INTERNATIONAL CASES

• INSURANCE LAW

United States Court of Appeals,Fourth Circuit.

Industrial Enterprises Incorporated Vs. Penn America Insurance Company (Decided on 18.03.2011)

Insurance coverage - Determination of liability - Whether a standard comprehensive general liability insurance policy ("CGL policy"), which indemnifies the insured for "all sums which the insured shall become legally obligated to pay as damages because of property damage," covers the insured's liability under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") for costs to remediate the presence of hazardous substances on the insured's land - Held, the standard CGL policy in this case does not provide coverage for CERCLA liability - Penn America had no duty to provide a defense or to pay the costs of a defense with respect to such liability - Thus, reversed and remanded

Held,The EPA was not attempting to vindicate the government's rights as a property owner but rather to fulfill the government's duty to regulate and remediate hazardous substances on private property. CERCLA authorises the EPA to protect the environment, which includes any "surface water, ground water, drinking water supply, land surface or subsurface strata, or ambient air within the United States." 42 U.S.C. Section 9601(8)(B). Accordingly the Court held that the government's demand for pollution cleanup was not liability because of damage to the government's property. Because the EPA was exercising its jurisdiction over surface waters "within the United States" to protect "the public health, welfare, and the environment," it was functioning as regulator, not a property owner.

The settlement agreement reached by the Coalition of property owners and the EPA in this case confirms that the EPA asserted regulatory liability for the cleanup of hazardous substances. Thus, the entire agreement was framed in terms of remediating hazardous substances on the property of Industrial Enterprises and neighboring properties, and nowhere in the agreement do the parties discuss or address compensation for damages to property of the United States.

Moreover while CERCLA itself allows parties to insure against CERCLA liability, 42 U.S.C. Section 9607(e)(1) there is no evidence to indicate that Penn America's CGL policy was intended to protect against that risk. The standard CGL policy language, which preceded the enactment of CERCLA in 1980, was formulated to address an insured's tort liability for property damage caused to third parties. The scope of that risk was well understood, and there is no evidence to indicate that the broad, indeterminate risks of CERCLA liability somehow became automatically includable in the term "property damage" .

The Court held that that Penn America's standard CGL policy, which provides indemnity to Industrial Enterprises for sums that it becomes legally obligated to pay as damages because of property damage, does not provide indemnity to Industrial Enterprises for regulatory liability (including remediation costs) under CERCLA. And because the standard CGL policy in this case does not provide coverage for CERCLA liability, Penn America had no duty to provide a defense or to pay the costs of a defense with respect to such liability.

Therefore the Court reversed and remanded with instructions to enter judgment in favor of Penn America.

• TAX LAWS

U.S. Fourth Circuit

State of Maryland Vs. Ciotti (Decided on 08.03.2011)

Tax liabilities - Discharged thereto - 11 U.S.C. Section 523(a)(1)(B) - Bankruptcy Court concluded that the debtor's state income tax liability for certain years preceding her Chapter 7 filing was discharged - District Court reversed, concluding that discharge was prohibited by Code Section 523(a)(1)(B) - Hence present petition - Whether the District Court erred in ruling that tax debt was not discharged - Held,report required by Section 13 - 409 was neither filed nor given as required by the Maryland statute, even if some or all of the information required in the report was given to the Maryland Comptroller by the IRS - Hence decision of lower Court affirmed

Held, In affirming the District Court's conclusion that the state tax debt was non dischargeable, the Court of appeals noted that, prior to the enactment of Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) near judicial unanimity existed with respect to the effect of section 523(a)(1)(B) on the "failure to file reports" . The overriding view during that pre - BAPCPA period was that section 523(a)(1)(B) did not save such resultant state tax obligations from discharge. Noting the intervening BAPCPA statutory amendment, however, the Court of Appeals concluded that "it is apparent from the changes the same policy reasons that justify precluding the discharge of tax debt when the debtor failed to file a return also justify precluding the discharge of the tax debt when the debtor failed to file or give a required report or notice corresponding to that debt." The fact that Section 13-409 also requires that the taxpayer provide information additional to that which would be found in a return, namely an explanation of any disagreement the taxpayer has with the federal adjustment, hardly supports the contention that the report is not an "equivalent report" for purposes of Section 523(a)(1)(B). In the end, the Court concluded that the report required by Section 13-409 is quite similar to a return in several respects and is, indeed, the type of report to which Congress intended Section 523(a)(1)(B) would apply. Hence District Court's decision is affirmed.

