IP After Brexit

Baroness Neville-Rolfe, Minister for IP

Source IPO Website
Crown copyright: all rights reserved

A few days after the EU referendum, Lady Neville-Rolfe, the  Minister for Intellectual Property, told the British group of the Union of European Practitioners in Intellectual Property in a speech entitled National and International-level concerns and developments regarding the IP landscape  that

"The UK has one of the world’s best intellectual property environments. The changes that will be triggered by the outcome of last Thursday’s vote will not alter that."

I beg to differ.  As the following pie chart shows, the UK continues to trail not only Germany and France in the number of European patent applications but also the Netherlands with a third of our population but even Switzerland with one eighth.

The reason for that is that IP services in the UK are too damned expensive, especially when it comes to enforcement despite Sir Richard Arnold's reforms of what is now the Intellectual Property Enterprise Court and the launch of its small claims track.

The Unified Patent Court, which was ready to open its doors early n 2017, could have made an enormous difference to the cost of enforcement for small and medium enterprises in the UK (see Jane Lambert Preparing for the Unified Patent Court 23 Jan 2016 NIPC Law). Part of the Court's Central Division would have sat in London. Costs would have been strictly controlled. The Court would have had jurisdiction over France, Germany and several other countries as well as the UK. There was even provision for legal aid for SME,  Brexit has stopped the project dead in its tracks. At the very least it has been delayed and even if it does go ahead it will do so without us as the UPC Agreement is open only to member states of the EU.

Another area of law that would have benefited British industry, particularly SME, is the reform of trade secrets law. At present the trade secrets are protected by the law of confidence which is fiendishly complex and anomalous as any lawyer who has had to seek an interim injunction against a departing director or senior employee will testify. On 8 June 2016 the Council adopted the Trade Secrets Directive that has to be implemented by 9 June 2018 which is just when we are likely to leave the EU (see Jane Lambert The Trade Secrets Directive 7 July 2016 NIPC Law). It would have been a golden opportunity to reform our law systematically by putting it on a statutory basis and bringing it into line with that of 27 of our nearest trading partners.

One of the core demands of Japan’s Message to the United Kingdom and the European Union is "Unified protection of intellectual property rights  Protection in the UK of registered Community designs and EU trademarks." More specifically the concern of one of the biggest sources of investment in British manufacturing is:

"To uniformly protect intellectual property in the UK and the EU in order not to create disadvantages for the right holders. If the UK’s withdrawal had an impact on the rights and effects of registered Community designs and EU trademarks, this could generate disruption."

So IP matters. Although IP played a minimal role in most voters' concerns in the referendum  debate it will play a massive role in the eventual settlement which could affect not simply our trade with the rest of Europe but inward investment from important overseas trading partners such as Japan, the USA, China, India and South Korea.

It is for that reason that Liverpool law form Guy Williams Layton have invited me to speak at their seminar IP after Brexit on 14 Sept 2016 between 16:30 and 18:00. I will outline the present IP structure which is based on a mix of domestic and EU legislation and the enormous potential black hole in the legal protection of British brands, designs, technology and creative works when the EU trade mark, Community design, unitary patent, the trade secrecy regime and EU plant breeders' rights disappear. However. although there is much uncertainty and many negatives I will also focus on some of the opportunities that we will have to exploit elsewhere in the world including little used tools such as our 100 or so bilateral investment treaties to protect our trade and investments abroad (see Jane Lambert  Bilateral Investment Treaties: Claiming Compensation from Foreign Governments under Bilateral Investment Treaties for failing to provide adequate IP Protection 27 July 2013 NIPC Law).

If you want to take advantage of the new international trading opportunities or simply stay in business at home you need to start planning for the post Brexut environment right now.  As a first step call Michael Sandys, IP Partner at Guy Williams Layton, on 0151 236 7171 or email him at  mls@gwl.co.uk to book your place. This could be the best use of 90 minutes of your time that you will ever make.

