IP – Straight To Your Bottom Line

Due diligence in the positive sense seeks to evaluate the intellectual property legal rights as a commercial asset. Anyone wishing to acquire or invest in intellectual property either through licensing or by a purchase will want to know that:

1. the intellectual property exists as a legal right/s;
2. a good title (ownership) can be established; and
3. the rights can be used to generate revenues and to prevent others from establishing a similar business or product or service.

This latter attribute is sometimes referred to as the strength of the intellectual property rights.

Due diligence in the defensive sense seeks to establish whether any intellectual property legal rights exist which may give rise to the risk of infringement and substantial damages being paid and/or business activity being stopped. If any intellectual property legal rights that may be relevant are found to exist, the strength of these rights must then be evaluated and an assessment made as to the extent of the risk and whether the business should be started or continued. It may be possible to reduce the risk by making changes or seeking a licence.

The due diligence – whether positive or defensive – will cover many of the same points such as assessing the existence of the rights and their strength. It is likely that a suitably qualified professional person whether as part of an internal legal department or an external firm of professional advisors will be engaged to undertake such a due diligence exercise.

Patents are obtained for inventions relating to innovations and developments if certain criteria are met. These are set out in the section called ‘Basic requirements of a patent’ below. The general requirements for obtaining a patent are now applicable in most of the important economies in the world. This is the culmination of the effects of the various international conventions. The most important of the convention in this respect is the Patent Co-operation Treaty. This usually referred to as the “PCT”. This is administered by the World Intellectual Property Organisation (WIPO) – more here – http://www.wipo.int/pct/en/

A patent is a nationally registered right. It is obtained by filing an application. The application is filed at a Patent Office. The application can be filed at a national or at a regional Patent Office. The national Patent Office could be for example in the United Kingdom. An example of a regional patent office patent office is the European Patent Office (EPO).

Once a patent application has been filed, the administration and processing of the patent application then follows a path that is common in many countries and regions but there are often local and regional special requirements and process options, notably in the US patent system. There is more information about the application process in the section called ‘The patent application process’ below.

Exclusions from patentability

In most countries, certain types of innovations are excluded and cannot be patented. But the interpretation of the exclusions is not straight forward. The excluded subject matter includes:
• discoveries, scientific theories and mathematical methods;
• aesthetic creations;
• schemes rules and methods for performing mental acts, playing games or doing business and programs for computers;
• presentation of information.

There are two other general exceptions to patentability. These relate to inventions the publication or exploitation of which would be contrary to public order or morality and to plant or animal varieties which have a scheme of protection of their own.

The patent law in the United States has less exclusions stating simply

” Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title”

This difference has lead to confusion as to whether software and business method inventions can be patented. In the United States software patents and business method patent have been have been granted. These type of patents have been granted because of the absence of the exclusions mentioned above in US patent law and because they meet all the other requirements for a valid patent.

There are three key legal requirements to be satisfied before a patent can be granted. There are other requirements that need to be met but these are the fundamental ones. The key requirements are that the invention must:

• be new. This is often referred to as “having novelty” or “being novel”;

• involve an inventive step meaning a technical advance over existing technological understanding which is not obvious. Such an invention is referred to as ‘not obvious”;

• be capable of industrial application.

A patent is a right obtained by registration. After the patent has been granted, the owner (the “proprietor”) has a legal document which defines the rights of the proprietor in the invention the subject of the patent. This document is the patent.

The process by which a patent is granted for an invention is now similar whichever Patent Office is handling it. The inventor files an application for the patent. This must comply will certain administrative requirements known as ‘formalities’. The application includes a specification which is a carefully drafted statement and description of the invention. The specification must eventually include paragraphs (known as ‘claims’) which state the extent of protection for the invention in words. The application, the specification, and the claims are usually prepared by a patent attorney. A filing fee is payable.

The application once filed will be acknowledged by the receiving Patent Office. The application and specification will be examined to ensure that it meets all the administrative requirements (formalities). Once an application has met the administrative requirements various events happen in accordance with a set timetable including examination of the application and its publication usually after 18 months. The timetable provides dates by which these events must happen. The patent application process in the EPO is a good illustration of the basic process.

During the examination phase, an examiner at the Patent Office where the application is being processed will scrutinise the application and specification. It is common for the examiner to raise objections to the application. A dialogue will take place between the applicant or the patent attorney and the examiner to resolve any objections.

Once the application has passed these hurdles it can become a granted patent.

After the patent has been granted the proprietor is sent a document that grants the patent and appropriate entries are made on the register of patents. From the date of grant, the patent establishes legally enforceable rights that date back to the filing date of the application which became the granted patent.

A patent lasts in most countries for twenty years from the date of first filing of an application for the invention. If there are several patents deriving from a first application then the twenty years will normally start on the date of the first application.

The procedures in some Patent Offices such as the European Patent Office provide for a period, after the intention to grant the patent has been published, for anyone interested to object to the grant of the patent. This is known as making ‘an opposition’ and the period as the ‘opposition period’.

A patent once granted is not guaranteed to continue to be registered. It is a common misconception with registered intellectual property rights that once registered the rights given by the registration cannot be challenged.

After the patent has been granted, it is open to any person affected by the patent rights to make an application to have the granted patent cancelled. This is referred to as ‘revoking’ the patent. The patent will be revoked if it is found to be invalid. The terms “revocation” and “invalidity” are closely related.

The grounds on which a patent can be found invalid (and so revoked) are set out for each country in the national patent law. In the UK the grounds are in Patents Act 1977. These mirror the provisions of various relevant international treaties.

The patent will be invalid, for example, if the invention is not new or is obvious or does not involve an industrial application. These are the normal grounds on which a patent is challenged as being invalid. There are other grounds too.

