I have been hosting focused intellectual property workshops for creative agencies for a few months now. Attendees are incredibly engaged, and invariably find aspects of the workshop a real eye opener.
Intellectual property is intrinsically bound up with the work creative agencies do. Therefore, a good knowledge of Intellectual property law helps in running a creative business, as well as reducing the risk of legal complications.
For example, better to avoid an infringement claim by doing proper due diligence checks before creating a logo than waiting to find out there is a problem once the logo is already created.
Liability for IP issues
While many agencies aim to limit their liability for IP related issues by putting the onus on the client to obtain legal advice themselves, it is difficult to see how agencies could successfully absolve themselves of liability in situations where they create a new logo, or even a new name.
One of the most memorable cases involved a dispute over the Dr Martens Airware logo . Due to a lack of IP knowledge the agency was embroiled in litigation along with the client, and suffered significant time, effort and expense in the ensuing court battle. This could have been so easily avoided with the right documentation in place.
IP law essential
The role of IP law is therefore crucial in avoiding pitfalls, and positioning clients of agencies for maximum success. IP fits hand-in-glove with the creative process.
The workshops highlights the pitfalls. Then by simply offering IP services, or referring matters to an IP specialist at the appropriate time in the creative cycle, agencies are able to give their clients real help while absolving themselves of responsibility.
Contrary to popular belief the right time to refer clients is not after the creative exercise is concluded. The appropriate due diligence checks should be carried out at an early stage, because if what you intend to create or use infringes on a third party’s rights, the client has nothing worth protecting. All the effort taken in creating the identity is wasted.
The workshops help agencies to find alternatives to simply asking their client to consult their own lawyers. Many clients will not have lawyers or may never consult any lawyers because they do not appreciate the significance of doing so. The upshot is that they are at risk of using an identity that may cause problems for them down the line. That will impact their revenues, and could expose them to litigation. And it’s doubtful that a clause excluding liability in the agency’s terms would be legally effective anyway.
The next workshop is on 14 July from 3-5pm. It’s a small session for a maximum of 8 people to attend.
This session costs £40+VAT per person (or £25+VAT for early birds) and includes refreshments, as well as a copy of my book Intellectual Property Revolution.
The claim arose out of the claimant’s ownership of the playboy.london domain name. The defendant, as owner of the world famous PLAYBOY trade marks, relied on a decision under the Uniform Domain Name Resolution Policy (UDRP) stating the domain should be transferred to it. The court held it did not have the authority to overturn the UDRP decision except in the case of manifest error, which was not relevant to this claim.
Evidence adduced at trial showed the claimant intended to use the domain name to chronicle the childhood and adolescence of his children. Access to the website would be restricted to users who had been given login details by the claimant. Accordingly, the court found there could be no trade mark infringement because the claimant was not selling any goods or services from the website. However, the judge ruled the claimant could not rely on the groundless threats provisions of the Trade Marks Act 1994.
The claimant claimed his use of the word PLAYBOY in the domain name was an ironic reference to himself. The judge concluded this irony relied on the reputation and goodwill in the PLAYBOY mark. Accordingly, the claimant’s use of the domain name would lead to passing off.
The court held it did not have the power to overturn the UDRP decision and the application for a declaration was an attempt to circumvent the court’s lack of jurisdiction. The judge further reasoned that granting a declaration stating there had been no trade mark infringement would not serve any useful purpose, since a similar declaration in relation to passing off could not be made. On this basis the claim was dismissed.
The High Court recently published its judgment in a case involving the Marussia Formula One team. The case related to a claim for trade mark infringement and underlined the importance of businesses ensuring they properly manage their IP rights.
The court heard how the claimant had licensed its trade mark to the defendant Formula One team, but that the defendant team had continued to use the trade mark after the licence term had expired. The team was refused permission by Formula One’s governing body to change its name during the course of a season, leaving them with little option but to continue racing and infringe the claimant’s trade mark as a result. Refusing to race would mean forfeiting the team’s entitlement to a substantial amount of money due to it.
The court held that the defendant therefore had no real prospect of proving, as it had asserted, that the use of the claimant’s trade mark had occurred with the claimant’s consent. It further held that the defences advanced by the defendant were unlikely to succeed and that the defendant would need to provide £1.75 million by way of security for costs if it wished to proceed to trial.
The case shows the importance of considering IP rights at an early stage and ensuring any agreements entered into properly reflect the needs of the parties and protect their interests. In particular, the defendant in this case would have benefitted from ensuring the licence was not timed to expire part way through a season. The facts of the case show the balance of power was strongly weighted in the trade mark owner’s favour, since the licensee was heavily dependent on the owner providing the funds which would allow it to participate in the Formula One season.
