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LICENSING EXECUTIVES SOCIETYBritain and IrelandNEWS EXCHANGE
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Peter and Webster spin a yarn!It may sound as though they're just spinning a yarn, but scientists at Montreal-based Nexia Biotechnologies Inc. have recently announced plans to produce spider silk fibres from the milk of genetically modified goats. Spider silk has long been admired by material scientists for its unique combination of tensile strength, elasticity, lightness and biodegradability. However, despite its superior characteristics, spider silk is not used commercially owing to a lack of availability. Unlike silk worms, spiders cannot be farmed due to their territorial, aggressive behaviour and thus production of commercially useful quantities of natural spider silk is not practical. Previous attempts to create man-made spider silk have achieved only limited success. Nexia, in collaboration with the US Army Soldier Biological Chemical Command, has for the first time spun synthetic spider silk fibres with properties similar to natural spider silk. The researchers introduced genes from two different species of spider into mammalian cells. The genes contained instructions for the production of the protein making up dragline silk, which comprises the radiating spokes of a spider web and is five times as strong, by weight, as steel. Silk protein produced by the mammalian cells was isolated and spun from a solution in water to form water-insoluble silk fibres. These synthetic spider silk fibres may soon be developed into artificial tendons and ligaments, biodegradable surgical sutures, fishing lines, soft body armour and have a wide range of further potential applications. Nexia has called the man-made spider silk "BioSteel" (Community Trademark Registration No. 1469352). In order to mass-produce the spider silk protein, Nexia plans to use genetically modified goats bred using nuclear transfer technology similar to that used to produce Dolly the cloned sheep. By applying these patented cloning techniques, and using patented spider silk gene technology (licensed from Geron Corporation and the University of Wyoming, respectively), Nexia was able to breed Webster and Peter, genetically altered goats each having a single spider silk gene along with their 70,000 or so goat genes. Webster and Peter are the founders of a herd of genetically modified goats, and the females of their herd will shortly begin producing milk containing the protein building blocks for the BioSteel silk fibres. Nexia has applied for a number of patents in this field, covering, for example, a method for the development of transgenic goats (WO 97/19589); a method of production of biofilaments, such as spider silk, in transgenic animals (WO 99/47661); and surgical sutures containing spider silk (WO 01/56626). The recent announcement by Nexia is indicative of the real progress being made in the commercial exploitation of gene-based biotechnology. However, the ethical debate on cloning and genetic engineering seems likely to intensify as more and more commercial applications of this new technology are explored. Further information on the synthetic spiders silk can be found on the web…….. Dr. Michael Douglas, Wilson Gunn Top President's Diary
Happy New Year! The year 2001 seems to have flown by at high speed and I am now entering the final six months of my presidency. A great many interesting meetings were held last year, both in the regions and nationally. Plans already in place would suggest that the meetings in 2002 will be equally as stimulating. I have just come back from this year's first Council meeting. Topics of particular interest to members were: The Annual Lunch at The Savoy, to be held in February; The Annual Conference and AGM to be held at Wolfson College, Cambridge in June; The Annual Conference for 2003, which we are considering holding in London, and the proposed Pan-European Meeting in 2006. Those of you involved in conference planning will appreciate that an early decision about the location is vital these days as the more popular venues are booked up well in advance! The Annual Lunch arrangements are now complete and you should all have had your invitations. This is a great opportunity to meet fellow licensing practitioners and I hope you will all try to attend. We have a policy of inviting a small number of eminent guests, who have a particular interest in licensing. Those of you who were able to attend the lunch last year will remember that Mr Ingo Kober, Head of the European Patent Office, kindly accepted our invitation and Justice Hugh Laddie came along, during his lunch break from court, as our guest speaker. This year we have Don Christopher, Head of Business and Legal Affairs for Celador International, as our guest speaker and we have extended invitations to a small number of High Court judges, whose interest in licensing is well-known. We are delighted to say that the Hon. Mr Justice Jacob has already accepted and we look forward to seeing him at The Savoy. The regular, half-day meeting preceding the lunch is always a very popular LES B&I event. Susan