Gordon:Okay. l think we'll get underway and my name is Gordon Harris. I'm a partner in the Gowling WLG IP team based in London. Good afternoon to everyone in Europe. Good evening in China and Singapore. Good morning in North America. I'm delighted that our audience today reflects the geographical range of our panel. So welcome ladies and gentlemen to the first in what will be a series of webinars, taking a fresh look at the field of intellectual property by tracing the choices, the options and steps, which occur in the lifetime of a smart idea. From the laboratory or the Eureka! moment right to the full development and exploitation, and indeed, beyond. I want you to imagine that a new idea has just emerged. It could be in any of a range of technologies from complex molecular biology to artificial intelligence or something much more basic. We will be looking at a variety of different routes this idea may take and, of course, the technology involved may be a feature in the choices which are to be made. At different times in this series we will be looking at the full range of IP rights. Every good idea needs a brand and many of them need designs too. For today we're focusing on patents and trade secrets and, in particular, the very first big question faced when an inventor has their smart idea; to patent or not to patent. We will be evaluating the options and the strengths and weaknesses of both routes and we'll be considering some of the national and regional variations which may effect the key choice. So let me just take a moment to introduce our highly experienced and truly international panel.
Starting with Canada, we have Michael Crichton, a partner in our Ottawa office, leader of Gowling WLG's intellectual property strategy and litigation group in Canada. Michael's IP litigation practice focuses on patents, trade secrets and software copyright enforcement. Michael has particular experience with Canada/US cross border IP disputes and issues. Then we have Evgeniya Gizatullina from Moscow. She's a patent attorney in the Moscow office with more than 12 years experience in patenting. Before joining us she was a patent examiner in the Russian patent office and in house counsel at Samsung. Next up, the most recent recruit into our team, Ivy Liang, who is in our Guangzhou office. In her former role she was presiding judge in the Guangdong Provincial Courts where she served as Deputy Director of the IP division. So no one knows the Chinese system better than Ivy. Next up, Huw Evans, he was a partner in our London office, maybe 30 years worth of experience helping clients to protect their IP assets, manage risk in complex disputes involving, in particular, patents and trade secrets. Much of his work is international and cross border. Finally, last but not least, Thomas Mayer in Munich. Thomas is a partner in our Munich office with over 20 years experience in patent litigation, employee invention law as well as technology transfer and licencing. As a counterbalance to the litigation biosphere, he's a certified business mediator, leveraging the advantages and alternative dispute resolution might bring, particularly to disputes involving trade secrets.
What I'm going to do today is to pose a series of questions to this great panel. Sometimes to all of them and sometimes to individuals. Through that we aim to pick our way through the issues which arise in a variety of crucially important jurisdictions around the world. Of course there is one key issue which can damage the prospects of pursuing either course. It's spelled out quite clearly in the very name of trade secrets. But the question of confidentiality is equally important to the prospects of obtaining patent protection. So starting with Michael, in Canada, I want to ask you what are your recommendations for ensuring that he most vital aspect, long term protection, confidentiality is maintained in the early stages of the life of an invention? Michael, over to you.
Michael:Thanks, Gordon. There are a few key things an organization can do to maintain confidentiality over the invention or a smart idea. First, ensure all individuals or other organizations that are involved with or have access to the invention, have executed strict non-disclosure agreements. This means even if it's early days in a development project, and some disclosure has already occurred, go get the recipient to sign an NDA that has retroactive applications. Second, be as restrictive as possible with respect to which specific people have access to any confidential information. Keep the group as limited as possible and on a need to know basis only. Third, make sure your organization has strong security protections in place. This includes adequate password protected networks and access controls as well as locked storage locations for anything of a physical nature. All too often we see inventors, or their organizations, come to us seeking to potentially apply for a patent, but either through carelessness or a failure to take adequate steps to keep the invention confidential, the ability to get a patent, let alone maintain the invention as a trade secret, is unfortunately jeopardized.
Gordon:Thanks, Michael. Thomas, you wanted to add a few points here, I think.
Thomas: Yes. Thank you, Gordon. I would just like to add two aspects. To start with, the most important step, as Michael has already mentioned, seems to me that only a limited number of employees within a company or organization are informed about the specifics of the invention. Additionally, it's just wiser that these employees are bound by confidentiality clauses in their respective employment agreements. Another aspect is, as regards the often necessary exchange with other parties outside your own organization, for example, in connection with shared development, you should insist on having a non-disclosure agreement signed by the other party before starting to make information on the invention available to the other party.
Gordon:Thanks very much, Thomas. Now, Ivy, I think you've got a bit of a war story to tell us, from China, to illustrate this point.
Ivy:Yes. As my colleague Thomas said we should insist on having the NDA signed before application. It is also wise that inventors should try to refrain from displaying the product before filing for patent. Especially the design patents. For example, to put the pictures of the product in advertising brochures or to promote it in the public exhibitions, etcetera. In a series of cases, the firm the British automotive manufacturer Jaguar Land Rover, the JLR, and the Chinese automotive manufacturer Jiangling Motors Corporation, Jiangling. JLR's prior disclosure of the public exhibition of the product, namely the car, in 2010. We started in the design patent being evaluated for lack of novelty. It seems like a blind spot in a sense and is often ... by the inventors. In a patent infringement case, if the accused infringer is capable of providing the evidence that the technology are decide in this build is known to the public, both domestically and abroad, before the phase of application. The accused infringer then can either use it as a strong defense in the case or to invalidate the patent rights fundamentally. So all in all it is wiser to file the applications as early as possible before publicizing the inventions.
