Author Archives: Mark Anderson

About Mark Anderson

I am an English solicitor (attorney) who qualified originally as a barrister in 1983. After working as an in-house lawyer and with Bristows in London, I formed Anderson & Company (now Anderson Law LLP) in 1994. Our offices are based in Oxfordshire, on the banks of the River Thames, 50 miles west of London. Outside work, I enjoy walking, swimming and canoeing. I met my wife Sara whilst cycling from Land's End to John O'Groats (1,100 miles) in 1991.

Contracts in Shakespeare – an occasional series

tempest

(Alex Kingston, above left, as Prospero in the Tempest, by William Shakespeare)

Regular readers of this blog may recall that it occasionally mentions plays that have a contract theme.

The current Royal Shakespeare Company production of the Tempest, starring Alex Kingston, is set in the 21st century. It is funny and entertaining, while being mostly true to the text. An obvious adaptation is that the central character is female rather than male. Kingston conveys all the icy, intellectual grandeur of Prospero, self-taught magician and usurped Duke of Milan, who has been stranded on an island for over a decade with her now teenage daughter. But she also brings a new perspective. The power struggles of the court of the King of Naples are seen differently when a bookish, trusting woman is deposed from her dukedom in favour of her younger brother, a scheming lightweight.

The relationship between Prospero and Miranda, his/her daughter, has a modern feel. At times, IP Draughts was reminded of the mother/daughter relationship in the film of Mamma Mia, and he wondered how Meryl Streep would have played Kingston’s role. With all of Kingston’s prior experience of Shakespearian roles, she is probably better cast than Streep would have been. Another comparison is with Kingston’s role as River Song in Doctor Who. In both roles, she conveys authority and wisdom, though Prospero has a vengeful side that would be unexpected in a benevolent Time Lord*. IP Draughts was interested to see many children in the audience at yesterday’s matinee performance, more than he usually sees at that venue. He hadn’t previously thought of the Tempest as a child-friendly play.

And so, on to the contracts. As with several other Shakespeare plays, there were references to a (future) marriage contract, in this case between Miranda and Ferdinand, son of the King of Naples. The play has a happy ending, so by one definition is a comedy rather than a tragedy.

The only other contracts mentioned are those that will be abolished in an ideal future. Shakespeare puts into the mouth of Gonzalo, a counsellor to the King of Naples, words very similar to those previously written by the philosopher Montaigne in an essay, Les Cannibales.

I’ the commonwealth I would by contraries
Execute all things; for no kind of traffic
Would I admit; no name of magistrate;
Letters should not be known; riches, poverty,
And use of service, none; contract, succession,
Bourn, bound of land, tilth, vineyard, none…

Mmm… No contracts, no judges, no ownership of property, no employment, no commercial activities, no literacy. No IP lawyers either, presumably.

Gonzalo’s utopia is ridiculed by the other characters in the play. The King of Naples remains in charge of his kingdom. Once her younger brother has been forced to give his ill-gotten dukedom back to Prospero, the Duke of Milan is content to remain in charge of Milan. The traditional social hierarchies remain.

 

*A reader has corrected me: River Song is not a Time Lord, and not entirely benevolent. See comments.

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Oxford case (7): permission to appeal refused

noThe Oxford case keeps on giving… material for more articles!

This week, the parties were back in court, for a hearing on consequential issues: liability for costs, confidentiality, and whether they could appeal the decision. The further hearing is reported as Oxford University Innovation Ltd v Oxford Nanoimaging Ltd (Re Consequentials) [2023] EWHC 138 (Pat) (26 January 2023).

  1. Costs. After hearing technical arguments about the amount of legal costs that should be paid, the judge ordered ONI to make an interim payment to OUI of £925,000, in respect of OUI’s legal costs. Nice for the law firm, Powell Gilbert, who represented OUI! As the judge pointed out, the amount of the costs that ONI has been ordered to pay exceeds the amount of royalties that they previously refused to pay, which led to this case being brought.
  2. Confidentiality. Oxford sought confidential treatment of certain evidence that had been put before the court. As the judge explained, the evidence “…references the internal discussions and documentation of the Intellectual Property Advisory Group (“IPAG”) of the University and OUI. On that basis [Oxford argued that confidential treatment] is appropriate because there is a risk that this material contains information which remains genuinely commercially confidential and the disclosure of which could prejudice Oxford or a third party.” The judge granted the confidentiality order requested, but with leave for a party to apply to the court to vary this order on notice.
  3. Appeal. The judge refused leave to appeal, on the grounds that “an appeal stands no real prospect of success and there are no other good reasons for granting permission.” ONI has a small window of time, in which it can apply directly to the Court of Appeal for leave to appeal, despite the judge’s refusal – a second bite of the cherry.

