Category Archives: Legal practice

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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Maelstrom in a teacup: IP professions should be lovers not fighters

sevenAccording to the Legal Services Act 2007, there are 8 legal professions in England and Wales (or, to use the lifeless terminology of the Act, 8 categories of “authorised persons” that are regulated by “approved regulators”).

 

 

  1. Solicitors
  2. Barristers
  3. Notariesplusone
  4. Legal Executives
  5. Licensed Conveyancers
  6. Patent Attorneys
  7. Trade Mark Attorneys
  8. Law Costs Draftsmen

The approved regulators are under the overall supervision and control of the super-regulator, the Legal Services Board. In the case of solicitors, the approved regulator is the Solicitors Regulation Authority (SRA). The regulator for patent and trade mark attorneys is known at IPREG. For historical reasons, the regulator for notaries is the Archbishop of Canterbury, through his Faculty Office.

In past decades, there was a degree of rivalry between patent and trade mark attorneys (PTMAs) on the one hand, and solicitors on the other. No doubt there was further rivalry between patent attorneys and trade mark attorneys, otherwise why would there be separate bodies representing these two tiny professions, but that is a subject for another day.

The rivalry between PTMAs and solicitors could be seen:

(1) in the campaign by PTMAs in the 1980s to be permitted to call themselves attorneys rather than agents, against rearguard defence by some solicitors who argued that PTMAs were the equivalent of patent agents in the US and would not be allowed to call themselves attorneys in the US as they were not qualified lawyers. US clients would be misled, so the argument went, into thinking that UK patent attorneys could provide general legal advice. Solicitors lost that battle, as evidenced by the enactment of section 278(2) of the Copyright, Designs and Patents Act 1988. Subsequently, the professional bodies for both patent and trade mark attorneys have renamed themselves by dropping the word “agent” from their titles and substituting the word “attorney”.

A few years ago, the Institute of Trade Mark Attorneys (ex-Agents) registered the name “trade mark attorney” as a certification trade mark, much to the consternation of solicitors practising in the trade mark field. Those concerns were eventually mitigated following a mediation and settlement that allowed solicitors to use the name trade mark attorney. There seems to be no end to the ways in which conflict can be continued under the heading of pursuing professional interests.

(2) in the campaign by PTMAs to gain rights of audience in the UK courts (ie, to appear as advocates before the court) in IP matters. This campaign has also been successful.

Thus, there has been a general trend to improve the legal status of PTMAs, to the point where they are now recognised by legislation and legal practice as lawyers, having largely the same privileges and duties as solicitors.

The downside to this is that PTMAs are learning just how tediously bureacratic the regulation of lawyers in the UK can be. Issues that IPREG has been grappling with include whether PTMAs must, as solicitors must:

  • have detailed rules of conduct, including on such subjects as conflicts of interest, complaints-handling, and diversity
  • comply with EU money laundering regulations when taking on clients
  • maintain separate “client accounts” for money held on behalf of a client

Much of the regulation that has developed for solicitors has been focussed on protecting consumers, as distinct from business clients. As politicians increasingly pander to consumerism, professions are mistrusted and the last vestiges of self-regulation are stripped from them. Instead, regulation is done by independent bodies run by politically-appointed committee-professionals and staffed by non-lawyers who use their own jargon such as “learning outcomes” and “behaviours”. People who have no experience of being an excellent lawyer can only measure those things that are capable of being measured, such as numbers of complaints or whether we have been to a private school. These may be relevant issues, but they are only a part of the picture. Regulated by outsiders, we lose some of the ethos that come from regulation by peer pressure, and which has helped to make the English legal profession respected internationally.

In this new world, PTMAs are just as vulnerable to interference and misrule by the political elite, all in the name of protecting consumers, as solicitors are. As indeed, are all professionals. Recently, we learnt that Government is considering the development of a new medical profession, somewhere between nurses and doctors. There were hints in the air that something similar might be contemplated for patent advisers, following the Hargreaves Review, but so far little has come of it other than the misguided sponsoring, by the UK IPO, of a British Standard for Commercial IP Advisers. Meanwhile the English criminal bar is being decimated by the introduction of a defender service.