Singleton and her colleagues on the EC/Laws committee have worked very hard to arrange this year's meeting, with a range of excellent speakers giving an update on Intellectual Property legislation. We have prepared an outline program for the Cambridge Conference, which is entitled "Maximising the Value of Intellectual Property". We plan to run an Intermediate Licensing Course prior to the start of the main meeting. Please book the dates in your diary now! We have had to move forward the date of the Pan-European Conference, originally planned for September 2006, to June 2006, when we will combine it with our own Annual Conference. The change in dates is to avoid a clash with the US/Canada Meeting, which is also planned for September 2006. We think we have given you enough time to change your arrangements! As I mentioned earlier, we are hoping to hold the 2003 Annual Conference in London, the first time for many years. The venue has not been finalised but suffice it to say that the present plans will not be welcome news to Arsenal supporters! I do hope you will be able to attend the Annual Lunch, it is always a very enjoyable occasion. Chris Goodman
DAVIDOFF AND LEVI STRAUSSThe European Court of Justice (the "ECJ") handed down, on 20th November 2001, its much anticipated decision in the two cases of Davidoff-v-A&G Imports Ltd ("the Davidoff case") and Levi Strauss & Co-v-Tesco Stores and Costco Wholesale UK Ltd ("the Levi cases"). The clarity which the ECJ's decision brings to this grey area of law is to be welcomed by all. It is, however, disappointing for parallel importers, retailers and consumer groups, and is being hailed - quite rightly - as a clear victory for brand owners. The ECJ's decision and the effects of the decision for parallel importers and brand owners are explored in this briefing. THE FACTS In the Davidoff case, Davidoff had sold perfumes and other toiletries bearing its UK registered trademarks "COOL WATER" and "DAVIDOFF COOL WATER" to a distributor in Singapore. The distributor was granted exclusive distributorship rights and undertook not to sell any products outside Singapore and to oblige sub-distributors, sub-agents or retailers to refrain from such sales. The goods in Singapore were imported into the UK and sold by the defendant, A&G. The batch code numbers on those goods had been removed or obliterated by someone in the chain of distribution. In the Levis case, Levi Strauss & Co manufactured jeans in the US, Mexico and Canada and sold them to their UK distributor for sale within the UK. The jeans bore the UK registered trademarks "LEVI'S" and "501". Levi refused to supply the defendants Tesco and Costco, who consequently obtained jeans from suppliers who had themselves obtained them from Levi's authorised suppliers in North America. The contracts under which Tesco and Costco purchased the jeans contained no restrictions as to the markets where they could sell the goods. Tesco and Costco sold the jeans in their stores in the UK. Davidoff and Levi Strauss each began trademark infringement proceedings in the English High Court. Both cases were "stayed" whilst questions were put to the ECJ. In particular, clarification was sought from the ECJ on the circumstances in which the proprietor of a trademark may be regarded as having consented, directly or indirectly, to the importation and marketing within the EEA of products bearing that trademark, which had been placed on the market outside the EEA by the proprietor of the mark or its foreign distributors. THE ECJ'S DECISION
WHAT DOES THIS MEAN? The ruling is a clear victory for brand owners, having wide implications for the future conduct of parallel importers and retailers in Europe. The onus is now on traders when importing goods from outside the EEA for resale in the EEA to satisfy themselves that they have the unequivocal consent of the trademark owner for such resale. In the absence of explicit consent, the trader must prove it has received implied consent. The ECJ has clearly and quite intentionally made the possibility of implied consent being inferred almost non-existent. One such example may be where a trader can show that a trademark owner has supplied a market outside the EEA with the knowledge that such goods will be imported back into the EEA - this in itself may not be easy to prove. The effect of the ruling is to allow brand owners to use their trademarks to control distribution prices in Europe, maintaining price differentials throughout the world and keeping prices high in Europe should they wish them to be. This right of the trademark owner to use its trademark to control the distribution of its goods into Europe is an extension of the more usual function of a trademark, that being to identify the origin and guarantee the quality of goods. Parallel importing is about genuine, not counterfeit, goods. It is now clear that if there is to be any change in this area of the law, it is not going to come from the ECJ. If traders and consumer groups want the law changed, they will have to lobby Parliament and the European Commission. This briefing is not intended as legal advice, rather as a brief overview of a complex area of law.
