Category Archives: Legal practice

Licence grant wording: take care over the details

Ken demonstrates the ancient art of invisible cat's cradle

Ken demonstrates the ancient art of cat’s cradle, conceptually, and without the wool

IP Draughts’ favourite commentator on contract drafting issues, Ken Adams, has written an article, Granting Language in Patent License Agreements: An Analysis of Usages. The article has recently been published by Landslide, the magazine of the American Bar Association’s Section of Intellectual Property Law.

It is always interesting to read Ken’s views, particularly when his accompanying blog article issues a challenge to IP lawyers, expressed in Donnesque terms:

IP guys, you are not an island: it’s best to base your contract usages on general guidelines for clear and modern contract prose.

IP Draughts agrees with the sentiment, and with much of what Ken says in the article. That is not entirely surprising: he saw a draft of the article and commented on it. There are, though, a few more IP factors to take into account before reaching any conclusions on the drafting points that Ken identifies – factors that might only be known by an IP specialist.

Cutting to the chase, the article provides “before and after” versions of a typical licence grant clause, the latter being Ken’s approved version. Here is the “before” version:

Subject to the terms and conditions of this agreement, Acme hereby grants to the Licensee, and the Licensee hereby accepts, an exclusive royalty-bearing license under the Patent Rights, with the right to grant sublicenses, in the Field of Use, in the Territory, to make, have made, import, use, have used, offer for sale, sell, and have sold Licensed Products.

And here is the “after” version:

Acme hereby grants the Licensee an exclusive, royalty-bearing (in accordance with section 4.5) license (with the right to sublicense) under the Patent Rights in the Field of Use to make, have made, use, offer for sale, sell, and import Licensed Products in the Territory.

As John Donne nearly said: Every IP lawyer is a piece of the continent, A part of the main. If a clod be washed away by the sea, Europe is the less.

As John Donne nearly said: Every IP lawyer is a piece of the continent,
A part of the main.
If a clod be washed away by the sea,
Europe is the less.

IP Draughts mostly agrees with the latter version, though he would probably make any right to sublicense subject to conditions, which would be set out in a separate clause or section. A cross-reference to that other clause would be appropriate. He would probably not bother to state here that the licence is royalty-bearing, as this means no more than that a contractual payment is due, which can be set out in a separate clause without a cross-reference in the grant clause.

Ken identifies a number of usages in conventional licence grant clauses that are either redundant or sub-optimal. IP Draughts’ brief summary of Ken’s comments, and his response to those comments, follow:

  1. Use the verb grants not licenses. Agreed.
  2. Refer to a licence not a right. Agreed.
  3. Use the expression hereby grants. Agreed.
  4. Don’t say ‘grants and agrees to grant’; the latter is redundant even in the case of future IP. Agreed in the case of licences. There may be some value in the case of assignment, in view of the differing national rules (and different rules for different types of IP within a jurisdiction) on the legal effect of an assignment of future IP. For a discussion of some US issues, see here.
  5. No need to ‘accept’ the licence. Agreed under English law. The advice from the Dutch contributor to our loose-leaf work on biotech transactions was that it was necessary to state that an assignee of IP, or a distributor of products, accepted the IP or appointment, and similar principles are likely to apply to licences. Bearing in mind that many IP licences are international, it may be safer to include some words of acceptance.
  6. Grant a licence, not a ‘covenant not to sue’ or an ‘immunity from suit’. Agreed. For a discussion of covenants not to sue and their usage, see here.
  7. Explain exclusive, sole, etc. Ken makes some subtle points about US drafting practice (eg phrases such as “exclusive, even as to the licensor”) but in the end, his “after” version simply says “exclusive”. IP Draughts’ view is that sophisticated parties are likely to be clear on the meaning of exclusive, but sole and semi-exclusive should be defined. And that if the EU territory is being divided, it would be prudent to be clear on whether sale outside the territory is permitted, and to ensure that whatever is agreed is aligned with EU competition law.
  8. Perpetual, irrevocable. As Ken notes, these terms are not synonyms. A licence could be perpetual, subject to right of early termination. Irrevocable is probably okay as a term in a short licence (if that is what is intended) but ideally the licence would make clear that no form of early termination by the licensor (whether or not properly characterised as revocation) is allowed.
  9. Assignable. IP Draughts shares Ken’s reservations about using the word “assignable” or similar in the long list of adjectives that precede the word “licence”. Instead, address this issue more precisely in separate clauses dealing with assignment and (less commonly) change of control. You may also want to address the question of whether the licensor is permitted to assign the IP that is being licensed, and the consequences for the licence of doing so. Typically, the default position under national patent laws is that a licence registered with the patent office is binding on a future owner, but what is less clear is whether the contract under which the licence was originally granted has any continuing effect. These matters should be addressed explicitly in the licence agreement.
  10. Sublicensing. IP Draughts agrees that the licence should address whether sublicensing is permitted. This is typically a matter for national patent law and the “default” position (ie if not addressed in the contract) varies between jurisdictions. However, if sublicensing is to be permitted, it is usually subject to conditions, eg as to duration, consistency of terms, etc, and those terms should be stated. IP Draughts’ preference is state these things in a separate clause an omit the word “sublicensable” in the grant clause.
  11. Worldwide. IP Draughts understands that, logically, it may be wrong to say a licence is worldwide if the IP is not registered in every country of the world, and of course one should be careful about giving warranties in unpatented territories. Nevertheless, licences are often expressed to be worldwide and usually this will not cause major problems of interpretation.
  12. Royalty-bearing or royalty-free; fully paid-up. IP Draughts can see a point in stating that no payments are to be due (if that is the case) and that a phrase such as “fully paid-up and royalty-free”, while rather jargon-ridden, may the simplest legal shorthand to express the point. He can see no point in stating that a licence is royalty-bearing in the long list of adjectives before the word “licence”. Just have a separate clause dealing with royalties.
  13. Limited licence. IP Draughts agrees that it is unnecessary to say that a licence is limited. The only concern that he identifies with this simple advice is that, particularly for US parties, the Universal Copyright Convention (to which most countries of the world are not parties, preferring the Berne Convention) has, or used to have, a concept of limited licences, which explains why copyright statements referred to limited licences as well as, or instead of, using the phrase “all rights reserved”. Although he is not a US lawyer, he understands that the provisions of this Convention may have been modified in recent years, making these references redundant. No doubt readers who are US lawyers can enlighten us!
  14. Licence to do what? IP Draughts agrees that the licence should state which otherwise-infringing acts the licensee is permitted to do, eg make, use and sell products. He was interested to see Ken’s explanation of why, in light of US law, licence agreements sometimes include a reference to “export”. IP Draughts has found this word problematic in past transactions and usually tries to avoid it.
  15. Subject to the terms of this Agreement. IP Draughts agrees that this expression is probably unnecessary in the grant clause, particularly if a separate termination clause makes clear that on any termination of the agreement, the licence automatically terminates. However, some lawyers clearly have a concern that the licence, once granted, may exist independently of the agreement under which it was granted, as a form of property right. For this reason, IP Draughts has tended to include this phrase, though he is now having second thoughts about its usefulness.

 

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Writing legal letters with empathy

Lord Bramall, holding his Field Marshal's baton

Lord Bramall, holding his Field Marshal’s baton

Let us hope this never happens. You are accused of a serious sexual offence involving children, dating back several decades. The police investigate and 20 policemen search your house for 10 hours, lunching in the village pub where it is obvious what they are doing. You are a public figure, and someone tips off the tabloid press about the allegations against you. The police deny it is them, but there are plenty of past examples of policemen earning some extra money by selling stories to newspapers.