Software and business method patents

Patenting software was at one stage thought not to be possible except in the US because of the seemingly specific exclusion of software. But patents have been and can be granted for software when combined with some element of ‘hardware’ such as operating a machine (including a computer) or similar since this can be regarded as not a patent for software as such.

Complex arguments have been adopted to get round the exclusion of software as such. The effect is it is possible that innovative software producing a new ‘technical’ effect and which meets the requirements for a patent can be patented. Simple software will still be excluded and will not be patentable.

The internet as a channel for doing business has become another source of technical advances. Some of these are essentially software innovations and can be patented if all the requirements for a patent are present. But other ‘internet’ innovations are regarded as essentially ways of doing business using the internet. These would appear to be excluded from being patented in Europe just as was software as such. Business methods are not easily patentable in Europe. Much will depend on the innovation and ‘technical’ advance being achieved.

If you have a software including apps or business method innovation, it would be prudent to speak to an experienced patent attorney who will be able to advise if you have an invention which might realistically be patented as each case depends on its circumstances.

A utility model is an intellectual property right granted for an invention. It might be described as less than a patent but more than a design registration or equivalent (depending on the country where protection is sought).

The law of some countries such as China, Germany, France, and Australia provide for the granting of utility models if certain criteria are met. However, utility models are not available in the US and UK. However, in the US, design patents are available to any person who has invented a new, original and ornamental design for an article of manufacture.

The national laws in a country where a utility model is available will provide details of a) the criteria to be met for the grant of a utility model and b) the scope of protection against copying of the invention and related products. The patent law in the US will do the same for a design patent.

A utility model has similarities to a patent but important differences. The main difference being that the criteria which must be met for a utility model to be granted are less strict than for a patent. The invention for which a utility model had been applied must be novel compared to information in the public domain. But there is not requirement for an ‘inventive step’ which is a criteria for the grant of a patent.

The subject matter of a utility model is usually (ie depends on the country) more limited than for a patent. Utility models tend to be available for physical products rather than processes, methods, formulations, software, and so on.

The term of protection is shorter than for a patent. For example, 10 years in Germany rather than 20 years for a patent.

Applying for a utility model and prosecuting the application to grant generally costs less than for a patent.

It is often possible to convert a patent application into a utility model application in those countries in which a utility model is available. This can be useful if the patent application is at risk of being rejected and so that no patent is granted. A utility model might available instead.

Utility models can be an important part of a strategy to protect a product from copying by rivals often alongside the registration of designs and trademarks.

Copyright is likely to be the most important intellectual property right protecting content in such things as software, APPs, websites, graphics, films, videos, and music.

Copyright exists without registration. It is a legal right that arises out of the act of creating and recording in some way the thing created. The thing created is referred to as “the work” or “the copyright work”. A work – text, software code, music, graphics – does not have copyright protection until it has been ‘recorded’, for example, on paper or on a computer. It may be confidential before being ‘recorded’ which would give the creator rights in confidential information which are explained later.

A key concept follows from this. Copyright does not protect ideas but the form in which those ideas have been expressed. Someone else could express the same idea a different way and not infringe the copyright in the first expression of the idea.

The law of copyright is a vast and complex subject. Some of the international treaties about intellectual property rights attempt to harmonise the general principles of copyright law but leave the detailed implementation to the individual national states. So in the last hundred years or so many countries (but importantly not all) have joined these treaties. By joining, countries commit to adapt or implement laws so that their laws are or will eventually be built on the same principles but differ widely in the detail. As a result, the basics are similar in many countries but the copyright laws of individual countries can be quite different in detail.

The following parts of this section on copyright will explain many of the complex concepts and illustrate these by reference to UK law.

Copyright works

In the UK, copyright works are defined in the latest statement of UK copyright law in the Copyright Designs and Patents Act 1988. A work only becomes a copyright work if it is original and when it has been recorded.

The categories of copyright works are as follows. These definitions from the UK 1988 Copyright Designs and Patents Act illustrate the breadth of works now capable of being protected as copyright works generally. In each country will have local nuances but these definitions can be taken as general guidance on what copyright can protect.

A literary work means any work (other than a dramatic or musical work) which is written, spoken, or sung, and accordingly includes a table or compilation and a computer program.

Software and APPS are protected by copyright as literary works. This can be both the code used and the structural architecture of the software. These can in some circumstances be patented as referred to above. The content used might also be copyright protected as graphic works, text, and moving images which are referred to below.

A dramatic work includes a work of dance or mime. Movement of some kind is required, therefore a mime or choreography would qualify. Background scenes may be protected as part of the whole dramatic work but not separately as a dramatic work.

A musical work means a work consisting of music, exclusive of any words or actions that are intended to be sung, spoken or performed with the music.

The music does not have to be written. Recording straight onto a tape or other medium is sufficient to meet the qualifying requirements. But the owner of the copyright created in this way would not necessarily be the person who devised the music but the person making the arrangements to record it.

An artistic work means:
a. a graphic work including a drawing, diagram, map, chart or plan, any engraving, etching, lithograph, woodcut or similar work;
b. photograph, sculpture or collage, irrespective of artistic quality;
c. a work of architecture being a building or model for a building; or
d. a work of artistic craftsmanship.

A sound recording means a recording of sounds or sounds reproducing a literary, dramatic, or musical work regardless of the medium on which the recording is made or the method by which the sounds are reproduced or produced. A sound recording is a recording of sounds from which those sounds may be reproduced. The physical medium onto which the sound recording is stored and also the method by which the sounds are reproduced or produced are both irrelevant.