Gordon:Thanks very much, Ivy. A few closing comments on this point from Huw.
Huw:What I would say is my colleagues have brought up sort of great points and recommendations. I guess the only thing I would add is for organizations to consider putting in place a more formal trade secret policy. This would, in part, include raising the level of awareness amongst employees of trade secrets and the importance of those trade secrets to the business. But it can also cover off how the business identifies and protects trade secrets. With all such policies one must take care how they are followed. They are often best accompanied with a training program.
Gordon:Thanks very much, Huw. Just one comment of my own here. It's quite common for inventors to liaise with universities during the development period of a new idea. This is extremely dangerous. If such a collaboration is not covered by really tight confidentiality provisions, there have a been a number of bad stories in the UK, were really valuable rights were lost due to careless prior disclosure in universities. So, let's hope we've all got that right and the confidentiality of the smart idea is secure, now what? Do we keep it confidential and pursue trade secrets approach to protection? Or take the polar opposite step. Tell all the world how to make your invention and file a patent application. The word patent, of course, is derived from the Latin word "patère", meaning to be open. The whole idea of letters patent, I'd say, used to be known as to strike a deal with the State. I, the inventor, will tell the world how to make my invention, exactly, and in return I receive a limited monopoly. Usually 20 years during which I can exploit the invention before the rest of the market comes crowding in. That all sounds simple enough but of course it is not the whole story. There are so many factors in play. Let's take a look at some of them by prompting our expert panel with a few key questions. I'm going to open up with Huw, in London, but I'll fire a whole raft of questions and then you can cover those off, Huw, then we'll hear from the other speakers.
The first one, the most provocative of all really, why bother with patenting? To get global protection requires many years of effort in many different patent offices. It is fiendishly expensive and it takes a long time. Even an expedited application usually takes at least 2 years and often much more. Who needs a 20 year protection now anyway? Technology moves so fast these days that smart ideas might be obsolete long before then. So, Huw, what have you got to say on that?
Huw:Well, I'll give you a short response first then expand on that. My short response is that patents are valuable assets. But expanding on what I actually mean by that value I want to just touch on this, both from the aspect of the protection afforded by patents and the further monetizing of that patent asset. So firstly, we have an increasingly knowledge based economy where the value of a business cannot any longer be counted by the size of their buildings or their factories. The patent may end up being the most valuable asset of the business. Indeed, I would like to say, may potentially be the only tangible asset of that business. Patents do provide a chance for investors particularly at the start of that new business venture. Often the very first question from an ... investor or ... is what patent protection do you have? Now this is for good reason. Most innovations, when exploited, simply cannot be kept secret. Now many times I've heard inventors say, "My competitors will not be able to work out what that vital ingredient is." In actual fact they do. Having said that I've also heard clients say competitors won't be able to work around my patent but competitors do that to. But just on that point, work arounds will mean a different and very often inferior product, which is less commercially viable. The point here is that patents do defer third parties from encroachment on the patentees business. This probably happens actually much more than we actually realized. Indeed, for those of us who are often engaged in freedom to operate studies, we see how our clients modify the manner in which they develop their products and business to avoid third party patent risk. These risks are often just pending patent applications. Sometimes these pending patent applications are the most dangerous for clients. So a patent which has never been taken down from a shelf in 20 years has not just been collecting dust. For all that time it may be performing its intended function, providing effective electric fence around the protected invention. So patents do offer protection but that's not the limit of their value. They can, of course, be traded to do deals with competitors but they can also be monetized in other ways to. Such as security for loans and also do not underestimate the value that can be derived from a licencing revenue street. Just to back up there on that last part of your question, well technology moves so fast so why bothering patenting anyway? On that I would like to take the example of Formula 1. Well, that's quite fast. Just look at teams like McLaren and Williams. Of course they are constantly innovating and looking at small incremental changes between races. Because those could be the difference between the first and last place. Maintaining secrecy of those changes is all important. But both these businesses have successful applied technology divisions. Indeed, back in 2008, Williams F1 developed a fiber technology for the 2009 F1 car. No patent protection would have protected them from their rival teams in that season. But patent protection did, no doubt, help them spin off that technology to GKN who in turn used it to reduce greenhouse gas emissions for other more sedate forms of transport. London buses now use 30% less fuel. Another Williams F1 example is the airflow developed for their car which now features in the fridges in the aisles of supermarkets to increase the efficiency of those fridges. Now, obviously, one can come up with countless examples where technology was developed for one reason but has subsequently been applied in very different ways. Although .. example is, I hate to disappoint everyone here, but NASA did not invent Teflon. I have to say, but I'm not advocating against trade secrets, far from it. But I don't think they're the full answer to protecting technology which is fast moving. Or where fast movement advantage is key. In addition, they may miss the added value that can be gained from the innovation in the first place.
Gordon:Thanks very much, Huw. It's a very comprehensive answer. Ivy, would you like to talk up from that in China?
