J 5/23 - Electronic Signatures are Invalid

Back in December 2021, I wrote about electronic signatures in light of the then recently published notice from the EPO about them being used as evidence for registering a transfer of rights. Before going any further, I recommend reading my previous post so you are familiar with the concept of digital/electronic signatures, if you are not already. In brief, the situation at the time was that, if a digital signature was to be used it would need to comply with fairly strict requirements to pass the test of being considered valid. It was evident at the time, as I tried to make clear, that a mark on a document that appeared to be a digital signature, but without the required certification, would not pass the test. Evidently, however, not everyone realised this and attempts were made to record assignments at the EPO with such documents. European application 21204983.7, filed in the name of Gyrus ACMI, Inc., is one such example, and appears to be the first one on this issue that has resulted in an appeal decision. 

In March 2022, the applicant's representative filed a request pursuant to Rule 22 EPC to record a transfer of rights regarding the application. The registration fee was paid and the request was accompanied by an assignment document, purportedly signed by both parties. The signature part of the assignment document as submitted to the EPO looked like this:

Both signatures were evidently not done by hand, but an indication that the document had at some stage been electronically signed was provided by a DocuSign Envelope ID at the top of the assignment document, which looked like this:

It is impossible to tell from the EP register whether the document that was submitted was in fact the electronically signed version, since these documents are resampled versions and any signatures would be stripped out. However, it is evident based on what happened next that what was submitted was merely a dumb copy without any actual digital signatures, because an objection was raised shortly afterwards by the EPO Legal Division in a communication dated 24 March 2022, stating:

"With regard to the electronic signatures attached to the Patent assignment submitted on 14 March 2022, we are unable to access the electronic certificates attached to them. We therefore cannot assess whether the signatures fulfil the requirements set out in the notice from the European Patent Office dated 22 October 2021 concerning electronic signatures on documents submitted as evidence to support requests for registration of a

transfer of rights under Rules 22 and 85 EPO and requests for registration of a licence or other rights under Rule 23 EPC (OJ EPO 2021,A86).

Your attention is therefore drawn to the definition and requirements of a qualified electronic signature provided under Article 3(12), (15), (23) Regulation (EU) No 910/2014. Please note that the qualified electronic signatures must be electronically verifiable by an accessible qualified certificate attached thereto. Only the original (digital) format of the electronically signed document allows such verification. Scanned or similarly reproduced documents do not serve this purpose.

You are therefore invited to re-submit the document in question in PDF format bearing either a verifiable electronic signatures or a handwritten signatures within two months of notification of the present communication".

Rather than going back and getting a proper digitally signed document or one with handwritten signatures, the applicant's representative argued back to the Legal Division that, because the assignment document contained text string signatures from both parties, the document should be accepted. The Legal Division disagreed, pointing out that only documents bearing qualified electronic signatures within the meaning of Regulation (EU) No 910/2014 could be accepted, according to the EPO notice of 22 October 2021. Such signatures, as pointed out by the Legal Division, "must be electronically verifiable by means of a digital qualified certificate included in the document filed. Only the original, digital format of the electronically signed document permits such verification". After some more (rather pointless) arguments from the applicant's representative, a final decision was made on 23 February 2023 to reject the request for recordal. An appeal was then filed in March 2023, arguing in part that Rule 2 EPC and the Decision of the President dated 14 May 2021 concerning the electronic filing of documents permitted assignments with text string signatures to be used for recordal purposes. 

The Board of Appeal, deciding on the papers alone, issued their decision in J 5/23 on 4 September 2023 (which, incidentally, is incredibly quick for a BoA decision). The unsurprising aspect of the decision is that the Board did not agree with the appellant that the general rules for filing documents could apply also to recordal of assignments. There was, however, a substantial sting in the tail, which is that the Board have decided that electronic signatures of any kind (qualified or otherwise) do not meet the requirements of Rule 22(1) EPC. The reasoning from the Board was in essence that the definition of the word "signature" in Article 72 EPC has not been changed to allow electronic signatures. At the time the EPC entered into force, and also according to standard dictionary definitions, the word "signature" meant something written by hand. If this were to interpreted to also include electronic signatures, the question arose as to what kind of electronic signature could qualify within the meaning of Article 72 EPC. Given that Article 72 EPC required there to be clear and unambiguous formal requirements for the transfer of a European patent application, it would be at odds with this rationale if - without any explicit legal basis - any type of text in electronic form could be considered a signature (see point 2.4.5). In the Board's view, the Notice from the EPO concerning electronic signatures could not overrule the definition of a signature in Article 72 EPC. What would be required is agreement between the contracting states to provide an updated interpretation, which would apparently go beyond what the Administrative Council was able to do. The Board's concluding statement was the following:

"In conclusion, the Board, applying the general rule of interpretation pursuant to Article 31 VCLT to the term "signature" in Article 72 EPC, i.e. interpreting this term in good faith according to its ordinary meaning in the applicable context and taking account of the purpose of this legal provision, holds that this term - in the absence of a different definition in the Implementing Regulations (see point 2.11 below) - must be understood as referring to a handwritten depiction of someone's name, written on the assignment "contract" referred to in Article 72 EPC. In the absence of any such handwritten signature, an assignment agreement does not comply with the formal requirements under Article 72 EPC and, under Rule 22(3) EPC, has no effect vis-à-vis the EPO. It follows from Rule 22(3) EPC that it is beyond the EPO's jurisdiction whether or not such a contract, in cases of non-compliance with the requirements of Article 72 EPC, also has no effect between the parties to the contract themselves. If necessary, this question must be decided by the competent national court according to the applicable law regulating the consequences of non-compliance with formal requirements for contracts" (point 2.9, emphasis added).

