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Knock-off merchants who copy well known brands are like perennial weeds, says anthony harrington. that's tough for clients but great for intellectual property lawyers read on....
HOT PROPERTY
Knock-off merchants who copy well known brands are like perennial weeds, says anthony harrington. that's tough for clients but great for intellectual property lawyers
Things just keep getting better and better for intellectual property (IP) lawyers and the long-term trend looks excellent. The more the world moves to a knowledge-based, brand-driven economy, the more work there is for the IP brigade. This is as true for the Midlands as it is for London and Scotland. As Kate Swaine, an associate in Wragge and Co's IP team, observes, IP is a national and even a pan-national phenomenon, rather than a regional one.
However, there are some common traits that tend to characterise Midlands IP cases. "With the industry we have here, many of our cases tend to be engineering-related, and we see design disputes there," says Swaine. "But we also see a good deal of brand-related actions and the usual counterfeiting for retail products. Basically any large company will tend to find itself having to defend its brands and products."
Knock-off merchants who look to make money by illegally copying well-known brands and proffering inferior, cut-price goods as alternatives to the real deal are like perennial weeds. The more the lawyers seek to strike them down in one place, the more they seem to pop up in another. This is tough for the clients but great for legal business.
Swaine says: "There is every sign that companies of all sizes are now more aware than ever before of the value and importance of IP and of the need for vigorous action to protect their IP."
With the huge sums that companies now invest in branding in order to gain a competitive differentiation over their rivals, a zero tolerance policy on brand and IP infringement makes more sense than ever.
There is a perception in the market that IP is expensive to enforce. In fact, as Swaine points out, the IP judges themselves frequently comment adversely on the cost of IP actions. "The Woolf Reforms aimed to make all court procedures cheaper and faster, and it often seems that IP is one of the more expensive rights to pursue, particularly within the Patents Court. However, there are things in patent law that require considerable extra work, such as the need to produce primers and technical explanations for the judges," she comments.
Rupert Bent, head of contentious IP at Eversheds, says his firm is dealing with a very wide array of IP-related disputes. "We are seeing a preponderance of copycat designs. Many Midlands companies produce products that are very highly designed, with what one might call strong eye appeal," he says. Some competitors seem to think that a good-looking product is worth copying. "We have a number of instances of companies who seem to have said to themselves: 'That's a great design - why don't we do something similar in our plant in Indonesia or China?'"
Designs, of course, do not have to be registered to be capable of being protected. However, an unregistered design is only protected in law for 10 years, whereas a registered design enjoys 25 years' protection. Moreover, with registration, the task of proving that a design does indeed belong to company A rather than to company B is considerably simplified.
However, Bent points out that for many companies the additional timeframe of registration is not particularly useful. "Very often, companies expect to have to move their design on very quickly anyway. The life of a particular design in any fashion-related sector is, after all, very short," he notes.
Mario Paiano, a partner in law firm Martineau Johnson's IP team, points out that what often happens is that one company will be aware that another has a patent in a particular area and will then try to design around it. Sometimes, however, it fails to leave a sufficiently wide margin between its new design and the old design and falls foul of an infringement action - even when there has been no out and out intention of infringing the patent.
"One of the more interesting facets of patent law is that the deal with the state is that you reveal all the technical details of your invention in exchange for the monopoly. So everyone who understands your field can see what you have done," Paiano points out. One famous instance of this occurred during the preparations for the Americas Cup yacht race. The Americans were very keen to see what the new design the Australians were working on was all about but never managed to discover anything prior to the race. "Had they taken the trouble to go to the Australian patents office they could have seen everything they wanted to see about the design of the boat," he points out.
One consequence of this is that large engineering companies around the world regularly make a point of keeping up to date on the patent applications of their competitors. "There are several benefits that follow from this," he notes. "First, you get some advance warning of what your competitors are planning to release. No company wants to get caught out by a sudden innovative move from a competitor. Second, you can utilise the technology disclosed provided you take a different route to achieve the goal, in order to avoid infringing the patent."
Colin Leech, senior associate in the technology and media team at Pinsents, reckons that his firm is seeing work across the board in all fields of IP. "It is impossible to say that one area predominates. Everything is active right now. We are seeing work in passing off, in design right infringement, in patent infringement and so on. There is now so much value tied up in IP that clients really see no option but to defend it," he says.
