22 November 2014

Top 10 Tips for Resolving IP Disputes

1. Be careful what you say and do.
If you threaten to sue someone for patent infringement you can be sued yourself under s.70 of the Patents Act 1977 unless you can justify those threats. You can be injuncted (ordered to refrain from making those threats on pain of imprisonment or fine for disobedience) and made to pay substantial damages and costs. So leave the accusations to your lawyers or patent attorneys who can take care of themselves.

2. Consider Before-the-Event Insurance
It is not a crime to infringe a patent in this country. You and only you are responsible for enforcing your monopoly. You must do that through the courts which can be expensive. There is no longer legal aid for IP or other business disputes. Because most IP litigation proceeds in 2 phases it is difficult for most lawyers to accept "no win no fee" retainers, especially now that it is no longer possible to recover success fees and after-the-event insurance premiums from the losing party. You must also make provision for the costs of the other side if you are unsuccessful.  Unless you can raise at least £100,000 from your own resources you should consider before-the-event IP insurance before a dispute arises because the premiums for after-the-event insurance are astronomical (see IP Insurance Five Years On  23 Oct 2014).

3. Follow the Practice Direction - Pre-Action  Conduct
This is very important because the court has power under paragraph 4 to penalize parties who fail to comply with the Practice Direction.  Remember that the purpose of the Practice Direction is to enable parties to settle their dispute without the need to start proceedings and that litigation should be the very last resort. Make sure that your letter before claim complies with Annex A of the Practice Direction and that you supply all the information and enclose all the documents that the other side will need to decide whether you have a valid claim. Although it was published some years ago you may also find the Code of Practice for Pre-Action Conduct in Intellectual Property Disputes useful.

4.  Consider ADR (Alternative Methods of Dispute Resolution)
As a general rule the sooner you resolve your dispute the better it will be for all concerned. True, you may be able to force a settlement if the other side runs out of money before you do but then you will also have incurred costs which your opponent may not be able to pay. As I have said above, one of the aims of the Pre-Action Conduct Practice Direction is to help you settle your dispute without recourse to litigation. You can do that through direct negotiations with the other side or you can ask an intermediary known as a "mediator" to help you. He or she will collect information in confidence from each of the parties and look for common ground upon which a settlement can be based. Often the settlement is a solution that would never have occurred to either of the parties (see Mediating Disputes from the Trade Marks Registry 1 Sept 2005 NIPC Law). The Intellectual Property Office runs a good mediation service (see The IPO's New Improved Mediation Service - will it make a difference? 7 April 2013 NIPC Law) as does the World Intellectual Property Office (see ADR of Intellectual Property Disputes 22 Aug 2006 NIPC Law). If there is a bona fide dispute that only a determination by a trusted third party will resolve you may be able to obtain an opinion on the issue from an examiner of the Intellectual Property Office for as little as £200 (see Intellectual Property Act 2014: The New Law on Opinions 29 Oct 2014 NIPC Law).

5.  Budget for Litigation as you would any other Expenditure
Since April 2013 the parties to a dispute have had a duty to help the court to deal with cases justly and at proportionate cost. In order to comply with that obligation most parties that are legally represented have to draw up, file and exchange budgets for conducing the litigation before the first case management conference under CPR 3.13 and the court may impose limits to the parties' expenditure if it thinks fit. There are a number of exceptions to this rule but it is a good discipline to follow even if you are not bound by it. Just as war is conducting policy by other means litigation can be said to be conducting business by other means. Just as you would plan and review any other type of expenditure with defined objectives so you should with dispute resolution. Circumstances can change in litigation just as they can in other transactions and you have to be sufficiently flexible and astute to adjust quickly to changing circumstances which may require settlement, some other form of dispute resolution or even discontinuance in certain circumstances.

6.  Choose the Right Forum for the Resolution of your Dispute
There are many forums for the resolution of IP disputes. There are the courts of England and Wales, those of other parts of the UK and the courts and tribunals of other countries. There are also Intellectual Property Office tribunals for some patent, trade mark and registered and unregistered designs disputes, the Boards of Appeal of OHIM (the EU design and trade mark registry) and the EPO (European Patent Office). There are the domain dispute resolution panels for the determination of generic and national top level domain name disputes. There are the IPO examiners' opinions which I have mentioned above for certain patent disputes and there will soon be an opinions service for registered and unregistered design disputes. There is also old fashioned arbitration and mediation. Each of those forums has its advantages and disadvantages and you should seek specialist advice or at the very least carry out extensive research before launching proceedings.