A film means a recording on any medium from which a moving image may by any means may be reproduced. It also includes the recording of the film sound track. The essential element is a moving image as distinct from a still photograph. The definition is broad and there is now no doubt that the definition covers video recordings.

A broadcast means a transmission by wireless telegraphy of visual images, sounds, or other information that is capable of being lawfully received by members of the public or is transmitted for presentation to members of the public.

A cable programme means any item included in a service which consists wholly or mainly in sending visual images, sounds or other information by means of a telecommunications system otherwise than by wireless telegraphy.

A published edition the typographical arrangement of which might attract copyright means a published edition of all or part of a literary, dramatic, or musical work. A published edition means a published edition of the whole or any part of one of more literary, dramatic or musical works.

A database means a collection of independent works, data and other information arranged systematically or in a methodical way and accessible individually electronically or otherwise.

Subsistence of Copyright

Copyright will subsist in a work if a number of conditions are satisfied by the work and the work must be one the description of which falls within the definitions. For example, the text of a brochure or a training manual will be a literary work and any illustrations will be artistic works. A computer game or website will have software (a literary work), complex graphics (artistic works), animations (a film), and sounds (musical works and a sound recordings).

Originality

Literary, dramatic, musical or artistic works must be original to be protected by copyright. This is not the same as patent law where novelty and inventiveness are required. The test for originality is not so strict. Originality is not defined (except in one or two specific areas like databases) and has, therefore, been the subject of significant debate in the courts. A good rule of thumb is that a work will be original in the copyright sense if a reasonable amount of skill and effort has been put into the creation of the work.

Ownership

In UK law, ownership is determined by reference to the creator. The creator is the first owner of copyright in a work. This is subject to an exception. For a literary, dramatic, musical, or artistic work made by an employee during the course of employment, the employer is the first owner of the copyright in the work unless there is an agreement to the contrary. Therefore, under UK law, a key concept in relation to copyright is that of authorship – in other words who did the creative work and in what circumstances.
The identity of the author or creator is a question of fact. In most cases making the identification is easy because the identity of the person who created the work is known. Otherwise a detailed investigation may be necessary to find out and check the author’s identity.

Duration

In order to determine the duration of protection it is essential to identify the creator of the work. As a general guide, copyright in an original literary, dramatic, musical or artistic work will exist for 70 years after the end of the year in which the creator dies. There are some variations for different copyright works such as for sound recordings, films, broadcasts and cable programmes.

Transferring copyright

By agreement

Copyright can be assigned to another person by an agreement, called an assignment. This type of agreement is one way of removing doubts about the ownership of copyright, called a confirmatory assignment. The agreement confirms the ownership by one person to which all the relevant persons are made party. This can be important if the copyright is to form the basis of a substantial business investment, a risk free title should be the aim.

Of course insurmountable problems may exist to obtaining such a confirmatory agreement. Typical problems are that the person who could have an ownership claim may:

• no longer be willing to co-operate as a result of a dispute;
• demand a substantial sum believing that the other person is over a barrel. The amount based on the “ransom strip” approach. The amount may be too much compared to the risk from the doubts about ownership;
• no longer be contactable;
• have purported to transfer the rights to someone else.

By operation of law

Copyright would form part of a person’s estate. Therefore, it would pass by operation of law in the event of say death or bankruptcy.

Infringement – the rights to prevent unlawful copying

The right to prevent unlawful copying is really the fundamental point of copyright. The commercial value of the copyright work – whatever it is – derives from the ability to prevent others copying a commercially successful work without permission.

It is only an infringement of copyright if copying of a substantial part of the copyright work without permission is established, ultimately to the satisfaction of a court. “Substantial” will be considered taking into account the quality and/or quantity which has been copied. This is straightforward with counterfeit goods, but can be more difficult where products are similar but not identical. To win a copyright case, the copyright owner must prove that copying occurred. If the original work and “copy” are closely similar, a court will often infer that copying took place and require an explanation from the person accused of copying. Such a person, to escape a finding of copying, will need to show a convincing defence of independent creation not copying. As always, the facts believed by the judge in a court will determine who succeeds.

These legal rights in a copyright work will broadly prevent any kind of unlawful copying and commercial dealing in any such copies. Additional legal powers are often provided to assist the copyright owner to stop unlawful copying and to obtain compensation in appropriate circumstances. It is not necessary to set out here all the powers that are available under UK law. Suffice to say the powers are formidable. Most countries have similar and equally formidable powers to prevent unlawful copying and associated commercial activity.

Intellectual property rights of two kinds now potentially exist in a database depending on applicable national laws. In the UK, a database is now specifically categorised as a copyright work. Secondly, a specific intellectual property right exists called a ‘database right’ which is a more limited than copyright.

The legal definition in the UK of a database

In the UK, the Copyright, Designs and Patents Act 1988 has a definition. The definition states that a database means a collection of independent works, data or other materials that have two characteristics:

• they are arranged in a systematic or methodical way;
• they are individually accessible by electronic or other means.

From a technical point of view, a database normally has a structural part and the content of the database. Each of these parts of the database can be protected by the intellectual property rights in the database.

Subsistence of copyright in the UK in a database

Copyright will exist in a database if the database is original. There is a very important difference from other copyright works. The standard of originality is much stricter for a database than with other copyright works. The stricter standard is that a database will only be original for copyright purposes if, and only if, by reason of the selection or arrangement of the contents of the database, the database constitutes the author’s own intellectual creation. The particular circumstances will determine whether this standard of originality is met.

The author of a database will be the person who creates it and will be a natural person as distinct from a company or other corporate body. However, in practice many databases are produced using computer systems. If this happens, the author will be the person by whom the arrangements necessary for the creation of the work are undertaken. Typically this will be a business rather than a natural person. Ownership and other aspects of copyright have already been covered in the section on Copyright.

