Category Archives: Intellectual Property

Unitary Patent – the UK removes the first veil

For the last year or more, talking to the UK government about Brexit and IP has been a one-way conversation. The UK IP professions have worked hard to agree common positions on what they would like the UK IP system to look like, after Brexit. An important part of the debate has been how far the UK will continue to participate in, or be aligned with, European IP systems. Papers have been written on this subject and supplied to government officials, and meetings have been held with those officials.

But – and IP Draughts doesn’t blame the officials for this, it reflects the political situation they have been in – the meetings have largely consisted of the professions explaining their positions, and government officials nodding wisely and refraining from making any comment whatsoever about how closely the UK wishes to be aligned with the EU. To do so has risked making political statements. For example, many models of alignment would involve the UK accepting the jurisdiction of the CJEU, and avoiding such jurisdiction has been one of Theresa May’s red lines.

Now, at last, with the publication of its White Paper, we are seeing some tantalising glimpses of the UK’s negotiating position on IP and other subjects, as the government starts its dance of the seven veils.

An area that is of particular interest to IP Draughts is the unitary patent, the unified patent court (UPC) and the UPC Agreement. The UK has ratified the UPC Agreement, and has taken out a lease on some rooms in an office block in central London, which will be the UK court. The UK government’s position has been that as long as the UK remains in the EU, it will continue to participate fully in the UPC. But the UK government has previously refused to state whether it wishes to continue as a participant in the system after Brexit or how this might be achieved. “That is a matter for future negotations” was about as much as anyone in government was prepared to say.

Last Autumn, IP Draughts coordinated a joint note from the IP professions to government on Brexit and IP. It was eventually sent to the IP minister and others in government in late December 2017. The note was brief and high-level, targetted at people outside the UK Intellectual Property Office. More detailed papers on IP topics had already been submitted to the UK IPO.

On the UPC, the note included the following recommendations:

…the Government should provide legal certainty regarding the UPC, and now do the following:
(a) confirm that it is the UK’s intention to stay in the UPC, and that the UK is prepared to abide by the terms of the UPC Agreement, following Brexit;
(b) work towards the coming into effect of the UPC as soon as reasonably practicable in collaboration with other UPC Member States; and
(c) work with other UPC Member States and EU institutions to ensure there are no legal or practical obstacles to UK participation in the UPC and the Unitary Patent, following Brexit, on equal terms with other Member States.

The objectives should be (i) continuation of the Court in London; (ii) continued involvement of UK national judges; and (iii) continued rights of participation of legal professionals qualified and based in the UK in all parts of the Court’s procedures on the same terms.

The part of the White Paper dealing with the UPC seems to be consistent with the above position, and this is to be welcomed. Paragraph 151 of the White Paper includes the following statements (colour added):

The UK has ratified the Unified Patent Court Agreement and intends to explore staying in the Court and unitary patent system after the UK leaves the EU. The Unified Patent Court has a unique structure as an international court that is a dispute forum for the EU’s unitary patent and for European patents, both of which will be administered by the European Patent Office. The UK will therefore work with other contracting states to make sure the Unified Patent Court Agreement can continue on a firm legal basis.

The bit in red is perhaps more tentative than one might wish to see (“intends to explore”), but at least it shows a good direction of travel.

The bit in blue we can ignore – it is directed to Eurosceptics who may be concerned about the residual jurisdiction of the CJEU, and seeks to divert attention from this point by making the legitimate point that for most practical purposes it will be the UPC court that decides matters.

The bit in green adds little to the bit in red, other than to say that the UK will be talking to other EU states about how the UPC Agreement can lawfully continue – in practice, an amendment to the text will be required if the UK is to continue to participate.

So, there is not much meat on how this miracle will be achieved, but at least the government is finally saying that it wants to achieve it. IP Draughts hopes that the UK IPO will now have a mandate to start, and actively pursue, negotiations with other member states and with the European Commission on these points.

According to IPKat, the a spokesman for the UK IPO has clarified what the IPO will be doing in light of the White Paper:

The UK intends to stay in the Unified Patent Court and unitary patent system after we leave the EU. The UPC and unitary patent project are an important means of simplifying the protection of innovative products throughout Europe. This Agreement sets the bar for the level of constructive cooperation that the UK seeks with European partners in the future.

UK participation in the UPC and Unitary Patent will extend the benefits of these systems to businesses operating in the UK.

The UK will work with our European Partners to ensure the Unitary Patent and Unified Patent Court continue on a firm legal basis. This will need to reflect the change in the UK’s status as we cease to be an EU Member State, which will require negotiations with our European Partners. We look forward to beginning those negotiations with our European Partners so as to ensure the continuing success of this new system.

