Category Archives: Intellectual Property

What should the Government’s IP policies be?

reactionAt a recent meeting of IP lawyers, at which IP Draughts was present, someone asked what the next UK Government’s policies should be in the area of intellectual property. This prompted several “instant reactions”, including the following:

  1. Unified Patent Court. Continue to support the UK’s participation in the Central Division of the (European) Unified Patent Court, by providing sufficient direction and funding for the new court’s facilities and activities. After David Cameron’s remarkable diplomatic success in getting the life sciences part of the Central Division’s work to be located in the UK, it is important to follow this up at an operational level, and avoid penny-pinching.
  2. Educate the population about IP. Establish a body that is responsible for widespread education about IP.  Consider introducing courses on IP in undergraduate programmes in science and arts subjects. Work with universities and IP professionals to take this forward, rather than rely on the UK IPO which is not established to be a training body.
  3. IP threats legislation. Depending on what the final recommendations are from the Law Commission, which is currently reviewing the subject of IP threats, promptly introduce legislation to implement their recommendations.

Having reflected since the meeting, IP Draughts would add a couple of further suggestions:

  • recognise that UK IP policy is mostly developed at an EU level nowadays, and put more Governmental energy into negotiating policy developments at that level. The same point could be made about many aspects of commercial law, including the current proposals to introduce an EU-wide sales law.
  • stopstop setting up independent reviews of UK IP policy, such as Gowers and Hargreaves. They generate a huge amount of work with limited benefits in return.
  • develop some genuine expertise on this complex subject within the relevant Government department (probably BIS). Don’t expect the UK IPO to be the main source of Government expertise – that is a bit like leaving it to HM Revenue and Customs to develop fiscal policy.

Do readers agree with these points? Do you have any other suggestions?

 

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Research results: more moonbeams in a jar?

braveI embarked on this post with trepidation.  It’s always worrying when you start out thinking that you have a problem and that you disagree with IP Draughts.  The problem involves know-how: how should you deal with it, when it is part of the output of a research project?

Many research projects produce identifiable and protectable IP. There may be negotiations over who should own that IP, and the law gives us a set of rules that explain who is the first owner if different terms are not agreed.

But research projects also produce interesting things that are not obviously classified as identifiable and protectable IP – the ill-defined stuff that is sometimes called ‘know-how’.  Partners in the research want (demand, in some cases) rights to continue to use the know-how or to stop other people from using it.   Research funders want to own it as an output of the research.   IP Draughts says it is not something that can be assigned. [Don't take any notice of his maunderings.  Ed.]

Two examples of know-how occupy my world:

Results – actual hard data.  As explained elsewhere, there is no property in information itself.  If it is to be protected, it needs to be covered by confidentiality or fixed as an acknowledged piece of IP.  It could be recorded as a copyright work or entered into a database.  But that approach doesn’t really deal with the whole problem.  The copyright owner can prevent the copyright work from being copied without permission but the data probably also exists outside of the copyright work (eg the difference between a publication and the data it is based on).  As for databases, it is the database, and the investment in creating the database, that is protected by database right and not the data itself.  Database right gives the owner of the database the right to control the use of the database rather than the content of the database.  Neither protects the data itself.  Conclusion: confidentiality is the best bet to protect the data.

Methods – specifically, refinements to established surgical methods that arise in the course of clinical trials.  Again, there is no property in the information itself.  Patenting is unlikely to be the answer (cost, difficulty in demonstrating novelty, exclusion of certain methods from patent protection).  Copyright offers some hope but the same arguments apply.  Conclusion (again): if the method is to be protected at all, confidentiality is the best bet.

Daguerrotype stereotype

Daguerrotype stereotype

The researcher will want to be able to continue to use the know-how.  The funder, stereotypically, will want to protect, restrict and commercialise.  And so we turn to the law to find out who owns the know-how and who can control it and, potentially, how to transfer it.