IP and Brexit: The Software Industry

"Baby" the world's first stored program computer

Author Tom Jeffs
Source Wikipedia
Creative Commons Licence

As much of our intellectual property law derives from European directives and regulations our withdrawal from the EU is bound to affect the legal framework that protects investment in branding, design, technology and the creative works. I explored this topic generally in What Sort of IP Framework do we need after Brexit and what are we likely to get? 3 July 2016. As the impact is likely to vary from industry to industry I am addressing separately the situation of each industry.

In this article I focus on the software industry, that is to say the businesses that write and maintain systems and applications software, databases and web pages. According to IBISWorld  the industry employs over 125,000 persons in the UK and is expected to generate some £21.8 billion in revenue. I am posting it in IP North West because the software industry started in this region.

In most industries investment in developing new products and processes is protected primarily by patents but that is not possible for software because art 52 (2) (c) of the European Patent Convention ("EPC") and s.1 (2) (c) of the Patents Act 1977 exclude programs for computers from patent protection to the extent that the invention relates to software as such. Consequently, the industry relies heavily on the law of confidence, copyright and database rights to protect its technology.  The law of confidence prevents unauthorized disclosure or use of information that has been communicated in confidence or circumstances giving rise to an obligation of confidence. Copyright prevents copying of original literary works which specifically include computer programs, preparatory design material for computer programs and databases. Database right protects investment in obtaining, verifying or presenting the contents of a database.

The law of confidence is common or judge made law.  Its basic principles were summarized by Mr Justice Megarry in Coco v AN Clark (Engineers) Ltd. [1968] F.S.R. 415 [1969] R.P.C. 41:

"In my judgment, three elements are normally required if, apart from contract, a case of breach of confidence is to succeed. First, the information itself, in the words of Lord Greene, M.R. in the Saltman case on page 215, must “have the necessary quality of confidence about it”. Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it."

Trade secrecy laws are about to be harmonized across the EU by the Council's adoption of the  Trade Secrets Directive (Directive (EU) 2016/943 of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure  OJ 15.6.2016 L 157/1) on 8 June 2016. I have discussed the directive in The Trade Secrets Directive  on 7 July 2916.

Copyright law is codified by Part I of the Copyright, Designs and Patents Act 1988. This statute has been modified many times to comply with EU directives, most particularly the Software Directive (Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs OJ L 122 , 17/05/1991 P. 42 - 46) and the Database Directive (Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases OJ L 077 , 27/03/1996 P. 20 - 28) but copyright law in the EU has never been harmonized as such.

The Database Directive has been implemented in the UK by The Copyright and Rights in Databases Regulations 1997 (SI 1997 No 3032). Database right is a new intellectual property right which did not exist before the 1997 Regulations came into force.

Patents are granted for the UK by the Intellectual Property Office ("IPO") pursuant to the Patents Act 1977 and the European Patent Office ("EPO") pursuant to the EPC.  There is not yet such a thing as an EU patent but there is an agreement to set up a Unified Patent Court ("the UPC agreement") and legislation to permit the EPO to grant patents for the territories of most of the member states of the EU including the UK, France and Germany to  be known as unitary patents.

Businesses in the software industry have trade marks which may be registered with the IPO for the UK alone under the Trade Marks Act 1994 or with the EU Intellectual Property Office for the whole EU including the UK under the EU Trade Mark Regulation (Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark OJ L 078 24.3.2009, p. 1).Art 50 (3) of the Treaty on European Union provides:

“The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.”

It follows that all regulations will fall away and that HM government shall no longer be required to implement directives. Statutes and statutory instruments that have been passed to give effect to directives will continue to apply unless and until they are amended or repealed because they were made by or under the authority of Parliament.

Negotiations over the terms of British withdrawal from the EU are likely to take time which makes it highly likely that the UK will still be a member state on the 9 June 2018 when the Trade Secrets Directive is to be implemented.  As the directive provides an opportunity to codify secrecy law and bring it into harmony with the laws of countries with which we wish to do business and collaborate it is probably in our interests to implement it. Having said that, it was the opinion of the European Scrutiny Committee that our law already complies with that directive (see Documents considered by the Committee on 12 February 2014 - European Scrutiny Committee Protection of trade secrets).

