BREAKING: Mr Justice Green rejects judicial review challenge to UK's tobacco plain packaging law

The AmeriKat's version of plain packaging....

This morning Mr Justice Green handed down his 386 page decision in Tobacco Packaging [2016] EWHC 1169 rejecting applications for judicial review brought by several of the world's tobacco manufacturers in respect of The Standardised Packaging of Tobacco Products Regulations 2015  - the plain packaging rules - which are set to come into effect in the UK tomorrow.

The Regulations were introduced, in part, to the policy established by the World Health Organization (WHO) in the Framework Convention on Tobacco Control (FCTC).  The FCTC provided a series of measures that contracting states were encouraged to adopt, including the prohibition on advertising on packaging and upon tobacco products (refereed to in the judgment as "standardized packaging" or commonly referred to as "plain packaging" - see Kat posts here).  The decision summarizes this provision as follows:

"At base it involves a substantial limitation being imposed upon the ability of manufacturers to advertise or place branding upon the outer packaging or the tobacco product itself. The Regulations do not however involve all tobacco products being sold in a homogeneous, undifferentiated manner. The manufacturers can still place the brand name and variant name upon the box and in this way they can still communicate their identities to consumers and differentiate themselves from their competitors. But the manner in which the name and brand may be used is highly regulated in order, in effect, to strip away as much of the attractiveness of the branding or advertising as possible."

Directive 2014/40/EU (the TPD) is the European legislation that implements the mandatory part of the FCTC.  The Directive required certain restrictions to be introduced into Member States' laws in respect of the labelling and packaging of tobacco products.  The TPD introduced a series of prohibitions relating to the presentation and appearance of different products.

Australia was the first country to introduce plain packaging restrictions.  Giving evidence in this case, the Australian Government stated that, as confirmed by their post-implementation review, the legislation is working well, with data demonstrating that the measures were having a desired effect on the prevalence and use of tobacco in Australia.   The UK Regulation was introduced without the benefit of the analysis of the Australian evidence on the basis that the UK Parliament considered that there was a real risk to public health and welfare if there was a delay in introducing the Regulation pending a full-blown analysis of the Australian evidence.   Based on the evidence available, the UK Parliament felt that the measures in the Regulation would be effective.

The Grounds

The manufacturers contended that the Regulations were unlawful under international, EU law and domestic in numerous respects. Mr Justice Green consolidated these arguments into 17 Grounds of Challenge.  Most of the the Grounds will be of interest to trade mark lawyers.  In particular, in relation to Grounds 6-8  - Non-expropriation of property without compensation -the judge summarized his findings as follows:

"I reject the submission however that the rights have been expropriated. Title to the rights in issue remains in the hands of the tobacco companies; the Regulations curtail the use that can be made of those rights but they are not expropriated. Indeed, the rights remain important in the hands of the tobacco companies because the word marks can still be used on packaging and will serve their traditional function as an identifier of origin. I accept that the figurative marks cannot be used in this manner but they still have certain, admittedly very limited, vestigial uses, which the Regulations do not curtail. Further the restrictions imposed pursue a legitimate public health based interest; a conclusion not challenged by the Claimants. These two factors (retention of title and measures imposed for legitimate public interest reasons) are in large measure sufficient to defeat in law the submission that the rights have been expropriated." 

What does a trade mark actually do - exclude or use?

Diving into this finding, you will find an interesting section on the judge's analysis on how to define a trade mark right - is it a negative right to exclude or a positive right to use?  The decision goes through a long analysis of the case law on the nature of trade mark rights.  Counsel for the Secretary of State argued that it is a negative right.  Because the Regulation merely limited the "use" of trade marks they did not strip away the trade mark owner;s right to prevent or exclude others from using their mark (citing Arnold J in Pinterest v Premium Interest).

Counsel for the manufacturers said that this position was artificially narrow in that it did not look at the "essence" or "substance" of a trade mark, since the real value of a trade mark for the purposes of Article 1 of the First Protocol of the ECHR is in its commercial exploitation (i.e. its use).  A trade mark would be an "economic hollow shell" if it could not be so used.  The "substance over form" analysis was the relevant test when looking at the Charter.  Under the Regulation, symbol or figurative marks could no longer be used at all either on packaging or on the tobacco products themselves, whereas the name trade marks could at least be used albeit only in a highly circumscribed manner.  Counsel for the manufacturers also cited the High Court of Australia's decision in JTI International v Commonwealth of Australia where the court accepted that the Australian measure had, in respect of the trade mark rights:

“rendered useless for all practical purposes”, according to Heydon J, at 216); and on the basis that “rights to exclude others from using property have no substance at all if use of the property is prohibited” (according to French CJ, 37); and that “each property right conferred included a right of use by the owner” (according to Heydon J at 216); and/or that the owners’ proprietary rights included “the right to turn the property to valuable account by licence or assignment” (Crennan J at page [264]. 

