League table of UK IP lawyers

peer reviewIt’s that time of the year again, when IP Draughts presents his “poll of polls” on the best transactional IP lawyers in the UK.

As in previous years, the methodology is very simple. Identify the people who are listed on both the IAM Patent 1000 list of recommended UK licensing lawyers, and the Chambers Directory list of recommended UK life science lawyers. The latter list was published earlier today.

Selecting people who feature in both lists has the advantage of weeding out some corporate lawyers who feature on the Chambers list. It also omits a few people who appear on the IAM list, whom IP Draughts rates highly, but you can’t have everything. IP Draughts thinks the result is a reasonably reliable list of genuine specialists in transactional IP with a technology focus.

The list comprises, in alphabetical order:

Laura Anderson – Bristows

Mark Anderson – Anderson Law

Malcom Bates – Taylor Wessing

Richard Binns – Simmons & Simmons

Allistair Booth – Pinsent Masons

Patrick Duxbury – Wragges

Jim Ford – Allen & Overy

Michael Gavey – Simmons & Simmons

Sarah Hanson – CMS Cameron McKennanot bad

Gary Howes – Faskens

Mark Lubbock – Ashursts

Nicola Maguire – Reed Smith

Lucinda Osborne – Covington & Burling

Daniel Pavin – Covington & Burling

Stephen Reese – Olswang

John Wilkinson – Reed Smith

 

 

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Legal fees: what is the right level of charge?

expensiveAccording to some who would consult for professional services firms, at least a third of your clients should be complaining about the fees they are asked to pay; if this isn’t happening, you aren’t charging enough. Statements of this kind capture one’s attention, which is what the financial services salesman wants to do. But is there any substance in the argument? Should one be striving to achieve what might be called an equilibrium of dissatisfaction among one’s clients?

In IP Draughts’ view, remarks of this kind should be treated with extreme caution. People don’t always complain; they just don’t instruct you on the next matter. If the fees are known to be high, you may not get instructed in the first place. Complaining mid-transaction or mid-litigation may be thought unwise, if it results in a loss of care and attention from the service provider, or necessitates a change of pilot, mid-stream. Many complaints about legal fees are not about the rates per se, which are usually known in advance, but about over-egged time recording by associates and trainees, which the responsible partner has been too busy, careless or venial to correct. If the issue gets as far as a formal complaint, the relationship may be in severe jeopardy.

Over the years, IP Draughts has advised clients many times on other lawyers’ fees. Sometimes, a quiet word in the ear of the senior lawyer concerned is enough to address the issue. Sometimes, a better process is needed for discussing bills in advance of their being submitted. Sometimes, discretion is the better part of valour. Many years ago, a well-known City law firm advised one of IP Draughts’ clients, a publicly listed biotech company, on a major research collaboration agreement. IP Draughts was asked to assist the CEO with his review of the fees that the firm charged.

can't affordThe first point to note was that fees were rounded up or down to the nearest £2,500. At the time, most of IP Draughts’ invoices were for less than this amount, so a rounding of this magnitude would have resulted in either a free or very expensive service, depending on which way the rounding went!

Secondly, the partner had spent nearly a week drafting the agreement, which seemed ludicrous, both in terms of the time spent and the fact that a senior partner had done the drafting at very expensive rates.

Thirdly, an associate in the firm’s competition department had recorded 8 hours to review the agreement from a competition standpoint. This was a breathtaking amount of time for something that should have taken an experienced competition lawyer (or at least one who knew about IP) no more than a couple of hours.

IP Draughts advised the client to focus on the main drafting time and partner rates, and not to waste powder on the competition law charge. And to consider using a less expensive firm next time. Subsequently, the company appointed a mid-tier London firm to be their corporate lawyers. The previous firm had been a self-indulgent luxury.

For some major public companies, perhaps they need, or think they need, to use a major City firm for large transactions. And perhaps in that situation they are more inclined to complain about fees than switch firms. So, maybe the consultant’s claim, that at least a third clients should complain, works in that situation. IP Draughts recalls a major company CEO commenting publicly some years ago about the fees charged by Slaughter and May. They provide a very good service and charge fully for that level of service, was his diplomatic way of putting it.

cheapIP Draughts looks at the subject rather differently. He prefers to get, and does get, comments from clients that his firm provides a very good service and very good value for money. That doesn’t mean we’re cheap! Marketing experts say one should never claim to be cheap, as the word has the wrong associations. By comparison with High Street firms, we are expensive. Reassuringly expensive, perhaps. By comparison with large IP and commercial firms in London, perhaps we are cheap good value. You decide.

