- The European Commission launches a public consultation (16/09/05) on whether and how to create a European Institute of Technology (EIT) that could strengthen research, education and market innovation in Europe.
Ján Figel', European Commissioner in charge of Education, Training, Culture & Multilingualism said that "a European Institute of Technology could play an innovative role in supporting knowledge transfer, attracting the best researchers and companies from around the world to work in partnership".
President Barroso welcomed this important public consultation: "Together we need to strengthen Europe's potential in research and technology, by stimulating research careers, by encouraging European researchers to stay in Europe and by attracting the best brains from around the world to Europe".
The public consultation will focus on 'first order' issues: the EIT's key missions, objectives, added-value and possible structure. An online questionnaire, available on the 'Europa' website, asks for views on how the EIT could best organise its activities in order to support innovation and the transfer of knowledge throughout the EU.
Once the public consultation is concluded, the Commission will consider whether it wishes to take the matter further, and may then prepare a paper for the Spring European Council in March 2006. If the idea of the establishment of an EIT were to be approved by the European Council, the Commission would make a formal legislative proposal to the Council and the European Parliament.
Further information:
http://europa.eu.int/rapid/pressReleasesAction.do?reference=IP/05/1150&format=HTML&aged=0&language=EN&guiLanguage=en
- Patent Office states (31/08/05) through their "What is Key?" campaign that growing businesses need to know their copyright.
The organisation is running the "What is the Key?" campaign for growing businesses with the Chartered Institute of Patent Agents and Institute of Trade Mark Attorneys to help entrepreneurs manage their intellectual property assets.
For any material drafted or created in the business, copyright protects the way the idea is expressed though not the idea itself. For example, in a company business plan, it is the arrangement of the words and images within that document that are protected by copyright.
Businesses should also be aware that it is usually the creator of the original work who owns the copyright unless this work was produced under a normal contract of employment. Ownership of copyright needs to be clarified when working with any sub-contractors.
If an entrepreneur creates a work and then sells it on, he or she will still retain moral rights and can object to it being used in a detrimental way.
See at: http://www.patent.gov.uk/media/pressrelease/2005/3108.htm
- Artpower Ltd v Bespoke Couture Ltd & Ozwald Boateng (28/07/05). The licence agreement between the parties engaged in the sale of designer menswear included a clause that was effectively a restraint of trade.
- Alan sales v Jonathan Stromber & Geraldine Knight, CIR International Ltd (26/07/05). A design based on a simple geometric shape was a protectable design under the Copyright. Designs and Patents Act 1988 and royalties were payable under the licence agreement.
This action concerned two designs: a double spiral arrangement called "Infinity" and a triple spiral called "Trinity", for a "personal harmoniser", a sealed copper tube pendant containing "imploded" water said to be beneficial to the wearer. Mr Sales had sent rough sketches of these designs to Mr Stromberg. However, they failed to agree an appropriate level of royalties and Mr Stromberg proceeded to develop and market similar designs.
The Defendants argued that, before considering the originality of the designs, Mr Sales first had to establish that the sketches and accompanying notes were design documents in which design right could subsist. However, the Court considered that this was not the correct approach. The question was whether the design was commonplace in the design field in question, and the fact that it was a simple geometric shape did not, in itself, exclude it from protection. Although the Court had more sympathy for the Defendants' contention that the imprecision of the crude drawings made it impossible for any article to be manufactured to the designs, Mr Stromberg had in fact been able to make prototypes to the designs.
The Court found on the facts that: Mr Sales had not been commissioned to produce the designs; the Defendants did not have an implied licence to use the designs; and, there were sufficient differences between the designs and any prototype(s) previously provided to Mr Sales for the designs to be considered to be original.
The Court held that the Defendants had failed to establish that the designs were commonplace in the design field of complementary medical devices, including ornamental or decorative devices. Although spirals were common in rock and similar art, the Defendants' expert had failed to appreciate the distinction between what is ordinarily termed a design (which includes surface decoration) and the definition of a design under the CDPA (a design for an article).