Many SMEs could potentially benefit by holding their IP in a separate IP company and having the holding company licence that IP to the company through which the business is operated. This has the benefit of protecting a business’ investment in its IP by ring-fencing its intangible assets. This will be particularly important if the main business falls into difficulties and should be considered at an early stage.
Design registraion is an important way in which to protect the unique shapes or surface designs that a company’s designers produce. Generally, there is no requirement to prove novelty in order to register a design. It is only when you want to rely on your design registration that it is relevant to prove novelty.So, the recent decision where Yves Saint Laurent (YSL) claimed victory over H&M because it indicates that it is not necessary for designers to come up with something radically different to what is on the market to qualify for design protection.
Overall Individual Character Wins
Last week the luxury fashion house YSL emerged victorious from a nine-year legal battle with the high-street retailer H&M over the validity of its two EU registered designs for its handbags.
H&M challenged the two registered designs, pointing to previous designs as evidence that the YSL designs lacked the required “individual character” to qualify for valid design protection. However, on the 10 September, the European General Court confirmed the previous decisions made by the Office for Harmonization in the Internal Market (OHIM) that YSL’s handbag designs had key differences from what H&M had cited as evidence. In passing the judgment the court held: “it must be held that the differences between the designs at issue are significant and that similarities between them are insignificant in the overall impression which they produce”. For a full summary of the judgment, see the official press release by the General Court of the European Union here.
The primary objective of the recent changes were to improve the litigation procedures and reduce litigation costs and, as a result, to increase access to justice in IP matters with special focus on individual claimants and SMEs who struggled financially to fight IP cases. Yassine Lefouili, one of the co-authors of the report, affirms the positive developments following the changes resulting in qualitative and quantitative evidence that there has been large increase in the number of intellectual property cases.
Introducing the report, IP Minister Baroness Neville-Rolfe praised the changes and confirmed that small and medium sized businesses and entrepreneurs now have better chances to actually defend their IP rights. This is good news, especially following a recent FSB research we wrote about in our article “SMEs And IP – FSB Reports They Struggle To Protect Their Intellectual Property” which revealed the struggle of SMEs and start ups to protect their IP.
The improvements come as a result of the costs cap and the 2010 active case management process. These amendments speed up the litigation process and also serve as an awareness tool for litigants to understand better their exposure before filing a claim. What is more, as Chloe Smith underlines for the Law Gazette, changes have opened up IPEC for patent and trade mark attorneys who are now able to represent their clients in court more often.
This suggests that reforms have paid off and, as the PatLit suggests, with the introduction of the Small Claims track we might as well have even better news in a following report.
With the recent launch of the Independent Press Standards Organisation’s (Ipso) consultation into setting up a pilot arbitration service to widen access to justice, it is interesting to consider the advantages of arbitration as an alternative dispute resolution method.
Arbitration has increased its popularity in recent years, and could be very advantageous in IP matters due to its flexibility, private and confidential nature.
Before agreeing to use arbitration to resolve a dispute, it’s important to explore the pros and cons of the option. The main arguments in favour of arbitration in IP disputes include:
When it comes to IP, especially with trademarks and patents, companies with rich IP portfolios have an incentive to keep any dispute private so that their IP does not suffer in any way. One of the perceived advantages of arbitration is its confidentiality. Parties can keep the nature of their dispute and all other details private. This is essential in some IP disputes especially when sensitive and secret information is involved. For example, in a dispute relating to a trade secret or a patent, a lot of confidential matters will be discussed. In such circumstances, it would be crucial for the owner of the IP to keep the matter private and confidential and make sure any business secrets remain hidden.
Of course, it should be noted that courts in civil litigation would also treat particularly sensitive information as confidential as well, and in this sense there will not be huge difference between both.
Another consideration is that parties could adopt strategies and measures that wouldn’t be available to them if the dispute were public in case it would be harmful or embarrassing to their reputation. In that way a party could act unfairly or inequitably, and yet be awarded the relevant remedy.
Still, one of the main advantages when it comes to arbitration is the very high level of confidentiality of the dispute it guarantees. This is fundamentally crucial for businesses whose reputation and future success are primarily based on intellectual property.
+ Flexibility and better price
Arbitration brings with it the choice of jurisdiction, arbitrator, and language and by doing so ensures an impartial and neutral process. The chosen arbitrator would be an expert in the field. And in a technical and specialised field such as IP, it is important to have someone with industry knowledge to have the competence to decide the matter. However, in jurisdictions where the court systems provide experts in the IP field, this advantage of the arbitration system would not be that significant. What is more, sometimes the act of choosing the arbitrator could lead to suspicion of bias and unfair outcome.
