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.

Outstanding, professor

The UK Supreme Court has been hearing some important cases recently. As well as the constitutional cases about Brexit, this week it has been hearing some joined appeals in relation to FRAND licensing, including the Huawei v Unwired Planet case. It has been interesting to watch the live streaming of the case, in which a commercial silk, Mark Howard QC, has been conducting advocacy on an IP and competition law case.

Perhaps slightly overlooked among these heavy cases, today saw the publication of the Supreme Court’s decision in a case about employee compensation for patents. In Shanks v Unilever Plc & Ors [2019] UKSC 45, the newly-elevated Supreme Court justice (and former IP barrister) Lord Kitchin gave the judgment of the court.

Under UK patent law, an employee is entitled to compensation if they make an invention that is of “outstanding benefit” to their employer. See sections 39-43, Patents Act 1977 (the Act). For many years, this entitlement seemed more theoretical than real, with very few reported cases that actually awarded compensation. This all changed with the case of Kelly and Chiu v GE Healthcare Ltd in 2009. The two inventors in that case were awarded £1.5M between them. Overnight, employee compensation became an important aspect of UK patent law.

Then along came the Shanks case, which until the decision today had seemed to pour cold water on the idea of employees getting compensation, particularly if they worked for a large organisation. All the decisions of the lower courts in this case had rejected Professor Shanks’ claim for compensation. A main reason for the rejection was the wording of section 40 of the Act, which requires that the employee’s invention is:

(having regard among other things to the size and nature of the employer’s undertaking) of outstanding benefit to the employer…

The benefit in this case to the employer was determined to be around UK£24M, which is a substantial amount of money. But is it an “outstanding benefit”? Unilever group is a huge multinational company, and £24M is a drop in the ocean for a company of this size. The lower courts held that the benefit was not outstanding for a company of Unilever’s size.

Pausing for a moment, what did the legislature intend when they included the words quoted above in the Act? One may speculate that they were trying to ensure that a small financial benefit could be outstanding in the context of a small company. Whatever their intentions, multiple courts have held that a large amount of money could be considered not to be outstanding in the case of a very large company.

But today, the Supreme Court has overturned the lower courts and held that £24M could be considered an outstanding benefit, even to a company like Unilever.

There is much to be gleaned from today’s judgment about the thought process that should be applied when considering whether a benefit is outstanding. For practitioners engaged in arguing cases of this kind, the judgment provides useful material. But the high level point is that it is too simplistic just to compare the financial benefit from the invention (or, under the earlier law, from the patent) with the turnover of the employer group, when making that assessment, as the lower courts and hearing officer had appeared to do.

Other points of detail were considered in Lord Kitchin’s judgment. Can you take into account the time value of money (yes), should corporation tax be deducted when deciding what benefit the employer has had (no), and should the commercial strength of the employer in making favourable licensing deals result in a reduced percentage to the employee (not in this case).

The hearing officer came up with a figure of 5% of the benefit received by the employer, and Lord Kitchin followed his approach, rejecting Arnold J’s reduction to 3% (the percentage awarded in Kelly and Chiu v GE Healthcare). Allowing for the time value of money and inflation, Lord Kitchin awarded Professor Shanks compensation of £2M.

The invention in this case was concerned with test kits, such as those used by diabetics to measure blood glucose levels. Professor Shanks had built a prototype, if not quite in his garden shed, at least at home, using parts from his daughter’s toy microscope set. This happened in the early 1980s. It has taken over 35 years for him to be awarded compensation – a nice retirement bonus.

IP Draughts usually avoids the hard sell in his articles. But if you would like to instruct his firm in claiming or defending a case for employee compensation, he would be pleased to hear from you.

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The small sturdy law firm (3): managing suitors

IP Draughts has been approached several times by would-be buyers of his firm, and he and members of the firm have been approached by headhunters. Indeed, IP Draughts has advised colleagues in the past that they are very likely to be approached, because they are good.

