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.

Hopeless student IP disputes

Complaints between PhD students and their supervisors seem to be on the rise. IP Draughts has been instructed on several in recent years, both on behalf of the student and on behalf of the supervisor and university (but not all at the same time!)

Memories of these cases came flooding back when IP Draughts read the recently-published court judgment in the case of Ukoumunne v The University of Birmingham & Ors [2020] EWHC 184. This was a preliminary decision in the Intellectual Property Enterprise Court (a low-cost court for smaller disputes) on whether to strike out the former student’s claims against various supervisors, the university and an academic publisher.

Nearly all of the claims were struck out, and those that remained were in the “last chance saloon” – the claimant, who was not legally represented, was required to be more specific as to what she was claiming.

An interesting feature of this case for IP Draughts is the discussion of the difference between plagiarism (copying ideas, not attributing them, etc, in breach of academic norms) and infringement of copyright (typically copying lines of text rather than underlying ideas, though occasionally the organisation and structure of a work can be the subject of a copyright claim). In IP Draught’s experience, academics are sometimes unclear about the differences between plagiarism and copyright infringement. Plagiarism claims may be referred to an academic committee (eg if there is a claim of research misconduct) – this happened in the present case and the claims were dismissed.

Copyright claims are ultimately for a court of law to decide. The claimant in this case was unable to persuade the judge that she had an arguable case on copyright infringement. This claim was struck out, as were claims of negligence, racial harrassment, bullying and sex discrimination by the university .

The claimant also made allegations of breach of confidence in relation to her thesis, and breach of contract (seemingly the terms on which she became a PhD student, though this was unclear to the judge). On these allegations, the judge gave the claimant one last chance to improve her case (clarity of argument and supporting documents), failing which these claims would also be struck out.

IP Draughts wonders whether the claimant really thought she had a good legal case, or was just hoping for the best, and determined to pursue her dispute. He also wonders whether any attempt was made to negotiate a settlement or refer the matter to mediation. Sometimes, people just want to be heard, and there may be less expensive ways of enabling that to happen than going to court. The money saved might be better spent on a settlement with the student than on court fees and lawyers.

Unlawful discrimination against copyright philosopher?

Under UK employment law, if you dismiss an employee for asserting their “religious or other philosophical belief[s]”, they may have a claim against you for unfair dismissal.

Question: if an employee (in this case, a market support assistant):

• is “passionate about [her] belief in the right of an individual, not only to own, but to profit from and receive credit for their own work if they wished”
• and as a result refuses to sign her employer’s standard intellectual property agreement
• and (after an extended negotiation) the employer then dismisses her on notice, in accordance with the terms of her contract of employment
• can she claim unfair dismissal on the grounds of discrimination against her philosophical beliefs?

Answer: no.

See the recent Court of Appeal decision in Gray v Mulberry Company (Design) Ltd [2019] EWCA Civ 1720 (17 October 2019).

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 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 is a huge multinational group of companies, and £24M is a drop in the ocean for a group of this size. The lower courts held that the benefit was not outstanding in relation to 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.