Make sure you spell out your IP protection
Monday, February 24, 2014
Intellectual property, or IP, may not be your most pressing concern right now. But if you are not careful it could soon become so.
IP is crucial to every business for two main reasons. First, it creates the right to not be copied, to remain unique and differentiate yourself from the herd. Second, it enables businesses to create and protect revenue streams.
IP is the backbone of every business and yet when deadlines are tight and resources tighter it is easy to become lax and not take the time to develop good practice.
BAPC chairman Sidney Bobb believes that the average printer only fully realises how important IP is to their business when they run into trouble.
“Most print businesses are of a modest size and spend their time dealing with customers and day-to-day issues of sales, production and payments,” he explains. “We receive very few calls for advice regarding IP before there is an issue. However, when something happens printers are quickly on the phone.”
Sanjay Prittam, a partner at law firm RPC, has worked for printers, including the DMGT’s Harmsworth Quays Printing, for around 20 years. He acknowledges that IP is of secondary concern to most in the printing industry. “I think that IP is one of a range of things that printers think about,” he says. “But they are more concerned with things like quality and turnaround times – deadlines are very important.”
The case for developing proper governance around IP is not a hard one to make. As Adam Rendle, an associate at law firm Taylor Wessing, says: “If you spend time and money producing something that can be protected by IP, then you should be able to stop other people freeriding on your investment.”
Other people can mean rival printers or new entrants to the printing marketplace. However, keeping a close eye on the relationship your employees have with the work they produce is also key.
Employees claiming ownership rights is not an uncommon occurrence and can create stressful situations for all involved. “The basic position is that a company owns the IP created by its employees when they are acting in the course of their employment,” says Rendle.
“It is about being clear about what belongs to whom,” says Alexandra Brodie, a partner at law firm Wragge & Co. “The number one rule is, know what you want to happen, express it clearly, write it down, get somebody else to sign it.”
Nicola Langley, commercial solicitor at the BPIF confirms that the use of standard terms and conditions of trade is one of the best examples of good practice that she has seen implemented when it comes to IP.
Brodie lists asking an employee to register a website domain name as one of the most common ways in which employers open themselves up to disagreements with employees.
“It is common for an employee at a smaller company to buy the domain name with their own money and then expense it,” she says. “You will quite often find that it is the employee, say John Smith, who actually owns a website.”
“If an employer then sacks John Smith, he will use that domain name as a ransom demand because he is, at first glance, prima facie legal owner. The employer will have to challenge for ownership and will be able to get it back, but it will be an expensive and anxious process.”
Avoiding this nightmarish scenario is relatively simple by ensuring that a domain in registered to and paid for by the company directly.
The same logic can be applied to trademarks, which protect the visual identity of a company such a logo or branding. If you ask an employee to register a trademark, you need to make sure that it is in your name. As with any conflict over domain names, it is not lost forever, but again, regaining it can be a costly and worrisome process.
Contact databases are also covered by IP. “The issue of contacts is quite a nuanced area,” says RPC IP partner Paul Joseph. “Potential problems might arise when an employee leaves a business and then tries to contact former clients or has a copy of an old contact list. However, it is not always clear when it does happen that a wrong has been committed.
“There is a difference between walking out of your old office with a contacts list under your arm and between contacting three people that you used to go out for drinks with every week when they were your customer.”
Put simply, there is a dividing line between walking away with confidential data and leaving a role with skills, information and expertise that you have accumulated naturally.
The most sensible way to guard against any attempted removal of confidential information is to make sure that employment contracts contain confidentiality clauses. “A confidentiality clause means that an employee is not meant to take copies of documents out of the building when they leave the job,” explains Joseph.
One situation to be wary of is when hiring a contractor, as the terms are not the same as the standard employee/employer contract in IP matters. “Contractor’s rights need to be addressed in their contract,” Rendle says. “You need an assignment in the contract you have with them to state that the IP is retained by the company.”
As more and more printers see the business advantages of investing time and resources in social media profiles, it’s wise to ensure that the employee tasked with running any social media profiles is not the only person within the company with access to passwords.
“The best thing to do is to make sure the employer always has access to passwords,” Rendle states. “It can get very messy because it is dependent on something so flimsy as a password. You can put all the procedure and contracts in place but there is still that risk that an employee goes rogue. If the worse came to the worse you would have to go to court to get an injunction and make the employee disclose the passwords.”
Who, what, when
Guarding your everyday IP interests against other businesses comes in two key forms. The first is copyright, which protects content creation. Copyright exists automatically and doesn’t need to be registered. This might sound simple but requires good internal record keeping as if you ever need to prove that you own copyright, you also need to prove when it was created and by whom.