Mr Justice Green concluded at [744] that:

"It follows that in delineating the property rights in issue a Court is not confined to the narrow and legalistic task of identifying and “classifying” what the bare minimum legal essence of the right is.  And as to practical, real world, substance it is clear, and was not in fact disputed by the Secretary of State, that the economic value of a trade mark lay in its use as well as its ability to exclude. In particular, the commercial value of a trade mark lay in its ability to forge links of recognition or identity and reputation in the mind of consumers. The Claimants adduced a substantial body of evidence on this which included evidence of international transactions where trade marks had accounted for a significant portion of the consideration paid."

Even so, Green J concluded that the substance of the rights have not been wholly destroyed, although he did accept that they had been "significantly and even substantially diminished".  At [745] he held:

"On the contrary the rights retain important functions. Regulation 13 explicitly protects against revocation for non-use and preserves the rights attached to registration and hence the right to prevent others from using the trade marks in an unauthorised manner. This is not, as was submitted, an illusory or fictitious exercise; on the contrary the Regulations permit tobacco companies to both place their name and the brand name on the packaging. As such the trade marks still serve their core function as an identifier of origin."

In his summary of the decision, Green J stated that:

"I accept that the Regulations do substantially limit and restrict the use of those rights but they do so for entirely proper and legitimate reasons and they do so striking a fair balance between the right to property and opposing public health interests and rights.  I have in this regard rejected the contention that the tobacco companies should entitled to any compensation at all.  I cannot see any logical or rational basis for imposing upon the State a duty to pay compensation to the tobacco companies for ceasing to engage in an activity which facilitates a health epidemic and imposes vast costs upon the state.

...

When one stands back from the immense detail of these challenges, as the Secretary of State submitted during the hearings, the essence of the case is about whether it is lawful for States to prevent the tobacco industry from continuing to make profits by using their trade marks and other rights to further what the World Health Organisation describes as a health crisis of epidemic proportions and which imposes an immense clean‐up cost on the public purse.
In my judgment the Regulations are valid and lawful in all respects.   

There is no basis upon which I could or should strike down the Regulations or prevent them coming into effect tomorrow. "

This judgment follows the CJEU's decision earlier this month holding that the TPD is valid (see decision here).  The AmeriKat plainly has not read all 386 pages of the decision in detail, so imagines that there will be a wealth of further analysis on the decision to come and its bearing on trade mark law and principles.  In the meantime, Reuters is reporting that BAT is planning to appeal the decision, whereas Philip Morris has not (see press release here).  

Does Mr Justice Birss' decision in Positec finally signal the end of disclosure in obviousness cases in the UK Patents Court?

The AmerKat explaining the relevance of
last week's decision on patent procedure
to whomever will listen...

The AmeriKat was so busy meowing about last week's case management decision of Mr Justice Birss in Positec v Husqvarna [2016] EWHC 1061 that she forgot to write about it.  Why the interest?  Well, it has to do with a long-standing and "notorious" point in English patent law - disclosure.

Background

Positec wish to sell robotic lawnmowers in the UK.  They are seeking to clear the path of Husqvarna's EP 1 512 053 ('053 Patent) relating to a method for operating an automatic device, such as a robotic lawnmower, under the guidance of an electronic "directing" system.  Postiec therefore commenced a revocation action and declaration of non infringement.  They claim that the '053 Patent is invalid in light of an earlier patent application (WO 99/59042, known as "Peless"). Their Grounds of Invalidity also refer to the common general knowledge (CGK), but they have yet to confirm whether their case is that the '053 Patent is obvious over the CGK alone or just over Peless in light of the CGK.   That will be confirmed in due course by a Statement of Case.

Husqvarna's Disclosure Report was prepared on the basis that disclosure on validity would be in accordance with paragraph 6.1 of the Practice Direction to Civil Procedure Rules 63 which requires disclosure of documents that came into existence within the four year window (i.e. two years either side of the priority date).  However, when later trying to agree the Order for Directions (i.e. the order which governs the deadlines in English litigation, including disclosure and evidence), Husqvarna argued that no validity disclosure should be ordered.

