Category Archives: Intellectual Property

Get up, stand up, stand up for your IP rights

marleyEarlier this week, in the English High Court, a decision was handed down about whether copyright in various Bob Marley songs, including No Woman No Cry, transferred under a 1992 agreement. See BSI Enterprises Limited v Blue Mountain Music Limited [2014] EWHC 1690 (Ch), issued on 4 June 2014. The case involves the interpretation of a definition in an IP agreement, but there is nothing very remarkable about the judge’s decision. The case is mainly interesting for its facts.

Those facts are messy and complex and involve:

  1. Bob Marley writing songs but claiming that others wrote them, apparently to get around contractual obligations to a publisher. This is referred to in the case as the Misattribution Ploy.
  2. Chris Blackwell of Island Records giving evidence in a 2006 court case that certain songs were excluded from a 1992 agreement under which the Marley oeuvre was sold to Island Records. By implication, if he was correct, copyright in those songs remained with the seller. In the present case, Mr Blackwell again gave evidence, and said that he was mistaken on this point in his earlier evidence.
  3. As a result of that statement in 2006, the first claimant entered into an agreement to acquire the copyright in these and some other Bob Marley songs from the seller, and then licensed them to the second claimant.
  4. In the present case, the claimants sought a declaration that they were the owner and licensee respectively, of the copyright in the songs in question.

The outcome of this case depended on interpreting the definition of Composition and Catalogue in the 1992 agreement. More on that below.  But first, Chris Blackwell’s evidence in the earlier case, that certain songs were excluded from the 1992 agreement.  He now considered that he had been mistaken on this point, and explained that he had been tired after giving evidence for a couple of days.  The judge in the present case accepted that explanation and in any event thought Mr Blackwell’s opinion on the interpretation of the 1992 agreement was not relevant. This was a matter for the judge to decide.

The definition of Composition and Catalogue read as follows. I have highlighted some of the key passages in bold text:

1.8 ‘Composition’ and ‘Catalogue.’ The term ‘Catalogue’ shall mean all presently-existing musical compositions, or portions thereof, including cues, domestic or foreign, whether originally claimed or registered as a musical composition or as a part of a dramatic-musical work, consisting of lyrics and/or music whether or not registered in the United States Copyright Office or elsewhere, whether published or unpublished, written recorded by Robert N. Marley, Winston Peter McIntosh and/or Neville Livingstone, and/or certain musical compositions written or composed by Alfonso Pyfrom and/or Jimmy Norman (which were recorded by any of Robert N. Marley, Winston Peter McIntosh and/or Neville Livingstone), under their own names or under any pseudonyms, individually or as part of any collaboration between or among any of them or others (individually a ‘Composition’ and collectively the ‘Compositions’) and all right, title and interest in and to such Compositions, including all copyrights and renewals and extensions of copyrights thereto in all jurisdictions throughout the Universe, to the extent such compositions, copyrights, renewals and extensions are owned, controlled or administered, in whole or in part, by any member of Seller or by Seller’s Music Publishing Business as of the Closing Date, or from which any member of Seller or Seller’s Music Publishing Business receives income, including, but not by way of limitation, the Catalogue listed on Schedule 2 attached hereto. In furtherance of the foregoing, and not by way of limitation, the Compositions also include all musical compositions owned by Seller which were recorded by Robert N Marley (whether alone or in combination with any other artists).

The claimants argued that, because the songs in question had not been listed in Schedule 2, and because this was (they said) a deliberate omission, they were not subject to the 1992 agreement. The claimants’ counsel tried to argue that it was clear that there had been a deliberate omission, and that this was part of the factual matrix that should be taken into account when interpreting the wording of the 1992 agreement.

The judge preferred to find the meaning from the wording of the 1992 agreement itself. The definition did not limit itself to the songs listed in Schedule 2.  The above-quoted wording made clear “almost to the point of redundant repetition” that all Bob Marley songs were included in the definition, whether or not they were listed in Schedule 2. IP Draughts takes issue with the judge’s use of the word “almost”. The above wording goes well beyond the point of redundant repetition.

If any point of general legal interest arises from this case it is simply the following, well-known point: the English courts are very reluctant to allow evidence of what the parties might or might not have intended to influence their interpretation of a contract.  What matters is what a third party would understand the words used in the contract to mean.

simon saysRegrettably, the judge did not opine on whether a contract drafter who uses the term “including” needs to add words such as “without limitation” or, as in this case, the words “but not by way of limitation” in order to avoid an argument that the list that follows the word “including” could narrow the general sense of what goes before the word “including”. It is very common for contract drafters to use additional words of this kind, though leading contract drafting expert Ken Adams considers that such additions are unnecessary. As with many things that Simon Ken says, IP Draughts is coming round to his view, but has not quite got there yet, and still sometimes includes an interpretation provision in his contracts, stating that “including”, when used in the contract, means “including without limitation”.