7.  Choose the Right Legal Adviser
For most cases two sets of skills are needed:

  • advocacy, and
  • the ability to conduct litigation.
Advocacy includes presenting cases to a judge or arbitrator, examining witnesses, drafting statements of case, application notices, witness statements and skeleton arguments. Until the Courts and Legal Services Act 1990 higher court advocacy was the preserve of barristers but now other professionals have rights of audience. Conducting litigation means corresponding with the court and other side, filing and serving statements of case and other documents, interviewing witnesses, drawing up lists of, and exchanging, documents (including emails, texts and other electronic messages) and generally preparing the case for adjudication. Traditionally this work was done by solicitors but now barristers and patent and trade mark attorneys as well as other professionals can apply for the right to conduct litigation. Look beyond law firms' websites and brochures to discover expertise. Try to research their decided cases and publications and choose the advocate and litigator whose expertise most closely matches your needs.

8.  Do not fight Unnecessary Battles
If you are a claimant and you think the other side will not be able to compensate you in damages if you win your case you may get an order from the court known as an "interim injunction" forbidding the defendant from doing something that would infringe your IP rights until trial or further order. These are in the discretion of the court and they don't come cheap. You have to apply quickly and promise to compensate the other side for any loss or damage it may sustain if it transpires that you should never have got the order. Conversely, if you are a defendant and fear the other side can't pay your costs if you win you can get an order for the claimant to pay funds into court as security for a costs order against you. There are many other interim applications that you can make - summary judgment on the basis that the other side is unlikely to prevail at trial, specific disclosure of a document, striking out parts of the other side's statement of case and sanctions for non-compliance with a rule or order. Such applications are very expensive and can delay the progress of a case. Sometimes they are necessary but as often as not they are not and every effort should be made to avoid them. If you are a defendant do not resist reasonable requests just for the sake of it. Work out ways of meeting the other side's legitimate needs while safeguarding your interests.

9.  Comply with the Rules and Directions of the Court
This may sound like stating the obvious but it is amazing how many litigants fail to do this. The courts have extensive powers to penalize some of which are quite drastic. For instance if you fail to file a costs budget in time you will be deemed to have filed a budget requesting reimbursement only of your court fees and you will be precluded from recovering your counsel and solicitors' fees which could amount to tens or even hundreds of thousands of pounds.

10. Keep Talking
Even if settlement negotiations fail you are still likely to have much to discuss with the other side. It is in your interest to agree facts, define and limit issues and other procedural matters because it simplifies the process and reduces the bills you may well have to pay. One of the reasons for instructing solicitors and counsel is to keep open a channel of communication between the parties. As I said above, circumstances can change for both sides and you are more likely to learn of those changes if you keep in touch with your opponents.

If you want to discuss this or any other matter connected with enforcement give me a ring on 020 7404 5252 during office hours or message me through my contact form. You can also contact me through Facebook, G+. Linkedin, twitter or Xing.

17 October 2014

Jackie Hutter's Articles on Strategic Patenting

As readers of this and my other blogs know, I am something of a fan of Jackie Hutter. Jackie is a US intellectual property lawyer with a difference. She describes herself as a “recovering patent attorney”and a member of the pioneering ranks of intellectual property (“IP”) strategists. If your next question is: "What is an IP strategist?" Jackie supplies the answer.

Jackie has just written four articles on strategic patenting which apply at least as much to the UK as they do to the USA.  I can do no better than supply the links:
  1. Why So Few Patents Create Real Value
  2. It’s Not Your Patent Attorney’s Job to Get it Right
  3. Why (Almost) Every Innovator Fails to Maximize Patent Value, and
  4. A Case Study of Success.
When you think of the cost and complexity of patent prosecution and enforcement in this country inventors you can see why her advice applies at least as much here as there.

