23 May, 2017

A Lack of Patent Exhaustion - Discussing the Lexmark Case Ahead of US Supreme Court Hearing

Many IP rights give their owners a great deal or rights and capabilities to restrict the use of their rights by other parties, and arguably, rightfully so, as the creation is indeed theirs. Even though this might be the case at face value, the use and exploitation of those rights should still have certain limitations, for example, from preventing an author from allowing certain people from reading their book after they have purchased a copy. This doctrine is called the exhaustion of rights, which means that after a certain point, the rights held by the author or owner of a technology cease to apply, allowing for the party to use their products as they please. Exhaustion of rights is still a developing area of law, and an up-coming case in the US Supreme Court has been primed to tackle this in relation to patents, with the case having ramifications both ways irrespective of the decision. Looking ahead to the decision, it is important to discuss the Court of Appeal case decided over a year ago.

The case of Lexmark International Inc. v Impression Products Inc. dealt with the sale of refilled ink cartridges for computer printers by Impression, who purchased used cartridges from abroad to refill and resell in the US (having a third-party circumvent the protection mechanism preventing reuse in the cartridges). Lexmark holds patents in relation to these cartridges, and most of the cartridges had strict single-use/resale restrictions set by Lexmark both in the US and abroad. Impression had not sought permission to resell the cartridges in the US, and Lexmark subsequently took the company to court for patent infringement.

Under 35 USC section 271, only the patent holder is authorized to sell and import patented inventions in the US. Impression argued that the rights (undisputed to be valid and enforceable) had been exhausted after the first sale of the cartridges to the original consumer, and therefore their resale and importation would not be an infringement of the rights.  The Court disagreed, and saw that "...a patentee may preserve its § 271 rights when itself selling a patented article, through clearly communicated, otherwise-lawful restrictions, as it may do when contracting out the manufacturing and sale". This would therefore allow Lexmark to assert its rights post-sale as per the stickers on the cartridges.

The Court focussed on the aspect of the provision that restricts the sale of the patented 'without authorization', as the lack authorization of resale through the sticker clearly leaves the buyer without rights. Conversely, the sale of an article without the reservation of rights would, arguably, have the right to resale the item. It all comes down to the language used during the sale process. The Court summarized their position, where "...[a] sale made under a clearly communicated, otherwise-lawful restriction as to post-sale use or resale does not confer on the buyer and a subsequent purchaser the "authority" to engage in the use or resale that the restriction precludes", following the decision in Mallinckrodt Inc. v Medipart, Inc.. This means that the patent owning party would retain the rights in the item if expressly and clearly communicated at the time of purchase, provided that no law or policy is violated through the retention of rights.


Patent exhaustion is a real plight! (Source: Good Little Robot)
The legislative position is not any different, according to the Court, from the common law position as set out in Kirtsaeng v John Wiley & Sons (discussed more here), which restricted the rights in items that have been sold (albeit in relation to copyright and not patent rights). The ultimate seller of patent rights can retain some rights in the sold items, which differs from copyright that does not offer the same varying set of rights.

The second question the Court had to grapple with was whether the sale of the items abroad conferred any authority to Impression to import the cartridges to the US and sell them there. Ultimately, following the Jazz Photo Corp. v International Trade Commission case, the Court determined that no legal rule to this effect existed. For there to be an ability to do so, Impression would have to have a licence, implied or direct, to do so, which in the case they did not have. Similarly to the above, the decision in Kirtsaeng does not apply in this instance either (where copyright protected works were bought abroad and imported for sale in the US), as the law in copyright affords an equivocal right to resell the items, which patent legislation does not give.

Ultimately, Impression's case failed and the Court found that they had indeed infringed Lexmark's rights.

Both Judge Dyk and Hughes dissented from the judgment, raising opposing views on both the applicability of Mallinckrodt and Jazz Photo.

In their view, in relation to the first argument of patent exhaustion, the decision in Quanta Computer Inc. v LG Electronics Inc. applies, which sets out that "...the initial authorized sale of a patented item terminates all patent rights to that item". The moment the item involving the patent has been sold with authorization, all rights in the patented aspect cease to apply, even in relation to resale. Additionally, in relation to the second argument, once the item was sold abroad (with no restrictions as to US patent rights), the rights in the patent works are exhausted. This is even more poignant, according to the judges, due to the sale by the patent rightsholder, and not a mere licensee.

