ARTIFICIAL INTELLIGENCE AND INDUSTRIAL PROPERTY LAW: GRANTED IN AUSTRALIA THE FIRST PATENT ‚INVENTED‘ BY A MACHINE

14/10/2021

With a groundbreaking decision of July 30, 2021 (available at https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2021/2021fca0879), the Federal Court of Australia has ruled – for the first time in the world – that an artificial intelligence system can be named as the inventor of a patented invention. As a result, the owner of the AI system can legitimately be named as the patent’s applicant and enjoy the exclusive rights arising from its registration.

 

The case

The dispute comes from a patent application filed by Dr. Stephen Thaler, developer and owner of an artificial intelligence system called „DABUS“, able to generate ideas by modifying the interconnections between different neural networks and to analyse the most critical consequences of such ideas. According to Thaler himself, DABUS developed entirely on its own the invention underlying the patent application, relating to a heterogeneous set of products and processes concerning containers, devices and methods for attracting enhanced attention using convex and concave fractal elements.

The patent application, filed by Dr. Thaler (among others) with the Australian Patent Office, did not name a natural person as the inventor, but „DABUS“. For that reason, the Office rejected the application on the ground that the applicable legislation was not compatible with the possibility of designating a non-natural person as the inventor of the patent. Dr. Thaler appealed this decision before the Australian Federal Court.

The decision

With the commented decision, the Australian Court, while confirming that the applicant for a patent registration must necessarily be a natural person (or a person with legal personality), excluded the existence of a valid legal ground to prevent an artificial intelligence system from being named as the inventor of the patent.

This is because, in the first place, there is no definition of inventor in the Australian legal context that unequivocally links that status to a natural person: in the Court’s view, the term ‚invent‘ has been used to describe actions directly attributable to men only because – historically – such actions could not (yet) be performed by machines: ‚however, now that artificial intelligence systems can perform the same functions, the word [invent] can also refer to them‚.

Secondly, the Court continues, the argument put forward by the Australian Patent Office according to which an AI system could not be identified as an inventor because – being it an artificial intelligence system – it could not be considered as the owner of a title to be transferred to the applicant-physical person (in this case Dr. Thaler), cannot be accepted. In fact, Art. 15(1)(c) of the Patents Act 1990, in providing that “a patent for an invention may only be granted to a person who [… ] derives title to the inventor or a person mentioned in paragraph (b)„, when it refers to „deriving title to the inventor”, would not necessarily require an act of assignment from the inventor/AI system to the applicant/individual, since the applicant, in his capacity as owner of the AI system, would be the owner of all inventions created by that system at the very moment those inventions came into his possession.

Finally, in conclusion of its reasoning, the Court points out that extending the definition of inventor in a way of including an AI system not only wouldn’t be contrary to the applicable legislation, but would also be in line with the objective set in section 2A of the Patents Act to promote technological innovation and its dissemination: otherwise, a disincentive for investments would be generated and owners of AI systems would be forced to protect patentable inventions as trade secrets.

Conclusions

The Australian decision, which is not yet definitive being it subject to appeal, could mark a turning point in the global panorama with regard to the increasingly discussed and topical issue of the relationship between artificial intelligence and industrial property law. For the time being, however, this is an almost isolated case which, in fact, appears to be in contrast with some other decisions (most recently the one of the Court of Appeal of England rendered on September 21, 2021, available at https://iponline.cipc.co.za/Publications/PublishedJournals/E_Journal_July%202021%20Part%202.pdf), which in front of similar cases, confirm that the status of inventor of a patent can only be attributed to a natural person.

Giorgio Rapaccini


WILL THE SEARCH FOR (FAIR) COMPENSATION BE LOST IN THE CLOUDS?

07/10/2021

In his Opinion of 23 September 2021 in Case C-433/20, Advocate General Hogan considered that the fair compensation for private copying provided for in Article 5(2)(b) of Directive 2001/29/EC must also cover the provision of cloud storage space or capacity made available by a third party such as an internet service provider and used by private users to obtain and store copies of protected works. That fair compensation is, however, presumed to have already been paid by the providers of the media enabling such storage (smartphones, tablets, etc.), unless the rightholder demonstrates that that amount is inadequate, with the assessment of the merits being left to the courts of the Member State.