Subsistence of the database right

The first point to understand is that database rights can exist whether or not the database is a copyright work. The database right will exist if there has been a substantial investments in the obtaining, verifying or presenting the contents of the database. Investment in this context includes any investment that is financial, human or technical. The practical assessment of the database right as an intellectual property right will need careful assessment. As in other areas of intellectual property, cases decided by the courts will have a bearing on the extent of the protection afforded.

It is likely that a database qualifying for databases right protection will include collections of independent works and other data such as musical works, texts, sounds, images, financial information amongst other things. To qualify for design right protection, these will need to be arranged in a systematic and/or methodical way and be individually accessible.

Ownership of the database right

The maker of a database is the first owner of the database right in it. For these purposes, the maker of the database is the person who puts the effort into organising the information for the database, checking it and investing in it. That is a summary of a more complex definition. An employer will be the maker if the person who makes the database is an employee acting in the course of his employment.

Infringement of the Database Right

Broadly, a person infringes the database right if, without permission, that person extracts or re-utilises all or a “substantial” part of the contents of the database. “Substantial” will be considered taking into account quality and/or quantity of what has been copied (as is the case with copyright). This pretty well speaks for itself. One point is worth emphasising which is that repeated and systematic extraction or re-utilisation of insubstantial parts of the contents of the database can amount to infringement.

Duration of the database right

The database right lasts for 15 years. The trigger point of the start of that period needs care. The 15 year period can either:

•  start from the end of the calendar year in which the making of the database was completed; or
• start 15 years from the end of the calendar year in which the database was first made available to the public provided this date was before the end of the period of 15 years calculated from the end of the year in which the database was completed.

Other relevant matters about the database right

It is not the purpose of this section to provide a comprehensive review of the database right. There are requirements to be met for a database to qualify for database right protection. These are very broadly similar to those requirements for qualifications for copyright protection although the detail would always need to be checked. There are also certain things that can be done which would not be regarded as infringements of the database rights. These, again, are similar to those permitted acts for copyright purposes. They generally cover non commercial activities such as accessing public records and similar.

The legal rights in brands are of broadly two types. Those that derive from a registration of the brand as a trade mark and those that are based on laws that might generally be described as unfair trading laws.

In the UK, the law relating to an unregistered brand is called “passing off” and is much more limited in the protection it can give to a brand than some of the unfair trading laws in, for example, Germany, France and Greece.

Generally, a registered trade mark gives better brand protection than legal rights which may exist without registration.

A wide range of ‘signs’ can be registered as trade marks – words, logos, designs, shapes, slogans, colours, even smells. Shapes, colours and smells are the most difficult to register. The more traditional words and logos are  much easier and straight forward to register.

Applying to register a trade mark can seem to be simple and straight forward.  We have provided guidance about the process in a section later.

However, there are two things it is absolutely essential you must consider and get right.  These are to make sure:

a) the trade mark you are registering is in the form that will give you the best and broadest protection against others misusing it. This means having a good understanding of the possibilities and choices. As an example, should you register your logo in colour or black and white or register a logo and any words used with it as one trade mark or as two or more separate trade marks?

b) that the goods and services for which your trade mark is to be registered are carefully considered, again to give you the best and broadest protection. The extent of your legal rights in a trade mark once registered are directly related to those goods and services.

If you are not experienced in the registration of trade marks, we recommend that you invest in some professional advice and help on these two vital points mentioned above. There are many benefits of doing so which will outweigh the cost of that investment.

Trade marks can be registered for many types of ‘sign’ which indicates a particular business. So a word or words in plain text form or in stylised forms, logos, designs are all registerable. So too are sounds, colours, smells and product shapes.

Traditional trade marks such as names, logos and some slogans will not pose any particular problem for registration of as trade marks. However, the extent to which more elaborate trade marks can be registered in any particular country is still developing. For example whether the shape of goods and packaging be can registered. Colours and smells will be more difficult to register as trade marks but registered trade marks for some colours and smells do exist.

Qualifying criteria

These ‘signs’ can be registered if sufficiently distinctive and not too descriptive. A ‘sign’ which is quite descriptive can have become sufficiently distinctive to be registered because it has been used by one business for a reasonable period of time such that it has become distinctive of that business and no other.

The aim of any trade mark legal system is, therefore, to balance these competing interests. For registration, the balance is between distinctiveness and descriptiveness. For infringement, the balance is often as to whether a rival brand is sufficiently similar to cause confusion or not. Both are difficult to achieve in practice.

Registration is only a good indication that the trade mark is correctly registered. As with patents and registered designs, the fact that a trade mark is registered is not a guarantee that the trade mark will continue to be registered. There are two grounds on which the registration of a trade mark can be attacked in legal proceedings commenced either in a court or in a specialist tribunal.

First ground is that the registration is invalid. The secondly ground is that the registration is liable to be revoked. The difference between these two broadly is as follows. A finding of invalidity means that the registration should never have been granted. If invalidated it will be treated as if it never existed. This can be an important way to defend court proceedings for using a trade mark without permission (called infringement).

A finding of revocation means that because of some activity by the owner of the registered trade mark such as lack of use or failure to properly enforce the brand, the registration should be cancelled from the date of the order of a court or tribunal revoking the registration of the trade mark. This means that any use of a trade mark without permission (infringement) before revocation can still be enforced by court proceedings.

If a proprietor of a registered trade mark fails to use the trade mark, or uses it in a way that it loses its distinctiveness, it would be at risk of revocation. For example, escalator, sellotape, and biro were once registered trade marks but they are now regarded as generic terms.