The Board does then, however, go on to indicate that this might be fixed by changing the Rules:

"While under the present legal framework the term "signature" must be understood as referring to handwritten signatures only, Article 72 EPC does, as such, not prohibit the legislator of the Implementing Regulations to the EPC, i.e. the Administrative Council, from specifying the meaning of the term "signature" in the Implementing Regulations (see G 3/19, Reasons XXVI.4). Taking due account of the rationale underlying Article 72 EPC (see points 2.4.2 and 2.4.3 above), such a definition could include a reference to some form of electronic signature and still respect the boundaries set by Articles 72 and 164(2) EPC. Providing such a definition in the Implementing Regulations would then change the context in which the term "signature" in Article 72 EPC is interpreted pursuant to Article 31 VCLT (see points 2.5 to 2.5.6 above), both by the departments of the EPO and by national courts." (point 2.11)

The upshot of all this is that, not only is it now clear that a "text string" signature in an assignment document is not acceptable but, based on this decision, all types of electronic signatures are now considered invalid for the purposes of recording an assignment. As of right now, all practitioners will need to revise their advice to clients that assignments must have handwritten signatures. It looks like there are only two options available if the EPO wants digital signatures to get accepted. The first option would be to somehow overturn this decision by getting the Enlarged Board of Appeal to decide on the matter, although there is of course no guarantee that the Enlarged Board would decide in any other way. This could in any case only happen once there have been two conflicting decisions, so it would first need another case to decide the other way for the President or a Board of Appeal to kick the issue further upwards. Perhaps there is another appeal currently pending? The alternative, which may be far less appealing but which could be a quicker option, would be to get the Administrative Council to amend the Implementing Regulations to change the context in which the term "signature" is interpreted, as suggested in point 2.11 of the decision. For the time being, however, it appears that using electronic signatures for assignments are effectively dead in the water. 

Postscript: Thanks to the anonymous commenter who has pointed out the final line in the decision (pdf version). Take a look:

Bitcoin File Format

Does copyright subsist in the 'Bitcoin File Format'? This was the question in Wright & Ors v BTC Core & Ors [2023] EWHC 222 (Ch), where Mellor J found earlier this year that it did not because the subject-matter was "not expressed or fixed anywhere" (paragraph 62). On appeal ([2023] EWCA Civ 868), Arnold LJ decided that all that was required was that "the structure be completely and unambiguously recorded" (para 69). The claimants did therefore have a "real prospect of successfully establishing the fixation requirement is satisfied" and the appeal was allowed. Do the claimants now therefore have a prospect, real or otherwise, of establishing that this fixation requirement is satisfied?

Firstly, for those who may be unfamiliar with the term (which is possibly understandable since it appears to have been invented for the legal proceedings), what is the "Bitcoin File Format"? According to the claimants, it is "the original work consisting of the structure of each block of the Bitcoin Blockchain" (referring to a Schedule which is unfortunately not publicly available, but which was written in 2022). The Bitcoin File Format (BFF) is therefore the way that data is arranged in each Bitcoin block. The basics of this are explained on the Bitcoin Wiki page for the Genesis Block, which in raw hexadecimal form looks like this:

Genesis Block (annotated)

My annotations indicate the various parts of the block, which have a particular meaning when read by the Bitcoin software. There is therefore a clear format to the block, which is the same for every subsequent block, but importantly the format is not clear from the block itself. There is in fact no information in the block itself about what each section means. Instead, the meaning has to be inferred from software that knows what to look for. This makes the fixation of the format different to that in, for example, an XML template where the template contains a structure (in <brackets>) that indicates what the content is about. This allows an XML reader to extract information from a file created using that template and order it accordingly. Previous cases have found that copyright can subsist in XML templates, i.e. an XML file with just the placeholders and no content.

An example XML template (from here)

This was the difficulty that Mellor J had when assessing whether the claimants had established that there was a serious issue to be tried. If the claimants could not establish how the format itself (not simply the data output, which was inevitably different every time) was fixed, the fixation issue was not met and there was no serious issue to be tried. The judge attempted to get the claimants to file evidence showing how the fixation requirement was met. The claimants filed various explanations from themselves and third parties that showed how the structure of each block was defined, but none of this was found to be relevant because they were not relevant works identifying the structure, only things that were provided after the event. As Mellor J stated:

"It is most revealing that, despite all these opportunities, the Claimants have not filed any evidence to the effect that a block contains content indicating the structure, as opposed to simply reflecting it. By 'content indicating the structure', I mean, by way of a crude example, a flag or symbol in the block which signals 'this is the start of the header' or 'this is the end of the header', or an equivalent of the sort of content which is found in an XML file format. Whilst I entirely accept that each block conforms to the structure described in Schedule 2 to the Particulars of Claim and is an instance or manifestation of that structure, the absence of such evidence confirms my initial view that, whether one considers the point at which the first, second or subsequent block(s) were written embodying the structure of the file format, nowhere was the structure of Bitcoin File Format fixed in a copyright sense in a material form in any of those blocks" (paragraph 57).

This is the key point on which the judgment was overturned on appeal. It is indeed clear that the format of the block is not evident from the block itself, unless you know what you are looking for, but Arnold LJ considered that this did not actually matter. The block did have a format, but the fixation of this format did not need to be in the same place. He summarised the requirements that the claimant would need to meet in order to establish that copyright subsisted in the BFF, which were set out (in paragraph 61) that: 

i) the Bitcoin File Format is a work; 

ii) it is a work that falls within one of the categories of protectable work specified in the 1988 Act; 

iii) the work has been fixed; 

iv) the work is original; and 

v) the work qualifies for copyright protection under the 1988 Act.

The only point in contention was iii), which Mellor J found was not met. Arnold LJ considered that, while it was correct that the work, that is to say the structure, must be fixed in order for copyright to subsist in it, it did not necessarily follow that content defining the structure was required in order to fix it. All that is required is that the structure be completely and unambiguously recorded. The claimants did therefore have a real prospect of successfully establishing that the fixation requirement was satisfied, provided they were able to provide evidence of the structure being recorded from the right time, i.e. from before the alleged infringements. 

An odd feature of this case is that, in the original Particulars of Claim (PoC), the claimants alleged infringement of: i) Database Right in the Bitcoin Blockchain (discussed by me here); ii) Copyright in the Bitcoin File Format; and iii) Copyright in the Bitcoin White Paper. There was no mention of the Bitcoin software itself, which as it turns out is actually where the Bitcoin File Format is fixed. The structure of the Genesis Block, for example, is in fact completely defined in the original Bitcoin software. It therefore strikes me as strange that the claimants chose not to refer to this as providing the fixation requirement, particularly as Mr Wright claims to have written the software himself and would therefore presumably know where to look. Given that Arnold LJ has decided that the work and the fixation requirements can be met by different things, perhaps this will be what the claimants come up with next in their attempts to enforce copyright in the Bitcoin File Format. 