Why an appeal is inappropriate

Unusually, this judgment gives detailed reasons why an appeal is inappropriate. The judge summarises each of the main arguments in the case, and why it stands no prospect of being overturned on appeal. IP Draughts is not sure whether the judge’s comments are directed primarily at the Board of ONI, to persuade them to drop the case, or to the Court of Appeal judge to whom ONI might apply for permission to appeal. The judge seems to be suggesting that the case has so many complex features that a Court of Appeal judge, coming to the matter cold, might find it difficult to see the wood from the trees. This could be regarded as helpful or impertinent, depending on your view. He concludes:

…the prospect is vanishingly small of the English courts reaching decisions with the aggregate effect that ONI would end up in a better position than it enjoys at present with respect to payment of royalties for key aspects of design of the Nanoimager which appear, prima facie, to be at percentages in the normal range for products of this kind.

Another way of putting this might be: while Mr Jing might personally wish to campaign for fair treatment of students, he is not a party to the proceedings. The case concerns a claim for unpaid royalties, which was brought against his current employer, ONI. ONI defended the claim, presumably on business grounds. ONI’s business interests are unlikely to be improved via an appeal.

Fresh issues

The judge also mentions that an appeal might result in additional, legally complex issues being raised by the parties in litigation.

Were the Court of Appeal to overturn the Main Judgment on the grounds suggested, that would open the door to further proceedings including as to what relief or remedy should be granted. On the assumption that an appeal succeeded, further proceedings would need to address the following …points …

The judge lists several points. They include:

  • whether an IP policy should be regarded as unfair based on its wording, even if in practice the policy is interpreted more narrowly than the wording suggests [a similar point was raised by IP Draughts in an earlier article on this blog]
  • even if Mr Jing has not assigned his interest in the licensed patents, has Oxford retained some ownership rights in the licensed patents, because there were two other inventors and they validly assigned their interests to Oxford
  • what the effect of the previous point is on the validity of the licence agreement to ONI
  • whether the parties are “estopped” from raising any of the arguments that were made in the case (eg that Mr Jing rather than OUI owns the licensed patent), on the basis that they voluntarily entered into the licence agreement
  • whether, if the licence agreement is void, any legal principle such as restitution would result in any reallocation of the benefits previously obtained in respect of the licence (eg revenue shares)

The judge opines that deciding these issues would be of “very limited wider interest” (but IP Draughts would be interested!). He also repeats a point, made in his main judgment in the case, that finding the licence agreement invalid on the ground that Mr Jing owns the IP, would lead to business uncertainty for ONI that its Board (as distinct from Mr Jing personally) might consider not to be in the company’s best interests.

In essence, his latest judgment makes an argument, on legal, business and even emotional grounds, for ending the litigation now rather than trying to prolong it through an appeal.

IP Draughts looks forward to hearing whether ONI applies directly to the Court of Appeal for permission to appeal, and if so, whether it obtains permission.

The business context

IP Draughts is also curious to know what ONI’s US-based investors think about the company’s expensive decision to defend OUI’s claim for royalties. Were they expecting ONI to win the case? Did they realise that under the English system, unlike the US system, the loser generally has to pay the winner’s legal costs? Or were they content for shareholder funding to be spent on what might be considered altruistic grounds, in support of a campaign to improve the lot of students at UK universities? The judgment mentions that:

The finance team at ONI has been replaced and currently matters are being handled by an interim CFO who needs to call upon external assistance in order to finalise royalty statements.

No reasons are given for this replacement of staff, so it is unclear whether it is linked to the outcome of the case.

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Habit, not logic, in IP transactions

familiarityWe are all creatures of habit. In commercial transactions, we like to use templates and clauses that we have seen before. It is comforting to use familiar concepts and wording in our contracts. We choose not to think so carefully about them.

We dignify our preference for the familiar with wise-sounding arguments. This clause is “market”. That clause has been tested in the courts, so using different wording is risky. Usually, these arguments are spurious nonsense.

So many examples come to mind. Here are the first 10 that IP Draughts thought of, assuming the agreement is made under English law:

  1. Parties. Adding Affiliates to the description of the parties (see popular blog article here).
  2. Interpretation. Including a long list of interpretation clauses in your contract, probably because they are in an office template. Making this drafting nonsense worse by putting the clauses “front and centre” in clause 1.2, rather than hiding them at the back of the contract.
  3. IP. In a technical services agreement, stating that the customer “owns the Results”, in addition to clauses that state that IP in the Results belongs to the customer, and the Results are to be considered the customer’s confidential information. IP Draughts has no idea what this statement means.
  4. Confidentiality. Refusing to accept unlimited duration to confidentiality obligations “because we need to know when we can close our file”.
  5. Statutory warranties. Including the phrase “with full title guarantee” in an IP assignment, probably because it is in your firm’s template assignment, without stopping to consider whether the statutory warranties that are implied by this phrase are appropriate in context.
  6. Representations. Starting a list of warranties with the phrase “represents and warrants” so as to give your client the opportunity to sue in tort instead of breach of contract.
  7. Indemnities. Requiring indemnities against breach of contract.
  8. Exceptions to limited liability. Carving out from the limitation of liability clause a long list of breaches, eg of confidentiality obligations, just because you have seen this in other agreements.
  9. Insurance. Requiring a party to have insurance against all risks arising from the contract. This is almost certainly impossible to achieve, as every policy has a financial cap, exceptions, and circumstances where the policy won’t pay out (eg non-disclosure).
  10. Block capital letters. Putting some clauses in block caps, because you’ve seen it before (probably in a US contract).