The question

What is the correct approach to disclosure in light of  CPR 31.5?  How does that approach apply to the question of whether to order disclosure of documents arising from the making of the invention in an obviousness case?

The law

Mr Justice Birss commenced with a history of disclosure in obviousness cases.  Whether or not an invention is obvious is judged by the notional skilled person.  The skilled person, a legal construct, may have characteristics based in reality, but is not a real person.  These nerds know all CGK, read obscure public documents and foresee only what is obvious (not what is inventive).  They are not the real skilled person.  They are not the inventor. Evidence of what the inventor actually did "can often be of little value" and is at risk of hindsight.  The value of this secondary evidence (as opposed to primary expert evidence ) was discussed at length by Lord Justice Jacob in Nichia v Argos [2007] EWCA Civ 741.  Although sometimes this secondary evidence can win a case, i.e. by telling the invention story of how the inventor toiled away in the dark (figuratively) before arriving at the invention (see Schlumberger v EMGS [2010] EWCA 819), it is often a "costly distraction".

There had previously been an attempt to limit disclosure on obviousness.  First, an attempt by Mr Gratwick QC failed in the Court of Appeal in SKM v Wagner Spraytech [1982] RPC 497.  The issue was tackled again by the Patents Court in the 1990s, but again it was felt that a crucial aspect of common law disclosure is the ability to obtain documents that may be adverse to a party's case.  A balance therefore needed to be struck.  Cue the introduction of the RSC in 1995 (which would become para 6.1 of the Practice Direction to CPR 63).  This limited disclosure by initially replacing disclosure on infringement by way of a product or process description (PPD)  and providing a four year window for validity disclosure.  This practice was well established by the mid-2000s.

Will this warning from Lord Justice Rix hold true following Positec?

But validity disclosure still haunted parties and the courts. In 2007, Mr Justice Pumfrey tried to do away with disclosure on obviousness in Nichia v Argos.  In the Court of Appeal, Lord Justice Jacob agreed stating that the principle of proportionality - which runs through the Civil Procedure Rules - normally requires that "such disclosure should not be ordered".  However Rix and Pill LJJ reluctantly refused to follow him on the basis that easily revealed documents known to exist which prejudice a case would not be disclosed allowing "dishonest or cavalier litigants" the possibility to "reap an unmerited advantage, contrary to the interests of justice".  However, any concerns about such sharp practice did not bear fruit, continued Mr Justice Birss, as exemplified by the experience in the Intellectual Property and Enterprise Court (IPEC) where there is no automatic right of disclosure and disclosure is addressed at the CMC on an issue-based approach. No complaints so far received .

The 2013 amendments to CPR 31 (Disclosure and Inspection), following the Jackson review, have made a material difference to the application of Nichia.  In particular CPR 31.5(7) which provides a menu of potential disclosure options governed by the preface that the court needs to have regard for the overriding objective and the need to "limit disclosure to that which is necessary to deal with case justly" before determining which of the orders to make.   Standard disclosure is no longer the default option.  However, given the nature of patent cases, the judge commented, issue-based disclosure on obviousness, is the same as standard disclosure.

What is the test?  

At paragraph 25, Mr Justice Birss outlined the questions that need to be answered by the court when deciding whether and what disclosure to order:

1. What is the probative value of the material that could be produced?
2. What is the cost of providing this probative material, in the context of the proceedings as a whole?
3. In light of all the above, would disclosure be fair, proportionate and in the interest of justice (i.e. in accordance with the overriding objective)?

The decision

On the first question - probative value - Husqvarna confirmed that it would not be relying on commercial success, calling the inventor, relying on the reactions of others to the invention or rely on its own internal documents to support its case on inventive step.  If they had, Birss J concluded, these would be reasons to order disclosure.

Disclosure will not be probative for purposes of  cross-examination.  Putting documents to witnesses in cross-examination that show what the inventor did assumes that the inventor is equivalent to the notional person skilled in the art (which he may or may not be).  This does little to answer the question as to what the notional person skilled in the art would have done based on the prior art and/or CGK.  Further, an expert's opinion on the steps that the inventor actually took, again. is not probative.  This is because it assumes that the expert has not thought of an obvious path from the prior art to the invention in the first place.  Such an approach is potentially tainted with hindsight and adds little to the cross-examination point.

