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.

Another patent purchase programme: IP3

stop me and buy oneThanks to Mike Mireles of the IP Finance blog, IP Draughts has learnt of a new patent purchase programme, known as IP3, that builds on the Google exercise of last year. Mike has expressed interest in IP Draughts’ views on the standard assignment agreement for the new programme. Could it be as bad as the Google agreement that IP Draughts previously commented on, in an article on this blog, Do No Evil …Drafting?

Preparing for this article, IP Draughts revisited the terms of the Google agreement of last year. He discovered that some of the drafting mistakes that he had identified had been corrected, but many others remained.

stop meComparing the new agreement for IP3 with the older Google agreement, it is clear that some of the text of the older agreement has been copied and pasted into the new one. Other parts of the new agreement are very different. IP Draughts has the impression that the drafter has taken their own, favoured template, and bolted in provisions from the earlier agreement, perhaps in response to specific instructions from their client.

He assumes it has been drafted by the Californian law firm, Fenwick & West LLP, as the address of the assignee is stated in the agreement to be this firm’s address in San Francisco, “Attention: Jake Handy”. Handy is a partner in the firm and chairs their technology transactions practice.

If IP Draughts’ name were put in the first paragraph of a document of this kind, he would be very keen to ensure that the drafting was up to scratch.

PATENTS 3 GUINEAS

PATENTS 3 GUINEAS

In IP Draughts’ view, the IP3 agreement is an improvement on the Google agreement, as he would expect from the work product of a reputable IP law firm. The template on which it is based is more mainstream, less home-made in style. There are fewer obvious drafting errors than in the Google agreement. But it suffers from problems that are seen in many law firm templates, including turgid, old-fashioned language, terms that are irrelevant to the present transaction (which should have been deleted) and wording that has been bolted on to the template in a very clumsy way. It also has its fair share of typos.

Here are a few of the problems with the text:

  1. Multiple verb pile-up. Rather than just “assign” the patents, the drafter considers it necessary, in the operative assignment clause (Section 1.1), to “assign, convey, sell, grant and transfer”. This is one up on the Google agreement, which only required the assignor to “sell, assign, transfer and convey”. But in the recital to the IP3 agreement, the assignor has only agreed to “transfer and assign” the patents. The IP3 assignor is also required to execute a formal confirmatory assignment, the terms of which are set out in Exhibit B to the agreement. Here, the assignor is to “sell, assign, transfer and convey”. Perhaps we should forgive the drafter for using redundant language that appears in their office template, though the chair of the technology transactions practice might feel it is time to modernise the wording of his firm’s IP agreements. But should we also forgive the lack of consistency in the wording throughout the document, which is the responsibility of the individual drafter?
  2. Sloppy and inconsistent drafting of warranties. Article 3 sets out some warranties. They start off in conventional style, but the drafting deteriorates towards the end. For instance, the first sentence of Section 3.3 starts “Assignor represents and warrants to Assignee”, which is clear as to who is making the promise, and to whom the promise is given. The second sentence starts “Assignor has provided Assignee with” – is this a warranty by the Assignor, or an acknowledgement by the Assignee? The first sentence of 3.4 starts “No funding …was utilized” – it is not clear whether either party is making any promise about this statement, though it is more likely than not to be meant as a warranty by the assignor. Depending on the intended meaning, all of these statements should start in the same way. The drafter has not cleaned up inconsistencies in the text. The Google agreement was better in this point, as all of the warranties in Article 6 were qualified by lead-in wording at the start of the Article, which read “Seller hereby represents and warrants to Google…”
  3. Typographical errors. The drafter seems not to have focussed very hard on the wording of section 3.4, as it also appears to have two typos: the word “form” in line 1 should be “from”, and the second instance of the word “and” in line 3 should be “any”. In section 1.3 the term “Assignee” should be used rather than “IP3”.
  4. Irrelevant text. According to section 1.1(d), the assignment includes an assignment of “all goodwill associated therewith”. “Therewith”, in this context, must mean the patents and inventions described earlier in the section. Perhaps there is some quirk of US patent law that has escaped IP Draughts’ attention, but he would have expected an assignment of associated goodwill to appear in a trade mark assignment, and not in a patent assignment. Can any US reader enlighten IP Draughts as to what, in legal terms, it means to assign goodwill in a patent? Or is this section a drafting mistake?
  5. Unclear drafting. Section 3.2 refers to the patents being free of encumbrances including “identifications to standard committees”. IP Draughts finds this wording very unclear but assumes it is the same point that appears in the Google agreement as a warranty that “there is no obligation imposed by a standards-setting organization on Seller or Google to license any of the Patents on particular terms or conditions.” If so, IP Draughts prefers the clarity of the Google wording. More significant, perhaps, is the lack of clarity in section 3.3, which states that the assignor has provide the assignee with “all information …concerning …validity, patentability and/or enforceability of the Patents”. Is this a warranty of validity by the back door? Should it be read as all information in the assignor’s possession or all information in the universe?