According to Leech, there is also much work to be done in simply helping clients to identify what they have by way of IP. "A good deal of my efforts at present is working with clients to help them to understand their full IP portfolio. And when they have a complete view, we work with them to find ways of maximising the value of that IP portfolio," he comments.
There is no value to a company in simply having IP sit in a filing cabinet. Business moves on, design moves on, and often IP can seem to be superseded by new developments. But in reality there is often a fresh market for inactive IP in the form of licensing revenues. By turning unused IP over to third parties under license it can be turned into a revenue source.
"Protecting IP through patents and so on is very expensive. So companies need to be vigilant in deciding which IP is worth protecting and which they can allow to lapse."
Leech points out that in the vast majority of instances, actions in the IP field never get into print or into the news. No company wants the adverse publicity associated with a negative judgement in a patent infringement action, for example. "I would say that in at least 95 per cent of the cases that I deal with, the action is settled without the need for the parties to go to trial," he comments.
As part of the settlement there is usually either a very bland press release, revealing almost nothing of the detail of the dispute. Or even more commonly, one party or another will insist on a confidentiality clause, which prevents any further publicity at all. "You quite commonly find that any infringement that does occur is accidental or unwitting. Under those circumstances a confidentiality clause in the settlement is inevitable," he comments.
In addition to the many actions currently underway across the Midlands in the field of IP, there are also developments afoot in the law itself. Paiano, for example, points out that there is now some realistic movement on the long-standing issue of software and patent rights. In general terms, software is not patentable but falls under copyright law. In today's world where whole designs are built into software before a single cog is cut, and where the entire system might reside wholly in software, this is not really an acceptable position for many companies.
"The basic position is that patents are for inventions and software is not deemed to be an invention. However, the European Commission has now approved a directive that envisages allowing direct software patentability. There are some sticking points among community members but things are now moving in the right direction," Paiano says.
On the subject of the Community-wide patent he points out that there is a "long-stop" position, as it were, in the form of the European patent. This is not quite the same thing as the one-filing-does-all intention behind the Community patent. Instead, with the European patent, which is already in existence and has been for some time, you have to specify in the filing which countries the patent is intended for. This is then treated as a local application in each of those countries.
"The problem with the Community patent is, basically, one of language. There are now 20 languages and the Commission has yet to resolve issues such as what happens if a patent infringement occurs because of a fault in translation," he notes.
With no single filing across the Community currently available, companies have little option but to be highly selective about which countries they choose to patent their IP with. "It would be impossibly expensive for any company to go for even a single, Europe-wide patent, never mind a worldwide patent," says Bent.
Swaine points out that companies have a number of options which can dramatically hold down the costs of IP protection when it comes to litigation. "For example, there is a fast-track procedure that allows you to opt for a speedy trial. This is very useful where the case is straightforward and does not need complex experiments or extra hurdles," she says. Both parties need to agree to the fast-track approach, but if company A approaches the court with a proposal along these lines, it can be very difficult for company B to resist this approach, and such resistance would certainly not find favour with the specialist IP judges.
The judges too are now prepared to hold hearings on preliminary matters. For example, it is often the case that the whole action stands or falls on a particular premise. In such cases it makes sense to ask the court to test this premise first. "In a copyright issue, for example, you will probably want to go straight to the issue of title," notes Swaine. "The judges are very receptive to applications that are about shortening the process and lessening the expense."
Another point is that IP litigation lawyers are required by the courts to give an estimate as to how long the trial may be expected to last. Once such an estimate is given, Swaine says, the legal team will be expected to stick with it.
Kate Legg, a spokesperson for the law firm Higgs & Sons, reckons that recent European developments are bound to increase the effectiveness of IP rights in future. "A European Court of Justice case last year, for example, expanded the type of mark that may be capable of being registered as a trade mark," she points out. The mark in question was a sound rather than a logo or a set of words. Anyone who has heard a particularly catchy theme tune to a TV soap will readily take the point that a sound can become uniquely associated with an event. Now the ECJ has decided that sounds can be registered.
"Also, in March this year, the European Parliament voted in favour of the IP Rights Enforcement Directive. This does not create any new IP rights in itself, but it seeks to harmonise enforcement measures across member states," says Legg.
The idea is to achieve a consistent level of protection across Europe. Many Midlands businesses who operate across the EU and beyond could be significant beneficiaries of this legislation in the near future, she concludes
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