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Blog posts in Business contracts
Intellectual property can seriously injure your wealth
February 17, 2010
This week’s blog comes from IP barrister Jane Lambert. Offering a very personal view of how small businesses can approach their IP, she points out that getting legal protection for your invention is no magic shield - many innovators learn that the expensive way. While IP is growing in popularity as a building block for contracts, partnerships and licences, the cost of defensive IP - including court action - is, as Jane explains, high, and she gives her own take on what action - legal or not - aspiring entrepreneurs should look at for their new invention.
Jane Lambert Barrister NIPC
In over 30 years at the English Bar I have seen far more businesses fail because they had too much intellectual property rather than too little. That may sound counter-intuitive and almost mocking – especially if you have just settled your patent agent’s bill. So here are the facts behind such a surprising statement:
Intellectual property can be expensive. In 2005, European Patent Office research showed the average cost of getting a typical 14-page patent for six countries and renewing it for ten years cost inventors €30,530. Even if your patent sees the light of day that’s a lot of money - but the sad reality is that most are never commercialised. Of the few that are, only a tiny percentage cover their costs and even fewer make serious money. Secondly, patents, copyrights, trade marks and other forms of intellectual property are essentially mechanisms which are used to bring a lawsuit.
Save for commercial bootlegging, counterfeiting and piracy, it is not a crime to infringe somebody’s intellectual property rights in the United Kingdom. Litigation can be very expensive. In 2003 IPAC (a government IP committee) reported that a patent infringement claim averaged £1 million in the High Court and between £150,000 and £250,000 in the Patents County Court. Legal Aid isn’t available. The only way that most small businesses can fund IP litigation is to take out IP indemnity insurance; the premium for reliable cover for the UK works out at around £4,000.
Thirdly, the IP protection chosen may not be the most suitable for the business. A patent, for example, may be unnecessary for products with a short shelf life. Unregistered design right which prohibits making articles to original designs and comes into being automatically as soon as the design is recorded in a drawing. A CAD file or other document or simply keeping the invention under wraps and relying on confidentiality may be all that a business needs in many instances. The advice that I have given my clients for many years is to consider where they want their business to be in a period of their own choice. It could be six months, six years, or indeed longer - or shorter.
Next, I ask them to identify their likely income streams over that period. After that I tell them to imagine the competitive threats to those income streams. I then get them to devise counter-measures to those threats. Nearly always those counter-measures are commercial such as lowering prices or developing new products or services.
In only a tiny minority of cases does a client suggest some kind of legal protection (i.e. intellectual property) and in many cases that protection is one that arises automatically. For those very few cases I always counsel the client to provide funding for enforcement either through insurance or otherwise.
Jane Lambert of NIPC.
Small firms on the web: when online risks aren't a pretty picture
December 16, 2009
Many small firms have a website nowadays, and those that don’t are probably thinking about one. But while we all know the benefits – increased sales, better market presence, satisfyingly glam company image – are you aware exactly how fast your website can get you into trouble?
A welter of court cases recently illustrates the pitfalls. Over 300 unwary firms and organisations have faced the perils of copyright infringement - using other people’s work improperly, such as pictures or words, online. It’s illegal, and as ‘improperly’ usually means not paying for the material, not crediting, or both, businesses are at risk of a nasty shock and a large bill.
One case came to the attention of The Guardian: “A church in Lichfield, Staffordshire, faced a [… ] fundraising problem: to pay a £6,000 bill demanded for photographs used on its website. […] In creating the church's website, a volunteer had included a couple of images sourced from Getty, a large picture agency, without paying for them. A couple of months later, Getty sent the church a demand for £6,000.”Great news for the new church steeple the villagers wanted.
While the church finally reached a conclusion with Getty, firms nationwide are still at risk of the same tactics from picture agencies and copyright owners everywhere. There may seem no immediate reason why a small-business owner or charity volunteer should know the ins and outs of copyright law; however, under the law a mistake is no excuse. These agencies are acting entirely legally.
