Britain and Ireland

Edinburgh International Conference well set for success

Patent Office Web site at your service

Bookings for the LES International annual conference in Edinburgh from 31 May to 3 June are well ahead of early expectations and are still coming in fast, says Fiona Nicolson, chairman of the conference organising committee.

The conference has been promised excellent support from commercial and other ventures. The UK Patent Office, one of several exhibitors, will be staging an Internet café to help participants and partners surf the web and discover the wealth of intellectual property now available.
For additional forms, more information about the conference, or assistance, contact Margaret Sherry at In Conference Ltd., 10B Broughton Street Lane, Edinburgh EH1 3LY, tel 0131 556 9245, fax 0131 556 9638.

From the President ...

In early June this year at the AGM in Edinburgh I shall be vacating the Presidential chair with gratitude that so many busy people have been prepared to spend time and effort in helping others experience the benefits of membership of our Society.
On my election in Cambridge last year I really wondered how I would manage the full programme of activities promised for the year, and in particular preparations for the International Conference. But my concerns were soon dispelled. Vice President Fiona Nicolson has done a fantastic job shouldering the Conference responsibilities. Renate Siebrasse has been extremely supportive, and the chairmen, vice-chairmen and members of a whole range of standing committees, special interest groups and regional bodies have been working very hard for the Society.
There has been a series of highly successful meetings during my term, covering a wide range of topics from the proposed Community Patent for Europe to pharmaceutical delivery systems. We also had a very enjoyable Burns’ Supper. As I write, two senior members of Council, Donal O’Connor and Michael Conner, are preparing a special one day course and workshop on advanced licensing issues scheduled for Friday, 22 May.
I will of course have an opportunity at the AGM in Edinburgh of thanking everyone personally for their hard work this year. But for now, I do hope that members as yet undecided about travelling to Edinburgh for June 1-3 and about attending other events in London and the regions will make up their minds and book now. These events are there for you, the members, to increase your licensing knowledge and to network with other licensing colleagues – take advantage of them!
I look forward to meeting as many of you as possible in the near future.

Council has been pleased to welcome the following to membership of the Society

Richard B J Bonnar, partner, Garretts of Leeds
Allan S Foster, patents & licensing manager, British Aerospace Royal Ordnance at Farnborough
Christopher S Gibbs, partner, Haseltine Lake of Leeds
James Irvine, partner, Llewelwyn Zietman of London
David W Johnson, contracts officer, The British Library at Boston Spa
Dr Patricia Jones, solicitor, Wacks Caller of Manchester
Dr John T Lewis, director, Dublin Institute for Advanced Studies
Ian MacDonald, partner, Llewelwyn Zietman of London
Suhail F Saba, partner, Saba & Co of Nicosia
Antony B Samuel, leader of the asset management group, Price Waterhouse of London
Philip N Spear, group ip manager, Alloid Colloids of Bradford
Maria Walsh, new business development manager, Johnson & Johnson of Bracknell
Elizabeth A Weir, assistant solicitor, Stephenson Harewood of London

LES and R&D Society joint meeting

Best practice in IP rights

Around eighty members of LES and the R&D Society met at the Department of Trade and Industry in London on 4 March to share their experiences in handling IP and to identify some principles of best practice. Dr Ron Coleman CB was in the chair.
The meeting began with two excellent overviews. Chris Goodman of Eric Potter Clarkson provided an outline of patents, trade marks, designs, copyright, know-how and licences. He offered examples of where each of these valuable assets might be used, stressing the importance of effective protection.
Henry Connor of Connor & Connor discussed the issues facing organisations contemplating collaborative R&D. He pointed out that arising IP and its potential exploitation often represented the most difficult aspects in setting up any collaborative arrangements. However, it was absolutely essential to have a clear understanding on these matters at the outset and to allow time to finalise details.
A particularly valuable experience for many was participation in one of three syndicate sessions. Each had a facilitator and a note-taker using laptop PCs so that the discussions could be recorded and projected for later discussion by the reassembled meeting. The sessions were:

Protection strategy (facilitator Richard Bahu, DTI; note-taker Richard Halliday, Huntingdon Research Centre)
It was concluded that many organisations did not have a clear protection strategy. Different individuals and groups within the organisation got involved. Patenting in particular was easy and cheap at the filing stage, but became costly later on, particularly if there was a need to defend claims. Therefore, it was essential to do the job properly and effectively.
Broad patent claims could cause problems in terms of greater scope for challenge, giving away too much information and creating difficulties in protecting the patentee’s own future related inventions. Regular notarisation of laboratory notebooks was now an accepted practice in Europe, as the US now recognised such evidence in determining the priority date for US patent applications.

