Intellectual Property Law Intellectual Property issues concerning
Intellectual Property Law
Intellectual Property issues concerning Cloud Computing
Prof. Dong Jingbo
By Dr. Rembert T. Graf Kerssenbrock
Content
1.
Introduction:
The term “cloud computing” is relatively new. The term describes a method to store information, run a program or an application on a specific server, that is itself over a network, connected to many more computing hardware machines (computers, cell phones, etc.) at the same time. The network can be represented by the internet or just a “local area network”. Instead of being forced to run the program himself or store the information on his own hardware the individual user just needs the permission to access the server to receive the services everywhere he can connect to network.
1 A great definition is given by Kang: the “cloud” is a conceptual or descriptive term for describing a set of computing resources which are connected in a communications network such that from the consumer standpoint, the hardware and structural details of that network are essentially invisible.
2
This method of providing services, programs and data has become very popular especially since modern cell phones have nowadays the processing power of computers 10 years ago but can be connected to the internet everywhere in the world. Nonetheless these great opportunities come along with legal issues. One of those are possible intellectual property rights infringements.
This paper will give an overview over the difficulties determining the liabilities that might occur, taking International and Chinese Intellectual Property law into consideration.
2.
The exhaustion doctrine and cloud computing
Providing cloud computing services questions a very important principle of intellectual property law:
The exhaustion doctrine. It basically means that the patentee shall not have the right to profit from a product twice. This requires that the patented product was sold by or with the permission of the patentee.
3 The new Chinese patent law refers to this principle in Art. 69:
None of the following shall be deemed as infringement of the patent right:
(1) where, after the sale of a patented product or a product obtained directly by a patented process by the patentee or any entity or individual authorized by the patentee, any other person uses, offers to sell, sell, or imports that product;
1 Federrath, ZUM 2014, 1,Technik der Cloud (Cloud technique)
2 Kang, Intellectual Property and Legal Issues Surrounding Cloud Computing, available at: http://media.straffordpub.com/products/cloud-computing-intellectual-property-legal-issues-2011-10-
12/reference-material.pdf, access at 9 th June 2014.
3 Sheppard Mullin Richter & Hampton LLP., NLR, available at: http://www.natlawreview.com/article/patentexhaustion-doctrine-china, 9 th June 2014.
Since Cloud computing has become a popular phenomenon for example German scholars ask, whether or not the exhaustion doctrine is longer needed.
4 Because the exhaustion doctrine would refer actually to a physical good and not just information or programs that could be accessed without limits. That is why for example Prof. Zech 5 suggests to apply instead licensing models. The actual economical value would no longer lie within the possession of the good, but only use of it. The application of licenses to protect the intellectual property seems so far the only method how to prevent “law-free” areas, that contradict the actual protection of the intellectual property law. But it is also feared, that the use of licenses might increase to an extent, that will disable the free usage of the internet in the long run, by favoring patentees too much.
6
3.
Chinese Patent and Trademark law – the infringements
3.1.
Patent Law
Art. 11 of the Chinese patent law outlines the situation, at which point an infringement happens and makes the infringer liable for a fee and possible damages according to Art. 12 and the following:
After the grant of the patent right for an invention or utility model, except where otherwise provided for in this Law, no entity or individual may, without the authorization of the patentee, exploit the patent, that is, make, use, offer to sell, sell or import the patented product, or use the patented process, and use, offer to sell, sell or import the product directly obtained by the patented process, for production or business purposes.
7
The second provision of Art. 11 states basically the same about the patent design, when it is incorporated in any way.
3.2.
Trademark Law
As will be shown later, not only the patent but also Chinese Trademark law might be infringed through cloud computing services. Therefore its infringement provision is equally important:
Article 57.
A person infringes the exclusive right to use a registered trademark if he:
(1) uses a trademark that is identical or similar with a registered trademark in relation to identical goods without the consent of the owner of the registered trademark; offers for sale
4 Pech, Lizenzmodelle in der Cloud (engl: Licencemodel within the Cloud), ZUM 2014, 22.
5 One of the speakers, mentioned by Pech’s article, fn. 4.
6 s. fn.4.
7 Patent Law of The People’s Republic of China, available at: http://www.ccpitpatent.com.cn/references/Patent_law_China.htm., access at 9 th June 2014.
goods that are in infringement of the exclusive right, intentionally provides facilities to a person who infringes the exclusive right to use a registered trademark.