After a year or two of painful delay, the police write to you to inform you that their investigation is completed and no further action is being taken. In effect, you have been cleared, but the letter is written in heavy, official prose that seems designed more to exonerate the police from blame than to give you reassurance that your nightmare is over. The police refuse to apologise for the investigation, for the tone of the letter, or for failing to say in unequivocal terms that the shadow of suspicion is no longer falling on you. Their argument is that they cannot apologise for doing their duty, or provide reassurance that may later prove to be inappropriate.

In IP Draughts’ view, there is a right way and a wrong way to write a letter of this kind. It is possible to write a letter that is legally watertight and yet provides comfort to the recipient. His attempt at such a letter appears below.

First, though, some background on the current case. The Metropolitan Police, the main police force in London, has recently closed its investigation of allegations of sexual crimes that were made against Field Marshal Lord Bramall. Here is how the mid-market tabloid, the Daily Mail, covered the story.

Field Marshal is the UK name for a 5-star general. In most generations, the senior general in the British army gets no higher than the 4-star rank of General. Usually a Field Marshal’s baton is only awarded during war time, for exceptional service. Winston Churchill made a few of his generals Field Marshals towards the end of the Second World War, including Monty. General Bramall was in charge of the army at the time of the Falklands Conflict in 1982 and was promoted to Field Marshal a few months after the sucessful conclusion of that conflict.

Some more background. Lord Bramall is now 92 years old. His wife was dying at the time of the police raid, and in fact she died a few months later. Although mentally confused, she remembered that the police had visited, and later kept asking Lord Bramall whether she had done something wrong.

According to press reports, the allegation was made by one man who has made allegations against various public figures, and the police found no other evidence to support the allegation.

Let’s leave aside the question of whether the police should have intruded on the Bramall family home on the basis of a single allegation unsupported by further evidence other than (apparently) press reports that repeated the single allegation. There is a context to this question, including the Jimmy Savile case, that is beyond the scope of this article.

Instead, let’s just focus on the letter. Some of the text of the letter can be found at the Daily Mail link above. IP Draughts has seen a version of the complete letter in the last few days but can’t seem to find it from internet searching today.

Another argument made by the police is that this letter was addressed to Lord Bramall’s solicitors, and therefore the tone was different to a letter written directly to an individual. IP Draughts is not convinced by this argument, but even if it is correct, the Metropolitan Police should be sending a ‘sign off’ letter to the individual who has been investigated. Just as they are learning to show empathy to the victims of crime, they should learn to show empathy to the victims of allegations of crime.

The issue is brought into sharp relief because the victim of the allegation in this case is an exceptionally distinguished public servant, and because of his age. But the same courtesy should be shown to any victim of such a situation. Here is IP Draughts’ attempt at such a letter:

Dear Lord Bramall

I am writing to confirm that the Metropolitan Police has concluded its investigation of allegations that have been made against you, and that it is taking no further action.

The Metropolitan Police has a duty to investigate allegations of crime. We do this without fear or favour, but we seek at all times to be courteous to those with whom we deal. We recognise that any police investigation can be distressing both for the victims of crime and for those who are investigated, regardless of the outcome. Thank you for your cooperation as we performed our legal duties.

You will appreciate that we cannot make any commitment about future action, for example if new allegations are made or new information comes to light. However, based on the information that we currently have, this matter is at an end.

If you would like to discuss any aspect of this matter, please contact [ ].

Yours sincerely
Steve Rodhouse, Deputy Assistant Commissioner, Metropolitan Police

 

 

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Letters patent for the uninventive

great sealPatents, formerly known as letters patent, are granted for inventions that (in summary) are new, have an inventive step, are capable of industrial application, and are not in any excluded category.

In the UK, the older name, letters patent, refers to the fact that they were originally awarded by means of a published, rather than private, letter from the monarch, to which the Great Seal had been applied. Note the Norman French usage of placing the adjective after the noun, which also survives in a few other legal expressions such as Attorney General and corporation sole.