Here is a link to the Wikipedia page of now generic trade marks – https://en.wikipedia.org/wiki/List_of_generic_and_genericized_trademarks

In contrast, Hoover, Jacuzzi, and Portakabin are still valid registered trade marks in proper use although they are often treated as though they were generic, for example in the media. Nevertheless, the proprietor of trade marks like these needs to be vigilant to ensure that  the trade marks do not slip into generic use, lose all its value and be vulnerable to being revoked.

It is common in court proceedings about an infringement of a trade mark, for the person accused of unlawfully using the trade mark (infringing) to challenge the validity of the trade mark or to try  to revoke it.

Infringement means the right to prevent another person from using the registered trade mark without the permission of the owner. The national laws of each country where the trade mark is registered will determine the extent of protection given to a trade mark in that country. This will be a combination of the laws of that country and the interpretation of them by the local courts.

The trade mark infringement laws in the European Union gives a good idea of when the use of a rival trade mark will be an infringement. The owner of an EU registered trade mark has the right to prevent all third parties not having permission from using in the course of trade:

• any trade mark which is identical to the registered trade mark and used in relation to identical goods or services;
• any trade mark which is similar to the registered trade mark and used in relation to identical goods or services and where there exists a likelihood of confusion on the part of the public;
• any trade mark which is identical to the registered trade mark and used in relation to similar goods and services and where there exists a likelihood of confusion on the part of the public;
• any trade mark which is identical or similar to the registered trade mark in relation to goods or services which are not similar where the trade mark has a reputation and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the registered trade mark.

If a trade mark was to be used which would be caught by these restrictions, the following will be the types of activity likely to be trade mark infringements:

• affixing the trade mark to the goods or the packaging;
• offering the goods, putting them on the market or stocking them for these purposes using the trade mark, or offering or supplying services using the trade mark;
• importing or exporting the goods using the trade mark;
• using the trade mark on business papers and in advertising.

The registration procedure in most countries will be similar but the details will vary. There are bound to be national idiosyncrasies. The procedure is usually simple. Goods and services are divided into 42 classes and are registered by reference to these classes. The classification system is international.

The application is begun by completing a form and filing it at a national or regional trade mark registry together with the appropriate fee. The application must show include ‘graphical’ representation of the trade mark (to use the legal terminology), state the class of goods or services for which registration is sought, and provide a detailed specification of the goods and services for each of the classes for which registration is sought.

The specification of goods and services is used to assess conflicts with existing registered trade marks and defines scope of the infringement rights of the trade mark owner. The specification is an important documents and time spent getting this right will pay dividends later.

Once filed, the trade mark registry will in due course scrutinise the application. This is referred to as ‘examining’ the application and is done by an ‘examiner’. In some countries a detailed scrutiny is made together with a search for similar registered trade marks. In others countries, the scrutiny is more about correct procedure than substance. On the basis of the result of the search (if any) and scrutiny, the mark will be accepted or rejected. If rejected, usually a dialogue ensues between the examiner at the trade mark registry and the applicant or the applicant’s attorney. The purpose of the dialogue is to see if there is a way to overcome objections perhaps by making amendments so that the trade mark can be registered perhaps with amendments. It is not the purpose of the trade mark registry to prevent registration but rather to ensure that trade marks are registered which meet all the criteria as far as known by the examiner at the time.

Once the trade mark has been accepted, perhaps after amendment, the application is usually advertised for a given period. In the UK, this is three months. This period is one in which an opposition by any person can be lodged to the registration of the trade mark. If an opposition is lodged, then an opposition procedure commences with the exchange of evidence and ultimately a hearing in a specialist tribunal to decide whether the trade mark should be registered or not. If there is no opposition or after an unsuccessful opposition challenge, the trade mark proceeds to be registered on the national register of trade marks.

There is no truly international scheme for the registration of trade marks. Each country has its own requirements, although some international arrangements do exist. The Madrid Protocol relating to the International Registration of Trade Marks is one – you can find out more here –

https://www.wipo.int/madrid/en/

Warning: The Madrid system seems an easy way to achieve world wide protection for your trade mark but there are some pit falls which may make this system not the right way to proceed.

There is a trade mark system for the whole of the European Union known as the EU Trade mark – you can find more here –

https://euipo.europa.eu/ohimportal/en/trade-marks 

Many countries give rights to businesses that have used a brand in trading activities whether for goods or in respect of services. These laws are often referred to as unfair competition laws or rights in passing off. Many European countries have unfair competition laws. Many countries that have been influenced by the UK system have passing off laws, for example, Australia, Canada, New Zealand, and Singapore.

Rights in passing off arise out of trading or activities akin to trading in respect of which the trade mark has been used such as words in plain text form and in stylised forms, logos, designs, colours, smells and product shapes.

For example passing off rights required three elements to be established. They are that there must be:

• a reputation or goodwill required by a business for its goods or services or which relate to a logo, a character or style;
• there must be a false statement (misrepresentation), not necessarily deliberate, in relation to that reputation or goodwill leading to confusion amongst the public or a section of the public;
• there must be damage suffered by the person who has the reputation or goodwill.

There is a mass of case law about passing off and what constitutes a protectable reputation, what constitutes a misrepresentation, whether deliberate or false, and what sort of damage can be recovered. The vast majority of these cases are unique in the sense that the outcome is dependent upon the facts of the case not on principles of law.

The rights in designs in many countries including in UK and the EU arise out of

1. registering a design and/or
2. from legal rights which exist in the law of a particular country without registration.

Registration generally gives stronger and longer rights. The extent to which these design rights give protection depends on the law of the country in respect of which they have been registered.

We have used the law and registration process for the EU wide design registration and protection to illustrate how to protect a design against unfair copying. The EU design right is called a ‘Community Design Right’ and covers the all EU countries. It is also possible to register designs in a particular EU country as well as or instead of a Community Design. However, national law and procedure will vary a lot in the detail so that advice from a patent attorney or lawyer in that country is essential.