 

Heraeus Noblelight v First Light Lamps

Since the case of Catnic Components v Hill & Smith came before the House of Lords in 1978, the principle of "purposive construction" has been established in UK law regarding interpretation of patent claims. In the Catnic case, the issue was about whether a patent claim to a lintel having a support member "extending vertically" covered an otherwise identical lintel having a support member that was not quite vertical. According to Lord Diplock's leading judgment, "A patent specification should be given a purposive construction rather than a purely literal one derived from applying to it the kind of meticulous verbal analysis in which lawyers are too often tempted by their training to indulge". This meant that the term "extending vertically" was to be purposively construed to effectively mean that the member should be sufficiently vertical for it to serve its purpose. A few degrees either way would still allow it to serve its purpose, so the term in claim 1 of the patent was not to be construed narrowly and the defendant's lintel was found to infringe. 

Even though the law has since developed into what is now, following Actavis v Eli Lilly, effectively a doctrine of equivalents for patent claims, the principle of purposive construction has not gone away and is still in use when it comes to interpreting specific terms in a patent claim in a way that means they should perhaps not be construed as narrowly as they first appear. 

A nice example, again with a simple mechanical invention, has recently appeared in the form of the judgment of Mr Justice Zacaroli in Heraeus Noblelight Limited v First Light Lamps Limited [2023] EWHC 1950 (Pat), issued on 31 July 2023. The case related to Heraeus' European patent EP1598845B1, which claimed a method for forming a quartz glass lamp, the invention relating to how a seal between a metal electrode and a quartz glass tube was formed during manufacture of the lamp. The problem the invention aimed to address was the previously complicated method of manufacture that involved many different stages and sometimes still resulted in failure of the seal between the electrode and the quartz glass. 

It was already known that an intermediate glass material having a thermal expansion coefficient between that of the electrode and the quartz could be used to reduce the differential stress set up on cooling the seal, but the manufacturing process was still complicated. The invention simplified this by, instead of making two seals with the intermediate glass that were subsequently joined together, forming a direct seal using a bead formed on the electrode that joined directly to the quartz tube, following which an internal pressure in the tube caused a smoothing out of any edges internally. This is best illustrated with two simple drawings from the patent, reproduced below. In the first drawing (Figure 2 of the patent), the electrode 2 has a bead 4 of intermediate glass material around its electrical feedthrough 3. This is inserted into a quartz tube 1 while heat is applied and the electrode is rotated relative to the quartz tube. After the glass bead is sealed against the quartz tube, as shown in the second drawing (Figure 1 of the patent), an internal pressure is applied to the quartz tube to smooth out the internal join with the glass bead, forming a smooth internal radius that reduces the possibility of cracking on cooling. 

Electrode (2,3) with bead (4) prior to sealing with quartz tube (1)

Electrode after being sealed against quartz tube.

The patent claimed the method in the following way (with emphasis added on the key feature in question):

1. A method of forming a quartz glass laser lamp or quartz glass flash lamp containing electrodes (2) at opposite ends within a tube (1) of quartz glass, an end of said tube (1) having an internal diameter, an external diameter and an annulus, wherein said method comprises formation of a glass to metal seal at said one end of the quartz glass tube comprising the following steps:
    (1) the electrode (2) or its electrical feed through (3) is surrounded with a sealing glass (4) comprising a sheath and a bead, the bead being bigger than the internal diameter of the end of the tube (1) but not bigger than the external diameter of the end of the tube (1),
    (2) heating the bead to a soft state while rotating it,
    (3) inserting the bead into the annulus so as to form a seal,
    (4) after the insertion, heating the seal so that the sealing glass (4) wets on and fuses with said one end of the tube (1), both internally and to the end of the tube (1),
    (5) after said fusing of the sealing glass (4) with said quartz tube (1), applying an internal positive pressure while the sealing glass (4) is molten causing the sealing glass (4) inside the tube (1) to move back towards the end of the tube (1) so as to form an internal radius of sealing glass (4) which is directly sealed between the electrode or its electric feed through (3) and the tube (1) of quartz glass.

It is clear that it would be necessary for the bead to be bigger than the internal diameter of the end of the quartz tube, otherwise a seal would not be made. However, did the claim really require that the bead was literally "not bigger than the external diameter of the end of the tube"? The question was important because the alleged infringing method did involve making the bead bigger, only by around 0.1-0.3 mm, but otherwise involved forming a seal in the same way as claimed in the patent.  

Heraeus argued that the term "not bigger" should be interpreted purposively as "not bigger by reference to tolerances that formed part of the common general knowledge [CGK]", claiming that 0.3 mm was within such tolerances. Alternatively, the term should be interpreted to be "not bigger such that it impairs the strength or utility of the seal", encompassing oversized beads. They also argued for literal infringement on the basis that some of the beads used by the defendant would inevitably be not bigger than the quartz tube due to variations, or alternatively that according to the doctrine of equivalents a lamp manufactured with oversized beads would be an equivalent. 

Having heard the arguments from both sides, including expert evidence, the judge found that the skilled person's CGK would include beads of varying sizes, including oversized beads. The question was then whether, as a matter of construction, the words "not bigger than" the outer diameter of the tube was to be read as imposing a stricter tolerance than that which the skilled person would understand to be CGK. The claimant argued that it did not, while the defendant argued it did. The judge considered that, since the requirement for the outer diameter of the finished lamp did not generally require such a tight tolerance, the protection sought in the patent was not limited to a method in which beads were precisely no bigger than the outer diameter of the tube but included variants in which the bead was not materially bigger than the outside diameter of the tube to an extent "which could have no material effect upon the way in which the invention worked" (per Lord Diplock in Catnic). Bigger in this case therefore meant not bigger such that it impaired the strength or utility of the seal, which encompassed any bead made within CGK tolerances. 

For completeness, the question of infringement by equivalents resulted in the same conclusion. Although it was not necessary to consider the question of literal infringement, this was determined not to be found because the evidence did not show smaller beads actually having been used. 