Some of the above examples might be justified in context. If you have thought carefully about the clause before including it, fine. IP Draughts’ objection is to clauses that are “there because they are there”.

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Oxford case (6): understanding university revenue sharing policies

shareIP Draughts hadn’t planned to write this article. He thought five detailed articles on the case of Oxford University Innovation Ltd v Oxford Nanoimaging Ltd [2022] EWHC 3200 (Pat) would be enough.

But the case keeps provoking thoughts about IP and universities. One that has caught IP Draughts’ attention is the purpose of a university’s revenue sharing policy.

To recap, most UK universities have an IP policy that claims ownership of certain IP generated by its researchers, whether they are employees or students. Irrespective of the poicy, most universities will get a formal assignment from the inventors at the time an initial patent application is filed. An incentive for executing the assignment is that the inventors are typically entitled to benefit from the university’s revenue sharing policy. Universities have similar revenue sharing policies, and they are thought to be generous to the inventors, at least compared with what an employee inventor might receive for making an invention when working in industry. For example, this is Oxford’s:

Total net revenue Inventor(s) total General fund Department Oxford University Innovation
to £50k 85.7% 14.3% 0% 30%
£50k to £500k 45% 30% 25% 30%
over £500k 22.5% 40% 37.5% 30%

Some university policies don’t have the fourth column, which is the top slice taken by Oxford’s technology transfer company before revenues are allocated three ways: to inventors, department and university.

Where there is more than one inventor, they are typically asked to agree among themselves what proportions of the inventors’ share each of them will have.

As was discussed in the previous article, in the above-named case, ONI argued that the allocation to Mr Jing, a DPhil student, was an unfairly low percentage, 45% of the inventors’ share. The judge rejected this argument for several reasons.

What is troubling IP Draughts is the following comment from the judge on this subject:

169. In particular, without Professor Kapanidis’ work and leadership, there would have been no Nanoimager project at Oxford. Without Mr Jing’s work, the detailed development is unlikely to have proceeded as quickly or possibly in the specific direction it did. Dr Crawford also helped the project to a material extent. That situation seems to me a clear one for the two researchers most involved respectively (i) at a higher level on overall design over a long period and (ii) a shorter period of detailed design contributing more to the patents to share equally the larger portion of benefits with the individual making the lesser contribution throughout entitled to a lower share which is ultimately what was agreed.
170. I find that there was nothing unfair to Mr Jing about the process whereby that was the position reached. In making that evaluation I do not say that it is always appropriate (or fair) for a head of a project or department to share equally with some of those more junior who undertake more of the work and, sometimes, it can be appropriate to provide for independent review processes by those not involved (as are provided under the IP Provisions discussed below). It was however appropriate in this case.

These quoted paragraphs form part of a larger discussion by the judge about fairness in the negotiation of revenue shares between the three “inventors”. The discussion appears to indicate that the judge thinks that someone who was not actually an inventor of the assigned invention, but participated in related work or leadership, can fairly be allocated part of the inventors’ share under a university revenue sharing policy.

This doesn’t sound right to IP Draughts. The key word in the revenue sharing policy is “inventors” not “team members and leaders”. He would also point out that a slice of the revenue goes to the department, and this may be the appropriate route for rewarding (albeit indirectly) other team members and leaders.

Ultimately, if it is left to the individuals to agree, the true inventors can presumably agree to share with non-inventors. But where the inventor is a student, and the non-inventor is his professor, doesn’t this raise the very point that Mr Jing raised in the above case, ie that the power dynamic between junior and senior staff risks unfairness to the student?

IP Draughts is persuaded by the judge’s view that, on the facts of this case, Mr Jing was not treated unfairly. But he is troubled by the apparent endorsement of professors sometimes getting part of the inventors’ share when they are not true inventors. The judge tries to make clear in paragraph 170 above that this will always be appropriate. But the suggestion that it might be appropriate is not one that IP Draughts thinks should be encouraged.

As part of the fall-out from this important case, IP Draughts recommends that universities should think about what their revenue sharing policies are trying to achieve, and consider whether to revise them to make their intentions clear, particularly with regard to the rewarding of team members and leaders.

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