The case, once decided by the Supreme Court, could potentially have huge implications to the sale and resale of goods incorporation patent rights in the US. Should the Supreme Court side with Lexmark, it could cause a huge cooling on the resale of products in the US, and an upswing on the incorporation of stricter sale terms in relation to patent rights in any given goods. This could cause prices to rise and items to be less readily available to consumers. On the opposite side, should the Supreme Court agree with Impression, patent rights could be hugely devalued in the US, especially when it comes to the sale of goods at first instance. This could mean higher up-front costs to protect against the loss on resales, but also release a whole swathe of second-hand markets for patent goods, particularly from abroad should the rights have been exhausted. No matter which way the case goes, it will be very important to both consumers and patentees alike, and shape the future of patent exhaustion for years to come.

Source: Gizmodo

18 May, 2017

Get a Grip - CJEU Decides on 'Hybrid' EUTMs With Technical and Decorative Features

The registration of trademarks can be quite finicky, especially when it comes to the nuance of graphical representation and what it covers (the Trunki case being a poignant reminder in the UK of the same in registered designs). One has to distinguish between the decorative and functional or technical features of the registration, without which your mark could be under threat for invalidity. After a lengthy battle in the EUIPO, spanning nearly 20 years, a case dealing with the same subject matter has faced its ultimate decision in the CJEU.

The case of Yoshida Metal Industry Co. Ltd v EUIPO dealt with the registration of a trademarks for the design of a knife handle by Yoshida (marks 1371244 and 1372580), which comprised of a metal handle with black dots in the handle (signifying circular indents in the metal). The marks were ultimately registered by the EUIPO; however, the decision was challenged by Pi-Design AG and Bodum. Having lost at the Board of Appeal and the General Court, Yoshida finally appealed to the CJEU.

Yoshida's arguments hinged only on the infringement of Articles 7(1)(e)(ii) and 51(3) of the Community Trade Mark Regulation.

Under Article 7(1)(e)(ii), a trademark cannot be registered if "signs which consist exclusively of… the shape of goods which is necessary to obtain a technical result". Case law, particularly in the LEGO decision, has noted that a shape cannot be rejected solely on the ground that it has functional characteristics. The dots used in the handles were, according to Yoshida, a hybrid mark, having both aesthetic and functional characteristics, therefore remaining registrable under Article 7.

The CJEU considered that, in adopting the wording used in Article 7 above, the exclusion of marks solely on their technical result or nature would be contrary to the law's intention, and clearly intends for marks that only incorporate the technical result and no aesthetic component to be unregistrable. Similarly, the introduction of one or more minor arbitrary elements in a sign, all of whose essential characteristics are dictated by the technical solution to which that sign gives effect, won't alter the conclusion that the sign would only achieve a technical result. Even so, a mark can still be registered if the sign incorporates major non-technical elements that play an important role in the shape of the sign.

Some sharp wit
The Court determined that "...the fact that the sign concerned has ornamental and fanciful aspects does not preclude the ground for refusal under Article 7(1)(e)(ii)... from applying, in so far as those aspects do not play an important role in the shape of goods at issue, all the essential characteristics of which must perform a technical function". In short, even if the sign has ornamental aspects along with the major technical features, it can still be rejected. This follows the decision by the General Court, who saw that Article 7(1)(e)(ii) applies where all the essential characteristics of the sign perform a technical function. The CJEU therefore rejected Yoshida's appeal under Article 7.

The second argument on appeal was under Article 51(3), which excludes particular goods and services applied for only if the invalidity grounds apply to those goods and/or services exclusively. Yoshida argued that the General Court had failed to consider Article 7 as above for all of the goods and services in question (particularly in relation to those that lacked handles, i.e. whetstones, and kitchen utensils and containers).

The Court swiftly despatched this argument, as Yoshida had neglected to bring the argument forward earlier during the proceedings, particularly at the stage when the consideration over the relevant goods were made. They had only limited themselves to the above argument under Article 7, ignoring Article 51 entirely. The CJEU therefore rejected the second argument simply for a lack of raising it at the General Court, barring them from arguing it at the CJEU.