Ivy:Yes. I totally agree with Huw that patents are valuable assets. In China we always say that better safe than sorry. In judicial practice, companies sometimes have difficulty bringing trade secrets, infringement cases to court due to challenges in getting and preserving the substantial evidence. Although there's a workable legislative and litigation framework in China, due to the fact that there's no such thing as evidence ... system here, and therefore the tangible evidence normally prevails. So from the perspective of litigation in China we advise that companies should consider prioritizing, filing these patents which can easily be infringed upon and copied by other ... For example, the mechanical patents.
Gordon:Thanks very much, Ivy. Thomas, would you like to add anything on this point?
Thomas: Yes. With regard to the question of why to patent. I think a very simple, but fundamental, consideration should not be missed. I mean, of course patent protection prevents your competitor from acquiring patent protection for the same idea. That's something very basic but it's very important. Moreover, seeking patent protection seems inevitable if the inventive idea can be detected by reverse engineering a product which uses the invention. In this scenario, trying to keep the invention secret, would just not work. Under an economic perspective, it must be noted that patent protection offers the option to make money with the invention, by licencing the invention. An invention that is protected by a patent can much easier be licenced than an invention that is kept secret. Last, but not least, an innovation that is kept secret can hardly be used for marketing purposes. Whereas having patents does not only demonstrate a companies innovative capacity, but with patents often being of considerable economic value, they are a very important part of a company's business assets.
Gordon:Thanks very much indeed, Thomas. Michael, a few quick words from you in Canada?
Michael:Sure. On the topic of the pace of technology it's true. The pace of technology is quite rapid these days. But if your smart idea falls into the category of being a pioneer invention, for example, something that is foundational in a technology area, that everyone's going to be practicing and building upon for years, then looking to patent may make a whole lot of sense, in the full 20 year period of the monopoly may be quite relevant.
Gordon:Thanks very much, Michael. I think that's a strong point. Now, for the first time today, I want to turn to Moscow, Evgeniya. As a patent attorney, with many years of experience, you must have had to give this sort of advice quite often. So, what would you like to add at this point?
Evgeniya: Thanks, Gordon. Here I can agree with Michael that patents are valuable assets. My point is that if the patent is possible patenting is much more preferable than keeping the idea as a secret. I can list at least three benefits of patenting in Russia. Costs are not so high. The time line is quite fast. It's about year or 2 years. As an alternative to Russian patent, you can get a broad protection, as Huw mentioned, over 8 countries of CIS region, including Russia, by applying to your agent patent. Also, considering the prevailing litigation practice in Russia, importance of patent rights is much more straightforward than importance of trade secret rights. There are much more uncertainties in the law with regard to protection of trade secrets comparing to patents. It's extremely important that to prove infringement of trade secret rights, and also seek for remedies from the ..., you have to gather the evidence that trade secret information was obtained locally but the law doesn't stipulate some regions. What does localized mean? That's why unfortunate of trade secrets is ...
Gordon:Thanks very much indeed. That's very helpful. Now, of course, some of the most valuable IP in the world is in the form or trade secrets. If Coca-Cola and KFC had applied for patents for their respective recipes and, yes, you can patent a recipe, they would have been in the public domain for many years, copied widely and freely. Now, we'll accept that these are exceptional cases but when is the use of trade secrets, as a basis for protection, the best way forward? I'm going to start here with Michael in Canada and then move on to everybody else. When would you recommend choosing to use trade secrets over patents and what are the key criteria in making that decision?
Michael:In order to make the call on whether to patent or keep secret you really need to know your industry and your technology quite well. Having that adequate knowledge will enable you to know just how likely you'll be able to keep the smart idea a trade secret. Keeping something a trade secret means not only keeping it under wraps within your own organization but also making sure whatever product you release to the market is not something that a competitor can reverse engineer. Formulae, fabrication processes and source code are examples of intellectual property that often times can be kept secret, indefinitely. So whatever your smart idea is, if you're able to maintain strict confidentiality, then you may wish to keep your smart idea a trade secret.
Gordon:Thanks very much, Michael. Let's go back to Moscow again. Evgeniya?
Evgeniya: Thank you, Gordon. Further to Michael's points, excessive risks of reverse engineering, we also would like to recommend to assess the potential ability of your invention and further enforcement ability as well. In such cases, when there is the ability of further enforcement might be problematic, we may recommend to keep your smart idea as a secret. We might highlight at least two scenarios when patents may not work and keeping your ideas a secret will be the best idea. The first one is when your idea is not patentable or it's difficult to get a strong patent. Likewise for most ... solutions ... software patents are practical and nothing personal in Russia. The reason is that if they're difficult to prove that the infringement product of process falls under the scope of the ... and abandoned claims. The second scenario is when the invention cannot be implemented as a consumer product. For example, we had a patent for some new technology process for pending some product, or you have a patent for complicated device. For example, it can be a pump. We had a real case of this. The defendant uses exactly a patented technology. Or maybe the defendant uses the pump that was patented, replicated from yours, and he uses the technology or device in effect with restricted access, or maybe it was no access. The thing is that in Russia the burden of infringement proof is placed on the plant. So you, as a plant, must get the evidence that the defendant has commercialized your patented invention. The second, that the potential infringement product that falls under your patent scope, in real practice it's very difficult to get such evidence when your patented technology or device is used in a factory with limited, or with no access, is
Gordon:Thanks very much. Good point. Now over to Guangzhou, Ivy.