The patent was found to be valid over the prior art cited by the defendant (the arguments for which I will skip over here as they don't seem to me to raise anything of interest), so the patent was found to be infringed by the defendant's process on both a purposive construction of the claimed invention and according to the doctrine of equivalents. 

You might think that the lesson to be learned from this would be that an overly specific patent claim can still be infringed even if some features are not literally present in the alleged infringement, and you would be correct. However, the trouble and expense caused by including such a specific feature in a patent claim can nevertheless be enormous if such a claim is litigated. Patent attorneys, being generally conservative and not wishing to cause unnecessary trouble, will most likely take a different lesson, which is that specific terms in a claim that are not strictly necessary for the invention to work or to provide a distinction over the prior art should be avoided. Following Catnic, drafting practice did not change so that specific terms such as "vertical" were used by patent attorneys, happy in the knowledge that they could be interpreted to mean "vertical enough to do the job required". Instead, the word "substantially" was used ubiquitously to provide more wriggle room, often without realising the reason behind doing it. In a similar way with this case, I would guess that any patent attorney reading it would have a more careful think about the claim in front of them and perhaps try not to use any limiting terms that really do not need to be there. I certainly will.

Satoshi or Not - Does it Matter?

Apparently as part of the build-up to the COPA v Wright hearing at the High Court early next year, an article appeared last month in Forbes (paywalled unfortunately, but easy to work around if you know how HTML works) with the title "Satoshi or Not, Here He Comes". The article is largely about Craig Wright, who is described rather charitably by the writer as an "Australian computer scientist". As an aside, if that definition applies then perhaps I should describe myself as a British computer scientist, based on my extensive experience of programming in BASIC on a ZX Spectrum in the 1980s. 

The writer of the article interviewed Mr Wright himself as well as a few others including me (in my human persona). The main thrust of the article is that, as the title suggests, it may not matter whether Wright is proven to be the person behind the pseudonymous inventor of Bitcoin, Satoshi Nakamoto. This is because the company he has been working for over the past several years now has an enormous patent portfolio that could soon be a threat to many. As the writer states: "if he can wield his trove of 800 granted and 3,000 pending patents in 46 jurisdictions the way he wants to, he could soon start charging for the right to build a wide variety of blockchain applications. That would affect everything from the $1 trillion cryptocurrency market to corporate implementations built by some of the largest companies in the world". That is quite a big "if", which seems to assume that Wright will still be around to wield anything after losing his court case as well as there being some value in the patent portfolio if he is. So, let's imagine what might happen if (as seems practically certain to anyone who is not being paid to say otherwise) Wright fails to prove to the High Court next year that he is Satoshi. This would primarily mean that it will become clear to everybody, if they were not previously aware, that Wright does not have, nor has he ever had, any special knowledge about Bitcoin. The patent portfolio should not therefore have any special status anymore, if it ever did have. Another consequence of this would be that, if Wright has been advancing a deliberately false case (which he has been known to do), this would cast serious doubts on the quality and provenance of any claimed inventions in the portfolio. Another point worth getting into is that Wright's so-called "Satoshi Vision" version of Bitcoin, BSV, is the basis of pretty much everything his company nChain has been working to build on since 2016. Most of the patent applications that have been filed since 2016, which now exceed 500 (based only on the number of GB priority filings) are based on the principles on which BSV is based, which are in important ways fundamentally different to those of the original Bitcoin. A substantial part of the patent portfolio's value would therefore be dependent on the principles of operation of the BSV network itself being valuable and something that others would want to use (for example for CBDCs, cattle tracking or  duplicate pictures of cute dogs, among other things). Unfortunately for BSV, this is evidently currently not the case, at least based on the current market value of BSV.

Going back to the article, an impression that it may have given (which I am sure was intended) is that, since nChain are being granted patents, the patents must be valuable. I was even contacted by someone very senior in the Bitcoin space who asked me directly why I seemed to be saying that the patents had value when, in his view, the portfolio was virtually valueless. I was indeed accurately quoted in the article as saying "A lot of these patents are, for better or worse, valid". This did not of course mean that I thought they were valuable. My view is, in fact, quite the opposite based on my own research on the European part of the portfolio, which at the time of writing amounts to 77 granted patents and 376 pending applications. To anyone familiar with how the patent system works, with a sufficiently technical-sounding specification and enough time and money, almost anything can be forced through the patent system so that it turns into a granted patent. This does not mean that the resulting patent has any value. If the claims are amended so that they cover a narrow technical implementation to work around prior art cited by a competent examiner, even if they cover what the applicant actually does in practice, the resulting patent is inevitably easier to work around and infringement can be avoided, making licensing tricky. For the few applications that do cover something broader and somehow work their way past an examiner (which has happened in a few cases), the resulting patents are more likely to be vulnerable to attacks in post-grant proceedings. What is left is effectively a lottery where an invention might be hidden amongst the trove that, by chance, turns out to be useful and valuable, but this would need a lot of persistence, focus and money to find. Given the enormous cost of prosecuting and maintaining a portfolio of hundreds of applications and patents in just one jurisdiction, it would need to take a world-beating invention worth at least hundreds of millions to justify the expense. It might, of course, be in there somewhere but I wouldn't bet on it.

Third Party Observations

Third party observations can sometimes be a useful tool when keeping an eye on other people's pending European patent applications. While EPO examiners typically do a decent job of search and examination, there are exceptions and even the best examiners only have a limited amount of time to deal with applications so cannot always cover all possibilities. Sometimes a little prod from a third party can make the difference, for example the difference between a third party having to file an opposition to get rid of a troublesome patent and preventing the patent from being granted in the first place (or at least being granted with a limited and non-threatening scope). 

Knowing that examiners typically do their job well, when is the best time to consider whether third party observations should be filed? If you have knowledge of highly relevant prior art, the best time is probably while examination is underway, preferably after the search report issues and before substantive examination begins. Observations are then more likely to be taken into account and the applicant can be forced to narrow the claims to work around the prior art. This is also relevant for other issues such as added matter and clarity, although the examiner should really be on top of these so should ideally be left to do their job. What, however, if there are issues that don't become relevant until later on? Things can be a bit more difficult, which I will show using a couple of recent examples. 