• INTELLECTUAL PROPERTY LAWS

United States Court of Appeals,Ninth Circuit.

Network Automation Inc Vs. Advanced Systems Concepts Inc. (Decided on 08.03.2011)

Trademark - Infringement claim - Whether the use of another's trademark as a search engine keyword to trigger one's own product advertisement violates the Lanham Act-Held, Applying the most relevant factors to the analysis of the likelihood of confusion, the Court reversed the decision of the District Court.

Held, the Court adhered to two long stated principles: the Sleekcraft factors (1) are non-exhaustive, and (2) should be applied flexibly, particularly in the context of Internet commerce. Finally, because the sine qua non of trademark infringement is consumer confusion, when the Court examines the initial interest confusion, the owner of the mark must demonstrate likely confusion, not mere diversion.

The most relevant factors to the analysis of the likelihood of confusion are: (1) the strength of the mark; (2) the evidence of actual confusion; (3) the type of goods and degree of care likely to be exercised by the purchaser; and (4) the labeling and appearance of the advertisements and the surrounding context on the screen displaying the results page. The District Court did not weigh the Sleekcraft factors flexibly to match the specific facts of this case. It relied on the Internet "troika," which is highly illuminating in the context of domain names, but which fails to discern whether there is a likelihood of confusion in a keywords case. Because the linchpin of trademark infringement is consumer confusion, the district court abused its discretion in issuing the injunction. Therefore, the Court reversed the District Court's order granting Systems' motion for a preliminary injunction, and remanded for further proceedings consistent with this opinion.

• FEDERAL COURT OF AUSTRALIA

Albany Molecular Research Inc Vs. Alphapharm Pty Ltd (Decided on 18.02.2011)

Patents - Whether patent is invalid for want of novelty - Section 7(1) of the Patents Act -Held, In the view of the law as expounded in Lundbeck and Apotex, the disclosure of a compound by exact naming in the prior art is sufficient, of itself, to constitute anticipation -On this basis, claims 1 and 6 to 10 of The Patent were held to lack novelty

Held, AMR accepted that Carr 129 and Carr 146 disclose the claimed piperidine derivatives but its position was however that Carr 129 and Carr 146 were not novelty defeating because both documents failed to provide information to a skilled person by which the compounds could practically and effectively be brought into existence. Essentially, AMR sought to rely on the proposition that mere disclosure of a compound by name in a prior art document would not amount to anticipation . The only exception to the requirement for the disclosure of effective means is where the skilled worker would, from the information about the compound given in the prior art, readily appreciate, as a matter of routine, how to go about preparing it. If that condition is satisfied, or if the effective means of preparation are disclosed as such, it does not matter that the compound may never have been prepared in fact. However the Court took the law expounded in Lundbeck and Apotex, the disclosure of a compound by exact naming in the prior art is sufficient, of itself, to constitute anticipation. That the disclosure of the relevant compounds in Carr 129 and Carr 146 in terms anticipated the invention in Claim1 of the patent in suit. It follows that it likewise anticipated Claims 6, 7, 8, 9 and 10. As indicated earlier in these reasons, Claim 11 is for a class of compounds made by reference to particular processes. It was no part of the Respondents' cases that the mere disclosure of those compounds in the prior art anticipated the invention so far as referred to in Claim 11. On this basis, claims 1 and 6 to 10 of The Patent were held to lack novelty .

Patents - Whether patent invalid for lack of inventive step -Held, the Court was not satisfied that the invention in suit would have been obvious to a person skilled- Invention involves an inventive step- No attempt was made by the Respondents to demonstrate that the synthetic methods incorporated into that claim would have been obvious to a person skilled in the relevant art in 1993-Claim involves an inventive step

Held, the Court was not satisfied that the invention in suit would have been obvious to a person skilled in the relevant art in the light of the common general knowledge in Australia before the priority date. It follows that the invention, so far as claimed in the product claims involves an inventive step. No attempt was made by the Respondents to demonstrate that the synthetic methods incorporated into that claim would have been obvious to a person skilled in the relevant art in 1993. It follows that this claim too involves an inventive step.