As Parliament has already enacted legislation to enable the Secretary of State to ratify the UPC Agreement and the statutory instrument giving effect to ratification has already been drafted (see The Draft Patents (European Patent with Unitary Effect and Unified Patent Court) Order 2016 10 March 2016) it is also possible that the unitary patent and Unified Patent Court will come into being before the UK leaves the EU. However, the UK would cease to be party to the UPC Agreement upon our departure since the Agreement is open only to EU member states.

Copyright and database right law would remain the same as they were created by or under an Act of Parliament.

The only intellectual property right affecting the software industry that would actually cease to apply to the UK upon our departure would be the EU trade mark.  The courts in the UK that have been designated EU trade mark courts will lose their jurisdiction over EU trade mark matters. However, registrations under the Trade Marks Act 1994 would be unaffected and EU trade marks would continue to apply to the rest of the EU.

End user licences, software development, maintenance, escrow and other commercial agreements should be kept under review, particularly if the Trade Secrets Directive is implemented and the unitary patent comes into force before we leave the EU. They should be reviewed again if and when we eventually leave the EU. Proprietors of EU trade marks should register corresponding trade marks here if and in so far as they have not already done so.

I will be conducting seminars on IP and Brexit and its impact on various industries including the software industry in Liverpool on 14 Sept and London on 15 Sept. Should anyone wish to attend either of those seminars, he or she should  call me on 020 7404 5252 during office hours or get in touch through my contact form.

Preparing for the Unified Patent Court

I have been invited to speak to the Merseyside meeting of the Chartered Institute of Patent Attorneys at the Hope Street Hotel at 40 Hope Street in Liverpool on 28 Jan 2016. The title of my talk is "Preparing for the UPC" and the reason why I have been asked to give that talk is that the UPC or Unified Patent Court is likely to open for business in the next few months. When it does the European Patent Office will be able to grant European patents with unitary effect or unitary patents, that is to say single European patents for the territories of a group of EU member states, including the UK, France and Germany, as though they were one country.

One of the reasons why European businesses have been less creative and innovative than their competitors in the United States, Japan and other countries is that it is much more expensive for European entrepreneurs to patent their inventions in the European Union.  In 2005 the European Patent Office commissioned research which compared the cost of patenting an invention  set out in a specification consisting of 11 pages of description with 10 claims spread over 3 pages in Europe the USA and Japan (see Cost of Patents: EPO Report tells us what most of us already knew 23 Dec 2015 NIPC Inventors Club). I wrote:

"The cost of obtaining such a patent was €30,530 in Europe (as of 23 Dec 2005 £20,861.15) compared to €10,250 (£7,004.85 for a comparable US patent granted to a US company - British applicants would have to pay £16,469.94 which is still less than they have to pay for protection in their own market) and €5,460 (£3,731.36) that a Japanese company would have to pay for a patent in Japan."

That was 10 years ago and some costs such as translation have come down as a result of the London agreement (though others have gone up) but the differential still remains. The unitary patent will greatly reduce the cost of patent prosecution in our home market (or if we decide to exit the EU in the forthcoming referendum) our biggest and closest export market.

Even greater savings will be made in the cost of patent enforcement. Another report from about the same time compared the cost of bringing an infringement claim in France, Germany, the Netherlands, the United Kingdom and United States (see The Enforcement of Patent Rights by the Intellectual Property Advisory Committee). The costs in France, Germany and the Netherlands ranged from €10,000 to €50,000 whereas those in the Patents Court were over £1 million and between £150,000 and £250,000 even in the Patents County Court. Costs in the USA were even higher that in England but there it is unusual for the losing party to pay the successful party's costs and it is possible for lawyers to accept instructions on a contingency fee basis. When those factors are taken into account it is small wonder that the UK continues to file consistently fewer applications for European patents than German, France and the Netherlands (6,823 in 2014 compared to 31,647 from Germany, 12,873 from France and 8,104 from the Netherlands according to the European Patent Office).