So, things are moving at last. Let’s hope the IPO is able to negotiate a solution that enables the UK to participate fully after Brexit, and retain the life sciences part of the central division of the court in London.


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Interpreting trade mark agreements

The authority of Court of Appeal decisions is sometimes said to be greater if a “strong court” decides the case. For a decision on the interpretation of an IP licence agreement, it would be difficult to think of a stronger court than:

  1. Lady Justice Arden – the first female judge to be appointed to the Chancery Division, who has decided many contract and company law cases. She is shortly to become a Supreme Court judge.
  2. Lord Justice Kitchin – a senior IP judge in the Court of Appeal. He is also shortly to become a Supreme Court judge.
  3. Mr Justice Birss – an IP judge in the Chancery Division who revitalised what is now the Intellectual Property Enterprise Court, and is surely due for promotion to the Court of Appeal before too long.

This was the panel in the recently-reported case of Holland And Barrett International Ltd & Anor v General Nutrition Investment Company [2018] EWCA Civ 1586 (04 July 2018). IP Draughts reported on the decision at first instance, here.

On appeal, the points at issue have crystallised into a point that was not discussed in IP Draughts’ summary of the first instance decision. He would summarise the point this way.

  1. GNIC sells a business in nutritional supplements to Holland & Barrett (HB), whose shops are familiar in UK high streets. As part of the deal, GNIC grants HB an exclusive licence under certain GNIC trade marks, including the “GNC” word mark and several ancillary marks that include the word GNC, eg one consisting of a device and the words “GNC Herbal Plus”.
  2. Clause 5.6 allows GNIC to terminate the licence in respect of one or more of the licensed marks if HB fails to use the relevant marks for a period of 5 years.
  3. GNIC purports to terminate the licence for 5 unused, ancillary marks. The licence remains in force for the main GNC word mark.
  4. GNIC contends that the implication of terminating the licence to these marks is that it may use them in the HB territory, even though such use may infringe the main GNC word mark.
  5. HB contends that such use would be a breach of the grant of exclusive rights to the GNC word mark.
  6. The judge at first instance agrees with GNIC.
  7. The Court of Appeal agrees with HB, and overturns the first instance decision on this point.

The Court of Appeal focused on the exclusivity granted to HB with respect to the main GNC mark, and found it would be breached if, for example, GNIC sold products under a mark that included the GNC word and other elements, as in the GNC Herbal Plus mark mentioned above. This analysis was not affected by:

(a) the fact that a separate licence had been granted to, for example, the GNC Herbal Plus mark; nor

(b) the fact that the latter licence had been terminated. It was not necessary to imply a term that on termination of the latter licence, the exclusive licence to the GNC word mark was qualified or reduced in scope.

And as the Court of Appeal stated, paragraph 53 of their judgment:

Putting the matter in a different way, if when the licence was being drafted, someone had suggested to the parties that clause 5.6 might have the consequence which GNIC contend for today, then taking into account the parties’ intention construed objectively from the document as a whole, the parties would have agreed that that is not what they intended to achieve.

In IP Draughts’ view, the Court of Appeal’s forensic analysis of law and facts is persuasive, and overcomes a first thought that such an interpretation fails to give GNIC an effective remedy for failure to use the marks.

It is also interesting to note that the judgment is described as “the judgment of the court” rather than being ascribed to one of the court members and then agreed to by the others. This technique should be used more often, in IP Draughts’ view, and is a further sign of the quality of the judgment.


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Chairing the IP Law Committee

Last week, IP Draughts attended his last meeting as chair of the IP Law Committee of the Law Society of England and Wales (the national bar association for English and Welsh solicitors). The appointment was for 3 years; he is now time-expired and ineligible for re-appointment as chair.

After last week’s meeting, we held our annual dinner. It was a pleasant affair, made more special for IP Draughts by the kind words he received from other members about his time as chair. Some of these words had been recorded in a framed poster – a kind of Wordle of quotes – that was presented to IP Draughts and now sits on his office wall. He is very grateful for the sentiments and for the poster.

He is also grateful for the support that he has received during the last 3 years, from both members of the committee and Law Society officials. Particular mention should be made of Lauren Rabaiotti, now our policy officer, but once our committee secretary. Her enthusiasm, diligence and aptitude have helped to make the chairing role a smooth one. She is increasingly taking the initiative in guiding the committee to actions – not an easy task in such a specialised area of practice.

He would also like to thank James Love and Michelle Blunt, who are retiring from the committee, for their expert and helpful contributions over several years.

Here are some brief thoughts on what works, in IP Draughts experience, when chairing a body of this kind.