The relevant section of the Guidelines is E-IV, section 3, which states:

Following publication of the European patent application under Art. 93, any person may present observations concerning the patentability of the invention. Although lack of novelty and/or inventive step are the most common observations, third-party observations may also be directed to clarity (Art. 84), sufficiency of disclosure (Art. 83), patentability (Art. 52(2) and (3),  or ) and unallowable amendments (Art. 76(1), 123(2) and 123(3)).

So there is no restriction on who can file observations as well as no restrictions, unlike in opposition proceedings, on filing observations regarding clarity. Another issue that is not specifically mentioned is that there is no restriction on observations regarding double patenting (G-IV, 5.4), which is also not a ground of opposition. 

In theory, observations should be taken into account at any stage while an application is still pending, i.e. before a decision has been made to refuse or grant the application. In practice, however, there is an issue with observations that are filed after a communication of intention to grant under Rule 71(3) EPC has issued. According to the Guidelines:

Observations by third parties received in examination after dispatch of a Rule 71(3) communication but before the decision to grant (EPO Form 2006A) has been handed over to the EPO postal service will be considered by the examining division. If they are relevant, the examining division will resume examination. Otherwise, brief substantive feedback will be provided in the file.

There should, therefore, be no difference between observations filed before or after issuance of such a communication if they are relevant. In practice, however, observations filed after a Rule 71(3) communication are typically far less likely to result in further examination largely because, at that stage, an examiner has already got to the point where, as far as they are concerned, examination is finished and there is apparently little to no incentive to reopen examination. There may, in fact, be an incentive not to reopen examination if the examiner will have to spend more time on the application without getting any more points. Any observations would therefore have to raise a pretty serious issue for examining proceedings to be reopened. 

As a first example, let's say a divisional application is examined and goes straight through to allowance. Claim 1 as allowed in the divisional is shown below, along with claim 1 of parent application as allowed (and since granted). Notice any similarities? Clearly in this case the examiner had not examined compliance with the Guidelines on double patenting, particularly following G 4/19. This should not have happened, and third party observations clearly could not have been filed before issuance of the notice of allowance to bring this to the examiner's attention. Whether the applicant or their representative would notice and point this out to the examiner is impossible to tell, but they would presumably not have an incentive to do so, particularly if their main incentive is to get as many granted patents for their client as possible without much regard to quality or cost.  

Claim 1 of allowed divisional.

Claim 1 of granted parent.

So, what should be the effect of a third party filing observations pointing out the double patenting requirements to the examiner in this case? The Guidelines state that examination should be reopened, but only if the observations as "relevant" and, if they are not relevant, the examiner must provide a note to this effect on the file. In this example, it is clearly impossible to argue with a straight face that double patenting is not a relevant observation, so the examiner must reopen examination, which it turns out is what the examiner did. The communication of intention to grant was rescinded and a communication under Article 94(3) EPC issued pointing out the requirement to the applicant and asking them to make amendments. Examination for that application is consequently still underway as a direct result of third party observations being filed, and the applicant has indeed made some narrowing amendments. 

Let's take another example on a different issue of added matter, where the issue also came up only after a communication of intention to grant issued. Again, this relates to a divisional application, which had a fairly easy ride through examination and a communication of intention to grant issued with claim 1 in the following form:

In this case it is more difficult to see immediately what the issue is but, on analysing the claim features in relation to what was filed as the parent application (see below for a link to the register), it is clear that there were significant added matter issues. Third party observations were filed that pointed out this to the examiner, stating the following:

The observations were properly and clearly argued, and raised substantive issues that were not raised during examination. They were therefore clearly relevant. One would expect that this would result in examination being reopened and the A76 issues addressed in full. This is, however, not what happened. Instead, the examiner provided the following explanation of why the observations were not relevant and did not justify examination being reopened: 

I would hazard a guess that any vaguely competent European patent attorney with even a limited experience of dealing with added matter objections at the EPO would be surprised at these comments. This is not something we would expect to see coming from an examiner at all, but sound more like something coming from a representative trying to justify some tenuous intermediate generalisations for a divisional application that did not have direct and unambiguous basis for the combination of feature as claimed. The result was that examination was not reopened and the application could then proceed to be granted with claim 1 in the form as allowed. 

The lesson from these examples (if they can be considered representative at all) seems to be that third party observations have to be pretty damning for an examiner to be willing to reopen examination. I wonder how clear an added matter objection would need to be for an examiner to consider observations to be sufficiently relevant to reopen examination? Is there a hidden threshold of relevance that a third party has to meet? The Guidelines do not explain. Am I perhaps unfairly making a general rule out of an unusual example, or is this a more common occurrence? As always, comments are welcome.

For those wishing to investigate further, the applications in question are published as EP4092953 (double patenting) and EP4117228 (added matter). 

Bitcoin & Database Right

Database right came into being in Europe (specifically the European Union) with the arrival in 1996 of EU Directive 96/9/EC on the legal protection of databases (the "Database Directive"). This was put into effect the following year in the UK by way of the Copyright and Rights in Databases Regulations 1997 (the "Database Regulations"), which is still in effect in the UK with a few post-Brexit amendments. 

Database right was an entirely new ('sui generis', i.e. of its own kind) thing, similar to copyright but intended to cover things that copyright could not cover directly, in particular pure information rather than literary works. In simple terms, database right was intended to protect a database owner's investment in creating and maintaining their database from being appropriated by others using information from the database without their permission. 

An early case in the UK relating to database right was British Horseracing Board v William Hill which, after a referral to the ECJ, ended up at the UK Court of Appeal in 2001. BHB's database right in racing data was found to be infringed by William Hill's unauthorised extraction and reuse in their online betting service. The case established that database right was potentially quite powerful for preventing others from using information that would not itself qualify for copyright protection. 

More recently, in November 2022 a claim was made by Craig Wright against various Bitcoin developers and companies, claiming infringement of copyright in the Bitcoin software, White Paper and 'Bitcoin File Format', along with infringement of database right in the Bitcoin blockchain. The copyright claim is fairly straightforward, in that Mr Wright claims to have written the White Paper and Bitcoin software and therefore anyone using or copying either will be infringing his copyright. This is, of course, disputed and the outcome will depend on whether Mr Wright can prove his claim. This will proceed to trial, although with the exception for the time being of the copyright claim to the Bitcoin File Format, which was struck out last week as having no prospect of success. The claim to database right, which will also be the subject of the trial, is a bit more complicated and, to me at least, is an interesting one to pick apart. So, in a change to my usual commentary on patent matters, I will carry out a brief review of database right, how this might be applied to Bitcoin and whether Mr Wright has any plausible claim. 