Issues arising from R&D collaborations (facilitator Henry Connor; note-taker Clive Halliday)
The conclusion reached here was that for effective collaborations, considerable time should be invested in obtaining a clear understanding at the outset of issues such as ownership of IP, access to background IP in order to practice the arising IP, and mechanisms for exploitation of the arising IP. Potential collaborators needed to be clear as to the destination between contract research and collaborative research. Both universities and industry should be prepared to invest in training of staff in matters relating to IP so they were better able to understand its potential value and how that value could be realised and destroyed. A regular dialogue between industry and university industrial liaison officers was recommended as a way of building understanding of respective needs and co-operative working practices.

Disclosure of ideas (facilitator Maurice Dwek, consultant, London; note-taker Graham Land, MGL Consulting, Croydon)
The major question here was how best to avoid unprotected disclosure. While confidential disclosure agreements were often useful, and sometimes essential, they did not guarantee absolute protection of information. If a party was likely to receive confidential information in an area in which they were already working, they should consider having their notebooks officially notarised in anticipation of subsequent disputes.
It was important that meetings were properly minuted and the use and distribution of confidential information was carefully controlled. The importance of ensuring that the contract of employment and leavers’ exit-meetings adequately covered knowledge and IP protection was highlighted.
It was considered that the organisation’s management culture should encourage consideration of potential IP implications, senior managers leading by example.

The proceedings were opened by Dr Clive Halliday, Head of Global External Scientific Affairs at GlaxoWellcome, who is a steering committee member of the R&D Society special interest group on benchmarking and management best practice.
In his introduction to the three syndicate sessions, Clive provided some examples of patenting activity in his own company, which has more than 90 people dedicated to IP support in its global intellectual property department.
The company typically files about 100 patents annually at a cost of over £10 million with even higher litigation costs. This represents one extreme, pharmaceuticals, where effective patent litigation protection is regarded as an essential prerequisite to underwriting the significant development times and costs associated in bringing new products to the market.
In closing the meeting, Dr Halliday commented: “This was an ambitious topic for an afternoon workshop and a lot of useful ground was covered in the time available. The meeting was oversubscribed and many late applicants could not be accommodated, leading to the suggestion that there could be a repeat event possibly focusing on just one aspect of IP Best Practice.
“Both societies acknowledge the help and support of Renate Siebrasse of LES and Graham Land of the R&D Society in organising the event. Thanks are also due to Dr Ian Harrison of the Department of Trade and Industry for arranging the venue and facilities”.

Society members take critical view of EC Green Paper proposals for Community Patent

