The Court of Milan says that standard-essential patents may be only “optionally” implemented in compliant products.

This past September the Court of Milan issued an interesting – and so-far unpublished – decision in a patent infringement cahtc-legendse involving smartphones and standard-essential patents. The decision is noteworthy as it addressed (albeit briefly) the dynamics of standard-setting and the concept of essentiality, in partial reversal of previous decisions from the same Court and other Italian Courts.

The facts first. The case involved, on the one side, TLC giant HTC and, on the other, IPCom: a German non-practicing entity. Around 2010 IPCom pressed criminal charges against HTC, claiming that a number of HTC smartphones infringed three of its patents (EP 1 236 368, EP 0 913 979 and EP 1 226 692) that had been declared essential to a number of standards (e.g. WDCMA, SAP and UMTS). In response to this, in September 2010, HTC summoned IPCom before the Court of Milan, looking for a declaration of invalidity and non-infringement of said patents. IPCom counterclaimed for infringement, but only for EP 1 226 692 (hereinafter “EP ‘692“).

A (complex and very lengthy) technical investigation phase followed suit, with the appointment of an independent expert. In particular, it was questioned whether HTC smartphones would have directly or indirectly infringed EP ‘692, which was preliminarily deemed valid by the Court-appointed expert.

In assessing infringement, the experts and the Court had to first come at odds with the fact that EP ‘692 had been declared “essential” to ETSI, a prominent standard-setting organisation, for the UMTS standard. And that HTC smartphones were undisputedly compliant to said technical norm.

IPCom contended that since EP ‘692 was formally declared essential to the UMTS standard, every product that proved to be complaint with said standard would automatically infringe its patent.

The Court of Milan, however, viewed things differently.

In the first place, it held that a declaration of essentiality is a “necessarily unilateral” statement, particularly referring to paragraph 3.2 of the ETSI Guide on IPRs, wherein the Institute specifies that it “cannot confirm, or deny, that the patents/patent applications are, in fact, essential, or potentially essential” (for the latest version of the ESTI Guide on IPRs see here). Therefore, the Court affirmed that it had to assess the infringement on a factual and technical basis, implicitly affirming that it could not presumptively do so, on the basis of the patent’s declaration of essentiality alone.

In the second place, the Court of Milan further reviewed the UMTS technical specification at stake, noting that the execution of the activities covered by the patent (relating to the so-called PDCP layer), although regulated in the standard, were only optional for standard-compliant products. To ascertain this, the Court ordered for tests to be carried out on HTC smartphones, simulating both the network operations and the phones’ connection to the providers. As the test revealed that “the phones communicated to the base station that they cannot do” the particular operations mentioned in the patent and that, in any case, “Italian providers don’t ask them to do” said operations, the Court excluded the occurrence of both a direct and an indirect infringement of IPCom’s EP ‘692 patent.

This passage of the decision highlighted a circumstance that is often disregarded in the SEPs discourse: namely that technically-essential patents may be indeed essential, but in relation to portions of the standard that are only optionally implemented in compliant products.

In light of the above, the Court of Milan seems to have stepped away from a previous case law of 2008, where – in line with the technical report drafted by Court-appointed expert – it established infringement of a standard-essential patent by referring only to its essentiality and to the product’s necessary compliance to the standard: a sort of presumptive assessment of the infringement (see Court of Milan, 8 May 2008, Italtel s.p.a. et al. v. Sisvel s.p.a et al.; similar reasoning were put forward – although in preliminary injunction matters – also by Court of Genoa, 8 May 2004, Koniklijke Philips Electronics N.V. v. Computer Support Italcard s.r.l., in Giur. ann. dir. ind. 2006, 4949; Court of Trieste, 23 August 2011, Telefoaktiebolaget L.M. Ericsson v. ONDA Communication s.p.a. ,in Giur. ann. dir. ind. 2013, 5951).

The approach here suggested by the Court of Milan in determining the infringement of SEPs seems to better take into account the inherent technical and legal nuances of the standard setting dynamics, where the possibility of the so-called “over-disclosure” phenomenon — i.e. claiming essentiality for non-essential patents – is considered to be wide spread, and where specific technical features may often be only “optionally” implemented within standard-compliant products.