Positec argued that a particular way of thinking on the basis of the prior art would be what the notional skilled person would do.  If this particular thinking and path was reflected by the inventor's documents, then this would support Positec's case that the invention was obvious.  However, again, the relevance of this disclosure depends on how close the notional skilled person is to the inventor(s) and their working context.  Importantly, held the judge, in this case it was unclear if this point was even in issue.  If and when it arises, provision could be made for disclosure on this point if it was considered to be required after the exchange of fact evidence and experts' reports (a point reiterated again by Mr Justice Birss at paragraph 42).

The judge also rejected the contention that Husqvarna arguing that disclosure should not be ordered, despite serving a Disclosure Report signed by a statement of truth, was indicative of a party who found a "smoking gun".  Mr Justice Birss stated that "in the vast majority of the minority of cases in which obviousness disclosure from a patentee plays any material role in litigation at all, it helps the patentee."

But if you are missing reading through
reams of inventors' notebooks, you can
purchase this handsome version here
on Amazon.  

On the second question - cost - Husqvarna, by way of its solicitor's witness statement, tried to argue that the value and importance of the dispute was low. However, the judge held that the picture this painted was wrong.  The case is not at the very low or very high end of cases in the Patents Court, but it concerned rival manufacturers of consumer products in a substantial market with a likely turnover in the millions, if not tens of millions.  The costs budgets filed in the case ranged from £0.8-1.1 million of which a minimum amount of £90,000 was estimated by the judge to be attributable to disclosure on obviousness.  This amount was "not a very substantial aspect of the costs of this litigation but neither is it in any sense a trivial sum of money".

On the final question - the overriding objective - the judged refused disclosure.  He acknowledged that this runs counter to the Court of Appeal in Nichia, but that the change to CPR 31.5(7) means it is not a binding authority.  He concluded:

"Experience in IPEC shows that the obligation to disclose documents which may be adverse to a party's case can be preserved as a critical aspect of a fair trial at common law within an issue by issue based disclosure regime in which disclosure on some issues, such as obviousness, is not ordered because the likely probative value of what is produced is not worth the cost. Applying what I perceive to be the right approach under the Civil Procedure Rules as they now are, I am not satisfied that an order for standard disclosure, or an order for issue based disclosure including the issue of obviousness, would be in accordance with the overriding objective in this case. This is an ordinary obviousness case with no special features which might make such disclosure worth the cost."

What does it all mean?

The AmeriKat understands that, so far, Positec have not appealed the decision so this case may stand as the new (or at least reported) approach to obviousness disclosure in the UK Patents Court.  So, has Mr Justice Birss finally achieved what those before him tried and failed to do?  Will much really change in the Patents Court, given that some judges (shout out to Mr Justice Arnold) have been refusing or extremely restricting disclosure in patent cases? Will parties be scrambling to argue that their obviousness cases have "special features" ripe for disclosure?  Are English patent litigators actually a bit more like their Continental cousins than they care to admit when it comes to disclosure?  Is this all getting us into shape for the UPC?

Despite all the questions (some of which are tongue in cheek), it is clear that following this decision parties need to be alive the test and considerations outlined by Mr Justice Birss when seeking or resisting obviousness disclosure.  In light of CPR 31.5(7), even if parties agree that disclosure should be provided, if they have a very active judge at their CMC, they may need to be prepared to answer the questions posed above.  Merpel wonders whether, if they take some of the cues from this decision, parties may agree to address the question of disclosure after exchange of expert reports, at which point the issues should be narrowed and targeted issue-based disclosure more easily ordered.  Now that would be something....

"Simply" invalid: French trade mark win for M&S in the Tribunal de Grande Instance de Paris

The beret seemed like a good idea at
the time, but when she stepped off
the Eurostar at Gare du Nord the
AmeriKat immediately
knew it was a mistake...

From across the Channel comes news from the IPKat's friends at Gide Loyrette Nouel of a decision of the Tribunal de Grande Instance de Paris (the French Court with exclusive jurisdiction at first instance in trade mark matters) concerning that stalwart of trade mark litigation, Marks & Spencer. The decision addresses a number of issues relating to the registrability of descriptive terms in English as European Union Trade Marks and the permissible scope of counterclaims for invalidity and revocation for non-use. Gide represented Marks & Spencer.  Emmanuel Larere explains:

Background

The Claimants - ISMS - are members of Auchan, the large international food retail and distribution group and operator of the SIMPLY MARKET stores in France and other European countries. There are currently over 2,000 Simply Market stores in Europe, owned and operated by the Claimants or one of their franchise partners.