Translation, enforcement and exhaustion

The European Commission’s much criticised proposals for a Community Patent and changes in the patent system again came under fire at a meeting of the LES EC/Laws committee in London on 19 February. Principal speaker was Robin Nott, a committee member and a partner in the intellectual property group of Cameron McKenna.
In outlining the nature of the proposals, Robin maintained that the translations issue was the trickiest of the several stumbling blocks to progress. The Community countries were anxious to have all patent specifications translated into all their national languages – 26 in total if the present applicants for admission to the EU should succeed – and the costs of this were seen as horrendous.
Industrialists had made it quite clear that if the new patent required them to translate their specifications into all these languages, there was no possibility that they would use it. Indeed, even the idea of translating just an enhanced abstract and the claims into so many languages was generally unacceptable.
Industry’s proposal, Robin said, was that patent applications should be examined and granted in English and that there should be no translations into any other community language. It could be rightly argued that English was the language of technology and that most people had sufficient knowledge of it to be able to understand a patent specification in English.
He added: ‘The Economic and Social Committee of the European Parliament (ECOSOC) had just published a draft report (since adopted) suggesting that the EPO – that is presumably patentees – should bear the cost of preparing an enhanced abstract in the three languages of the EPO, and that the Community – that is industry and consumers, of course – should bear the cost of translating the enhanced abstract into the other languages of the Community.
‘Industry would be obliged to translate the claims of the patent to all in the community into all languages on grant. Industry is not happy with this’.
Enforcement, including validity and infringement, was another serious stumbling block. He said that those in industry felt that many national courts of first instance were simply not competent to adjudicate patent disputes, particularly questions of validity. They wanted a Community Patents Court of First Instance, to be staffed by experienced patent judges prepared to hear cases in different countries.
He recalled that the ECOSOC report had suggested that all countries should designate up to five courts of first instance. But no suggestion was made as to how experienced judges would be available to staff so many. These courts would only be able to declare a patent invalid as between the parties to the dispute (‘inter partes’). A decision that the patent was valid as against the whole world (‘erga omnes’) could only be given by a patent chamber of the Community Court of First Instance, to which all appeals would go, or by the European Patent Office.
This seemed a complicated, tortuous and unnecessary procedure. The suggestion that the EPO should be an arbiter on validity was not acceptable to industry, particularly if validity was going to be considered independently of infringement.
On the third big area of contention, exhaustion, it had to be remembered that the existing Community law had been established by the European Court of Justice on the basis that it was impossible to get a single Community-wide patent. The Court has suggested that if such a wide patent were to be available, the rules might have to change.
There was considerable fear in industry that the changes might cause real problems. If a patentee failed to take out patent protection in all the countries of the Community – because he had chosen to get national patents by direct filing or by application through the EPO under the European Patent Convention – that failure might well be treated as an implied consent by the patentee to the sale of the patented product in countries where no patent had been obtained.
This implied consent would allow the free circulation of goods so sold throughout the Community. Such a rule of exhaustion would destroy the national route, something that the Commission was anxious to preserve.
Several members present suggested that this would destroy the national system, and could be devastating to small industry interested only in protection in its own country or in a very few countries. Further, if small industry were to get a Community Patent yet be unable to supply the Community market, this might lead to a compulsory licence application allowing competitors to enter the market, effectively destroying the small industry’s commercial position.
Robin pointed out that although this problem of exhaustion had been much discussed at the recent meeting in Luxembourg, there had been little comment on it at the Commission’s conclusion of the meeting, and it had been studiously ignored in the ECOSOC report.

Note: a fuller report on the discussions on the Green Paper can be obtained from Robin Nott at Cameron McKenna, 160 Aldersgate Street, London EC1A 4DD.

House of Lords hearing for Society's views

By Nigel Jones, chairman, LES EC/Laws committee

The committee’s activities continue to be dominated by the Community Patents Green Paper. Our focus over the last few months has been preparation for, and then attending, a hearing before the European Communities Committee of the House of Lords on 18 February. We were represented by David Cannon, a member of the committee, and by Michael Connor.
Michael is an ‘outsider’ to our committee, but obviously not to LES of which he has been a staunch supporter and very active member of Council for many years. I would formally like to thank both David and Michael for giving up their time and representing us so effectively at this hearing.
The Chartered Institute of Patent Agents was represented at the same hearing. CIPA and LES have similar views on most of the issues in the Green Paper, such as translations and enforcement procedures.
The issue on which David and Michael represented our views particularly forcefully was that of the perceived threat of the Commission’s current stance on exhaustion of rights – an issue addressed in our written submission, which was summarised in the last issue of News Exchange. David has a full copy of the transcript of the hearing if anybody would like a copy: contact him at J.A. Kemp & Co., tel 0171 405 3292.
As to the overall progress of the Green Paper, we understand that the Economic and Social Affairs Committee (ECOSOC) has adopted its opinion (we understand this to be broadly in line with our views, although we are not in agreement with one or two suggestions).
Their report is due to go to the European Parliament shortly, and should then formally be endorsed by the Council of Ministers in April or May. There seems to be a desire on the part of the Commission to have draft legislation on this issue published by the Spring of next year, but it remains to be seen whether this timetable will be adhered to. We are also monitoring developments with the UK Competition Bill.