11 September 2014

Forthcoming Seminars

26 Sept 2014
14:00 – 17:00
Making Sure you make Money from your Brands and Ideas and not other People
Workshop and clinic with speakers from 4-5 Gray’s Inn Square, Loven IP and the Intellectual Property Office CPD BSB and SRA
Grantham College, Stonebridge Road, Grantham, NG31 9AP

29 Sept 2014
16:00 – 18:00
Intellectual Property Ac 2014 – What it means to you and your clients
In-depth seminar led by Jane Lambert, CPD BSB and SRA
QualitySolicitors Jackson & Canter, 88 Church Street, Liverpool, L1 3AY
15 Oct 2014
18:00 – 19:45
The Intellectual Property Act 2014 - What it means for you and your clients
In-depth seminar led by Jane Lambert, CPD BSB and SRA
Business and IP Centre. Central Library, Calverley Street, LS1 3AB

27 August 2014

Funding your Invention: R & D Tax Credits

I am often asked about where to get funding for one's invention. I mention the usual such as triple F (friends, fools and family), business angels and venture capitalists but often overlook one of the most obvious which is R & D credits. This is a very generous deductible allowance against corporation tax which can actually be a cash rebate for companies that are not liable to pay corporation tax.

There are two schemes: one for small and medium enterprises which has existed since 2000 and the other for larger enterprises which has existed since 2002.  According to HMRC's Research and Development Tax Statistics  which was published on 15 Aug 2014 over 100,000 claims have been made for R & D tax relief since he scheme was launched in 2000 and some £9.5 million has been allowed or paid out in that time.

In R & D Tax Credit Statistics which I published in my Patent Box and R & D Credits blog on 25 Aug 2014 I compared the claims for R & D tax credits and the number of patent applications by region in 2013 and found a remarkable correlation.

R & D Tax Credit Claims and UK Patent Applications 2013

Claims for R & D Credit
Patent Applications
South East
North West
West Midlands
South West
East Midlands
North East
Northern Ireland

Further information on R & D tax credits can be obtained from HMRC's website.  Also, I cover developments in tax law relating to IP in my Patent Box and R & D Tax Credit blog. Our chambers are almost unique in that our intellectual property specialists work under the same roof as Atlas Tax Chambers and share the same clerks. We can thus provide comprehensive IP and corporation tax advice to businesses that invest heavily in high technology. Should anyone wish to discuss this article or any of the topics referred to he or she should call us on 020 74404 5252 during office hours or contact our clerks through this form.

02 August 2014

USPTO Annual Inventors' Conference - something we should do here

Every year at this time of the year the US Patent and Trademark Office opens its doors to private inventors and puts on a conference for them. I have mentioned this several times before (see "US Patent and Trade Mark Office helps Independent Inventors"  11 Sept 2005). Last year it was cancelled owing to wrangling between the President and Congress over the budget (see "Politicians wrangle at Inventors' Expense" 12 Oct 2013). Happily a conference is taking place this year between the 15 and 16 Aug.

There is an impressive agenda with star speakers one of whom is the serial inventor Woody Norris. Here is a link to talk he gave about two of his inventions.  The attendance fee is US$90 which is just £53.50 at the current rate of exchange.  Independent inventors are taken seriously in America - not mocked or patronized as they are so often elsewhere. We really should do something like this here.

The USPTO also provides a comprehensive portal for inventors resources which include information on patents and trade marks, inventors' assistance, pro bono services and an excellent newsletter.

25 July 2014

UK slumps to Ninth Place in European Patent Applications

According to the European Patent Office the UK has slumped from fifth place in the number of applications for European patents in 2004 to ninth in 2013. There were 6,469 European patent filings from the UK in 2013 which was an increase of just 7 from the 6,462 in 2004. By contrast, there 32,022 from Germany compared to 28,221 in 2004 and 12,417 from France in 2013 compared to 9,656 in 2004. But the real growth in applications has come from China (22,292 in 2013 compared to 1,880 in 2004) and South Korea (16,857 in 2013 compared to 5,721 in 2004).