 

The case

The case, which has reached the Court of Justice of the European Union, originates from a dispute brought by the German society for the collective management of copyright and related rights on musical works (Austro-Mechana) for the assessment of the enforceability (and consequent quantification) of fair compensation for private copying against the German company Strato AG, a provider of virtual cloud storage services (through the service called „HiDrive“) within the Austrian territory.

According to Austro-Mechana, Austrian law provides for the payment of royalties for any type of recording media that has been placed on the market in Austria, including the provision of cloud storage space, as provided by Strato AG. On the other hand, the application of fair compensation for private copying also to „dematerialised“ storage spaces (such as the cloud) was contested by Strato AG, according to which, in the absence of a physical support for the recording of the protected work, the law in question would not be applicable. Strato AG also argued that such remuneration would not be due since the rightholders would have already obtained the payment of the remuneration for private copying (i) from the manufacturers of the devices, without which it would be impossible to upload the protected content to the cloud (i.e. smartphones, tablets, etc.), and (ii) from Strato AG itself for the acquisition of the storage servers located in Germany.

The Commercial Court of Vienna dismissed Austro-Mechana’s claims, finding that the fair compensation for private copying provided by Austrian law was not applicable to the cloud storage space provided by Strato AG, because the user would not have physical access to the media for storing protected content (i.e. servers), but only the possibility to access the storage capacity in some unidentified location in the provider’s cloud. Austro-Mechana appealed the decision and the appellate court raised two preliminary questions before the Court of Justice.

The Advocate General’s Opinion

Both preliminary questions concern the interpretation of Article 5(2)(b) of Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society, which provides that Member States may provide for exceptions or limitations to the exclusive right to authorise or prohibit the reproduction of protected works for reproductions made by private individuals on any medium on a non-profit-making basis, subject to the requirement that the rightholders pay fair compensation. The first question concerns the enforceability of that fair compensation by the holders of copyright or related rights against providers of cloud storage space for private users, while the second concerns the quantification of that fair compensation.

According to the Advocate General, in response to the first question, the terminology ‚reproductions on any medium‘ used by the European legislature does not limit the private copying exception to physical media (CD/DVD, etc.) owned by individual private users, but also covers intangible media, such as cloud storage space or capacity, made available by a third party such as an internet service provider and used by private users to obtain and store copies of protected works. That conclusion is based on the assumption that, in itself, any reproduction of protected works constitutes an act adversely affecting the rights of the rightholder, of which the private copying exception is a limitation; consequently, according to the Advocate General, there can be no discrimination between categories of media which do not also include those resulting from technological progress. Obviously, the limit to the applicability of the compensation for private copying would be represented by the legitimacy of the acquisition of the protected work by the private individual, all forms of reproduction/abusive making available which would in themselves constitute an infringement of the rights of the owner being therefore extraneous.

Having determined that fair compensation for private copying is also payable by the rightholder to the third-party provider of cloud storage services, it is not possible, however, to quantify the exact amount of that fair compensation. Hence, the Advocate General’s conclusion, in response to the second question referred for a preliminary ruling, that no additional compensation is payable by the third-party cloud service provider, since there is a risk of imbalance between the rights of rightholders and the rights granted to private users. Only if the rightholder can show that the payment of fair compensation made by the providers of the media (i.e. smartphones, tablets, etc.) may be considered inadequate to the actual prejudice suffered by private uses, will the referring court have to verify and quantify any additional amounts due to rightholders as fair compensation.

Alessandro Bura


COVID-19: COMPULSORY LICENSING POSSIBLE IN CASE OF NATIONAL HEALTH EMERGENCY

01/10/2021

The new Article 70 bis of the Italian Industrial Property Code will allow the granting of compulsory, non-exclusive and inalienable licenses for the production of medicines and medical devices considered essential to face health emergencies, which will be valid only for the duration of the emergency period, up to a maximum of 12 months from the end of the emergency itself.

 

With the recent Conversion Law (Law July 29, 2021, no. 108) of the so-called “Decreto Semplificazioni” (Decree-Law May 31, 2021, no. 77), an important amendment to the Italian Industrial Property Code (Legislative Decree February 10, 2005, no. 30) was approved: following the proposal of the former Minister of Health Giulia Grillo, Art 56 quater as inserted in the “Decreto Semplificazioni” innovates the Italian Industrial Property Code, introducing, for cases of declaration of a state of national emergency motivated by health reasons, a case of granting of compulsory licenses for the non-exclusive use of patents relevant to the production of medicines or medical devices.

