Category Archives: Legal practice

International IP transactions and the effect of local laws

Litigating IP rights is such tiring work!

Litigating IP rights is such tiring work!

You have entered into an IP agreement that applies worldwide. It might be a licence agreement in which the licensed territory is all countries of the world. Or it might be an assignment of all of your IP, in all countries of the world.

The parties have agreed the law and jurisdiction of the contract. For present purposes, let us say that English law is to govern it, and that the English courts have exclusive jurisdiction. But the issues mentioned below are likely to apply irrespective of which law and jurisdiction are chosen.

The contract addresses IP-related issues in each country of the world. Take the example of an exclusive licence agreement that includes a term stating that the licensee can sub-license its rights. To what extent will this term override provisions of national IP law that state whether a licensee is permittee to sub-license?

As far as IP Draughts is aware (but he hasn’t done any worldwide research), on this point national IP laws may provide a fall-back position if the contract is non-specific on the issue, but they tend not to be prescriptive in the sense of overriding what the parties have agreed. For example, section 30(4)(a) of the UK Patents Act 1977 provides:

to the extent that the licence so provides, a sub-licence may be granted under any such licence and any such licence or sub-licence may be assigned or mortgaged

This suggests that, in the absence of a provision in the head licence agreement that permits sub-licensing, sub-licensing is not allowed.

Some years ago, when we wrote our loose-leaf work on agreements in the pharmaceutical sector, our German-law contributor included the following comment as a footnote in the licence agreement template:

Under German law, the right to grant sub-licences in case of an exclusive licence follows by law. Thus the parties need to explicitly exclude such right if desired.

IP Draughts suspects that, in most cases, national IP laws on the interpretation of an IP agreement will not override terms that the parties have expressly agreed in their contract.

If we broaden the subject from IP laws affecting the interpretation of IP agreements, to IP laws more generally, can we still assume that the terms of the contract override national IP laws? Probably not. For example, an IP agreement made under English law might state that the licensee can sue infringers. National IP laws may not allow the licensee to bring an action in its own name. Should the agreement be interpreted as requiring the IP owner to sue an infringer on behalf of the licensee in those countries where a licensee lacks locus standi to sue in its own name? IP Draughts cannot offer any universal answer to this question. It may depend on how the court interprets the contract. And even if the English court (in the above example) says that the answer to this question is yes, how enforceable will this decision be in the jurisdiction where the action is to be brought?

lex luthor

lex luthor

This type of question has long troubled IP Draughts, and he regrets that he didn’t take a course in conflict of laws at university. When, occasionally, he scratches the surface of this subject, he sees the liberal use of Latin expressions such as lex situs and lex fori, realises how dry and complicated the subject is, and leaves detailed study for another day. Even apparently helpful documents that seem to be directly on point, such as this one, cause him mild panic.

It was with mixed feelings, therefore, that IP Draughts read last week’s judgment by Arnold J in the case of Gloucester Place Music Ltd v Le Bon & Ors [2016] EWHC 3091 (Ch) (02 December 2016).

Readers may have seen reports in the national press about this case, and the dissatisfaction of the defendants with the outcome. Boiling it down to its essentials:

  1. The defendants are the members of the 1980s pop group, Duran Duran, and their service companies.
  2. In the 1980s they made an outright assignment of the worldwide IP in their songs to the claimant, a UK company, in return for payments including royalties. The agreements were all made under English law and were subject to the jurisdiction of the English courts.
  3. The assignment was very broad in scope (and used excruciating language, but that is a discussion for another day).
  4. US copyright law (section 203 of the US Copyright Act 1976) allows authors who have assigned their copyright to reclaim it after, typically, 35 years, by serving notice on the assignee. Section 203(5) provides: “Termination of the [assignment] may be effected notwithstanding any agreement to the contrary…”
  5. The defendants have served notices under section 203 on the claimant.
  6. The claimant sought and won a declaration in the English High Court that by serving such notices the defendants are in breach of their contracts with the claimant under which the IP was originally assigned.

The judge managed to use another Latin expression from the conflict-of-laws dictionary, namely lex loci protectionis. Applying English law principles of interpretation he concluded, “not without hesitation”, that he should give effect to the assignment as written, and should not make it subject to the rights given to authors by US copyright law to claim, in effect, a reversionary interest in the copyright.

This brief report omits mention of a number of other issues that the judge considered, including the fact that neither party provided expert evidence from a US lawyer.

IP Draughts hopes that this dispute will be appealed to the UK Supreme Court, so that we can get some guidance from Lord Neuberger and his colleagues on the interplay of national IP laws and IP contracts made under another law. Dare he say it aloud, but he would find this a far more interesting subject on which to get the Supreme Court’s ruling than whether the Prime Minister is required to introduce a Parliamentary Bill (which will almost certainly be approved by the House of Commons) before giving notice under Article 50 to leave the European Union.