The Claimants were the registered proprietors of European Union Trade Mark No 4712196 -  SIMPLY MARKET - for various food and drink goods in classes 29, 30 and 35, and European Union Trade Mark No 5 410 998 SIMPLY for retail services of food products in class 35.

The sign used by the Claimants in France was as follows:

Marks & Spencer, since returning to the French high street in 2011, had been selling a range of goods which were branded with the M&aS name as follows: 

In September 2014, the Claimants brought proceedings against M&S for infringement of both EUTMs under Article 9(1)(b) of Council Regulation (EC) 207/2009, and for unfair competition, relating to use of the above-mentioned sign.

M&S responded that there was no likelihood of confusion, and counterclaimed for invalidity of both trade marks, and requested that both trade marks be revoked for lack of use.

Decision

Scope of Counterclaim

The first point the court, comprising a panel of three judges, had to decide was whether M&S was entitled to request the cancellation of all goods and services of the cited registrations, or just those on which the infringement claim was based. After substantial reasoning on this point, it decided that this was a question of purely national law.  According to the French IP code, M&S was not entitled to demand the cancellation of those goods and services not cited against it by ISMS, and therefore the claims for cancellation should be accepted as far as they apply to those goods and services cited in the infringement claim but rejected for those not so cited.

On the validity of CTM 5410998 SIMPLY

Recognizing the need to consider the validity of the marks by reference to the average consumer in all EU member states, the court referred to the decision of Liz Earle Co v OHIM, which held that English was understood in Scandinavia and Holland as well as Ireland, Malta and the UK. In France, the average consumer could be considered to have a 'baccalaureat' or high school/A-Level level of English. Consequently the term Simply would be directly understood by the average consumer in France.  They further held that:

• 'Simply' could be an adverb or have a laudatory function. 

• The fact that a word is complimentary or laudatory term does not necessarily mean it is devoid of distinctive character as long as it is capable of indicating commercial origin. 

• That being said, the average consumer, faced with the ordinary term simply, would immediately understand that he might benefit from services simply offered or executed and would not be concerned by rules of grammar, which are often ignored in advertising and promotional materials, and would perceive the sign as being exclusively a description of a quality of the services and not an indication of commercial origin. 

• Therefore the registered sign SIMPLY is not inherently distinctive and should be cancelled for the services: "Retail services of food products" in class 35.

On the validity of CTM 4712176 SIMPLY MARKET

The court held that:

• The sign is composed of the term SIMPLY (as discussed above), and the term MARKET, which is translated as and defined by the French term marché, meaning a physical or virtual space for the exchange of goods or services. The relevant public would interpret this as a particularly ordinary term. 

• The association of the two terms gives the trade mark a more precise and easily understood meaning than either in isolation, regardless of any questions of incorrect grammar, and allows the public to immediately understand it as meaning a supermarket organized simply or whose products have a price or quality that is strictly that of a market in the traditional sense. 

• The sign, although not descriptive of the products themselves, is descriptive of the means of their commercialization and composed of banal terms implying an alternative to normal structures of supermarkets.  The sign would be immediately and exclusively perceived by the relevant public as having a solely promotional function,  not capable of indicating the origin of the products for which it is registered. 

• Therefore the registered sign SIMPLY MARKET is not inherently distinctive and should be cancelled for the relevant goods.

On the other claims 

Following its decision on the validity of the two trade marks for the goods and services cited in the infringement claim, the court found that it did not need to consider the counterclaim for revocation for non-use or the infringement claim.

However, the court did considered the similarity of the sign used by M&S and that used by the Claimants in the context of the unfair competition claim. Noting the differences between the signs, the court noted that the products are sold in shops under the sign Marks and Spencer or on the dedicated M&S website. The consumer knows that M&S is a contraction of the brand name of the premises in which he has entered, or the domain name of the site he is visiting. He perceives M&S as the sign denoting commercial origin and simply, which has been established as being perceived as having a promotional message, as being merely descriptive of a quality of the products. Any confusion between the second claimant's brand name, which has a different colour and font, or the commercial name or domain name of the claimants is even more difficult to see in light of the message at the bottom of the M&S product, in English words which are particularly easy to understand by the French public, as having the quality of the undertaking who offers them for sale "M&S Quality", despite being at a low price "Simply Priced". 

The Claimant have just decided to appeal the decision."

The French decision can be found here.
The English translation of the decision can be found here.