According to letter a) of paragraph I of Art. 56 quater, Art. 70 bis is inserted in the Italian Industrial Property Code, according to which it is provided that, in case of a declaration of a state of national emergency motivated by health reasons, in order to address proven difficulties in the supply of specific medicines or medical devices deemed essential, it is possible to grant, in compliance with international and European obligations, compulsory licenses for the use, not exclusive, not alienable and directed mainly to the supply of the domestic market, of patents relevant to production purposes, having a validity bound to the duration of the emergency period or up to a maximum of twelve months from the end of the same.

Such compulsory license is granted by decree of the Minister of Health, in agreement with the Minister of Economic Development, after consultation with the owner of the intellectual property rights, subject to the opinion of the Italian Drug Agency regarding the essentiality and availability of medicines, or subject to the opinion of the National Agency for Regional Health Services regarding the essentiality and availability of medical devices, always with respect to the emergency in progress.

The aforementioned decree also establishes the appropriate remuneration to be paid to the owner of intellectual property rights, determined taking into account the economic value of the authorization.

It should be noted that the system of compulsory licensing is not new to the Italian Industrial Property Code, as it is already regulated by Articles 70 – 74 of the same. However, the substantial innovation of Art. 70 bis consists in shortening the waiting time, ensuring that a patent on medicines or essential medical devices can be licensed as soon as a period of health emergency begins: in fact, compared to the common regime, in case of emergency context the procedure for granting the special compulsory license can be activated without waiting for the expiry of the period of three years from the granting of the patent or four years from the filing of the application, as happens instead, in particular, in ordinary cases of compulsory license for lack of or insufficient implementation regulated by Art. 70 of the Italian Industrial Property Code.

The introduction of Art. 70 bis in the Italian Industrial Property Code stems from the objective of encouraging the production of and access to vaccines, an objective that has been pursued so far through various measures, including the COVID-19 Vaccines Global Access Program (COVAX), the COVID-19 Technology Access Pool (C-TAP) and, in particular, the Waiver from certain provisions of the TRIPs Agreement for the prevention, containment and treatment of COVID-19 proposed by India and South Africa.

However, some of the measures taken, including the new Art. 70 bis of the Italian Industrial Property Code, may give rise to some concerns. The crucial question is whether the compression of intellectual property is actually justified and can guarantee the achievement of the intended result. Indeed, many commentators have noted that the protection resulting from intellectual property is not only consistent with the objectives of safeguarding health, even during a health emergency, but that it is itself the main driver of such safeguarding, as demonstrated by the very fact that the development of effective vaccines was achieved in a very short time.

Filippo Ponso


THE IMPLEMENTATION OF THE COPYRIGHT DIRECTIVE IN ITALY AND THE NEW LIABILITY REGIME FOR ONLINE SERVICE PROVIDERS

21/09/2021

On 5 August 2021, the draft legislative decree transposing EU Directive 2019/790, by which the European legislator updates copyright on the internet, was adopted. Of particular importance are the provisions on the liability of „online content-sharing service provider“, even if they are open to divergent interpretations.

 

On 5 August 2021, the Council of Ministers adopted the preliminary draft legislative decree transposing EU Directive 2019/790 on copyright and related rights in the digital single market, which will now be submitted to Parliament for scrutiny before being introduced into domestic law by the Council of Ministers in its final version.

The transposition of this Directive is far-reaching as it aims to innovate the regulation of online copyright and to balance conflicting interests such as users‘ freedom of expression and platforms‘ freedom of economic initiative.

The importance of the Directive is constituted, not only by the concession of new rights connected to the publishers, but above all, by an incisive modification of the system of responsibility configurable in the hands of the suppliers of Internet services, holders of the technological “ tools“ through which the violations of copyright are committed.

In particular, it must be stressed that the dissemination of copyrighted content has increased thanks to the services offered by providers, which allow the exchange and storage of such content in a very fast and easy way for their users. Therefore, although we are witnessing a dematerialisation of creative works, it cannot be said that their transmission over the network does not maintain a physical component, i.e. the use of the infrastructures provided by the providers. In fact, they constitute a fundamental crossroads for sharing protected content on the network and it is for this reason that the European legislator has identified in them an essential role in combating content that infringes copyright.