The other primary form of IP is a trademark. It is advisable to register trademarks with the government’s Intellectual Property Office as they will be better protected by law. Unregistered trademarks can be protected by common law and it is possible to sue for ‘passing off’, but it can be a costly process.
Aside from trademarks and IP, patent law protects inventions but patents are difficult and time-consuming to obtain as the rules around what is considered valid for a patent are complex.
Protecting your own IP is only half the story. No modern business can afford to operate without thinking about whether the resources it harnesses are its to use.
“I think the most common way of violating IP is thinking that everything on the internet is free to use,” Brodie surmises.
She highlights one such scenario. “Imagine you are short on staff numbers, and short on instant cash to be able to outsource copy creation, and somebody is working late at night under stress,” she says. “It can be tempting to pull together five or so pieces, splice these bits of texts together and justify it as being new. But that is copyright infringement.”
The same logic can be applied to music and images as well as text. Using background music found on YouTube or pulling images from the internet without permission would constitute copyright violation.
More deceptively, and so more of a danger for printers in terms of committing infringement unwittingly perhaps, is where images and computer software have been purchased legitimately but then used for a purpose outside of their licence.
“You can legitimately get something through the door but use it outside the scope of that licence. It is easy to do when you haven’t got proper governance processes in place,” details Rendle.
For example, a software package might be bought on the understanding that it can only be used a certain number of times or an image might be downloaded for non-commercial purposes.
IP infringement is a civil matter, as opposed to piracy and counterfeiting which are criminal. As such there are three possible outcomes of abusing IP. First up is an injunction to ensure that you never commit the violation again. Second is delivery or destruction of any infringing items, which can be a costly expense. Finally, you can be ordered to pay some of the rights owner’s legal costs and then either damages or an account of profits made from the violation.
The method courts use to determine damages is to assess what the rightful owner would have charged for usage and order the guilty party to pay the difference. There can also be an ‘uplift’ to recognise IP infringement. Uplift fees vary from a minor charge such as 10% or 20% of a usage fee up to 100% or over, although this is very rare and only applicable in cases of wanton disregard of the law.
The best strategy for staying on the right side of IP law, and enforcing your own IP, is to deal with issues before they have a chance to arise.
Ensuring that employment contracts contain confidentiality and ownership rights clauses, registering IP such as domain names and trademarks in your name and developing good record keeping to protect copyright are crucial practices to implement in order to protect your own IP. Meanwhile, remembering that just because content is online does not mean it is free to use and that licences have terms and conditions, is half the battle of respecting others’ copyright.
Good sources of legal advice come from both the BAPC, the BPIF or any other body which offers members free legal advice. An invaluable resource comes in the form of the Intellectual Property Office, the website which offers an IP health check for businesses and clarification on all types of IP and IP infringement.
When trying to become more IP aware, the best option, especially if your business is an SME, is for the chief executive or managing director to take ultimate responsibility for the company’s IP.
BAPC chairman Sidney Bobb recommends the chief executive take an overview of IP before utilising the skills of senior colleagues “to create greater awareness within the company and perhaps implement a formal company policy. Certainly, the greater the awareness, the better the protection.”
When it comes to IP, prevention really is the best cure.
In 2007, equipment manufacturer Durst claimed that EFI had used white ink technologies in such a way that infringed Durst’s utility model (a German IP term similar to a patent in English and Welsh law). In 2009, a German regional court dismissed the claim.
Durst appealed the ruling and the case went through multiple local, patent and appeals courts before Durst seemed to claim victory against its rival in spring 2013. Düsseldorf District Court found in favour of Durst and handed down a judgment stating that Durst was entitled to stop the sale of EFI’s Vutek model of printer, which used the technology, and to claim a royalty from the sale of the Vutek printers over the preceeding four years.
EFI apealed the court’s decision, filing a nullify action, and the latest development, in October 2013, saw it claim another victory against Durst when the Federal Patents Court of Germany ruled to invalidate “substantial parts” of Durst’s patent.
- Make sure your employment contracts are up to the job Ensuring that employment contracts contain a clause covering confidentiality agreements and a clause that outlines that you, the employer, own the IP created in the course of an employee’s work is crucial
- Register trademarks and domain names in your own name Do not rely on an employee to register these with their own money and in their own name, no matter how trustworthy they may be. Any conflict over these matters can be resolved but this can be expensive and troublesome
- Ensure contractors understand your policy in regards to your IP Be aware that when you take on a contractor, they are not bound by the same employee/employer position when it comes to IP and ensure they provide written confirmation that any IP resulting from their work is retained by your company
- Remember to protect your trademarks and copyright Register trademarks with the Intellectual Property Office and guard copyright by developing good internal records so you can prove the origins of significant pieces of content