Category Archives: Intellectual Property

Transactions in IP: an incoherent, statutory mess

This week, IP Draughts comes back to a topic that is of interest to only a few: the patchy, incoherent, incomplete, unthoughtful mess of UK legislation in the field of IP transactions.

It seems as though Parliamentary draftsmen, writing Bills for different types of IP at different times, run out of steam by the time they get to the bits that deal with transactions. The subject is a niche (IP transactions) within a niche (property transactions) that is also part of a separate niche (IP law) within a niche (technical commercial laws); the draftsmen seem not to have engaged properly with the complexities of the subject. Perhaps their energies have been sapped responding to Home Office requests for new and unnecessary laws that send people to prison, to satisfy the baying lust of the mob and their interlocutors in Parliament. [Controversial!]

There seem to be several problems:

  1. A failure to consider properly the status of IP as personal property and the extent to which the rules governing IP are intended to be different from or the same as the rules governing other types of property (e.g. goods, land or other intangibles).
  2. A failure to consider properly whether the type of IP under consideration (e.g. copyright) should have rules that are the same as, or different from, the rules governing other types of IP (e.g. patents).
  3. A failure to think through all the implications of the above treatment, and clarify the legal issues that arise.
  4. A failure to consider the international aspects, including the desirability of consistency of treatment of IP transactions in different countries. [This is not a uniquely UK issue.]

Time for some brief and incomplete examples, without references. (This is only a blog article!) Some of the questions raised below have been considered or answered in other articles on this blog (e.g. whether consideration is required for a valid assignment of IP).

  1. Legal status of IP. Traditionally, IP was treated as a “chose in action” or, if you prefer to avoid Norman French legal jargon, a thing in action. The Patents Act 1977 (PA) clarifies that patents are personal property without being a thing in action. But none of the other IP statutes deny thing/chose in action status. The status of IP as property affects whether you can look to general principles of property law to determine issues that are not specifically addressed in the IP legislation. E.g. certain rights of co-owners – see below.
  2. Ownership. When unregistered design rights were introduced, the legislation stated that a party commissioning a design would own it – the opposite of the position for other types of IP. It took about 15 years for this anomoly to be corrected by an amendment to the legislation.
  3. Co-ownership. We know that in the case of patents, co-owners have an equal, undivided share, unless otherwise agreed. This is not stated in the legislation governing all other types of IP. But what does this mean? Is it equivalent to tenancy in common, in land law, and therefore unlike joint tenancy? What is the relevance of saying “equal” unless a party is entitled to a half share of any revenues generated by the other co-owner – a point more explicitly addressed in some other countries’ IP laws?
  4. Formalities for assignment. Can you assign IP that doesn’t yet exist? Copyright, Designs and Patents Act 1988 (CDPA) says you can for copyright; PA is silent on the subject. Why is only the assignor required to sign an assignment, unlike the position for European patent applications? Why is the assignee not required to accept the assignment, as apparently is required under Dutch law? Is consideration required for a valid assignment?
  5. Rights and obligations of assignors and assignees. Do obligations accepted by an assignor (e.g. to pay royalties to a previous owner of the IP) pass to the assignee? Probably not, under the principle of privity of contract, though a good argument could be made for saying they should. Does the assignor give any implied warranties, e.g. of title or the right to assign free of encumbrances?
  6. Legal status of an IP licence. Is an IP licence an interest in property? Possibly not, it is only a contractual right, though an exclusive licensee has certain statutory rights. The answer to this question may affect whether traditional property laws, e.g. on whether a new owner of the property is bound by previously-granted interests, apply to IP. To a certain extent, this issue is addressed in some IP legislation, eg CDPA refers to licences being binding on subsequent owners other than a purchaser in good faith for valuable consideration and without notice of the licence. Other IP legislation, e.g. PA, is silent on this subject but some protection is given by registering the licence.
  7. Formalities for licensing. The Trade Marks Act 1994 (TMA) requires licences to be in writing, but there is no such requirement for licences of other types of IP; the implication being that for other types of IP, licences can be oral.
  8. Rights and obligations of licensors and licensees. Under the PA, a licensee can sub-license “to the extent the licence so provides”, whatever that means. The position for certain other types of IP is not stated in the relevant legislation. What warranties does the licensor give, e.g. as to title? This is not stated in the legislation.

