The new Patent Act (III) – The importance of professional advice

The new Patent Act, Act No. 24/2015, set to take effect on 1 April 2017, provides for far-reaching changes in the procedure for obtaining patents of invention in Spain in the future but at the same time ushers in new demands as well.

Earlier blog entries have dealt with the patentability requirements and the mandatory examination for all new applications filed after the new Patent Act and its Implementing Regulations have come into force. This means that applicants who up to now have made use of the general procedure for grant and hence are not used to replying to communications from the Spanish Patent Office raising objections to the patentability of their applications can expect to encounter new stumbling blocks to overcome during patent prosecution. Here are just a few examples of some of the substantive changes:

  

• To begin with, Examiners will now be able to object that lack of clarity of the claims prevents him or her from carrying out a meaningful search of the prior art.

• Further, applicants will need to bear in mind that the patentability of an invention can be vitiated by European patent applications designating Spain and published in Spanish and by PCT applications that have entered the national phase in Spain and were filed before the priority date of the application even if only published afterwards. Should this situation arise, it will bear on the novelty requirement but not on the inventive step requirement.

• In addition, where an invention relates to either biological material, either animal or vegetable, the new Act requires the application to disclose the geographical origin or source, though that information will not prejudice the validity of the patent. 

• The new Patent Act will also expressly define substances and compositions "for use as medicines" as patentable, something not contemplated under the Patent Act (Act No. 11/1986) currently in force. 

• In an important new development regarding utility models, the novelty requirement will change from local (Spain only) to absolute (worldwide) novelty. In addition, utility models will be able to be used to protect not only mechanical devices but also chemical, though not pharmaceutical, substances and compositions.

• And finally, the patentability requirements (novelty, inventive step, and industrial applicability) and how they are assessed by the SPTO will be new concerns for some applicants with a view to responding convincingly and appropriately to objections by Examiners and thus avoiding additional objections – for instance, on grounds of lack of clarity.

What is more, the changes being implemented by the Patent Act address not just substantive matters but also a number of other significant aspects of patent prosecution. To mention only a few of the most important: 

• The new Act stipulates that the fee for the Report on the State of the Art (search report) will have to be paid along with the filing fee. 

• Applicants will have three months from publication of the search report to request the substantive examination. Absent a timely request for examination, or if the request is withdrawn, the application too will be deemed to have been abandoned. When requesting the examination, an applicant may, at the same time, respond to any objections raised in the SPTO's Examiner's written opinion issued with the search report. 

• There will no longer be only one chance to overcome any deficiencies noted by the Examiner before the reasoned opinion, and Examiners will have to allow applicants additional opportunities to amend the application and submit new arguments under a procedure to be specified in the Implementing Regulations. All amendments will have to include an explanation as to why they make a difference, and support for the amendments in the application as originally filed will have to be shown. If there is no response to the Examiner's communications, or if the applicant is unable to overcome the objections, the application will be refused. 

• Third-party opposition proceedings will now take place after grant, within six months of the date of grant, instead of prior to grant as provided under the current Act. There will be new administrative procedures to enable applicants to voluntarily limit and surrender patents, where appropriate.

So it is that upon entry into force of the new Patent Act, applicants seeking patents of invention in Spain will encounter a completely new scenario, with many substantive and procedural changes. This highlights the need for top professional assistance with a view to optimizing your industrial property assets by minimizing the stumbling blocks that can be anticipated during patent prosecution.

Blog entries dealing with the new Patent Act:

I. A new Patent Act … In two years'time? (Antonio Castán)

II. 180º turn in Spain's system of granting patents  (Francisco J. Sáez)

III. The importance of professional advice (Francisco J. Sáez)
IV. Lawsuits under the new Patent Act (Antonio Castán)
V. Utility models under the new Patent Act (Pedro Saturio)

Author: Francisco Javier Sáez

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The importance of intangible assets to start-ups: Keys to proper protection

The third industrial revolution is upon us. The first was marked by controlling natural resources and building infrastructure and the second by mass production and distribution. The third is marked by generating value through information. We live in an age of globalization and hyperconnectivity, when speed in developing and implementing valuable ideas means the difference between success and failure.

