Category Archives: Legal policy

Potential UN convention on IP licensing

In 2 weeks’ time, IP Draughts will be going to Geneva. The University of Geneva has invited him to give a presentation on IP licensing, as part of an all-day conference on technology transactions, which is jointly sponsored by the university and by LES Switzerland.

Since accepting the invitation, he has learnt that the morning séance is being conducted in English, and the afternoon in French. Thankfully, IP Draughts has been allocated to the morning session. His GCSE French (grade A) is not really up to debating implied terms in licensing transactions. Froggy Hunter (his French teacher; were nicknames ever politically correct?) could have provided language training on this subject, but for some reason it didn’t seem to be a priority in the 1970s classroom. There was more of a focus on not pronouncing faim as femme.

IP Draughts’ talk will propose that the United Nations should develop an international convention on IP licensing, perhaps drawing on some of the approach taken in its existing convention on the international sale of goods. The talk will draw attention to some of the problems with international IP licensing, including:

  • different legal systems approaching the interpretation of licence agreements in different ways, with some countries having limited experience of the subject.
  • different approaches to negotiation and the preparation of agreements in different countries.
  • the use of template agreements of varying drafting quality.

The talk will cite the example of the English High Court case of Unwired Planet v Huawei, where the court scrutinised the terms of a licence agreement between a US company and a Chinese company.
Finally, the talk will mention some areas that the convention might cover, including general principles of interpretation, implied terms, and perhaps even a model agreement.

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Brexit and IP: priorities for the UK government

Just before Christmas, the Law Society of England and Wales sent to UK government ministers and officials a short, 3-page note on Brexit and IP. The note identifies the top 5 priorities of the UK IP professions in relation to IP issues arising from Brexit. A copy of the note can be found here.

The note is signed by the chairs or presidents of CIPA, CITMA, the IP Bar Association, the IP Federation and the Law Society’s IP Law Committee (IPLC). It will be interesting to see whether and how the government responds to the note. The most important response will be the action the government takes to continue cooperation between the UK and EU members states in areas such as the UPC and pan-EU IP rights. Actions speak louder than words.

As chair of the IPLC, IP Draughts instigated the note, prepared the first draft, and moderated the preparation of revised drafts to take account of comments from members of the organisations mentioned above. Once it was finalised, he then had to persuade the Law Society to adopt it, and send it out. These were substantial tasks, in effect a multi-party negotiation between expert, strong-minded but ultimately cooperative professionals. By way of illustration of the amount of work involved, there are well over 250 emails in the electronic folder that IP Draughts has used for this project. The resulting note has certainly had careful scrutiny!

The IP professions have generated, and will continue to generate, many documents on Brexit and IP; after all, this is the single most important event in IP law and policy for a generation. Most of the notes that IP Draughts has seen are technical notes, that consider in great detail the dozens or hundreds of issues that are thrown up by Brexit in the field of IP. Some of them are designed to be read and used by the UK Intellectual Property Office, which has responsibilities for IP policy within the UK government.

What is different about the note mentioned above is its scope and intended audience. It became apparent to IP Draughts that the UK government will need to take decisions on a huge number of trade-related issues, and that IP will be just one of these. The officials taking those decisions may have little or no familiarity with IP, and will not have time to consider in detail the dozens of issues that Brexit raises for IP law and policy.

In that context, it seemed desirable to have a short list of the IP professions’ top “asks”, that didn’t go into a lot of detail, and could be read fairly quickly by a non-specialist. The note started off as two sides of A4 paper. During its evolution it grew to three sides of A4, and IP Draught repeatedly pruned it, and cut out subsidiary phrases, to keep it within that limit. Another word or two would have brought it on to four pages.

It still manages to pack a fair amount of detail into those three pages, perhaps too much, but overall IP Draughts thinks the document is clear and fulfills the purpose that he set for it. It is good to see the IP professions cooperating on this important issue and speaking with a single voice.

 

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Technology transfer (the other type)

Nowadays, when the term technology transfer (TT) is used, most people probably think of TT from universities and other research institutions to industry. Or at least, they probably think this way in the UK and other developed countries. Since the 1980s, national policies such as the Bayh-Dole Act in the USA, and the decision to allow UK universities to commercialise their own IP, have led to the proliferation of TT offices across the universities of North America and Europe.

Organisations such as PraxisAuril in the UK, ASTP-Proton in Europe, and AUTM in the USA, have helped to train a generation of specialist TT practitioners. The first generation is now reaching retirement and we have a second generation that hasn’t experienced the pioneering days of TT.

When IP Draughts qualified as a lawyer, just before the start of the developments mentioned above, the dominant meaning of TT was rather different. Most people probably thought of TT in relation to the policies of developing countries that sought to obtain technology from industrialised countries, with a view to improving the economic development of the former.

Back in the 1980s, there seemed to be a constant stream of articles in technology law journals about the TT policies of particular countries. For instance, it seemed that Brazil came out with a new government policy every few years, and most of these policies seemed deeply unattractive to technology owners in industrialised countries. If you licensed software to a Brazilian company, the terms of the licence had to be approved by a Brazilian government agency, you had to deposit the source code with them, and the source code would be made freely available after 5 years. IP Draughts recalls such a transaction where both parties ignored the local laws.

An illustration of this understood meaning was that the publishers of IP Draughts’ first book, now in its third edition (fourth out soon) and called Technology Transfer, thought this name was potentially unclear and misleading to readers in the mid-1990s. Instead, IP Draughts had to settle for the clumsy name Technology: The Law of Exploitation and Transfer.

IP Draughts wonders what has happened to this other meaning of TT. The general trend of international IP policy seems to have been towards a more pro-IP approach, supported by international treaties such as TRIPS. In specific sectors, there have been initiatives to support developing countries, such as EU Regulation 816/2006 on ‘compulsory licensing of patents relating to the manufacture of pharmaceutical products for export to countries with public health problems’.

We seem to hear less about the national TT policies of developing countries. IP Draughts speculates that these policies have been shown to be a failure, like some other economic theories that focus on state control of the market. But here he is sounding dangerously like a right-winger, which doesn’t sit easily with his status as a member of the liberal, metropolitan elite.

 

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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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