Firstly, what is a database? According to Section 6 of the Database Regulations a database is "a collection of independent works, data or other materials which - (a) are arranged in a systematic or methodical way, and (b) are individually accessible by electronic or other means". This broad definition appears to cover the Bitcoin blockchain. This is a series of data blocks that started to be created on 3 January 2009 and continues to be created with a new block arriving on average every ten minutes. Each block is generated by 'mining', which is a process of collating all transactions transmitted to the Bitcoin network that can be fit into a single (size limited) block, the block being created by the miner that finds a hash value for the block that meets a particular target difficulty. Once created, all other nodes on the network validate the block as correct and it becomes the next one in an unbroken chain, with each block referring to its immediately preceding block. The Bitcoin blockchain, which is accessible to anyone with an internet connection, therefore should qualify as a database, with the blocks being independent works in the database that are arranged in a systematic way and accessible by electronic means. 

Secondly, it is crucial to define who the maker of the database is. According to Section 14 of the Database Regulations, the maker is "the person who takes the initiative in obtaining, verifying or presenting the contents of a database and assumes the risk of investing in that obtaining, verification or presentation". The important part of this definition is the need for investment, which goes to the heart of why database right was created in the first place. The person who takes the initiative and assumes the risk of investing in creating a Bitcoin block is the miner. Mining is an energy-intensive process, requiring a large number of calculations to be made to find a correct hash value to mine a block. To do this requires substantial investment in equipment and energy. The maker of any Bitcoin block must therefore be the miner. In practice, this would be the person or company responsible for running a particular mining operation that created a block. 

There are in reality lots of miners, all independently trying to create new blocks in a competitive process that over time drives up the cost of creating blocks. The Bitcoin blockchain will therefore have many different makers. This is accounted for by Section 14(6), which states that "a database is made jointly if two or more persons acting together in collaboration take the initiative in obtaining, verifying or presenting the contents of the database and assume the risk of investing in that obtaining, verification or presentation". So, the Bitcoin blockchain is a database with many different makers. The miners can be considered to collaborate, given that each block is, once mined, transmitted to all other miners who then use it as the basis for subsequent blocks.

Thirdly, we need to define who actually owns the database. Section 15 simply states that "The maker of a database is the first owner of database rights in it". The Bitcoin blockchain is therefore a database that has many joint owners, all of which are miners. 

There is, however, a catch. Database right was originally defined by Section 18 as a right that would only apply to individuals and bodies national or resident within the European Economic Area (the EU plus a few extras). Following Brexit, this was redefined in the UK to be individuals or bodies national or resident within the UK (plus the Isle of Man). The Bitcoin blockchain would therefore only qualify for database right if blocks were made within the EEA or, as from 31 December 2020, within the UK. A further qualification to this is that the making has to have been at a "material time", which is defined as "the time when the database was made, or if the making extended over a period, a substantial part of that period". This would appear to allow for some part of a database to be made outside of the EEA or UK, provided a substantial part of it was made within the EEA or UK. It is evident that some blocks will inevitably have been made within the EEA since the creation of Bitcoin, but does this amount to a "substantial part"? 

Where does this leave Mr Wright? In his Particulars of Claim (PoC), he defines the Bitcoin blockchain as a database within the meaning of the Regulations, defining it in particular as the part from blocks 0 to 478,558 on 1 August 2017 and further in the period from October 2015 to 1 August 2017. Mr Wright, from his claim to have invented Bitcoin, also claims to be the owner of the database right in the blockchain. Mr Wright is, however, an Australian national and was, until around October 2015, resident in Australia. On this basis alone therefore, his claim does not appear to establish that there is any database right in the Bitcoin blockchain. To establish that there is, he would need to show that he was a joint maker in collaboration with others who would qualify as EEA/UK nationals or residents. This seems to be a difficult hurdle to overcome. At best, Mr Wright could claim to be a joint owner of database right in the Bitcoin blockchain, but only if other joint owners within the EEA or UK collaborated with him. 

But what about the period from October 2015 to 1 August 2017? If Mr Wright was in the UK during that period, wouldn't that establish a claim to database right? Perhaps, but only if he can prove that he created some blocks during that period. Mr Wright may then be able to claim to be a joint owner of database right without needing others to join him. There is, however, unfortunately no evidence provided to this effect. 

Another puzzle is, if database right is found to subsist in the Bitcoin blockchain, whether one out of many joint owners of the database is permitted to bring an infringement action without the permission  or involvement of the other joint owners. The Database Regulations do not say how action can be taken for a jointly owned database, but for other IP rights such as copyright and patents the other joint owners would need to be involved and at least made parties to the proceedings. This would clearly be a difficult process for the Bitcoin blockchain, involving possibly many thousands of parties, many if not most of which will be unidentifiable. 

As a final point, even if Mr Wright were to somehow overcome all of the above hurdles, he would still need to prove that he actually created some of the blocks of the blockchain. To anyone familiar with how Bitcoin works, this would be very simple. All that would be needed is to provide a signature verifying ownership of coins in the relevant coinbase addresses. Mr Wright has failed to do this for any addresses, so the possibility of this coming about seems remote. 

In summary, although the possibility of the Bitcoin blockchain qualifying for database right appears at least theoretically possible, the chances of Mr Wright establishing that he is an owner, let alone the sole owner, of the database right appear to be very small. I look forward to finding out how the trial turns out, but I suspect we will be waiting for quite some time. 

Postscript (20 Feb 2023): Although the database right question can most likely be resolved without needing to look at whether anyone is infringing Mr Wright's IP, if we consider that database right does subsist in the Bitcoin blockchain, can any owner claim infringement? This can be resolved simply by looking at the wording of Section 16, which states that "a person infringes database right in a database if, without the consent of the owner of the right, he extracts or re-utilises all or a substantial part of the contents of the database" (emphasis added). What happens once a block is mined? The miner immediately transmits the mined block to all others on the network so that they can verify it and add it to the blockchain. Otherwise, the miner will not be able to claim their coinbase and transaction fees for mining the block. A condition of mining is therefore that the miner consents that all other nodes on the network can copy and verify the block. Therefore, even if the miner is determined to be the owner, they automatically consent to the block being extracted or re-utilised by the act of transmitting it to other nodes on the network. There can therefore be no infringement of any database right in a Bitcoin block. 