There are also drafting points that raise commercial issues, eg Article 2 says that assignee “will pay” the price, but doesn’t say when it will do so, though the sentence ends with an acknowledgement of receipt.

Many of terms in the IP3 agreement are designed to protect the interests of the assignee, and in principle one can see why these terms have been included. What is less understandable is why some of them are different from the warranties and obligations in the Google agreement, when the context of both agreements is similar.

Some of these differences seem random, as if they are simply a reflection of the template that the drafter picked up on each occasion. For example, the Google agreement has much more detail on what the seller must do with the prosecution files, including keeping them confidential (section 5.1), considers it important to address the position of Affiliates, and has extensive clauses limiting liability. The IP3 agreement doesn’t focus on these issues but instead has more of a focus on encumbrances, withholding tax and payment of renewal fees after the Effective Date. It is tempting to speculate that some of these terms reflect issues that arose on an earlier transaction, rather than topics that are important for the present transaction.

Overall, IP Draughts prefers the IP3 agreement, but neither document is well drafted. In some areas, as mentioned above, the Google agreement is better. For example, both agreements refer to the possibility that the assignor may have licensed the patents, but only the Google agreement specifically asks the assignor to deliver the licence agreements (see Exhibit A); section 3.5.2 of the IP3 agreement should have included this item in its list.

processIP Draughts is left with the impression that both of these agreements have been drafted by patent attorneys who are focussed on the technical process of transfer of title to patents, and who lack some of the skills required to draft contracts clearly and accurately. Perhaps their clients do not demand such clarity, and instead assume that patents (including patent transactions) are a difficult technical subject that they can’t and don’t need to understand. If so, that is a shame. We are told that a revolution is coming in the way in which law is practised. Lawyers who are inward-looking and focus only on their core skills may find they are less marketable to employers and clients in future.

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10 year campaign by Law Society to change IP law: we’re nearly there

queen speechThis week, Her Majesty the Queen nearly used the words “intellectual property” in public. From her throne in the House of Lords, she outlined the Government’s legislative programme for the current Parliamentary term. The speech focussed on matters of general interest. Perhaps it was unrealistic to expect the Government (which writes her speeches on these occasions) to ask Her Majesty to refer specifically to the Intellectual Property (Unjustified Threats) Bill. Instead, it was swept up in the phrase “Other measures will be laid before you.”

Nevertheless, the Government’s supporting papers, issued at the same time as the speech, make clear that this Bill is one of 21 that they will introduce in the coming months.

The announcement gets us very close to a successful conclusion of a campaign that the Law Society’s Intellectual Property Law Committee initiated in about 2006. The exact date on which we started work is lost in the mists of time, but I have managed to find a committee paper on this subject dated February 2006. As that paper noted:

Today we have an illogical and inconsistent assortment of threats actions relating to various IP rights; they run counter to the over-arching encouragement [e.g. in the Civil Procedure Rules] to communicate and settle rather than precipitately issue legal proceeding and they leave clients and solicitors in jeopardy of  being sued for making actionable threats, simply by reason of the sending of what would otherwise be an uncontroversial letter before action.

Robin Fry

Robin Fry

I am now the Chairman of the IPLC, but credit for this campaign lies mainly with others. Among the many committee members who have worked on the project, two names stand out: Robin Fry, a former member of the committee, who led the discussions and drafted our position papers in the early years, and Isabel Davies, who chaired the committee from 2006 until 2015.

Isabel Davies

Isabel Davies

The IP threats provisions are complex and technical, but in essence they provide a legal remedy to someone who is threatened with IP litigation. The recipient  of the threat can sue the threatener for making “unjustified threats”. How you view these provisions may depend on what question is asked. If you are asked, should we have laws that stop aggressive IP owners from using spurious IP claims to bully smaller businesses and consumers into buying their products (or avoiding competing products), the answer may be yes.

If, on the other hand, you are asked whether struggling creative artists, whose IP is being misused by major companies without acknowledgement or compensation, should be inhibited from asserting their IP rights by satellite litigation that focuses on their precise choice of words in correspondence, then the answer may be no.

At this point, and unusually for this blog, I feel the need to issue a dislaimer. To discuss this subject, we need to get technical, but this journalistic overview should not be used as legal advice. Don’t use any of the information in this article when asserting or defending IP claims!

ceaseEnglish IP owners (or their lawyers) who know about these laws have typically drafted “cease and desist” letters (to use an American term) in the most bland of terms, to avoid being accused of making threats. Unless the recipient of the letter is also in-the-know, and can interpret the code, they are left none the wiser by the letter. Some lawyers have taken the view that even a bland letter is too risky, and that the only safe course of action is to issue proceedings before communicating with the infringer; once proceedings are started, the threats provisions no longer apply. These strategies run completely against the spirit of the English civil procedure rules, where clear and open communication is required.