Giovanni Trabucco

Court of Milan, IP division, decision of 21 September 2016, No. 10288

Industrial Design works: exhibition in museums as proof of special artistic merit?

A recent decision issued by the Tribunal of Milan (full-text in Italian available here), Specialized IP Section, has acknowledged special artistic merit, hence copyright protection (under Art. 2.10  of Italian Copyright Act implementing Art 17 of EU Directive 71/98) to after-sky boots, branded Moon Boots (as designed after the US astronauts’ boots ), a popular model marketed (also) in Italy since more than 40 years.

nasa
Aldrin’s boot and footprint in lunar soil – credit: Nasa

(As known, in some countries like Germany and Italy, copyright protection of industrial design products requires a plus of artistic merit than the mere ‘individual character’ requested by the general copyright paradigm).

 

The trump card for this recognition was the Louvre Museum’s choice of Moon Boots as one of the 100 most representative industrial design works of the XX century. The readers will think, and with reason, that this position is not novel, either in Italy or in other countries (Germany,i.a.). And with reason: as a matter of fact, Milan’s Tribunal just follows the blueprint of Flos.

So, it is not for its peculiarities that we are recalling the Moon Boots decision. Rather, it is an occasion for some critical comments on the general position – general:  aside from the specific case – espoused by the Milan Court.

First: is the selection/exposition by even prestigious museums a per se decisive argument for assessing special artistic value? More precisely: is it so without inquiring whether the exhibition was the Museum’s choice an autonomous initiative, or was it sponsored by the producers of the industrial design products? We all know how quite often, nowadays, public and private museums and art galleries, as well as the press, generalist and specialized, specialized struggle for balancing their budgets. And how a skillfully set up ‘environment’ can frame prestige and ‘cultural’ aura for the presentation of even everyday household appliances. And we know, of course, how  intense is the ‘race’ by industrial design producers to obtain that prestigious upgrading, which translates in a potentially over 100 years rent-seeking position.

So, at least Courts should adopt the testsponsored or autonomous’?

One might add that an even more significant test could be adopted. By checking whether this or that industrial product, of which the producer/plaintiff claims special artistic value, has ever been auctioned at art sales by famed houses as Christie’s, Sotheby’s and the like. Or, just by checking with same houses if they are prepared to auction such products as after-sky boots… (I am personally interested to this, I must confess: in my garage I have a couple of forgotten old used boots that I was going to throw away…).

Let’s now give a broader glance at the issue. First of all, its ‘competitive cost’. Is it reasonable, and consistent with the principle of freedom of competition, that utilitarian products sold since many years, even after the expiry of the 25 years design registration, and whose basic model has been currently adopted, after such expiry, by many competitors (usually SMEs ) — is it reasonable, then, that a sudden ‘copyright baptism’ makes them again object of exclusive rights? — possibly, repeat, for  more than a century ahead! I do not think so: however, the question of an ‘easy’ building of such rent/seeking positions is not worth neglecting. Also for an additional reason. Under Berne Conventions’ rule on derivative works (Art.2.3) the rightholders on the original design retain the faculty to inhibit the production and marketing of competing products bearing variants.

At least — at the very least— a more balanced regime should establish a suitable term for competitors, who entered the market after the expiry of the registration, to continue production and sales as not to waste the investments poured therefor. On the determination of such ‘transition’ period, it is well known, lobbies of big international furniture producers are actively at work, e.g. now in UK after the disgraceful repeal (itself lobby-driven), of Sec. 52 of Design Act by the Enterprise Act of 2013 .

Finally: let alone SMEs, do Courts worry about the cost for consumers, i.e. effect on price, of such… baptism? Not that I know.

Gustavo Ghidini

 

Court of Milan, IP Section, decision of 7 July 2016, No. 8628/2016

Max Mara gets patent protection for jeans’ pockets which fit better to wearers’ body shapes.

By judgment no. 472 of 14 January 2016, the IP Court of Milan (Judges Mr Marangoni, Mrs Dal Moro and Mrs Giani) ruled that jeans produced by Germani Group and distributed by Il Passatempo infringed Max Mara’s italian patent on “a pocket for clothing” that can “enhance and shape the forms of the wearers, with particular reference to the gluteus area”.