What Does My Claim Cover?: UNION-IP Roundtable, Munich, 24 February 2023

It is almost inevitable that at some point during prosecution of a patent application, amendments will need to be made. If amendments to the claims are made, this will undoubtedly affect the scope of protection of the resulting patent. Indeed, this is the primary aim of making amendments to the claims. However, it is not clear whether amendments made to the description are either necessary or would actually result in the scope of protection being affected post-grant. 

The European Patent Office would like everyone to agree with them that it is important to amend the description to align it with the claims because "Any inconsistency between the description and the claims must be avoided if it could throw doubt on the subject-matter for which protection is sought" (Guidelines F-IV 4.3). But is this necessary? Is it justified by the case law? Is it even relevant for post-grant proceedings at national courts? To address these questions, UNION-IP has gathered together some illustrious and knowledgeable people from across Europe to discuss the matter at a 'roundtable' event to be held at the German Patent and Trade Mark Office (DPMA) in Munich on Friday 24 February 2023. 

The event, titled "What Does My Claim Cover? - Intended and Unintended Consequences of Amendments During Prosecution and Post-Grant Proceedings", will be an excellent opportunity to debate the impact of the changes to the Guidelines for Examination (F-IV 4.3 in particular) in relation to amendments to the description, in judicial proceedings and before the EPO. There will be two panels comprising speakers including judges and experienced professionals.

The first panel, which will discuss the changes to the Guidelines and how they have changed practice at the EPO, will include Gerry van Dooren (EPO DG1 Operations Director), Felix Hermann (Boehmert & Boehmert) and Thomas Burchardi (Ericsson).

The second panel, which will discuss how claim scope is affected by the description in litigation, will include Edgar F. Brinkman (Senior Judge, District Court of The Hague), Matthias Zigann (Presiding Judge at Regional Court Munich, UPC Judge for Munich Local Division), James Mellor (UK Patents Court Judge) and Lionel Martin (August Debouzy). 

The panels will be moderated by UNION-IP Patents Commission President Rui Gomez and Vice-President Joana Santos. The event will be introduced by Fabian Edlund, President of UNION-IP, together with Bernd Maile, Vice-President of the DPMA. 

The registration fee, which includes lunch at the DPMA (which has always been very good at past events) is 175 Euros for non-members and 120 Euros for UNION-IP members. 

A brochure for the event, which includes details of how to register, is available here from the UNION-IP website. 

The event is the first one to be held in person since February 2020, so will be a very good opportunity to finally get out of the office and meet some people in real life, particularly as trips to Munich are getting more infrequent. I look forward to seeing you there!

University IP and Fair Shares: What's Not to Like?

A long time ago, while I was working as a post-doctoral researcher, I invented a thing. It is not important what that thing is (but you can check here if you're interested). What was important is that it was of commercial interest to a company I was working with at the time. The company came to an agreement with the university and bought the IP rights, which was primarily the invention itself. A while later I went to work for the company to help them develop the invention, from which many other patent applications followed. This was interesting for a while until I got distracted by the IP aspects of the work and switched to becoming a patent attorney. The invention therefore, in a roundabout way, led to my change of career, which has turned out quite well so far. 

Without going into too much detail, a key aspect of the change of career turned out to relate to the contractual terms at the university that specified how much was given to the inventor(s) and how much the university got from proceeds relating to an invention. The share at the time, which was decided at the university level, was that the university's commercial arm would take an initial cut and the rest would be divided between the relevant university department and the inventor(s). Since I was the sole named university inventor on the patent application, the inventor share was all mine. At the time, it did not occur to me to think that the share was in any way unfair, as I thought it was quite generous. I was after all employed by the university, so whatever I did on work time was understood to belong to the university. If I were to be working for a private company I would not expect to receive any share of the proceeds, particularly if I was employed in a position where it was not unreasonable to expect that an invention might come up at some point. The deal therefore seemed to me to be a fair way to compensate those who might come up with something commercially useful, perhaps partly because those working at a university might not be paid as well as those in the private sector.

The ONI nanoimager: literally a black box.

It turns out, however, that not all university researchers felt the same way as me, as I found by reading the recent decision in the case of Oxford University Innovation Limited v Oxford Nanoimaging Limited [2022] EWHC 3200 (Pat), which issued just before Christmas. The decision is extremely long winded, running to 651 paragraphs (177 pages in the pdf version). The case, however, is actually relatively simple and deals with two key points. The first is the issue of whether an invention should be owned by an employer under Section 39, while the second (which takes up the bulk of the judgment) deals with whether a contractual agreement between a lowly researcher and a University employer is unfair pursuant to the European Directive on Unfair Terms in Consumer Contracts, 93/13/EEC (the UTCD). 

What's inside the black box?

The story started with a talented researcher named Jing Bo (Mr Jing), who went to work at the University of Oxford in 2012 to help develop a new microscope. Mr Jing invented an improved version of a microscope that researchers at the University had been working on. Two patent applications covering the new microscope were applied for, the first one published as WO 2015/059842 A1 (see Fig. 2 of the application here) and the second as WO 2016/170370 A2. 

The microscope was considered to be of sufficient commercial potential that a spin-out company was formed, Oxford Nanoimaging Limited. In line with the University's usual terms, ONI was set up so that the inventors (Mr Jing and two others from the University research group) owned 50% of the shares and the University owned the other 50%. Any royalties paid were also arranged to be distributed so that both the University and the inventors received a share. The company, with Mr Jing working first as CTO and then as CEO, turned out to be quite successful and royalties started to come in. At that point, you might imagine all would seem well. The University would be justified in getting their share of the proceeds and the inventors too, with Mr Jing being in his position due largely to being the right person in the right place at the right time to take advantage. 