Celebrating Burns

Around 50 people attended the Burns’ Supper held in the Old Brewery in the City of London on 6 February, writes one of the celebrants, Barry Quest. This event, in substitution for the Savoy lunch, provided this year’s annual post-Christmas get-together for members and their guests.
It was a splendid and fitting function appropriate to commemorate not only the birth of the great Scottish poet but also the impending international meeting in Edinburgh. Vice President Fiona Nicolson, Past President Ron Campbell and Council member Ian Traill notably represented the Scottish contingent.
After a period of networking, the main part of the proceedings commenced with the formal piping-in of the haggis, a most impressive example of its kind held aloft huge and richly bloated before being sacrificed to Ian’s dirk viciously applied during recitation of the appropriate Ode.
At the end of dinner Ron and Ian regaled us with more un-subtitled Burnsian readings culminating in poetic words of amorous admiration coincidentally (so we were asked to believe) addressed to fair lasses called Fiona and Renate. In response, our very own Fiona, on behalf of the ladies, humorously abused the good gentlemen in attendance.
As if this was not enough, the men were then called upon to perform strange and undignified activities, given impenetrable names such as strip the willow to the rhythm of a ceilidh band. In practice, this involved movements of a greatly energetic but totally random nature followed by an ordered procession to the bar.
This was a splendid evening and an undoubted foretaste of the pleasures to come in Edinburgh.

How to make money from your intellectual property

Report by Peter W D Hanna, chairman, LES Ireland region.

Making the most of intellectual property: valuation, tax planning and market strategies, Ireland region’s very successful one-day seminar on 12 February, attracted 55 members and guests who found much of interest in contributions from an excellent line-up of speakers.
Mark Bezant of the London office of Arthur Andersen spoke about the more sophisticated methods which accountants may use to value intellectual property, particularly when the stakes are high. Methodologies examined included analysis of previous licences, licences for comparable IP, industry norms, ‘rule of thumb’ approach, and standard rate of adjustments and economic analysis, including discounted cash flow.
John Heffernan, an Irish tax expert from Ernst & Young, Limerick, took an in-depth look at the tax regime in Ireland, currently very favourable to Irish companies who license IP. Since 1973, 100% tax relief on patent royalty income has been available to Irish companies in respect of patented inventions developed in Ireland. This ought to be a great incentive to Irish companies to license out patented technology, but to curb abuses of the system, very many ‘terms and conditions’ now apply. For instance, since 1997 it may be necessary to show the Revenue Commissioners that your patent was granted for a ‘radical innovation‘, thereby introducing a system of merit.
Yvonne McNamara of the Dublin solicitors McCann Fitzgerald gave a presentation on Licensing and legal issues in the Irish and European context. The important point was that when entering into a licensing deal, you do not have to understand the complexities of the law of licensing and EU competition law, but you do need to be aware of the issues and who to go to for advice before concluding the deal.
Michael McGuire, technology transfer director of FORBAIRT, the Irish Government agency which assists indigenous industry, gave a short review of the helping hand available to start-up companies and those involved for the first time in technology transfer. Michael was an invited speaker at the recent 1998 winter meeting of LES (USA & Canada) in Newport Beach, CA.
Shane Smyth and his Russian client, Ivan Invention (Liam Burkett), both of F.R. Kelly & Co., patent trade mark attorneys, Dublin, gave an amusing role play introduction to the world of patents and trade marks, and how to include them in your marketing strategy.
Finally, Brian Caulfield of Peregrine Systems Ltd., Dublin, software developer, gave a case study of how his company’s intellectual capital came to be valued by venture capital investors and then licensed to Visa International. His company has developed software to handle cardholder complaints, statement error processing and credit card fraud.
The common thread in the seminar and the discussions was really how to make the most money from your IP. It is a subject which experience shows always attracts a big attendance and helps keep everyone awake! Thanks are due to several people, in particular Peter McLaughlin for putting together the programme and acting as moderator.

Surprise menu for North West region

Report by Mark Goodwin

Professor Bosworth of UMIST, James F Jones of Net Benefit and Peter Brownlow of Bird & Bird, provided plenty of points for discussion at the November meeting of the region, in particular the ramifications and uses of the Internet.
There was a disappointing buffet menu, something of a surprise to the North West lawyers who were quite clearly used to better things. Fortunately the next meeting at Simply Heathcotes more than made up for this. The superb cuisine supplemented an amusing anecdotal speech by Elwyn ‘Robbie’ Roberts concerning his many years in the trade mark profession.
Robbie has now disappeared on a well deserved world cruise and is meeting up with many of his long standing contacts along the way.
Jonathan Moakes will be standing down and handing over to me as chairman following our next meeting. This North West region would like to thank him for his efforts and are pleased that he will be remaining on the committee to provide the benefit of his experience.