For a more complete picture I have compiled the following table of the top 10 applicant countries based on European Patent Office data:

South Korea

The UK's performance is even more depressing when the number of applications per million inhabitants are taken into consideration (see the table on page 15 of Facts and Figures for 2014 that can be downloaded from the "Publications" page of the EPO website). The UK comes 16th in that league with 72 European patent applications per million inhabitants.  Top of the list is Switzerland with 832 European patent applications per million inhabitants followed by Sweden (402), Finland (360), Denmark (347), Netherlands (347) and Germany (328). Japan comes 9th with 177 European patent applications per million inhabitants, France 10th with 148, South Korea 12th with 129, the Republic of Ireland 13th with 115 and the USA 15th with 107.

Why does the UK do so badly in the number of applications to its home patent office in comparison with its global competitors? I used to think that it was because of the high cost of enforcement in the UK compared to France, Germany and the Netherlands. The rule changes limiting the costs and duration of proceedings in the Patents County Court (now IPEC) in October 2010 addressed that problem but  the number of European patent filings from the UK has actually fallen from 7,146 in 2010 to 6,469 in 2013.

Paradoxically a report by Silicon Valley Bank on Innovation Economy Outlook 2014 published this week paints a rather rosy picture for the UK. This report may well contain the answer. Much of the UK's growth has been in the service sector, especially financial and professional services and information technology for which patents are not available. Manufacturing in the UK is less important than it is in our continental and East Asian competitors.

If that is the explanation it suggests a failure of Coalition policy since 2010 to rebalance the British economy from one that is heavily dependent on services and the public sector to an economy based on manufacturing and exports.

11 July 2014

If you think someone has infringed your patent talk to a lawyer first

Royal Courts of Justice

Litigation is supposed to be the last resort for any kind of dispute including those over patents or other types of intellectual property. For most cases the first step towards settlement it a complaint to the person who has harmed you with a request to stop and maybe a request for compensation. However if you do that in certain types of intellectual property disputes that could land you in a whole heap of trouble.

That is because s.70 (1) of the Patents Act 1977 provides:
"Where a person (whether or not the proprietor of, or entitled to any right in, a patent) by circulars, advertisements or otherwise threatens another person with proceedings for any infringement of a patent, a person aggrieved by the threats (whether or not he is the person to whom the threats are made) may, subject to subsection (4) below, bring proceedings in the court against the person making the threats, claiming any relief mentioned in subsection (3) below."
There are similar provisions in other enactments relation to design rights, registered designsCommunity designs and trade marks including Community trade marks.

The relief to which s,70 (3) and the corresponding provisions of the other statutes and statutory instruments refer is:
"(a) a declaration or declarator to the effect that the threats are unjustifiable;
(b) an injunction or interdict against the continuance of the threats; and
(c) damages in respect of any loss which the claimant or pursuer has sustained by the threats."
Those damages can be heavy. In SDL Hair Ltd v Next Row Ltd. and Others [2014] EWHC 2084 (IPEC) Judge Hacon awarded damages of £40,500 against those who had threatened patent infringement proceedings against the distributor of a competing product and a well kn own shopping channel.

The threat need not be formal, explicit or even uncivil but it must be such as to leave a reasonable persob in no doubt as to the consequences of non-compliance.  In Luna Advertising Co Ltd v Burnham & Co. (1928) RPC 258 one of the defendant's reps visited a customer of the claimant and complained that a sign exhibited outside the customer's premises infringed his boss's patent and asked for it be removed. Granting an injunction against the defendant Mr Justice Clauson said
“I think that an interview of this kind … between business men, although nobody speaks of solicitors and writs, has no real meaning except to convey … that the threatener has legal rights and means to enforce them … in the way in which they are naturally enforced, i.e. by legal proceedings.”
Lawyers and patent and trade mark attorneys have to be particularly careful because they have no special protection merely because they are carrying out their clients' instructions.

There are however a number of exceptions and defences in the Act.

First, and most obviously "the person aggrieved" who may be the person to whom the threat is made or his or her supplier will not prevail against the person making the threat if that person can show that the conduct of which he or she complained would infringe a patent. However, a new subsection (2A) inserted by s.12 of the Patents Act 2004 now provides that the person aggrieved will still win if he or she can show that the patent was invalid in a relevant respect unless the person making the threat can show that at the time he she made the threat that person did not know and had no reason to suspect that the patent was invalid. As you might expect a lot of complex and expensive litigation begins with an action  for groundless threats, a counterclaim by the defendant for patent infringement and a counterclaim to the counterclaim for revocation of the patent.