We know that know-how is practical information that is secret, substantial and identified (EU Tech Transfer Reg (772/2004)) and we know that know-how is not property and cannot be assigned (IP Draughts commentaries).

English law protects trade secrets but will not protect know-how of itself (Faccenda Chicken).  Know-how is treated as a lesser being than a trade secret and needs to shelter behind confidentiality.  The EU is currently considering a draft Directive introducing specific protections for trade secrets (EU draft Dir 2013/0402) that would impose penalties for the unlawful acquisition, disclosure or use of trade secrets.  A trade secret is defined as information that is secret, has commercial value because it is secret and has been the subject of reasonable steps to keep it secret.  On that definition, know-how might amount to a trade secret in some cases.  But again we see that confidentiality is key.  We also see a requirement for that confidentiality to protect a commercial value.

small printSo, it looks like the answer to my problem is that no one really owns know-how, although you can expect to control it if you have the benefit of a confidentiality obligation that covers it.  There might be property in related IP rights but my sense is that these IP rights will often not catch the guts of the know-how – the data or the method.  Phew, I agree with IP Draughts.

And the lessons for our researcher?  Read the definitions in the research agreement and read them carefully.  Then see where and how those definitions are used.  If know-how is referred to in the definition of Confidential Information and the funder controls the Confidential Information, the researcher’s right to use their general know-how may be restricted.  If the definition of Intellectual Property includes data or methods, we may have ‘category confusion’ particularly if that data and those methods are not protected by any recognised form of IP.

A good (?) example of this is the EU’s Horizon 20/20 programme, whose contract terms define Background as follows:

Background’ means any data, know-how or information — whatever its form or nature (tangible or intangible), including any rights such as intellectual property rights — that: (a) is held by the beneficiaries before they acceded to the Agreement, and (b) is needed to implement the action or exploit the results.

Faced with a definition like this, which mixes up know-how, information and IP rights, you need to look very carefully at where the defined term is used and how it affects you.

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Unfair IP terms in student contracts

wise monkeysOnce upon a time, dear readers, universities knew nothing about IP.  There were both cultural and legal reasons why this was so.

The Stone Age

IP Draughts grew up in the 1970s, when socialist ideas were fashionable and the coal miners’ strikes caused electricity to be rationed during the so-called three-day week. IP Draughts remembers his father showing him how to light an old-fashioned Primus stove, using its pump.  The stove had been brought out of the attic, so that we could cook our dinner, during one of the periods when it was our neighbourhood’s turn to be without power.

At this time, and into the 1980s, there was a great deal of academic disdain for anything connected with commerce.  The term commercial exploitation was, for some, a pejorative term: the word exploitation said it all.

year zeroIn any case, there was little need for UK universities to be involved in IP commercialisation, as most research was funded by the Research Councils, and the Government required universities to channel any IP that was generated from such research through a governmental body, the National Research and Development Corporation, later renamed British Technology Group. This arrangement ended in 1985, which could be viewed as the Year Zero for technology transfer units in UK universities.

As a result of these factors, universities gave little thought to the question of who owned the IP that was generated by their academic staff, and even less thought to IP that was generated by students who assisted on academic projects.  Typically, therefore, students owned the IP that they generated, and they needed to be persuaded to assign it to the university or its nominee (eg NRDC) in appropriate cases.

The Bronze Age

During the later part of the 1980s and into the 1990s, universities became more familiar with IP issues.  They came to realise that students sometimes owned part of an IP package that the university was trying to commercialise.  In some cases, the student couldn’t be found, as they had left the university and had provided no forwarding address.  While they might be content to be treated in the same way as university employees, and assign the IP to the university in return for a generous revenue-sharing arrangement, there was always the risk that they might not agree.  In that case they could, in theory at least, obtain an injunction to prevent the university or its licensee / assignee from infringing their IP rights.

sign hereTo address this issue, some universities changed their financial regulations to require students, as well as academic employees, to assign their IP to the university.  Students are required to sign a form as part of the admission process, and the form typically refers to the student agreeing to be bound by the financial regulations.