Lively times in Scotland

Report by Caroline Sincock

LES Scotland region has regularly attracted more than 40 people to each of its early evening events, and there is a growing demand for repeats across Scotland. A lively session in Aberdeen last Autumn included a Grampian Enterprise sponsored seminar on International Licensing with guest speakers Vernon Parker, formerly of ICI, and Ian Artis of Allied Domecq Spirits & Wine.
Another in Edinburgh was hosted by the Chartered Institute of Accountants in Scotland on the subject Finance for Technology Companies. This attracted more than 60 members and guests, Hazel Cameron of 3i gave the first progress report on the then newly launched Scottish Technology Fund. Aiden Courtney of Seraphim outlined characteristics that informal investors look for at the time of investment appraisal and Tom Ogilvie of Forthright Innovation conducted a walk through the maze of grants available in Scotland to support technology and innovation.
The demand for and success of this meeting led to a like presentation in Aberdeen on 17 February, hosted by Grampian Enterprise. Brian Kerr of the Scottish Technology Fund updated members on the first companies to receive Fund investment. Jane Karwoski of Seraphim spoke on funding with business angels while Grampian Enterprise’s own expert, Tony Aldhous, discussed grant funding.
Members and guests attending the Glasgow meeting on 12 February were truly amazed and fascinated by the seminar on Amazing Designs for the Millennium - the changing face of product design and commercialisation. Richard Blackmore, then intellectual property manager of Glasgow University and Alex Thorpe, post graduate, were the speakers.

Romance on the pharmaceutical delivery system front ...

Christi Mitchell reports on a recent successful joint meeting between the Healthcare and EC/Laws committees

Dr Huw Jones, commercial director at Elan Pharma, and Christopher Samler, chief executive of Weston Medical, combined commercial expertise and scientific skills to convey fascinating case histories.
Dr Jones has been responsible for establishing the commercial infrastructure at Elan’s subsidiary in Stevenage. He explained that drug delivery companies were dependent on a degree of lateral thinking in conjunction with the licensing out of their own technologies and the acquisition of new products and new companies.
Elan had, in recent years, bought the companies Athena Neurosciences and Sano Corp. Athena concentrates on products to diagnose and treat neurological diseases while Sano is primarily known for its development of novel transdermal patches.
Many companies were now working to develop novel drug delivery systems and this posed a strategic need for a company such as Elan to collaborate or in some way acquire access to new delivery technologies.
As with most companies, types of licensing deals varied from the conventional to hybrids that incorporated part classical, part licensing rights. Some deals were in a risk and reward sharing basis, while others were technology swaps - ‘product for technology’ and Equity positions or funding vehicles.
Christopher Samler conveyed his philosophy of ‘creating and capturing value’ when describing Weston’s needleless disposable device for the delivery of liquid parenteral medicines (Intraject).
He ran participants through the courtship and potential marriage that can result when a small company tries to license its novel technology to the major companies, emphasising the length of time this process normally takes and the need for the two companies to fully understand each other’s cultures and drivers.
It was critical that the small licensor fully understood why there was interest from the larger potential partner – was this move aimed at entering a new marketplace, defending a current franchise or simply to copy or register the technology? The answers would heavily influence subsequent negotiation and detailed licence drafting.
He emphasised that during the romance period, it was critical that both companies had an understanding of each other. Licensors had to take care not to become blinded by their own technology and never to over or under sell the product or its state of development.
At this stage the small company needed to create a wide base of support, identify key decision makers and understand the deal approval process. It had to look for consistency of message and for ways to speed up the decision making process.
Both the ‘selling’ that the licensor needed to achieve during the initial stage of negotiations and the ‘buying in’ of technical objective that the company has to live with in the future were critical.
When cutting the deal, both sides should be encouraged to state what they wanted, and why. The comprehensive use of financial and marketing models helped in the negotiation process by providing a firm base and stimulated both sides to look for creative ways of achieving the desired npv.
Time was spent with attendees in debating exactly at what stage the lawyers should be involved in the licence negotiations and how best to manage the flow of information within the company to ensure that all the critical parts came together. This was such an informative meeting that I hope to be able to elaborate upon it in a future issue of News Exchange.