Another exception is provided by s.70 (4):
"Proceedings may not be brought under this section for -
(a) a threat to bring proceedings for an infringement alleged to consist of making or importing a product for disposal or of using a process, or
(b) a threat, made to a person who has made or imported a product for disposal or used a process, to bring proceedings for an infringement alleged to consist of doing anything else in relation to that product or process."
This subsection was also amended by the 2004 Act. Until the subsection was changed threats to bring proceedings in respect of making or importing an allegedly infringing product were excepted but not threats in respect of other acts. Consequently patentees and their lawyers had to be very careful when corresponding with businesses that made or imported and distributed the allegedly infringing product. Needless to say they still have to be careful when dealing with distributors or other intermediaries of an allegedly infringing product.

Yet another amendment brought about by the 2004 Act was made to s.70 (5).  The subsection now reads:
"For the purposes of this section a person does not threaten another person with proceedings for infringement of a patent if he merely -
(a) provides factual information about the patent,
(b) makes enquiries of the other person for the sole purpose of discovering whether, or by whom, the patent has been infringed as mentioned in subsection (4)(a) above, or
(c) makes an assertion about the patent for the purpose of any enquiries so made."
Thus, merely sending a specification to an alleged infringer is not a threat but patentees have to be careful how they respond to any reply. If the recipient of the specification asks "Why have you sent me this?" it is important not to reply "Because you have infringed the patent" or words to similar effect.  In settlement negotiations or mediation parties often mention the possibility of litigation when trying to persuade the other side to make concessions. If uttered in any other context such statements would be actionable threats but the Court of Appeal has held in Unilever plc v. The Procter & Gamble Company [2000] F.S.R. 344 that threats made in bona fide settlement negotiations cannot be referred to in subsequent proceedings. However, the negotiations must be genuine. Merely heading a threatening letter "without prejudice" will not do (see Kooltrade Ltd v XTS Ltd [2001] FSR 344, [2001] ADR LR 7/11).

Supplementing the amended s.70 (5) the 2004 Act inserted a new subsection (6) into s.70 of the 1977 Act which provides yet another defence:
"In proceedings under this section for threats made by one person (A) to another (B) in respect of an alleged infringement of a patent for an invention, it shall be a defence for A to prove that he used his best endeavours, without success, to discover -
(a) where the invention is a product, the identity of the person (if any) who made or (in the case of an imported product) imported it for disposal;
(b) where the invention is a process and the alleged infringement consists of offering it for use, the identity of a person who used the process;
(c) where the invention is a process and the alleged infringement is an act falling within section 60(1)(c) above, the identity of the person who used the process to produce the product in question;
and that he notified B accordingly, before or at the time of making the threats, identifying the endeavours used."
S.70 does not apply to threats to sue abroad unless the person making the threat threatens proceedings in this country too.  Other Commonwealth and a few former Commonwealth countries such as the Republic of Ireland have similar provisions in their patent laws but the United States does not. A few countries actually go further than the UK in that they provide an action for groundless threats for copyright infringement.

There have been calls from time to time by various interest groups to abolish this cause of action and this legislation has been considered recently by the Law Commission. In their report Patents Trade Marks and Designs: Groundless Threats the Law Commission recommended that the cause of action be retained but that the law should be reformed to permit some communication with distributors and lawyers and patent and trade mark attorneys should be exempted from liability.

Threats actions in respect of threats of patent, registered design and registered Community design infringement proceedings should be brought in the Patents Court or the Intellectual Property Enterprise Court ("IPEC"). Proceedings in respect of trade marks, unregistered designs or unregistered Community designs can also be brought in IPEC or the Intellectual Property list of the Chancery Division or any country court that is attached to a chancery district registry such as Manchester, Leeds, Liverpool or Newcastle.

Having cut my teeth in intellectual property litigation in the North of England I have probably seen more threats actions than most members of the intellectual property bar. I was counsel in one of the leading cases on this cause of action. This is a complex area of law in which you can easily get into trouble. If anybody wants to discuss this article or any instance where a threat has been made he or she should not hesitate to call me on 020 7404 5252 during normal office hours or complete my contact form. I am also on twitter, Facebook, Linkedin, G+ and Xing.