Patents - Whether patent invalid due to inadequate description of invention or lack of clarity and whether the expression "substantially pure" sufficiently clear - Section 40(2)(b) and (3) of the Patents Act -Held relevant claims defined the invention with clarity for the period subsequent to the making of the amendment-Thus Respondent's case rejected

Held, from a verbal or grammatical viewpoint, the expression "substantially pure" is not unclear. But the concern of Section 40(3) is not confined to such matters. The purpose of a claim is to define the invention (Section 40(2)(b)), and it is in that context that the requirement of clarity is to be considered. According to the Court that requirement is that a claim must clearly define the invention, so far as it relates to the matter claimed. A claim which is a model of verbal or grammatical clarity may nonetheless fail the test of this requirement if it leaves the definition of the boundaries of the invention uncertain or variable. In the view of the Court, the claims which are presently contentious did fail that test in the period before the specification was amended in 1998. The Court wondered how much of a given compound had to be constituted by the piperidine derivative before the compound itself would be regarded as "substantially pure" with respect to the derivative. Therefore the Court held that a person skilled in the art would read the passage as a whole as giving content to the term "substantially pure", and as recognising that the amended patent claimed a compound in which regioisomeric impurity was limited to a maximum of 2% of the whole. As so understood, the relevant claims defined the invention with clarity. For the period subsequent to the making of the amendment, the Court rejected the respondent' s challenges under Section 40(2)(b) and (3) of the Patents Act .

Patents - Amendment to specification - Whether amendment affected priority date -Section 114 Patent's Act;3.14(b) of the Patents Regulations 1991 - Held, the matter claimed in the complete specification was not "in substance disclosed as a result of amending the specification". Rather, that matter had been disclosed from the outset. It follows that, in relation to the presently contentious claims, there is no variation to the priority date

By Section 114, "Where a claim of a complete specification claims matter that was in substance disclosed as a result of amending the specification, the priority date of the claim must be determined under the regulations". The relevant regulation is reg. 3.14(b) of the Patents Regulations 1991 which provides that, in a case to which Section 114 of the Patents Act applies, the priority date of a particular claim is "the date of filing of the statement of proposed amendments that resulted in the disclosure" referred to in the section. On the Respondent's case, if the contentious claims were brought into conformity with the requirements of Section 40(2)(b) and (3) only by the provision which was inserted by amendment in 1998, it follows that those claims claimed matter "that was in substance disclosed as a result of amending the specification" and, therefore, that the priority date became 15 September 1998. Section 114 is concerned with what is claimed in a complete specification. The specification then claimed substantially pure piperidine derivative compounds, without further definition. Although claims in those terms lacked the clarity required by Section 40, nonetheless they had a meaning. It was sufficient for present purposes to hold that a compound of at least 98% purity would have rightly been described as "substantially pure". Thus, such compounds fell within the wording of the claims as they stood before the amendment. Using the language of Section114, therefore, the matter claimed in the complete specification was not "in substance disclosed as a result of amending the specification". Rather, that matter had been disclosed from the outset. It follows that, in relation to the presently contentious claims, there is no variation to the priority date pursuant to Section 114.

Patents - Section 40(2)(a) of the Patents Act - Whether patent invalid for lack of sufficient description and Whether patent gave the best method known to the inventor of performing the invention - Inventor assumed an appreciation of techniques, rather than describing them, does not warrant the conclusion that the specification in suit did not describe the best method  - Thus the Court rejected the Respondent's case

Held, the specification in the present case, on its face, goes further than to disclose "a wished for result". It asserts that the prior art does not permit the synthesis of the compounds of interest in substantially pure form and, therefore, that those substantially pure compounds did not previously exist. It "tells the reader the manner in which the desired object is to be achieved". Thus, the Court found no substance in this ground of objection advanced by Alphapharm and rejected the Respondent's contention.

Held,The Court found that Carr 129 did not provide an effective means of preparing fexofenadine but that does not amount to a holding that "the skill of the skilled addressee in adjusting ordinary laboratory techniques" was not available to him or her in construing or following the prior art. That the inventor assumed an appreciation of such techniques, rather than describing them, does not warrant the conclusion that the specification in suit did not describe the best method known to the inventor of performing the invention. Thus the Court rejected the Respondents' case under Section 40(2)(a) of the Patents Act.

Patents - Whether patent invalid for lack of fair basis in the claims - Section 40(3) of the Patents Act - Held, Court declined to accept that the claims were not fairly based

Held,this appeared to be a fairly conventional compound patent, in which the compound is identified with Section 40(2)(a) of the Patents Act, the known methods of preparing the compound are set out. With respect to the Respondents, the Court had difficulty appreciating how it might be said that claims for the compounds are not fairly based in a specification such as this. The compounds for which claims are made are unambiguously referred to in the specification. The Respondent's point seems to be that the devising of a means to prepare compounds of substantial purity is the only advance which the specification made over the prior art. That is, of course, a separate point, but even then it must be remembered that the actual compounds to which the claims relate are substantially pure piperidine derivatives. Therefore the Court did not accept that the claims were not fairly based on the ground proposed by the Respondents. If the claims are for a new invention, the compounds to which they relate were correspondingly dealt with in the specification.

Patents - Whether patent invalid due to false suggestion - Court had to determine whether false suggestion made to commissioner, if so, did it materially contribute to Commissioner's decision to grant patent- Section 138(3)(d) of the Patents Act -Held, present case an instance where false suggestion led to grant of patent-Thus proceedings dismissed accordingly.

Held,stressing on the letter of 20th June 1997 placed on the importance of at least 98% purity in the pharmaceutical context, the Court was in no doubt that the suggestion in that letter materially contributed to the Commissioner's decision to grant the patent in suit. The present case is an instance of one in which "it may ... be inferred that a representation in fact contributed to the decision to grant a patent, ... [when] the representation was objectively likely to contribute to such a decision and the patent was in fact granted". It follows that the ground referred to in Section 138(3)(d) of the Patents Act has been made out.

Hence, for the following reasons the Court held that the patent in suit should be revoked under Section 138(3)(b) of the Patents Act for lack of novelty. It also follows that AMR's infringement proceeding should be dismissed.

• SERVICE LAW

Supreme Court of UK

Patmalniece (FC) Vs. Secretary of State for Work and Pensions (Decided on 16.03. 2011)

Pension - Entitlement thereto - Section 1(2)(a) of the State Pension Credit Act 2002 - Whether the conditions of entitlement to State Pension Credit (SPC) are compatible with a rule of EU law which prohibits discrimination between nationals of different Member States - Held, Government's aims in introducing the "right to reside" test were consistent with the aims of Regulation 1408/72 - Hence appeal dismissed

Held,The Court considered three issues: (1) do the conditions of entitlement for SPC give rise to direct discrimination? (2) If they give rise only to indirect discrimination, is that discrimination justified? (3) Is that conclusion undermined by the favourable treatment that the Regulation gives to Irish nationals? All UK nationals would automatically satisfy the "right to reside" element of the test, whereas nationals of other Member States would not automatically do so. However, UK nationals still had to satisfy the requirement of "habitual residence". The result is that the "in Great Britain" test would be satisfied by some, but not all, UK nationals, and some, but not all, nationals of other Member States. It was more likely to be satisfied by UK nationals than nationals of other member states.

A difference in treatment which amounts to indirect discrimination can be justified only if it is based on objective considerations independent of the nationality of the persons concerned and is proportionate to a legitimate aim. The Court held that the aim was to ensure that claimants were economically or socially integrated in the UK, or elsewhere in the Common Travel Area, thereby protecting the social security system against the risk of "benefit" or "social" tourism. This justification was independent of nationality. Additionally it was mentioned that the Government's aims in introducing the "right to reside" test were consistent with the aims of Regulation 1408/72 and that it is logical that if a person does not have a right under EU law to reside in a particular state, that state should not have the responsibility under EU law for ensuring their minimum level of subsistence. The Appellant argued that, as entitlement to SPC was extended to Irish nationals, it was discriminatory not to extend it to nationals of other Member States. The court rejected that argument. The provision for Irish nationals in the conditions is protected by Article 2 of the Protocol on the Common Travel Area, which provides that the UK and Ireland "may continue to make arrangements between themselves relating to the movement of persons between their territories. Hence appeal dismissed.