IP transactions course

IP Draughts spent last week in London, convening and speaking at a 5-day course on IP transactions, which is run annually at University College London’s Faculty of Laws. This is the 6th year that the course has run.

The law faculty has very recently returned to its building in Endsleigh Gardens, after a 2-year period of major building renovations. We were delighted to be one of the first conferences to use the new facilities. Although the builders still need to do some “snagging” and finish off cosmetic works, the atmosphere of the building was fantastic, and undoubtedly helped both teachers and students to get into the right frame of mind for our intensive course. Our lecture room had the name “Hong Kong Alumni Room”, which probably means that thanks are due to UCL Laws alumni based in Hong Kong who helped pay for the renovations.

The feedback that IP Draughts has seen so far has been exceptionally good. Here is an example:

Fantastic course. The only course of this type – truly transactional law and practice. Genuine speakers who are still currently practising. Really enjoyed it. Great location and venue – love the renovations. Well done, Mark and Sir Robin!

Thanks are due to our speakers, listed below. IP Draughts would also like to thank Lisa Penfold of UCL Laws, who organised and administered the event, and IP Draughts’ associate Christopher Pollard who helped organise it on behalf of Anderson Law. The speakers and workshop facilitators were:

Mark Anderson, Anderson Law
Christopher Bates, Ashurst
Christine Bendall PharView Limited
Michelle Blunt, Baker McKenzie
Stephen Brett, Anderson Law
Ruth Burstall, Baker McKenzie
Toby Crick, Bristows
Sam de Silva, CMS
Braeden Donnolly, Ashurst
John Enser, CMS
Faye Harrison, Bristows
John Hull, Farrers
Inbali Iserles, Ashurst
Professor Sir Robin Jacob, UCL
Steven James, Brown Rudnick
Tomos Jones, CMS
Charles Kerrigan, CMS
Mark Lubbock, Brown Rudnick

Sam Oustayiannis, CMS
Chris Shelley, Pennington Manches
Sally Shorthose, Bird & Bird
Jeff Skinner, London Business School
Adrian Toutoungi, Evershed Sutherland
Joanne Vengadesan, Pennington Manches
Philip Wareham, Government Legal Service
Matthew Warren, Bristows
Tara Waters, Ashurst
Tim Worden, Taylor Wessing
Cerys Wyn-Davies, Pinsent Mason

The dates for next year’s outing of this course have already been set. Put them in your diary! They are: 8-12 April 2019. Hopefully the snagging will be completed by then.

Now he just has to write this year’s exam…

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Whose job is it to check the contract schedules?

It is late at night. You are a lawyer, preparing the final versions of a large and complex set of contract documentation. You have asked a business colleague for the final version of a schedule to the contract, and she has provided a version. But you are not satisfied that this is the final version. You ask her to check again, and she provides another version in an email timed at 23:31 hours. You attach this version and prepare a final set of contract documents. The contract is signed. Everyone is happy.

But the schedule was not the final version that had been agreed in negotiations. The schedule attached to the contract that was signed provided for annual payments to your client of £500,000, over a 15 year period, with no provision for indexation of these payments. But the final version of that schedule, which by mistake had not beeen attached to the signed contract, provided for annual indexation of those payments, to allow for price inflation.

Is your client entitled to increase the amount of the payments each year to allow for inflation? And if not, who bears the loss?

Here are some further facts, to make the question more interesting.

  1. The contract was negotiated as part of a tender process in compliance with public procurement regulations. Your client is a local government body. Arguably a contract was formed by acceptance of a tender and before the formal contract was signed.
  2. But the signed contract included an “entire agreement” clause stating that the parties have not relied on any other documents in entering into the contract.
  3. Commercial management of the negotiations was handled, on your client’s behalf, by a management consultant, PriceWaterhouseCooper (PWC). It was a PWC representative who provided you with the version of the schedule that you attached to the signed contract.
  4. The schedule that was attached to the contract had some missing details that were still to be completed, which arguably made the schedule “inoperable”. But neither party spotted these defects before the contract was signed.

You have one hour to answer this question. No conferring.

Ah, but we have an answer, in the form of a High Court decision from last year. IP Draughts has just stumbled across the case of Borough of Milton Keynes v Viridor (Community Recycling MK) Ltd (No 2) [2017] EWHC 239 (TCC), decided by Coulson J. With some simplification, the description above summarises one of the main issues facing the judge in this case.

A recent tweet by @jamessflee alerted IP Draughts to the case. The tweet paraphrased a comment from the judgment, at paragraph 67, which reads as follows:

There is no doubt that it was sloppy work by PwC, the management consultants and, to a lesser extent, by Ms Brittlebank [of Dentons], the solicitor. PwC’s error is perhaps a sad reflection of the fact that modern day contracts of this kind are so complicated that nobody (not even the consultants) bothers to check the actual documentation being signed.

So there was sloppy work. But has there been negligence? Has any negligence caused recoverable loss? And by whom should the loss be borne – PWC or Dentons (or both), or more likely their insurers?

Fortunately for them, but unfortunately for the curious observer, Mr Justice Coulson didn’t need to answer these questions, because he was prepared to accept that the contract should be “rectified”, ie that the final version of the payment schedule should be substituted for the one that was actually attached to the signed contract.

Interestingly, on the issue of the entire-agreement clause, the judge, quoting an earlier authority, comments:

where there is a strong case for rectification, the agreement which constitutes “the entire agreement” is to be found in the contract as rectified and not in the contract which, ex hypothesi, does not reflect the true intention or agreement of the parties. I consider that that is the position here. Thus the entire agreement clause is immaterial.

