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.

Trade Secrecy Law changes Tomorrow - check your NDA, Standard Terms and other Agreements

Jane Lambert

Tomorrow is a big day for inventors. It is significant because it is the day on which Directive 2016/943 ("the Trade Secrets Directive") is due to be implemented. Every country in the EU, including the UK, has to bring its laws on trade secrets into line with the Directive by 9 June 2018.  It concerns inventors because every patented invention is supposed to start out as a trade secret and for many other inventions that's the way they remain.

Why was the Directive adopted?
At paragraph (9) of a set of paragraphs known as "the recitals", the European Council and Parliament explained that they adopted the Directive because there are big differences in the way that different countries protect trade secrets giving rise to uncertainty, causing unnecessary expense and impeding new product development in Europe.

What does the Directive do?
The most important provision is art 6 (1) which requires EU member states to "provide for the measures, procedures and remedies necessary to ensure the availability of civil redress against the unlawful acquisition, use and disclosure of trade secrets."

What is a "Trade Secret"?
For the purpose of the Trade Secrets Directive a ‘trade secret’ means

"information which meets all of the following requirements:
(a) it is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;
(b) it has commercial value because it is secret;
(c) it has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret."

Basically that has always been the position in the UK but that was not the case in every country.

What is meant by Civil Redress?
Basically injunctions (orders by a judge) not to acquire, use or disclose trade secrets in future or the payment of compensation or other monetary relief for unlawful acquisition, use or disclosure of trade secrets in the past.  In some circumstances, injunctions and other relief such as orders for the preservation of evidence or assets can be granted before the issue of proceedings.

Do we have to comply with the Directive as we have voted to leave the EU? 
Yes as the UK remains a member of the EU until 29 March 2019 at the very earliest and we should have to abide by EU law until 31 Dec 2020 under the draft withdrawal agreement or even longer under the proposed backstop agreement. More importantly this Directive works in favour of British business because entrepreneurs and inventors know that for the first time the trade secrecy laws of the other countries of the EU are more or less in line with those of the UK.

What has HMG done to comply with the Directive?
HM government believes that our law of confidence and contract law plus our Civil Procedure Rules already comply with most of the provisions of the Trade Secrets Directive but it has identified a few issues where they do not.  One concerns definitions and the other the time limits within which an action for unlawful trade secret acquisition, use or disclosure must be launched. Also there is some doubt as to whether the Scottish courts have the powers to make the orders required by the Directives. To address those issues, Mr Sam Gyimah MP, Minister of State at the Department for Business, Energy and Industrial Strategy, has signed The Trade Secrets (Enforcement, etc.) Regulations SI 2018 No 597 which will come into force tomorrow.

So what do Inventors need to know?
Even though reg 3 (1) of the regulations makes clear that the existing law of confidence still applies in relation to trade secrets the Directive may give trade secret holders (that is to say, persons lawfully controlling trade secrets) greater rights and powers. Also, we are used to talking about "confiders", "confidantes" and "breaches of contract" while the Trade Secrets Directive introduces new terms time like "trade secret holders", "infringers" and "infringing goods".  It would probably be a good idea for trade secret holders to ask their lawyers to review their terms and conditions, standard contracts and, in particular, non-disclosure and confidentiality agreements to make sure that they are still effective.

Where to get more information?
I have written more about this topic in Transposing the Trade Secrets Directive into English Law: The Trade Secrets (Enforcement etc) Regulations 6 June 2018 NIPC Law. That article links to some of my other articles on that topic. I am also giving a talk on the topic at Barclays Eagle Labs in The Landing on 26 June 2018.  If you want to discuss this article or trade secrets generally, contact me on 020 7404 5252 during office hours or send me a message through my contact form.