How to avoid Entitlement Disputes

 

Jane Lambert

In Disputes over Ownership of Inventions 6 Aug 2015 NIPC South East I wrote:

"According to the Intellectual Property Office at least 30 disputes are referred to its tribunals every year over who should own or be entitled to apply for a British or foreign patent or be named as an inventor (see the table on page 50 of the IPO's Facts and figures for 2013 and 2014 calendar years)."

As I said in the next sentence, disputes over ownership of patents or patent applications are known as "entitlement disputes."  Of the 41 inter partes hearings, and reasoned decisions made without a hearing in 2014 mentioned in that table, 31 were entitlement disputes.  The situation had not changed much by 2018 which is the last year for which I have been able to find comparable statistics.  According to the table on page 60 of Facts and Figures 2018, entitlement disputes accounted for 24 of the 38 inter partes hearings, reasoned decisions made without a hearing and reviews of opinions in 2017 and 21 of the 32 in 2018.

Entitlement disputes are often heartbreaking because they arise from a breakdown of hope and trust and sometimes friendship.   The right to a patent or patent application is contested fiercely even when the patent is clearly invalid or of little commercial value.  There are three types of relationships from which entitlement disputes tend to arise:

• The first is between friends or acquaintances where one of them has a bright idea and the others pitch in to help him or her develop it.   
• The second is where the inventor hires a product design consultant, engineer or some other contractor to help with the product's design or development.
• The third is where the inventor or the original collaborators accept investment from an angel, venture capitalist or some other third party.

In the first situation, the friends or acquaintances fall out when they meet the first hurdle.   That can occur in a variety of ways.  One of them may want to apply for a patent or make a prototype and the others do not because they will have to dip into funds that they had earmarked for other purposes.  The second situation may arise because the inventor and third party fail to draw up a proper consultancy agreement or rely on the standard terms of business of the third party which do not reflect the parties' intentions.   The third situation can arise where the investor has paid for everything and the inventor has contributed nothing other than his or her initials idea but still insists on the application proceeding in his or her name alone.

Each of those situations can be avoided if the parties take independent legal advice and negotiate a written agreement that reflects the parties' intentions before any time or money is committed.   By independent, I mean a barrister, solicitor or patent attorney who is unconnected with the patent attorney who prosecutes the patent application.   I say that because in every entitlement dispute in which I have been instructed the attorney has been instructed by one of the parties.   It is next to impossible to act for a client but also safeguard the often conflicting interests of the other parties.

A properly negotiated and drafted agreement will anticipate the possibility of the parties falling out over minor as well as major issues and provide machinery for resolving them such as expert determination in the case of minor issues and mediation or some other form of alternative dispute resolution in the case of major issues.  Taking independent legal advice may be daunting at a time of rising interest rates and flattening demand but it is chickenfeed in comparison to the costs of the sort of entitlement dispute that I describe in my 2015 article.   And in relation to that article, the only thing that has changed since 2015 has been the costs of litigation which have increased along with everything else,  

So if you are thinking of collaborating on the development of an invention or investing in such a collaboration have a word with me or some other specialist lawyer or attorney first.  If you are unfortunate enough to be caught up in an entitlement dispute, I (or someone like me) may be able to advise you on how to resolve it without going before a hearing officer.   If a tribunal hearing cannot be avoided, you will need some skilled and experienced specialist representation before it.  Once again, there are members of the Intellectual Property Bar Association (of which I am one), the Chartered Institute of Patent Attorneys and specialist solicitors who can help you,

Anyone wishing to discuss this article may call me on 020 7404 5252 or send me a message through my contact page,

Further Reading

For an example of an entitlement dispute, read Jane Lambert Patents - Bionome Technology Ltd v Clearwater 14 Dec 2024 in NIPC Law.

Saving Money on IP at a Time of Rising Prices

 

Jane Lambert

At a time of rising production costs and weakening demand for their products and services, businesses are tempted to reduce or even curtail their spending on intellectual property services.  That will often prove to be a mistake because brands, designs, technology and creative output are rather like the golden eggs in Aesop's fable and the laws that protect them the goose   The reality is that many businesses will take that risk because savings have to be made somewhere.  There are, however, steps that can be taken that will save money but not increase risk excessively.  Those steps are suggestions and not recommendations. There will be occasions when only the most expensive option will do.  That will depend entirely on the circumstances. 

Ascertaining Intellectual Assets

Before any decision can be taken as to what intellectual assets are to be protected a business needs to know what it holds.  A patent or trade mark attorney or solicitor specializing in IP will carry out an IP audit for a fee and there are some schemes that will pay for such audits (see How to use an IP Audit 13 Jan 2022 NIPC News).  However, for businesses that do not qualify for such funding and do not want to pay such fees, there are two very useful diagnostic tools from the WIPO and the IPO that will do much of the work for nothing.   

The WIPO IP Diagnostics generates a customized report with recommendations.  There is more information in WIPO IP DiagnosticsAn IP self-assessment tool for SMEs and the WIPO IP Diagnostics Frequently Asked Questions.  The only caveat is that the WIPO tool is not designed specifically for British users though most of the information will apply to users in the UK. 