8
According to Art. 58 any liabilities resulting from infringing activities as described in Art. 57 would be then governed by the Anti-Unfair-Competition Law.
These provisions should be considered when infringements of Chinese Trademark or Patent law will be discussed.
3.3.
Indirect Infringements
Trademark law mentions the further possibility to infringe the intellectual property right by committing indirect infringements. Art. 57 (3) says, a person infringes the exclusive right to use a registered trademark if he: offers for sale goods that are in infringement of the exclusive right to use a registered trademark;
The first possibility means to induce, as a third party, someone else to commit the direct infringement.
Such an action could be for example selling parts to someone else, knowing those parts could only be used for a patented product, knowing he helps his business partner to infringe someone else’s patent right.
9
The other option would be the contributory infringement. (6) saying, that he who intentionally provides facilities to a person who infringes the exclusive right to use a registered trademark so as to help the person to execute an infringement on the exclusive right to use the registered trademark, is infringing the trademark. It is very similar to the induced infringement. The only difference is that the seller now knows, that the parts he sells are only useable in a way, that infringes someone else’s patent right, only this time there is a specific intent needed.
10
8 Trademark law of the The People’s Republic of China, available at: http://english.sipo.gov.cn/laws/lawsregulations/201101/t20110119_566244.html, access at 9 th June 2014.
9 Definition and example provided by http://www.legalmatch.com/law-library/article/types-of-patentinfringement.html, access at 9 th June 2014.
10 Legal Match, available at: http://www.legalmatch.com/law-library/article/types-of-patent-infringement.html, access at 9 th June 2014.
4.
License agreements as means to avoid infringements
There are two different relationships that have to be distinguished when considering the license agreements in nowadays most popular cloud computing.
4.1.
Downloading the media from the cloud provider
As already shown, one way to use cloud computing is to store information, programs, music onto it.
Then the download of these medias would have to be regarded as a copy, since the media must be saved and installed on the device (computer or cell phone). That is why a license should already be given to the Cloud provider. Only this license will then allow him to give access to the application through the “cloud-network” to the final user of the application. Otherwise the user of the application as well as the cloud-provider could be liable for both, a trade – and a patent infringement.
When the cloud computing- provider offers the media this could be considered as the “offer to sell” according to Art. 11 of the Chinese Patent law. The User on the other side could infringe the patent by just downloading the media and “using” it. Both parties would be without a proper license liable to the application provider and could be also sued as joint-tortfeasers for damages.
11
The actual liability would not only depend on the cloud service or use of the service, but also on the grade of intent. According to Art. 70 for example any negligently committed infringement will not be considered to be an infringement. The burden of proof lies with the “potential infringer”. He would have to proof, that he obtained the material through legitimate channels. Whether or not this is likely to be proven to the court’s satisfaction will depend on the case. But considering cloud computing in general providing for example a program actively will most likely be considered as a directly intended infringement since the cloud provider will have either direct contact to the application designer or not and therefore know, if he is licensed to provide the program. Whereas the final “user” of the program, either downloading, will not have specific information about the origin of the program.
Through the same action the cloud provider could commit a trademark infringement, if the application designer would also hold a registered or well known trademark with the application software. But similarly to the patent law Art. 64 stipulates, that unintentionally infringing sale of goods would result in a liability for the damages.
Depending on the grade of intent one also has to take indirect infringements into consideration. If the cloud computing- provider does not know for sure the origin, but assumes that the use of the program
11 An option that exists in English patent/tort law and might be recognized by Chinese Courts, see Thornham,
Enforcement of patents in cloud computing, available at, http://www.taylorwessing.com/download/article_patents_cloud_computing.html, access at 9 th June 2014.
after its download might infringe the trademark rights of for example the application provider, then he could be liable for his action at least for a contributory infringement.
4.2.
Running the media within the Cloud without the download
The relation between the cloud-computing provider and the final applicant/user of the media is slightly different and deserves an own consideration, when the media does not have to be downloaded.
The patent infringement would be a different one. Nowadays cloud computing systems do not always require the download of a program, but can be used directly through the continuous use of the internet connection. Then the infringement would not be anymore committed through selling the product. The user would not posses the media anymore and the Cloud computing provider would not sell the patent itself.
