Category Archives: Intellectual Property

Do no evil …drafting

Four_wise_monkeysEarlier this week, Google invited us to sell them our patents. In their words, “the Patent Purchase Promotion is an experimental marketplace for patents that’s simple, easy to use, and fast.”

Apparently, selling your patents (but only your US patents) to Google will ensure that the patents don’t end up in the hands of “patent trolls”. All transactions are to be handled in a standardised way, using a Patent Purchase Agreement whose terms can be found here. In FAQs that accompany the promotion, Google declares:

…we aren’t going to negotiate with anyone. You set the price, we set the terms, and if things work out, we get you paid by the end of summer.”

Others have commented on whether you should take Google up on their offer, eg see this article: Google Says Trust Us and Sell Us Your Patents. (IP Draughts has just mis-typed this in a Google search, and found some web pages on the subject “Google Says Trust Us and Sell Us Your Parents”, which is quite a different promotional opportunity.)

Google asks us to remember that:

…this program is an experiment (think of it like a 20 percent project for Google’s patent lawyers)

And they emphasise that:

There’s some fine print that you absolutely want to make sure you fully understand before participating, and we encourage [you] to speak with an attorney.

So, what does this attorney think of the fine print?

The drafting of the Patent Purchase Agreement is so “experimental” as to make IP Draughts suspect that the promotion is not serious. It shows signs of being a rush job, performed by incompetent staff. Let’s be slightly charitable and say that the patent department didn’t have time to involve the legal department in the drafting. IP Draughts suggests a new research project for Google’s “patent lawyers”: learn how to draft contracts. Note to IP Draughts’ staff: if you ever draft something as terrible as this document, you won’t have a future with the firm. Yes, it really is that bad. Let’s take a few examples. Each one on its own might not be a sacking offence, but cumulatively they amount to gross misconduct.

  • the missing “not”

Agreement NonTransferable. The Seller may assign or otherwise transfer this Agreement, or any rights or obligations under this Agreement, to any third party without the prior written consent of Google.

  • the missing sentence

Governing Law; Venue/Jurisdiction. This Agreement will be interpreted, construed, and enforced in all respects in accordance with the laws of the State of California, without reference to its choice of law principles to the contrary. Seller irrevocably consents to the jurisdiction and venue of the courts identified in the preceding sentence in connection with any action, suit, proceeding, or claim arising under or by reason of this Agreement.

  • cutting and pasting text from another document. Badly. Eg section 5.1, which refers to the “Delivery Date”, or section 5.2 which refers to the “Closing” and the “Closing Date”. In all of these cases, IP Draughts suspects that the defined term “Effective Date” may have been what the drafter intended to use, if he had taken the time to clean up the draft.
  • double definitions, and confusion over whether the defined term should be “Seller’s Patent” (section 1.1) or “Seller’s Patent(s)” (section 2). This mental confusion results in some horrible phrases, such as “any of the Seller’s Patent”.
  • misuse of defined terms, eg section 6.6, which should refer to “Seller’s Patent” not “the Patents”
  • turgid or error-strewn drafting, eg:

…necessary or desirable for effecting completely the consummation of the transactions contemplated hereby

…represents and warrants to Google as follows that as of the Effective Date and as of Closing

  • use of the future-perfect tense (for goodness sake) and multiple verb pile-up:

Upon the Effective Date, Seller …shall have caused its Affiliates to sell, assign, transfer and convey to Google …

  • incorrect cross-references, eg section 7.2 cross-refers to section 3.4, which doesn’t exist.

The above examples focus on mistakes and the very worst kind of drafting. The document also contains plenty of examples of drafting that IP Draughts considers to be unacceptable, but not quite as bad as in the bullet points above. In the following examples, the point that (most) concerns IP Draughts is highlighted in bold text:

restrictions and encumbrances including without limitation any pledge, charge [etc] …or other restrictions and encumbrances (collectively, “Restrictions and Encumbrances”)

The Seller’s Patent has never been found invalid …

NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR IMPUTED) … FOR COVER OR FOR ANY INCIDENTAL…

And there are plenty more.