In 2019, however, ONI, under Mr Jing's charge, stopped paying royalties to the University. By 2021 the amount owed to the University stood at over £700k (and has increased since). The dispute between ONI and the University (or more specifically its commercial arm, Oxford University Innovations Limited, or OUI) was that Mr Jing challenged the University's right to own the inventions under Section 39 of the UK Patents Act and also challenged the terms of the contract agreed to by Mr Jing while working at the University as being unfair due to the status of the parties being unbalanced at the time. 

Section 39 states that "an invention made by an employee shall [...] belong to his employer [...] if it was made in the course of the normal duties of the employee or in the course of duties falling outside his normal duties, but specifically assigned to him, and the circumstances in either case were such that an invention might reasonably be expected to result from the carrying out of his duties". Mr Jing argued that he was a lowly researcher, who was paid very little at the time of coming up with the invention, and should not therefore have his invention owned by the University because it was not reasonable to expect that an invention might result from his employment. A problem with this argument, however, was that Mr Jing did a very successful job at selling himself to the University to get the position in the first place, providing references that described him as someone who "thinks very logically and analytically" and was "skilled at solving technical problems". Mr Jing was indeed not paid very much, but the judge found that he was engaged to work on a potentially exciting project and he was an experienced researcher who was expected to do valuable work on the microscope project. It was therefore clear that an invention could reasonably have been expected to arise (see paragraphs 211-212). The judge also considered that "The pay of an employee was not a relevant consideration under s.39 if, because of their duties and characteristics, invention would be expected from them" (para 213). 

From a patent law perspective therefore, the decision seems uncontroversial. I would have been very surprised had the judge found any differently. Even though there are few precedents, the principle is clear: if you are paid to invent then the invention belongs to your employer. Considerations beyond this that go into whether the amount paid was not enough to justify ownership of any inventions is not for a court to decide. 

The other point is of less interest to me as a patent professional, but has some interest from a personal perspective, having been in a similar position to Mr Jing while at another university. I will not even attempt to summarise the legal analysis in the judgment, which runs to over 400 paragraphs. The gist, however, is that Mr Jing, while working as a DPhil student (which followed a short period of employment during which he came up with the first microscope invention), should have been treated as a "consumer" within the meaning of the UCTD and the University should have treated him as such. The terms of the contractual agreement, however, as noted briefly above, were not unfair and the positions of the parties were not unbalanced. Indeed, the terms were much better than any employee working for a private company could have expected to get. As the judge found, the University's "general benefit sharing policies were not out of line with those of other institutions when the issue is properly examined, including with regard to the scope for differences in reasonable policy choices the University could make" (para 559). There was no unfairness in the way the University allocated benefits under its IP Provisions as between researchers and the University, including as to share of royalties and equity. Those most involved in the project received substantial equity shares and royalties and the University, supporting the work, ensured that the benefits were spread more widely. This was not unfair but instead, as the judge noted, "the reasonable response to such a scenario is not a complaint but: 'what's not to like?'" (para 562). 

In summary, it seems that the case does not set any new tests or guidance regarding University inventions or how proceeds from such inventions should be handled. Instead, it in effect largely confirms that what Universities have generally been doing for a long while is quite fair, if not generous, and there really is no need to complain if you are or were a University researcher and your invention becomes successful. A small share in something very big is, after all, better than a big share of nothing at all. 

A Change in Practice for Compliance Periods and 'Divisionals' in the UK

The way that 'divisional' applications are treated in the UK is a bit different to how they are treated at the EPO. This sometimes catches applicants out, which I wrote about a while ago in this post. In brief, unlike at the EPO where the rule is that a divisional application can be filed as long as there is a pending parent application (with some additional leeway for the time allowed for filing an appeal against refusal), Rule 19(2)(b) of the UK 2007 Patents Rules requires a new application under section 15(9) (commonly termed a divisional application) to be filed before the period ending three months before the compliance date of the earlier application. The compliance date is defined by Rule 30 as the end of the period of four years and six months from the date of filing (or the earliest priority date) or, if later, twelve months from the date of the first examination report. This can sometimes catch applicants out if they find themselves running up to the end of the compliance period and, with their EPO frame of mind, thinking that they still have time to file a divisional while the parent is still pending. Although extensions are available to the compliance period under Rule 108, any as of right extension is limited to only two months. It is therefore necessary to rely on the discretion of the examiner to get a divisional validly filed if you are already less then two months away from the compliance date. 

Practice at the UK IPO has been to take any extension to the compliance period applied to the parent application as being also applied to any divisional application. The effect of this has been that, in some cases, applicants can take advantage of repeated extensions to the compliance period and still file a divisional application if things are not going their way just to keep something pending. An example of this is in decision BL O/610/22 (Wei Xu), where the applicant filed repeated requests under Rule 108 to keep extending the compliance period and filed several divisional applications, keeping prosecution going on multiple related applications for years. The IPO eventually grew tired of this and refused to grant any further requests under Rule 108 because the applicant was not making any realistic attempts to progress the applications. It looks like this kind of practice, if not this actual case, has now made the IPO look again at how the compliance period should be determined for divisional applications. The IPO has recently issued some statutory guidance on how they will be determining the compliance period as from 1 May 2023. This states:

In accordance with r.30(3)(b) of the Patents Rules 2007 (as amended), from Monday 1st May 2023, the IPO will attribute to a divisional application filed on that date or after, a compliance period of:

• four years and six months beginning immediately after

(i) where there is no declared priority date, the date of filing of the application, or

(ii) where there is a declared priority date, that date; or

• if it expires later, the period of twelve months beginning immediately after the date on which the first substantive examination report is sent to the applicant, in relation to the earlier parent application.

This change in practice will mean that the IPO will no longer treat the compliance period of the earlier parent application that has been extended under r.108(2)/r.108(3) as the un-extended compliance period of the divisional application. Extensions to the compliance period of both parent and divisional applications will continue to be available under r.108 in the normal way.

The key part of the guidance is underlined above. The effect of this is that the practice of repeated extensions will no longer allow applicants to keep the option open of filing divisionals. This will also very tightly compress timescales for getting divisionals allowed, relying more on the IPO's discretion to allow extensions. Applicants and their attorneys, particularly those used to the more generous provisions at the EPO or USPTO, should pay close attention.