In line with this, corporate value is undergoing a shift from tangible to intangible assets. Companies like Google, Facebook, and Apple have very little in the way of tangible fixed assets; instead their growth is driven by their intangible assets. Companies will be piling onto this bandwagon more and more, and this includes even traditional companies, which are adapting or will have to adapt their business models to survive.

As intangible assets grow more and more important, protection of these assets has become a vital necessity. Brick and mortar can be protected by locks, alarms, and guards – but how do you protect a valuable idea? Using the framework of the law is key. Today, intellectual property is playing an increasingly important role, and that role will only become greater.

Intellectual property is like a hand with five fingers: trademarks, patents, designs, copyright, and trade secrets. This simile is an apt one here, because the hand is an extremely versatile tool capable of performing the most intricate tasks. Think of playing a musical instrument. The trick is to use the available rights wisely.

Which right is the right one, when and where should it be registered, should it be used in association with complementary rights, how can it be enforced against competitors, and what kind of valuation is appropriate for business transactions – all these questions are key to intelligent use of intellectual property.

Integrating intellectual property into the creative process is another key factor. It is not enough to develop something and then decide on protection-related issues when finished. Projects cannot be managed without managing employee and participant, partner company, supplier, and customer relations from the very outset.

Decisions to redirect or abandon a project cannot be taken without taking into consideration rights obtained, registered, or pending, possible repurposing, and the consequences of abandonment.

This is important to all companies, but it is vital to innovative SMEs and start-ups. It can spell the difference between success and failure. I have seen many young companies with important innovative business ideas fail because they failed to plan out their intellectual property matters as required.

Companies of this kind often complain that intellectual property is an expenditure, is very expensive, serves no real purpose. I can sympathize, even with the last of these objections, because intellectual property is of little benefit when it is not used wisely.

In other words, integrating it into the innovation process and using it intelligently is what makes intellectual property beneficial, necessary, fundamental. Doing this does not require so much money, only thinking about how and when to spend it, how to invest well so that it will help bring about success.

Author: Javier Fernández-Lasquetty
Visit our website: http://www.elzaburu.es/en

Reduction of the statute of limitations for Spanish actions

Up till now Spanish plaintiffs benefitted from a more than generous fifteen year general statute of limitations for most actions in personam. In a major reform of the Spanish Civil Procedure Act and the Civil Code which entered into force last Wednesday, October 7, this has now been reduced to five years.

    

This affects many of the most common contract based actions such as breach, non-payment, supply of defective goods, rent review and all claims relating to a contract of sale. The new legislation seeks to strike a better balance between the creditor’s interest in preserving his claim and the need to ensure that there is a reasonable time-limit. Fifteen years was held by most operators to be excessive.  The system has now been brought into line with that of other European countries which have a five year limit.     

With a previous time limit of fifteen years, transitional provisions are obviously of great importance. As one might expect, the new limit will only apply to obligations arising after the entry into force of the reform. Those arising prior to 7 October 2000 are already statute-barred due to the expiry of the old fifteen year limit. Those arising between that date and 7 October 2005 remain subject to the old limit. Those arising after that date and before 7 October 2015 will be statute-barred on 7 October 2020, i.e. they will be given the benefit of five years from the date of entry. Thus an obligation arising on 7 October 2010 will now be barred in 2020 and not in 2025, a full five years earlier.

In view of the above, clients are advised to urgently review any outstanding claims arising after 7 October 2000. We remain at your disposal should you require any further information with respect to the above. 

Author: Alba Mª López

Visit our website: http://www.elzaburu.es/en

180º turn in Spain's system of granting patents (II)

The different stages in the prosecution of Spanish patent applications have up to now started with an initial examination as to certain formal aspects along with certain technical features and clarity of the invention as claimed, followed by a search of the potentially anticipatory prior art preceding the filing date of the application, which is carried out by the Spanish Patent Examiner.

