Three to Watch in IP Law: Gray Goods, India Patents, YouTube

Here’s a look at three recent developments in intellectual property law with implications that go far beyond copyright, patent, and other IP issues. You should know:

1. Gray Goods are Red Hot

The Supreme Court recently heard oral arguments in a case of international proportions: does the Copyright Act’s doctrine of first sale – which allows a purchaser of a copyrighted object to sell that object without the rights owner’s permission – permit the sale of gray goods? Why wouldn’t it? Because the very same Copyright Act bans the US sale of protected works purchased outside of the country.

It’s an important issue for buyers and sellers alike. From Skadden Arps:

“Content owners argue that applying the first-sale doctrine to overseas goods will weaken intellectual property protection and further a gray market in copyrighted goods. Retailers and auction sites, meanwhile, argue that not applying the first-sale doctrine to goods manufactured and acquired abroad will unjustifiably inhibit legitimate sales.”

Not to mention that there’s significant money involved: the gray market is estimated to be worth approximately $63 billion. (Sands Anderson)  (Skadden Arps) (Bernstein Shur) (Mintz Levin) (Venable)

2. India IP Board Invalidates Roche Hepatitis C Patent

Earlier this month, the Intellectual Property Appellate Board of India set aside Patent No.198952, held by Roche on its Hepatitis C drug Pegasys. The patent was the subject of a post-grant challenge by non-governmental organization Sankalp Rehabilitation Trust, who claimed the drug was costly and that the patent gave Roche a monopoly in India according to Reuters.

How to interpret the board’s move? It’s not a good sign, writes Courtenay Brinckerhoff of Foley & Lardner:

“The NGO’s persistent efforts to invalidate the patent are interesting, particularly as we prepare for post grant review challenges under the America Invents Act. Well-funded organizations opposed to pharmaceutical or biotechnology patents could launch targeted attacks against key patents. While the immediate effect of such successful challenges might be to make the specific patented products more widely available through generic products, the long-term effects on research and development could have a negative impact on public health. As it is, I imagine that this decision will have pharmaceutical and biotechnology companies revisiting their plans to pursue patent protection and product development in India.”

The ruling comes on the heels of the India Patent Office’s grant of a compulsory license for Bayer’s Nexavar to generic drug maker Natco Pharma. (Foley & Lardner)

3. YouTube copyright infringement lawsuit knocked out in first round:

A federal court dismissed a lawsuit claiming online video content providers YouTube and Justin.tv “unlawfully induced copyright infringement” by allowing users to upload television footage of a boxing match. Ark Promotions, who owned the copyright to the boxing match, said that YouTube and Justin.tv encouraged others to violate copyright by creating their websites and providing instructions on how to upload videos. The court didn’t buy that argument, and in doing so set an important precedent:

“The guidance [the court] provides should help ease litigation burdens on online services that provide platforms allowing users to share content, provided that they do not take affirmative steps for the specific purpose of encouraging copyright infringement. The decision also adds to the growing body of legal authority holding that the Communications Act does not regulate the streaming of cable television footage on the Internet.”

One more to watch, as it were. (Wilson Sonsini)

The updates:

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