Category Archives: Legal policy

IP policy for SMEs – but which SMEs?

plan5According to some, national IP policy should support the creative and innovative sectors. The individuals who work in these sectors are often employed (or self-employed) in small and medium sized enterprises (SMEs). They include designers, photographers, artists, musicians and authors. Their creative output is protected by IP rights, including copyright. Often, they lack the financial resources or business scale to challenge misuse of their IP rights by ‘big business’ or by consumers who download their works from the internet.

In a slightly different category are the business sectors that depend on innovation in science and engineering, including computer software. Again, many of the innovators in these sectors are based in SMEs, but others are in major companies such as Apple or GlaxoSmithKline.

Reading the UK Intellectual Property Office’s draft 5-year strategy document, and the Conservative Party’s 2015 Manifesto, it is clear that the current UK Government has sympathy for the creative and innovative sectors. Encouraging the growth of new businesses generally, and IP-focussed businesses in particular, is seen as a route to improve the state of the national economy. The Manifesto includes ringing statements such as “With the Conservatives, Britain will be the best place in Europe to innovate, patent new ideas and set up and expand a business.”

The IPO’s draft strategy document reflects these priorities. It refers, for instance, to:

  • making the IP system simpler and less costly
  • ‘encouraging’ creators through the IP system
  • ensuring that businesses understand how to manage their IP effectively to support growth

These points, and others in the strategy, seem to IP Draughts to be focussed on the needs of small-scale creators and innovators, as distinct from major UK companies such as Dyson whose success depends partly on strong IP laws, or UK businesses that make use of IP rather than creating it, and whose commercial success could be prejudiced by IP laws if they became unbalanced in favour of the small-scale IP creator.

Assuming, for the sake of the argument, that it is right to direct Government policy to the needs of IP-dependent SMEs, which types of SME should be the focus of Government attention and support? SMEs vary widely in their scale, ambitions, financial resources, understanding of technical issues, and dependence on the protection of IP laws. Over the years, IP Draughts has seen Government attempting to ‘reach out’ to SMEs via regional development boards and other quangos, usually with limited success. Many SMEs have no interest in engaging with bodies of this kind; they are too busy running their businesses.

In IP Draughts’ view, if IP-related Government support is to be given to SMEs, it should be focussed on the types of SME that are most likely to produce a return to the UK economy from providing that support. This is not a call for a 1970s-style financial support for ‘strategic industries’, but rather is saying, if we are going to spend Government money on creating new IP systems that support SMEs, let’s take a hard-headed look at which types of SME are most likely to produce a benefit to the UK economy when they receive this support, and design the IP systems to be suitable for them.  For example, focussing on the needs of the ‘inventor in a shed’ may be less useful for the economy than focussing on university spin-out companies. Of course, this assumes that the purpose of Government policy in relation to SMEs is to improve the UK economy, rather than to increase the number of its supporters or out of sympathy for the SME ‘underdog’.

To focus the discussion, let’s take three, fictional examples that represent some of the categories of IP-dependent SMEs that IP Draughts has encountered. Should the Government target its IP policies on Xavier, Yvonne or Zac?

Xavier

Xavier is a self-employed designer and photographer. Most of his work is for large companies, helping them with advertising campaigns and branding projects. He is often asked to provide ideas for campaigns ‘on spec’ (and without charge to the client), on the understanding that if his ideas are selected, he will be commissioned to do further work.  This unpaid work can be very time-consuming, and depressing if the ideas are not accepted. Sometimes, companies ‘steal’ his ideas and use them to create campaigns in-house, without any acknowledgement or financial compensation. Although he has heard that the Intellectual Property Enterprise Court is considered a good and cost-effective court for smaller disputes, he has been told that it might cost him £50,000 to sue a company that takes his ideas, and he might be liable for another £50,000 if he loses the case and the court orders that he has to pay the company’s legal costs. He cannot afford anything like £100,000. The profit on each project is typically in the region of £5,000-£10,000.

Yvonne

Yvonne is the founder of a medical devices company, which is a ‘spin-out’ from the University of Rummidge, where Yvonne is Professor of Bio-Engineering. The company is developing a kit for non-invasive blood glucose monitoring, ie a means of helping diabetics to control their blood sugar levels without the need for taking blood samples or inserting tubes into the blood stream. There is a huge worldwide market for blood testing devices. Non-invasive devices have been attempted over the years but have never succeeded, on technical grounds. The company has received £500,000 in funding from a ‘business angel’. Yvonne knows nothing about  intellectual property. The business angel has indicated that the company will need another £5-£10 million to develop the product to the point where it can be licensed to a major company such as Boehringer, and that raising this amount from venture capitalists should be achievable if the company keeps hitting agreed milestones for developing the product and validating it.

