Category Archives: Contract drafting

Comic book contracts

There is a view, held by some who are involved in contracts, that there should be  visual illustrations in many contracts, particularly those involving consumers or other non-specialists.

This view is aligned with a view about how universities should teach – that people learn in different ways, and the traditional focus on words and theory disadvantages those who think better in numbers or images, or who learn better when they see the practical aspects. So far, IP Draughts gets the impression that universities pay lip service to this idea; on the whole they don’t do much about it. He would like to see contract law taught through examining contracts, but this practical approach is probably too radical for leading law faculties.

Anyway, back to visual aids. IP Draughts was interested to read about an initiative in Australia, where a large engineering company called Aurecon has generated a standard employment contract in the form of a “comic book contract”. The complete contract can be found here. It appears to have been designed by a company called Creative Contracts.

Reading this contract, and looking at the pictures, several points occur to IP Draughts. First, the use of cartoon-like images is prevalent in consumer advertising in the UK, e.g. it is used by domestic gas companies. This advertising provokes a negative response in IP Draughts, based partly on the attitudes of his (non-intellectual) parents and grandparents, who were disdainful of attempts to treat them and others as children. Perhaps this says more about IP Draughts’ family values than about the merits of the use of cartoons.

Next, much (perhaps a majority) of the Aurecon “contract” is not really a set of contract terms. It describes the company’s values and processes, as well as setting out some very abbreviated contract terms. It probably wouldn’t comply with the requirement under English law that an employer must set out certain core terms in writing – typically done in a schedule to the contract – e.g. when did the period of continuous employment start. (This is relevant when calculating statutory payments for redundancy.)

IP Draughts honed in on the IP terms. Text appears above the following image (original is better quality):

The text reads as follows:

We own any intellectual property rights in things you create in the course of your employment. You help us to apply for any needed patents and to protect our intellectual property.

IP Draughts is always interested in new ways of communicating ideas. His impressions of the above examples are:

  1. Does the image increase the reader’s understanding? What is it trying to say? Looked at analytically, rather than impressionistically, it doesn’t convey much, other than someone handing to someone else a big book with the title “IP + Patents”. What does this mean, in relation to IP ownership?
  2. The accompanying text skates over the surface of the complexities of IP. It uses several terms that have legal meaning, and which may not be clear to the typical reader: intellectual property rights, things you create, course of your employment, patents, and intellectual property. IP Draughts would be interested to hear about the thought process that led to this choice of words and image, and whether it was intended to make the terms legally binding. The choice of words seems to be “legal lite” – using legal terms of art but avoiding definitions – rather than fundamentally redesigning the language to fit a simplified, non-legal approach

Similarly, there is an image linked to some text that requires the employee to “respect” the company’s confidential information. A separate image (of putting various electronic items in a cardboard box) requires the employee to “remember” that their duty of confidentiality “extends beyond the duration” of their employment.

A question that runs through IP Draughts’ mind is that there is a trade-off between simplicity and legal effectiveness, and he wonder whether the company has written down what this trade-off should be. Is the intention to focus, say, 80% on simplicity and only 20% on legal effectiveness, recognising that the company may lose employment disputes as a result, but thinking this risk is worth taking for the benefits of a simplified contract?

Contracts of this kind are experiments, and not yet part of the mainstream. IP Draughts’ view is that the drafter/designer needs to work really hard to make the meaning clear when the text is so abbreviated. Without seeing the design specification for this contract (if there is one) it is difficult to say, but IP Draughts doesn’t think this is a good template, at least when it comes to complex legal issues such as IP and confidentiality.

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Filed under Contract drafting, Employment

New writing projects

Something old…

While rummaging among the innards of this blog – the ‘dashboard’ that gives statistics on what has been read, where the readers are from, and so on – IP Draughts noticed that a couple of people had downloaded an article that he had written in about 1992 – one of the first that he published, though he can’t now remember where.

The article concerns an old House of Lords case on the interpretation of a patent licence agreement: Fluflon Limited v. William Frost & Sons Limited (1966) FSR 184. Looking back over nearly 30 years since he wrote the article, the main point IP Draughts now takes from the case is the importance of precise, meticulous drafting in IP agreements, particularly on major issues such as which products are royalty-bearing.

IP Draughts comes across an argument, raised even in comments on this blog, that if business people are happy that they know what they mean by contract wording, lawyers should not interfere too much or raise ‘academic’ arguments about legal interpretation.

This is not IP Draughts’ approach. He thinks it is part of a good lawyer’s role to stress-test negotiated wording and (unless instructed otherwise, or the scale of the deal does not justify it) to raise whatever objections occur to the lawyer, to make the wording suitable in light of the client’s commercial objectives and the underlying law.