From the day it opens Unified Patent Court will have exclusive jurisdiction over claims for the infringement and revocation of unitary patents. For a transitional period of 7 years it will share jurisdiction over claims for infringement and revocation of other European patents including those that designate the UK with the Patents Court, Intellectual Property Enterprise Court and other national courts unless the owners of such patents decide to withdraw their patents from the UPC's jurisdiction within that transitional period.  After that transitional period the UPC will have exclusive jurisdiction over all European patents including those that have been granted for the UK. Eventually businesses from all parts of Europe, including the UK, will operate on a level playing field in that costs and delays for UK businesses should be no greater than for their German, French or Dutch competitors.

The immediate reduction in prosecution and maintenance costs and the eventual levelling out and reduction in enforcement costs should act like a shot in the arm for British businesses and especially those based in North West England. Lower costs should be particularly beneficial for small businesses and individual inventors who will be eligible once again for legal aid - a benefit that was taken away by the Access to Justice Act 1999 (see Jane Lambert Legal Aid for the UPC 23 Jan 2016 NIPC  Inventors Club).  If you want to discuss this article or the unitary patent or Unified Patent Court in general please call me on 0161 850 0080 during office hours or message me through my contact form.

Date	Author	Title	Source
	Preparatory Committee	An Enhanced European Patent System	UPC website
23 Jan 2016	Jane Lambert	Preparing for the Unified Patent Court	NIPC Law
23 Jan 2016	Jane Lambert	Legal Aid for the UPC	NIPC Inventors

.lancaster Domain Name

Lancaster

Author Antiquary

Source Wikipedia

Creative Commons Licence

I am proud to have been born in the historic county of Lancaster even though the city in which I was born had been a county borough for many years. For centuries there was a Court of Chancery of the County Palatine of Lancaster and the judicial title "Vice-Chancellor of the County Palatine of Lancaster" for the presiding judge of the Chancery Division in the Northern and North Eastern Circuits remains survives to this day. The city from which Lancashire derives its name is of course Lancaster which has a population of just over 52,000 according to Wikipedia.

There is  another Lancaster on the other side of the Atlantic in Pennsylvania.  That Lancaster has a slightly larger population than the English city but it retains its allegiance to the red rose which appears in the city's flag (see Wikipedia Lancaster, Pennsylvania). There is also a county of Lancaster in Pennsylvania which was settled by the Pennsylvania Dutch. It is well known for its distelfinks.

Lancastrians on both sides of the Atlantic may be interested to learn that ".lancaster" will soon be available as a new generic top level domain name.  According to Nathalie Dreyfus that gTLD will be generally available in December 2015. Surprisingly, the application to sponsor this gTLD came not from Lancashire or even Pennsylvania but from France.  The proposed sponsoring organization is "Lancaster" of 95 Rue du Parc, 93130 Noisy le Sec in France. Even more surprising is that ICANN's String Delegation Readiness Report  determined the LANCASTER String not to be a Geographic Name which meant that it did not have to complete a Geographic Names Review.

Apparently there have been no objections to the creation of the .lancaster registry but that begs the question how many people in either the UK or the USA were aware of the application? If anyone wants to discuss this further give me a ring on 0161 850 0080 or 020 7404 5252 during office hours or send me a message through my contact form,

Why you need an IP Strategy - even if you don't export

Yesterday I attended the Daresbury Business Breakfast Networking Event at the Park Royal Hotel in Stretton. After the meeting Tony Brown and Sara Knowles of UK Trade and Investment gave a very interesting talk entitled UKTI Services - how to internationalise your business. I hope to get the slides for that talk and I shall make them available to you in this blog if I do.