 

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New UK Intellectual Property Act 2014

bitThe Intellectual Property Act 2014 received Royal Assent earlier this week, so is now enacted, but has not yet been brought into effect.  It will be brought into effect by statutory instrument, probably in October.

The Act is a rag-bag of detailed changes to the UK law of unregistered design right, registered designs, patents, and copyright, which the UK IPO considers will “modernise” the law. The UK IPO’s summary of those changes can be found here.

Only a few of those changes are of direct interest to this non-contentious IP lawyer, mainly the following:

  1.  To make the first owner of a commissioned design the designer rather than the commissioner. Under previous (and still current, until October) design laws, the party commissioning a design (ie the client) was the first owner of design right. This change will apply to both unregistered design right and registered designs, and will align the commissionerlaw in this area with the position for copyright. Under UK copyright law, the author is the first owner unless he is acting in the course of his employment. IP Draughts recalls when unregistered design right came in, in 1989, and has always thought it very odd that the rules were different for design and for copyright, respectively. It has only taken the Government 25 years to correct this confusing anomoly! See sections 2 and 6 of the Act.
  2. To introduce criminal offences for intentional copying of registered designs in the course of a business, and marketing of those copies. See section 13 of the Act.
  3. To allow patent marking by means of an internet link rather than providing patent numbers on the patented article. This is relevant to the question of recovering damages for infringement. See section 15 of the Act.
  4. To enable the Secretary of State to make arrangements to establish the Unified Patent Court in the UK. See section 17 of the Act.
  5. To introduce an exception from disclosure under the Freedom of Information Act 2000, in the case of certain information obtained from a research programme, so as to allow orderly publication of results at a later date. See section 20 of the Intellectual Property Act.

 

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Execution of IP assignments as deeds

mistakesA recent posting on the Solo IP blog, subsequently reported by IPKat, raised several questions about the valid execution of IP assignments (and specifically trade mark assignments) as deeds.

IP Draughts would like to offer some thoughts on the points raised. As he understands the position under UK laws:

  1. Methods of transfer of ownership of IP. The main method of transfer of ownership of IP is by an assignment.  There are a couple of other methods, mainly automatic transfer to a dead person’s executors, and subequent transfer to a beneficiary in a will or on intestacy. See eg section 24(1) of the Trade Marks Act 1994, and section 30(2) and (3) of the Patents Act 1977.
  2. Formalities for assignment. Assignments of UK intellectual property must be in writing, and executed by the assignor. See eg section 24(3) of TMA 1994. Unlike the position under some former IP laws (eg, as IP Draughts understands it, the Patents Act 1949), there is no need under present UK IP laws for the assignment to be executed as a deed. Nor is there any need under IP laws (but see below) for consideration to be given for an IP assignment to be valid or for the assignment to be registered at the UK IPO.
  3. Underlying contract? Many IP assignments are made as part of a larger commercial transaction or relationship, eg if a consultant develops software for a principal, and assigns copyright in the software to the principal. Where an assignment forms part of a contract, the IP lawyer will typically be concerned to ensure that the contract is valid. One of the requirements for a binding contract under English law is that consideration should be given, or the contract should be executed as a deed. In the latter case, consideration is not required. If it is unclear what consideration is being given for an assignment that is part of a commercial transaction, a party’s lawyer will sometimes either (a) insert a nominal consideration in the written contract or assignment, or (b) execute the contract or assignment as a deed. Alternatively consideration may be found in the underlying relationship, eg if an assignment is made pursuant to an obligation in a binding consultancy agrement.
  4. Transfer of property by gift. However, it is not necessary for there to be a contract in order to pass title to personal property (including intellectual property). The transfer of property could be a gift. Dredging up his memories of undergraduate law, for a gift to be valid there must be an intention to give and an act of giving. The act of giving IP would seem to be demonstrated by signature and delivery of the assignment. In this situation, consideration would seem to be irrelevant. A cursory examination of the law in this area suggests that the donee must also accept the gift.  This seems like a good reason to have the assignee execute the assignment as well as the assignor, even though this is not required by UK IP laws, so as to provide evidence of acceptance. In any case, in international IP assignments, many countries require the assignee also to execute the assignment (eg this is a requirement for assigning an EPC patent application).
  5. Execution of an IP assignment as a deed. Parties sometimes choose to execute their IP assignment as a deed, eg because of concerns about consideration as mentioned above. As IP Draughts understands current law, a deed is a method of execution of a contract or other instrument. It is, perhaps, misleading to think of a deed as a different type of instrument; rather, it is a different means of executing the instrument, and involves different formalities, eg as to use of a seal (in a few cases), who must sign, requirement for formal delivery, etc. Clearly, if parties do intend to execute their assignment as a deed, they should comply with these formalities. It is no longer a surprise to IP Draughts how often reputable City law firms present deeds for execution that have incorrect signature blocks for universities, charities, government bodies and other “unusual” parties. In many cases, these bodies must use their official seal, even though the requirement to use a seal was abolished for Companies Acts companies and for individuals back in the 1980s. An illustration of this mistake can be seen in the very recent High Court case of Briggs v Gleeds, where the drafter of some pension deeds failed to use the correct signature blocks for execution by partners in a traditional partnership.
  6. Partial execution as a deed. Although he has no authority for this proposition, it seems to IP Draughts that one can have an instrument (eg assignment or contract) that is intended to be executed, and is validly executed, by one party as a deed and by the other party by simple signature (eg to acknowledge receipt). One would need to analyse the underlying transaction to know whether it is necessary for both parties to execute the instrument as a deed.
  7. perfectEffect of failure to comply with formalities for deeds. There are two, different problems that can arise: (1) the wrong signature blocks are used (as mentioned above), or (2) the right signature blocks are used, but the parties don’t complete them correctly, eg the space for a witness to sign is left blank, or the witness signs after the party signs, and without actually witnessing their signature. The latter class of problems tends to occur where a party doesn’t involve their lawyer in the signing process. As the discussion of earlier case law in the case of Briggs v Deeds, linked above, illustrates, such failures may or may not be fatal to the validity of the instrument. There is also a strand of case law in relation to “equitable assignments” of IP that don’t comply with the formalities, which may provide an escape route in some cases. IP Draughts would generally be very cautious about allowing a defective deed to be left unchallenged.