The Defendants' triple spiral design did not infringe the Trinity design, despite a clear causal connection between the two, as it was made from one piece of copper tubing rather than two, which necessarily made the design sufficiently different. Similarly, there was no breach of confidence as the Trinity design had not been sufficiently developed to put it into practice (the two pieces of tubing broke apart easily) as was required, and the general idea of a triple spiral was not capable of being protected.
The Court swiftly rejected the Defendants counterclaim for infringement and passing off, since Mr Sales was selling products made by the Defendants and was therefore truthfully representing that the goods he was selling were the Defendants.
See at: http://www.twobirds.com/english/publications/casereports/Reported_TM_Design_Copyright_Cases_September_2005.cfm
- London General Holdings & Ors v USP Plc & Anor [2005] EWCA Civ 931 (22/07/05). An infringing copy could be used in several ways each giving rose to a claim for damages. In this case the breach consisted of the unauthorised use of the text.
The relevant copyright was originally in the template CAA, drafted by Messrs Cooper Chan. It was first vested in Unicorn and assigned to USP in 1999. The CAA was integral to the establishment of the trust which was an essential characteristic of the scheme. It was envisaged, moreover, that the CAA would provide a template for future schemes.
The appeal was brought with permission granted by Jacob LJ on 15 December 2004 against a decision of Master Price given in the Chancery Division on 20 June 2004. The proceedings before the Master consisted in an inquiry into damages in a copyright action. Master Price, having conducted the inquiry, made an award in USP's favour of £126,720 plus interest. The master found that the general risk which was foreseeable was that infringement of copyright would lead to losses to the claimants by undermining their special competitive position. In effect, the claimants' actions were steps taken acting reasonably in mitigation of their losses in reducing their price in response to the tortious actions of the defendant during the Powerhouse transaction.
Mr Stuart Turner was the Warranty and Insurance Manager of Powerhouse. In September and October 1999 he was reviewing Powerhouse's extended warranty scheme. He attended meetings with Mr Mian of LGH in September 1999, and Mr Borrill of the respondents in December 1999. So it was that at this period Powerhouse through their principal protagonist Mr Turner were negotiating both with AON and the respondents. At AON's request Powerhouse on 7 February 2000 entered into a wide-ranging confidentiality agreement by which they (and therefore Mr Turner) were prohibited from using any information supplied by AON other than for the purpose of taking forward the scheme being elaborated for Powerhouse by AON. After this, and following a request which had been made by Mr Mian of AON on 2 February 2000, Powerhouse sent AON information about the size of their warranty business. There was then another meeting between Mr Turner and the respondents, who by Mr Borrill on 10 February 2000 sent a proposal to Powerhouse. It included a provision for a one-off implementation fee of £40,000. The proposed scheme's costing structure also included operating profit figures which were, however, swiftly reduced after further discussion.
The figure of £15,000, which the Master arrived at in carefully reasoned steps, was not in fact itself the subject of challenge by AON. AON's complaint is that the Master was wrong to award, as he did, the additional and much greater sum of £111,720 by way of damages for infringement in relation to the Powerhouse transaction.
The question the Master had to decide, as he put it in paragraph 27 of his judgment, was whether USP (as owner of the copyright in the CAA) had a good claim against AON for damages for infringement arriving out of the respondents' conceding reductions in their price on 1 March and on 24 March 2000.
Laws LJ held that there can be no question of the copyright-protected text of the template being causative of any loss. He found that in its original form the template CAA was not satisfactory. It would have needed some alteration and development to be brought into practical effect for the purpose of implementing any trust-based scheme. So much was common ground. Laws LJ then said that it was a short step to the conclusion that in truth the parties are at one in accepting that use of the relevant protected text cannot be said to have been the genesis of the damage claimed.
