Really, don’t make Affiliates a contracting party

The third most popular article on this blog, Don’t make Affiliates parties to the agreement, has been viewed approximately 20,000 times since it was published in 2014.

That article discussed why, in IP Draughts’ view, it is bad drafting practice to define a contracting party, for example in a licence agreement, as “X (together with its Affiliates)”. Now we have another reason for avoiding this pernicious, thoughtless usage.

The English High Court case of Illumina, Inc v Premaitha Health Plc [2017] EWHC 2930 (Pat) was published last month. Thanks to Mark Robinson for alerting IP Draughts to the case on Twitter.

At paragraph 242 onwards, the judgment discusses whether Illumina was an exclusive licensee of a patent and had standing to sue an infringer of that patent.

Section 67(1) of the (UK) Patents Act 1977 provides:

Subject to the provisions of this section, the holder of an exclusive licence under a patent shall have the same right as the proprietor of the patent to bring proceedings in respect of any infringement of the patent committed after the date of the licence; and references to the proprietor of the patent in the provisions of this Act relating to infringement shall be construed accordingly.

Section 130 of that Act defines exclusive licence as:

a licence from the proprietor or applicant for a patent conferring on the licensee, or on him and persons authorised by him, to the exclusion of all other persons (including the proprietor or applicant), any right in respect of the invention to which the patent or application relates.

The court was asked to consider whether an exclusive licence granted to Illumina “and its Affiliates” was an exclusive licence within the meaning of sections 67 and 130 quoted above. Illumina argued that, in practice, all the Affiliates were under the control of Illumina. After considering the evidence and some prior case law, the judge, Mr Justice Carr, concluded at paragraph 254 that Illumina was not an exclusive licensee for the purposes of section 130 and therefore did not have title to sue an infringer, though the patent owner did:

Accordingly, a licence is only exclusive under section 130(1) if it is granted to a single person, although he may grant sub-licences to “persons authorised by him”.  The PPA does not comply with this definition, as it is a licence granted by the proprietor to a number of persons, even though one of them is in de facto control of the others.

This problem could have been avoided if the parties had not included Affiliates within the scope of the licence, and had instead given Illumina the right to sub-license its Affiliates. This is, in any case, the preferable way of extending a licence to Affiliates, for the reasons stated in IP Draughts’ earlier article.

That article did not mention standing to sue as a reason for avoiding the “and its Affiliates” usage. But we can now add that reason to the list.



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Thinking (and communicating) like a lawyer

Readers of a certain age will remember the film and TV series, the Paperchase. Set in a US law school, it tracks the lives of a bunch of law students and their teachers. The star of the show is Professor Kingsfield, a teacher of contract law, whose voice is heard on the introduction to the show saying:

You come in here with a skull full of mush, and, if you survive, you leave thinking like a lawyer.

The good lawyer will first learn how to think, and communicate, like a lawyer. The excellent lawyer, having learnt those skills, will learn when not to think and communicate like a lawyer.

In a different context, Picasso supposedly said:

Learn the rules like a pro, so you can break them like an artist.

Picasso first learnt to paint like this…

IP lawyers learn, if it is not already innate in them, the importance of rigorous accuracy in their professional communications. Errors, or even just looseness of language, are likely to be picked on by supervisors, opponents in litigation, and judges, and criticised. The ambitious, junior IP lawyer or patent attorney learns to make their documents fastidiously accurate.

…before he learnt to paint like this.

IP Draughts has long wondered whether this approach reflects the scientific training of many IP lawyers, or their competitiveness, or both. Or is it just a mysterious trait that has developed in the IP world, without any obvious explanation? IP Draughts would like to know whether the same approach is followed in other areas of law. He suspects, for example, that in the world of entertainment law, personality may count for more than a misplaced semi-colon.

Precision and accuracy may be important qualities, perhaps even dominating qualities, in IP protection and litigation. No-one wants their submissions to be torn apart by opponents or by a bad-tempered judge, in front of one’s clients.

IP Draughts has long thought that this is taken too far. Should a judge criticise a court bundle because of inaccurate pagination, or because a page went through a photocopier askew, leaving some text unreadable? Let’s assume the bundle is 90% right and it has taken 2 hours to get it to that level. It may take another 2 hours (or greater supervision by a more expensive lawyer) to check it so carefully as to ensure that the 10% of errors are removed. Is it a good use of expensive lawyers’ time (and client’s money) to double the scale of the exercise to make the bundle perfect, or should the judge “get a life” and live with the 10% imperfection; or if he needs a replacement page, to ask for it politely and with no hint of criticism?

Whatever the rights and wrongs, meticulous accuracy is a prized skill in the IP professions. For some, it infuses all their communications. They don’t know when to switch it off. Letters to non-lawyer clients read like submissions to the court, and are a big turn-off. Articles on their firm’s website read like an academic thesis.

In IP Draughts’ view, the first thing to think about when writing a letter, an article, a memorandum of advice, or a short reply to an email, is who is the intended reader? What are their expectations? How do they process information? Where on the scale of informal chat to PhD thesis do they want your communciation to be?

Of course, this is not always the only consideration. If you are writing a letter to the other side in litigation, you may also want to advance your client’s cause, influence the other side’s (or their client’s) behaviour, anticipate how a judge would view the style and tone of your letter if it is scrutinised in court, and so on. But for many communciations, the focus should be on the reader.

A small example illustrates the point. IP Draughts has recently been leading on the preparation of a note from the IP professions to government, on the subject of Brexit and IP law. The note is a short document (2-3 pages) that is intended to be read by non-specialists such as politicians and government officials; they will have to consider dozens of areas of commercial law and practice that may be affected by Brexit, and not just IP. Our note needs to be short, clear and quickly engage their attention. The IP professions have made other, more detailed submissions that are being considered by the UK Intellectual Property Office. This note serves a different purpose and has a different audience.

One of the points discussed in the note is the Unified Patent Convention. The note suggests that the UK should seek to participate in the UPC after Brexit, and to keep the court for life sciences that David Cameron, when Prime Minister, negotiated to be located in London.

In IP Draughts’ first draft of this note, he referred to this court being for “the life-science part of the central division of the court”. He was aware that the London court would cover more than just life sciences, but he thought this was a convenient shorthand for the non-specialist reader. During the many rounds of negotiation of the text of this note, he was asked to change this first to the “chemistry (including life sciences)” section. For a quiet life, IP Draughts went along with this form of words, even though it sounded rather lawyerly to him.

This form of words survived several drafts, but at a late stage, when the draft was almost finalised, he was asked to change this to “the section dealing inter alia with life sciences and chemistry”. The person making this request pointed out that, technically, the London court would be for “human necessities” which was wider than just life sciences and chemistry. Thankfully, he recognised that this phrase might not mean much to the intended reader, but he thought it was important to be accurate, and that it would be better to use the phrase that he had suggested.

IP Draughts tried, gently, to push back on this request, but met with firmness.

For a submission to a patent office or court, one could not fault the logic of the IP professionals who requested these changes. But for a short note to a civil servant or politician who knows very little about IP and may care even less, this level of nit-picking accuracy is, in IP Draughts’ view, not only unnecessary, it is positively disadvantageous as it reduces the readability of the note.

Most of the suggested changes to the note were beneficial, and IP Draughts is grateful to all the people who gave up their time to help improve it. The final document was a collective effort and, in IP Draughts’ view was clearly and concisely written. But he wishes he could have been firmer in insisting that questions of tone and style should be left to his judgment.







Filed under Legal practice

One-sided contract term of the day (1): warranty of legal effect

This early blog posting on warranties was praised for its illustrations. Is that like getting points in a school essay for neat handwriting?

IP Draughts

This is the first of an occasional series highlighting IP Draughts’s “favourite” one-sided provisions in contracts.  These provisions are often found in contracts where there is an imbalance of power between the parties, as in many financing transactions, and where the party with the power (let us call him the “Patron”) seeks to reduce a sometimes theoretical risk by imposing it on the other party (the “Supplicant”).

Today’s one-sided term is:

The Supplicant represents and warrants that the terms of this Agreement are legally binding upon it.

The risk being addressed here is that the other, one-sided terms of the contract are not enforceable, perhaps because they are so extreme that a court could not bring itself to enforce them, or because despite the Patron’s “no expense spared” attempts to make the contract watertight, his lawyers have overlooked some loophole.

Sometimes, the clause goes on to state that it does…

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IP-related events in 2018

Everyone at Anderson Towers is currently flat-out busy, helping clients with the pre-Christmas rush of projects.

But that doesn’t stop the planning for conferences and events in 2018. Below are a few that will involve IP Draughts as speaker and/or organiser.

  1. ASTP-Proton’s training course on technology licensing, to be held in Sitges (near Barcelona) from 24-26 January 2018. IP Draughts will give his session on the nuts and bolts of licence agreements, and help Jeff Skinner to run a licensing case study.
  2. University of Geneva and LES conference on technology transactions, to be held in Geneva on 8 February 2018. IP Draughts will give a paper on patent licensing, in which he will suggest that some international standards for licence agreements should be developed, perhaps via UNCITRAL.
  3. The 6th, annual outing of University College London’s 5-day course on IP transactions, to be held in London from 16-20 April 2018. IP Draughts created this course and is its convenor, as well as being one of approximately 30 speakers, who are mostly experienced IP lawyers. The course is designed for newly-qualified IP lawyers, but we also attract patent and trade mark attorneys and licensing managers, from the UK and overseas.
  4. American Bar Association conference on life sciences, to be held in Copenhagen from 10-12 June 2018. IP Draughts is part of the planning committee for this conference (at the request of the Law Society of England and Wales) and will be moderating a session on patient data.

In addition, IP Draughts will be running some one-day courses at UCL in the coming months. Details will follow once dates are set.

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