Yet another strategy is to focus, in the letter, on types of IP that are not covered by the threats provisions. For example, a product might infringe both copyright and design rights. A “clever” lawyer might try to draft a letter threatening (only) to sue for copyright infringement which is not covered by the threats provisions, and avoid mentioning design rights, which are covered by threats provisions.

In other words, the threats provisions are the cause of some absurd behaviour by IP owners and their specialist lawyers.

By contrast, the IP owner who cannot afford specialist UK IP lawyers, and who communicates in clear terms with an alleged infringer, is at great risk of being sued for making threats. Note that the previous sentence refers to “specialist UK IP lawyers”: one of the leading cases on this subject in recent years concerned correspondence from a Spanish law firm that might not have been expected to know the quirks of English law in this area. English law is out of line with most other jurisdictions on this subject.

As specialist IP practitioners, our committee saw that this area of English law wasn’t working properly, and needed to be changed. However, we faced several obstacles. First, the subject was very technical, and unlikely to get much political interest. Secondly, several IP judges were against change, at least in the early days. The IP judges have influence with legislators.

From a judge’s perspective, IP threats provisions might be thought useful as a curb on egregious behaviour by aggressive IP owners. But the judge only sees the cases that come before him or her, and not the large number of claims that are settled before they reach court, or which are not made at all, due to the dampening effect of the threats legislation. As practitioners “at the coalface” we could see what the judges apparently could not see.

law commissionSo, we didn’t get much traction for our ideas in the early years. But we persisted, and kept arguing the case for change, for example in our responses to Government-sponsored reviews of the IP system, including the Gowers and Hargreaves reviews. Eventually the Law Commission decided to take up this issue, with our active encouragement. They issued a consultation document, and later a report recommending changes, which our committee largely supported. The Government mostly accepted the Law Commission’s recommendations. The threats provisions are not to be abolished, but they are to be greatly improved, and made more consistent between IP types.

The Law Commission and the Parliamentary Draftsmen’s Office prepared a draft Bill to effect these changes, on which our committee provided detailed comments. Last year, one of our regular committee meetings focussed on this subject; our invited guests included three representatives of the Law Commission, two from the Parliamentary Draftsmen’s Office, and two from the Intellectual Property Office. My main contribution to that discussion, as a transactional IP lawyer rather than a litigator, was to challenge the use of the term “best endeavours” in the draft Bill; the wording was changed in a later draft.

The Bill is now set to be introduced in the House of Lords by a special procedure that is used for uncontroversial measures.

Sometimes, the law is changed through vigorous political activity. Our campaign illustrates a different approach: it is possible to achieve important, but very technical, changes to the law through patient committee work.

 

 

 

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Just sign the _____ form

sign here1A reader has asked IP Draughts the following question.

 

A university has entered into a research collaboration agreement with a commercial company, under which any inventions made in the course of the research are to be licensed to the company. Employees of the university – academic researchers – are engaged on the research and make an invention. The university asks the academics to execute a written assignment of the invention in favour of the university.

persuadeThe academics query the need to execute the assignment. Perhaps they are suspicious that they are being asked to give away their rights, or they are naturally loathe to commit themselves in writing. Perhaps they secretly know that someone else has rights in the invention. Or they just hate anything to do with the university’s administration. They point out that the university has a written IP policy which states when an invention belongs to the employer, and say that this should be sufficient.

Why, asks a reader of this blog, should the academics execute the assignment?

Several points occur to IP Draughts, not all of which are suitable for publication. We will leave aside the general argument that an employee should comply with all reasonable instructions from his employer. Even though this argument is strong in law, there is a strand of thinking among academics that rejects such a proposition, and a university’s senior management (eg its President or Vice Chancellor) may be slow to walk in that minefield. Instead, this article focuses on some pragmatic points.