Zac

Zac runs a health-food store in Islington, London. He started the shop after leaving university. Business was very slow for the first 7 years, but he has gradually built up a loyal following for his range of ‘detox drinks’. He would now like to expand the business and a friend has suggested to him that franchising across the UK may be the way to go. He has looked at the IPO’s website and learnt that he should apply for a trade mark for the drinks, which he calls SupaCleanse. He calls up the IPO’s helpline and they guide him through the steps for applying for a UK trade mark. They put him in touch with a commercialisation adviser (not part of the IPO) who confirms that he complies with the British Standard for Commercial IP Services, and who says he can arrange for the drafting of a franchise agreement and a ‘bible’ of technical information on how to run the franchise.

ynotOver to you, dear readers. If you were in charge of Government IP policy, which of these individuals (and their companies) would you target as a ‘type’, when designing SME-friendly IP systems? Or should it target all three? Will it help the economy to focus on the needs of Xavier, Yvonne or Zac? If the Government has limited resources, where should its priorities lie?

 

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Strategy meetings – are they worth having?

strategySelect a dozen or so people who have a common interest but different perspectives on a subject, say intellectual property or legal services. Select people who represent ‘stakeholders’ in the subject. Give them a draft document that you wish to discuss with them. Hold a meeting lasting an hour and a half, at which you canvass their views on the document.

Last week, IP Draughts participated in two such meetings. The first was a meeting of solicitors to discuss the Law Society’s corporate strategy. The second was a meeting of various trade bodies to discuss national IP strategy.

The two meetings were very different in their participants, subject-matter and the way they were run. But in some ways the meetings felt very similar. You may think that some of the following points are obvious, but they only became obvious to IP Draughts after reflecting on how the meetings went, and how they differed from the meetings of IP lawyers and business people that he is used to attending.

  1. It is very difficult to develop any coherent conclusions on a topic when (a) the topic is complex and multi-faceted, and has numerous points of detail, (b) the meeting participants have widely-differing interests and personalities (and in many cases have not met before), and (c) you only have an hour and half to discuss the topic.
  2. Getting people to stick to an agenda, and to discuss their pet subjects under the relevant agenda headings rather than download their ideas all at once, is much harder than one might expect.  Strong chairmanship is required.
  3. Meetings develop ‘group-think’. The nature of that group-think depends on who has been invited to the meeting.

These comments make some tacit assumptions as to the purpose of the meeting, eg that they are intended to find solutions to problems through discussion. But what if the purpose of the meeting, at least on the part of the people who called it, is to ‘engage’ with stakeholders in the wider sense, without necessarily expecting (or needing) that engagement to lead to any consensus?

By contrast, meetings of the Law Society’s Intellectual Property Law Committee seem much more productive. This may be partly because:

  1. Under our current Chair’s guidance, the IPLC has been good at sticking to an agenda in its meetings. Preparatory work is done outside meetings, eg through the development of draft submissions on proposed legislation, and sufficient time is given in the meeting to discuss each point in a focussed way.
  2. Members of the IPLC get to know one another over several years, and develop a productive working relationship.
  3. Members of the IPLC are not representing ‘interests’, other than in the very general sense of all being specialist IP lawyers.
  4. IP lawyers tend to take what IP Draughts calls an ‘engineering approach’ of trying to find workable solutions to problems.

Similarly, client meetings that IP Draughts has attended, eg of the executive committee of a listed biotech company, have been focussed, kept to an agenda and produced relevant conclusions.

It is not surprising that strategy discussions take more of a ‘blank sheet of paper’ approach, and this inevitably leads to a looser discussion. But IP Draughts is left wondering about exactly what the purpose was of the meetings he attended this week and whether, in the minds of the organisers of each of those meetings, the purpose was achieved.

 

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Protecting the public from non-lawyers

office1According to popular culture, and therefore according to populist politicians, lawyers use their privileged position to charge too much and do too little. They provide their services in an old-fashioned way that is out of step with the service methods of banks, department stores, airlines, holiday companies and other mass-market providers. They are also too clever by half –  a particularly British, social sin. This negative feeling seems to operate mainly at the group level. Ask someone to comment on the service that their lawyer provides, and a more appreciative response is often given.

Prejudice against gender, race, religion or age is now outlawed. Prejudice against professions ticks no forbidden box. It is not only lawyers who are disparaged. Other professions, including doctors and teachers, are fair game for public hostility. This leads politicians to chip away at the the legal mechanisms that protect and promote professional services. Why do you need a lawyer to sell your house, when any Tom, Dick or Harriet could do it? Let them do it, and let them call themselves lawyers, it doesn’t harm anyone except overpriced solicitors.

Making these comments almost invites a sarcastic response. Another strand of popular sentiment is that well-paid professionals can look after themselves. Perhaps they can, but consumers of professional services can’t, and they are the ones that need protection.