The case brought up a very interesting argument, albeit a flawed one when looking at the wording of the Regulation. The CJEU's decision make sense, since, if Yoshida's argument were allowed, the introduction of any non-technical features to a sign could then avoid the limitation of registering those types of features. As long as the important parts of the sign registered for are the ones that create the technical feature, the mark should not be registered. This writer is sure that both Yoshida and Bodum are happy the case is over, even if the decision didn't swing their way.

09 May, 2017

Plainly Winning - Australia Wins Plain Packaging Challenge at the WTO

Plain packaging seems to be a nigh inevitability in the current legislative climate, especially with countries pushing for stricter laws surrounding cigarettes and their marketing. This blog has discussed the challenge against the Australian Tobacco Plain Packaging Act 2011 in the WTO and in Asia (discussed here and here) by a number of countries, but the conclusion of those disputes has been coming for some years now. While similar initiatives have been introduced in a number of countries, including the UK, the disputes seem to have put a damper on those efforts, if nothing at least for the duration of the cases.

The WTO dispute (including others made by other nations) concerns the TPP Act 2011, which introduced measures to standardize tobacco product packaging, including changing the color to a boring olive green, and prominently displaying graphic warning labels. The arguments presented against the legislation were that it presents a technical barrier to trade under the Agreement on Technical Barriers to Trade (Articles 2.1 and 2.2), and infringing various provisions under the TRIPS Agreement, for example giving other Member countries more or less favorable treatment (Article 3.1) or creating an obstacle for the registration of a trademark due to the nature of the goods it is used for (Article 15.4). Finally, the Act allegedly gives imported products less favorable treatment under The General Agreement on Tariffs and Trade (Article 3.4).

As discussed above, while the judgment hasn't been released yet, sources at the WTO have claimed that the WTO has sided with the Australian government's argument on the measure qualifying as a legitimate public health measure. The restriction of branding, therefore, does not infringe the above Agreements, and is appropriate for the aim sought by the legislation.

The details of the case will be discussed more when the decision is released in July, but it still remains an important signpost in the development of plain packaging legislation worldwide.

Without a doubt, the tobacco companies and the relevant countries will appeal the decision, as has been indicated by British American Tobacco.

'Quitting clearly had no benefits', Alan thought
According to the WTO, a barrier to trade would amount to, for example, any methods that would give domestically produced goods an unfair advantage. Additionally, countries have the prerogative to "...adopt the standards they consider appropriate — for example, for human, animal or plant life or health, for the protection of the environment or to meet other consumer interests". Even if the standards are brought in to protect these legitimate aims, they still cannot be "...applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail or a disguised restriction on international trade".

This writer does not claim to be a master of international trade law, but would argue that the application of a plain packaging standard to protect human life and health would not amount to a barrier on trade, as the standard would apply equally to Australian and foreign tobacco producers, and is clearly not an arbitrary or unjustifiable measure to do so. Plain packaging evens the playing field for all tobacco producers, but also seeks to stop the starting of a smoking habit, lowering the amounts of tobacco products used in that particular country (Australia showing a drop of 6% in smoking rates in adults, and the reduction of sales of tobacco products by nearly $500 million after the law's introduction).

In the end, plain packaging will be a hard fought, long battle, which will clearly go on for years to come. The tobacco industry is also in a state of transition from the old business models to new ones, including vape products, but the core remains the same and the brands equally valuable to that business. This writer is wholly for plain packaging, but its impact on IP will be a milestone for not just tobacco, but for other possibly harmful products in the future.

Source: Sydney Morning Herald

02 May, 2017

Press Pause - Sale of Multimedia Players to Facilitate Copyright Infringement is a Communication to the Public

The question of what amounts to a 'communication to the public' under EU law has been debated and adjudicated on fiercely in the last couple of years (discussed more here, here, here, here and here) with very little or no end in sight in the near future. Every decision seems to make an ultimate determination more and more elusive, and this writer for one thinks that the matter will never be decided. Even so, the Court of Justice of the EU has been busy yet again, and a recent decision discussing the sale of devices that aid the infringement of copyright was awaited keenly by many. After some time, the CJEU finally rendered its verdict last week.

The case of Stichting Brein v Jack Wullems dealt with the sale of a multimedia player (Filmspieler) that came pre-loaded with applications and open-source software that allowed you to access pay-for content online for free using your own TV. The Filmspieler was sold on a variety of websites, including Mr Wullems' own website. Stichting Brein found out about the sale of the Filmspieler, and requested that Mr Wullems stop selling the device, which he refused to do. Stichting Brein then took the matter to court, which ultimately ended up in the CJEU, where Stichting Brein asked four questions from the Court.