The IPO's IP Health Check is designed for users in this country.   It will also generate a report covering

• "a personalised list of actions to take
• an explanation of why we have made each recommendation
• guidance on how to put each course of action into practice
• links to useful information, websites and other resources."

Both tools have their strengths and as they are both free there is nothing to stop users from trying both.

Not all Intellectual Property Rights Cost Money

Patents provide the most comprehensive protection but they are not cheap.  An applicant can pay up to £5,000 or more for searches, office charges and attorneys fees just for this country.  Afterwards,there are periodic renewal fees which increase over time in some countries.  One of the conditions for the grant of a patent is that you have to disclose  "the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the art." As anyone in the world can read a patent specification once it is published it is often necessary to patent the invention in every country where there is a market as well as every country where there could be a competitor.  The Patent Cooperation Treaty has reduced some of those costs but patenting in more than one country can still cost many tens of thousands of pounds.  Also, if a court or the Comptoller-General of Patents, Designs and Trade Marks ("the Comptroller") finds that a patent should never have been granted, the grant can be revoked.

If the invention cannot easily be reverse-engineered the inventor may decide to keep the invention secret and disclose it in confidence only to people who need to know about it.  Some product information such as the way to make Coca-Cola or Chartreuse can be kept secret for centuries.   Even where an invention can be reverse-engineered but its competitive advantage is unlikely to last more than a few years, it may be sufficient to rely on unregistered design rights, copyright in the software that actuates the invention or some other non-registrable IP right.

Supplementary unregistered designs which provide up to 3 years protection from copying for designs that could be registered under the 1949 Act may be all that is required for toys, novelties and fashion goods  Unregistered design rights, which last up to 10 years (though licences of right are available in the last 5 years of a design right term) are another alternative to design registration. 

Passing off is a less obvious substitute for trade mark registration as goodwill by reference to a mark, sign or get-up has to be built up but the cause of action is sometimes available in circumstances where a trade mark would not be registrable.  Having said that, an action  for passing off is usually more expensive than a claim for trade mark infringement,

Before the Event Insurance

For many small and medium enterprises, the costs of litigation are an existential threat.  Such a threat can be mitigated by legal expenses insurance.  Cover against IP claims is available before a claim arises and afterwards.  As is to be expected, the premiums for before-the-event insurance are considerably less expensive than for after-the-event cover,   The IPO has provided some useful guidance on IP insurance.  The Chartered Institute of Patent Attorneys publishes a list of specialist IP insurance brokers as do the Chartered Institute of Trade Mark Attorneys.

Examiners' Opinions

A dispute over whether a patent is valid or whether it has been infringed can often be resolved by referring the dispute to a patent examiner for an opinion pursuant to s.74A of the Patents Act 1977.  The advantage of the opinion is that it will be based on evidence and argument from both sides.  It is also inexpensive.  The IPO charges £200 for the service.  While the opinion of an examiner is non-binding it can often facilitate settlement through mediation or negotiation.

Domain Name Disputes

Although the Court of Appeal held in  British Telecommunications Plc and others v One In A Million Ltd and others [1998] EWCA Civ 1272, [2001] EBLR 2, [1999] WLR 903, [1999] ETMR 61, [1999] 1 WLR 903, [1998] Masons CLR 165, [1999] FSR 1, [1997-98] Info TLR 423, [1998] ITCLR 146, [1999] 1 ETMR 61, [1998] 4 All ER 476 that unauthorized registration of a trade mark as a domain name is actionable, the Internet Corporation for Assigned Names and Numbers ("ICANN") has devised the Uniform Domain Name Dispute Resolution Policy for resolving disputes between trade mark owners and domain name registrants. For US$1,500, a dispute over entitlement to a domain name ending in ".com", ".org", ".net" or other generic top-level domain can be referred to a tribunal of one or three panellists who will deliver a decision within days of the referral.  Registrars are bound by their agreements with ICANN to give effect to such decisions.  That is considerably easier, cheaper and quicker than seeking to enforce the judgment of a UK court abroad.  There are similar schemes in national or regional domain name authorities such as Nominet for the ".uk" domain or EurID for the ".eu" domain,

Proceedings in the Intellectual Property Office

The Comptroller has jurisdiction to decide many kinds of patent, trade mark, registered and unregistered design disputes.  The procedure of his tribunals is simpler and less formal than that of the courts.  It is often possible to dispose of disputes without a hearing.  Unless a party behaves unreasonably the maximum costs that can be awarded against it are limited to a published scale.  In trade mark and design cases, it is possible to appeal to an appointed person who will award costs on the same scale,

The IPEC Small Claims Track

If the owner of an IP right other than a patent, registered design, plant variety or semiconductor topography has a straightforward claim that can be decided in a day and seeks primarily an injunction and damages of £10,000 or less, he or she should consider an action in the small claims track of the Intellectual Property Enterprise Court (see Small IP Claims last updated 19 Jan 2018 in NIPC News).  The procedure is simpler and shorter than claims in the multitrack and recoverable. costs are limited to a few hundred pounds in most cases.