EU Regulations provide a whole legal regime for the Community Design. There are two separate rights; a registered Community Design and an unregistered Community Design.

You can find out more about design protection in the EU here – https://euipo.europa.eu/ohimportal/en/design-basics

The definitions and qualifying criteria for the Community Design are the same whether the design is registered as a Community Design or exists as an unregistered Community Design. The rights given by a Community Registered Design are longer – up to 25 years. The unregistered Community Design lasts only 3 years only. You can see the benefit straightaway of registering a design.

Legislation in the UK provides a similar registered design for the UK with similar definitions and legal rights. But the rights which exist in the UK in a design which is not registered under UK law are different and explained in a later section.

Meaning of a design

The definition of a design from the EU Regulation gives a good guide to the types of designs for which registration can be obtained in the EU. The position in the UK is similar in relation to a design registered in the UK.

The EU system for registering a design is a useful guide to what can be registered in other countries.

The definitions are from Article 3 of the EU Regulation.

Article 3

Definitions

For the purposes of this Regulation:

(a) “design” means the appearance of the whole or a part of a product resulting from the features of, in particular, the lines, contours, colours, shape, texture and/or materials of the product itself and/or its ornamentation;

(b) “product” means any industrial or handicraft item, including inter alia parts intended to be assembled into a complex product, packaging, get-up, graphic symbols and typographic typefaces, but excluding computer programs;

(c) “complex product” means a product which is composed of multiple components which can be replaced permitting disassembly and re-assembly of the product.

You can find out more about the definition of a design which can be registered in the EU here – https://euipo.europa.eu/ohimportal/en/design-definition

Qualifying criteria

The design to qualify for the legal rights given by the Community Design right must satisfy several criteria set out in the Regulation. The requirements are complex and detailed. It is not necessary to explain them all here. The basic requirements are the design must be new and have individual character. There are further provisions of the Regulation explaining what ‘novel’ and ‘individual character’ mean.

Some excluded designs

This is again a complex part of design law with many details. However, three aspects of design are excluded which are important to understand in the context of protection for innovative designs in the EU. These exclusions include designs dictated by their technical function, designs of features allowing interconnections, and designs contrary to public policy or morality.

These exclusions are part of a balancing act by the European Commission between the desire for a free and open market within the EU and the need to protect the rights of individuals and businesses. These exclusions are part of the free trade side of the balance.

Length of protection

If a design in the EU is not registered, the rights in the unregistered Community Design last for three years from the date that the design was first made available to the public within the EU.

The rights in a registered Community Design last for 25 years provided that renewals are paid at five yearly intervals. If a renewal is not paid the rights are lost from that time. The renewal can be paid late within a period of six months after the due date provided an extra fee is paid.

We have referred again to the position in the EU Regulation in relation to a Community Design and the subjects referred to below. The position in the UK is similar in relation to a design registered in the UK.  The position in other countries about these subjects might be similar or different. Further information should be sought about these matters for a particular country.

Scope of protection and infringement

The main legal rights given by a Community Design (whether the design is registered or not) are the exclusive right to use the design and to prevent anyone else using the design without the consent of the owner.

The scope of a Community Design includes an identical design to the one registered and any design which does not produce on the informed user a different overall impression. The later has been the subject of much case law and is a difficult analysis to apply without expert legal advice.

Infringement of a Community Design occurs when the design is being used without the permission of the owner as part of some commercial activity. This activity might be advertising or selling a product made to the design. The activity is usually commercial although this is not a requirement for infringement.

Ownership

The rights in the design are owned by the designer except a) if the design was created by an employee “… in the execution of his/her duties or following the instructions given by his/her employer..” in which case the right to the Community Design shall be owned by the employer or b) unless otherwise agreed or specified under national law. A design will be jointly owned if two or more persons have jointly developed the design.

Transferring ownership of a Community Design

The rights in the Community Design whether registered or unregistered may be transferred and otherwise dealt with as a property right and as if the Community Design was a national design right of the country in which the holder is based. The details are a more complex but this is sufficient to understand that ownership of the rights can be transferred.

We have referred again to the position in the EU Regulation in relation to a Community Design and the subjects referred to below. The position in the UK is similar in relation to a design registered in the UK.  The position in other countries about these subjects might be similar or different. Further information should be sought about these matters for a particular country.

Invalidity

A registered Community Design may be declared invalid either by EU Intellectual Property Office or a by national court of an EU member state as a counter claim in court proceedings about infringement of the design.

In contrast, an unregistered Community Design can be declared invalid by a national court of an EU member state either by an application for that purpose or as part of a counterclaim in infringement proceedings in respect of that design.

The grounds for invalidating a Community Design are detailed. The most important grounds mirror the qualification criteria requirements for a Community Design (mentioned in another section above) and for the obtaining of a registration for it. If a Community Design in found to be invalid, then the rights in the design whether registered or not would cease to exist.

If a person is accused of using a Community Design without permission (infringement), then a defence often used is to claim that the design and the registration for it (if any) is invalid and never existed.

We have referred again to the position in the EU Regulation in relation to a Community Design and the subjects referred to below. The position in the UK is similar in relation to a design registered in the UK.  The position in other countries about these subjects might be similar or different. Further information should be sought about these matters for a particular country.

The application for a Community Registered Design can be made at the EU Intellectual Property Office (EUIPO) located in Alicante, Spain or at the equivalent Office of a member state of the  EU.

The equivalent office in the UK for the registration of a design in the UK is the UK Intellectual Property Office (UKIPO) which also deals with applications to register patents, trade marks, as well as designs.

The procedure is to make an application including representations of the design. The application is examined to ensure that it meets the relevant administrative criteria (often called ‘formalities). Importantly, there is no examination as to whether the design being registered meets the qualification criteria such as is the design new and does it have individual character. The registration process normally takes several months resulting, if successful, in the grant of a registered Community Design.

You can find out more about the EU design registration here – https://euipo.europa.eu/ohimportal/en/rcd-route-to-registration

It is possible to seek world wide design registration using a procedure known as the Hague system for the international registration of industrial designs. The system is administered by the World Intellectual Property Organisation. You can find out more about the Hague system here –https://www.wipo.int/hague/en/

As explained in relation to patents and trade marks, the fact that the design has been registered is not conclusive of the validity of the registration. The registration can still be challenged at anytime usually by a person or company with a commercial interest in removing the registration. This most often happens, again as with patents and trade marks, when the owner of the design seeks to enforce it by court action. The almost invariable defensive response is to a) deny infringing the rights in the registered design and b) to claim that the design registration is invalid.

A design can qualify for protection in the UK against copying in two ways:

• as an Unregistered UK Design; and/or
• as a Supplemental Design which was introduced after Brexit to mirror the unregistered Community Design in the EU.

Care needed.

Designers should take advice about the available intellectual property protection before publically disclosing any new design. For example, by advertising, offering to sell, or selling anything made to the design or incorporating the design. This is because Supplementary Unregistered Design will be established by first disclosure in the UK or another qualifying country. It will be subject to interpretation by the UK Courts.

Therefore, designers should carefully consider how, when and where the first disclosure the design will take place in order to establish unregistered protection in the UK and the EU.

First disclosure in the EU will not establish Supplementary Unregistered Design. However, it may destroy the novelty in that design, should you later seek to claim UK unregistered rights.

But first disclosure in the UK may not be effective to establish the EU unregistered design right.

Registering the design in the UK and the EU would avoid these concerns as to whether the unregistered design rights come into effect.

UK Unregistered Design Right

Definition

The definition of a design which might qualify for UK Unregistered Design Right is “the shape or configuration (whether internal or external) of the whole or part of an article.” This definition will cover most manufactured products. There is no artistic criteria so that purely functional designs will have protection against copying.

Some designs are specifically excluded. Such as methods or principles of construction or surface decoration are excluded. Also excluded are the so called “must fit” and “must match” features of a design.

Qualifying criteria – original and not common place 

There are two qualifying criteria

• the design must be original: and
•  it must not be “commonplace in the design field in question at the time of its creation”.

 Duration

 The rights given by the Unregistered Design Right continue for either

• 15 years from the date when the design was recorded or an article was made to the design; or
• 10 years from the date when articles made to the design were first put on the market if that date was within 5 years of the first recording or making to the design.

 However, any person is entitled during the last 5 years of the existence of the Unregistered Design Right to a licence to do anything which would otherwise require permission to of the design right owner to do (ie which would be an infringement).

If the terms of the licence cannot be agreed a mechanism is provided to settle the terms.

 Infringement rights 

 Any person infringes the Unregistered Design Right who does or authorises another to do anything which is the exclusive right of the design right owner. The exclusive rights cover almost every commercial activity. So any person who reproduces the design either exactly or substantially by making an article, advertising, or selling it (and so on) will infringe. So will a person who imports, sells, or has possession of such an article. 

 EU unregistered designs to continue in the UK after Brexit

Designs that are protected in the UK as an unregistered Community Design before 1^st January 2021 will be protected as a UK continuing unregistered design and will be automatically established on 1^st January 2021.

It will continue to be protected in the UK for the remainder of the 3 year term attached to it.

The fact that a corresponding unregistered community design was established before 1^st January 2021 through first disclosure in the EU but outside of the UK will not affect the validity of the continuing unregistered design.

UK Supplementary Unregistered Design after Brexit

The UK is creating an additional UK unregistered design right called Supplementary Unregistered Design.

This right will ensure that the full range of design protection provided in the UK before 1^st January 2021 will remain available for new designs after the UK leaves the EU.

The terms of Supplementary Unregistered Design protection will be similar to that already conferred by unregistered Community Design. However, the protection it provides will not extend to the EU.

The Supplementary Unregistered Design will mirror the unregistered Community Design by providing post 1^st January 2021 UK protection for both 3-and 2-dimensional designs.

The legal system in any particular country will determine to what extent confidential know how can be protected against wrongful disclosure or use. In the UK the law of confidential information is based on a set of principles developed over hundreds of years in the UK by its courts. It is the application of those principles in particular circumstances that determines whether information is to be regarded as confidential or not. To achieve fairness between person in each case the principles allow considerable flexibility. As a necessary consequence, there are no hard and fast rules but instead broad principles. These principles are interpreted and applied by the courts in each set of circumstances.

The fundamental principle on which the UK law of confidence is based is that a person who has received information in confidence from another must not take unfair advantage of it or profit from the wrongful use or publication of it. A complex law of confidential information in the UK has been built upon this fundamental principle.

The requirements to be met under UK law for information to be protected as confidential are that:

• the information is the type of information recognised as protectable by the courts;
• it must actually be confidential in the sense of not being in the public domain; and
• there must be a confidential relationship between the owner of the confidential information and the person to whom it has been disclosed.

The right in confidential information is broadly the right to prevent its unauthorised disclosure and use of the information.

Confidential relationship – through agreement – non disclosure agreement

Reaching an agreement to keep information confidential is a familiar event in business life. Employees are usually required to keep their employer’s business information confidential by a term of the contact of employment. Non-disclosure agreements (NDAs) are sought before sensitive business information is disclosed in any negotiation. Similarly, if an inventor is seeking backing from a potential business partner or provider of finance. The requirement to keep information confidential is a specific obligation in these agreements.

But it is also possible that an obligation to keep information confidential can be implied into any contract if justified by the circumstances. It is not possible to give a check list of factors which if all or most were present would indicated that such an obligation would be implied. The best guide would be to imagine what one party to an agreement being a reasonable person would think if receiving the confidential information. Did an obligation arise to keep the information confidential?

Confidential relationship – through circumstances

An obligation to keep information confidential arises in many relationships without any doubt and this has been recognised by the law. For example, such an obligation exists in the relationships between doctor and patient, solicitor and client, and banker and customer.

But other relationships can also give rise to an obligation to keep information confidential. For example, the obligation may exist in a business negotiation where valuable business information is disclosed in trying to reach a deal. The obligation is more likely to arise if the information communicated is either detailed or highly valuable or both. But where the information is communicated in a social setting rather than a business one, the obligation is less likely to arise.

The law in relation to confidential information is such that it allows flexibility to do the fairest thing in the circumstances but this is at the expense of certainty in any particular circumstances. This flexibility makes assessing whether or not a confidential obligation arises in particular circumstances difficult, at least with any precision. There are no hard and fast rules except in those few types of relationships mentioned above where the law is clear

The best guide that can be given is similar to that in relation to obligations of confidence being implied into a contract. Imagine what one person being a reasonable person would think if receiving the confidential information. Did an obligation arise to keep the information confidential?

These rights do not derive directly from copyright works but are related to them. They are sometimes referred to as related rights or, equally ambiguously, as economic rights or even moral rights. They are not the same as the rights of performers of copyright works, these will be covered in the next section.

The first important point to make is that the law giving the rights to individuals in created works is complex. These rights are of crucial importance in the exploitation of literature, music, recordings of music and other literary works, films and in broadcasts. The extent to which author’s rights exist and can be enforced depends on a number of factors that interrelate and lead to the complexity. The extent to which author’s have these rights varies depending in the nationality of the person who created the rights, the national state in which the rights were created and the national states in which the rights are to be exploited.

There are two primary rights which individuals have in works they have created. These are based on the provisions of an international treaty called the Berne Convention. These are broadly available internationally. The two rights are as follows. First, the right to be identified as the author of a, literary, dramatic, musical or artistic work or to be identified as the director of a film in which copyright subsists. This is sometimes referred to as the paternity right.

Secondly, the right of such an author not to have the work created subjected to derogatory treatment. This is sometimes referred to as the integrity right.

It is not the purpose of this section to explain the meaning of these individual rights in detail or to consider the other rights individuals may have under the laws of a particular national state. It is sufficient for the purpose of this section to establish that these rights exist.

These again are rights of individuals but distinct from the author’s rights mentioned in the previous section. Here again, the legal position is complicated. These rights are primarily of concern in the entertainment industry involving the exploitation of recordings of music and literary works, films and making of broadcasts.

An important starting point is an international convention signed in Rome in 1961 that commits the national states that have signed the convention to give performers certain rights. These rights relate to unauthorised broadcasting, recording of performances and exploiting those recordings. The minimum protection was to be for 20 years.

The approach was that national states that had signed the convention would amend their laws to give minimum levels of protection for individuals who are nationals of other national states who had signed the convention. So, again, whilst there is an international convention about the rights of performers in recordings of their works, the detail depends on the national legislation of the country where the recording is to be commercially exploited either by broadcasting, by the sale of a recording or similar.

The European Commission has issued three Directives that have an impact on the rights of performers in recordings of their performances. The most important of these is the EC Directive on lending rights (Council Directive 92/100/EEC on rental right and lending right and on certain rights related to copyright in the field of intellectual property). This gives performers the exclusive right to authorise or prohibit certain things in relation to their performances. These can be summarised as including recording of live performances, the distribution of such recordings, the rental and lending of those recordings and the broadcasting of them. This is very much a summary and not a comprehensive list of what can be authorised or prohibited. The aim of the Directive is to harmonise laws throughout the European Economic Area in relation to the rights of performers in their performances.

For the rights of performers to exist, various requirements about qualification must be met. The ownership of the rights depends on who created the work and what was their relationship with other persons, particularly those organisations which would be involved in the commercial exploitation of any recordings.

In certain circumstances, a performer is entitled to what is described as equitable remuneration. For example, where a sound recording is broadcast or is otherwise made available to be heard by the public. There are provisions as to how this equitable remuneration will be assessed if it cannot be agreed by those involved. Finally, various rights are given to performers to prevent infringement of their rights and provide for compensation to be payable.

These are rights accorded to any person having an exclusive recording contract with performers. Typically, record companies and broadcast organisations will have the benefit of exclusive recording contracts with performers. The recording rights give rights to the person having the benefit of the exclusivity in relation to the recording of the works of the performers and the commercial exploitation of such recordings. They are clearly valuable rights. The usual remedies exist for the prevention of infringement of these rights.

Any person who wishes to use a work for commercial exploitation will need to consider very carefully whether to do so would amount to an infringement of any copyright in that work or any of the related rights. Those related rights are Author’s Rights, Performer’s Rights and possibly any Recording Rights.

The expression used for this process is the clearing of the rights to use a copyright work. The process of clearing rights is an normal activity in the entertainment industry and is most relevant to recordings of literary works, typically plays and music, and in relation to films and broadcasts.

However, copyright does protect other commercial works and the need to check for infringement applies to these equally. For example, the use of a graph or photograph as an illustration in a book, brochure or website.

This is very much part of any due diligence exercise which should be done prior to the production of computer games and complex websites where the use of copyright works is often contemplated.