Spain's current Patent Act already prescribes that to be patentable an invention should be new and inventive (i.e., non-obvious) over all the prior art available up to the application's priority date.

This prior art search, called, in English translation, the "report on the state of the art", encompasses all documents disclosed by the Spanish Examiner which, in his or her opinion, could pose an obstacle to the patentability of the invention as claimed, either by reason of lack of novelty or because the invention is obvious in view of the prior art.

Paradoxically, however, as things currently stand, unless the applicant specifically requests the Patent Office to carry out an optional patentability examination, the application will automatically proceed to grant even if the Spanish Examiner has misgivings about an invention's patentability or, indeed, directly finds the invention to be unpatentable.

The resulting patent will, of course, be at risk of possible nullity proceedings in the Spanish courts at the request of any interested third party, and if the court agrees with the Examiner's opinion, the patent will most likely be ruled to be null and void, i.e., never to have had effect at all. This entails costs for the applicant, for third parties, and for society as a whole, and this situation could be mitigated if patents were granted only if they successfully passed a substantive patentability examination by the Spanish Patent Office, currently only optional.

Requesting a patentability examination was introduced as an option for Spanish patent applications in the early 2000's in the hope that it would gradually become common for applicants to request examination, particularly where the search report had been negative, in an endeavour to persuade the Examiner to reconsider the initially adverse opinion. Things have not, however, gone as intended, and today the patentability examination is requested for fewer than 10 % of patent applications, even where the search report is unambiguously unfavourable. This means that the validity of more than 90 % of the patents currently in force is potentially suspect.

No Safe Harbour: Sailing in the tempest (Case Maximillian Schrems v Data Protection Commissioner)

The long-awaited decision in Case C-362/14 Maximillian Schrems v Data Protection Commissioner was finally issued on 6 October 2015. Controversial in its findings, this preliminary ruling sheds new light on the ongoing debate regarding the collection, transfer and processing of EU citizens’ data by US companies, and the processing of that data by US intelligence agencies within the framework of the PRISM program.

Background information

Mr. Schrems, an Austrian citizen, has been a Facebook user since 2008. In the case of all users residing in the EU, some or all of the data with which they provide Facebook is transferred from Facebook’s Irish subsidiary to servers located in the United States, where it is processed.

Mr. Schrems lodged a complaint with the Irish supervisory authority (the Data Protection Commissioner) on the grounds that, in light of the revelations made by Edward Snowden in 2013 concerning the activities of the United States intelligence services (in particular, the NSA), the law and practice in force in the United States did not offer sufficient protection against surveillance by the public authorities of data transferred to that country. The Irish supervisory authority rejected the complaint on the basis of the decision of 26 July 2000, which considered that under the “safe harbour scheme” the United States ensured an adequate level of protection of the personal data transferred (known as the Safe Harbour Decision).

Mr. Schrems then filed an appeal with the High Court of Ireland, which considered that the issue prompting his action was closely related to EU law since, according to that High Court, the Safe Harbour Decision did not comply with the principles set forth in the judgments in C-293/12 and C-594/12, EU:C:2014:238.

Preliminary questions submitted to the CJEU

On 17 July 2014, the High Court of Ireland, before which the case had been brought, submitted the following questions to the Court of Justice for a preliminary ruling:

(1)  Whether in the course of determining a complaint which has been made to an independent office holder who has been vested by statute with the functions of administering and enforcing data protection legislation that personal data is being transferred to another third country (in this case, the United States of America) the laws and practices of which, it is claimed, do not contain adequate protections for the data subject, that office holder is absolutely bound by the Community finding to the contrary contained in [Decision 2000/520] having regard to Article 7, Article 8 and Article 47 of [the Charter], the provisions of Article 25(6) of Directive [95/46] notwithstanding?

(2)  Or, alternatively, may and/or must the office holder conduct his or her own investigation of the matter in the light of factual developments in the meantime since that Commission decision was first published?

The Advocate General’s Opinion of 23 September 2015

According to the Opinion of the Advocate General (Yves Bot), a company, by merely having a Safe Harbour certification, would not automatically comply with the European data directive on export requirements.

This argument had already been made in Communication COM(2013) 846 and Communication COM(2013) 847.

As was to be expected, the CJEU followed the arguments put forward by the Advocate General.

Impact of counterfeiting in Spain's sporting goods sector third-highest in the EU

Spain ranks third among EU countries in which counterfeiting has the greatest impact on the sporting goods sector, at 15.7 % of sales, more than twice the EU average (6.5 % of sales), behind only Lithuania and Latvia. Nevertheless, in absolute terms the greatest impact is in France and Spain, these two countries accounting for one-third of lost sales due to counterfeiting in the EU, amounting to a total of 492 million euros.

These are the main conclusions with regard to Spain in the recent report entitled "The Economic Cost of IPR Infringement on Sports Goods", issued jointly by the OHIM's European Observatory on Infringements of Intellectual Property Rights and the European Patent Office. According to the report, total consumption of sporting goods in the EU in 2012 was estimated at 7,500 million euros, with 4,271 companies manufacturing products of this kind, employing 43,000 workers in the EU.

In addition to the direct repercussions of counterfeiting in the form of lost sales by lawful companies in the sporting goods sector, other economic sectors are also indirectly affected, suffering losses of 361 million euros. Government revenues are also impacted, with lost taxes (VAT, income taxes, corporate taxes, and social security contributions) estimated at 150 million euros. The direct and indirect impact of counterfeiting in this sector on the EU economy is estimated at around 850 million euros and 5,800 lost jobs.

The report takes into account only manufacturing of sporting goods and equipment as such (e.g., golf clubs, tennis rackets and balls, skis, etc.), excluding sports apparel and footwear, so the economic costs associated with the counterfeiting of sporting goods are in fact higher than those estimated by the report.

Author: Juan José Caselles

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Product shape and acquired distinctiveness: possible registration of the KIT KAT trademark

On 16 September 2015, the Court of Justice of the European Union (CJEU) delivered its long-awaited judgment (case C-215/14) on the referral for a preliminary ruling made by the High Court of Justice of England & Wales concerning whether it was possible to register the shape of Kit Kat chocolate wafers as a trademark: 

Nestlé had filed an application for registration of the mark with the UK Trademark Office.  However, the Office accepted an opposition lodged by Cadbury and refused the application on the grounds that it had not been sufficiently demonstrated that the mark had acquired distinctive character.  It considered that the shape that had been applied for had three features, as follows:  

• The basic rectangular slab shape; 
• The presence, position and depth of the grooves running along the length of the bar; and
• The number of grooves which, together with the width of the bar, determine the number of ‘fingers’.

According to the UK Office, the first of those features was a shape that derived from the very nature of the goods claimed (with the exception of cakes and pastries), and the other two were necessary to obtain a technical result.

That decision was appealed to the High Court of Justice, which found that there was not enough case-law from the Court of Justice in respect of the issues that had been raised, and therefore made a referral for a preliminary ruling.  In its judgment, the CJEU changes the order of the three questions that had been referred to it, and first of all examines the question concerning the possibility of cumulatively applying the bar to registration of signs consisting of the shape of goods where that shape is imposed by the nature of the product and where it is necessary to obtain a technical result.  The reasoning behind this change of order is that a sign to which that ground for refusal applies can never acquire distinctive character through use. 

In that regard, the CJEU reiterates the legal doctrine established in the recent Hauck judgment, C 205/13, EU:C:2014:2233 (Tripp-Trapp chair), in the sense that the three particular grounds for refusing to register product shapes operate independently of one another. Therefore, in the Court’s view it is irrelevant whether a certain shape could be denied registration on the basis of a number of grounds, and it will suffice for just one of those grounds to be fully applicable to the shape in question in order for registration to be denied.

As the Advocate General had explained in points 65 and 66 of his Opinion of 11 June 2015, what the CJEU had precluded in the Hauck judgment was the possibility of applying the three different grounds for refusal in combination, but not the possibility of applying them cumulatively, provided that at least one of those grounds fully affects the sign in question.