Other Forums

All other IP claims for damages of £500.000 or less that can be tried in 2 days could be brought in the Intellectual Property Enterprise Court where recoverable costs are also limited.    For slightly higher-value and more complex cases, there is the shorter trials scheme (see IPEC and the Shorter Trials Scheme Compared  28 May 2022).

Conclusion

These suggestions are by no means comprehensive.  Other practitioners will suggest other possible cost savings or disagree with mine.   It would nevertheless be useful to start a conversation on the topic.   Anyone wishing to discuss this article can call me on 020 7404 5252 during office hours or send a message through my contact form.

Is China still the Best Place to outsource Manufacturing?

Author Daniel Case Licence CC BY-SA 3.0  Source Wikimedia Commons

 

Jane Lambert

For the first 20 years after China joined the World Trade Organization in 2001, it was almost instinctive for small businesses in the UK to look to China to outsource their manufacturing. There were many reasons for that. Labour was relatively cheap.  Components and raw materials were abundant and locally sourced.  Freight costs were tumbling as the belt and road initiative unfolded.  There was even talk of London becoming "the Western hub of Chinese finance" (see HM Treasury and George Osborne Chancellor welcomes London renminbi clearing bank 18 June 2014).

As a result, much of my work was connected with China in one way or another.  I was asked to review and occasionally draft manufacturing agreements or licences with Chinese manufacturers.  I warned clients that their UK or European patents, trade marks or designs afforded no protection against in other countries and urged them to seek legal protection in their principal markets and sources of supply. Quite a few infringing products have been tracked to China, sometimes even by manufacturers that had made the outsourced product under licence.

I have noticed a significant drop in demand for legal services relating to China in the last 2 years and it is not hard to see why.  The Trump administration imposed tariffs on Chinese goods.  The British government restricted Chinese investment in infrastructure projects such as 5G telecoms and nuclear power.  Protracted lockdowns to suppress covid have interfered with production. The Russian invasion of Ukraine and sanctions on Russia have cut overland links to Western Europe.  Chinese labour is becoming scarce and hence more expensive as a result of the one-child policy.  Spiralling transport costs have eroded whatever price advantage remains. Concern over human rights and worries over a possible invasion of Taiwan has added to a change of attitude towards China.   It is hardly surprising that there has been a rethink on outsourcing to that country.

Of course, China remains an enormous market with a faster rate of growth than most countries even now.  The best way to supply that market remains through joint ventures with Chinese businesses or licensing.  But manufacturing in China to supply the UK or other European markets is ceasing to be feasible.  There are alternative outsourcing manufacturers in countries like India, Indonesia and Bangladesh but they are also a long distance away and the manufacturing sectors of Bangladesh and Indonesia are less developed.  At a time of rising costs, businesses that can supply their customers from shot supply chains enjoy an advantage.

Anyone wishing to discuss this article may call me on 020 7404 5252 during office hours or send me  a message through my contact form. 

UK Innovation Strategy

Standard YouTube Licence

Jane Lambert

In his foreword to Global Britain in a competitive age which I discussed in NIPC Brexit on 19 March 2021, the Prime Minister wrote: "Our aim is to have secured our status as a Science and Tech Superpower by 2030." The Secretary of State for Business referred to that target in his foreword to UK Innovation Strategy Leading the future by creating it.  In my article, I wrote:

"As an intellectual property lawyer, I should love to see the UK become a science and technology superpower with vibrant creative industries attracting investment and expertise from around the world.   I just can't see how it is going to happen,"

I read the UK Innovation Strategy very carefully in the hope that it would explain how the UK will become a science and tech superpower in 9 years.

Synopsis

The document is 116 pages long divided as follow:  

• Secretary of State's Foreword (pages 4-5);
• "At a glance":  a bulleted list of the steps that the government proposes to take (page 6);
• "Introduction:  Why do we need an Innovation Strategy?":  a summary of the strategy (pages 7 - 10);
• Part 1 "Innovation today" covering "What is innovation?", "Why is innovation important?", "The challenge: Innovation created the modern world, but progress is slowing" and "The opportunity: The UK is ideally placed to lead a renewed global spirit of innovation" (pages 11 to 17);
• Part 2 " Innovation tomorrow" covering "Learning from the pandemic to create the world’s best innovation ecosystem", "Vision 2035: The UK as a global hub for innovation" and "Tracking progress towards our vision" (pages 18 - 21);
• Part 3: "Achieving Vision 2035" covering "Pillar 1: Unleashing Business – We will fuel businesses who want to innovate", "Pillar 2: People – We will make the UK the most exciting place for innovation talent", "Pillar 3: Institutions & Places – We will ensure our research, development & innovation institutions serve the needs of businesses and places across the UK" and "Pillar 4: Missions & Technologies – We will stimulate innovation to tackle major challenges faced by the UK and the world and drive capability in key technologies! (pages 18 - 100);
• Part 4: "Achieving our ambitions – implementation and next steps" (pages 101 - 107);
• Annex A "Innovation institutions" (pages 108 - 113) and
• Annex B: "List of Stakeholders Consulted" (pages 114 and 115).