During his talk Tony listed some of the questions that he he is often asked by small and medium enterprises. Three of them were on IP topics:

1. What can I do to protect my business if I can't afford a global patent?
2. How do I protect my brand internationally? and 
3. How can I protect my software for US$35?

Tony's reply to the first question was protect what you can with trade marks and confidentiality. There were three patent and trade mark agents in the audience plus me and we all stuck our hands up at that point because we wanted to make clear that trade marks protect brands and not technology for which you need a patent. To be fair Tony acknowledged and clarified that point. His answer to the second question was to apply for a trade mark in key markets possibly through OHIM or the Madrid Protocol. The answer to the third question was that $35 was the cost of registering a copyright with the Library of Congress. I pointed out that the USA was party to the Berne Convention and that registration was required not for subsistence but for enforcement.

At that point Paul Treloar, Business Support Manager at Sci-Tech Daresbury, intervened to say that these are difficult legal issues for which businesses should take the appropriate professional advice. Realizing that not everybody can afford a patent or trade mark agent or specialist IP lawyer I mentioned the excellent materials available on the IPO, European Patent Office, OHIM (EU trade marks and designs registry) and WIPO (UN specialist agency for intellectual property) websites and the services of the Business and IP Centre of the British Library and its associated libraries in Manchester, Liverpool, Leeds, Sheffield and elsewhere.

It also prompted me to stress the need for an IP strategy which takes account of enforcement as well as registration of IP rights.  I have suggested the following simple one many times but it does bear repetition.

1. When writing your business plan consider where your revenue is likely to come over the period for which you are planning.
2. Consider the potential threats to those revenues streams. I don't mind betting a penny to a pound that most of them will be commercial like a competitor brings out a better product or the market for the product will become satiated.  Ripping off your idea or claiming an association with your brand is not the primary worry for most businesses though it does happen.
3. Consider the counter measures to those threats. Again I would wager that most of these will be commercial like lower your prices or develop an improved model. Only in a few cases will you need legal protection for your brand, design, technology or work of art or literature.
4. If you do need legal protection tailor that protection to meet the precise threat. You may have a brand new, earth shaking technology but if consumers are attracted to the shape of your product then it is the design that you need to protect with a national or EU design registration rather than a patent.
5. Prioritize your protection to your principle markets and the countries in which your competitors operate. Very few businesses can afford or even need blanket protection in every market of the world.
6. Consider how you will enforce your rights in each market. Don't assume that the authorities will prosecute infringers on your behalf. Not all infringements are criminal offences. Art 61 of the TRIPS agreement requires governments to provide criminal sanctions only for piracy and counterfeiting (copyright and trade mark infringement on an industrial scale) and although some countries such as ours do a little more adding bootlegging and most recently intentional copying of registered designs to the list of IP offences many other countries do not. Do not assume that a lawyer will act for you on a no win, no fee basis - at least not in this country now as success fees are no longer recoverable from your opponent. If you can't afford to fund an action out of your current account then you should consider some kind of IP insurance.

I have offered to train UKTI's advisors in these matters if they so wish and that offer extends to other organizations that advise and assist small and medium enterprises. If anyone wants to discuss this article or IP strategy in general, he or she should call me on 020 7404 5252 during office hours or send me a message through my contact form.

Vaping a claim - Fontem v Ten Motives

In Easyair Ltd (t/a Openair) v Opal Telecom Ltd [2009] EWHC 339 (Ch) (2 March 2009),  Mr Justice Lewison, sitting in Manchester, said at paragraph [15] of his judgment

"it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it."

Patent cases often turn on a question of construction because the monopoly granted to a patentee is set out in a series of numbered paragraphs called "claims".

In Fontem Holdings 1BV and anther v Ten Motives Ltd and Others [2015] EWHC 2752 (Pat) (2 Oct 2015), another case from North West England, a Cheshire business which marketed and distributed e-cigarettes was sued by one of its competitors for patent infringement. The claimants alleged that two of the defendants' products fell within the claims of their patent.  The defendants applied for summary judgment under CPR Part 24 .  The action turned on the construction of claim 1 of the patent and the defendants invited the judge to construe it in their favour.

