Category Archives: Legal Updates

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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Sex bomb

sex bomb

There are no interesting IP contract court cases to report this week.

Readers from the academic sector may, however, be interested to read a Court of Appeal case in which an academic is accused of:

“(a) being a sex pest;

(b) being an alcoholic;

(c) being unqualified for his lecturing post at the university;

(d) being guilty of deception in apparently buying his qualifications;

(e) making false promises to external departments of the university;

(f) professional incompetence;

(g) being arrogant and patronising in his manner; and

(h) telling lies.”

IP Draughts can’t imagine any academic he has encountered falling into any of these categories.

mark anderson qcIn other news, IP Draughts’ (“MA1″) namesake, Mark Anderson QC (“MA2″) has become a Deputy High Court judge.  MA1 and MA2 attended Bar School together in 1983 and were in the same advocacy class.  All that MA1 can remember of MA2 is that MA2 commented in class that MA1′s advocacy was “very earnest”.  IP Draughts feels that, after 30 years, he should forgive MA2 for this remark.

Finally, IP Draughts urges people who are still considering whether to sign up for next February’s UCL course IP Transactions: Law and Practice, to get their applications in as soon as possible, and to let Lisa Penfold (lisa.penfold@ucl.ac.uk) at UCL Faculty of Laws know of their intentions.  The course attracts 29 CPD points and students can take an exam after the course, leading to a Certificate in Intellectual Property Transactions, issued by the Institute of Brands and Innovation Law at UCL.  The official deadline for applications was yesterday, but there are still a few vacancies.  The course brochure can be downloaded from here.

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Keeping secrets deep in the heart of Texas

texasHow much time should you spend in negotiating the law and jurisdiction clause in a confidentiality agreement (CDA)?

This question probably assumes that the parties are based in different jurisdictions.  If both parties are located in the same jurisdiction, it would be rare for them to propose a different jurisdiction for their contract.  Rare but not impossible: some Russian oligarchs seem to prefer to use the English courts to resolve their business disputes.

In most types of business contract, it would be unwise to gloss over this important issue in negotiations or to leave the point unaddressed in the contract.  But there are exceptions.  Research contracts with US state universities commonly leave the point unstated, as many US state universities claim to be not allowed, as a matter of state law, to agree to a law and jurisdiction outside their state.  A practice has developed, particularly in multi-party collaborations that involve several US state universities, for the collaboration agreement to remain silent on law and jurisdiction.

frogAnother exception may be routine CDAs.  Some technology-based companies enter into dozens, or sometimes even hundreds, of CDAs per year.  Often, these CDAs are the first stage in a business courtship.  For any given package of technology, the technology owner may enter into CDAs and then discuss potential business transactions with multiple, potential collaborators, before entering into a more substantive agreement with one of them.  Put more graphically, the company kisses a large number of frogs before finding, and consummating a relationship with, what it hopes will be a charming prince.

Given the large number of CDAs that some companies sign, and the smaller number that lead to a substantive transaction, it is tempting to try to minimise the time and costs of negotiating each CDA.  Thus, when a sticking point in the negotiations is the law and jurisdiction clause (as it often is), it is tempting to omit the clause completely.

IP Draughts recognises that this is a pragmatic approach in CDAs, and in many cases he would not fight with a client who proposed to follow this route, particularly if the other party’s jurisdiction is a reasonably mainstream one, and preferably (but not essentially) one with a familiar, common law legal system.  To take an example at random, this thought process might be followed if one party is based in England and the other party is based, say, in Texas.

Forum shopping with Frankie Howard

Forum shopping with Frankie Howard

Although this is a pragmatic solution, and saves costs in the short term, there is always the risk that the CDA will be litigated.  In that case, the litigation costs may well be increased, and the outcome of the litigation may be less predictable, if there is no law and jurisdiction clause in the contract.

A good illustration of this point, and the reason for writing this article, is the recent litigation between two listed companies operating in the market for touch-screen displays: (1) a UK company based in Yorkshire, England, Carclo plc (listed on the London Stock Exchange), and more particularly its subsidiary Conductive Inkjet Technology Limited (CIT), and (2) a US corporation based in Texas, UniPixel Displays, Inc (UPD, listed on NASDAQ).

These parties are currently engaged in simultaneous litigation in both the English and Texas courts in relation to a claim that UPD has breached confidentiality obligations with CIT.  Essentially CIT claims that certain patent applications filed by UPD claim inventive concepts and subject matter that were disclosed to UPD by CIT in confidence, and therefore CIT should be treated as the owner or part-owner of these patent applications.

Forum shopping with Mr Justice Roth

Forum shopping with Mr Justice Roth

The English version of the litigation has most recently surfaced with the publication on 7 October 2013 of an interim decision in the Patents Court case of Conductive Inkjet Technology Limited v Uni-Pixel Displays Inc [2013] EWHC 2968 (Ch).  Roth J was asked to set aside permission previously granted to CIT to serve claims on UPD outside the jurisdiction of the English court – ie in Texas.  He was also asked for a stay of the English proceedings while parallel proceedings in Texas were pending.

IP Draughts would not usually trouble readers with a report of interim proceedings that discuss arcane legal principles such as applicable law, forum non conveniens, the court’s power to stay proceedings,

Forum shopping in the Texas state court with Judge Cara Wood

Forum shopping in the Texas state court with Judge Cara Wood

and jurisdiction provisions in the European Patent Convention.  He does so now only to illustrate the expensive procedural mess that parties can find themselves in, when litigating an international CDA.  The case is also interesting for its discussion of how the Texas courts have approached the parallel proceedings (with the case being bounced up to the Federal court and then back to the State court), and how two expert witnesses on Texan law (both retired Texas judges) differed in their interpretation of applicable legal principles.

The remainder of this article will therefore pick up some interesting titbits from the case rather than summarise all the legal arguments.

The case report discusses three CDAs between the same parties, referred to

Forum shopping with Judge Simeon Lake III in the Federal court for the Southern District of Texas

Forum shopping with Judge Simeon Lake III in the Federal court for the Southern District of Texas

variously as the 2005 NDA, the 2006 NDA, and the 2010 NDA.  The court focuses mainly on the 2005 and 2010 NDAs.  It seems that the parties negotiated the 2005 NDA in some detail, and agreed to remain silent on law and jurisdiction, after CIT rejected UPD’s proposal for Texas law.

When UPD presented a similar NDA in 2010, which included their preferred wording on law and jurisdiction, it seems that CIT chose not to spend time in negotiating its terms, and therefore the following wording remained in the final version:

This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, except for its rules concerning the conflict of laws, and venue shall lie exclusively in the courts of Montgomery County Texas.

montgomeryInterestingly, CIT framed part of its case as a claim that UPD had breached an equitable obligation of confidence.  IP Draughts surmises that this is an attempt to bypass the argument that claims for contractual breach of confidence, under the 2010 NDA, should be heard in the Texas court.

After extensive legal analysis, Roth J dismissed UPD’s application to set aside permission to serve out of the jurisdiction or stay the action pending the outcome of the Texas case.  This is an oversimplification, but will do for now.  For complex legal reasons it seems that CIT may be in difficulty in serving proceedings overseas for anything other than a claim for a UK-wide injunction.  In other words, CIT may have to forego a claim for a worldwide injunction.

This brings us on to another point.  Although this case is also about ownership of patents, the typical claim in a breach of confidence case is for an urgent (ie interim or interlocutory) injunction.  It may be very difficult to enforce interim orders outside the jurisdiction of the court in which the injunction is granted.  Therefore negotiating for the exclusive jurisdiction of your own country’s or state’s court in a CDA may be counterproductive if you need to bring interim proceedings in the other party’s court.

yorkshireIt is not clear to IP Draughts where the CIT v UPD case is going.  It will be interesting to see whether the case comes to trial (in either the English court or the Texas court or both) and, if it does, what evidence CIT has for a claim that UPD misused CIT’s confidential information.  IP Draughts will report on the case as it develops.  In the meantime, as both companies (or their parents) are listed companies, they may have to make public disclosures of the progress of the litigation.  This report from a regional UK newpaper, the Yorkshire Post, reports on the litigation as follows:

In a separate development, Carclo’s chief executive Chris Malley said he was pleased to announce that the English High Court has said CIT can pursue claims against US rival Uni-Pixel Displays in the English courts for breach of confidence and patent entitlement.

He added that as a result of this successful decision, Uni-Pixel will be obliged to pay the majority of CIT’s costs.

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Property in information? Wrong question, m’Lud.

Readers with long memories will recall this blog’s discussion of a case in the English High Court last year, in which the judge decided that there was no “property” in information.  The information in question was emails stored on a computer.

High Court decision

Mr Adkins, when he was CEO of Fairstar

Mr Adkins, when he was CEO of Fairstar

The case, Fairstar Heavy Transport NV v Adkins [2012] EWHC 2952 (TCC) had some unusual facts.  Mr Adkins had been employed as the CEO of Fairstar (a company involved in the shipping industry), but was not an employee.  His services were provided through a Jersey-based company controlled by him.  Emails sent to his company email account were automatically forwarded to his personal email account and the original emails were then deleted from the company’s system.

The agreement between Mr Adkin’s company and Fairstar was made under Dutch law and was subject to the exclusive jurisdiction of the Dutch courts.  A dispute between that company and Fairstar had been resolved by a settlement agreement made under Dutch law, but there was continuing litigation in the Dutch courts between Fairstar and Mr Adkins personally, in which it was alleged that he had mismanaged the company, and in which Fairstar sought to enforce some restrictive covenants.