 

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Getting the tone right in legal work-product

polishPart of IP Draughts’ job is to review draft documents that have been prepared by junior colleagues, before the document is sent out to a client or another party. The document may contain legal advice, explanation or commentary, argue a case, or ask for further information.

More often than not, IP Draughts has little to say about the substance of any advice or other information that is contained in the draft. Prepared by IP Draughts’ excellent and diligent colleagues, the substance tends to be accurate.

The main task, in many cases, is making sure that the content of the document is expressed in the best way possible. ‘Best’ may vary between types of document, but often includes providing information in a helpful way, or arguing a case persuasively. In most cases it is important to use clear language and to structure the document in a way that helps the reader to find their way through the details. For example, if the document is lengthy, it may be better to put it in a Word document, with plenty of headings and a summary at the beginning, rather than just paste it into a lengthy email.

mindreadingIt is also useful to try to put oneself into the mind of the intended reader. How do they process information? Are they looking for reassurance, or a simple overview, or chapter and verse? Are they likely to be ‘difficult’ and should the tone be checked for anything that might give them an excuse to react in an unproductive way? Are they expecting a recommendation, rather than just a setting out of options? Is the purpose of the document to try to steer the reader in a particular direction, and is it likely to have this effect? Predicting some of these points may require several years’ experience and a degree of empathy. Adjusting the document to take account of these points will similarly require experience and well-developed drafting skills.

too-hardSometimes, the task is to make the document more user-friendly and less lawyerly. At other times, the drafter may have gone too far in this direction. In a well-intentioned effort to be helpful, he may have stated his views with too much certainty, based on too little knowledge of the client’s commercial objectives. The result may be a document that appears useful but isn’t. It may be necessary to rein back on the recommendations and make them more robust, or to make clear the limits of the author’s expertise.

All of this requires thought and care. IP Draughts tries to follow an approach that he learnt as a junior lawyer, that there should be no personal pride in a document, and it should be critically scrutinised by the author or others before it is sent out. Sometimes, this results in more than one draft.

Sometimes, IP Draughts finds it helpful to think hard about the following points:

  1. Purpose. What is the document trying to achieve? In the case of a letter of advice, what has the client asked for and how will they use the advice?
  2. Reader. Who is the reader, and how will they understand and react to the document?
  3. Clarity and presentation. Is there a logical structure and flow to the document? Is it signposted with headings, an overview and other aids to reading? Is the language clear?
  4. Content. Is the document providing the right information and the right amount of information? Or is it too detailed or not detailed enough? Are there any inconsistencies in content between different parts? Is it answering questions that weren’t asked or which are not needed by the reader?
  5. Boundaries. Are there any limits on the scope of the document, eg that it is not intended to be comprehensive (because the work involved would require disproportionate expense), or depends on information provided, or is focused on one aspect of the problem, or that the reader is responsible for taking commercial decisions in light of the content of the document? Do these limits need to be stated explicitly?
  6. Professionalism. Is the document a professional piece of work, that would withstand scrutiny by a hostile regulator? While this criterion should usually flow naturally from dealing with the earlier points, and one should avoid being too defensive, there may be occasions where something in the document sticks out as not looking quite right, and where some tweaking of content or tone may be required.

working-outTypically, a well-drafted document will not show these workings, even if the drafter has made use of them in the background. They are part of the toolkit of the lawyer, perhaps less obvious than other elements such as understanding of the law, or even the ability to draft clear contract terms, but no less important when it comes to providing an excellent service.

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Leading UK licensing lawyers 2017

leaguesFor several years, this blog has produced a table of leading IP licensing lawyers, created by the simple but imperfect method of identifying all the lawyers who are recommended in both of the following directories for that year:

(a) the IAM Patent 1000 list of leading UK patent licensing lawyers; and

(b) the Chambers Directory list of leading UK transactional lawyers in the field of life sciences.

The latter list  was published earlier today; the IAM list was published some months ago.

So, who is on the IP Draughts list for 2017? Drum roll…

Laura Anderson  Bristows LLP
Mark Anderson  Anderson Law LLP
Malcolm Bates  Taylor Wessing LLP
Alison Dennis  Fieldfisher LLP
Patrick Duxbury  Gowling WLG
Jim Ford  Allen & Overy LLP
Michael Gavey  Simmons & Simmons LLP
Mark A Lubbock  Ashurst LLP
Nicola Maguire  Cooley LLP
Lucinda Osborne  Covington & Burling LLP
Daniel Pavin  Covington & Burling LLP
Stephen Reese  Olswang LLP
Chris Shelley  Penningtons Manches LLP
Sally Shorthose  Bird & Bird LLP
John Wilkinson  Cooley LLP

 

Most of the names on this list have been on the list for several years. A few names have dropped off but there are no new names. As a result, there are 15 names on the above list compared to 20 last year.

vennAn advantage of this list over the Chambers Directory list is that this list omits some individuals who are really corporate lawyers rather than IP lawyers. A disadvantage of this list is that it omits some fine IP lawyers who are not particularly focused on life science work, eg Matthew Warren of Bristows, or who are up-and-coming (eg IP Draughts’ partner Lisa Allebone, who has been named in the IP section of Chambers Directory for the first time).

Despite these defects, the list continues to be a fairly good indicator of the leading technology licensing lawyers in England and Wales.

Congratulation to all who appear!

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New standard agreements for universities are published

Sir Richard Lambert

Sir Richard Lambert

Have you had sleepless nights? Have you found it difficult to concentrate on Brexit or the US presidential elections, through wondering when the new Lambert agreements, promised many months ago, will finally be issued?

Worry no more: over a dozen new agreements and term sheets are waiting for you on the UK IPO website.

How are they different from the old Lambert agreements, IP Draughts hears you ask. In fact, he is one of those asking. Well, it’s difficult to say, without a line-by-line comparison. Has anyone done such a comparison? The Lambert committee, for example? And could they share the mark-ups? That would be very helpful for the university community.

Comparing the new and the old agreements won’t provide a complete picture, as some of the new documents are completely new, and don’t have an equivalent in the old set. In particular, there are now 7 bilateral agreements, numbered 1-6 (yes, that is confusing – there is a 4A as well as a 4). The old set comprised 5 bilateral agreements. There continue to be 4 multi-party agreements, numbered A-D.

A European consortium: Queen Victoria and Albert, the Prince Consort

An early European consortium: Queen Victoria and Albert, the Prince Consort

IP Draughts prefers to call the documents bilateral, or two-way, agreements, and multi-party agreements, though the documents themselves are named “collaboration agreements” and “consortium agreements” respectively. In IP Draughts’ mind, these official names are not descriptive. Some bilateral research agreements don’t involve a true collaboration, and are merely one party paying another to do research. And most multi-party research agreements are collaboration agreements, as that term is normally used. The name consortium agreement seems to have become popular through its use as a term of art in EU funded research projects, and in this context is synonymous with collaboration agreement.

Sometimes, universities will instinctively select Lambert 2 as a starting point. Its terms are similar to those used by US universities in most cases, ie the university owns the resulting IP, and grants the sponsor a non-exclusive use licence plus an option to negotiate an exclusive licence to commercialise.

From a quick scan through the new Lambert 2, and without the benefit of a line-by-line comparison with the old one, IP Draughts spotted the following:

  1. Many or most of the terms are familiar from the old document.
  2. There seem to be more optional terms, marked in square brackets.
  3. One of the clauses mentions the need for the university to demonstrate public impact in its research, and to disclose certain information for this purpose. “Impact” as an important policy objective for UK universities post-dates the date of publication of the old Lambert agreements.
  4. There are some tediously lengthy schedules that set out policies on issues such as anti-bribery, non-use of child labour, etc. Many large companies now seem to require references to such policies in their standard agreements.

As with the old agreements, the main “variable” between them is their different IP terms. Below is a summary of the IP terms in each case.

Bilateral agreements
No Terms IPR owner
1 Collaborator has non-exclusive rights to use in specified field/territory; no sub-licences (Institution)
2 Collaborator may negotiate further licence to some or all Institution IP (Institution)
3 Collaborator may negotiate for an assignment of some Institution IP (Institution)
4 Institution has right to use for non-commercial purposes (Collaborator)
4A Each party has right to exploit certain results created during project and takes assignment of those results. Institution has right to use for academic and research purposes, Collaborator for research purposes (Both)
5 Contract research: no publication by Institution without Collaborator’s permission (Collaborator)
6 Institution has right to use for academic and research purposes (Collaborator)

Multi-party agreements
No Terms
A Each member of the consortium owns the IP in the results that it creates. They grant each other party a non-exclusive licence to use those results for the purposes of the project and any other purpose.
B The other parties assign their IP in the results to the lead exploitation party (or the lead exploitation party is granted an exclusive licence).
C Each party takes an assignment of IP in the results that are germane to its core business and exploits those results.
D Each member of the consortium owns the IP in the results that it creates. They grant each other party a non-exclusive licence to use those results for the purposes of the project only. If any member of the consortium wishes to exploit another’s IP they must negotiate a license or assignment with the owner of that IP.

A new feature in the 2016 Lambert agreements is that two templates for term sheets are provided, one for Lamberts 1-6, and one for Lamberts A-D. In IP Draughts’ view, these are not particularly useful documents. They are very detailed and lengthy. If one is going for that amount of detail, it will often be better to move straight to negotiation of the actual agreement. IP Draughts has previously commented on his preference for term sheets, MOUs, heads of agreement and similar documents to be brief, perhaps no more than 2-3 pages. For instance see this article: Keep the Term Sheet Simple. Pretty please…?

IP Draughts is aware that some UK universities use modified versions of the (old) Lambert agreements. It will be interesting to see if those documents are updated to reflect the new Lambert terms. If not, we may end up with a proliferation of versions, and the original Lambert message – that parties should use the Lambert agreements rather than their own, favoured documents – may be further diluted.

 

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