Ivy:I definitely ... on Evgeniya's view that it is sometimes difficult to get and produce evidence. Therefore I think that this ... laid out for trade secrets should be considered by company's whose invention may not be easily copied or reverse engineered. For example, some inventions in the related high-tech field of communications, technology and electricity. That's my point of view.
Gordon:Thanks very much, Ivy. Thomas, in Munich.
Thomas: Yeah. I would like to stress again that trade secret protection is, of course, preferable for technological area is concerned, in which patent protection does not work because of exceptions from patent ability under the respected national laws. Just to give two examples from Germany. Under German law the human body, it's formation and development and the sequence of ... of a gene as well as processes for cloning human beings, it would be excluded from patentability. Another example is business methods which are also not patentable in Germany. So apart from other protective rights, to which I think we will come later, when you want to keep a business method confidential treating them as a trade secret is probably the only option.
Gordon:Thanks very much. And, finally, Huw.
Huw:Well I think my colleagues have made the case very well for trade secrets and that's particularly so in the instances where patentability is troublesome. The issues highlighted by Thomas apply very much to the UK and other European countries as well. But I still would say don't underestimate the value of a pending application and trade secrets need to be part of your arsenal but not the complete arsenal. One of the things that has been touched on is about the unpredictability of patent protection and also we always hear stories about the inconsistent enforcement of patents in different jurisdictions. On that, for sure, there are inconsistencies. But aside from areas such as business methods and software, these stem more from the differences in the quality and process of local judicial systems, but these differences are going to apply equally to trade secret enforcement. Albeit perhaps in different ways. So don't think trade secrets are going to save you from that. The other thing I would say that for patents, the basic law across the globe has benefitted more than any other IP rights, from international alignment through treaties such as the Paris Convention, the PCT and the European Patent Convention. There has of course been efforts to bring up the standard of trade secret protection. In the US we've seen the US Defend Trade Secrets Act and in Europe we've seen the Trade Secrets Directive. But these don't go to the detail and harmonization of the various patent conventions.
Gordon:Thanks very much, Huw. So, coming out of that we did pick up one thing, which is that not every idea is capable of being patented. There are, of course, some specific exceptions to the scope of potential patents, and on top of that, there are regional variations and approach to some types of technology, particularly in the tech sect. It's pretty much common ground around the world that mathematical algorithms, esthetic creations, computer programs in their own, right business methods, schemes and rules for performing mental acts, human, plant or animal cloning, these are all incapable of being patented, along with more general categories like inventions, which are incapable of industrial application. So let's just take a moment from there to run around the world and get an idea of specific issues of patentability from each of the jurisdictions represented here today. I'm going to address each speaker in turn. We'll start in Russia. Are there any specific exceptions to patentability in your country, and if not or in any event, what is the approach in each of your jurisdictions to software and AI patents? Evgeniya.
Evgeniya: Thanks, Gordon. As I said there are some obvious exclusions to patentability like computer programs and mathematical algorithms, as such. ... consider computer related inventions. They are patentable now in Russia only if they're implemented by technical means or technical features, so the technical problem, and provide effect of the technical nature, it's very important now.
Gordon:Thank you. Ivy. Curious to know your position in China on this.
Ivy:Yes. Just give you a glimpse of it. We share the point of view here in China actually. In China both the software and the AI are patentable and as for the software, the computer programming, itself, can only be protected by the Copyright Act. Either by writing, in a reasonable way, the invention and creation by operating this programming, can be carried out in specific technical scheme. Then this software could be protected by patent. According to China's patent law the followings are not patentable, for example, scientific discovery, ... methods of intellectual activities by diagnosis and treatment methods of illnesses expected. Actually that's not a very different from other parts in the world.
Gordon:Thanks, Ivy. Michael, what's the position in Canada?
Michael:Well, just from a high level in Canada, the main areas of excluded subject matter are scientific principals and abstract theorems, methods of medical treatment and higher life forms. Now, looking specifically at computer related inventions, which would encompass artificial intelligence inventions and software inventions, these are patentable provided that if we're dealing with, for example, the case of a method, the underlying method must be patentable. So for the underlying method to be statutorily patentable it must be a solution to a practical problem and be within a field of technology. Otherwise, if it's a non-patentable method, you can't make it patentable just by adding a computer or other hardware to a patent claim.
Gordon:Thanks very much, indeed, thank you. Thomas, Munich?
Thomas: I just would like to highlight one aspect for Germany. According to the case law of the German Federal Supreme Court, a computer implemented invention is patentable, I should say it's only patentable, if the teaching link of the invention comprises instructions for the solution of a specific technical problem by technical means. This is important, by technical means. That's what you need. Instead, a patent will not be granted for a program without a technical context. That's quite briefly.
Gordon:So there are considerable familiarity across the world on these things. I'm not expecting anything materially different from Huw, given the proximity of the UK and Germany, legally. Huw.
Huw:Well, you've probably guess, I'm just going to say I agree with Thomas. I think that patent has covered pretty much everything of importance. It's not going to be a surprise that I sort of follow what Thomas says because, of course, the UK remains a signatory to the European Patent Convention, like Germany and like other European States as well.