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Software licensing: it ain’t necessarily so…

porgyIt ain’t necessarily so
The t’ings dat yo’ li’ble
To read in de Bible,
It ain’t necessarily so.*

The theme of today’s sermon is the commercial supply of software, and the contracts that are used for such supply.
Typically, such contracts provide for a licence to use the licensor’s intellectual property. As a result, software licensing is commonly thought of as a type of IP or technology licence. However, in IP Draughts’ view, there are flaws in this approach. Many software supply agreements are closer, conceptually, to a sale of goods than to an IP licence.
Grant
In many technology licence agreements, the licence grant is at the heart of the agreement, often placed “front and centre” in clause 2. Much thought is given to defining the intellectual property that is to be licensed, the types of licensed product that may be made and sold under the licence, and any field and territory restrictions.
By contrast, the software licence agreement will often not get into the question of what IP is being licensed. This omission would be extraordinary in most technology licensing, but in software licensing it is regarded as normal – the customer doesn’t care what IP is being licensed, as long as it won’t be blocked off from using the software in accordance with the terms permitted by the agreement. This is because what the customer is really buying is a product; the IP licence is secondary.
Supply of product
In many commercial software supply agreements, the heart of the agreement is the supply of a product, and associated terms, including specification, warranties, delivery, acceptance, and ongoing support. The agreement will usually include licence terms, but they tend to be ancillary to the main commercial provisions. Because software is an electronic product, which can be reproduced virtually without additional cost, a supplier will usually wish to place limits on the use that can be made of the software. The price charged for the software may be based on the extent of use that the customer is permitted to have under the contract. A convenient contractual mechanism for setting these limits is to grant a limited IP licence.
A distinction should be made between supply of software to an end user (under an end-user licence) and supply of software to a business that will distribute copies of the software, or incorporate it into another product for supply to an end user. The recipient under either type of agreement will typically be permitted to use the software under written licence terms which set limits on the permitted use.

Implied and express terms

The use of a licence mechanism in software supply is understandable, for several reasons. It provides a way of limiting the use that the customer can make of the software, which enables the supplier to maintain some control over reproduction of the software and to establish robust pricing models. Perhaps it points the courts away from the idea that software should be treated as the sale of goods, which might have unfortunate consequences for the supplier, including:
  1. The application of laws on “exhaustion of rights” and “non-derogation from grant” – but over time these areas of law are encroaching on software supply – eg see the UsedSoft case.
  2. The incorporation of implied warranties into the contract, eg in the UK warranties of title and quiet enjoyment under the Sale of Goods Act 1979.  Similar warranties can be found in some other jurisdictions, eg countries that have incorporated the UN Convention on the International Sale of Goods into their national law.

As previously mentioned on this blog (see last link above), the implied warranty of quiet enjoyment has been held to have been breached if a purchase of goods is sued by a third party for IP infringement. It might be argued that industry practice deals with this issue explicitly, so that it is not necessary to get into academic discussions about whether software is goods for the purposes of sale of goods legislation. The issue is dealt with explicitly in software licence agreements that include (as many do) either a warranty of non-infringement of third party IP, and/or an indemnity against liability arising from such infringement.

The practice of including such warranties and indemnities is much less commonly encountered in technology licensing, particularly in the case of early-stage technology licensing. This contrasting practice reflects, in IP Draughts’ view, the reality that software supply is very close to a supply of goods and not very close to a licence of technology.

 

Competition law

A little over ten years ago, there was much fanfare over the inclusion of software copyright licensing in the 2004 EU Technology Transfer Block Exemption Regulation. Previous versions of the regulation (they tend to be replaced and updated every 10 years or so) had focussed only on patent and know-how licensing.  Ten years later, the European Commission has had second thoughts, and the 2014 version of the regulation, and associated guidelines, clarify that most software licensing should be considered under the block exemption regulation for distribution of goods. Rhetorical question: could this be because software supply is much closer to the sale of goods than it is to technology licensing?

 

Convenience of lawyers?

A possible reason why software supply is thought of as an IP transaction lies in the organisation of law firms. Complex, technology-related contracts are often dealt with by a specialist department of the law firm, sometimes called an IP and IT department, or a TMT department, or similar.

IP Draughts' father bought one of these in 1979, and IP Draughts programmed it to perform invoicing and payroll functions.

IP Draughts’ father bought one of these in 1979, but applications software wasn’t available. IP Draughts programmed it to perform invoicing and payroll functions, saving the programs onto cassette tapes.

Software supply agreements have only been around since the 1980s, and when they first appeared it was understandable that lawyers and their clients struggled to fit the facts of software supply into a conventional commercial law category. Established law and practice in relation to the sale of goods didn’t quite fit the new technologies. 30 years on, we should be more confident about treating commercial software supply as a variant on the sale of goods.

 

*Written by Ira Gershwin, from Porgy & Bess

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A book you can keep under your hat

Untitled-1Nestling in IP Draughts’ inbox this morning was an email from Law Society Publishing, inviting him to purchase the recently published, third edition, of a book, Drafting Confidentiality Agreements. Written by some lawyers called Anderson and Warner, apparently.

It is a small book, so it may fit under your hat, or in your loved one’s Christmas stocking.

Details here.

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