Anyway, most people don’t want to break the law, even if they don’t understand it. So how do you avoid getting hit? First, find out when you need permission. If material has been created by someone else, the maker owns copyright and you need a written license to use it. This applies to most artworks, photos, graphs, tools, words - even blog entries and tweets. The material doesn't need the © copyright sign on it – it belongs to the owner regardless. Neither does it matter where you got it from. Copyright applies to the Internet just as much as it does elsewhere. Ripping a picture off Google and popping it on your home page is almost certainly illegal. Don't assume you can get away with it. Your website is visible, after all. Even if the copyright holder doesn’t want to sue you - they probably won’t – you will usually have to pay them to go away.
The rise of the web, too, has seen the establishment of firms whose business is monitoring publications and websites to spot copying. Find the copyright owner of what you want to use. Try the publishers – i.e. the administrators of the website, or the address on the masthead of the mag. Write to them telling them how long you want to use their material for, why you want it and who it was by, if you can tell. Ask to use the extract for free - the owner can always come back asking for money. If you can't find out who owns the material, abandon the idea of using it. Using anything without permission, even if permission is impossible to get, is a no-no. If in doubt, leave it out.
Visit the Law Donut for more great advice on copyright.
Intellectual Property 101
October 07, 2009
Most people know what intellectual property rights are, and nearly everyone knows that they can be fairly useful and important in a competitive business environment. But in my experience, most people have a poor understanding of some of the key categories of intellectual property and the protection that’s available for them. The following is by no means a comprehensive survey of IP protection. But it's a good start, in plain English, for anyone thinking about protection.
Copyright gives an author (or an artist) the ability to protect their work. So if someone creates an original text in the course of their business (for example, an instruction manual), copyright means that others can’t use or reproduce that text without permission. This protection is so strong that it’s not even necessary that the author has branded their work by stating "copyright", their full name and the year that the work was produced.
Trademarks protect you from having your business’s image or brand reproduced by another business. Trade marks can protect a name, word, phrase, logo, symbol, design, image, or combination of these - you can even trademark colours and, I think (but don't quote me), scents. You need to go through a formal registration process, and your trademark will be in relation to an industry and region, depending on the trademark you apply for. But if you don't apply for a trademark, you don't have one! Just putting TM beside your new product doesn't get you the protection you need.
A patent lets you protect something you've invented - such as a machine, a material or a process. Patents give exclusive rights to the patentee and have varying levels of financial obligation and term, depending on a number of things including which territories (parts of the world) and categories (eg “food” or “textile” you want protection for). It's relatively complicated to apply for a patent, but once you have one, you are well protected against anyone trying to steal your idea.
Then there’s design registration and design right which provides the creators of new designs with varying levels of protection. You can choose to register (with the Intellectual Property Office) or not, and protection ranges from three years to 25. Exactly what is protected differs depending on how far you go with registration. Protection can also be extended to other countries.
Intellectual property protection can become quite complicated and the laws in this area are developing all the time. So you really should always seek help from your lawyer or other intellectual property specialist.
Court clarifies when a UK patent can be revoked for being ‘obvious’
June 19, 2009
The courts have recently clarified the test for when an invention is ‘obvious’, so that a patent awarded to protect it can be revoked, so existing patent owners can expect more attacks on their patents on these grounds.
If a patent has been awarded for an invention that is ‘obvious’, it can be revoked because that means it lacks an inventive step. The test is whether an unimaginative but skilled person, with common general knowledge in this area, would think it was obvious. Common general knowledge is knowledge generally known by that skilled person, that they would automatically accept as reliable.
In a recent case, the court considered whether this included what is known as "secondary common general knowledge", that is, information that would not necessarily be to the forefront of their mind, but that they would routinely obtain or be provided with to tackle the problem – for example, review articles.
The court said that common general knowledge could extend beyond general information which the skilled person would know as a matter of course or could find in leading textbooks, such as information in review articles, but that the information:
- Had to be “regarded as highly probable to be reliable”.
- Would certainly be found by the skilled person doing his job properly, as part of his normal approach to the task of identifying sources of information to use as a starting point.
- Had to inform and guide the skilled person’s approach to the problem from the outset.
The more that a “diligent search” was necessary, following leads and cross-references, the less likely that the information was common general knowledge.
Those seeking patents for inventions need to be sure that their invention could not be found to be obvious, given the extension of the test to include secondary common knowledge.
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