Further questions arise at an international level. For example, if a licence agreement is made under English law, the licensed IP includes a German patent, and the agreement is silent on whether the licensee can sub-license, should one look to UK patent law or German patent law to determine whether sub-licensing is permitted?

Many of these questions are obscure and haven’t been tackled clearly in the legislation, or not with IP transactions in mind. IP Draughts would welcome the Law Commission taking this on as a project, given the increasing importance of IP transactions to the UK economy. Ideally there would a consistent and complete set of statutory provisions governing transactions in all types of IP, unless there is a clearly-identified need for a different treatment in an individual case. In fact, why not go further, and introduce a code for IP licences, equivalent to the rules for the sale of goods under the Sale of Goods Act 1979?

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Skill set for transactional IP lawyers

Are the skills required for an IP litigator different to those required for a transactional IP lawyer? And are the skills for the latter different to those required for an M&A lawyer? What has happened to the general commercial practitioner who can turn his or her hand to anything that comes through the door, of a contentious or non-contentious nature?

Recent posts on this blog have focussed on drafting techniques, but they are only a part of the overall skill set required by many lawyers who advise business clients (using the term “business” loosely to distinguish from consumers).

The skills and attributes that IP Draughts tries to help his junior colleagues develop include (some of these overlap, and in no particular order):

  1. A foundation of technical accuracy, developed by continuous learning. Our UCL course on IP Transactions, as well as the Oxford diploma course, helps to supports this long term objective.
  2. Drafting skills, in commercial contracts and more generally in legal documents including notes of advice.
  3. Clear and purposeful communication with clients and others. The purpose will vary, and in individual cases the communication may need a particular mix of (a) analysis of what is needed, (b) organisation of material, (c) helpfulness, including understanding how the intended reader processes information, (d) conciseness, (e) completeness and accuracy, (f) bullet-proofness, (g) advocacy, (h) directing or recommending, etc.
  4. Ethical conduct and regulatory compliance.
  5. User-friendliness.
  6. Negotiating skills and tradecraft.
  7. Recognition of the different roles, character and temperaments of parties and understanding their needs and priorities.
  8. Risk management.
  9. Mutual cooperation in a supportive working environment.
  10. Self-motivation and motivation of others.
  11. Participation in the wider community of lawyers and clients, eg through writing, teaching, committee work.
  12. A passion for excellence in all of the above.

The skills for commercial litigators will overlap with the above list but include other items. IP Draughts sometimes gets involved at the margins of litigation, eg knowing how to select, instruct and manage a barrister, or how to write a letter before action, but rarely gets involved in the core activity, including working within the civil practice rules and directions.

Has IP Draughts missed anything important for a transactional IP lawyer?

 

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Congratulations to IP winners

Twice a year, the UK state recognises outstanding contributions to society through national awards. Known as the New Year’s Honours, and the Queen’s Birthday Honours, these awards come in different ranks and classes. There are civil lists and military lists, home and overseas, and a personal list for loyal servants of the Queen.

There are the most important honours, such as the Order of Merit (limited to 24 individuals), Companion of Honour (limited to 65 individuals) and knighthoods of various kinds. Most award recipients receive one of the different classes of the Order of the British Empire – the name now seems quaint. In order of rank, you might be made a GBE, KBE/DBE, CBE, OBE, MBE or BEM. In this traditional, hierarchical world, concepts such as egalitarianism and flat organisations have yet to make their presence felt.

Today’s Birthday Honours List includes several people from the world of IP and commercialisation.

Professor Ruth Annand has been awarded a CBE (Commander of the Order of the British Empire) for services to intellectual property. Professor Annand is an Emeritus Professor at the University of Bristol and is, or was, an “Appointed Person” – a judge who hears trade mark appeals. She was also, for many years, the host of the IP Diploma course that was run at the University of Bristol until her retirement, and is now run at the University of Oxford.