Now the infringement lies with “processing” the media on the computer/ cell phone within the cloud.
Art. 11 of the patent law stipulates, that in infringement is also caused by the
use the patented process, and use, offer to sell, sell or import the product directly obtained by the patented process […].
Though this process could be considered as a lease, this does change the nature of the infringement.
12
Providing such a process could represent itself an infringement as well as its use. But, as already shown above, there would be no infringement, if the cloud provider or/and user could prove, that they previously assumed to receive the access legally without any infringement of one patent or trademark right.
5.
International Intellectual property law
International intellectual property law depends highly on the lex loci-principle meaning the law of the place. This may be lex loci contractus, the law of the place of making the contract or of the act committed.
13 That is why a “patentee” (the one holding the patent) or the owner of a trademark has not only one, but considering specifically global players many “rights” for the same product.
But this principle is challenged since cloud computing involves the use of a network, mostly the internet, that is provided internationally. That is why at first the method must be considered how to find the law, that must applied to verify if an infringement (violation of the law) has happened.
12 Nägele / Jacobs, Rechtsfragen des Cloud Computing (Legal questions concerning cloud computing, ZUM 2010,
28.
13 Legal Dictionary, available at: http://legaldictionary.lawin.org/lex-loci/, access at 9 th June 2014.
Theoretically speaking it could be demanded of all the cloud computing-providers to apply for a protection in all the countries, that the services are available at.
14 Referring to internet-based services would implicate a world-wide application, that would be highly impractical.
15
A first option to find the applicable law might be the location of the server from which the program or material is provided from.
16 But that would only encourage possible “infringers” to locate their servers in those countries where the legal protection is not given.
17 Furthermore does a server not necessarily consist out of one device but might be itself a bundle of computers, that could be scattered to many locations and make an enforcement of intellectual property rights practically impossible.
That is why some scholars support the Bogsch-theory.
18 According to this theory lex loci should not be applied since in matters, where the internet is involved the economical use would be the more important behavior than the service.
But many German scholars support a more flexible procedure, referring to the “most-significantrelation” doctrine with which courts might consider each case individually, each of its details, trying to estimate, to which country the closest connection was established.
19
6.
Conclusion
Although the Chinese Patent and Trademark laws are modernized enough to give scholars and courts a tool to handle cloud computing, the rapid change of the technology in use endangers to make the existing laws obsolete and ask for a new approach, regarding intellectual property in the digital area.
14 Nägele / Jacobs, Rechtsfragen des Cloud Computing (Legal questions concerning cloud computing, ZUM 2010,
28.
15 s. fn. 14.
16 s. fn. 14.
17 s. fn. 14.
18 Katzenberger, GRUR Int. 1983, GRURINT Jahr 1983 Seite 895.
19 s. fn. 14.
References:
Federrath, Hannes Technische Grundlagen von Auskunftsansprüchen Normen Stichworte Schlüssel
CoR Computerrecht, Zeitschrift für Urheber- und Medienrecht 2014, 1, (Cloud
Kang, Peter H.
technique)
Intellectual Property and Legal Issues Surrounding Cloud Computing, available at: http://media.straffordpub.com/products/cloud-computing-intellectualproperty-legal-issues-2011-10-12/reference-material.pdf.
Katzenberger, Paul Urheberrechtsfragen der elektronischen Textkommunikation (Questions concerning intellectual property in relation to electronical written communication), Gewerblicher Rechtsschutz und Urheberrecht Internationaler
Teil. 1983.
Legal Match http://www.legalmatch.com/law-library/article/types-of-patentinfringement.html.
Nägele, Thomas /
Jacobs,Sven
Rechtsfragen des Cloud Computing (Legal questions concerning cloud computing), Zeitschrift für Urheber- und Medienrecht 2010.
Pech, Sebastian Lizenzmodelle in der Cloud (engl: Licencemodel within the Cloud), Zeitschrift für Urheber- und Medienrecht, 2014.
Sheppard Mullin Patent Exhaustion Doctrine in China, The National Law Review, available at:
Richter
Hampton LLP.
& http://www.natlawreview.com/article/patent-exhaustion-doctrine-china.
Thornham,
Christopher
Enforcement of patents in cloud computing, available at, http://www.taylorwessing.com/download/article_patents_cloud_computing.html.