Mr Justice Norris refused to do so. Patents are addressed to "persons skilled in the art", that is to say persons with the skill and knowledge needed to make or use the invention and judges have to construe patents from the perspective of such persons. In order to do that they require expert evidence as to how a skilled addressee would read the patent. Expert witnesses can inform the judge whether any of the terms used in the patent has a special meaning, how the addressee would interpret the drawings and what technical knowledge would be expected of such persons.  Such evidence is often hotly disputed as it was in Fontem Holdings. Even though he referred to Easyair  in his judgment Mr Justice Norris did not think that he could construe claim 1 without such evidence. That is the crucial difference between the two cases.

In  How to read a patent 2 Aug 2013 IP London I explained how patents are presented and how they are to be read and understood.  For those who want more basic information I wrote "So what's a patent" on 6 Sept 2014 in IP East Midlands and What is a Patent? Why might I want one? How do I get one? on 19 March 2014 in IP South East. For those who want more detail I have discussed Fontem in Summary Judgment in Patent Cases: Fontem Holdings 1BV and Another v Ten Motives Ltd and Others 8 Oct 2015 NIPC Law.

Mr Justice Norris's decision in Fontem is important for another reason. The patent that he was asked to construe was a European patent, that is to say one issued by the European Patent Office in Munich as opposed to the UK patents which are issued by the Intellectual Property Office in Newport. European patents are usually granted simultaneously for several European countries one of which may be the UK. For the first 9 months after the grant of a European patent can be challenged in the European Patent Office by a procedure called "opposition" under art 99 of the European Patent Convention. After those 9 months have expired a European patent can only be challenged in the courts of the countries for which the European patent is granted.

If an opposition succeeds the European patent is revoked and any infringement proceedings that have been launched fail automatically. The only problem with opposition proceedings is that they can take a long time during which time the patent remains in force. Sometimes the courts will stay infringement cases until after the opposition proceedings have run their course.

There was an opposition in Fontem Holdings and the defendants applied for a stay of the infringement action in England until after the opposition proceedings in the European Patent Office had been resolved in case their summary judgment application failed.  The judge refused that application as well. In reaching his decision he weighed the interests of the parties in very much the same way as he would consider an interim injunction application and he decided that the balance of justice law in allowing the infringement action to continue. That is not to say that a stay will be refused in every case. Each case is to be decided on its own facts.

If anyone wants to discuss this case or patent law in general, he or she should call me on 0161 850 0080 or 020 7404 5252 during office hours, or send me a message through my contact form.

Venturefest Manchester

There has been a Venturefest in York since 2005 and one in Oxford for even longer. Over the years there have been Venturefest events in Bristol, the East and West Midlands and other parts of the country. Last year there was the first in Manchester. On the 22 Sept 2015 the second Venturefest Manchester will take place at Lancashire County Cricket Club at Old Trafford.

As its name suggests Venturefest is a festival of enterprise. It brings together business, the professions, education and local government in an all day conference and exhibition. The event is organized by the Business Growth Hub and sponsored by InnovateUK and the Knowledge Transfer Network.

The event will begin with business breakfasts at 08:30 on life sciences, investment and graphene, a welcome from Mark Edwardson, the keynote speech from Sir Howard Bernstein and then parallel events in different rooms (see the Agenda).  One of those events will be the Innovation Showcase competition the winner of which will receive

"a unique package of business support worth up to £30,000 and including a year’s free space at the Sci-Tech Daresbury, support around accountancy, patents and legal issues and a range of marketing and PR services."

Exhibitors include Lancaster, Manchester and Salford universities, the Intellectual Property Office, UK Trade and Investment, local business angels, science parks and patent agents.

You can register for the event through the Business Growth Hub website. I shall be there and I shall look forward to meeting you.