The Directive, as far as it is relevant here, is of considerable interest for the change of course adopted by the European legislator with regard to the providers‘ liability. The Directive, in fact, identifies a different category from those determined by the Directive 2000/31/EC, sanctioning a responsibility with a positive approach, unlike the exemption regimes provided by the e-commerce Directive. The European legislator focuses on platforms that allow the storage and sharing of copyright-protected content, the real key players in the dissemination of creative works online.

After a very tumultuous legislative process, in particular with regard to the provision concerning the relationship between providers offering services of storage and public access to copyright-protected content and rightholders, a final version of today’s Article 17 of the new Copyright Directive has been reached.

The purpose of this provision can be found in recital 61. According to what is stated in recital 61, the activity carried out by providers of services for the sharing of copyright-protected content contributes to creating “uncertainty” as to the legal situation of those providers. The question arises, first of all, as to whether their activity constitutes a use of content protected by copyright and, secondly, as to whether or not they must request the consent of the right holders in order to be able to use the protected works.

This uncertainty is then also projected onto the rights holders themselves, who find it difficult to understand if and how their works are being used, running into not insignificant obstacles in obtaining fair compensation.

Finally, recital 61 expresses one of the main objectives of the Directive, i.e. the facilitation of the conclusion of licensing contracts between rights holders and suppliers of online services, in such a way that the former achieve fair results also in economic terms, in any case not by imposing contractual conditions „from above“, but in respect of the freedom of economic initiative.

Having established, therefore, the intentions on which the provision is based, the European legislator has established that if an Internet provider acts in such a way that his action can be configured as granting access to copyrighted material to the public, he must request authorisation from the owner of the rights to that material.

An essential element that innovates the scope of the responsibility of the new category of the „online content-sharing service provider“, as defined by the Directive, is that the consent obtained by these last, stipulating, for example, “ licensing agreements“ with the holders of the rights, must concern also the “acts carried out by users of the services falling within the scope of Article 3 of Directive 2001/29/EC when they are not acting on a commercial basis or where their activity does not generate significant revenues”. The incidence of this obligation is understandable also in the light of the absence of the operability of the regime of exemption from liability defined by Article 14 of the e-commerce Directive, where providers carry out acts of communication to the public or making available to the public of content uploaded by users.

The strict obligation imposed on these intermediaries, however, is mitigated through a sort of exemption from liability that intervenes for the benefit of those who have not obtained an authorisation from the rightholders, on condition that a number of precautions are observed.

Firstly, (a) providers are required to have made ‚best efforts‘ to reach an agreement with the rightholder; (b) secondly, providers must have ensured that the works identified with the rightholder are not made accessible to the public by means of their own technologies, by making, also at this juncture, ‚best efforts‘ and by observing ‚high industry standards of professional diligence‘; (c) finally, online service providers must, in any event, have acted without delay to disable access to or remove the content identified following a notification received from the rights holder and have made ‚best efforts‘ to prevent the further and possible upload of the content identified by the rights holder.

In analysing these legal provisions required of the provider who wishes to benefit from this sort of new safe harbour, the expression „best efforts“, used by the legislator to emphasise the efforts made by the service provider to obtain authorisation from the rights holders, becomes particularly important. This wording risks creating discrepancies between the laws of the various Member States at the transposition stage. The connotation that the expression in question may have, in fact, can be both quantitative and qualitative. More specifically, if, on the one hand, it is interpreted as meaning ‚maximum efforts in an absolute sense‘, there is a risk of placing an excessive burden on service providers; on the other hand, if it is interpreted as meaning more like ‚best possible efforts‘, it could again place right holders in a situation of legal uncertainty. National legislators will therefore have to be careful to transpose this expression through the principles of reasonableness and proportionality.

In conclusion, the European institutions have become aware of the need to protect copyright in a more effective and efficient way, since it has been identified as a valid driver of creativity, as well as an important economic incentive for the creative industry and the economy in general, although the legislative instrument of the directive could leave room for different internal regulatory texts that would fragment the European Union’s proactive work.

Alfredo Bergolo


THE LIPSTICK THAT LEAVES THE MARK: THE GENERAL COURT OF THE EUROPEAN UNION RECOGNIZES THE REGISTRABILITY OF THE SHAPE OF THE GUERLAIN LIPSTICK AS EU 3D TRADEMARK

14/09/2021

With its decision of July 14, 2021, the General Court of the European Union annulled the decision of the First Board of Appeal of the European Union Intellectual Property Office (EUIPO) of June 2, 2020, finding that the shape of Guerlain’s Rouge G lipstick has distinctive character and, therefore, is eligible for registration as a 3D trademark.

