May 2016: A decision in the IP Enterprise Court provides a warning to company directors of their potential liabilities in regard to intellectual property infringement. The court gave summary judgment for the claimant in a claim for trade mark infringement and passing off, finding the company director jointly liable with his company. The judge observed that the defendant’s status as the sole director and shareholder raised an evidential presumption that the corporate defendant’s acts were committed at his instigation and therefore the judge took the view that the director actively co-operated with his company to commit the acts of passing off and infringement and intended that his co-operation should bring about those acts.
November 2015: Two recent cases provide warnings to businesses on the sanctions that can be imposed for copyright infringement:
- In the first case, the High Court passed a 28-day custodial sentence suspended for 12 months on a nightclub owner for copyright infringement. The sentence followed an application by Phonographic Performance Limited (PPL) for committal of the defendant for breach of a court order prohibiting him from playing or authorising the playing in public of sound recordings within PPL’s repertoire
- In the second case, the Intellectual Property Enterprise Court ruled on damages involving the use of 21 photographs on the website of a home improvement services company without the photographer’s consent. The court awarded the owner of the copyright in the photographs damages of £300 and a further £6,000 for unfair profits or, alternatively, for the flagrancy of the infringement
April 2015: The Intellectual Property Office has launched a finance toolkit, advising businesses how to understand and present the value of their intellectual property (IP) to potential lenders. The toolkit has been developed to encourage and guide businesses to document their IP assets ahead of any application for finance, and to develop more effective IP management and commercialisation strategies.
This business briefing highlights the different types of intellectual property (IP) rights that a business needs to be aware of to ensure that it:
- Protects what the business creates
- Maximises the business’ competitive position
- Avoids infringing the IP rights of other people and businesses
What is intellectual property? IP is an umbrella term used to describe a range of legal rights that attach to certain types of information and ideas, and to their particular forms of expression.
Types of intellectual property rights: IP rights fall into two general categories:
- Registered rights. These rights are granted on application to an official body, such as the UK Intellectual Property Office. Registered rights are monopoly rights. This means that, once registered, the owner can stop others from using the right without permission. They include:
- trade marks, and
- registered designs
- Unregistered rights. These arise automatically, give protection against copying or using the right, and include:
- unregistered trade marks
- unregistered design rights, and
- confidential information
Patents: Patents provide inventors with a legally protectable monopoly over their inventions and protect new and inventive technical features of products and processes. They last for a limited period (20 years in most countries)
- To qualify for patent protection, an invention must
- be new
- involve an inventive step
- be capable of industrial application, and
- not be specifically excluded from protection (for example, methods of doing business)
- To obtain a patent, it is necessary to file an application for one, normally with the Patent Office of the country where the inventor works
- Patents can provide a high level of protection and are essential for some industries (for example, pharmaceuticals, where years of research and development are necessary to commercialise a new product)
- However, patents are expensive to obtain and maintain. They also involve public disclosure of technology, which could enable a competitor to develop a competing product without infringing the patent
Trade marks: A trade mark is a sign or symbol used by a trader to distinguish its products or services from those of other traders. For example:
- A brand name
- A company logo, or
A trade mark can also consist of the shapes of products or their packaging (for example, the Coca Cola bottle), and colours associated with a trading style (such as the Cadbury’s purple colour for chocolate), as well as sounds, smells and slogans. However, it is more difficult to register these marks. Trade mark owners can apply for a UK or a Community trade mark (CTM). There is also a system for international trade mark registration. A UK-registered trade mark is only enforceable in the UK, while a CTM is enforceable throughout the EU. Both registrations last for ten years, but are renewable for further ten-year periods.
- To be registrable, a trade mark must be:
- capable of being represented graphically
- capable of distinguishing goods or services, and
- not excluded by law
- Goodwill in an unregistered trade mark can be protected in an action for passing off. However, an action for passing off can be both difficult to prove and expensive. It requires:
- proof of a reputation in the mark
- a misrepresentation that could mislead the public, and
- proof of damage (for example, financial loss or damage to goodwill)
- Copyright protects original artistic, musical, dramatic and literary works (including computer programs), sound recordings, films, broadcasts and typographical arrangements of published works
- It arises automatically on the creation of the work and lasts for 70 years after the death of the author for artistic, musical, dramatic and literary works. Sound recordings and broadcasts are protected for 50 years from the date of publication. On 1 November 2013, the period of copyright protection for sound recordings increased to 70 years
- Copyright does not protect against independent development of the same idea(s), only against the actual copying of another’s work
- Ownership of copyright in a work will allow the owner to prevent unauthorised use of the work, such as:
- the making of copies, or
- issuing copies to the public
Design rights: Design rights protect the appearance of the whole or part of a product.
- A registered design provides a legal monopoly. As with registered trade marks, design owners can apply for a UK registered design or a Community Registered Design. A registered design must be:
- of individual character, and
- not excluded by law
- Protection lasts a maximum of 25 years, with registrations renewed every five years. Design registration is relatively low-cost and is particularly appropriate for industries where design is instrumental in selling the product (for example, fashion)
An unregistered design gives a right against copying. Protection is given at both the UK and EU level. The EU right is broader in scope but only lasts for three years. Under the UK right, protection lasts for the lesser of 15 years from first recording or ten years from first marketing.
It is possible to protect sensitive business information through rights in confidential information (which covers know-how and trade secrets). Although not strictly IP rights, they can protect sensitive information (both technical and commercial) and do not need to be registered. To be enforceable, the information must satisfy three tests:
- It must be confidential in nature
- It must have been imparted in circumstances in which an obligation of confidence arises
- Its unauthorised use would be to the detriment of the person imparting it
The content of this Business Briefing is for information only and does not constitute legal advice. It states the law as at May 2016. We recommend that specific professional advice is obtained on any particular matter. We do not accept responsibility for any loss arising as a result of the use of the information contained in this briefing.