Be smart about IP

Written by: Chris Menon Posted: 27/09/2017

IP illoIf you’re convinced you’ve just invented the next big thing, you’d best make sure you protect your intellectual property

The increasing pace of technological advances means intellectual property (IP) – the ownership of creative output rather than physical objects – is a key battleground for competitors across many different industries. And protecting it requires planning, because in the event of infringement, litigation can take years and be very costly.

Apple and Samsung have been slugging it out for six years over alleged infringements of patents and trademarks (see panel overleaf). Meanwhile, in an unrelated lawsuit that began in 2014, accusing Facebook and Oculus of copyright infringement, ZeniMax Media recently won a US$500 million legal judgment against Oculus, though the latter has asked for a new trial.

Disputes over intellectual property aren’t a recent phenomenon – the concept of protecting novel designs goes back to the ancient Greeks. While in Ireland in the sixth century, Saint Columba copied a psalter he’d borrowed from Saint Finian, sparking an argument over copyright that precipitated the Battle of Cúl Dreimhne (Battle of the Book) in which 3,000 folk died.

IP, at its broadest, encompasses inventions, designs, artistic works, logos, names, computer programs and databases. As Sandra Duerden, a Senior Associate and intellectual property law specialist at law firm Mourant Ozannes, explains: “More or less any idea that can be represented physically is potentially capable of some form of protection.”  

All around us

Thus, we’re surrounded by IP, from the toothpaste we use to brush our teeth and the bottled water we drink, to the websites we visit and the branded clothes we wear.

Some obscure and unexpected things can also fall under IP protection. Matthew Hives, a Director at One Stop IP, points out that the song ‘Happy Birthday to You’ is protected by an artist copyright – and in the US, ‘Santa Claus’ and ‘Merry Christmas’ are both covered by trademarks.

However, as Duerden stresses: “An idea itself can’t be protected. Instead, a combination of the different forms of IP rights may be used to protect different aspects of your idea or concept. What IP law protects is the identifiable expression of your idea.”

There are a range of IP rights, as Elaine Grey, a Partner at Carey Olsen, explains: “Most people have heard of trademarks, which protect your brand and act as a badge of origin – much like the cattle brand, which is where the word comes from; copyright, which regulates who can copy artistic and literary works; and patents, which protect inventions. There are also design rights, plant breeder rights and indicators of geographical origin. 

“And new IP rights are still being created, as Guernsey did with the world’s first registered image right, which is aimed at stopping unfair exploitation of a person’s image, characteristics or likeness.”

Some IP rights arise automatically – such as copyright – as soon as a distinctive idea finds creative expression. Other rights must be registered in order to provide protection. According to Duerden, “These include registered designs – which provide protection for 2D and 3D designs – trademarks and patents.”

Too little too late

Generally, larger companies are more adept at protecting their IP, whereas smaller firms tend to view it as a cost without any reward, only realising its importance when there’s a problem. 

“It’s very often too late by then, and you can quickly find that your invention is no longer eligible for patent protection, someone else has registered your brand name as a trademark or domain name, or you’ve inadvertently been infringing someone else’s IP,” explains Duerden. “In these cases, the costs in lost sales and putting things right can dwarf the cost of doing proper due diligence and protecting your IP from the outset.

“Of course, the other side of IP protection is that IP rights are assets that can be used to generate income. By proper management and, where necessary, registration of its IP rights, a business can sell or license them to others.”

Seeing Machines, for instance, has successfully licensed its eye-tracking technology to global behemoths Caterpillar and General Motors. It relies on trade secret and patent protection for its technology innovations. 

As its Chief Technology Officer, Timothy Edwards, explains: “We decide on a case-by-case basis which innovations to place into the patent system and which to hold confidentially. In terms of competition, we would assert our patent rights when appropriate to mitigate against unlicensed or undesired use by third parties. 

“We’re extremely careful about sharing unpatented confidential information,” adds Edwards, “and do so only under strict non-disclosure agreement [NDA] conditions, whereas we’re unlikely to ever disclose trade secret innovation, even under NDA.”

Choose your battles wisely

There’s often a very thin line between innovative independent development and IP infringement, which is why court cases encompass everything from smartphones to songs. Yet, as Matthew Hives points out: “Over 90 per cent of IP disputes are resolved long before they go to litigation, and the advice is always try and resolve the dispute without resorting to the law.”

In the event of litigation, Elaine Grey advises: “The relevant legislation lays down your remedies, which can range from damages, delivery of infringing items, or an account of the profits made because of the infringement.” 

Exactly which it will be depends on the circumstances of each case. Moreover, legal advice is essential because if you don’t have a right and threaten someone else wrongfully, that in itself could give rise to a claim against you.

The generally complicated nature of IP law is another reason to employ expert counsel. For example, according to Duerden, if you’ve invented something but failed to patent it and someone who knows it’s your invention applies for a patent, there are avenues by which you can oppose the grant of a patent. 

In contrast, she warns: “If you’ve invented something and someone else, entirely independently of your invention, has the same idea and applies for a patent first, there’s not a lot you can do. Guernsey law permits you to continue using the invention in the way in which you were using it before but, short of selling the business, you can’t license or sell the rights to that invention to anyone else. In any event, it’s vital to document everything, so you can prove what you invented and when.”

So how possible is it to protect the IP of very similar companies, such as ride-sharing apps Uber and Lyft? Duerden explains: “Each company owns its software and can protect that. They also each own the trademark in their respective brand, and there’s no similarity between those brands. If Uber started advertising under any of Lyft’s trademarks, Lyft could bring a claim to try to stop that.

"However, the idea of using a mobile phone app to order taxis is not, at least in the UK and Guernsey, capable of protection.”

Given the ever-increasing importance of innovation to many successful businesses, and the increasingly litigious society in which we live, it makes sense for every company to examine how best to protect and exploit its IP.

APPLE VS SAMSUNG

The long-running IP war between Apple and Samsung is perhaps the best modern example of how litigious and costly a dispute over intellectual property can be – it’s estimated to have cost each side many tens of millions in lawyers’ fees alone. 

It began with Apple taking Samsung to court in 2011, alleging that it had infringed designs from its iPhone and iPad devices. Samsung counter-sued and, at its peak, these lawsuits were taking place in over 50 countries. The litigation has been settled or resolved by the courts in most of these locations; the battle is now primarily confined to the US. 

Samsung partly succeeded in the UK, and Apple was ordered to publish a notice on its website stating that Samsung’s design for its Galaxy Tab device did not copy the iPad. The dispute in the US concerned utility patents and design patents (the latter being broadly analogous to design right), and Apple was initially the successful party. 

Sandra Duerden, Senior Associate at Mourant Ozannes, explains: “The initial US judgment against Samsung [in 2012] was for US$1.05bn, but they’ve spent the past five years chipping away at various elements in successive appeals. Even if Samsung overturns the entire judgment, its legal costs are likely to be in the tens of millions, on top of countless hours of employee time, significant disruption to their business, and negative publicity.”

Apple doesn’t appear to have gained much from the costly litigation either – it hasn’t managed to get Samsung’s key products banned in major markets, nor has it collected a penny of damages from the high-profile first US trial. 

As to whether it would have been better for them to have reached an agreement in 2011, Duerden says: “You might ask this about any litigation. But both parties were convinced they were in the right, and neither was prepared to make concessions which might have had huge commercial ramifications.

"Ultimately, the IP rights in question are enormously valuable, and each party has demonstrated to the other, and to the market at large, that they are prepared to devote substantial resources to defending those rights.”


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