Quantifying maximum benefits of law reforms: questions about Hargreaves

Veteran copyright and information science expert Professor Charles Oppenheim has keen keeping an eagle eye on the predicted benefits of the promised/threatened UK digital copyright reforms outlined in the hastily-conceived and even more hastily-composed Digital Opportunity (the Hargreaves Review, which you can read all about on its very own web page here). Apparently questions have been asked in the House of Commons:

""John Whittingdale (Maldon, Conservative [and Chairman of the All Party Parliamentary Intellectual Property Group]) asked Secretary of State Vince Cable MP why the estimates of maximum financial benefits from the implementation of the Hargreaves Report have been cut, following on from the news that the revaluation had brought the gains down from £27 billion to to £790 million through the Modernising Copyright plan.

Jo Swinson (East Dunbartonshire, Liberal Democrat), responding, stated that the reason for the reduction in net gains to the British economy is due to the fact that Modernising Copyright does not contain the creation of the single EU patent or the Digital Copyright Exchange (DCE)".

Comments Charles:

"REALLY? Are the single European patent and the DCE going to be that valuable to the UK economy (and over what period?) I'm amazed!".

Comments this blogger (who shares Charles's amazement), what does the new patent package have to do with the valuation of the benefits of a new digital copyright regimes anyway?  He also thinks that the real reason why the DCE will not confer vast value on the British economy is that most digital products are ripe for being exploited globally via the internet, while the DCE can hardly confer benefits that extend beyond the jurisdiction.

If you're small and do other people's R&D ...

The UK's Intellectual Property Office has just published a note on the relaxation of R & D tax rules in the current issue of its IP Insight e-magazine. The current rules for claiming additional tax relief on research and development (R&D) are due to be relaxed. Small and medium-sized enterprises (SMEs) carrying out R&D will be able to claim the additional relief on their activities, even if they don’t own the intellectual property that will result from their R&D.

The new regime will apply to any expenditure on R&D which falls within an accounting period ending on or after 9 December 2009. This shift should help subcontractors carrying out research for larger companies. At present, to be eligible for the additional tax relief on R&D, SMEs must own any intellectual property created by their R&D activities.

The SME Scheme is open to organisations with fewer than 500 employees, an annual turnover of less than 100 million euros and a balance sheet not exceeding 86 million euros, so long as they have an annual spend on R&D of at least a token £10,000. There may be more to come, since public consultations on IP taxation are promised for later this year.

You can find further detail on R&D relief for Corporation Tax on the HM Revenue & Custom website here.

Madonna seeks giant privacy payout in UK litigation

The Guardian has reported that pop icon Madonna is claiming more than £5 million in damages from the Mail on Sunday newspaper, which admitted a breach of privacy and copyright infringement following its publication of private photographs of her wedding to film director Guy Ritchie. If Madonna succeeds, she will have created a new UK record for a pay-out in a privacy case (the current record is the £60,000 recently awarded to Formula One boss Max Mosle after revelations concerning his sex life were published in the News of the World).

The singer had accused the Mail on Sunday of breaching her privacy and copyright by publishing pictures of her wedding in the Scottish Highlands, eight years after the event, following news that her marriage to Ritchie had broken down. The wedding was said to have been "wholly private" though the photos were said to have been surreptitiously copied by an interior designer at Madonna's home in Beverly Hills.  The paper is said to have paid just £5,000 for them. A decision from Mr Justice Eady is expected in the New Year.

[Thanks, Birgit Clark, for supplying this information].

Damages for observing patent injunction

From the 3rd edition of LECG's UK Newsletter comes this little insight into the deployment of a financial consultancy in intellectual property litigation, in Les Laboratoires Servier and another v Apotex Inc and others [2008] EWHC 2347 (Ch), heard on 9 October by Mr Justice Norris and briefly summarised here and here:

"... Our UK case highlights include being instructed by Taylor Wessing to calculate Apotex UK Limited’s damages as a result of an injunction they had observed. For a period of 11 months, Apotex was injuncted from selling a particular generic drug, because of claims of patent infringement brought against it by Servier, which manufactured the branded version of the drug. Apotex had always contended that the patent was invalid, and when this assertion was subsequently validated by the Court, Servier was liable for the damages suffered by Apotex as a result of the injunction.

Apotex won a substantial damages figure of £17.5M. ... The amount of interest awarded was also a matter of contention, and in a separate hearing, Norris J awarded a further £2.1M in interest. In respect of the interest calculation, Norris J deemed the Apotex parties ‘substantially right’.

Of particular interest in this case were the market dynamics, which were specific to the industry in question. The interaction between ‘branded’ drugs, ‘generic’ drugs and ‘authorised generic’ drugs (sold as generics under authorisation of the original patent holder) played a part in the formation of the ‘but-for’ scenarios. The market dynamics were important to every aspect of the case, but in particular (i) the role of potential market entrants, in the (hypothetical) absence of the injunction and (ii) the extent to which the injunction affected Apotex in perpetuity".

This looks like a great victory for LECG, but it should not be forgotten that the calculation of damages for failure to be allowed into a market still remains a largely conjectural exercise. As the judge said at para. 60:

"Recognising the imprecision inherent in the exercise but the precision of some of the assumptions used I have then stood back and compared that sum with the £74 million Servier earned during the period of the injunction to which it was found ultimately not entitled, to the £11 million which it paid to AG2 to keep it out of the market, and to the $20 million paid to G4; and I have asked myself whether in the round this sum overcompensates Apotex for the loss that it has suffered, reminding myself that the jurisdiction is compensatory not punitive. The range of figures presented for my consideration went from £400,000 (Servier) to £27 million (Apotex). I am satisfied that my figure is broadly right, though I would propose to round it down to £17.5 million to underline the fact that one can only do broad justice where there are so many significant variables. £17.5 million is accordingly the figure which I award as compensation on the enquiry".