Viewed from not very far away, PTMAs and IP solicitors are almost identical in their activities, professional regulation, and vulnerability to political interference. This should lead them to make common cause to protect themselves from outsiders, not fight among themselves like Afghan tribesmen.

In parallel with increased political interest in the IP/legal/any and all professions, is the increased interest in the substance of IP laws. This operates at two levels: the impotent national level, as indicated by a wearisome and unimpressive series of Government reviews, including Hargreaves; and the plenipotential EU level, where there is a continuous stream of legislative proposals. CIPA and the Law Society of England and Wales have committees that consider these proposals and reviews, and provide thoughtful and detailed responses to them. In IP Draughts’ view, there should be more joint activity by PTMAs, IP solicitors and other IP professionals when making these responses. For example, has CIPA considered asking the Brussels office of the Law Society (actually it is a joint office of several Law Societies) if it could come under its umbrella?

irishlawsocA similar point could be made at an international level. IP Draughts is a member of the Law Society of England Wales’s IP Committee and we have recently started discussions with the Irish Law Society’s IP Committee about cooperation in responding to EU IP proposals. This seems so obviously a good idea once it has been raised, but it is not always obvious before someone thinks of it.

Surely it is time for the UK IP professions to work together both on professional regulation and on new developments in IP law? Who knows, perhaps in time they might merge into a single profession?

 

 

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Legal fees: what is the right level of charge?

expensiveAccording to some who would consult for professional services firms, at least a third of your clients should be complaining about the fees they are asked to pay; if this isn’t happening, you aren’t charging enough. Statements of this kind capture one’s attention, which is what the financial services salesman wants to do. But is there any substance in the argument? Should one be striving to achieve what might be called an equilibrium of dissatisfaction among one’s clients?

In IP Draughts’ view, remarks of this kind should be treated with extreme caution. People don’t always complain; they just don’t instruct you on the next matter. If the fees are known to be high, you may not get instructed in the first place. Complaining mid-transaction or mid-litigation may be thought unwise, if it results in a loss of care and attention from the service provider, or necessitates a change of pilot, mid-stream. Many complaints about legal fees are not about the rates per se, which are usually known in advance, but about over-egged time recording by associates and trainees, which the responsible partner has been too busy, careless or venial to correct. If the issue gets as far as a formal complaint, the relationship may be in severe jeopardy.

Over the years, IP Draughts has advised clients many times on other lawyers’ fees. Sometimes, a quiet word in the ear of the senior lawyer concerned is enough to address the issue. Sometimes, a better process is needed for discussing bills in advance of their being submitted. Sometimes, discretion is the better part of valour. Many years ago, a well-known City law firm advised one of IP Draughts’ clients, a publicly listed biotech company, on a major research collaboration agreement. IP Draughts was asked to assist the CEO with his review of the fees that the firm charged.

can't affordThe first point to note was that fees were rounded up or down to the nearest £2,500. At the time, most of IP Draughts’ invoices were for less than this amount, so a rounding of this magnitude would have resulted in either a free or very expensive service, depending on which way the rounding went!

Secondly, the partner had spent nearly a week drafting the agreement, which seemed ludicrous, both in terms of the time spent and the fact that a senior partner had done the drafting at very expensive rates.

Thirdly, an associate in the firm’s competition department had recorded 8 hours to review the agreement from a competition standpoint. This was a breathtaking amount of time for something that should have taken an experienced competition lawyer (or at least one who knew about IP) no more than a couple of hours.

IP Draughts advised the client to focus on the main drafting time and partner rates, and not to waste powder on the competition law charge. And to consider using a less expensive firm next time. Subsequently, the company appointed a mid-tier London firm to be their corporate lawyers. The previous firm had been a self-indulgent luxury.