Gordon:Thanks very much, Huw. Now, noticing that we're just over halfway through, I should have drawn your attention though I think some people have obviously already noticed it, to the Q&A button at the bottom. If you want to pose a question, we'll obviously try to get to questions, we'll try to hopefully finish in time to do that. If you want to plant a question then click on the Q&A button on the bottom and pop a question on. We've got seven so far which we will come back to later. I'd like to deal with questions at the end, really, so that we can get through as much of the material as possible. So there are some areas where patents are simply not available or at least difficult to obtain and consequently problematic in force. Then maybe the next best option will be to use trade secret law, if possible, but are there any obvious pitfalls in that approach? Of course in an ideal world the question of keeping things secret would be straightforward and protective barriers would all work. But this is not an ideal world. I think we know that better than ever right now and things leak. Even at the highest levels of apparent security. So, kicking off with Huw, how big a problem is cyber security and the risk of leaks to the ability to use trade secrets to protect invention? Are there any solutions at hand? Do you any of the other countries apply different standards? For example, Canada, which has no specific trade secret law, so we'll hear from Michael on that a little later on. But, Huw, do you want to kick off on this point?
Huw:Thanks, Gordon. There's quite a lot in that question and so I'll try and unpack that and perhaps answer in a different order to what it was put. But first I'd like to start by giving some comments around the risk of leaks, and solutions to prevent leaks, from both the legal and practical position. I will then finish by reference to your more general question as to the problem of cyber security. So under leaks. The concern I have here is the plain vulnerability of trade secrets. Often information is digitalized and readily transferable. Plus for the increasing role of long supply chains and joint ventures, secrets have to shared, for businesses purposes. No matter how good trade secret protection, is from a legal standpoint, resorting to trade secret enforcement is often a little bit like the old saying of closing the barn door after the horse has bolted. Now of course measures can be put in place to increase security. These measures can be physical as well electronic. I've seen scanners in operation at plant premises to prevent visitors bringing in electronic devices and, obviously, to prevent visitors leaving with electronic devices. There's often monitoring of employees as well. So definitely there are solutions that can be used to increase the security of trade secrets, and very often this is about raising awareness amongst key individuals and partners, by identifying a trade secret and putting the limitations on who is in the know and tracking the trade secret. Now trade secret legislation helps determine perhaps the effective solutions to take steps against the known thieves of trade secrets. In the UK we've always had strong protection for trade secrets, via breach of competence and contractual remedies, combined at the legal system that can move quickly to make seizures and searches. But this hasn't always been the same story across the whole of Europe. The reason the Trade Secret Directive is some way forward bringing up the standard of trade secret protection across Europe. Indeed, it gives us hope for the first time an actual definition of a trade secret. It also provides, of course, a Member State should be able to maintain the confidentiality of a trade secret which it's actually be enforced. This of course sounds obvious, but while in the UK we have a long history of being able to handle the confidentiality of the subject matter in dispute, that has not always been the case across all EU Member States. Believe it or not, in some jurisdictions, to enforce that trade secret one would actually have to plead in it in a non-confidential document. So if there hadn't already been a divulge of a trade secret there will be by the time you get to the litigation. Now, on that, I'm going to let Thomas comment a bit more on that because I believe Germany was one of those jurisdictions. Back to your point of other solutions, one should not focus just on trade secret legislation. Often a trade secret theft is also a copyright infringement. For example, downloading the information on to a memory stick without permission. It may even be theft of physical property. Who owned that memory stick? Or those papers that were stolen which contained the information on them? Plus accessing the computer for an unauthorized purpose is in many countries a criminal act. So do look to other rights that you may have. So far I've been referring more to risk and perpetrators that are perhaps are more easily identifiable. But to answer your question as to how big an issue is the broader issue of cyber security, the answer, simply, it's a massive issue. The problem is our businesses are constantly under attack from third parties seeking to access our computer networks. Very often with the sole intent of stealing secrets. It is difficult to see how making trade secret protection law more stringent can help here against these unknown perpetrators so often abroad. Indeed much of the focus of the legislator has often been upon the duties owned by businesses who hold personal data so as to make their systems more secure. Perhaps of more use here is, we've seen various jurisdictions enact laws in making hacking computers criminal acts, wherever those computers may be. In the UK, for example as I mentioned, we have the Computer Misuse Act, and there's similar legislation elsewhere. But the problem comes from the very fact that it can be very difficult to identify and prove who the hacker is. In addition to that, many cyber attacks stem from rogue States or countries with inadequate criminal protection.
Gordon:Thanks, Huw. That's a very comprehensive answer and there's a lot in that. What I want to do is take that and just top that up a little bit. One of the questions you raised there was the existence of criminal sanctions within individuals countries for the act of computer hacking. Now, I suspect there may be a world of difference between the existence of a law and it's uniform enforceability, however, let's first of all pop over to Moscow and Evgeniya the question of what the legal position in Russia is with regard to individual hackers.
Evgeniya: Actually it's not my area of practice but as far as I know, cyber security, the Russian law provides for criminal liability ... says to computers and private data, and we can say that the law is less or more successful applied to the cyber crimes, especially in the theatre of Russia. But as to the cases when cyber attacks stem from Russia, in relation to companies of positions overseas, as far as I know there are some international acts that also imply criminal liability to cyber criminals, hackers, in most cases but are ... as far as I know. However, in practice this issue also go into the political playing and it's not so easy to get right answer here.
