intellectual property laws
INTRODUCTION
The theoretical purpose of effective intellectual property protection is to reward creative innovation whilst simultaneously promoting opportunity for commercial exploitation (Davis 2007). Restrictions on commercial convention promoting a free market without barrier are justified on grounds of necessity to protect creativity. Indeed the statement above points to preservation of economic value of intellectual assets being dependant on effective legal protection. However, some critics have questioned whether the traditional methods of intellectual property protection within rigid and established slots are sufficient to accommodate the challenges faced by technological change, in particular the proliferation of the Internet (Clive, Throne & Bennett 1998).
The Internet has widened the scope for business growth through e-commerce, which highlights the close relationship of economic value of intellectual assets with technological development. Intellectual property protection has to therefore strike a balance between competing rights and preservation of intellectual value which is challenged by the widening boundaries of exposure through technological change (Bainbridge 2007). Accordingly, as the above statement propounds, legal protection of intellectual assets should therefore “reflect the impact of economic and technological change”. This analysis will focus on how far the current system of intellectual property protection actually reflects economic and technological change in context of patents and trademark law.
PATENT LAW
Patent protection is rooted in the reward of novel innovation through the grant of a limited monopoly (Hollyoak & Torremans 2005). Section 125(1) of the Patents Act 1977 (PA) states that a patent shall (unless the context requires otherwise), be taken to be that specified in a claim of the specification as interpreted by the description and any drawings in the specification; and that this will determine the extent of patent protection. Accordingly, claims are of central importance to balancing protection of the patentee's rights vis-à-vis the need for certainty for any competitors wishing to enter a similar market to know that their conduct does not constitute patent infringement.
Hence the importance of correct interpretation, however the intrinsic nature of patents has rendered interpretation of patent claims inherently problematic fuelling academic debate (Pendleton 2004). The central issue that has exercised the courts is the appropriate method of interpretation, particularly on infringement claims (Macqueen, Waelde & Laurie 2007). Bainbridge's observations of the intricacies of patent infringement emphasise the fine balance that interpretation must address: “Patent infringement is not measured in terms of whether a substantial part has been taken as is infringement of a work of copyright, but there are difficulties where the invention has not been taken in its entirety by an alleged infringer, or where some feature of the invention has been changed” (Bainbridge 2007).
Whilst effective patent infringement is essential as a protection mechanism for the value attached to a granted patent, effective legal protection is rooted in certainty of application (Merges, Menell & Lemley). Furthermore, the very purpose of patent protection is to promote innovation while striking a balance with free competition (Davis 2007); therefore as Bainbridge further asserts; “effective protection for a patentee has to be balanced by the interests of third parties who need to be able to see, from the patent specification, the extent of the monopoly granted so that they can be reasonably certain that any activities they are contemplating do not fall foul of patent law” (Bainbridge 2007).
Conversely, “a rigid approach to interpretation….. could deprive a patentee of effective protection” (Bainbridge 2007), which further highlights the conflict of balancing competing objectives within the current system.
The conflict between these competing rights in patent law is further compounded by traditional legal approaches to interpretation of claims, which is essential to effective protection of competing rights. The current approach under UK law to interpretation is as stated in the case of Catnic Components Ltd v Hill & Smith ([1983] RPC 183). The House of Lords rejected the previous pith and marrow test and confirmed that a purposive approach should be adopted when construing patent specifications.
Lord Diplock asserted that the crux of the matter was whether practical persons skilled in the art would understand strict compliance with a particular word or phrase was intended by the patentee to be an essential requirement of the invention. If so, any variant that did not comply would fall outside the claim regardless of whether it had any effect. If the variant did have material effect, there would be no infringement.
Whilst the multifarious issues raised by the Catnic decision are outside the scope of this analysis, the Catnic test nevertheless highlights the complexity of balancing competing rights in an effective patent protection system, whilst preserving a competitive market in commerce and industry. However under the Catnic test, the pendulum seems to have swung too far in favour of the potential infringer (Turner 1999). The fundamental problem of the Catnic rationale is the presumption the purpose of the claim defines the parameters of the granted monopoly, which completely undermines the need for flexibility which is inherently necessary to accommodate “the patentee's failure to anticipate all the ways in which its invention may be used”(Turner 1999).
This conflict is compounded by Article 69 provisions of the European Patent Convention (EPC), which state that the extent of patent protection will be determined by the terms of the claims. Accordingly, the flexibility required can only be provided by appropriate interpretation of the claims (H Macqueen, C Waelde, & G Laurie (2007).
The limitations of patent protection to address technological changes is perhaps most evident in the context of software and the question of available protection for new products such as software has become a complex issue (Plotkin 2004). Under UK law, the Copyright Design and Patents Act 1988 (CDPA), protects software under the law of copyright (Merges, Menell & Lemley 2003). Although this is a powerful form of protection against an authorised copying of code, it may not be adequate to protect novel underlying ideas behind the software. For example, although copyright prevents competitors from taking the whole or a substantial part of the software code, it does not prevent a competitor from mimicking the novel concept behind the software system and taking these concepts to develop its own software (Davis 2007).
