21 August 2010

Enforce a Confidentiality Agreement for as Little as £475

Most inventors learn from the Intellectual Property Office (“IPO”), librarians, Business Link advisors, patent attorneys and each other that they should disclose their inventions only in confidence. They know that they should ask business partners, investors and others to sign instruments like the IPO’s “Confidential Disclosure Agreement”.

But what happens if a person who has signed one of those agreements breaks his or her promises by making the invention or disclosing it to a third party? Theoretically the inventor can claim an injunction, damages or other relief for breach of confidence. If he or she acts quickly enough, the inventor can apply to the court for an injunction to restrain the breach until trial. But an application of that kind can cost thousands of pounds. There are not very many individuals or indeed businesses with that kind of money.

Before the Access to Justice Act 1999 legal aid was available for that kind of action. Unfortunately para.1 (h) of Sched. 2 of that Act now excludes business disputes from legal aid. Many unscrupulous opportunists are aware that civil litigation is not an option for their victims if they disregard their obligations.

However, civil litigation is not the only means of enforcement. Parties to an agreement can agree to refer any dispute or difference arising from their agreement to a tribunal of their choice known as an “arbitrator” who will determine the dispute in accordance with the law and evidence in much the same way as a judge would though in private and at a time and place of the parties’ choosing. That is a process known as “arbitration”. It is one of several alternatives to the courts that are bundled together under the label “alternative dispute resolution” or ADR.

There are many types of dispute for which arbitration is more appropriate than litigation. If a case turns on a technical issue as happens frequently in civil engineering, the issue is more likely to be understood by an arbitrator who has spent his lifetime in that profession than by a judge who has spent his in the criminal or divorce courts. If the parties are from different countries and neither is comfortable with the legal system of the other they can refer their dispute to a neutral that they both trust. Yet another type of case appropriate for arbitration are disputes between trade mark owners and proprietors of domain names that are the same or similar to the mark as to who should own the domain name. The parties to such disputes need a process that is fast and fair but also inexpensive. Procedures like the Uniform Domain Name Dispute Resolution Policy (“UDRP”) deliver a binding decision within a few weeks of the complaint for as little as US$1,500.

There is no reason why a process like the UDRP should not be used to resolve other types of intellectual property dispute such as those that subsist between inventors and their collaborators, investors, licensees and other third parties. NIPC Ltd has established such a process called NIPC Arbitration. This is “a low cost dispute resolution service for intellectual property, technology, media and entertainment cases” inspired by the UDRP and similar schemes. NIPC Arbitration can deliver an order to refrain from breaching a promise not to use or disclose confidential information within a few days of the reference for as little as £475 (£250 to the arbitrator for a telephone hearing lasting less than an hour plus £100 to the company for registration, another £25 for appointing the arbitrator and £100 for arranging the hearing). Rule 5 of the scheme’s Arbitration Rules confers on the arbitrator all the powers of the court including the power to grant interim injunctions. The risk to the inventor is limited by rule 11 (4) which limits costs to those that would be awarded by a hearing officer in an Intellectual Property Office tribunal which very rarely exceed £3,000 and are usually much lower. An award by an arbitrator is as good as a judgment for most purposes and can be backed up if necessary by the courts.

NIPC Arbitration is by no means the only arbitration scheme but it is the only one that is tailored to IP disputes involving individual inventors, start-ups and other small businesses. Key to the scheme is an arbitration clause which refers disputes to an NIPC arbitrator under the NIPC Arbitration Rules. Examples of such clauses are to be found on the Arbitration Agreement Page of the NIPC website.

For more information fill in the on-line contact form or visit www.nipcarb.co.uk .

1 comment:

Stuart Fox said...

So many people, even from IP Offices, reccomend confidentiality agreements though it may be very difficult to prove breach of confidentiality, yet at least in the UK an inventor may lodge a Patent Application free of government fees - why risk it!

Stuart Fox - Chairman, Inventors Society Of Australia (formerly from Leeds)