Gordon:No. I think that's probably the answer we fully expected. Similarly, Ivy, what's the position in China on this?
Ivy:Yes. I want to come back a little about a trade secret thing. So I am going to race to the point. The first one is that in China the new Anti and Fair Competition law was adopted in April 2019, and it specifies that the electronic intrusion is one of the means to infringe upon trade secrets, which was not mentioned before. The new law provides the clear legal basis for claimants to exercise their rights. The second point is about the cyber security issue we talk about. It is possible to bring in civil claim, by the administrative action, as well as criminal sanctions to the electronic intrusion in Chin, if the intrusion has links to China. I'll give you an example. For example, if the hacker, or server, is in China or the infringement occurred in China, then China would have jurisdiction to pick up this issue. While, in practice we usually start from filing it to the Public Security Bureau, PSB. Since the PSB has the power and technology to specifically locate the hacker, the aforementioned approach that's clearly stipulated in the cyber security law as well as the civil law, administrative law and criminal law of China.
Gordon:Thanks very much, Ivy. That's really helpful. Yeah, interesting as well. I found this to be a constant theme with China, that they have laws that you simply would not expect, but are actually very useful and very enforceable within China. Thomas, any comments from you on the position in Munich?
Thomas: Yes, to start with I would like to refer to Huw who said that there are jurisdictions where it might be an issue to keep the subject matter of the lawsuit confidential. In this respect, the new German law in the protection of trade secrets is a great step forward. According to this law, in a trade secret litigation, the court can declare that information that is the subject matter of the proceedings is confidential. The consequences that all parties involved must keep this information secret and may not use or disclose it outside the legal proceedings, and at the same time the court can restrict access to documents and even the access to all proceedings to a narrow sort of persons. This new law, which has implemented the EU Trade Secret Directive into German law, came into force in April last year. It requires that the trade secret owner has taken reasonable steps to protect the respective confidential information. If he haven't done so the information does not qualify as trade secret which has the legal consequence that it's owner is not entitled to claims against the wire nature. This of course puts a considerable burden on the owner of a trade secret and requires that he makes sure that appropriate and serious confidentiality clauses are included in, for example, agreements on joint ventures and other agreements like agreements on surety relevance.
Gordon:Thanks very much, Thomas. If anything that takes us right back to the beginning, doesn't it? And the sort of precautions you need to make to secure confidentiality, and your saying that the German law there means that actually, you have to do have done that in order to gain any credibility as the owner of a trade secret. Finally, on this question, over to Michael, in Canada. I said that Canada was lacking law in this area. Perhaps you'd like to prove me wrong.
Michael:Well, no, you're right, Gordon. A challenge with Canada is the lack of a trade secret statute. So this means enforcement needs to be done in Provincial courts, which are general to the litigation courts, and they tend to move more slowly. They're injunctions are not national in scope. This is contrast to the more specialized Federal Court of Canada, which hears the vast majority of patent, trademark and copyright cases. So what this means is it can lead to an undesirable ... of cases. Using an example that Huw alluded to, a plaintiff may have a copyright infringement claim for copying of source code, in additional to a trade secret infringement claim. That person will be on the horns of a dilemma of having to choose between two different actions in two different courts or one slower streamlined action in a Provincial court. The same situation might occur where a plaintiff has a patent infringement claim related to a patented product developed using a fabrication process for the subject of trade secret protection. So, while we can no doubt enforce any claims of trade secret infringement in Canada, it would be nice to have a national trade secret statute that allowed for enforcement in the Federal court, which is the court that regularly deals with IP matters in Canada.
Gordon:Thanks very much, Michael, that's interesting and I've no doubt that will be under consideration at some point. So, this is my favourite bit, actually, now. Not every idea is capable of being patented. We've shown that. Some of those which are not capable of being patented might be equally problematic from the point of being protectable secrets. Either due to reverse engineering or cyber leakage comprising the secrecy. So that does mean that nothing can be done in those cases? Is that just bad luck? This is the point where the panelists have to do a bit of thinking so we'll get us kicked off with Thomas. If you can't get a patent, and you can't keep it secret, what do you do to try to gain some protection? Or at least give yourself a head start in the market for your smart idea. Thomas.
Thomas: Yeah. That's an interesting issue, indeed. If neither works and you cannot gain patent protection, nor keep the invention secret, there are still some options. First of all you might still think of finding a patent application, as it may be that just an existence of an application deters competition for long enough to achieve a market advantage, even if the patent ultimately is not granted. Furthermore, you could think about other protection rights, of course. Copyright law might possibly offer protection for the subject of your invention. In this context it is important to keep in mind that you should make sure that you have agreements in place, according to which you are entitled to use, and assert the copyright if you are not the one who created it. Last, but not least, a particular option is which provided by German law, you might go for a driven utility model which offers a 6 month grace period, which might help if patent protection is no longer considered because the invention has become public. The German utility model is, as you know, ... and it is quite cheap and, this is something which is really important, it offers very nice strategic options when it comes to enforcing the utility model.
Gordon:Thanks very much, Thomas. That's interesting and we may hear about utility models in another context later. Michael.