Becoming a "Science and Rech Superpower" in Nine Years

The Introduction states on page 8:

"The Prime Minister has announced our intention to be a science superpower by 2030, placing science, innovation and technology at the heart of his vision for the UK. This involves being to science and technology what we are to finance: a central hub of the global economy, and the country that the world’s most innovative people and firms make their home."

Although there are signs that it has lost some business to Amsterdam, Dublin, Frankfurt, Madrid, Milan and Paris as a result of the UK's departure from the European Union, London remains one of the world's leading financial centres rivalled only by New York, Shanghai, Hong Kong and Singapore (see The Global Financial Centres Index 29  Long Finance. March 2021. Retrieved 18 March 2021).

A good measure of scientific and technical activity is the number of patent applications sought in a year.  According to the World Intellectual Property Indicators for 2019 published by the World Intellectual Property Organization, applicants in China applied for more than 1.5 million parents from the world's top 20 patent offices in 2018.  The United States came second with 597,141. Japan followed with 313,567 and South Korea came fourth with 209,992.  Companies from those countries. Huawei, Mitsubishi, Samsung, Qualcomm and Oppo, were among the top 5 applicants.  China, the USA, Japan and South Korea can fairly be regarded as scientific and technical superpowers.   If the UK is to be in science and technology what it is in finance it should aspire to create a similar number of patentable inventions by 2030.

With 29,941 patent applications in the world's top 20 parent offices, the UK lay number 13th.  It was ahead of Mexico but behind Taiwan, Germany, India, Russia, Canada, Australia and Brazil.   If the UK is to leapfrog over all those countries to join the USA, China, Japan and South Korea as a scientific and technical superpower it has a lot of work to do.

The government acknowledges the magnitude of that task on page 18 in the section headed "The opportunity: The UK is ideally placed to lead a renewed global spirit of innovation":

• "Business investment in R&D has fallen relative to our international peers. 

• There are low rates of technology adoption by firms that lead to underutilised knowledge. 

• We are at risk of a ‘brain drain’, the UK being a net exporter of talent. 

• Our workforce has skills gaps in some key areas which are at risk of growing in the coming years. 

• Our regulatory system often favours incumbent businesses over innovative new ones. 

• Growth is increasingly due to consumption, not due to investment. 

• Data, research and IP must be safeguarded to maintain competitiveness."

 Learning from the Pandemic

Part 2 of the UK Innovation Strategy points to the development of the Oxford/Astra-Zenica vaccine and other medical technologies in response to the pandemic as examples of British scientific and technical prowess and indicators of the way forward to superpower status. The speed with which the Oxford/Astra-Zenica vaccine had been developed and deployed was indeed a substantial achievement despite criticism of its effectiveness and side effects and the delay in obtaining regulatory approval in the USA.   However, similar success has been achieved elsewhere.  China has developed 7 vaccines that have achieved regulatory approval.  Russia has developed another 4.  The USA another 3 although the Pfizer–BioNTech and Janssen or Johnson & Johnson were developed in collaboration with German and Dutch scientists.  Two vaccines have also been developed by Cuba.  Others have been developed by India, Iran, Kazakhstan and Taiwan,

The Four Pillars

On page 21, the UK Industrial Strategy states that the government has four objectives it refers to as ‘Pillars’ in the document:

• "Pillar 1: Unleashing business – We will fuel businesses who want to innovate. 

• Pillar 2: People – We will make the UK the most exciting place for innovation talent. 

• Pillar 3: Institutions & Places – We will ensure our research, development & innovation institutions serve the needs of businesses and places across the UK. 

• Pillar 4: Missions & Technologies – We will stimulate innovation to tackle major challenges faced by the UK and the world and drive capability in key technologies."

These are amplified in  "At a glance" on page 6:

"Pillar 1: Unleashing Business – We will fuel businesses who want to innovate.

Increase annual public investment on R&D to a record £22 billion. 

Reduce complexity for innovative companies by developing an online finance and innovation hub between Innovate UK and the British Business Bank. 

Invest £200 million through the British Business Bank’s Life Sciences Investment Programme to target the growth-stage funding gap faced by UK life science companies. 

Consult on how regulation can ensure that the UK is well-placed to extract the best value from innovation. 

Form a new Business Innovation Forum to drive implementation of this Strategy.

 Pillar 2: People – We will make the UK the most exciting place for innovation talent. 

Introduce new High Potential Individual and Scale-up visa routes, and revitalise the Innovator route to attract and retain high-skilled, globally mobile innovation talent. 

Support, through Help to Grow: Management, 30,000 senior managers of small and medium-sized firms to boost their business’ performance, resilience, and growth. 

Pillar 3: Institutions & Places – We will ensure our research, development and innovation institutions serve the needs of businesses and places across the UK.  

