Publications
European IP Bulletin, Issue 13, June - Intellectual Property
Intellectual Property
The Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2004 (the “Regulations”) come into force on 25 June 2004. They extend The Privacy and Electronic Communications (EC Directive) Regulations 2003, which came into force on 11 December 2003, to allow corporate subscribers to register with a managed telephone register if they do not want to not to receive unsolicited telephone calls for direct marketing purposes. The register is known as the Corporate Telephone Preference Service (the “Corporate TPS”).
Under the Regulations it is unlawful for someone in business (including charities or other voluntary organisations) to make unsolicited marketing telephone calls to a telephone number allocated to a corporate subscriber if that corporate subscriber has either told that business or organisation that they do not want to receive such calls or has registered with the Corporate TPS that they do not wish to receive such calls from any business or organisation.
A corporate subscriber includes corporate bodies such as a limited company in the UK, a limited liability partnership in England, Wales and N. Ireland or any partnership in Scotland. It also includes schools, government departments and agencies, hospitals and other public bodies.
All those in business (including charities and voluntary organisations) who make direct marketing telephone calls to corporate subscribers must comply with the Regulations.
Companies must verify and purge any data used for cold calling purposes as frequently as is necessary to ensure that nobody protected by the Regulations, who has registered with the Corporate TPS register 28 days or more previously, is contacted.
The Corporate TPS is administered by the Direct Marketing Association, but the Information Commissioner is the public body responsible for enforcing the Regulations.
A business plan is rarely thought of as being valuable because of the protectable IP rights contained and embodied in it. While it is usually treated as confidential and disclosed through a non disclosure agreement, it is usually considered as the vehicle to get money and not intrinsically valuable in its own right. The basis of the value of the underlying ideas in a business plan is rarely analysed.
Recently in the English case of Ball v Druces and Attlee (a firm) [2004] EWHC 1402 (QB) what goes into a business plan had to be analysed to support an award of damages for professional negligence against the defendant who were Mr Ball’s former lawyers and who failed to protect his interests in the subject matter of the business plan.
Ball was co-founder of The Eden Project, an international award winning environmental tourist attraction near St. Austell, Cornwall England. He and his co-founder developed the concept of the Project in a long business plan which was used as the basis of getting funding. Ball and his co-founder. Smit, were the originators of the mane and logo for the Eden Project, which, at the time of breach of duty had limited value and could have been superseded.
The business plan contained text and spreadsheets from accountant’s architectural concepts from an award winning firm or architects, and a general structure from business structure advisors. The underpinning and concept originated from Mr Ball and his co-founder Mr Smit.
At an early stage of this now hugely successful Project, Mr. Ball retained Druces & Attlee to protect his position and to help establish an appropriate legal entity so that funding could be received In January 1996, Druces & Attlee established the Eden Trust, which was the eventual recipient of the funding, but did so without protecting Mr. Ball's legal position, so that in terms of rewards from the Project, Mr. Ball's position changed from possessor of legal rights to a supplicant to the trust. See Lakeview Computers Plc v Steadman (CA) (Unreported, November 26, 1999). Some 2 years earlier the High Court had specifically declared that the trade mark rights belonged to the Eden Trust and not Mr Ball personally (Jonathan Ball v The Eden Project Limited & The Eden Trust Chancery Division – 11/04/01 – Laddie J .)
Under English trust law, on the founding of the Trust all of Mr Ball’s rights in the business plan vested in the Trust, and his position became unprotected. He was at the mercy of the trustees who were legally bound not to reward past consideration.
Mr. Ball was later removed from the Project and subsequently started litigation against the Eden Trust on the grounds that he had not been properly compensated for his work since 1994. When that settled, as the rights had passed to the Trust, he sued Druces & Attlee for negligence and an issue became whether Mr Ball had significant intellectual property rights arising out of the business plan which represented protectable IPR.
The Defendant argued the limit of the protection was to a name and logo which Mr Ball had devised, but which, without the funding were of no real value. The trial judge had little difficulty in rejecting that narrow assertion. He held that the intellectual property rights in the business plan consisted not merely of the name and logo, but copyright in drawings for which Mr Ball would have obtained an exclusive licence to use for the purpose for which they were intended, and more particularly, the intangible property and material gathered over the 15 months in which they were engaged on the project. Their creative ideas and work embodied the business plan, the knowledge of the design team and others, and was intended to be confidential.
The outlines of the idea were released for public consumption to gain support but the details were not revealed. This very substantial amount of work and energy by the co-founders amounts to confidential material such as that described by Lord Greene M.R. in Saltman Engineering Company v Campbell Engineering Company [1948] 65 RPC 203. What makes material which may be available to every one confidential is the manner in which its use and assembly has been perceived and created by its maker. Such a person has “used his brain and thus produced a result which can only be produced by somebody who goes through that same process.” Saltman at 215.
Accordingly it was held that even though a great deal of the work was done by others, Mr Ball as the originator and co-ordinator of the business plan (with Mr Smit) was entitled to all rights in the whole, and those who contributed were held to have given an unwritten exclusive licence to Mr Ball (and Mr Smit) which entitled them to them benefit of the whole value of the Business Plan.
Mr Ball was awarded about £2.1 million against his former lawyers, before credits for monies already received.
There have been some recent amendments to Hungarian legislation that relate to trade marks and designs.
The legislative changes were necessitated by the automatic extension of the Community Trade Mark and Community Design Regulations to include Hungary following its accession to the EU on 1 May 2004. The fifth enlargement of the European Community is significant for the EU intellectual property rights system because of the widened geographical scope of community rights in intellectual property.