But don’t take away the message that in cases of this kind, the judge will sort it all out, applying common sense. It is difficult to win cases based on rectification, and it only happened here after a very close scrutiny of the facts and the underlying law, and in the face of sustained and forceful arguments to the contrary by the other side’s QC. It will be interesting to see if the case is appealed.

Coming back to the practice point, what is the solicitor who is managing the contract documentation supposed to do? In this case, she twice asked the client’s representative to provide the correct schedule, perhaps annoying them in the process, and the representative should have been aware of the need to carefully check that she was supplying the right version. But she didn’t. And nobody noticed, from either side, before the contract was signed. Is it fair to blame the solicitor in these circumstances? Mr Justice Coulson clearly thought that the primary responsibility lay with the client representative, in this case PWC. But that doesn’t necessarily let the solicitor off the hook.

Many of us who advise on contracts are familiar with the situation where you are the only person attending to the details, in the face of pressure from commercial colleagues to “get the deal done”. Perhaps those colleagues wouldn’t even blame you if things go wrong, as they would accept that everyone wanted to close the deal and not spend further time obsessing about the documents.

Perhaps. But if losses are incurred as a result of a mistake, how likely is it that senior management will take this view?

Are you willing to make yourself unpopular to get the documents right, or do you “go with the flow”? Perhaps the answer depends in part on the scale of the deal and its risk profile. For a contract involving payments of 15 x £500,000, IP Draughts hopes he would always fall on the side of accuracy rather than expediency, unless clearly instructed to do otherwise.



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Article on drafting FRAND licences now published

Back in December, IP Draughts had an article published in the online version of the Journal of Intellectual Property Law and Practice (OUP). The article’s title is How to draft a licence agreement that is fair, reasonable and non-discriminatory: a ten-point plan.

IP Draughts learnt at the weekend that this 10,000-word article has now reached the paper version of the journal. For non-subscribers to the journal, it can be purchased here.

The abstract reads as follows:

The English High Court case of Unwired Planet International Ltd v Huawei Technologies Co Ltd & Anor is of great interest to IP lawyers who advise on standards-essential patents (SEPs), on associated questions of competition law, and on licensing patents on fair, reasonable and non-discriminatory (FRAND) terms. The case is also of interest internationally, partly because there have been relatively few cases anywhere in the world, to date, that provided judicial guidance on legal issues relating to SEPs and FRAND and because this is the first time that an English court has determined a FRAND royalty rate.

This article focuses narrowly on the FRAND aspects of the Unwired Planet case, and on what the case teaches us about how to draft a patent licence agreement that is FRAND. But the discussion is broadened to reflect not only on the licensing of SEPs but also of other types of licence where there is an obligation to negotiate fair and reasonable licence terms, with particular reference to the terms of grant of the European Commission for Horizon 2020 research projects.

This focus results in the author omitting discussion of some points that would be of interest to the lawyer who is running litigation against a user of an SEP (perhaps in parallel with negotiating a FRAND licence with that infringer), or who may be advising on compliance with competition laws in the context of such litigation and negotiations.

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University spin-outs: our research report

There is much to celebrate within the UK’s university spinout sector. But could it do more?

It is a timely question, given that the start of April marked the official launch of UK Research and Innovation (UKRI), an amalgamation of the seven research councils, Innovate UK and Research England. With this, UK universities’ ability to turn research into innovation is once again under the spotlight.

In many ways, spinouts are a real success story. Since the mid-1980s, UK universities have been allowed to commercialise the results of their research. Over the last 30 years, many universities have gained experience of managing their knowledge transfer activities, either in-house or through a subsidiary company, or in some cases in partnership with external companies. An important part of this activity has been setting up spinout companies and securing initial funding for their activities. Some highly-successful UK and international companies can trace their origins to UK university research.

In 2014, the commercialisation of university research received a further boost when the Research Excellence Framework (REF) introduced a requirement that university research should show “impact”.

However, just four years later, research funding is facing a crossroads. Uncertainty over Brexit has left the future of many funding streams far from secure. At the same time, the government’s industrial strategy recognises the need for UKRI to benchmark how well universities commercialise the results of their research.

The time feels right, then, for scrutiny of how the university spinouts system works, In particular, the relationship between the sources of funding for academic research, and successful commercialisation of the research. It is somewhat surprising that nobody has really done this before.

So, a few months ago, Anderson Law commissioned research into precisely this. The findings, summarised in our newly published report, mark the first real insight into how innovation from UK universities is being funded and how this leads to the creation of spinouts.

Overall, it’s a positive picture. Spinouts from UK universities are thriving; nine out of ten spinouts which have received private investment between 2011 and 2015 have survived. Among start-ups on the whole, only two in ten survive beyond their fifth year.

We also found that the number of spinouts from UK universities is on the increase and, with this, so is the amount of investment into them from private investors. But we believe more should be done.

As UKRI begins its work, we expect that the commercialisation of research from UK universities will be a priority. We also think the government has a role to play too, giving Universities a clear policy steer on their role as innovators, as part of a national strategy for the commercialisation of research from UK universities.

A better-defined strategy for commercialising university research will also go a long way towards demonstrating the value of universities to the UK, and the economic and societal impact they can have. But there is a real need to get this right, now. The uncertainty over Brexit adds extra urgency. If the UK is to remain competitive on the international stage over the next decade, it is essential we understand what we are good at, where we are helping ideas develop into successful entities, and back those systems.

If we do not, the ultimate price could be a UK struggling to produce world-beating start-ups and SMEs ten years from now – which would have real consequences for our economic prospects.

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