Colin Adams is a recently-retired Director of Commercialisation at the University of Edinburgh. He has been awarded a CBE for services to innovation and entrepreneurship.

And last, but certainly not least, is Andrea Brewster, former President of the Chartered Institute of Patent Attorneys, prime mover behind the IP Inclusive initiative, and author of the only bit of the CIPA Journal that IP Draughts reads carefully – the humorous Secret Diary. Andrea has been awarded an OBE (Officer of the Order of the British Empire) for services to intellectual property.

Congratulations to all of you!

 

 

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Diversity in IP practice: what does it mean?

The IP professions, and the UK legal professions generally, are keen on promoting diversity in the workforce.

The Law Society and SRA impose diversity obligations on solicitors, for example requiring each firm to collate diversity statistics and publish them. IP Draughts’ firm’s statistics – now a little out of date – can be found here. Before being accepted as a member of a Law Society committee, would-be members must take an online course on diversity. Committee chairs are required to take further online courses on diversity and disability. Shortlisting of applicants for committee vacancies is done “blind” without seeing the names of the applicants.

The Chartered Institute of Patent Attorneys and other IP professions have formed IP Inclusive, and an increasing number of firms have signed up to its charter.

Some might say that such initiatives are particularly necessary in the legal professions, which are perceived as lacking diversity.

IP Draughts attended a meeting earlier this week – all the other participants were not lawyers – at which one of the people present referred to an initiative to help women to progress in the workplace, and another participant expressed the view that the best person should be chosen for a job, irrespective of gender. IP Draughts commented that how one defined the requirements of the job might affect who would be regarded as “best”. He cited the example of the UK Supreme Court, where only one woman has been appointed, and where traditional selection criteria may militate against certain types of candidate.

This exchange reminded IP Draughts that the legal professions may be ahead of some other sectors when it comes to talking about diversity. This is not meant to be a cynical comment. Talking is the first step in getting new attitudes embedded in an organisation.

An issue for IP Draughts is that diversity can mean so many different things, and that initiatives to improve diversity may tackle the most visible examples – gender and skin colour – while failing to improve the overall culture of an organisation. Measuring diversity through statistics is a very blunt instrument; it may result in improved statistics but not fundamentally change attitudes.

The UK Intellectual Property Office recently sent IP Draughts a copy of its corporate plan for 2017-2020. Most of the document is concerned with the IPO’s outward-facing activities. Among its high-sounding corporate objectives was the following statement on its internal values, which IP Draughts found very encouraging:

We believe we are an organisation where difference is valued and one where our people feel able to bring their whole selves to work. Nobody in the IPO should have to change who they are when they come to work just to ‘fit in’*.

*A 2013 study by Deloitte revealed that 61% of respondents covered up an aspect of themselves at work.

Giving people space to be themselves at work is, in IP Draughts’ view, an extremely important part of the larger diversity agenda, and it is good to see the IPO focussing on this aspect. Much earlier in his career, IP Draughts was in a job where he felt he had to suppress a significant part of his personality in order to ‘give the right impression’. It made him determined, when he started his own firm, to create a different atmosphere for staff.

Giving people space needs to be combined with recruiting people whose skills and attitudes will contribute to the common enterprise. For example, if ‘being oneself’ means being anti-social, disruptive, lazy or incompetent, then that contribution is not being made. But as long as the overall objectives of the organisation are being met, and the individual is making a positive contribution, they should have reasonable freedom to be themselves.

IP Draughts was interested to read the news that a leading international law firm, Linklaters, is offering people a 40-hour week in return for a one-third salary drop. This could be viewed as an initiative that will help to promote diversity, whether it be for the person who has caring responsibilities, or the person who simply isn’t cut out for 60-hour weeks (if that is what is usually required) or who isn’t interested in being a millionaire but wants to do good work in a prestigious firm.

Ultimately, valuing people as individuals, and reducing the expectation of social conformity, may lead to greater progress on all aspects of diversity than targets, statistics or policy statements.

 

 

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