Theoretically patent protection should address the inadequacies of copyright as a means of protecting novelty (Vaver & Bentley 2004). The purpose of patent protection is to encourage and fuel innovation and the practical use of inventions. However, the issue of whether software should merit patent protection has remained a contentious issue with inconsistent approaches internationally.
Under UK law, the PA does not provide patent protection for anything that consists, of a method of doing business or a programme for a computer per se (Section 1(2) PA). The European Patent Office (EPO) on the other hand has adopted a liberal interpretation to patent protection of software by excluding software patent protection unless they have “technical effect”(Article 52 of the European Patent Convention). US law goes further in favour of a presumption of patent protection by requiring software to have “practical utility,” (35 U.S.C. 101) however neither the US or EPO position provides guidance on what constitutes technical effect or practical utility for the purpose of patent protection.
Despite the EPO and US move towards recognition of software patentability, its application in practice has remained contentious and inconsistent. Although the UK Patent Office has adopted and amended its guidelines in accordance with the EPO position (Patent Office Guidelines at available at www.patent.gov.uk), it begs the question as to how useful this is in practice when the EPO has preferred to take an ad hoc approach to patent protection of software instead of providing substantive guidance (Muir, Brandi-Dohrn & Stephen Gruber 2006).
The problem is compounded by the fact that debate on software patentability has justifiably focused on what constitutes “patentable subject matter” as defined under national laws (Plotkin 2004). The requirement of function, novelty, inventive step and industrial use is essential to filter claims that fail to qualify for patent protection in order to protect inventions (Muir, Brandi-Dohrn & Gruber 2006).
US patent legislation applies a categorical approach to patentable subject matter, according to five categories of subject matter, namely processes, machines, articles of manufacture, and compositions of matter all merit patent protection. The European Patent Convention (EPC) and the PA's approach although wider in definition, can have a limiting effect as the requirement of “industrial application” without any guidance or specified non-exhaustive categories creates uncertainty as to what might merit patent protection.
To exacerbate the uncertainty, the European approach expressly excludes computer programs, however only “as such”. Whilst clearly welcome instead of outright exclusion, it fails to add any light as to when a computer program would be granted software protection. Furthermore, despite the issues of novelty and inventive step which also factor in the debate on software patent protection, the centre of the uncertainty seems to lie in the issue as to whether computer programs, “as a class, should even be susceptible to patent protection in the first instance” (Plotkin 2006).
The current US and EPO position acknowledges in principle the concept of software being a patentable subject. Nevertheless, there are no clear, objective definitions of the conditions for such protection and there is no consistent approach to discerning whether any particular claim for patent protection will be successful. If we consider the cost of patent applications, this leaves innovators in a situation where only those with the funds and backing of established companies would be able to test out a patent application, which contradicts the purpose of patent law as a means to encourage innovation. Patent applications are expensive in any event however the lack of any meaningful guidance at the outset proves a deterrent, leaving software developers reliant on the inadequate protection and exposure of copyright protection.
Although both the “technical effect” and “practical utility” measures are in line with the concept of inventive step and industrial use requisites for patentability and exclude by their very nature abstract ideas; in leaving it open for judicial bodies to interpret the grey area leads to ad hoc decisions on a case by case basis, perpetuating the uncertainty.
There is still no answer to the obvious question of what actually constitutes “technical effect” and “practical utility”. Herein lies the inherent difficulty of legislating for software within the ambit of patent law. Every computer programme in use on a computer arguably produces a “technical effect” in a sense (Stobbs 2000). For example, a programme causes the computer to store, modify and transmit signals. However, if the sole fact of transmitting electric signals internally in the computer by execution of the program was in itself sufficient to constitute technical effect, this would lead to the undesirable result of every computer program being granted a patent (Stobbs 2000).
It was hoped that the position regarding patentability of software would have been clarified (from the European perspective at least) through the implementation of the European Union (EU) Directive on the Patentability of Computer Implemented Inventions. The objective of the draft directive was to harmonise the approach of various EU national courts.
The Directive provided that in order for software to be protected by patents, the software had to make a technical contribution, which was further defined as contribution to the state of art in a technical field which is not obvious to a persons guild in the art. Accordingly, the approach was that the software can only be patentable when used as part of process as part of a system.
Although welcome in an attempt to harmonise laws throughout EU member states, the Directive still failed to address the issue of what factors would constitute inventive step for the purpose of patent protection (Plotkin 2004). In any event, the European Parliament rejected the Directive, with the current future of the Directive or similar provisions unclear. With the future of the Directive in tatters, the English Court of Appeal's (COA) judgment in the recent case of Aerotel Ltd v. Telco Holdings ([2006]EWCA Civ 1371) where the COA felt bound by precedent to accept the “technical effect” approach.