It is also suggested that arbitration is a better option from a financial point of view and is less time consuming as well. The International Survey on Dispute Resolution in Technology Transactions concluded that survey participants spent significantly more time and had higher costs in court litigation than in arbitration and mediation. In US terms this means that in courts parties spent approximately three years and $475,000 while arbitration lasted only a year and cost around $400,000 (WIPO, 2013). However, linking this to my next point, often the length of the dispute could be a reason for the increased cost of arbitration. For example, sometimes it takes from six to nine months just for the arbitration panel to be settled.
+ Shortened procedure
Generally, it is said that arbitration is much faster than court proceedings and there is practical evidence for this as mentioned above. This is due to various reasons related to the characteristics of arbitration one of which could include one of its disadvantages, namely the finality of appeal.
And although it is assumed that arbitration is usually the faster dispute resolution method, there are some arbitration cases which have lasted so long that arbitrators retired and were replaced by their colleagues. This is because the longer the dispute, the higher the price.
These were the main reasons why parties decide to go ahead with arbitration. But one needs to be fully aware of the contra-arguments related to this method. The negative side of arbitration is related more to the consequences flowing from that choice of ADR.
– Not necessarily that cheap and quick
At first arbitration may seem the better choice from a financial point of view especially if the court litigation is as pricy as in the UK. And in many instances it would be. However, as already mentioned, some disputes may last for so long so as to incur costs leading to bankruptcy of a business. Therefore, one needs to explore the options in detail, bear in mind this danger and consult with a professional as to what the impact for the business could be. And in the context of IP, where IP rights are all a business has as an asset, it is likely that the business gets in trouble simply because it is too difficult to evaluate IP rights and use them as a collateral for a loan for example. And it could end up in a situation where the business does not have the money to proceed with arbitration.
– Finality of appeal
In contrast to court proceedings, arbitration does not give the parties an opportunity to appeal a decision. That is, the decision of the arbitrator is final and binding and that would be the end of the matter. This is of fundamental significance and should be acknowledged when the decision to agree to arbitration is taken. And the chances to be satisfied by the arbitrator’s decision are as high as the chances not to be. Therefore, one needs to balance the pros and cons and decide whether to take the risk.
To summarise this brief outline of pros and cons for arbitration, it is crucial to say that arbitration could be a double-edged sword. On the one hand, it could be helpful for your business especially where reputational issues are at stake. However, on the other hand, it could be a big risk to take especially for SMEs with small IP portfolios who may not be able to bear the eventual high cost of arbitration.
Since writing my book, Legally Branded, a number of business owners have thanked me for making this fundamentally important subject of intellectual property (particularly trade marks) understandable.
Some entrepreneur friends have even suggested I emphasise the risks, and danger of ignoring intellectual property advice. However, I’ve always tried to steer clear of scare mongering as a tactic to raise the profile of intellectual property, preferring to work with those clients that “get” the importance of intellectual property. Our clients are the ones that get it, even if they’re not in industries where IP is obviously critical to their success. They value their IP from the moment they start their businesses as did our client Headspace, for example, who are doing great things to make meditation accessible.
I recently attended a meeting with a business owner whose mind was firmly made up that there was no point paying expensive lawyers to give advice on IP. I had agreed to meet with him at the request of his marketing manager who understands the importance of IP and hoped that someone more aware of the ins and outs of IP may be able to persuade his boss. However, this business owner’s views did not shift one bit as a result of our meeting mainly because he talked far more than he was willing to listen, and his mind was already made up. So, I know better than to try to address those whose minds are already made up that they know all they need to know about IP.
This is for readers who are curious, or undecided
This post is for those who may be curious, or who are still on the fence about whether it’s worth bothering with trade marks. While it’s never a good idea to generalise about who does or does not need IP, I will stick my neck out and say that if you’re a lifestyle business (by which I mean you’re aiming to earn a livelihood and are not trying to build a big business or one you can ultimately pass on or sell) you can ignore trade marks. You’re unlikely to come to anyone’s attention, or pose a threat to existing trade mark owners such that they would want you to rebrand for infringing on their rights. Even if someone did require you to rebrand, chances are it will just be an inconvenience to change your marketing materials and rename the business. You won’t have a name that attracts business, so could rename the business without suffering a drop in activity. Similarly, if you’re setting up a business and want to first see if it will take off, then you MAY, depending on your business idea, be able to use a temporary name, or take a chance with the name you want to use (provided you’re willing to change it if the advice is that you would do better to choose an alternative name), and see if you can get anything off the ground before worrying about trade marking. But for everyone else, it would be really foolish not to get trade mark advice from a specialist lawyer on the name you’re using.