Court of Appeal allowed the appeal on the ground that the claimed loss is not attributable to any breach of copyright: not because it was unforeseeable or otherwise too remote for the reasons urged by Appellant, but because in it lies beyond the scope of protection which the law of copyright affords.
Jacob LJ added:
"Copyright in a literary work is infringed if the work is copied exactly or substantial (see s.16(1)(a) and (3) of the Copyright Designs and Patents Act 1988). It is the text of the work which is protected from copying. The head of damage claimed here in no way turns on the fact that the exact text was copied. It is not attributable at all to the precise nature of the text used by the defendants. So it did not flow from the fact that the exact text was taken - it was not caused by the infringement."
- Clearsprings Management Limited v BusinessLinx Ltd and Mark Hargreaves (14/07/05). Whether a term relating to ownership and licensing was to be implied into a contract depended entirely on the circumstances of the individual case.
Software house BusinessLinx Limited and its managing director, Mr Hargreaves (BL), successfully defended a High Court claim by their customer, Clearsprings Management Limited (CM), to be entitled to the copyright in a computer system which CM had commissioned BL to write.
In July 2000, CM engaged BL to produce a new, web-based system to enable CM's staff to access remotely via the internet various databases in order to allocate accommodation and generate reports for the Home Office. The new system was intended to replace CM's existing system which was not web-based.
The court found that the contractual terms under which CM had engaged BL were contained in the written price estimate which CM had accepted. This set out the modules of software for a fixed cost and further work was to be invoiced by BL on a time and materials basis. There was no express agreement between the parties relating to copyright ownership.
The parties both accepted that BL, as author of the software, was the first owner of the copyright. However, CM argued that a term should be implied into the agreement between the parties whereby BL would either assign the copyright to CM, or that CM would have an exclusive licence to exploit the copyright in the software, including by selling or sub-licensing the copyright to third parties.
BL disagreed. They argued that there was no implied term regarding assignment of the copyright. Nor was it implied in the agreement that CM would obtain an exclusive licence. The only implied term was that CM should have a limited licence to use the copyright in the software for their own, internal business uses, without the right to sub-license. BL accepted however, that their ownership of the copyright was not unrestricted because the software incorporated information about CM's specific business practices, which BL was not entitled to disclose. BL could not therefore sell or license the software as a whole to third parties. However, BL should be able to exploit for future projects the generic code which they had developed for CM's software.
The judge reviewed the authorities on implied terms in contracts concerning the commissioning of copyright works and stated that the implied term must:
- be reasonable and equitable;
- be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;
- be so obvious that "it goes without saying";
- be capable of clear expression; and
- not contradict any express term of the contract.
Furthermore, if the court must decide which of various alternative terms should be implied, the choice must be that which does not exceed what is necessary in the circumstances.
The necessity (for business efficacy purposes) for an assignment of copyright would only be likely to arise in circumstances where the commissioner of the work requires the right to exclude the contractor from using the work and the ability to enforce the copyright against third parties. The court would have to consider the facts of each case individually. Where it was necessary only to imply a licence, rather than an assignment, the terms of the licence should be no wider than what is required to secure for the client the rights which the parties intended that the client should have. The licence should therefore be limited to what was in the contemplation of the parties at the time they entered into the contract and should not extend wider so that the client is able to take advantage of a new and unexpected profitable opportunity.
The judge heard evidence from each side's witnesses concerning the meetings and negotiations which took place between the parties with a view to agreeing on the ownership of the copyright. He found that the witnesses for BL had been truthful and fair, whereas one of the CM witnesses had not been convincing or reliable. Where there were inconsistencies in the evidence, the judge preferred the BL witnesses' accounts of events.
On the issue of an implied exclusive licence, the judge found, on the evidence, that CM had agreed that, in order to write the CM software, BL would develop some of its pre-existing proprietary software. The judge did not accept CM's evidence that they had specifically instructed BL to produce entirely bespoke software because this would have taken longer for a much higher price.