• Undertake an independent review, led by Nobel Laureate Professor Sir Paul Nurse, Director of the Francis Crick Institute, looking across the landscape of UK organisations undertaking all forms of research, development and innovation. 

• Allocate £127 million through the Strength in Places Fund to develop R&D capacity and support local growth across the UK. 

• Invest £25 million of funding to the Connecting Capability Fund to help drive economic growth through university-business innovation. 

Pillar 4: Missions & Technologies – We will stimulate innovation to tackle major challenges faced by the UK and the world and drive capability in key technologies.  

• Establish a new Innovation Missions programme to tackle some of the most significant issues confronting the UK and the world in the coming years. 

• Identify the key seven technology families that will transform our economy in the future.

• Launch new Prosperity Partnerships to establish business-led research projects to develop transformational new technologies, with £59 million of industry, university and government investment."

Those  "pillars" are addressed in more detail in Part 3 and repeated for good measure in Part IV. 

Intellectual Property

One of the reasons why there are relatively few patent applications from businesses in the UK is the high cost of prosecution and enforcement.  

In 2004 the European Patent Office commissioned Roland Berger Market Research to compare the cost of patenting an invention in the UK and 5 other countries with the cost of patenting it in the USA and Japan (see my article Cost of Patents: EPO Report tells us what most of us already knew 23 Dec 2005).   In its Study on the Cost of Patenting Roland Berger reported that the cost of patenting an invention consisting of 10 claims on 3 pages, 11 pages of description designating 6 countries including the UK would be €30,530.  The cost of patenting the same invention would be €24,100 in the USA and €5,460 in Japan.  The cost of patenting in Europe may have fallen as a result of the Agreement on the application of Article 65 of the Convention on the Grant of European Patents in London (OJ EPO p 560 12 Feb 2001) but it is still believed to be higher than in the USA and Japan.

According to TaylorWessing's Patent Map. the typical costs of an infringement claim are between £200,000 and £1 million in England, €200,000 - €800,000 in France, €100,000 - €200,000 on infringement and a similar amount on validity in Germany, €75,000 - €200,000 in the Netherlands and  €2,530 - €375,000 in Switzerland.   The costs of litigation in the USA will be at least as much as in England because it is also a common law country but it is unusual for lawyers' fees to be awarded against the unsuccessful party.  It is arguable that England is the most expensive and possibly the riskiest jurisdiction in the world in which to enforce an intellectual property right.

Governments of both parties have been aware of this problem for at least the last 20 years (see DTI Innovation Report Competing in The Global Economy: The Innovation Challenge 1 Dec 2003).  They have also been aware of the solution which was an EU patent to be enforced by an EU patent court.  It is for that reason that the UK ratified the Community Patent Convention in 1975. It supported proposals for a Litigation Protocol to the European Patent Convention, a regulation for an EU patent and later the agreement for a unitary patent.  Even after the 2016 referendum, the government believed it would be possible to remain party to the agreement.  Mr Boris Johnspn in his capacity as Foreign Secretary actually deposited the UK's instrument of ratification on 26 April 2018.   Sadly, Amanda Solway MP gave notice of British withdrawal from the Unified Patent Court Agreement just over a year ago (see UK Withdrawal from the UPCA 20 July 2020).

As I argued in Has the Volte-Face on the Unified Patent Court Agreement been worth it? in NIPC Brexit on 6 April 2021 and in other articles, the sudden reversal by Amanda Solway of a longstanding policy on a unitary patent did British industry and science no favours.  It has perpetuated the disincentive to patent in this country.   Without adequate legal protection for innovation, investment in research and development can be expected to diminish.

The government might have been expected to respond that withdrawal from the Unified Patent Court Agreement was a necessary consequence of Brexit and that losses resulting from withdrawing from Europe will be more than offset by new opportunities elsewhere.  I looked carefully to see whether that was the case but I found nothing in the UK Innovation Strategy to suggest that it was.  Though the Intellectual Property Office published a press release on 29 July 2021 promising that IP was at the heart of the new innovation strategy, there is very mention of IP at all.  The word "patent" occurs twice in the document's 116 pages and there are a few paragraphs under the heading "Safeguarding Intellectual Property" on pages 39 and 40.  There is nothing in those paragraphs on reducing the cost of patenting or the cost of enforcing intellectual property rights.

I am not the only commentator to spot that lacuna.   Graeme Moore wrote in his comment New Innovation Strategy for the UK for The Patent Lawyer Magazine:

"However, there is a major factor that the UK government’s announcement fails to address satisfactorily – how to better protect the innovations developed in the UK from being copied and exploited by other companies who have not invested in the innovations? This should be at the forefront of the UK government’s mind when committing to spend UK taxpayers’ money on R&D – it’s a key part of ensuring a return on investment."

Conclusion

There are announcements to be welcomed in the Strategy such as the spending promises in Piller 1 and the "new High Potential Individual and Scale-up visa routes" in Pillar 2.  But the idea that British companies will be competing with the likes of Huawei, Mitsubishi and Samsung in such fields as artificial intelligence,  mobile telecoms, consumer electronics or any other new technology is as fanciful as the garden bridge, an airport in the Thames estuary and a bridge to Northern Ireland.  