The Court dismissed the defendants’ exception of patent invalidity, based on the alleged lack of inventive step. A three-dimensional pocket that well adapts to the body constitutes an appropriate technical solution for a very clear technical problem: the reduction of the jeans unpleasant aesthetic effect of flattening and the increase in comfort. “This technical solution involves an inventive step, since for a person in the art it was not evident from the state of the art.

The Court recognized that the patent infringement amounted also to unfair competition for contrast with professional ethics principles under art. 2598 no. 3) Italian Civil Code.

With reference to the distributor, the Court excluded its exemption from liability because unaware of the infringing nature of the saled product. Since intellectual property rights are subject to a system of publicity, the Court argued that market operators are presumed to be aware of their existence. As a consequence, the sale of i
nfringing goods amounts to infringement unless the distributor gives evidence that he was unaware, without his fault, of the infringement. That was not the case, since the distributor continued in marketing the infringing product even after the date of notification of the summons.

As regards the assessment of damages, the Court ordered the defendants to return the profits derived from the sale of the infringing products pursuant to art. 125 Italian Code of Industrial Property. This remedy was granted notwithstanding that Max Mara had not provided any evidence of the alleged damages and loss of profits. Even if the infringement does not give rise to damages, in any case it cannot enrich its authors, which will have to return their profits.

The decision seems to set the inventive step’s threshold required to get patent protection at a particularly low level. The related risk is that the same owner could claim different protections in relation to the same products. Indeed, in connection with the same jeans, design or even trademark protection could be successfully invoked as well.

Court of Milan, 14 January 2016, n. 472, Max Mara v. Germani Group et al. 

 

Jacopo Ciani

Can the interim re-assignment of a trademark be ordered? Well actually it can’t, says the Court of Milan

Article 133 of the Italian IP Code (IPC), providing for the right to request interim re-assignment of unlawfully registered domain names (*), cannot be invoked to obtain the interim re-assignment of trademarks: as a special provision, specifically concerning domain names, its application cannot be extended to other distinctive signs. On this ground the Court of Milan, by decision of 11 January 2016, denied the interim re-assignment of a trademark requested under the above article.

The Court did not rule out the possibility of the interim re-assignment of trademarks being obtained under different provisions of law, namely article 700 of the Code of Civil Procedure. Nevertheless, it did not grant the requested re-assignment on the basis of the latter article either, holding that an interim injunction was enough, in the case at stake, to secure protection of the petitioner’s trademark rights.

The decision – whose full text may be found here – is well-founded. And yet it lends itself to some considerations on the rationale underlying article 133 IPC and, correlatively, on the reason why the interim re-assignment of trademarks would make little sense.

The need for interim re-assignment of domain names stems from the very nature of these signs. Unlike trademarks (which, de facto, may be used by anyone), domain names can only be used upon assignment. No matter who is legally entitled to the sign which the domain name consists of, it is the sole assignee who can materially use the (assigned) domain name.

This means that, in the context of domain names, there is a gap between legal and material entitlement, and that two different entities may have, respectively, the legal and material entitlement to use a sign as a domain name.

Such a gap cannot be filled by injunctions. Indeed, injunctions can effectively prevent the assignee from using its (infringing) domain name. They can do nothing, though, with regard to the assignee “occupying” it, that is to say with regard to curtailment of the material possibility of using the sign which the domain name consists of by the subject who is legally entitled to that sign. For this purpose, a different, specific remedy is necessary. And here is where the need for interim re-assignment of domain names arises.

On the contrary, the material possibility of using a sign as a trademark is totally independent of the existence of third party registrations/trademark applications (the possible filing by a third party of a trademark application for “Coca-Cola” would not have any impact on the material possibility of the Coca-Cola Group using the same sign as a trademark). Thus, interim re-assignment of a trademark (as opposed to final re-assignment under Article 118 IPC) would add very little, if anything, to what an interim injunction already gives to the owner of a trademark.

Riccardo Perotti

(*) The text of Article 133 IPC reads as follows: “The judicial authority can order, in addition to an injunction concerning use in the course of trade of the unlawfully registered domain name, its provisional re-assignment …”.

Court of Milan, 11 January 2016 (interim ruling), Swiss Eco Patent v. VV Italia srl, Veritex Enterprises LLC and Laree Holding LLC