The public benefits from having highly-regulated professions, and from laws that control the performance of professional activities, whether it be cosmetic surgery or investing people’s money. But who will point this out and stand up for the professions when they are under attack from politicians? If professionals do so, their comments are dismissed as the product of self-interest.

financial adviserThese gloomy thoughts are prompted by a letter that an elderly relative of IP Draughts received recently, on which IP Draughts’ advice was sought. The letter was written by a “financial adviser”. It offered to help this relative to create a “tenancy in common” of her house, and thereby avoid the house being compulsorily sold to pay local authority care home fees, if the relative needed to go into a care home in the future.  The adviser offered to charge a fixed fee for this work, and another fixed fee for creating a “mirror will” and trust to support the change of ownership.

This is not an area of law with which IP Draughts is familiar, but some Googling soon revealed the basic idea behind the proposal. In essence it is a scheme for ensuring that the surviving spouse, after the first spouse dies, can avoid selling their home to pay the care home fees. Apparently this works when the first spouse has set up a legal mechanism to ensure that their “half” of the property does not pass to the surviving spouse when they die. As a result the property cannot be sold, or is unlikely to have a market value.

For the benefit of readers who are not English lawyers, property can be jointly owned by two people in two different ways. The two ways are known as “joint tenancy” and “tenancy in common” and they have different legal consequences. When a joint tenant dies, the property automatically passes to the surviving owner. A tenancy in common passes in the deceased person’s will.

The scheme assumes that:

  • the spouses originally own the property as “joint tenants” (which many spouses do, including IP Draughts)
  • they convert their ownership to “tenancy in common”
  • the spouses do not pass their half-shares to each other in their wills but instead provide that they pass to someone else, eg trustees of a family trust
  • protection is sought from selling the house when the second spouse goes into a care home

IP Draughts was surprised that a financial adviser should be offering to transfer property, draft wills and create trusts, rather than directing the client to a solicitor. But she told IP Draughts’ relative that she has a law degree, so of course she understands these things.

severeHe was even more surprised by the letter, which appeared to be a modified version of a template letter. The template uses some pompous legal expressions like “sever the [joint] tenancy”, but because the writer doesn’t really understand what she is doing, phrases like “we will severe your tenancy” appear.

For several reasons, this scheme is unlikely to help IP Draughts’ relative:

  1. Her husband died many years ago, so it is too late to set up the scheme between husband and wife.
  2. She owns her property outright – there is no current joint tenancy.

If a solicitor offered garbage of this kind, they could be referred to the regulator – the SRA. They could be sued for negligence when the scheme doesn’t work, and they would have compulsory insurance that would cover any losses that might arise. Any competent solicitor would know that they have to check the client’s circumstances meticulously before offering a scheme of this kind. IP Draughts’ experience of local solicitors in the area where this relative lives is that they tend to err on the side of caution.

When a “financial adviser” dabbles in a subject that they don’t fully understand, and when they haven’t checked the facts properly before offering a service, who knows whether the client will be fully protected.

Situations like this one need to be explained to politicians when they engage in periodic bouts of lawyer-bashing. Financial advisers should not be allowed to offer legal services. It hurts the consumer when they do so. Old-fashioned, slightly stuffy solicitors are much better protectors of consumer interests.

This example concerns consumer law, which is what politicians tend to understand. For those of us advising business clients, we may think that situations like this don’t directly affect us (except when our relatives suffer from them). But misguided de-regulation in the consumer arena tends to have effects that are felt across the professional spectrum.

 

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Would you like to be a member of the IP Law Committee?

law societyNow that the Kat is out of the bag, IP Draughts can confirm what he has known, or thought he has known, for several weeks: that he has been appointed as the next Chairman of the Intellectual Property Law Committee of the Law Society of England and Wales. The appointment is for a 3-year term, starting in September.

A Law Society press release on this subject was issued a few minutes ago. IP Draughts’ haste to mention the topic is because the Committee is also in search of new members. The deadline for applying is 5pm today, so if you are interested (and are a member of the Law Society) you will need to apply this afternoon. Details of the vacancies and how to apply can be found here. Expenses are paid (subject to loads of rules) and there is also an annual allowance of about £60o. (Wow!)

In IP Draughts’ unbiased view, being a member of the Committee enables you to make a contribution to the IP profession, and to influence new legislation in the UK, EU and internationally. If you have experience as an IP lawyer, have a mindset where you think about the legal issues involved, and are willing to contribute to discussions and position papers, you may well be the person we are looking for.

The background to this recruitment drive is that for the last decade (and earlier, but IP Draughts is not familiar with that period) the committee operated as a lowly sub-committee, and was largely left to get on with its work undisturbed by Law Society protocols. The work was done very well, and eventually (a few months ago) the Law Society recognised this fact, and decided to upgrade us to being a full committee. However, one consequence of the increase in status is that we are now required to comply with Law Society procedures for committees, including a requirement to retire members and appoint new ones in a 3-year cycle.

The formalities for appointing the Chairman are even more detailed than for members. As well as undergoing SRA checks, and approval by a Board of the Law Society, IP Draughts was required to take 2.5 hours of online training on the subjects Disability Confident and Unconscious Bias, and to pass two exams in these subjects, which he has done. At least IP Draughts is now fully conscious of his biases.

 

 

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