The Iron Age

The problem with a blanket obligation on students to assign IP is that it potentially captures more IP than the university has a legitimate need to acquire. Several years ago, IP Draughts recalls stumbling across an internet discussion board in which Australian school leavers compared notes on the (seemingly broadly drafted) IP policies of Australian universities.  The contributors’ concerns were that they might lose the IP to any computer games that they created while at university.

Some universities now take a more nuanced approach, and require an assignment only of IP in certain cases, eg as a condition of participation in industrially-sponsored research projects.

Making the Bronze Age agreements legally effective

During the “Bronze Age” mentioned above, IP Draughts was asked to advise on several university IP policies.

expectsRegrettably, the wording of those policies was often decided in an academic committee, without specialist legal involvement. As a result, obscure language like “claims ownership”, “expects”, and “asked to” was sometimes used, which created some doubts about the legal effect.

For example, consider the following wording, from the University of Bristol’s IP policy.  IP Draughts has chosen this for no other reason than that it was the first UK university IP policy that came up on an internet search; the wording is more favourable to the student than some other policies that IP Draughts has seen.  And there are some clues that this wording has gone through a legal review process.

In the event that an undergraduate student or a postgraduate student on a taught course generates intellectual property in the course of a University project, either solely or in collaboration (where the collaborators may be fellow students, members of University of Bristol staff, employees of a sponsoring organisation or collaborative partner or a combination thereof), he or she is asked to assign [emphasis added] to the University any intellectual property that he or she may generate. Assignment will only take place in the event that intellectual property is generated. A student shall then give to the University all reasonable assistance to enable the University to obtain patents or other forms of legal protection for the intellectual property.

Did the university intend the first sentence of this quoted text to create a legal obligation on the student to assign their IP, or alternatively just to give an impression that the student has very little choice in the matter? The third sentence is more conventionally hard-edged, using the word “shall”. A later paragraph, dealing with postgraduate students, uses stronger language:

Postgraduate students will be required to execute agreements and assignments of intellectual property as a condition of participation in University research projects, a copy of which is available from the Research and Enterprise Development Office…

IP Draughts’ best guess is that the university is not claiming ownership of all student IP, and that “asked to assign” means the university will request, but the student will not be obliged to accede to the request.  However, this could be made more clear.

Duties on university to act reasonably to students?

locoWhen asked to advise on this type of language, one of the concerns that IP Draughts has raised is whether the university may have duties to the student, or other legal obligations, which prevent it from being too “grasping” in respect of student IP.  There are at least 2 main areas of concern:

  1. Students who are under the age of 18 and where the university may have duties to act in the best interests of the student where it is acting in loco parentis as a kind of guardian of the student during their minority.  This will only rarely be relevant, as most students are over 18.  However, might a court impose some similar, but perhaps lesser duty, to that mentioned above, in the case of undergraduates over the age of 18?  IP Draughts doesn’t have any case authority to back up this idea, but instinctively he feels there is a potential issue, perhaps under the law of equity.
  2. Are students consumers, and do they benefit from consumer protection legislation? The answer to this question is almost certainly yes.  If that is the case, does consumer protection legislation, and in particular the Unfair Terms in Consumer Contracts Regulations, prevent the university from imposing one-sided IP terms (eg a blanket assignment of all the student’s IP) as a condition of admission to the university?

In IP Draughts’ view, the second of these points is likely to constrain the university in the terms that it can impose, although the limits of what can or cannot be imposed are not clear – as far as IP Draughts is aware, there has been no case law on student IP terms.

oftSupport for this view (and here we finally get to the reason for writing this article at this time) is given in a report by the UK Office of Fair Trading, published this week and entitled Universities’ Terms and Conditions. The report focuses on unfair terms relevant to student debt, and makes no mention of IP.  But some of the statements in the report are made in general terms, and could (in IP Draughts’ view) apply to IP terms.  Consider, for example, the following statements in the report:

1.17 We recommend that universities review their rules and regulations, other terms and conditions, and practices in light of the OFT’s views outlined in the report, and make amendments where necessary. We would expect universities to refrain from using unfair terms and practices, and from misleading students about either the university or student’s legal rights.