The first and second questions were dealt with together by the CJEU, which asked in essence "...whether the concept of ‘communication to the public’, within the meaning of Article 3(1) of [the InfoSoc Directive], must be interpreted as covering the sale of a multimedia player… on which there are pre-installed add-ons, available on the internet, containing hyperlinks to websites… on which copyright-protected works have been made available to the public without the consent of the right holders".

What 'communication to the public' entails requires a certain set of criteria to be fulfilled, namely an ‘act of communication’ of a work and the communication of that work to a ‘public’. Whether there has been an act of communication requires a more flexible approach where certain complementary criteria, taken holistically, are applied to the act. A particular focus is on whether, in making the act of communication, in full knowledge of the consequences, intervenes to give access to a protected work to a customer, and without their intervention, the customer would not have had access to the work in question.

A 'public' is defined as an indeterminate number of potential viewers, but implies a fairly large number of people viewing the work. The works have to, however, be communicated to a 'new public' or via new means that were not used in its prior communication. Finally, whether the communication makes a profit or not is not a wholly irrelevant criterion in this determination.

The Court therefore had to assess whether the sale of a multimedia player, as described above, would amount to a 'communication to the public'.

Dave was too lazy to care about his Filmspieler no longer working
While the InfoSoc Directive does expressly exclude the provision of physical facilities enabling or making a communication to the public, the Court determined that this didn't in itself limit it from the sale of such devices. The CJEU focussed on the pre-installation of the applications allowing for the infringing activities, which, according to the Court: "...enable[ed] a direct link to be established between websites broadcasting counterfeit works and purchasers of the multimedia player, without which the purchasers would find it difficult to benefit from those protected works", separating it from the mere provision of physical facilities for doing so.

Through this the CJEU considered that "...the provision of a multimedia player such as that at issue in the main proceedings enables, in view of the add-ons pre-installed on it, access via structured menus to links that those add-ons which, when activated by the remote control of that multimedia player, offer its users direct access to protected works without the consent of the copyright holders and must be regarded as an act of communication". Clearly the Court distinguishes between the provision of a device that would have the capability of utilizing such applications, and the pre-installation of those applications on the same device, where the proactive step of installation puts it beyond the 'mere provision of physical facilities' under the Directive.

Whether the act of communication had been done to a 'public' still remained, and the Court decided that, as the Filmspieler had been purchased by a large amount of people, and continued to be available for further purchases, and clearly the communication was therefore aimed at an indeterminate number of people amounting to a 'public' under the Directive. The Filmspieler made the protected works also available to a 'new' public, as the material accessed was not freely available online for all to view, and the Filmspieler made it available to a 'new' public beyond the contemplation of the rightsholder when the works were published. Mr Wullems knew, or ought to have known, that the hyperlinks posted provided access to works illegally placed online. Finally, if the posting of the hyperlinks is done seeking gain or profit, it is expected that the poster would check the links for legality, presuming that any illegal hyperlinks would have been included within the full knowledge of the poster. Mr Wullems sought profit through the sale of the multimedia player, and thus, his sale of the Filmspieler amounted to a communication to the public.

The CJEU was then faced with two questions, which dealt with the streaming of content, but the questions themselves were only treated as hypotheticals and didn't directly apply to the case at hand. The questions asked "...whether the provisions of Article 5(1) and (5) of [the InfoSoc] Directive… must be interpreted as meaning that acts of temporary reproduction, on an multimedia player such as that at issue in the main proceedings, of a copyright protected work obtained by streaming from a website belonging to a third party offering that work without the consent of the copyright holder satisfies the conditions set out in those provisions". The Article in question provides that, in essence, any temporary reproductions that are transient or incidental (e.g. streaming) are exempt from the rights afforded in the Directive in Article 2.

For Article 5 to apply, certain conditions need to be fulfilled, namely: the act is temporary; it is transient or incidental; it is an integral and essential part of a technological process; the sole purpose of that process is to enable a transmission in a network between third parties by an intermediary or a lawful use of a work or protected subject matter; and that act does not have any independent economic significance. All of the conditions are cumulative, and need to be fulfilled for the exemption to apply. Additionally, the use under the exemption cannot conflict with a normal exploitation of the work and prejudice the interests of the author.

