How to keep out of court

Lord Esher: "better have his patent infringed .... than have a dispute about a patent."

Source Wikipedia

Jane Lambert

In Ungar v Sugg (1899) 9 RPC 117 Lord Esher MR said:

"A man had better have his patent infringed, or have anything happen to him in this world, short of losing all his family by influenza, than have a dispute about a patent. His patent is swallowed up, and he is ruined."

Clearly, there has to be a better way and indeed there is but you have to think and plan ahead.

The key to keeping out of court is to anticipate and defuse potential disputes before they arise. The best way to do that is to commission regular intellectual property audits from your lawyers or patent or trade mark attorneys.

An IP audit identifies the intellectual assets that you use in your business - that is to say, your brands, designs, technology and works of art and literature (which includes computer software and databases, catalogues and users' manuals as well as poetry and painting) - and finds out who owns them.

If you or your business own an asset the auditor considers whether it is protected by law. If it is not protected adequately a good auditor will present you with options. For instance, if your R and D staff have invented a new product you may wish to apply for a patent which means disclosing it to the world in return for a monopoly of the product's manufacture, marketing and use or keeping it secret and relying on the law of confidence to prevent unauthorized use or disclosure by those who know about it. If you want to allow others to use your intellectual assets the auditor will review your licences and other agreements and suggest ways in which they can be improved.

If it turns out that you do not own an intellectual asset that you use in your business the auditor will review the licence under which you use the asset to ensure that your use falls within it. If it does not he or she will help you comply with your licence, negotiate a new licence or propose yet another solution.

One of the points that your lawyers or attorneys should raise in any licensing deal is dispute resolution. Should a dispute arise between you and your licensor, licensee, customer or supplier do you really want to go to court with all the expense, delays and publicity that litigation involves or would you prefer to try negotiation followed by mediation and arbitration before neutrals of your own choice should negotiation fail. There are drawbacks to arbitration and mediation. It can sometimes take longer and be more expensive and there are limited rights of appeal. However, the process takes place in private; it is controlled by the parties; and there is a much better chance of preserving a business relationship when the dispute is resolved.

Whichever method of dispute resolution you choose it is likely to cost money. You should therefore give some thought to funding. If you run a small business you should consider before-the-event IP insurance. It is still more expensive than general legal indemnity insurance though premiums are coming down.  Before-the-event insurance is always considerably cheaper than after-the-event insurance and the costs are coming down.  To learn more about this type of cover my article "IP Insurance Five Years On" 23 Oct 2010 Inventors Club is as good a starting point as any.

If despite these precautions you find still find yourself having to face down a third party you must be careful to frame your opening letter to the other side or response in accordance with Annex A of the Practice Direction-Pre-Action Conduct. Paragraph 8 of that Practice Direction requires parties to consider alternative dispute resolution ("ADR"). Two forms of ADR that are provided by the Intellectual Property Office: mediation in either London or Newport and examiners' opinions on the validity and infringement of patents under s.74A and s.74B of the Patents Act 1977. From October 2014 the opinions service will cover other types of patent dispute as well as registered designs and design rights (see Jane Lambert "How the Intellectual Property Act 2014 will change British Unregistered Design Right Law" 11 June 2014 JD Supra and "How the Intellectual Property Act 2014 changes British Registered Design Law" 19 June 2014 JD Supra). In negotiating with the other side always be mindful of the groundless threats provisions in the Patents, Registered Designs and Copyright, Designs and Patents Acts (see Jane Lambert "If you think someone has infringed your patent talk to a lawyer first" 11 July 2014 Inventors' Club).

We can help you keep out of court as well as represent you in court or tribunal. We can carry out an IP audit, review your licences and other agreements. negotiate on your behalf. We can draft letters before claim and response in accordance with Annex A. We can appear for you at arbitration, mediation and other ADR proceedings. If you need an arbitrator or mediator Joe Dalby and I are on the World Intellectual Property Organization panel of neutrals. Thomas Dillon has specialist expertise in film and TV disputes and Louis Harms in international arbitrations.

If anybody wants to discuss this article or any instance where a threat has been made he or she should not hesitate to call me on 020 7404 5252 during normal office hours or complete my contact form. I am also on twitter, Facebook, Linkedin, G+ and Xing.