Michael:I guess I would say there's still potentially a benefit to seeking patent protection even if the battle, at first, seems like it's an uphill one. This is because it's really important to keep in mind what might not be patentable, or might be unlikely to succeed through the patent prosecution process, one day it could be patentable in a year or two or three down the road where there may be a change in jurisprudence.
Gordon:Okay. Thanks very much. I see both speakers doing their best to try and avoid the question, in some respects, but giving us a fair answer anyway with something substantial. Now, Evgeniya, tell me the position in Russia and what you're idea would be maybe to deal with this.
Evgeniya: As Thomas has mentioned, we would recommend to assess if your idea can be protected by copyright. For example, in Russia, a computer programs can be protected by copyright and you may register your computer program, and the first step prefer a patent. It is essential that upon registration, on the general information is available about your computer program while the court is secured, is undisclosed. At the second step you might apply for a patent for a computer implemented invention. You may refer to your registration of your computer program and as a benefit. It will help your patentability issues. Such as like an industrial applicability that may arise in the absence of such registration of computer programs.
Gordon:So registering the computer program software as copyright may be a stepping stone to patentability. Is that right?
Gordon:That's interesting. Ivy. What's the position in China here?
Ivy:It seems like quite smart to protect the intellectual property rights by copyright law. We also have an interesting story to share here in China. As I mentioned before that in the case of Jaguar Land Rover versus Jiangling, the China company, it was dramatic that both parties invalidated their counterpart's ... patent during the litigations. Which meant that both lost their legal basis to enforce the design. However, the court affirmed that the influential design of the product of JLR, the car, should be protected under Anti-unfair Competition Law, and therefore ordered that China's company, Jiangling, to immediately stop all acts of unfair competition, as well as awarded damages totaling 1.5 million RMB for compensation. So, we can then infer that the Anti-unfair Competition Law can be applied here, as the back up or blanket protection where other intellectual property rights have fallen short.
Gordon:Thanks very much, Ivy. So this is interesting. We're getting a theme here that sort of what we might almost consider to be junior rights. We've got copyright, we've got unfair competition, we've got utility models and all coming up as alternative options and methods of protection. Huw, I think, is going to take us back to basics again, Huw.
Huw:I think they're all fantastic ideas from the perspective of IP rights protecting the idea itself. But very often it is the brand which is the most valuable rights of all and brand and trademarks can potentially last forever. Often it is just the brand which enables a particular pricing to a market share. But I'd also say don't just think about your IP rights. Obviously think carefully about building that brand but also think how you get that all important first move advantage. For this it can be very important for a new venture to have it's financing in place, it's supply channels in place, sort out any regulatory issues it may have and have this all ready and done so that there's no issues at the point of which it launches. So it can hit the market in a big way and in the most effective way possible. So getting that first move advantage, or indeed taking the place of the first mover who has failed to organize itself properly, is really just down to IP rights. It will always be a combination of various factors. As you may expect I would say so, coming of course from an international full service law firm, this needs the support of business minded lawyers from a variety of key practice areas. Now, if your first onto the market, and as the business disrupter, you should not underestimate the attacks you will get from the traditional players in the market. Having a multi-disciplined team around you will be key to success. I was just going to give just one example around this. So there is a well known online estate agency which upset the status quo by offering a new fixed price fee for listing your property. You didn't even have to pay this fee up front. As it happens sellers and buyers absolutely loved this platform. By choosing the right brand, and by being organized and well financed, it hit the market and quickly became one of the favourite platforms, not just for online estate agency but also for the whole estate agency market itself. Or real estate, as I think Michael you might call it in Canada. Anyway. Whatever. There was extensive advertising around this and then perhaps, inevitably, came the complaints to advertising standards, issues around regulatory affairs and so forth. All this put the business under intense scrutiny. Of course, the interesting thing was whilst the complaints were from the perspective of the consumer, the complaints did not actually come from the consumers themselves. So being well advised and well placed to actually react is all important. Remember, your competitors are going to use every tool they can to try and unsettle your position, they're not just going to look to IP rights.
Gordon:Thanks very much, Huw. Now, we've touched on variations which can arise around the world in terms of protection patentability and enforcement. We will be returning to these items again later in the context of the other webinars further down the series. So watch this space for that. I'm going to let the panelists off what was going to be my last question and what we will do instead is actually take a few of the questions from the audience here. What I was going to ask them just to give like a single tip for inventor country. What we'll do is we'll distribute those answers after the event because we were going to send some follow up material to those of you who have been kind enough to participate today, anyway, but we'll deal with those issues there. Let me just have a little look at some of the questions to see if we can ... one or two that we can deal with in a reasonable time scale today. So, I saw one earlier on. I think some of these questions were asked quite earlier and they have actually been covered elsewhere. There is a general question that seems to come up and it's on the question of patenting as against reliance on copyright. The software. Would any of you like to just sort of spin roll the dice here and say which you think is probably better for software protection? Any takers. Michael.