There are also points of substance in the agreement that should concern any seller. Some of these indicate half-baked thinking on the part of the drafters, including the ridiculously elaborate warranty in section 6.3 which provides that, in respect of any licenses that the seller has previously granted under the patent:

…each such license is nontransferable (except solely in the context of acquisition of the respective licensee and in that case, the scope of each such license or rights in the Patents is limited to the activities of the licensee prior to the acquisition)

Or the provision that the seller can inform its existing licensees that it has sold the patent “provided that the Seller shall not identify Google”.

In its FAQs and other documents describing the promotion, Google emphasises “simplifying the process”, “better experiences for sellers”, “removing complications”, and “keeping it simple”. Yet the core document of the transaction fails to live up to these ambitions. This just doesn’t make sense. IP Draughts’ conclusion is that Google isn’t serious about this exercise, and that it has been dreamt up as a PR stunt on short notice. Either that, or Google’s competent contract drafter(s) didn’t get the memo.

 

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Stallone praises London IP Crime Unit

expendables3Celebrity endorsements are nothing new. Mr Pettifog is fond of telling us all that his Great Uncle, Adolphus Pettifog, earned ten guineas for providing a quotation to the Carbolic Smoke Ball Company, which read “I found the Carbolic Smoke Ball most efficacious for treating my piles”.  Thus, the first public proof of the Pettifog family’s skill at blowing smoke… But enough of that.

In IP Draughts’ copy of The Times this weekend, a report that Hollywood legend Sylvester Stallone has thanked the UK’s Intellectual Property Crime Unit for arresting a Yorkshireman on suspicion of leaking Stallone’s latest cinematic oeuvre, Expendables 3, to internet streaming sites. Sly is reported to have said:

I’d like to thank the Police Intellectual Property Crime Unit at the City of London Police for working with US Homeland Security Investigations to apprehend the suspect. It is important to protect the rights of creatives around the world.

city of london policeIP Draughts applauds Mr Stallone for his comments. For those of you who are not au fait with the IP Crime Unit, it was set up in 2013 with funding from the UK Intellectual Property Office. Its 20-strong team of detectives, analysts and researchers forms part of the City of London Police, a small police force that should not be confused with the Metropolitan Police.

Although not reported by The Times, it appears from the Crime Unit’s website that its very own Detective Inspector Mike Dodge also commented on this successful operation. He said:

Today’s operation demonstrates the international remit of the Police Intellectual Property Crime Unit (PIPCU). PIPCU has a remit to protect the UK’s creative industries but we are also committed to ensuring the UK is not a safe haven for criminals seeking to attack international businesses from our shores.

…PIPCU is coming down hard on criminals exploiting intellectual property for their own financial gain and today’s action should serve as a warning to online pirates.

As a Lancastrian by birth, it would be very wrong of IP Draughts to make comments about the piratical tendencies of Yorkshiremen, particularly after the Law Society was good enough to pay for his recent diversity training. So, let’s just leave it at that.

IP Draughts wonders whether the UK IPO might capitalise on the goodwill shown by Mr Stallone, and ask him to encourage his fellow stars in Expendables 3 to support the UK IPO’s activities by starring in films with an IP theme? Could Mr Schwarzenegger be persuaded to star in a new film, The Trollenator, in which he plays a ruthless non-practising entity from a future world?  Or could Mel Gibson be enticed to play the role of a heroic trade mark attorney living in a distopian world, in Mad Marks?

 

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Who practises IP in the UK?

IP lawyers have their own niche, and defend it with zeal

IP lawyers have their own niche, and defend it with zeal

Intellectual property is thought of as a niche subject within the broad category of commercial laws. Yet an increasing number of people, both in the UK and internationally, make it their profession to advise and assist clients on IP matters.

To assist us to understand the make-up of the IP professions, IP Draughts has done some simple research using public registers, including those of the Law Society of England and Wales, IPReg (the regulator for patent attorneys and trade mark attorneys), the IP Bar Association, and the UK Intellectual Property Office’s register of IP business advisers. Some of the results are surprising.