Anyone wishing to discuss this article can call me on 020 7404 5252b during office hours or send me a message through my contact form,

Patent Revocation FAQ

Jane Lambert

What is meant by "Revocation"?

Revocation means removing a granted patent from the register of patents and cancelling the monopoly of the invention that the patent conferred.

What does that mean in practice?

It means that anyone can make, sell, import or keep your invention without asking your permission. Any action you may bring for the infringement of your patent will fail. You may no longer be entitled to any licence fees in respect of your patent.

Do I get any money back from the EPO or IPO?

Probably not.  It's one of the risks that you take when you apply for a patent.

Who can revoke my patent?

The European Patent Office can revoke a European patent in all the countries for which it is granted if someone opposes the grant under art 99 of the European Patent Convention within the first 9 months. The Intellectual Property Office, the Patents Court or IPEC (Intellectual Property Enterprise Court) can revoke a European as well as UK patent at any time under s.72  of the Patents Act 1977. The Comptroller (chief executive of the IPO) can also revoke such a patent under s.73.

On what Grounds can my Patent be revoked?

Essentially, the patent should never have been granted.

In the case of a European patent, art 100 EPC sets out the following grounds:

"(a) the subject-matter of the European patent is not patentable under Articles 52to 57;

(b) the European patent does not disclose the invention in a manner sufficiently clear and complete for it to be carried out by a person skilled in the art;

(c) the subject-matter of the European patent extends beyond the content of the application as filed, or, if the patent was granted on a divisional application or on a new application filed under Article 61, beyond the content of the earlier application as filed."

The grounds under s.72 are somewhat wider:

"(a) the invention is not a patentable invention;
(b) that the patent was granted to a person who was not entitled to be granted that patent;
(c) the specification of the patent does not disclose the invention clearly enough and completely enough for it to be performed by a person skilled in the art;
(d) the matter disclosed in the specification of the patent extends beyond that disclosed in the application for the patent, as filed, or, if the patent was granted on a new application filed under section 8(3), 12 or 37(4) above or as mentioned in section 15(9) above, in the earlier application, as filed;
(e) the protection conferred by the patent has been extended by an amendment which should not have been allowed."

The Comptroller's powers under s.73 arise when an invention was anticipated by an unpublished patent application or where an examiner finds that a patent was invalid under s.74A and his or her opinion is not successfully challenged.

How can a Granted Patent not be a Patentable Invention?

Let me give you just one example.

As you know an invention must be new. An invention is new if it does not form part of the state of the art. The examiner checks the databases and publications that are available to him or her and publishes details of the invention on the office's website and journal. However, much of the world's new technical literature is now in Japanese, Korean or Mandarin, none of which is widely understood here. There is a risk that the examiner will miss relevant prior art written in one of those languages when an application for a patent is filed. If that prior art finally comes to light it can invalidate the patent.

Can I still rely on Confidentiality, Design Rights or other IPR if my Patent is revoked?

Probably not.  Your specification is supposed to disclose your invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the art.  If it doesn't do that your patent would probably be void for insufficiency.  One of the less publicized passages of Mr Justice Whitford's judgment in Catnic Components Ltd. v. Hill & Smith Ltd. [1982] R.P.C. 183 is to the effect that you dedicate any copyrights or nowadays design rights in design drawings to the public when you apply for a patent.

What about Costs?

It depends on where the proceedings take place.

Costs in the EPO are usually borne by the parties themselves though the rules do provide for apportionment.

The losing party in the IPO usually contributes a few thousand pounds to the successful party on a fixed scale.

That is also the case in IPEC though the amounts awarded are usually much greater.

Costs in the Patents Court can be many hundreds of thousands of pounds.  Revocations are usually brought by way of counterclaim in infringement proceedings or vice versa.  According to Taylor Wessing, the costs of a typical patent action are between £200,000 and £1 million.

What can I do about it?

Take the best possible specialist advice when choosing the optimum legal protection for your intellectual assets, applying for such protection, enforcing and defending it. Such advice will not come cheap so it is important to arrange before-the-event insurance or other funding for those expenses. Obtaining IP protection without the means of enforcing it is as risky as travelling to North America without accident and medical insurance.

Further Information

Should anyone wish to discuss this article or patent litigation in general, call me during office hours on +44 (0)20 7404 5252 or send me a message through my contact form.

Talk "How can I protect my Business Idea?"

Jane Lambert

I have been holding patent clinics around the country for many years and the most frequently asked question is "How can I protect my business idea?"

There is no easy answer because it depends on the nature of your business and the type of idea. For instance, a patent may afford the most extensive protection for a new product or process but if the costs of patenting, insuring and policing the are likely to outweigh the income likely to be generated from the invention you would be better off looking at other forms of legal protection.