The main modifications in the Hungarian Trade Mark and Geographical Indication law are:
- substantive examination of trade mark applications by the Hungarian Patent Office has been narrowed to absolute grounds for refusal only;
- an opposition system has been introduced into Hungarian trade mark law to allow holders of prior right to oppose new applications;
- exhaustion of rights has become EU-wide;
- applicants are allowed to file a request for termination of trade mark protection owing to non-existence of the previous owner ; and
- new chapters incorporating provisions for the extension of community trade mark regulation, and regarding the grant and protection of geographical indications and designations have been added.
For design law, the following amendments have taken place:
- the concept of “Availability of Design” has been defined;
- limitations on design protection have been defined in context of where a repair is required to be carried out on a design protected-product, or where a person has a prior right in a design;
- the scope of infringement remedies has been broadened to include the cooperation by custom authorities in preventing goods from reaching the market where they are in violation of design rights; and
- provision for invalidation of a design granted to a person not entitled to file an international application.
These amendments undertaken by Hungary in its domestic law ensure a more harmonised and uniform approach in the field of intellectual property rights across the EU.
On 12 May, Mr Peter Prescott QC delivered his judgment in R Griggs Group Ltd & Ors v Evans & Ors [2004] EWHC 1088 (Ch).
In December 2003 the High Court held (reported at [2003] EWHC 2914 (Ch)) that the claimants, who manufactured “Dr. Martens” footwear, were the beneficial owners of the copyright in an advertising logo designed by the first defendant, Mr Evans. The claimants had commissioned Evans to design the logo but had omitted to execute a formal copyright assignment. Evans subsequently purported to assign the copyright to the second defendants, Raben Footwear, a competitor of the claimants. Peter Prescott QC (sitting as a deputy judge) held that there was an implied term in the contract that Evans would assign the copyright to the claimants, and that they were therefore the owner of the copyright in equity. He also held that because Raben Footwear had notice of the facts giving rise to the claimant’s prior equitable interest that they should be ordered to assign the copyright to the claimants.
Prior to drawing up his order, counsel for the defendants questioned whether the deputy judge had the power to make orders affecting the ownership of foreign intellectual property. The defendants admitted that the court could compel the assignment of British copyright, but denied that it could do so with respect to non-British copyrights. If the court upheld this argument, it would mean that the claimants would have to take individual actions in every Berne Member country in order to perfect its title. Peter Prescott QC, aware of the significance of the challenge raised, undertook a lengthy analysis of the complex legal issues involved.
The deputy judge first considered his jurisdiction to make orders that affect foreign property per se. As regards foreign lands, the House of Lords in British South Africa Company v Companhia de Moçambique [1893] AC 602 had held that the English Courts generally have no jurisdiction to try a question relating to the ownership of foreign land. Counsel for the defendants argued that the principle applied, by analogy, to the present case. Peter Prescott QC distinguished that case on the basis that it concerned rights in rem, whereas the claimant’s equitable claim arose from a right in personam against the second defendant, i.e. that it would be unconscionable for Raben Footwear to assert title under an assignment when it had notice of the claimant’s prior equitable interest.
Next, the deputy judge considered two early cases - Norris v Chambers (1861) 29 Beav 246 and Deschamps v Miller [1908] 1 Ch 856 - which on their face seemed to support the defendant’s contention. They held that English courts do not give effect to equitable interests in foreign land that are raised against a third party who has purchased land with notice of prior equitable interests. Peter Prescott QC respectfully opined that private international law has evolved since these decisions, and that it was now open for an English court to assert its equitable jurisdiction against purchasers with notice of prior equitable interests.
Next, the application of these principles to intellectual property was addressed. The judge emphasised that intellectual property was of a different character to land, and that it was therefore open to the court to adopt a novel approach. The defendants raised Tyburn Productions Limited v Conan Doyle [1991] Ch 75 in their favour. It involved an application for a declaration that an original film featuring the “Sherlock Holmes” and “Dr Watson” characters did not infringe any intellectual property rights in the United States of the defendant, the one time owner of the by then expired Conan Doyle copyrights. The court refused to make a declaration on the basis that it was precluded from entertaining questions relating to the title of foreign intellectual property rights. The judge distinguished that case on the basis that the present case concerned not the existence of foreign intellectual property rights, but the court’s equitable in personam jurisdiction against a purchaser with notice of equities.
In finding for the claimants, Peter Prescott QC held that it would not be a breach of international comity to order Raben Footwear to assign the foreign copyrights in the logo to the claimants. As a general principle, the in personam equitable jurisdiction of English courts entitles them to make such an order. Only where it could be shown that the laws of a foreign country extinguish that equity (which was not shown in this case) would the court decline to exercise this jurisdiction.
Where there is a cross-border European dimension to an intellectual property dispute, the Brussels and Lugano Conventions will normally guide litigants as to the appropriate forum. For instance, Article 16(4) thereof provides that in proceedings concerning the registration or validity of patents, trade marks, designs or other similar rights requiring registration, that the country of registration shall have exclusive jurisdiction. The conventions also contain rules for the appropriate forum in infringement proceedings (see also Pearce v Ove Arup Partnership Limited [1999] FSR 525). It would seem, however, that common law rules apply to jurisdictional issues that arise in ownership disputes.
In essence, this case holds that the equitable in personam jurisdiction of English courts entitle them to compel the transfer of foreign copyrights, which are purchased with notice of a prior equitable interest, to the equitable owner. By so holding, Peter Prescott QC, departed from earlier case law, relating to foreign land. It remains to be seen whether this decision will apply to a situation where a foreign registered intellectual property (e.g. patents or trade marks) is acquired by a purchaser with notice of equities. If evidence is adduced that foreign authorities grant priority to registered transfers, even where a purchaser is on notice of earlier interests, it may decline to exercise its in personam jurisdiction.
Click here to return to the Summary page, or on any of the headings below to see the full case notes for that topic:
