Interesting legislation – will it happen?

The Queen’s Speech is a grand ceremonial affair, part of the State Opening of (the UK) Parliament. The speech announces the legislation that the government plans to introduce. This year, Queen Elizabeth was not able to deliver the speech in person, and the Prince of Wales read it on her behalf.

The speech, and the government briefing note which followed, announced a very large number of Parliamentary Bills, several of which caught IP Draughts’ eye. It remains to be seen whether they will all be introduced and passed. They include the following items. Bullet points are quotes from the briefing note.

Electronic Trade Documents Bill:

• Allowing the adoption of new digital solutions which bypass the need for paper and wet ink signatures.
• Ensuring that trade documents in electronic form meet certain criteria designed to replicate the key features of paper trade documents. These criteria include: ensuring that an electronic document is subject to exclusive control (only one person, or persons acting jointly, can exercise control over it at any one time) and once transferred the previous holder should no longer be able to exercise control
  over the document.
  
  

Comment: Electronic signatures are discussed in our book, Execution of Documents. Covid has led to a much greater use of Docusign, and similar services. This technical legislation looks interesting.

Brexit Powers Bill:

• Creating new powers to strengthen the ability to amend, repeal or replace the large amounts of retained EU law by reducing the need to always use primary legislation to do so.
• Clarifying the status of retained EU law in UK domestic law to reflect the fact that much of it became law without going through full democratic scrutiny in the UK Parliament.

Comment: Giving the government powers to change the huge amount of retained EU law without primary legislation sounds undemocratic.

Data Reform Bill

• Ensuring that UK citizens’ personal data is protected to a gold standard while enabling public bodies to share data to improve the delivery of services.
• Using data and reforming regulations to improve the everyday lives of people in the UK, for example, by enabling data to be shared more efficiently between public bodies, so that delivery of services can be improved for people.
• Designing a more flexible, outcomes-focused approach to data protection that helps create a culture of data protection, rather than “tick box” exercises.

Comment: Compliance with data protection legislation adds significantly to the cost of drafting and negotiating contract terms for research projects, often with no obvious benefit to the data subject. But what, exactly, will the legislation do? If it is proposed to allow widespread access to health records for research, this will raise important privacy issues.

Genetic Technology (Precision Breeding) Bill:

• Creating a new, simpler regulatory regime for precision bred plants and animals that have genetic changes that could have arisen through traditional breeding or natural processes. No changes will be made to the regulation of animals until animal welfare is safeguarded.
• Introducing two notification systems for research and marketing purposes where breeders and researchers will need to notify Defra of precision bred organisms. The information collected on precision bred organisms will be published on a public register.
• Establishing a new science-based authorisation process for food and feed products developed using precision bred organisms.

Comment: public attitudes have evolved since the first wave of genetically-modified organisms, which resulted in the Flavr-Savr Tomato in the 1980s. IP Draughts recalls that there was widespread public hostility in the UK and Europe to GM crops. The lack of outcry about this proposed legislation suggests that our society is now more comfortable with genetic engineering.

Economic Crime and Corporate Transparency Bill:

• Broadening the Registrar of Companies’ powers so that they become a more active gatekeeper over company creation and custodian of more reliable data, including new powers to check, remove or decline information submitted to, or already on, the Company Register.

• Introducing identity verification for people who manage, own and control companies and other UK registered entities. This will improve the accuracy of Companies House data, to support business decisions and law enforcement investigations.

Comment: If this results in Companies House doing identity checks on company shareholders and directors, this may reduce the need for solicitors and other professionals to do ID checks on corporate clients. IP Draughts would welcome a more risk-based approach to compliance with anti-money-laundering legislation.

Messy litigation over patent agreement

Sometimes, a commercial dispute has so many strands that it takes a while to understand what it is all about. A recent judgment in the case of Otsuka Pharmaceutical Co Ltd v GW Pharma Ltd [2022] EWHC 1012 (Pat) (03 May 2022) is a dispute in point.

GW Pharma is a UK company that develops drugs based on cannabis. Otsuka is a Japanese pharmaceutical company. They entered into a research and development collaboration agreement under which, in brief summary:

1. The R&D concerned the use of botanical extracts from chemovars (chemical products derived from plants) of Cannabis sativa for the treatment of central nervous system and cancer indications.
2. Otsuka provided funding and technical resources. A grant of £1M was made for research to be conducted at the University of Reading (UK) into the anti-seizure properties of cannabinoids. The inventors of the patents relevant to this dispute include scientists at the University of Reading.
3. Otsuka had the right to take forward the commercialisation of any product arising from the collaboration. They elected not to do so.
4. GW Pharma had certain rights to develop candidate drugs and own any associated patents, subject to paying royalties to Otsuka.
5. GW Pharma did undertake the further development of drugs arising from the collaboration, but claims that the product it is selling (known as Epidyolex) is not subject to any royalty obligation to Otsuka. As the dispute is still at an early stage, the precise nature of its defence has not yet been made known, though GW Pharma has given an early indication.
6. Otsuka claims that it is owed royalties on sales that by 2020 had reached around $800M.
7. The agreement is made under New York law, and is subject to arbitration (which is to be conducted in London if Otsuka brings the claim). The agreement does not state whether any court has jurisdiction.
8. The agreement provides that arbitration will not apply to disputes about “patent scope, validity or infringement”.
9. Otsuka brought an arbitration claim in London.
10. GW Pharma challenged the jurisdiction of the arbitrators on the grounds that the dispute was about patent scope, validity or infringement.
11. Otsuka brought proceedings in the English High Court, and GW Pharma challenged the jurisdiction of the English courts. GW Pharma brought proceedings in the New York State Court.
12. Much of the collaboration under the agreement took place in the UK and Epidyolex is now manufactured in the UK. Most of the sales have been in the USA.
13. The judgment linked above is a preliminary decision of the English High Court, to consider whether it has jurisdiction.
14. The judge decided that the English court did have jurisdiction.

IP Draughts is not greatly interested in most of the judge’s reasons for his decision. Questions of forum non conveniens, and whether a patent falls within the rule in British South Africa Co v Companhia de Moçambique [1893] AC 602, are not directly relevant to his transactional practice, particularly if the agreement includes an appropriate law and jurisdiction clause. Two aspects did interest him, though:

1. His experience is that when agreements with an international element provide for arbitration, typically they don’t also provide for a court to have jurisdiction. It is sometimes thought that stating that a court has jurisdiction contradicts the idea that the parties will go to arbitration. Increasingly, he is wondering whether such agreements should state that a particular court has jurisdiction to cover situations where (a) the dispute falls outside the scope of the arbitration agreement (which in this case was stated to be the case for disputes about patent scope, validity or infringement); or (b) there is uncertainty about which court has supervisory jurisdiction over any arbitration proceedings. Part of him still thinks this should often be unnecessary. In the case of (a) the parties presumably intended that patent cases would be brought in the jurisdiction of the patent, while (b) can be addressed by stating clearly the “seat” of the arbitration, as some arbitration bodies’ model arbitration clauses do. But the practical reality is that parties in dispute will often try anything that is to their commercial advantage, so perhaps an explict jurisdiction clause, worded so that it doesn’t apply to the arbitration per se, may be desirable.
2. The judge decided that the dispute in this case was not primarily about patent scope, validity or infringement. Based on the indicative defences that GW Pharma indicated they would raise, he concluded that this was mainly a contractual dispute, and the patent arguments were back-up points, that could be dealt with by staying English court proceedings (and, IP Draughts speculates, also by staying arbitration proceedings) while any patent dispute is heard by the relevant court. This sounds sensible to IP Draughts.

The judge in this case, Ian Karet, is a Deputy High Court Judge. Deputies are part-time, serving up to 30 days per year. As such, Ian can retain his main job, which is as a solicitor with the leading UK law firm, Linklaters, where he has been an IP partner for many years. It is good to see that a few solicitors are being appointed to these roles, though IP Draughts thinks there is still a long way to go before the Judicial Appointments Commission recognises and appoints the available talent on the solicitor side of the English legal profession.

Liability clauses: are they effective?

IP Draughts is delighted to announce the publication of Macdonald’s Exemption Clauses and Unfair Terms.

He and his long-term colleague and writing collaborator, Victor Warner, took over the writing of this book for the third edition. The second edition, which was published 16 years ago, was written by the original author, Professor Elizabeth Macdonald.

Published by Bloomsbury (which purchased certain former Butterworths titles several years ago, supposedly using spare cash from publishing the Harry Potter series), this book complements our other Bloomsbury books in the contract law field, including Drafting and Negotiating Commercial Contracts (4th edn) and A-Z Guide to Boilerplate and Commercial Clauses (4th edn), in that:

• Macdonald is a traditional law textbook that focuses on analysing the law. Drafting effective clauses that limit or exclude liability is a minefield of case law and statute law, and to do it well you need to really understand the subject. Some of the recent cases are also mentioned on this blog, eg this Court of Appeal decision, which upheld a total exclusion of liability in a commercial contract.
• This is not to say that our other books don’t discuss the law, but they do so in a different context. In the case of Drafting and Negotiating Commercial Contracts (DNCC) we focus on practical drafting issues, particularly for the newcomer to the world of contracts. In A-Z Guide to Boilerplate and Commercial Clauses, the central focus is on drafting different types of boilerplate clause, including how they are drafted and why they are needed – the need being often based on case law that is discussed in the book.
• The third edition of Macdonald runs to 558 pages – more than DNCC (378 pages) but less than A-Z (695 pages).

Although these three books could be viewed as making a set, we shouldn’t overlook our other main textbooks, particularly:

Technology Transfer (4th edn) – 1,056 pages, also published by Bloomsbury

Drafting Confidentiality Agreements (3rd edn) – 212 pages, published by Law Society Publishing

Execution of Documents (3rd edn) – 428 pages, published by Law Society Publishing

Between them, these books provide the reader with 2,271 pages of legal goodness!

Plus, we continue to write and update several volumes of the Encyclopedia of Forms and Precedents, as well as chapters in other authors’ books. See the book page on this blog, as well as the other pages that lurk behind the page on which blog articles appear. We also continue to write template agreements and guides for clients and others, eg for PraxisAuril (in the UK) and Knowledge Transfer Ireland (in Ireland).

Six months on the Law Society Council

In October last year, IP Draughts was elected (if that is the right word when he was the only candidate) as a member of the Council of the Law Society of England and Wales, for a new constituency: Business and Commercial Law.

He had been arguing for more representation for commercial lawyers for several years, so when the Law Society finally added several Council seats for commercial lawyers, he thought he should put his name forward.

The constituency is defined as:

Solicitors mainly working on behalf of business clients of all types, and providing non-contentious legal services across a range of areas within the company and commercial law fields,  including intellectual property, technology and media law (including data protection), taxation, pensions and procurement, as well as acquisitions and dispositions of businesses, the regulation of  businesses, and business transactions of commercial products.

The Law Society enables its Council members to send an email to their constituents twice each year. Some readers of this blog should get my first six-monthly report from the Law Society soon; a copy is linked below. Please let me know when you receive it, and whether you have any comments on the views that I have expressed.

Thank you.

council report 220423