 

law societyBy far the largest number of IP lawyers practising in the UK are within the solicitors’ profession. According to the Find a Solicitor website of the Law Society of England and Wales:

9,466 solicitors practise IP law, of whom 3,901 are in private practice (in 1,618 firms), and the rest work in industry, government and other settings. (A further 390 solicitors practise IP law in Scotland, according to the Law Society of Scotland’s Find a Solicitor search engine.)

ipregThe next highest number practise as patent or trade mark attorneys. According to  the handy spreadsheet provided by IPReg, last updated in December 2014:

1,984 individual patent or trade mark attorneys offer services to the public. (A separate list from IPReg suggests that they work in approximate 220 firms.)

barAccording to the IP Bar Association list, updated in January 2014:

128 barristers practise IP from 30 chambers. (Well, places of practice might be more accurate, as the latter list, although mostly sets of barristers’ chambers, includes a firm of patent attorneys, a firm of solicitors and a Japanese law firm.)

ipoThe UK Intellectual Property Office maintains a list of people who have “completed the accredited IP Master Class” for business advisers and are therefore considered competent to offer IP Health Checks to businesses. (Thankfully, the IPO seems to be no longer listing people who claim adherence to a misguided British Standard for IP advisers.) According to the current list:

56 individuals have completed the IP master class. The relevant part of the IPO website includes the following statement “Many business advisors understand the importance of IP within a business. Reach your potential with this CPD certified quality IP advisor training for business professionals.”

The last of these lists might be viewed as a list of unregulated, but IPO sponsored, IP business advisers, unless they are regulated by one of the other bodies mentioned above.

There is, inevitably, some overlap between the above lists. Nevertheless, they provide an interesting snapshot of who is practising in the field of intellectual property in the United Kingdom.

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Are universities difficult to negotiate with?

difficultThere is a strand of opinion among companies that deal with universities, that the latter (and in particular their technology transfer departments) overvalue their technology; that they are difficult to negotiate with; and that contractual discussions take for ever.

IP Draughts discussed this point earlier this week with a poacher-turned-gamekeeper, who used to work in a university TT department, and now works for a company that in-licenses IP from universities. As this person freely admitted, it was difficult for a university to trust complaints of this kind, when made by a company in the course of negotiations, particularly if, in the next breath, the company demands very wide commercialisation rights that could be viewed as a “land grab”. The company in that situation is not an objective witness.

And yet the accusations persist. They are not just made in the heat of negotiations. They feature in national reports on university technology transfer. They are usually anecdotal rather than being based on solid, statistically-valid data. By repetition, the comments acquire a reputation for accuracy, and an impression of objective truth. But how much substance is there in them?

common mythAt one level, it hardly matters whether the accusation has any universal truth, or is just a convenient whinge to lower a university’s commercial expectations. The fact is that the rumour has taken hold in some quarters, and needs to be recognised and addressed. And universities are sometimes their own worst enemies: no matter how good their intentions, a lack of resource in TT offices, and the oddities of the university decision-making process, can conspire to make contract negotiations less commercially-focussed than they would be in a business environment.

Bad impressions can be countered in a number of ways: by providing data to demonstrate that the accusation is false; by acting in a way that is designed to give a positive impression; and by employing the dark arts of public relations. The most productive of these alternatives is to demonstrate that you are easy to deal with. But easiness comes in different forms. An easy manner may help the flow of commercial discussions. Easiness about the substance – the commercial terms on offer – may be appreciated by the licensee, but is it in the university’s best interests? Is there a danger that eagerness-to-please on deal terms may result in the university not getting market value for its valuable IP? Might this be a breach of charity laws? In a European context, could it amount to an unlawful State Aid under EU laws?

easy skankingThis blog has commented before on an initiative that started at the University of Glasgow, and has since been copied by an increasing number of universities, particularly in the UK and Australia. The initiative is called Easy Access IP, and it is designed to make the process of negotiating technology licences with industry as painless and simple as possible. Typically, the licence is free of upfront payments and is either royalty-free or requires the payment of a small royalty on commercialisation. A simple, one-page licence agreement is used, that doesn’t require negotiation.