 

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Introducing Background IP to a research project: what does it mean?

unknownClauses that deal with “Background IP” are very familiar in research collaboration agreements. Consider the following example, taken from a draft agreement that IP Draughts was asked to review earlier this week. It is a typical example of its kind. Both the clauses and related definitions are set out below.

“Background IPR” means all Intellectual Property Rights owned by or licensed to a Project Partner at the start of the Project;

“Intellectual Property Rights” or “IPR” means all industrial and intellectual property rights including patents, utility models, rights in inventions, registered designs, rights in designs, trademarks, copyright and neighbouring rights, database rights, moral rights, trade secrets, and rights in confidential information and know-how (all whether registered or unregistered and including any renewals and extensions thereof) and all rights or forms of protection having equivalent or similar effect to any of these which may subsist anywhere in the world and applications for registrations of any of the foregoing;

The Project Manager and the Representative shall be responsible for identifying and agreeing in writing on behalf of the Parties any Background Intellectual Property used, or to be used, in the course of the Project and the owner of the same, prior to or as soon as reasonably practicable following its disclosure in the course of the Project;

Each Party acknowledges that a Project Partner’s Background IPR may be required to be accessed by the other Project Partners in order to undertake the Project and to use a Project Partner’s own Foreground IPR (“Relevant Background IPR”).

Each Party hereby grants to each of the Project Partners an irrevocable, non-exclusive, perpetual and royalty-free licence to:

(a) use its Relevant Background IPR during the term of the Project for the purpose of carrying out the Project; and

(b) use its Relevant Background IPR after the term of the Project strictly for the purpose of using a Project Partner’s own Foreground IPR.

The above clauses may be a little more elaborate than some that IP Draughts has seen, but they are similar in effect to many that are in circulation. Readers may spot some general drafting issues in the above wording, but that is not the point of this post. IP Draughts has chosen this wording as representative of a class of clauses that deal with background IP, and not with a view to criticising the specific agreement.

Let’s take a couple of examples, and test them against the wording. In both cases, assume that the contracting party is a university:

  1. Software. One of the university’s academics uses in the collaboration some software that a colleague generated prior to the start of the collaboration. The university has not done any due diligence on who owns any IP in that software, but at least some of the IP is likely to belong to the university as the employer of the individuals who wrote the lines of code. The university intends to form a spin-out company that will obtain an assignment of the party’s IP (such as it is) in the software.
  2. Scientific technique. The university uses in the collaboration a technique for radio-labelling the molecules that are the subject of the collaboration.  The university’s principal investigator believes that he invented the technique, but neither he nor the university has sought to patent the technique and, unbeknown to them, another institution has already patented it so it is unlikely that the university would be able to patent it anyway.

How are these examples affected by the contractual obligations quoted above?

Software

In the case of the software, what is being “used” in the collaboration is an intangible product – software.  It is not being made available to the other parties. It is probably protected by copyright in the lines of code, and perhaps as confidential information. However, there is every chance that this IPR may be overlooked by the parties, as the academic mistakenly believes that, because the software implements ideas that have been published in an academic paper, it is freely available for use by anyone and not protected.

Therefore, there is likely to be some Background IPR in the software. But it is debatable whether this IPR (as distinct from the software itself) has been “used” in the collaboration. Note that the definition of Background IPR does not include information or software as such, and there is no other defined term such as Background Information, which sometimes appears in agreements of this kind.