  1. General duty of cooperation in relation to external contracts. The university has entered into the collaboration agreement at the request of the academics. This imposes some duties on the academics to cooperate with the university to ensure that the university can comply with its contractual obligations to the company. If an academic is not willing to give such cooperation, he shouldn’t ask the university to enter into contracts.
  2. Responsibility lies with the administration. The university’s administrators (eg its research contracts or technology transfer teams) are responsible for managing contractual obligations in relation to IP. The academics’ starting point should be to cooperate with, and comply with requests from, those administrators in relation to those obligations, unless they are manifestly wrong.  If the academics think that a request is inappropriate, the onus is on them to articulate why it is wrong and to persuade the administration to take a different line.Where a request is reasonable and conventional, any argument for refusing needs to be exceptionally strong.
  3. Invention is subject to external contractual obligations. The premiss of the question is that an invention has arisen under a research collaboration agreement with a company, and is subject to a licensing obligation to the company. If the academics think there is any doubt about this, they have a duty to articulate to the university what their concerns are. In the absence of any such explanation, the university is entitled to assume that the invention should belong to the university so that it can comply with its obligation to license the company.
  4. Company expectations. The company will expect to see a formal assignment from the inventors to the university, so that that university can grant a licence to the company. This is a normal part of the paper trail that a company would expect to see as part of its ‘due diligence’ into its rights to exploit the invention.
  5. Executing assignments is normal. It is normal for academics to execute assignments in favour of their employing university, particularly when patent applications are made or the university has obligations to a sponsor to license or assign the invention. The academic should be reassured that this is not an exceptional request; it is a conventional practice. Indeed, it may be necessary to enable the university to pursue patent applications in some countries.
  6. Legal reason for executing assignments. In the UK, the question of whether an employer or an employee owns an invention made by an employer is subject to the detailed and complex rules set out in section 39 of the Patents Act 1977. Oversimplifying, if the employee’s employment duties include the making of the invention, the invention will belong to the employer; otherwise it belongs to the employee. Nothing in an employment contract can override that statutory position, at least in relation to future inventions. Whether an academic employee has a duty to make inventions is unclear. Unlike many researchers in companies, researchers in universities rarely have contracts of employment that state explicitly that they are employed to invent. For this reason, IP Draughts would usually recommend to a university that it obtain a specific assignment of IP after an invention has been made, rather than rely on an argument that the IP belongs to the university as a matter of general law or under the employment contract. The latter argument may sometimes be valid, but the uncertainties mentioned above make a specific assignment highly desirable.
  7. Don’t rely on the IP policy. A university’s IP policy is generally useful to clarify the university’s approach, and to set expectations among its employees, but it should not be treated as an alternative to a formal assignment of IP as recommended above. There are several reasons for this, including: (a) it is not always clear whether the policy has been incorporated into an individual’s contract of employment or otherwise made legally binding; (b) the policy cannot override section 39 of the Patents Act 1977; and (c) the wording of the policy is sometimes inadequate from a legal perspective, particularly if its drafting has been the subject of negotiation with a union, or has not been supervised by a specialist IP lawyer, or the wording has been copied from another university’s IP policy that suffered from these problems. For example, many policies say that the university “claims” certain rights, the meaning of which is obscure from a legal perspective but is probably designed to be more conciliatory than a simple statement that the university owns those rights.
  8. No good reason to refuse. For the reasons mentioned above, an academic inventor should generally comply with a university’s request to execute an assignment. Assuming that the academic has acted in good faith, there should not be any personal risk on the academic from signing a simple document that transfers title to the invention to the employer. By executing such an assignment, the academic is not entering into a direct contract with the external company that could expose him to liability, and anyway his employer has a general duty to indemnify him against liabilities arising from the performance of his employment duties. This is subject to some exceptions, eg if he has acted fraudulently, but these cases are likely to be very rare. If the employee thinks there is a good reason to refuse, he should explain to his employer what the issue is. For example, if an academic is concerned that the invention may incorporate material owned by a third party, then he almost certainly has a duty to make this clear to the university so that the university can decide whether to disclose the issue to the company.

In summary, just sign the form!get on

 

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World IP Day: inheritance books

world ip dayRhoda Baxter is the nom de plume of a UK-based IP practitioner who also writes romantic fiction. Her first novel, published in 2012, was originally called Patently in Love. It was reviewed on IPKat here. In the words of the book’s Amazon blurb:

A job in a patent law firm is a far cry from the glamorous existence of a popstar’s girlfriend. But it’s just what Jane Porter needs to distance herself from her cheating ex, Ashby, and the press furore that surrounds the wreckage of her love life.

Patently in Love was reissued in 2014 under the title Girl on the Run, presumably for sound commercial reasons. Is there a lesson here about the lack of appeal of IP to the general public?

Rhoda also writes a blog about creative writing. As a regular feature of the blog, Rhoda interviews other writers about their ‘inheritance books’. These are books which have some personal associations for the interviewee, and which they have inherited from a previous generation, or which they would pass on to the next generation.

To coincide with World IP Day 2016, Rhoda interviewed IP Draughts about his inheritance books. The results can be found here.

zitherIn the interview, IP Draughts refers to the books of the late Graham Greene, who was possibly the leading British novelist of the 20th century. IP Draughts is not aware of any major IP issue associated with Greene, but Greene was involved in at least one law suit. In 1937, Twentieth Century Fox successfully sued him for libel, for writing an article that suggested a sexual connotation to the film Wee Willie Winkie, which starred an 8-year-old Shirley Temple.

There is no charge for this valuable piece of information.

 

 

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