Michael:I'll take a stab at that. I think we're talking big picture here but software, when you think of the scope of protection of IP rights, software can be protected mainly by copyright, trade secrets and patents, but more of a high level. The copyright really deals with the expression of the code so the literal copying of the code. Copyright would be useful when someone walks out the door with a copy of the code and you've got an actual, you know, catch someone red handed with a copy of the code, and you can enforce your copyright there. You can also enforce your trade secrets right there. Patents though, can also be useful for software where maybe a competitor comes out with a competing product that is trying to mimic your product, but they hadn't actually copied your code. You can't make a copyright infringement claim but if the functionality was patented, then you can still make a patent infringement claim.
Gordon:Thanks very much, Michael. That's interesting. I'm going to take one of the questions myself, actually, because I raised the point. Someone said are there any additional precautions we can take when working with universities, beyond the signed NDA? And, yes, there are. There are lots of very practical things you can do. You would talk about locked rooms and locked cupboards, making sure that paperwork, or samples or partially completed experiments are not available. Universities are places where people come in and out of rooms quite freely. Different tutorials, seminars, lectures take place in different places. You've to make sure there are some clear protocols for material which universities are working for, on your behalf, to be extremely limited in who has them and where they're kept and to ensure that they kept under lock and key. Of course we hear that even if there is a leak later it may be, in some countries, we've heard about this in relation to Germany and also in relation to China, that unfair competition law may be a player. In order to use that you're going to have to show that you've made every effort to keep things confidential. So stipulate very clearly with universities how that should be done.
Let's have a look. What else have we got here? Time is slipping but there are a lot of questions. If we've got any ... questions we'll try and wrap up some of the answers. Somebody said here that many investors are unwilling to sign NDA's. What happens to be managed if you're reliant on trade secrets? Huw, that looks like one tailormade for you.
Huw:Haha. Well, what I think the problem with NDA's is, and I guess it'll say if someone comes up with a bright idea and they want to share it with someone else who they think may invest, and that could be from say an already industry player, the problem is that investor may be already working on something similarly already. So that may be behind the reluctance towards signing the NDA. I guess that is often where the patent application, the fact that there's a patent application, can sort of save you as the person with the new idea. Because if you have got the patent application you could share that. Now of course you may end up losing. It would not have yet been published you would have lost the confidentiality around that but it will give you some kind of protection. But course there's always going to be that chicken and egg. If you've got a great idea and you want to get someone to invest in it. You need to somehow share it. If that person isn't going to sign the NDA it does, of course, place you in a nervous position. You need to just look at things around that. Indeed, I would add anyway, just getting the signed NDA isn't always enough anyway because can you trust that investor as well, is the question.
Gordon:Thanks. Thanks, Huw. That's great. Somebody has asked whether or not you should keep a register of your trade secrets in the same way that you ordered other IP rights that you own. Obviously the answer to that is, yes. If you've got a very specific item that you believe is secret, and keeping it secret is crucial, yes you should be able to identify that and, yes, you can then treat it accordingly within your organization. Another question here. Somebody has asked is Brexit likely to change the position in the UK? Will we see a divergence between the UK and the EU? I'm going to let Thomas answer that one, actually.
Thomas: I am not in charge of Brexit, right?
Thomas: The question should clearly go to Huw. I don't think that this will change much. Let me think. No I don't think so. You have already implemented the EU Trade Secret Directive in the UK. The level of trade secret protection in the UK, if my understanding is correct, was even higher than it was in Germany before we implemented the Directive into German law. So, yeah, I don't think there will be a big ...
Gordon:I think that's right, Thomas, and I think also that there is no current move for the UK to leave the European Patent Convention, so enforceability will be roughly the same. I'm going to have to draw a line there, which is a shame, we're getting some great questions. I think what we'll do is we'll go through those questions and try and see if we can pull these together later. In some of the material we send out to you because I don't want to keep you all hanging on for too long here. We've already gone over time a little bit. But we will send out some additional material which will we'll try and answer some of these questions. Also, some of the questions are about patentability and I would say that is going to be coming down the tracks in later webinars in this series. We will have one which is dedicated to the field of tech and AI and we'll be looking at patentability of tech generally but also, very specifically, the question of the patentability of the AI created inventions and what have you. Which is a subject key issue. So that's all coming. Something for you to look forward to in the future.
I just want to thank everyone who has attended today. I hope this has whetted your appetite for the remainder of the series which will be rolled out over the coming weeks. For me, I think one of the big takeaway messages from today, is that this is all very commercial stuff. There has to be a good reason to seek a patent. It must never be a vanity project. Oh, I'm so excited to have my name as inventor on a patent. A patent is a business asset. It must make sense from a business perspective. It's not cheap so it should be assessed like any other investment. What are the costs of obtaining a patent? What are the risks of not seeking protection? What are the potential benefits in terms of the business performance and finances? What are the alternative options and how do they meet the other criteria of cost and benefit? So the decision, whether or not to patent, is not just about whether an invention is actually patentable. There's a lot more to it than that.
So there's an overview. For the next session we are going to be going into considerably more detail about the protection of trade secrets around the world. Some of the steps which can be taken to ... secrets and keep them genuinely confidential. So if you're question was on that area you know what to do. Look out for the promos for the next webinar and sign up to that one.
Thanks very much, indeed, to everybody for joining us today. Thank you very much, indeed, to my panel as well for the hard work you put into this and for your openness and the views you've expressed today, which have been extremely valuable. We will close there and look forward to seeing you again soon. Thanks very much, indeed.