If this Background IPR has been used, it is debatable whether the other parties need access to it.  Perhaps they would like to have access to the software, to validate work done in the project or do further work, in which case they will also need a licence under the Background IPR.  But this is all highly speculative, based on the facts described above.

If it turns out that the other parties do need a licence to use the software, this could be problematic for the university, if it has plans to hive the software off into a spin-out company. If the university or the investors in the spin-out company manage to spot the issue in their IP due diligence, it may be necessary to carve out free licences to the other collaborating parties as required by the above clauses, which may dilute the value of the software as an asset of the company.

Scientific technique

We might speculate that the other collaborating parties will need to use, in subsequent development or commercialisation work, the radio-labelling technique that the university has used in the collaboration.

It is doubtful whether the university has any Background IPR in the technique, as it has not patented it, but certain aspects may be protected as confidential information. The technique as such is pure information and not within the definition of Background IPR.

Let us assume that, despite these technical points, the parties identify the technique as the university’s Background IPR. Now the university must license the technique to the other collaborators. But in fact, the only real IPR protecting the technique is a patent that is owned by someone else, which the parties are not even aware of when they record the technique as the university’s Background IPR.

Is the university liable if the patent owner sues the other parties when they use the technique? The above clauses don’t include any express IP warranties, but might such a term be implied? Which law is the contract made under? Many international research collaboration agreements are made under Belgian law.  What does Belgian law have to say about implied warranties in an IP licence?

Observations

pieIn IP Draughts’ view, many of the clauses that are seen in research collaboration agreements on the subject of Background IPR are of doubtful value. They seem to be there to establish a general principle, rather than provide specific legal protection, and sometimes the wording raises more issues than it settles.  Issues that may arise include:

  1. The agreement may provide a mechanism for identifying Background.  In practice what the parties are likely to do (particularly if the people doing the identification are scientists rather than IP specialists) is identify background information -techniques, software, etc – rather than items of intellectual property. Sometimes the wording of the agreement doesn’t distinguish between the two.
  2. Universities typically don’t do due diligence on background IPR before conducting a research project.
  3. What the user of Foreground IPR is typically interested in is not being prevented from using the Foreground IPR because someone owns some Background IPR. That is fine in principle, but if the parties cannot realistically identify the Background IPR that they are concerned about, any “licence” to unidentified Background IPR is rather notional. Perhaps it would be better to include a simple obligation on the parties not to sue one another for infringement of Background IPR if that infringement occurs in the context of using or exploiting Foreground IPR.
  4. In addition, perhaps a distinction should be made between use of Background IPR in further R&D activity, and use in commercialisation. There may be stronger arguments for asking for financial terms in any licence, if the IPR is used in comercialisation.
  5. There is also the issue of what happens if the Background IPR cannot be licensed because it is “tied up” elsewhere, eg by an exclusive licence or assignment.  Sometimes, the licence clause will only require a party to license if it is free do so.  But this begs the question of whether a party is allowed to tie up their Background IP after the collaboration agreement has started, eg by assigning it to a spin-out company.

theoryIt is understandable that parties, or their IP advisers, may be concerned that the assertion of rights to Background IPR presents a risk to the commercialisation of Foreground IPR. How real or theoretical that risk is will vary depending on the parties and the technologies concerned. When dealing with university parties, the risk seems likely to be lower than with some commercial companies.

IP Draughts has not come to any settled view on how best to deal with these issues (and part of the problem may be the use of “one size fits all” clauses on Background IPR) but he is tentatively moving in the direction of thinking that a very limited licence, similar to a “covenant not to sue” approach, may be the right way forward. For example, something along the following lines – but this is not final wording!

The parties acknowledge that the performance of the Project, or the use of Foreground Intellectual Property as contemplated by this Agreement (together, “Permitted Activities”), may infringe a party’s Background Intellectual Property. The Parties’ Principal Investigators have identified in Schedule 1 any significant Background Information that they think will be used in the Project, and any Background Intellectual Property that they are aware of (but without conducting any searches or investigations) which they consider likely to be infringed when conducting Permitted Activities.

If a Party considers that it needs access to another Party’s Background Information or Background Intellectual Property in order to conduct Permitted Activities, it will so notify the other Party and those Parties will discuss in good faith whether such access will be given and on what terms.  Where access is given for research and development activities, it will generally be given without charge.

MM910001107This wording is work-in-progress, and may well be revised in light of readers’ comments. A key difference from the wording quoted at the beginning of this article is the lack of definite and immediate licences to Background IPR. Sometimes, it will be appropriate to include such licences in the collaboration agreement. But is it right to include them as a default position in a template agreement? IP Draughts is not sure, and would welcome any suggestions.

 

 

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