For some major public companies, perhaps they need, or think they need, to use a major City firm for large transactions. And perhaps in that situation they are more inclined to complain about fees than switch firms. So, maybe the consultant’s claim, that at least a third clients should complain, works in that situation. IP Draughts recalls a major company CEO commenting publicly some years ago about the fees charged by Slaughter and May. They provide a very good service and charge fully for that level of service, was his diplomatic way of putting it.

cheapIP Draughts looks at the subject rather differently. He prefers to get, and does get, comments from clients that his firm provides a very good service and very good value for money. That doesn’t mean we’re cheap! Marketing experts say one should never claim to be cheap, as the word has the wrong associations. By comparison with High Street firms, we are expensive. Reassuringly expensive, perhaps. By comparison with large IP and commercial firms in London, perhaps we are cheap good value. You decide.

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Interpreting an expenses policy

expensesAt our recent partners’ meeting, Mr Pettifog was in a lather about an expenses policy. He is a committee member of an international grouping of lawyers, known as Societe des Avocats du Droit d’Oeuvres, or SADDO for short. SADDO is an agency of the United Nations, and Mr Pettifog is frequently absent from the UK on official SADDO business.

SADDO has a generous expenses policy, or so Mr Pettifog thought. However, his recent claim for reimbursement of expenses when he was on a jolly important cultural mission to Milan has been turned down. This has meant that Mr Pettfog is out-of-pocket to the tune of several thousand Euros for 5-star hotel accommodation, bottles of champagne, chauffered limousines, and so on. Not to mention tickets for the opera for himself and several members of the Milan Bar. Having failed to recover these expenses from SADDO, he has tried to claim them from our firm, but our expenses clerk and archivist, Deirdre Sprocket, rejected his claim on the grounds that the expenses were not incurred on firm business. Hence his fury.

After he calmed down a little, he asked the firm’s junior partner, Dominic d’Aubusson, if he would start an action in the English High Court for judicial review of the SADDO policy, on the basis that SADDO is a quasi-governmental agency and therefore subject to judicial review. In particular, Mr Pettifog objected to the following terms in the FAQs sections of the policy:

  1.  Question: When there are two claimants sharing a room, may the individual allowances be added together? Answer: Where two people are required to stay overnight on business and wish to share a room, claims should be made in the spirit of the policy. Claims for shared rooms should not exceed the maximum reimbursement allowance for overnight accommodation for a single member. [It seems that Mr Pettifog and his friend and fellow committee member, Edmund Longshanks QC, decided – towards the end of a very good meal at Il Luogo di Aimo e Nadia – to book a room together in Milan that cost roughly twice the amount of the hotel allowance for individual committee members. They can’t understand why this wouldn’t be allowed, as it cost SADDO no more than if they booked separate rooms. Mr Pettifog wants Dominic to run the argument that this refusal is based on a policy of discrimination against homosexuals, while avoiding any suggestion that he is, in fact, a homosexual.]
  2. la scalaQuestion: Can members claim for taxi journeys to collect paperwork from an office that is not their usual place of work to take to a SADDO meeting? Answer: If this is an irregular occurrence this detour en route to a SADDO meeting can be claimed. If this becomes a regular occurrence, then the costs cannot be claimed as regular occurrences may mean it becomes a commuting journey. In order to avoid this, it is respectfully suggested that members look at different methods of collecting papers. [Mr Pettifog is of the view that Teatro alla Scala, Milan, counts as his office for this purpose, in that he had left a copy of some confidential client papers in the crush bar several nights earlier and came back to collect them. Therefore, he should be able to claim for taxi journeys to and from La Scala. Surprisingly, it seems that the Secretariat of SADDO disagrees with this interpretation of the rules.]
  3. Question: Are members entitled to claims taxi fares to and from the restaurant where they are taking their evening meal? Answer: Costs will only be reimbursed if the taxi journey was milano-transportation-maptaken home / back to their hotel late at night when there is either no public transport or it would be unreasonable to expect someone to use it. [Mr Pettifog wishes Dom to argue that it would be completely unreasonable to take public transport after an evening on SADDO business entertaining foreign dignitaries. He feels it would leave a very poor impression with said foreign dignitaries. Apparently the SADDO Secretariat is suggesting that he could have caught a Metropolitan Line train from Duomo station, very near La Scala, which would have taken him directly to his hotel.]

Readers who have experience of interpreting expenses policies, or of actions for judicial review, are invited to comment on whether Mr Pettifog’s action is likely to succeed.

 

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