The judge found that, unless there is a specific instruction, it is to be expected that software developers will import pre-existing code into the software being written for the client, as well as export it for other projects.
The judge ruled that it was not necessary to imply into the agreement between the parties a term that would give CM exclusivity in relation to the software copyright. The only terms necessary for business efficacy were the grant of a licence to CM to use the software for their business and a restriction on BL to prevent them using information about CM's operating procedures for any purpose other than producing the software for CM. Following this logic, if an exclusive licence were not necessary for business efficacy, it necessarily followed that an assignment of copyright was also not necessary.
On the issue of a licence with the right to grant sub-licences, CM had adduced email evidence to demonstrate that BL knew that CM wanted to acquire ownership of the copyright in order to sell or license it to third parties. However, the judge found that "the evidence comes miles short of establishing that the parties knew CM would be selling and licensing the software to others". Work had already begun on the development of the software under the terms of BL's written estimate which made no mention of copyright. It could not therefore have been in the joint contemplation of the parties that CM should be able to sell or license the software to third parties. Even if CM had communicated to BL their desire to obtain ownership of the copyright at an early enough point in the negotiations between the parties that it would have been possible for this to form the basis for implying a term into the agreement, the judge did not believe that it would be a necessary implication that CM should acquire, without further payment, the copyright or the right to sub-license. There was no evidence that CM had, at that time, had a clear plan to exploit the software by sale or licensing and so this could not have been a purpose of the agreement between the parties. This was a future, but indistinct, business opportunity requiring further negotiation between the CM and BL.
The implied term which the judge found was that CM should have a non-exclusive, personal licence to the copyright in the software, without any right to sub-license. This licence was perpetual, irrevocable and royalty-free and would permit CM to repair, maintain and upgrade the software in accordance with its business of providing accommodation for asylum seekers.
This case will serves as a reminder that commissioners of copyright work should agree appropriate copyright terms with the software developer to ensure that the commissioner obtains all the rights they require. Simply paying for the creation of software does not, of itself, imply into the agreement any wider benefit to the commissioner than that which is strictly necessary to give business efficacy to the agreement. This is particularly so, as it is common practice in the industry that, in the absence of a contrary term in the agreement, software developers can use pre-existing code when developing new software for their client and also, in turn use codes from the resulting the new software in future projects for other clients.
- 7. JR French Ltd v Redbus LMDS Ltd (14/07/2005). On its true construction the licence agreement could only be terminated without cause by giving six months notice. Furthermore, the licence should be amended to reflect what the parties had agreed with respect to sub-licensing.
The claimant was the inventor of two machines which detonated land mines without destroying the tanks which passed over them. The inventor then set up what was to become the defendant company with another individual.
The company then granted an exclusive licence for the exploitation of the intellectual property rights. The party which acquired these rights called RGSA, then agreed to invest £400,000 in the company in exchange for a 40% share. The original inventor then set up another company with the proceeds and transferred the rights from his original company to the newly formed company with the consent of RGSA.
Due to various circumstances, RGSA then became the owner of a 70% share in the company and was also owed a vast amount of money by the original owner.
On the 9th April 2004 a sub-licence was granted by RGSA to LMDS Ltd for the exploitation of the intellectual property rights of the mine detonating machines.
The inventor objected to this and subsequently removed the prototypes from the premises and insisted on the licence being terminated between themselves and RGSA and also RGSA and LMDS Ltd.
The Court ruled that in order to terminate the licence between the inventor and RGSA, a six months notice period must be served. It was also held that the sub-licence was to be permitted as it was agreed between the parties that sub-licences would be allowed and an order to alter the original agreement to reflect this was made.
This decision outlines how important it is to ensure the correct drafting of an agreement to prevent any future occurrences which are detrimental to the particular party. Had the inventor had a prohibition on sub-licensing included in the original agreement then this problem would never have occurred.
See: http://www.lawdit.co.uk/reading_room/room/view_article.asp?name=../articles/Patent%20Licensing.htm