There is nothing unique about being approached, and IP Draughts doesn’t mention it out of vainglory. Rather, he hopes readers may be interested to read a discussion of what can happen. He should emphasise at the outset that his firm has no plans or current desires to merge with anyone. Do not read anything into the fact that IP Draughts is writing this article. Please.

Sometimes, these approaches are cut off by IP Draughts in an initial telephone call from the suitor or their agent. The proposal is clearly barking up the wrong tree. On other occasions, we have had several conversations. It has sometimes been interesting to hear what the suitor has to say. A common problem that IP Draughts has found is that some people are entirely focused on how a joining of forces would benefit them, and they have very little to say about how it would benefit IP Draughts and his colleagues. Nor do they take much trouble to find out what his ambitions are. If IP Draughts were seeking acquisitions, he would spend at least 50% of each conversation on gaining an understanding of what the other party is looking for.

One early approach was by a well-known US IP law firm, headquartered in California. They wanted to build a new team in London. Flattered by the name of the firm, IP Draughts made it clear from the outset that he wasn’t looking for a job, but would be prepared to meet with them and hear what they had to say. After 5 rather content-free meetings including a few pleasant lunches, he lost patience and asked them to attend at his office rather than have him trek into London. He heard nothing more.

A more recent approach from a UK provincial law firm resulted in several meetings including a joint lunch with members of our respective teams. With hindsight, IP Draughts should have ended the discussions earlier. But the mixture of feeling flattered and intellectually curious has its own momentum.

These and other experiences have led IP Draughts to the following hypotheses:

  1. Who? A firm on the prowl, with a chequebook and a strategy of expansion, is often not the right firm to get into bed with. Just because they see some advantage in it, doesn’t mean it is a good idea for us.
  2. Buyer or seller? Why should we be consumed by a mid-ranking commercial law firm, just because it has the larger turnover? Shouldn’t we be taking them over, and introducing them to some of our values? But it is unlikely that the suitor will see it that way.
  3. Price. Pricing is probably focused on turnover and profits, and is unlikely to recognise the long-term value and growth potential of a small, sturdy firm, whose reputation has been carefully built over several decades.

If you are contemplating approaching IP Draughts with an offer he can’t refuse, please be prepared to answer the following questions:

  • what is the strategic fit: in what ways are the people, client base and ethos of each firm matched or complementary?
  • how does the proposal help to advance his firm and his colleagues’ careers?
  • how will the proposal preserve and promote the distinctive character and reputation of his firm? Is the suitor firm prepared to make changes to fit in with his firm’s approach?
  • what is the timescale for measuring success? How many decades?

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Leading UK IP transactional lawyers 2020

It has become a tradition, each Autumn, for IP Draughts to create his list of leading IP lawyers in the UK who specialise in IP transactions.

As in previous years, this year’s list is a simple cross-check between two sets of recommendations – (a) for UK transactional lawyers in IAM Patent 1000, and (b) for UK transactional life science lawyers in Chambers Directory (the closest that Chambers UK has to a list of transactional IP lawyers). Your presence on both of these lists guarantees that you are on IP Draughts’ list.

This year, the people on the list are:

  1. Laura Anderson – Bristows LLP
  2. Mark Anderson – Anderson Law LLP
  3. Malcolm Bates – Taylor Wessing
  4. Richard Binns – Simmons & Simmons LLP
  5. Allistair Booth – Pinsent Masons
  6. Alison Dennis – Fieldfisher LLP
  7. Patrick Duxbury – Gowling WLG
  8. Jim Ford – Allen & Overy LLP
  9. Michael Gavey – Simmons & Simmons LLP
  10. Mark A Lubbock – Brown Rudnick LLP
  11. Nicola Maguire – Cooley LLP
  12. Susie Middlemiss – Slaughter and May
  13. Lucinda Osborne – Covington & Burling LLP
  14. Daniel Pavin – Covington & Burling LLP
  15. Chris Shelley – Penningtons Manches Cooper LLP
  16. Sally Shorthose – Bird & Bird LLP
  17. John Wilkinson – Cooley LLP

As in previous years, this list omits some talented lawyers who appear on one but not both lists, including IP Draught’s partner Lisa Allebone. Congratulations to all of you!