3.6 We have identified that the overarching rules and regulations tend to be lengthy and we consider they may be difficult for students to navigate. We understand that some universities may provide students with information in other sources such as in joining information, student handbooks and on intranet sites. However, it is not clear how aware the average student may be about a university’s terms and conditions.

5.5 It is the OFT’s view that a university’s rules and regulations that purport to govern the relationship between the university and undergraduate students are likely to form part of a contract for the provision of educational services. The terms set out in the rules and regulations are likely to be subject to the test of fairness under the [Unfair Terms in Consumer Contracts Regulations].

6.19 Terms which have the effect of irrevocably binding the consumer to terms with which he or she had no real opportunity of becoming acquainted before the conclusion of the contract are open to challenge. A term which deems students to be bound by the university’s rules and regulations, unless they are given an appropriate chance to read them, is likely to be considered unfair. In our view, providing the relevant rules and regulations at the time of the enrolment process is unlikely to be considered sufficient to mitigate the potential unfairness of binding students to terms they have not have the chance to become familiar with.

As the OFT makes clear, it is for the court to decide whether a particular term is unfair and therefore not binding, eg under the Unfair Terms in Consumer Contracts Regulations. However, the OFT’s analysis is persuasive and by publishing their report they have put universities on notice that they should review all of their terms affecting students, including (in IP Draughts’ view) those on the subject of IP.

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Assignment of trade secrets: selling moonbeams in a jar?

moonbeam jarA recent article on IPKat, Assignment and licence-back of a trade secret: no yawning matter, has prompted IP Draughts to remove the dustsheets from one of his favourite hobbyhorses.  As discussed briefly on this blog here in 2011, IP Draughts is troubled by the very idea of an assignment of know-how.

First, we need to define our terms.  The title of this article, echoing the IPKat article mentioned earlier, refers to trade secrets, while the earlier article on this blog, linked above, referred to know-how.

In English law and, as far as he understands them, US laws, “trade secrets” are generally regarded as the most sensitive items of confidential information, and are distinguished from less important categories of confidential information. It is not always easy to make the distinction.  Nearly a century ago, Lord Parker in the case of Herbert Morris Ltd v Saxelby [1916] 1 AC 688 came up with a rather simplistic test:

“If the information is of such detail that it cannot be carried in one’s head then it is a trade secret, but if it is just some kind of easily remembered general method then it will not qualify as a trade secret.”

faccendaMore recently, in the landmark case of Faccenda Chicken v Fowler [1985] 1 All ER 724, the Court of Appeal declined to give any general definition, but instead came up with some examples of trade secrets (“or their equivalent”), including information about prices, and:

“secret processes of manufacture such as chemical formulae” and

“designs or special methods of construction”

There is not, as far as IP Draughts is aware, any universally-applied, single definition of trade secrets in English law.

Much of the English case law on the meaning of trade secrets has been about employees and their duties not to disclose their employer’s, or former employer’s, commercial information.  In this context, the courts have found it helpful to distinguish between the most sensitive types of information – labelled trade secrets – and other types, sometimes referred to generically as confidential information. Generally, employees have stronger duties to their employer with respect to trade secrets than they have with respect to any other category of confidential information.

By contrast, reported English cases about general business disputes (ie not involving claims against employees) rarely seem to require a discussion of whether there is any distinction between trade secrets and other categories of confidential information.  Perhaps as a consequence of this, English commercial agreements seldom use the term “trade secrets”.  Instead they tend to refer to confidential information and, in the context of licensing, to know-how.