TRADEMARK PROTECTION
The growth of domain names, which play an important part in e-commerce, has challenged the boundaries of trademark law as an effective protection mechanism (Yan 2000). Domain names are an extension of the brand value and reputation and it has been propounded that whilst “domain names have great economic value to online business, on the other hand, these names expose three ways in which it puts domain names at risk. In brief, these include a) cybersquatters who occupy a name hoping that a trademark owner will make an offer for it…. b) activists who register confusingly similar domain names… and c) typo-squatters who register domain names incorporating variations of well-known trademarks terms” (Throne & Bennett 1998).
There is currently no separate law governing domain name disputes, which is rooted in the intrinsic difficulty of determining whether domain names are part of intellectual property (Meyer-Rochow 1998). Article 15 of the TRIPS Agreement defines a trademark as “any sign, or any combination of signs, capable of distinguishing the goods and services of one undertaking from those of other undertakings”. This definition is further embodied in section 1(1) of the Trade Marks Act 1994, which also states that a “trade mark may, in particular, consist of words (including personal names) designs, letters, numerals or the shape of goods or their packaging”. Compliance with the legal definition enables registration of the mark, which heightens economic value to the owner and the brand (Bainbridge 2007).
Trademarks are economically important in identifying and differentiating products and services and maintaining brand value and reputation to the consumer (Kerly 2005). However, trademark protection requires distinctiveness, functionality, use and registration. Whilst this is necessary in preventing a punitive market monopoly, it highlights the limitations of trademark protection to cover domain name disputes. Not every domain name will necessarily have trademark protection however the economic damage caused by cybersquatting will arguably still be the same as a domain name protected by trademark registration (Davis 2007).
Furthermore, trademarks are limited geographically and by classification, therefore there are potentially many owners with the same trademark name applied to different classifications (Pullar 1998). However, this sits uneasily with domain name protection as the availability of domain name suffixes are limited, often operating on a “first come, first serve basis” (Throne & Bennett 1998), thereby causing a gap in effective online protection and e-commerce. Moreover, a consumer will always assume the domain name has an identifying function (Kerly 2005) and if someone registers the domain name first, it could potentially dilute the brand value if registered in respect of a different field (Kerly 2005). For example, the case of Prince plc v Prince Sports Group Inc ([1998] FSR 21) highlights the online domain name registration system as operating on a first come first served basis.
Conversely, not all business names satisfy the requirements for trademark registration and may legitimately register a domain name in order to grow their online presence. Clearly, it would be undesirable for the law to punish legitimate online users in such circumstances however this again highlights the potential conflict with the value of a registered trademark.
However, section 10 of the Trade Mark Act 1994 states that trademark infringement occurs if a person uses in the course of trade a sign that is identical with the trademark in relation to goods or services which are identical with those for which it is registered. It is questionable whether section 10 is an effective tool within the technological arena as the opening of borders through Internet trade widens the scope for floodgate claims and incurring of costs, which are arguably futile due to difficulty in policing and broader scope for anonymity on the Internet (Yan 2000).
An alternative option for protection is passing off, but the reality with domain name disputes is either cybersquatting or dilution of brand value with legal arguments of “confusion” often skating on thin ice (Kerly 2005).
CONCLUSION
The above analysis clearly demonstrates that existing models of intellectual property protection have been challenged by the pace of technological change. The shifting scope of economic value attached to intellectual assets is central to preservation of innovation and effective e-commerce. As such, the legal mechanism for intellectual property protection must reflect this. With regard to trademark protection, the most significant challenge faced is the use of domain names (Osborne 1997). The use of the domain name highlights the conflict between the value of a trademark as effective legal protection and legitimate online practice (Small & Weston 1998).
Furthermore, the contentious issue of cybersquatting exposes the difficulty in enforcing trademark protection online. Whilst a single model to encompass the range of situations covered by domain names is unrealistic, some form of official discussion is needed to avoid ad hoc interpretation of existing trademark law and passing off, which are not always appropriate. It is submitted that the issue of determining and recognising the value of a domain name as an intellectual asset needs to be addressed in the first instance before further progress can be made.
With regard to patent protection, interpretation of claims is essential to determining the scope of the patent right vis-à-vis the competitor (Bainbridge 2007). The inconsistency between the UK position under Catnic (1983) and the European position is undesirable and arguably exposes a patentee to sanctioned infringement for failing in the claims to account for what was clearly intended to be protected by the patent (Turner 1999). In fact, it is now ripe to rectify the problems caused by Catnic without further delay in order to ensure consistency going forward with the European position (Rich & James 2005). This in turn will go towards a meaningful protection of competing rights under patent law and encourage reciprocity between the UK and Europe in commerce and industry.
With regard to software patents, the inherent difficulty lies in the complexities of software and technology whereas the legislative measures and discussion to date has focused on the pressure from businesses to gain greater legal protection of software. This has led to jurisdictions trying to extend and interpret existing requirements for patentability without a meaningful debate on the complexities of software and technological advances. It is essential to research and consider the variants of what could constitute technical effect or practical utility from the outset. Only then can the UK consider drafting proposals for a satisfactory method of addressing patentability of software within a credible legislative framework.