  1. Enthusiasm. Leading by example, with enthusiasm and commitment helps to encourage everyone to give up their time to the cause.
  2. Tone. Left to their own devices, some IP lawyers can be rather critical. Setting the right tone, particularly at meetings, helps people to be relaxed and engaged, and willing to speak up. In IP Draughts’ view, a little irreverent humour is a positive contribution. Avoid having meetings that are like an appearance before a hostile judge.
  3. Balance speaking and listening. It is legitimate for the chair to start off debates by stating his or her views, but then he or she should actively listen to the other members, and encourage contributions, particularly from quieter members.
  4. Respect. The committee has some national, or even international, expert in their subjects. You don’t have to be the best at everything – let them take the lead, but within a framework that you help to set. Be respectful of their expertise and that of support staff, and patient but politely insistent in urging them to meet deadlines and deliver work product.
  5. Personal initiatives. While you don’t have to lead every initiative, leading on some where you have expertise helps to demonstrate commitment and set tone. You have an opportunity as chair to develop your own agenda; within reason, this is a good thing rather than an abuse of power.

IP Draughts stated, when he became chair, that he wanted to bring IP closer to the centre of the Law Society’s thinking. He believes he has had some success with this aim. The presence of the incoming President of the Law Society, Christina Blacklaws, at last week’s dinner, was an illustration of this success. He also thinks he has had some success in increasing cooperation among the various IP professional bodies in the UK, including those representing IP barristers, patent attorneys and trade mark attorneys. Our joint note on Brexit and IP, delivered to government last December, was an example of this cooperation.

An issue that he has noticed, but not yet found a complete solution to, is how to encourage new and younger members of the committee to speak up more and give their views. Law is still a hierarchical profession, and we have some very experienced and talented members on the committee. It can be a little daunting for younger members to give their views in such company, despite IP Draughts’ best efforts. Sometimes, members only really “come on stream” in their second 3-year term of office. This may be a symptom of a wider issue in the legal profession, rather than something that can easily be fixed within one committee, though this does not excuse us from trying to mitigate it where we can.

IP Draughts wishes the best of luck (not that she needs it) to his capable successor, Carolyn Pepper, and he looks forward to continuing on the committee, as a co-opted member, for a further (but final), and hopefully not too arduous, 12 months.

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Do you have to pay the one dollar/pound consideration?

Today’s special is a lightly-grilled patent assignment. It only costs a dollar.

A recent case in London’s Intellectual Property Enterprise Court (a specialist IP court for smaller disputes) reminds us of some legal points concerning patent assignments.

The case is Dichand v Hydraredox Technologies Holdings Ltd [2018] EWHC 1142, and the judge was HHJ Hacon.

Most of the judgment is about who said what to whom – a typical, messy dispute over facts. Those facts relate to the signature of a patent assignment and whether the signature was procured by fraud. The judge said no – the assignment was legally binding.

But the facts remind us of some larger truths, under English law. Tongue slightly in cheek, IP Draughts summarises them as follows:

  1. If you are a sophisticated investor/businessman and are presented with a one-page patent assignment during dinner at the Four Seasons Hotel, Bangkok, the assignment clearly identifies the patent applications that are being assigned, and you spend a few minutes reading it before signing it, you can’t get out of it later on the grounds that you didn’t understand what you were signing. You didn’t have to sign it there and then, and you could have taken it away and sought advice from your lawyers.
  2. If the assignment provides for payment of one dollar in consideration, you can’t get out of the assignment on the grounds that the dollar was never paid. You have a separate action in debt.

The judgment mentions that other legal arguments were raised, or perhaps flung around in desparation might be more accurate. If you can’t persuade the judge on your fraud point, or on failure of consideration, try unilateral mistake, breach of trust, and unjust enrichment. One of them might stick. Or not, in this case.

On the consideration point, there is a respectable argument that, under English patent law, consideration is not required to make an assignment legally binding. See our earlier blog article here.

But sometimes the assignment document goes further than just a formal assignment, and includes contractual obligations, eg of “further assurances”. In many common law jurisdictions, for a contract to be binding, there must be consideration. English law accepts that consideration can be a nominal amount such as a pound, which may not be the case in some other jurisdictions – see Ken Adams’ article on the position under US laws here. And as HHJ Hacon briefly points out in the case cited above, under English law if it is not paid this is just a debt, and does not invalidate the transaction.

Of course, if it is paid, it may be subject to VAT, and should be recorded in the parties’ accounts – points that are also, often, overlooked. Some people take the view that paying the nominal amount is more trouble than it is worth. Others make a joke of it, and demand their pound.

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