A link to the article appears on the second page of this site – not this page, which contains all the blog articles but a separate page that has links to most of IP Draughts’ articles in journals and magazines.

Something new…

IP Draughts writes articles occasionally, fitting them around client work, teaching, updating books, and other roles. He thinks it is time to write another one, and would welcome suggestions for a topic.

One idea that he has had is to write an article on why the English courts should not give dual remedies in contract and tort (e.g. for misrepresentation) to a party that is suffering from a breach of contract. As well as considering cases in which the English courts seem to have been persuaded that dual remedies can exist, the article would discuss both:

  1. The arguments raised by Ken Adams, eg here; and
  2. The logic of recent English cases on solicitors’ negligence, where the courts have decided that if there are potential claims in both contract and tort, only the contractual claim (and the contractual measure of damages) can be pursued. See for example Wellesley Partners LLP v Withers LLP [2015] EWCA Civ 1146, [2015] All ER (D) 146 (Nov).

Where this article would be placed is less obvious to IP Draughts. It is a broader subject than articles  on IP contracts, which IP Draughts has tended to place with JIPLP.

If you have any suggestions for articles, or if you know someone who might be interested in working with IP Draughts as a research assistant (perhaps someone in the early stages of an academic law career), he would be interested to hear from you.

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Filed under Contract drafting, Intellectual Property

Spelling mistakes of intelligent people

spA common task for many of us is to review and edit draft documents, written by ourselves or others. Over several decades of practice, IP Draughts has noticed that certain spelling mistakes occur surprisingly often among intelligent people.

Here are some of his favourites (correct spelling in bold).

Principal – often confused with principle

Minuscule – perhaps because the u is spoken as an i.

Supersede – do people think it is somehow related to cede?

Inure – the word is so obscure (but often found in contracts) that spell checkers don’t recognise it.

Therefor – another obscure word in contracts, which  is misspelled as therefore

Effect – this verb often appears as its cousin affect.

IP Draughts is not focussing here on differences between UK and US spelling.

One that took him by surprise this week is that some people make a distinction between when it is appropriate to write judgment or judgement.

Do you have any favourite misspellings?

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Filed under Contract drafting

Rhetoric and habit in negotiations

We are creatures of habit. We like the familiar. In commercial negotiations, we hear the same argument a few times, and we think it has merit. We use the argument ourselves, and it is persuasive, because the person we use it on has heard it before. Whether the argument has any genuine merit is an entirely separate question. Here are a few:

  • I’m not paying your taxes (IP Draughts hears this from US parties, in relation to a clause that says that payments are exclusive of VAT; usually the person doesn’t understand the European VAT system).
  • “Represents and warrants” gives remedies in tort as well as contract.
  • We should not pay royalties on patent applications that are more than 5 years old.
  • Confidentiality obligations should not be perpetual, as we need to know when we can close our file. 5, or at most 10, years is conventional.
  • Your cap on liability should not apply to breach of confidence, IP obligations or data protection issues.
  • We need to own the data that comes out of the project; our business client expects to see such a clause. IP rights are a separate issue, dealt with in a separate clause.
  • The definition of each party should include its affiliates.

If IP Draughts had more time, he could think of more examples. Some of these arguments (or perhaps assertions would be a better word) have emerged as conventional wisdom during the time that he has been practising. Some are the subject of more detailed discussion in old articles on this blog.

In all cases, the arguments can be questioned on the grounds of logic, legal principle, or whether they favour one’s client’s interests. But questioning them can be a backwards step in negotiations, because one is challenging the norm. Particularly if the point seems secondary or unimportant to the deal, or if one’s commercial client really doesn’t care about the issue, it is tempting to go along with what everyone else seems to do.

An example: fairly early in IP Draughts’ career, he negotiated a confidentiality agreement and, after some discussion, persuaded the other party to increase the duration of confidentiality to 20 years (or was it 15?). Later, IP Draughts’ client relayed some feedback from the other party, that IP Draughts had been difficult over a minor agreement, and that this didn’t bode well for the more important negotiation of the “full” agreement. Even if there was logic in a longer period of confidentiality (for a biotech client’s technology), it was not considered appropriate to go above a 10-year confidentiality term.

Negotiating agreements involves a series of judgment calls about whether to accept an argument, a form of words, a compromise: when doing so, IP Draughts recommends that you keep a clear head on whether the argument is valid or just familiar. Of course, this requires you to be really on top of the technical aspects of your profession.

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Filed under Commercial negotiation, Contract drafting, Legal practice