It is for that reason that I am giving a talk at Barnsley Business and Innovation Centre (BBIC) entitled

How can I protect my Business Idea?

on 9 May 2017 between 12:15 and 13:15.

I will 

• introduce you to all the tools in the legal toolbox such as patents, trade secrecy, unregistered design rights, trade marks et cetera; 
• tell you the advantages and disadvantages of each type of protection; 
•  explain how to get each type of IP and how much it will cost; 
• give you some useful tips about insurance, watch services and enforcement; 
• advise you on the different types of IP professional, where to find them, how to instruct them and how much they are likely to cost; and finally,
• share a methodology for working out an IP strategy.

There is likely to be quite a lot of demand for places so call George or any of his colleagues on 020 7404 5252 to book your place as soon as possible,

Patent or No Patent

Jane Lambert

In IP's not just for Big Brands and High Tech Businesses 27 Aug 2016 NIPC News I wrote:

"In my career at the Bar I have known far more businesses that have failed from having too much IP than too little. Some of those failures had been caused by patents that cost many thousands of pounds to obtain but could never be worked. Others by disputes that were abandoned because the rights owner (who in many cases had a strong claim) simply ran out of money."

I appreciate that observation probably goes against everything that you have been told by your accountant, bank manager, business adviser, your patent agent and your peers but that does not make it any less true. You take a risk and commit yourself to considerable expense which you may never recover whenever you apply for a patent. So think long and hard before you take that step.

What are the Risks and Costs of Patenting?

In order to get a patent for an invention you have to "disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the art" (see s.14 (3) of the Patents Act 1977).  If you don;t do that, the Intellectual Property Office or a judge may take that patent away from you under s.72 (1) (c) of that same Act.  So the first risk is that you tell the world, including potential competitors in countries where you do not seek patent protection, how to make or use your invention. If your invention is any good that is precisely what they will do, The only thing stopping them is whatever patent protection you may be granted around the world and your ability to enforce that protection through civil proceedings in the English and other courts.

Before you apply for a patent you can rely on the law of confidence to prevent anyone to whom you may disclose the invention in confidence, such as angels, consultants, contractors, designers, manufacturers and others, from making use of the invention or disclosing it to third parties for so long as the invention is secret (see Trade Secrets FAQ  24 Aug 2016 NIPC News). You lose that protection as soon as your application is published because your invention becomes public knowledge.  Losing the protection of the law of confidence is the second risk that you run. Moreover, it could be argued that you disclaim all other IP rights, such as unregistered design rights,  when you apply for a patent because you dedicate your invention to the public. The would be another risk.

There is no guarantee that you will get a patent and if, you do get one, there is always the risk that it may be taken away if it is found that the invention had already been invented, that it was obvious in the light if previous inventions or some other reason.  If the IPO decides not to grant you a patent or the IPO or a court decides to take it away all the money that you will have spent on searches. professional fees, payments to the IPO or other patent offices and so on goes down the plughole. That is yet another risk.

Now for the costs.

A patent attorney will charge you several thousand pounds for preparing a patent application just for the IPO or European Patent Office ("EPO").  If you want to apply for patent protection in other countries it will cost you many times more.   Although it is not compulsory to instruct a patent attorney you are strongly advised to do so. Attorneys are trained to draft specifications in such a way as to claim a sufficient monopoly to make the invention commercially viable but not so broad as to render it invalid.  That's a great skill to have and that is why attorneys need good natural science, engineering or technology degrees to do their job as well as years of legal training.  It is possible for a reasonably intelligent and well educated lay person to apply for his or her own design registration or even a trade mark successfully but it us very rare indeed for a lay person to draft a satisfactory patent application.

If you are short of money it is very tempting to apply for a patent for the UK alone and ignore the world outside. The problem with ignoring the rest of the world is that your competitors outside the UK will then be free to make and sell your invention everywhere else and you won't get a bean. You may comfort yourself with the thought that the UK is the 5th or 6th largest economy in the world for time being. That may be true but compared to the USA, China, Japan or indeed the rest of the EU number 6 {or even number 5} is not all that big.  If you are going to confine your monopoly to the UK make sure that there is a sufficient market in this country to make money from your invention.

Your expenditure does not stop on obtaining the grant. Every year for the life of the patent you have to pay renewal fees to the IPO and other patent offices just to keep the patent alive.  In many countries those renewal fees increase during the term. You have to watch out for potential infringements and if the patent is infringed you may have to take legal proceedings to prevent the infringement.  That is the biggest cost and risk of them all because it can cost hundreds of thousands if not millions of pounds to pursue an infringer in a common law country like England or the United States and anything up to 50,000 euro even in civil law countries like France or Germany.

You and your backers need to be pretty sure that your invention is a real money spinner before taking those risks and incurring those costs.

What are the Alternatives to Patenting?

Essentially keeping your invention under wraps and relying on the law of confidence to stop unauthorized use or further disclosure (see Understanding Trade Secrecy and Confidentiality 23 July 2016). That can work very well if your product cannot easily be reverse engineered once it is put on the market which is  the case with beverages like Coca Cola or Chatreuse (see Trade Secrets FAQ 24 Aug 2016). The problem is that most technical secrets can be ascertained by buying a product and taking it apart and analysing it or discovered through parallel research.  In the absence of a patent there is nothing to be done to prevent reverse engineering or parallel research. Indeed, the functioning of a free market depends on it.

In the UK a technical design may be protected from copying for up to 10 years by unregistered design right, an almost uniquely British IP right.  That would include the shape of equipment or the arrangement of its electronic or mechanical components but design right would not protect the technology as such. If a competitor makes a similar product without copying the protected design he is quite free to make and market it in the UK. Moreover, anyone in the world including an infringer is entitled to apply for a licence to reproduce a design as of right for the last 5 years of the design right term.

Design right law is used to protect semiconductor topographies in the UK with a number of amendments that permit citizens of countries outside the EU to apply for protection and give a longer term.

Computer programs are protected from copying for the life of the author plus 70 years by literary copyright and the source code of a program can be a trade secret so long as it is not disclosed.

The advantages of confidentiality, copyright and design rights are that they are all free but they provide only limited protection. However, that may be long enough for a business to establish itself in the market and build up a reputation which would give it a competitive advantage. For many businesses that is all that is required. The big disadvantage is that the protection is much less extensive than the monopoly that only a patent can offer.

So how do I choose between a Patent or No Patent?

Here are my tips.

1. Remember that the purpose of IP is to protect income streams and not to protect clever technology just for the sake of it.  
2. Referring to your business plan try to identify the main income streams for your business over the business planning period.
3. Consider all the possible threats to those income streams. I don't mind betting that a large number of those will be commercial rather than legal such as new products based on different technologies or demand for the product drying up because of changing market conditions.
4. Think about possible counter-measures to those threats. In many cases those counter-measures will be commercial too such as reducing your prices or improving your product. Only in a  few cases will you need a legal remedy,
5. Where you do need a legal remedy consider all the alternatives such as design right and confidentiality. Choose the one that gives you the most cost-effective protection over the business planning period. In some cases that may be a patent but in many other cases it will not.
6. Unless you expect your earnings to grow substantially, take out intellectual property insurance or make other arrangements to fund enforcement litigation.

If you want to discuss this article, call me on 020 7404 5252 during office hours or send me a message through my contact form.

IP Insurance: CIPA's Paper

Lloyd's of London

(c) 2011 Lloyd's: all rights reserved

Source Wikipedia

Creative Commons Licence

Jane Lambert

It will cost you several thousand pounds to get a patent for the UK and considerably more if you require patent protection elsewhere in the world especially outside Europe but unless you can enforce your monopoly in the civil courts you may as well spend the money on a new car or exotic holiday or even down the pub.

The cost of patent litigation has come down considerably in England and Wales (though not in Scotland and Northern Ireland) with the changes to CPR Part 63 in 2010 (see New Patents County Court Rules 31 Oct 2010 NIPC Law) but it is still not cheap. The costs that you may recover from the other side are capped at £50,000 for the trial on liability plus another £25,000 for an account or inquiry but you will probably have to pay at least as much out on your own solicitors and counsel and probably a great deal more. As for litigation in the Patent Court there are no limits though the judges will do their best to keep the parties focused on the issues and avoid unnecessary expense.

So what are your options if you are an inventor or small business owner?

• "Legal aid?" Sorry, chum, that was abolished for business disputes by paragraph 1 (h) of Schedule 2 to the Access to Justice Act 1999 although it may become available for litigation in the Unified Patent Court (see Legal Aid for the UPC 23 Jan 2016), 
• "How about no win, no fee?" No mate!  That may be a perfectly sensible way of funding personal injuries claims against insurance companies but intellectual property litigation isn't like that. For a start liability (whether your patent has been infringed) and the account or inquiry (how much money is due to you) are separate proceedings separated by many months and sometimes years. There's a great deal more uncertainty. Several lawyers have got their fingers burnt (see Success Fees and ATE Premiums in the Patents County Court: Henderson v All Around the World Recordings Ltd. 4 May 2013 NIPC Law).
• Litigation funding? Possibly but unlikely. Most funds shy away from IP litigation for the same reason lawyers steer clear of no win no fee retainers in this area of law.
• Legal indemnity insurance? You will find that most policies specifically exclude IP litigation.

No your best bet is IP insurance. Two of my most popular posts in this blog have been IP Insurance 3 Sept 2005 and IP Insurance Five Years On 23 Oct 2010.

More than five years have elapsed since my 2010 update but I have decided not to update it because the Chartered Institute of Patent Attorneys have just done that job for me.  They have published a 10 page report entitled IP Insurance and other IP litigation funding arrangements which can be downloaded from the CIPA's website. This report discusses before and after-the-event insurance and various alternative funding arrangements and then lists the brokers, insurers and other associations who offer IP cover. 

Anyone wishing to discuss this article, the CIPA report or IP insurance in general should call me during on 020 7404 5252 during office hours or send me a message through my contact form.