The only question before the English court was whether Fairstar could have access to the emails on Mr Adkin’s personal computer.  Mr Adkins was refusing to provide access.

landIn the English High Court, the parties’ counsel were asked to formulate a specific question on which they sought a ruling from the court.  They came up with the following:

Does Fairstar have an enforceable proprietary claim to the content of the emails held by Mr Adkins… insofar as they were received or sent by Mr Adkins acting on behalf of Fairstar?

The judge in the High Court, Edwards-Stuart J, decided that the answer to this question was “no”.  He reviewed the case law on the nature of information and concluded that there was no property in pure information.

Appealing to the Court of Appeal

Fairstar sought leave to appeal the decision.  The judge refused, but the Court of Appeal decided to give leave to appeal.  The case came before the Court of Appeal in April this year (Mummery, Patten and Black LJJ), and their written decision was handed down last week.

special agentIt seems that Fairstar’s legal team had a rethink on the best way to present their case to the Court of Appeal.  Instead of focussing on the jurisprudential nature of information as property, they argued that Mr Adkins was acting as an agent of Fairstar, and that under the law of agency, when an agency appointment comes to an end, the principal is entitled to have access to documents held by the agent in his capacity as agent.

Mr Peter Susman QC, for Fairstar, asked the court to allow him to submit a revised skeleton argument that focussed on this area.  Mr Richard Spearman QC, for Mr Adkins, objected on the ground that this was a completely different point, which had not been argued in the High Court, and that it would be improper to allow the appeal to be argued on this new legal basis.

Mummery LJ, who gave the only judgment in the Court of Appeal (and with which Patten and Black LJJ agreed) allowed Mr Susman to submit his revised skeleton argument and to argue the point before the court.  In Mummery LJ’s view, it was part of the original case that Mr Adkins was an agent of Fairstar.  It was unfortunate that the parties had focussed so much on the proprietary nature of information in their question to the court (quoted above).  This had introduced an unnecessary complication and was a distraction from the core issue, which was the relationship between Fairstar and Mr Adkins.

Court of Appeal decision

Mummery LJ declined to enter into the controversy over whether information is property.  It was not necessary to do this in order to decide the case before him.  In particular he was very reluctant to make sweeping statements, such as that information could never be property.  There might be cases where the facts pointed in a different direction.  For instance, he observed that:

Some kinds of information, such as non-patentable know-how, are more akin to property in their specificity and exclusivity than, say, personal information about private life.

Before stating his conclusions on the agency point, Mummery LJ cleared the decks by saying what the case was not about.  In the English case:

  • there was no claim for ownership of the computer on which the emails were stored, nor any claim to own any USB stick, electronic medium, sheets of papers or other physical thing or material
  • there was no claim to ownership of confidential information in the emails, nor any claim of misuse of confidential information
  • there was no claim to copyright or other IP in the content of the emails
  • there was no allegation of breach of contract, fiduciary duty or any other wrongful conduct on Mr Adkin’s part, and he was willing to preserve the emails.

distractionThus, the only issue was whether Fairstar was entitled to access to the emails.  Fairstar described this claim as “proprietary” but, as mentioned earlier, this was an unfortunate distraction from the real basis of the claim which was in agency.

Mummery LJ accepted Fairstar’s submissions and allowed the appeal.  In summary, his main reasons were:

  1. The relationship was one of agent and principal.
  2. A principal is entitled to require production by the agent of documents relating to the affairs of the principal.  This right survices termination of the agency appointment.
  3. Documents may include information held electronically (eg see CPR 31.4).
  4. Documents held on a computer are subject to the rule summarised in point 2 above.
  5. The question of whether information is property does not need to be decided in this case.

Comments on the decision in the Court of Appeal

In IP Draughts’ view, Mummery LJ was bending, if not breaking, the rules to do justice in the case.  Viewed from the outside, it looks like a completely new line of argument was raised in the Court of Appeal.  It is difficult to detect any sign of the agency point being part of the argument or decision in the High Court.  The principal line of authorities under discussion in the High Court was on the question of property in information.  The principal line of authorities under discussion in the Court of Appeal was from a different branch of commercial law – agency law.

Mummery LJ is a very experienced, wise, humane and pragmatic judge who is due to retire fairly soon.  His approach is the opposite of some Chancery judges whose judgments read more like academic treatises than practical decisions for busy people.  IP Draughts is left feeling that justice was probably done in this case, but at the same time he is uneasy: if judges disregard the rules on what can be argued on appeal, there may be costs to the justice system overall, and the outcome of cases becomes less predictable.

As for the question of whether information is property, we are no further forward.  As this blog has previously mentioned, the question is not just an academic one.  It has practical implications for the wording of IP contracts, including licences and assignments.  Mummery LJ rightly highlights that commercial know-how looks more like property than private information.

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