The expression “know-how” tends to be used in reference to technical or commercial information about products or services that is protected under the law of confidence, although other usages are seen.  IP Draughts finds it convenient to refer to the definition that appears in Article 1(1)(i) of the EU Technology Transfer  Block Exemption Regulation, ie:

‘know-how’ means a package of non-patented practical
information, resulting from experience and testing, which
is:
(i) secret, that is to say, not generally known or easily
accessible,
(ii) substantial, that is to say, significant and useful for the
production of the contract products, and
(iii) identified, that is to say, described in a sufficiently
comprehensive manner so as to make it possible to
verify that it fulfils the criteria of secrecy and substantiality;

Items (ii) and (iii) of the above definition are more concerned with competition law issues than commercial definition, in that the European Commission is concerned to avoid anti-competitive restrictions being agreed behind the smoke-screen of a dubious know-how licence.

Out for a stroll...

Supreme Court goes for a wander…

Under English law, in IP Draughts’ view there is no special category of property right called trade secrets or know-how.  The law of confidence may protect a trade secret or know-how.  Separately, recognised types of intellectual property, such as patents or copyrights, may provide protection.  However, confidential information as such is not recognised as property.  As Lord Neuberger, President of the UK Supreme Court, commented in a 2012 case that IP Draughts reported on here:

In my view, the upshot of this summary of the current position as discussed in the cases and the books is that, while the prevailing current view is that confidential information is not strictly property, it is not inappropriate to include it as an aspect of intellectual property.

By contrast, IP Draughts understands that some US state laws recognise trade secrets as a type of property. It seems to be more common for US commercial agreements to refer to trade secrets than is the case in English agreements.

Drawing together the threads of the above discussion, under English law the following propositions can be made:

  1. Where confidential information is viewed as a business asset, it is conventional to refer to it as know-how.  The term “trade secrets” is less frequently encountered, outside the niche area of employee duties.
  2. Know-how and other types of confidential information are not “property” and therefore it is questionable whether “title” in know-how can be transferred from one person to another via an assignment.
  3. Despite this questionable legal status, it is common to see know-how being licensed, as illustrated by the provisions on know-how in current and former EU Technology Transfer Block Exemption Regulations.

So, what is an assignment of know-how, and should documents of this name be used?  As this 2011 article on IP Draughts comments, what should definitely not be done is to take a patent assignment and do a “search and replace” of the word “patent” with the word “know-how”. Instead, if a know-how assignment is required, IP Draughts recommends that thought be given to the different components of the transaction, as discussed in the last-linked article.  In some situations, it may be appropriate to include some or all of the following wording in the assignment.  In other situations, different wording may be required – eg to impose obligations on individuals as well as the assigning institution.

To the extent that the Assigned Property includes any know-how protected under the laws governing confidential information, references to the assignment of such know-how include the following obligations on the Institution:

(a)          The Institution shall transfer to the Company such rights as it may have in law to prevent the unauthorized use or disclosure of such know-how;

(b)          to the extent that such rights cannot be or are not transferred by virtue of the provisions of Clause [ ], the Institution shall agree to be joined in any action (whether as claimant or otherwise) brought by the Company or its assignee against any third party that is alleged to infringe such rights, subject to the Company effectively indemnifying it against any damages, costs and expenses incurred in relation to any such action;

(c)          the Institution shall neither use nor disclose any such know-how without the prior written consent of the Company, but these obligations of non-use and non-disclosure shall cease upon the know-how becoming publicly known (other than as a result of breach of this clause by the Institution);

(d)      the Institution warrants that it is not aware of any disclosure of such know-how to any third party before the date of this Assignment, except under written obligations of confidentiality;

(e)    if required to do so by the Company, the Institution shall make such acknowledgements to third parties as the Company may reasonably require, stating that the Company owns all such know-how and that the Institution does not retain any ownership rights in such know-how; and

(f)     the Institution shall: (i) inform the Company of all technical information concerning the Assigned Property; (ii) supply the Company with any documents or drawings relevant to the Assigned Property; and (iii) license the Company to use such documents, information and drawings.

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