The key aim of Article 5 is therefore to protect innocent conduits between two parties or entities, such as the ISP, not causing liability for transient copying of works for the facilitation of services between other parties.

The Court ultimately saw that "...temporary acts of reproduction, on a multimedia player such as that at issue in the main proceedings, of copyright-protected works obtained from streaming websites belonging to third parties offering those works without the consent of the copyright holders are such as to adversely affect the normal exploitation of those works and causes unreasonable prejudice to the legitimate interests of the right holder, because... that practice would usually result in a diminution of lawful transactions relating to the protected works, which would cause unreasonable prejudice to copyright holders". Due to the prejudice to the legitimate interests of the rightsholders through the streaming of content through the Filmspieler, the temporary copies made for the purpose of streaming would not be exempt by Article 5.

The decision in the case is clearly a positive one for rightsholders, particularly trying to combat the sale of multimedia devices such as in the case. What remains key in the case is the provision of physical facilities (in itself not infringing) in addition to facilitating copyright infringement can turn the provision of physical facilities into an infringing act. One would have to therefore be careful about the content and usability of devices that have the capability of infringing copyright, particularly with pre-installed software. While the case does not settle things once and for all, it remains an important step in the progression of the definition of a 'communication to the public' under the Directive.

Source: IPKat

25 April, 2017

Copyright Usurped - EU Proposal for a New Copyright Directive

This article was kindly drafted by Axel Beelen, who writes the blog IP News (focusing on EU and Belgian IP developments). He can also be found on Twitter here. He is also a data protection specialist.

In September 2016, the European Commission published a proposal on a new EU Copyright Directive. This new proposed Directive follows the InfoSoc Directive, drafted in the wake of the European Commission's review on the modernization of the EU copyright rules. The European Commission has presented legislative proposals to make sure that consumers and creators can make the most of the digital world, and will aim to help European copyright industries to flourish in a new Digital Single Market and authors to reach new audiences. The proposal is still fiercely discussed at the European Parliament, with plenary vote set for late 2017 or early 2018.

This article aims to set out the key points of the proposed Directive, and to discuss its impacts in the EU legal landscape.

1. The EC Proposal

1.1 A new publishers' right (Art. 11 of the proposal)

Because press publishers are facing difficulties in licensing their publications online and obtaining a fair share of the value they generate (which could ultimately affect citizens' access to information), the EC wants to provide publishers with the same reproduction and communication to the public rights that the InfoSoc Directive provide for authors. 

These new rights for publishers (so-called "neighboring rights" or an "ancillary copyright") would apply for 20 years after each publication.

Some fear that these provisions would generate more income for European publishers by allowing them to charge internet platforms for displaying snippets of their content to users. In fact, anyone using snippets of online content would first have to get a license from the publisher responsible for the content. 

The new neighboring right has been sharply criticised by Google and other businesses sharing online content. News aggregators argue that they provide online publishers more visitors on their websites (in turn increasing revenues from, for example, ads), and are not substituting the publication of the original works.

Sometimes it's easier to not bother with copyright
The EC's proposal is a clear response to uncertain and temporary national solutions to tackle this phenomenon, resulting in either the conclusion of agreements between Google and local press publishers (Belgium, France, Italy) or the adoption of legislative initiatives (Germany, Spain) in relation to news content forcing news aggregators to pay publishers when their headlines and news snippets appear in the news aggregators services. In Germany and Spain, right after the adoption of the regulation, Google Inc. stopped its local Google News tool. As a result, German and Spanish publishers said they lost significant traffic.

1.2 The value gap (Art. 13 of the proposal)

As legal access to streaming movies, music and literary works has become more ubiquitous and easy for consumers in recent times, there still is a clear gap in the remuneration (or the lack of increase thereof) of rightsholders through these services. 

The gap is between what service providers like YouTube, DailyMotion, Vimeo and others are willing to pay for e.g. music licenses and their real market value. The difference between rightholders' income and YouTube revenue is profoundly immense and the latter have limited appetite to properly or sufficiently remunerate rightsholders for copyright-protected content online. 

In place of talking about a “value gap”, we should focus more on the big 'transfer of value' between the value that certain digital platforms extract from music, movies and other works and the smaller value that is returned to related rightsholders. These digital platforms are clearly under-licensed or not licensed at all. 

Following Article 13 of the proposal, internet platforms hosting “large amounts” of user-uploaded content must monitor user behavior to identify and prevent copyright infringement. It will mean that intermediaries will have to attain proper licences and will have to implement filtering technologies to proactively prevent infringing activities. As raised by many, one of the most concerning aspects of the EC’s proposed legislation is the complete lack of detail provided on how the suggested policies would be implemented.

Note that, beside the use of not defined terms (e.g. what qualifies as “large amounts” of content), this part of the proposal could be in breach of existing EU law. Indeed, the safe-harbor provisions of the E-Commerce Directive forbid general monitoring obligations that Article 13 would establish, which was confirmed by the CJEU in SABAM v Netlog.

1.3 A limited text and data mining exception (Art. 3 of the proposal)

Article 3 of the EC Proposal (“Text and data mining”) aims to establish a new EU-wide copyright exception for the modern research method of text and data mining, but only for “research institutions” and “for the purposes of scientific research”, and only when the research institutions “have lawful access for the purposes of scientific research”. 'Text and data mining' means any automated analytical technique aiming to analyse text and data in digital form in order to generate information such as patterns, trends and correlations. 

One can criticize the limits of this new exception, in that why should “data mining' not be permitted for research conducted in a commercial context, for purposes of journalism and for any other purpose? 

2. Publishers' right to disappear and be replaced by a presumption of representation

The adoption of the Directive requires several European Parliament (EP) Committees to draft opinions that will then need to be taken into account in the Report by the lead Committee of the EP on this matter, namely the Legal Affairs (JURI) Committee.

The draft report of the JURI Committee written by rapporteur MEP Comodini (EPP) was published in March 2017. 

It does not mention the publisher neighboring right anymore as discussed above on point 1.1. The report rejects the Commission’s premise and clarifies that using snippets to make news discoverable is not necessarily harmful to publishers’ financial interests, and thus shouldn’t be subject to licensing. 

The paper proposes to replace the neighboring right with a right that "…provide[s] publishers of press publications with a presumption of representation of authors of literary works contained in those publications and the legal capacity to sue in their own name when defending the rights of such authors for the digital use of their press publications". It has to be seen if this would also mean that publishers can still sue for non-licensing.  

Moreover, the draft report proposes to remove the obligation for automated monitoring for online service providers, leaving electronic platforms to ensure the functioning of agreements with rightholders without prescribing how to do so. Only information society service providers that are actively and directly involved in the making available of user uploaded content to the public should take appropriate and proportionate measures to ensure protection of works or other subject-matter.

Those measures, such as the use of effective content recognition technologies, have to be appropriate and proportionate. The service providers have to provide rightholders with adequate information on the functioning and the deployment of these measures, as well as, when relevant, adequate reporting on the recognition and use of the works and other subject-matter on their platforms.

The Legal Affairs Committee also wants to extend the text and data mining exception to all people considering that if you have the right to access/read content, you also have the right to mine it.

3. Deadline

Amendments to the draft report were accepted until 12 April 2017, after which the report and the amendments will be debated again and voted on in June 2017. The plenary vote at the European Parliament on the Directive text is expected at the end of 2017 of at the beginning of 2018.

04 April, 2017

Sine Hominum - The Impact of Artificial Intelligence on Copyright

When people speak about artificial intelligence, or AI (the development of computer simulation of human behavior), they often think of things like Skynet or a near omnipotent, all-knowing computer entity that will overcome human's capabilities and rule us all through their superiority. While sci-fi can be a little heavy-handed on the drama, AI is coming and is already somewhat a part of our lives. As things develop in this field more and more legal question will have to be answered; however, this writer has been pondering its effects on copyright specifically, and what the future might hold, particularly in relation to authorship.

In the UK, under the Copyright, Designs and Patents Act 1988, section 154, for a work to be protected by copyright it needs an author (discussed more here). As the law stands today this would have to be a legal person, and a computer generated piece of work, with no human input bar the basic themes or elements of the work, would have no rights in the work as an author (nor, arguably, its creator). Similar provisions exist in Canada and Australia that also require a human author.

In the United States the situation is not much different, as an author is required under 17 USC 201 (albeit is not defined further), but the US Copyright Office has raised it as a possible future problem as far back as over 50 years ago. Their considerations even back then echo the main question when it comes to copyright and AI: "...whether the "work" is basically one of human authorship, with the computer merely being an assisting instrument, or whether the traditional elements of authorship in the work …were actually conceived and executed not by man but by a machine". The US District Court did look at non-human authorship some time ago in Naruto v Slater (discussed more here and here), and maintained that non-humans cannot have authorship in works, which has been established some time in the US judiciary (specifically referring to 'humans' or 'persons'). It is quite clear therefore that AI wouldn't have authorship under US law, and no copyright would vest in the works created.

AI can make up its own mind
A possible extension of the authorship of the work, to enable to protect the work under copyright, is to view the AI (or computer executing the AI's commands) as an extension of the human author. The UK case of Express Newspapers Plc. v Liverpool Daily Post & Echo Plc discussed the creation of works with computers programs, and determined that "...[t]he computer was no more than the tool by which the...[works] were produced to the instructions, via the computer programmes, of [the author]". This was codified in section 9 of the CPDA 1988, where the provision states that "[i]n the case of a literary, dramatic, musical or artistic work which is computer-generated, the author shall be taken to be the person by whom the arrangements necessary for the creation of the work are undertaken". While one could conceive that the AI could be seen as an extension of the human author, it still raises the question of actual input. A very sophisticated AI wouldn't, and at the heart of AI development, shouldn't require human input, bar the very basics of what is meant to be achieved through it. The AI should be able to 'think for itself' and therefore it would be a stretch to call the AI a mere tool of the human operating it initially.

The case of Nova Productions Ltd v Mazooma Games Ltd further adds to this, where the court deemed that the authorship of the copyright protected works would be afforded to the human programmer as they "…devised the appearance of the various elements of the [video] game and the rules and logic by which each frame is generated and he wrote the relevant computer program". One should be cautious with this logic as the creation of an AI that could itself create, with minimal or no input at all, a near limitless amount of protected works, and possibly lead to a virtual monopoly in music, art or whatever the AI creates simply due to its capacity to create works on-demand (or even outside of demand). Clearly, in a broad application of creative AI in this way should be denied protection as the original programmer(s) would simply reap the benefits of their artistic 'creations' and potentially limiting the market based on the AI's capacity to create and do so nearly instantaneously. A distinction therefore needs to be made between computer-created works and works created with the assistance of computers, which would protect the interest of active, computer-assisted creators, but limit rights in passive AI creation in the absence of clear and substantial human input.

The future of copyright and AI seems quite murky, with very little legislative discussion surrounding these issues and their future. Even though changes right now might be premature, the law should be ready to follow the technology as it develops and not only be reactionary as and when needed. In being one of the few to look ahead, the EU Legal Affairs Committee has called for "...a criteria for an ‘own intellectual creation’ for copyrightable works produced by computers or robots", but left the nature of this criteria open. As technologies like Google's DeepDream, Project Magenta and Future University Hakodate's AI that writes novels, the future is almost here, and the law seems potentially unable to adjust or adapt as it stands right now.

AI presents us with a wealth of possibilities, and a way for us to revolutionize how we create, work and interact with our world, but much like the revolution presented by the Internet, AI will drastically change the landscape in which the law has to operate. While it might be possible to extend the current provisions to cover these issues, particularly relating to computer-assisted creation, specific legislation would arguably be needed to prepare, not just for what exists now, but what might exist in the coming decades.

27 March, 2017

Gimme a C! - Cheerleader Outfit Designs Protected by Copyright, Says US Supreme Court

Having discussed the Varsity Brands case in the US Court of Appeals nearly 6 months ago, this writer was quite excited to hear the Supreme Court's decision in the same case. While cheerleader outfits and their designs touch on very few people's lives, the matter still will shed light on very seldom discussed aspects of copyright; something that many IP practitioners and academics will appreciate quite a bit. The Supreme Court handed down its decision only last week.

Without discussing the facts in too much detail, the case of Star Athletica LLC v Varsity Brands Inc. dealt with two companies that design and manufacture cheerleading outfits, which often incorporate fanciful designs and patterns to distinguish the cheerleaders from each other (and to bring in their respective schools' colors). Varsity had registered over 200 such designs, many incorporating "...combinations, positionings, and arrangements of elements that include chevrons, lines, curves, stripes, angles, diagonals, inverted [chevrons], coloring, and shapes". The designs at issue are registrations 299A, 299B, 074, 078, and 0815 (viewable at the Appendix to the judgment). Varsity took Star Athletica to court over copyright infringement, specifically relating to the designs above, with the matter ultimately ending in the Supreme Court.

