Commercialisation of your IP
Once you have fortified your brand with various forms of IP protection, you may wish to commercialise it. Commercialisation can take many forms, the most common of which are selling outright through either share or asset purchase, licensing and franchising, together with many other different types of commercial agreement.
For instance, commercialising IP as part of a distribution agreement might entail the creation of a worldwide non-exclusive royalty-bearing licence granted by the manufacturer to the distributor to use the IP for the purpose of distribution of certain products branded with the IP. Since commercialisation, at least in Scotland and the UK, is governed heavily by the laws of contract and obligations, pacta sunt servanda and freedom of contract prevail, subject to various nuances of unfair contract terms legislation and competition laws. Suffice to say, as a business, you are free to negotiate virtually any term you like depending on your bargaining strength. In a recession such bargaining strength is more difficult to predict: some businesses can become more desperate than others depending on cash flow and other factors.
For further reading about commercialisation of IP, see the Lex Mundi Worldwide Commercialisation of IP Survey by jurisdiction. I helped to compile this when doing a summer placement at my former law firm.
Commercialising Intellectual Property in Scotland and the United Kingdom
The response by the United Kingdom covers the following:-
1. Joint IP in the forms of copyright, patents, designs and trade marks;
2. Knowhow and protection of know how;
3. Royalty payments and royalty structures;
4. Remittance of licence fees or, as Americans would say, license fees. Obiter, WardblawG thinks it’s only a matter of time before the US develops a separate noun spelling to distinguish the noun “licence” from the verb “to license”;
5. Government approvals and requirements regarding registration of IP;
6. Options for registration of intellectual property rights including trade marks, copyright and patents;
7. Registration of licences such as licences of copyright, licences of registered design rights, trade mark licences and patent licences;
8. Implied rights particularly in respect of copyright and patents;
9. Prohibited terms in commercial contracts, such as those under the Unfair Contract Terms Act 1977 (“UCTA”) and hardcore restrictions under EU competition laws;
10. Procedures for dispute resolution;
11. Analysis of jurisdiction of the courts of Scotland the UK and governing law. Notably, Scotland’s Court of Session has several specialist intellectual property law lords, which specialism should be ameliorated by the enforcement of the Lord Gill review;
12. Non-compete obligations which may fall foul of competition rules of the EC with consideration of post-termination restrictions.
A concise extract detailing registration of licences of IP is as follows:-
The licensing of copyright requires no particular formalities and, although it will usually be advisable to record what has been agreed in the form of a written agreement, a license granted orally or by implication can still be effective. The registration is free and it provides a presumption that the license exists is such a manner and with whom as the records portray.
However, in order to obtain the statutory rights of an exclusive licensee, an exclusive license must be recorded in writing (Copyright, Designs and Patents Act 1988 (“CDPA”), s92; otherwise, the licensee will have contractual rights without also being entitled to the statutory rights.
Whenever any person becomes entitled to an interest in a registered design they shall apply for registration of that interest (Registered Designs Act, s19(1)). While the license will not be invalid due to a lack of registration, any assignee of the owner’s rights in the design may not be bound by the licensee’s rights (RDA, s15(8)).
Another consequence of failure to register an interest in a design is that unless the court directs otherwise, the document relating to that interest cannot be admitted in court as evidence of title (RDA, s19(5)). The only exception to this rule relates to applications to rectify the register under section 20 of the RDA. As such it is strongly advisable that licenses of registered designs are registered. Given that the Designs Registry may require written proof of the license, a written license is recommended. Currently statute requires that only exclusive licenses are recorded in writing (RDA, s15C(1)).
Trade mark licenses must be in writing to be legally effective, but there is no compulsory provision to register such a license. However, there are associated drawbacks for not doing so: as with a transfer, registration provides a statutory right (in the absence of any agreement) to bring infringement proceedings in default of an action by the registered proprietor and registration enables the license to be enforced against third parties.
Whether or not exclusive, such licenses should be registered at the Intellectual Property Office as soon as possible after execution for the same reasons as given above for transfer. In all cases, registration is advisable as it enables a license to be enforced against third parties.
Last, but not by no means least, recently I read a rather interesting article on copyright trolling by IPKat Matthew Fisher with some pertinent commentary on the true definition of innovation.