Trade marks may be revoked
Trade marks can be cancelled, so even if you’ve secured a trade mark registration it doesn’t mean you’re all right to use that mark. That’s why it’s misguided to do your own registration work, just to save on legal fees. You may end up getting a registration, but it may not be for a mark that is capable of generating brand value. You may not have an adequate scope of coverage, so that although you’re registered, it may not protect you if someone were to challenge your rights. For example, registering a logo with a totally descriptive name – that is, one that describes what the business does – is easy enough to secure. However, it’s an extremely poor choice of branding.
The law protects businesses against various unfair competitive practices, and helps you fight off competitors who use similar marks to yours, but you have very limited recourse with a descriptive name. Using a descriptive name or a name that is otherwise incapable of being owned by you as a trade mark, leaves you wide open. You will lose business that may have been intended for you, and you will have a business that is far less valuable than it might have been had you selected a legally powerful name. This is the reason you should always consult your own IP lawyer on any name your branding professionals help you to choose, unless they are willing to take responsibility for its legal effectiveness.
Keyword rich names probably best avoided
Also, take a look at the blog I wrote about Google’s recent algorithm change, which makes it even more of a poor decision to use descriptive names now online. The writing is on the wall, so I would avoid choosing keyword rich names too when branding your business online. The slides from my talk at Make It Big in 2013 also discuss descriptive names more.
Get legal advice
Even though you get some protection in this country just by using a name, don’t let that lull you into a false sense of security. For example, if someone registers a Community Trade Mark they can stop you using a name you’ve been using, or limit you to using it only in a certain geographical area. Why court the vagaries of litigation with all the cost implications when you can secure your rights in a name you’re getting recognition with, by paying ten times less?
Trade marks and legal advice should not be dismissed as too expensive to bother with for anyone who has a viable business. They are an investment, and are the foundation for licensing and other ways of monetising your products and services. In particular, don’t wait till you have reached certain turnover targets, because trade marks are fundamentally relevant to any business that aspires to be more than a lifestyle business. Your business name is what the law protects when competitors behave unfairly. So, trade marking is good business practice and isn’t just about whether you intend to become a brand, or think that if you sold your company whoever bought it would want to use your brand name.
There is a lot of misunderstanding about the relevance of IP, and huge generalisations are made about its costs. But given that there are many different IP rights, of which trade marks are just one type, it’s foolish to dismiss them all as too expensive. Knowing how to implement procedures to protect just one of these rights may be the critical element to your business success after all.
I think the problem is down to the complexity of IP law. We are still in a transitional period between an industrial economy and a knowledge economy. Consequently knowing how to deal with the physical things, the tangibles comes easy while intangibles that you can’t feel or touch, are less well understood. Intangibles are our knowledge, our brands, our digital content, and more. By their very nature, they are easy to lose. Being transient, and non-physical, their legal significance can sometimes be overlooked or misunderstood.
Scrabulous and other high profile cases
The fact is that it can be difficult for lawyers to point out the benefits of IP except by pointing to situations where there have been well known incidents, such as with Scrabulous, which I discussed in a post recently. Those of us IP lawyers who prefer to focus on the positives, won’t therefore want to keep pointing out the dangers, but I have outlined a number of scenarios in my book Legally Branded, which should help you better understand the risks. Don’t assume that just because big businesses like Apple resolve their IP issues, that you will do so too. People should know that for smaller businesses, the scenarios they hear about in the news about the Googles, Microsofts, Apples of this world would put them out of business because they would not have the resources to get themselves out of trouble.
So the moral is if you are a small business without access to huge sums of money to litigate your way out of trouble then you absolutely need to make sure you avoid the problem in the first place by getting professional advice to register your trade mark.
Also, if you’re going to ignore IP protection, you need to know what you’re doing. It could in some cases be rather like deciding not to bother with the foundations of a house you’re building. In television programs like Grand Designs, the participants who overspend may end up not having enough money to do all the fine design details they had wanted. Their lack of funds means they have to compromise on the surface issues like designs. They can’t compromise on the very structure and foundation of a building. Unfortunately, the opposite approach happens in business when IP is ignored. People can spend a fortune on the surface things like branding and websites while ignoring the fundamentals.