The crux of the matter lies in whether the designs used by Varsity are protected by copyright under 17 USC 102(5) as pictorial, graphic of sculptural works, and whether they would be classed as a 'useful article' under the provision, meaning an article "…having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information", therefore not being protected by copyright. Useful articles would only be protected by copyright if they incorporate "...pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article". This would mean that the design used, and wished to be protected, needs to stand out on its own from the article its used on, otherwise it will be deemed as merely functional and won't be protected.

Justice Thomas, handing down the majority's opinion, then moved onto whether the designs actually can be identified separately from, and can exist independently, from the utilitarian aspects of the uniforms.

The Court set out the ordinary interpretation of the statute's text, in that for the design to be identified separately from the useful article, the decision-maker only needs to "...be able to look at the useful article and spot some two- or three-dimensional element that appears to have pictorial, graphic, or sculptural qualities". This is pretty much as simple as it gets, as the identification of a design in the article, so long as it doesn't blend into the article or isn't a part of its functionality, is most likely quite straightforward in many instances. The second part, the independent-existence of the design, is a determination of "...that the separately identified feature has the capacity to exist apart from the utilitarian aspects of the article". The design therefore has to retain its design value, i.e. remain a work capable of being protected under section 102(5); however, it still cannot be a useful article in itself even if separated from the original article it was applied to, nor will it give rise to rights in the useful article it was applied to even if it is protectable outside of that article.

In summary, "...a feature of the design of a useful article is eligible for copyright if, when identified and imagined apart from the useful article, it would qualify as a pictorial, graphic, or sculptural work either on its own or when fixed in some other tangible medium". What remains curious is the subjectivity involved in the test, where the decision-maker has to only identify the design and imagine is outside of the useful article for it to potentially be protected.

Some don't need fancy patterns to distinguish themselves in cheerleading
In applying the test to the designs in question, Justice Thomas determined that the decorations were features that had pictorial, graphic or sculptural qualities. They also, if removed from the outfits themselves, were separate from the useful article, possibly being usable in another medium, for example on a canvas as a two-dimensional work of art. The removal of the designs would not replicate the uniforms, but merely the designs used in them, therefore not making them a useful article in themselves. While the designs do include the outline of the uniform, Justice Thomas rejected the argument that this would reproduce the useful article as whole, as the artistic value in the work still remains, even recreated with the outline of where it would be applied to. This would not, as discussed above, create rights in the useful article or its construction, but merely the design.

Star Athletica put forth a wealth of arguments to contradict the above determination. Among them Justice Thomas rejected the assertion that, for protection to be afforded for the design, both the design and the useful article have to exist as such when separated (i.e. as a protectable design and a useful article in themselves), where the extracted design would solely be an artistic feature, as the focus is on the design rather than the article it was taken from and the end-result after separation for it is irrelevant. Applied art would be protected if separated, even if it fulfilled some useful aspect in the article.

The Supreme Court therefore held that the designs in the cheerleader outfits are protected by copyright, and rejected the appeal.

While the majority issued its, arguably at least, straightforward decision, there was some dissent from Justice Breyer and Justice Kennedy. The Justices, in their joint dissent, argued that the design and the dress (as depicted in the registrations) were not separable, and would merely reproduce the dress in the new 'separated' design. Due to this lack of both physical and conceptual separation, the design would not be protected under copyright. The dissent's viewpoint clearly stems from the depiction of the designs, but this writer would argue that their perspective would entail a great deal of splitting hairs. While it is clear one has to treat the design as it is presented in the registration, it is still possible to apply common sense when looking at the design from a subjective point of view, which affords this ability to both identify and imagine the design separate from the outline of a dress (or the three-dimensional depiction of the same).

The case if a very interesting one, and has finally set a clear test for the consideration of useful articles and designs in the same. While the subjectivity of the test can, and most likely will, ruffle some feathers, it seems to be the simplest and most logical approach to assessing the designs, but does leave the outcomes of cases in the hands of the respective judges and their subjective viewpoints. In its simplicity lies some level of concern, as it will undoubtedly impact the "knock-off" business, but rightsholders would argue this is the right, and desired outcome.