Although it is no longer the method of grant for modern patents for inventions, Her Majesty the Queen continues to award letters patent in other contexts, including the appointment of diplomatic and other representatives of the Crown. Last week, the latest batch of appointments as Queen’s Counsel were announced. 115 appointments were made, including 5 appointments for intellectual property barristers.

In fact, these appointments will not take effect until 22 February, when they are announced in the London Gazette. On the same date, the new QCs will receive their letters patent at a ceremony at Westminster Hall, in the same room where Charles I was sentenced to death in 1649, in Britain’s brief flirtation with republicanism.

For centuries, the London Gazette has been the definitive source of information about State business. Nowadays, it is available online. Here, for example, (and reproduced below) is the announcement of the appointment of Nelson Mandela as an honorary QC in 2000.

Crown Office

House of Lords, London SW1A 0PW

3rd May 2000

The Queen has been pleased by Letters Patent under the Great Seal dated 3rd May 2000 to appoint Nelson Rolihlahla Mandela, Esquire; David Eryl Corbet Yale, Esquire; Roger Grahame Hood, Esquire, C.B.E. and Paul Philip Craig, Esquire; to be Her Majesty’s Counsel learned in the Law honoris causa.
C. I. P. Denyer

An appointment as a QC continues until superseded by another Royal appointment (eg as a High Court judge) or, in extremely rare cases, it is revoked. Here (relevant text reproduced below) is the London Gazette for the 11 December 1874:

The Queen has by Letters Patent under the Great Seal of the United Kingdom determined the Letters Patent whereby Edward Vaughan Kenealy, Esq., was appointed one of Her Majesty’s Counsel learned in the Law, and removed and discharged him from the said office.

london gazette 1874Edward Kenealy QC (as he then was) was counsel for the Titchbourne claimant in a notorious trial that was the longest in English legal history. His client had brought a civil action in which he claimed to be the heir to a baronetcy and the associated estates. This civil claim failed and his client was charged with perjury. In the subsequent criminal trial, the prosecution introduced 215 witnesses and the trial lasted 188 court days. It took the jury 30 minutes to decide that the defendant was not who he said he was. He was sentenced to a prison term of 7 years. Both the judge, in summing up, and the jury, made comments condemning Kenealy’s confrontational behaviour in the trial.

The story was made into a film in 1998, with a stellar cast including John Geilgud and Stephen Fry.

 

 

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League table of UK transactional IP lawyers 2016

leagueFor the fourth year in a row, IP Draughts presents his annual table of tables, which lists transactional IP lawyers who are recommended in both IAM Patent 1000 and Chambers Directory. The latter was published today.

In IP Draughts’ view, this super-table is a crude but useful way of identifying most of the leading UK practitioners in the field of IP transactions. As Chambers does not specifically recommend UK transactional IP lawyers (as distinct from IP lawyers generally, and then only on a regional basis), its closest available listing is the UK national listing of transactional life science lawyers.  Although not perfect, and having a life science bias, the resulting list feels mostly right.

The 20 lawyers who feature on both lists in Autumn 2015 are as follows:

Laura Anderson – Bristows
Mark Anderson – Anderson Law
Malcolm Bates – Taylor Wessing
Richard Binns – Simmons & Simmons
Allistair Booth – Pinsent Masons
Alison Dennis – Fieldfisher
Patrick Duxbury – Wragge Lawrence Graham & Co
Jim Ford – Allen & Overy
Michael Gavey – Simmons & Simmons
Sarah Hanson – CMS Cameron McKenna
Gary Howes – Fasken Martineau
Mark A Lubbock – Ashurst
Nicola Maguire – Reed Smith
Lucinda Osborne – Covington & Burling
Daniel Pavin – Covington & Burling
Stephen Reese – Olswang
Chris Shelley – Penningtons Manches
Sally Shorthose – Bird & Bird
Julian Thurston – Baker & McKenzie
John Wilkinson – Reed Smith

Congratulations to all of you!

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