 

The trademark, by creating a link between the products placed on the market and the company, makes it easier for the consumer to find the products he is looking for, allows the owner to build and strengthen the identity of his company and at the same time rewards efficient producers, to the extent that they are able to capitalize on their business merits within the distinctive sign, becoming a fundamental tool in competitive strategies.

Traditionally, the role of indicator of the provenance of a fashion design item is entrusted to the word trademark and the figurative trademark. In fact, fashion houses tend not to consider the shape of the product itself to be suitable for a distinctive function, since it is believed that consumers find it easier to attribute an indicator meaning to a term or a logo rather than to a shape. This does not mean that the fashion world is devoid of 3D trademarks: Hermès, currently, among registered and applied-for trademarks, has more than thirty shape trademarks, Ferragamo has forty-seven.

The number of companies in the fashion industry that can claim ownership of several 3D trademark registrations has been steadily increasing in recent years. Following the decision of the General Court of the European Union, among these there is also the Rouge G lipstick by Guerlain.

 

The General Court of the European Union recently annulled the decision rendered by the First Board of Appeal of the European Intellectual Property Office (EUIPO) regarding the application for registration as EU trademark of a three-dimensional sign consisting of the shape of an oblong, conical and cylindrical lipstick proposed by Guerlain.

On October 19, 2018, Guerlain had filed an application for EU trademark registration covering the shape of a lipstick in Class 3 for “lipstick” goods.

The EUIPO had refused the application, deeming the sign to be devoid of distinctive character. This decision was also confirmed by the First Board of Appeal on the grounds that the shape of Guerlain’s Rouge G lipstick did not differ from the other usual shapes on the market.

The General Court of the EU, on July 14, 2021, ruled on the case, annulling the previous decisions, considering that the shape under examination „is uncommon for a lipstick and differs from any other shape existing on the market“ (par. 49).

This decision supports the opinion according to which the distinctiveness of a 3D trademark must be assessed on a case-by-case basis, looking at the norm and the customs of the sector concerned, which „all the shapes which the consumer is accustomed to seeing on the market“ and verifying whether the product is capable of generating an uncommon visual effect in the public.

The General Court, denying the Commission’s conclusions, pointed out that the mere fact that a shape constitutes a „variant“ of one of the usual shapes of a type of product is not sufficient to establish that said shape has distinctiveness. The fact that a sector is characterized by a wide variety of shapes of products does not imply that any new shape is necessarily perceived as one of them (par. 50).

With reference to the capacity of a shape to be perceived as an indicator of origin, the Court has underlined how the fact that certain goods have a quality design does not necessarily imply that a mark consisting of the three-dimensional shape of such goods is distinctive ab initio (par. 42). On the contrary, the aesthetic aspect of the product will have to be assessed to ascertain a departure from the norm and from the customs of the sector, provided that this aesthetic aspect is understood as recalling the objective and uncommon visual effect of the specific design of the said trademark. Consequently, according to the Court, the consideration of the aesthetic aspect of the mark should not result in an assessment of the beauty or lack thereof of the product in question, which would be subjective, but is aimed at ascertaining whether that aspect is capable of having an objective and uncommon visual effect on the relevant public (par. 44).

In the present case, the above analysis led the General Court of the European Union to conclude that the shape of Guerlain’s Rouge G lipstick is uncommon for a lipstick and distinguishes itself from any other shape existing on the market, as:

  •  „the shape recalls that of the hull of a boat or a baby carriage“ thus distinguishing itself from the cylindrical or parallelepiped shape presented by most lipsticks on the market;
  •  „the presence of the small oval shape in relief is unusual“ and therefore contributes to the uncommon appearance of the mark applied for;
  • finally, the fact that the lipstick represented by the 3D trademark cannot be placed in a vertical position reinforces the uncommon visual aspect of its shape.

These elements allow to identify the product as coming from a certain firm and therefore to distinguish it from the products of other companies. The same is, therefore, distinctive within the meaning of and for the purposes set out in Article 7(1)(b) of Regulation (EU) 2017/1001 and is therefore capable of constituting a valid trademark.

Giulia Spata