IP Draughts has gone back over the last 4 years: his list has been remarkable static with only one name dropping from the list, and two well-known and long-established lawyers joining the list. Surely some of these people will retire at some point and let in some new blood?

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The small sturdy law firm (2): playing to your strengths

There was a discussion on Twitter this week about the procurement of “enterprise software”, particularly by universities. The author (@random_walker) made an interesting analogy: the purchase of baby clothes.

Which type of baby clothes do you buy?

There are two types of baby outfits. The first is targeted at people buying gifts. It’s irresistible on the rack. It has no fewer than 18 buttons. At least 3 people are needed to get a screaming baby into it.

Other baby outfits are meant for parents. They’re marked “Easy On, Easy Off” or some such, and they really mean it. Zippers aren’t easy enough so they fasten using MAGNETS. A busy parent (i.e. a parent) can change an outfit in 5 seconds, one handed, before rushing to work.

The author compared buying baby clothes with the procurement of software, which has been designed with the buyer in mind, and not the user:

It’s actually designed to look extremely attractive to the administrators …who make purchase decisions. Since they can’t easily test usability, they instead make comparisons based on… checklists of features.

It has every feature ever dreamed up. But like anything designed by a committee, the interface is incoherent and any task requires at least fifteen clicks (and that’s if you even remember the correct sequence the first time).

A similar analogy can be made with the purchase of legal services. IP Draughts’ experience of procurement departments buying legal services has not been good. The process seems designed to favour irrelevant factors, such as the size of the firm, whether it has experience of an identical transaction to the one contemplated, or how well it “plays the game” in procurement exercises. The questions that should be asked – how good are these lawyers, can they adapt their knowledge and experience to new deal structures, will they work well with our team, are they reliable, are their prices reasonable, can we trust them – seem to be ones that are difficult to reduce to a standardised process involving (to a greater or lesser extent) buyers who are not users of the services.

But it is too easy to blame a remote procurement department. The users of the legal services must also take responsibility, to the extent the procurement process permits it. And sometimes the users are also the buyers, with no external procurement department involved.

Each user of legal services has their own priorities as to what they want from their lawyers. Some just want a brand name, and perhaps a standard legal process. Others are more selective, and perhaps want creativity, and support in structuring deals. Yet others don’t really know what they want.

IP Draughts has learnt over the years to focus on the good relationships, and not agonise over those that don’t seem to be going so well. Sometimes, the same organisation will be dominated by different people at different times, and what was once a loyal client becomes a difficult one. Such is life. If you stick around long enough, new people come along who are more receptive to your style of legal services. Some of IP Draughts’ clients pre-date the formation of his firm.

Similarly, each lawyer is different in the skills that they bring to a project. IP Draughts has tried to recruit people who bring different aptitudes (super-powers) to the provision of legal services, while sharing a base-level of competence and attitude. The result is that most of our lawyers can turn their hand to most of the work that we do, but some are leaders in particular areas.

But these differences are within a range. IP Draughts has had discussions with his colleagues about the types of lawyers that they encounter, and the fact that it is sometimes easy to predict which firm they work for.

A problem that IP Draughts encountered early in his career was when he found himself in a work environment that seemed to notice his weaknesses more than his strengths. This toughened him up and probably reduced his weaknesses, but it wasn’t a pleasant experience. It left him thinking that it is better to work in a firm or department where your strengths are valued and recognised, and where you are encouraged to iron out any undesirable wrinkles. He has tried to do this in his own firm.

 

 

 

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