Advocates of the initiative point to the non-licensing benefits that can result from offering licences on easy-access terms, including PR/reputational, supporting local industry, and demonstrating industrial “impact”. In some cases, easy-access licensing results in increased funding of university research. Cynics may suggest that technology tends to be offered on easy-access terms after it has languished on the shelf for several years, unable to attract buyers on full commercial terms.

easyThe initiative has been running now for about 5 years, and it is a good time to take stock of what it has been achieved. Various organisations in the university sector have clubbed together to commission a study by independent consultants on whether Easy Access IP has been successful. The study has resulted in a report, and the report was published earlier this week. It is worth a read.

Among the points that IP Draughts took from the report (and in his own words):

  1. Small data. Most of the universities that claim to offer easy-access licences only do so with a small minority of their available technologies (perhaps 10%). Licensing on easy-access terms has been on a relatively small scale. The majority of easy-access licences have been granted by just two universities: Glasgow, where the initiative was born, under the management of Kevin Cullen; and New South Wales, where Kevin now works.
  2. Soft benefits. There are soft benefits in offering easy-access licences. It demonstrates that you care about being seen to be easy to deal with, and counters the lazy impression that all university support departments are bureaucratic and negative in their approach.
  3. Not the main issue. Offering easy-access terms does not make a huge difference to the time it takes to get university technology out into the community. In reality, the negotiation of commercial licence terms is not a slow or difficult process, when compared with other factors, such as the difficulty of marketing university technology and finding licensees. It is easy to blame the lawyers but they are not really the problem.
  4. Uptake by SMEs. The main recipients of easy-access licences are small businesses located near the university. For them, any contractual terms are difficult, because they don’t have much experience of negotiating them, nor much of a budget for obtaining legal advice. A non-trivial proportion of those local-business licensees are start-ups formed by the academic who created the technology. In other words, easy-access licensing is sometimes used as a way of letting the academic commercialise the technology.
  5. No thanks. Large companies tend not to like easy-access licence terms, because they have their own template licence agreements that they prefer to work with. These are usually more complex than the one-pager that the university offers. Similarly, investors in spin-out companies are not willing to accept the simplified terms of an easy-access licence, and want to include detailed warranties and other provisions to address legal risk.
  6. Gotcha. At one level, offering easy-access licence terms could be viewed as calling industry’s bluff. You think we are difficult, and we understand that and want to help – here are some very easy terms. Oh, you don’t want easy terms after all? You actually want detailed and complex terms, you just want us to be amenable to those terms.
  7. Where’s my money? Some other stakeholders dislike easy-access terms. Where university research has been funded by an external agency such as a funding charity, the funder may consider it important to see a financial return from its funding. Offering free licences doesn’t achieve this objective. Similarly, some academic inventors dislike easy-access terms, for the same reason – they want to generate a financial return from industry’s use of their technology.
  8. Yeah, whatever. Another important stakeholder is the university itself. The technology transfer manager may be a convert to the new religion of easy access licensing, but is the university finance director still following the old theology where TT offices are expected to maximise the financial return from IP commercialisation? Are TT staff still incentivised to maximise income, eg through bonus arrangements? Easy access programmes work best where senior management actively supports the idea of easy-access licensing. In some universities it is difficult to get senior management support for, or interest in, any aspect of technology transfer activities.

Dear reader, what are your thoughts on easy-access licensing? Is it a really important initiative, or a minor diversion? Is it a nice idea, like the Lambert Agreements, that hasn’t really achieved what its advocates hoped?

Finally, a drafting point. At the end of the report is an example of an easy-access licence agreement. Is IP Draughts alone in thinking that the drafting of this agreement is terrible? Perhaps the author wanted to avoid having the agreement written in a “legal” style that might be offputting to some readers. But surely we can do better than this example, which is poorly written by any standard.

 

 

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