Distinguish IP from other legal work
While there are some legal issues you can and should skimp on in the early days of a business, IP isn’t one of them. Note that IP is very often a contractual matter, and isn’t just about registrations. So, take advice to see how to minimise your IP expenditure in a safe way if you think spending on IP may seem a waste. Some business owners question any expenditure which doesn’t enable them to make money (such as learning a new marketing trick would increase their chances of generating revenues). However , think of IP as what enables you to keep the money you make, and in some cases to continue to earn revenues. So at the very least you absolutely have to take advice in order to develop your strategy for IP.
The House of Lords’ decision yesterday that Matthew Fisher’s 38 year delay in claiming a share of copyright royalties should not prevent him claiming future royalties has been widely reported. See, for example the IPkat here.
It is interesting therefore to focus here on how joint copyright arises, and how it came about that Fisher’s share was assessed at 40%.
Joint Copyright The Copyright legislation regards the concept of a work of “joint authorship” as meaning:
“A work produced by the collaboration of two or more authors in which the contribution of each author is not distinct from that of the other author or authors”.
One issue which is interesting to many people arises from the fact that the public place far more emphasis on ‘ideas’ than the law does. However, copyright exists not in ideas but in the written expression of ideas.
So, what this means in practice is if someone participates by doing something like the writing of the book or otherwise shares responsibility for the form of expression in the copyright work he will share in the legal rights in the work. On the other hand if he merely contributes ideas to help the creator of the copyright work to produce a better end product, then he gets no recognition from the law.
It is immaterial that he thought up the plot of the play or made suggestions for a comic routine to be included or, indeed, that he passed on his reminiscences to a ghost writer. It is not even good enough that the parties divided the job between themselves so that only one of them would do the actual writing. See Flyed Microsystems v Key Radio Systems.
The Share There is no requirement that joint authorship involve a 50:50 sharing. It is possible for there to be a joint ownership in unequal shares.
In this case Mr Fisher’s pleaded claim was for a 50% share. However, in the absence of any positive case being advanced by the defendants against that result the judge decided the question essentially by way of a subjective assessment of the significance of the involvement of each party.
On this basis he came up with a 40:60 split as he felt that Mr Fisher’s contribution to the overall work was on any view substantial but not as substantial as that of Mr Brooker, who was therefore accorded the greater share.
It is worth noting that the organ solo that Mr Fisher was responsible for does not add up to 40% of the length of Whiter Shade of Pale. Valuing the percentage of someone’s contribution is always going to be difficult. Just as in copyright infringement cases it is never possible to know whether copying even a small part of a work might amount to copyright infringement if it forms a “substantial part” of the work qualitatively speaking, so there can never be a simple way to assess the share that the contributed part of a work should have over the whole.
So in one copyright infringement case the judge had to decide whether a 20 second recording of a piece of music known as ‘Colonel Bogey’ (where the whole song lasted four minutes) infringed copyright. In finding that it did, he said: “this reproduction is clearly a substantial part of ‘Colonel Bogey’, ……. Anyone hearing it would know that it was the march called ‘Colonel Bogey’, and though it may be that it was not very prolonged in its reproduction, it is clearly, in my view, a substantial, a vital, and an essential part which is there reproduced”.
Any guesses as to what share of the whole such a 20 second recording would have had if it had been produced by somebody else.
When finding out his bottle was a possible infringement of the Westmalle Belgian ringed bottle (trademark rights in which had been assigned to the New Belgium Company in Colorado) Mr Hindy, the owner of the Brooklyn Brewery was happy to withdraw the similar bottle design his designer had come up with for the Brooklyn Local 1 bottle. See here and here
Before and after (Photo: David W. Dunlap/The New York Times)
The bottle featured a double ring around the base of the neck and was amber in colour.
So, he had a ring free bottle mould created at a cost of over $60,000. Reportedly he was already involved in a trademark litigation matter and wanted to avoid further litigation.
What is interesting about this case is how much publicity it has attracted for Mr Hindy’s Brooklyn Brewery. I would guess that having the story run in places like the New York Times must be worth a lot more than the $60,000 it cost to redesign the bottles.
[Notes: The trademark for the Belgian ringed bottle was registered on 27 February 2007, registration number 3211981 by ABDIJ DER TRAPPISTEN WESTMALLE V.Z.W. CORPORATION BELGIUM Antwerpwesteenweg 496 B-2390 Westmalle BELGIUM : (LAST LISTED OWNER) W – N BELGIUM, LLC LTD LIAB CO NEVADA 500 LINDEN STREET FORT COLLINS COLORADO 80524]