Addleshaw Booth & Co
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New Draft Competition Act Guidance on Intellectual Property RightsBy Susan Singleton, Chair of the EC/Laws Committee Ever since the Competition Act 1998 came into force on 1 March 2000, lawyers and their clients have been waiting for guidance on how the Act treats intellectual property agreements. This was eventually issued for comment on 28th November 2001. Comments are invited on the draft guideline and should be made by Thursday 28 February 2002. The draft states that many intellectual property agreements, such as software licences, will be outside the competition rules so there is nothing about which to be concerned. However, this is not always the case. The guidelines are to be welcomed and comprise a good summary with a helpful statement of the EU competition rules and intellectual property law and up-to-date case law footnotes. The 1998 Act is based on EU competition law. The guidelines will need to be revised again when the technology transfer block exemption regulation 240/96 is updated. The European Commission published, in December 2001, the "Commission evaluation report on the transfer of technology block exemption regulation n° 240/96 - Technology transfer agreements under article 81" (which may be found on the Internet at http://www.europa.eu.int/comm/competition/antitrust/techno). The OFT Guidelines are, in general, up-to-date and include the recent refusal to license in the case of IMS Health. They do not cover some of the areas of particular difficulty under the EU competition law in this field, which also worry lawyers under the Competition Act. For example, restrictions relating to intellectual property in agreements, which settle litigation, which are often horizontal rather than vertical agreements and thus subject to even greater scrutiny and where it is particularly important that restrictions are enforceable. Nor do they fill the gaps left by the absence of a block exemption for copyright including software licences. So the guidelines are not radical but they are helpful. Below is a summary of some of the more interesting areas in the guidelines. Pricing No licence should restrict the licensees prices. The guidelines state that, "The Director General considers that the licensee must remain free to determine its own policy in relation to the sale of the products covered by the IPR. For example, the setting of royalty rates in an IPR licence in a way intended to fix the prices at which the goods or products are sold is likely to infringe the Chapter I prohibition." Exclusivity Common provisions in IPR licence agreements may include the grant to the licensee of an exclusive right to manufacture and sell the goods in a particular territory and/or the grant of a particular field of exploitation. The OFT says that, "these types of exclusivity provisions will be unlikely to infringe the Chapter I prohibition unless, having regard to the conditions of competition in the relevant market, they have the effect of foreclosing competition in that market and therefore have an appreciable effect on competition". Improvements Any provision in an IPR licence which requires a licensee to grant back to the licensor the exclusive right to improvements, may infringe the Chapter I prohibition. Post Term Use The owner of an IPR may wish to prevent a licensee from continuing to exploit that IPR once the licence has expired. Any such post-term use ban, which exceeds the lifetime of the IPR, may infringe the Chapter I prohibition. Other provisions in a licence, which continue to apply even after the IPR itself has expired, for example a requirement to continue to make royalty payments, may also infringe the Chapter I prohibition. Ties Provisions which require the licensee to purchase certain products from the licensor, may infringe the Chapter I prohibition where they have the effect of foreclosing the market. Such provisions may, however, not raise competition concerns if they are necessary for quality control. A dominant IPR proprietor might be prepared to grant a licence of the IPR only if the licensee also agrees to buy another product or service which is not covered by the IPR. If such provisions are necessary for a satisfactory exploitation of the licensed IPR, or for ensuring that the licensee conforms to quality standards, they would be unlikely to infringe the Chapter II prohibition. Quantity Restrictions An IPR licence may include a requirement on the licensee to produce minimum quantities of the product, which is made using the licensed IPR. Any minimum quantity provisions, which have the effect of preventing the licensee from using other IPR to compete with products made using the licensed IPR, may, however, infringe the Chapter I prohibition if they foreclose the market and therefore have an appreciable effect on competition. Excessive Pricing The Director General does not consider that there will necessarily be an infringement of the Chapter II prohibition where a proprietor of IPR holds a dominant position and it charges a higher selling price or royalty rate for a product, process, or work protected by its IPR as compared with a product, process, or work not protected by an IPR. Refusals to License The Director General takes the view that a refusal by a dominant holder of IPR to license its IPR is not, in itself, an abuse. It may, however, be that in certain situations the exercise of the exclusive right in refusing to license the IPR may infringe the Chapter II prohibition. This may occur if there is no objective justification for the refusal and the IPR:
(Reference is made here to Case T-504/93 Tiercé Ladbroke v Commission [1997] ECR II-923. Joined Cases C-241/91P and C-242/91P Radio Telefis Eireann (RTE) and Independent Television Publications (ITP) v Commission [1995] ECR I-743 and Case 238/87 AB Volvo v Erik Veng (UK) Ltd [1988] ECR 621. See also COMP D3/38.044 - NDC Health/IMS Health: Interim Measures, Commission Decision of 3 July 2001 (suspended by order of the President of the Court of First Instance in Case T-184/01R IMS Health Inc. v Commission, 26 October 2001)). The Guidelines make interesting reading for licensing practitioners. They are on the Internet at www.oft.gov.uk under Competition Act/Technical Guidelines. Susan Singleton, Singletons Solicitors, susan@singlelaw.com, www.singlelaw.com Top
LES News from the RegionsLES Irish Section News LES Irish Region held a very successful half-day seminar on Thursday 25th October on the topic of "Valuation of Intellectual Property". Attracting more than 70 attendees, the event was organized by the Irish Section Committee member and Treasurer, Brian Moore, a patent agent with Tomkins in Dublin. The meeting was chaired by Mary Swords and the key note speaker was Tony Hindley of Valuation Consulting in the UK. The venture capitalists' perspective was the theme of a talk by John Flynn, of ACT Venture Capital, and taxation implications of the valuation of IP was the subject of a joint presentation by tax experts Anna Scally of KPMG and Catherine Galvin of Matheson Ormsby Prentice. The seminar was followed by a very pleasant lunch at the historic and recently refurbished "Guinness Hop Store." Report by Mary Swords, Chair of LES Ireland Region. XXXXXX LES Irish Section Annual Dinner This year our Annual Dinner will be held on Friday, 8th March 2002, in one of Dublin's most popular restaurants - Chapter One. The restaurant opened 10 years ago and is situated in the basement of Dublin's Writers Museum, a listed Georgian building. Come along and enjoy innovative and delicious food and the friendly service provided by the expert hands of Ross Lewis and Martin Corbett. Dining at Chapter One is a magical experience! If you still need convincing that this will be a good event check out the restaurant's web site: www.chapteronerestaurant.com, where you will even find a selection of the recipes! Chris and Sybil Goodman are guests of the Committee and we are delighted to welcome them again to Dublin.
LES North West Region News by Nicola Amsel On December 4th 2001 the North West group hosted a meeting at Nico Central restaurant in Manchester. The guest speaker was Mark Engelman, Barrister at Law of 7 New Square, Lincoln's Inn, who spoke on the subject of Digital Trademarks: Recent Trademark Decisions. The meeting was well attended. Mr Engelman's talk was both informative and entertaining and certainly provided material for lively discussion over dinner! Details of the February Meeting will be announced later. The meeting planned for April will include a tour of the new Jaguar plant at Halewood. This will involve a talk from the Executive Director of the Jaguar-Daimler Heritage Trust. For details please contact: Philip Woods at: pdwoods@hilldicks.com Top Qinetiq Sets Up Venture FundQinetiQ, in its former life as the major part of the Defence Evaluation and Research Agency (DERA) Trading Fund, had a remit to transfer technology to civil markets but faced the common problem of finding funding to develop the technology to the point where it could be successfully licensed. Since April 1999, Trading Funds have been free to enter into joint ventures to bring private capital to bear on closing this "technology gap" and between then and the formation of the company in July 2001, DERA entered into more than 10 such ventures. With its new status as a private company, QinetiQ has used its greater freedom to set up a fund of £24m to invest over a three-year period in new businesses being created by QinetiQ to commercialise its technology. By investing its own money, QinetiQ is able to secure a larger share of value growth from such businesses. QinetiQ has appointed Hal Kruth as Chief Executive Officer of QinetiQ Ventures Ltd, a new subsidiary set up to manage the fund. Hal arrives from his role as Senior Vice President, Ventures and Licensing for SRI International, Menlo Park, California.
Report by Tony Bowdrey Top The Investment EngineA New Approach for Corporate IP Exploitation Dr Gavin Troughton, of Scientific Generics, gave a thought provoking talk at the LES London Meeting in January describing his company's innovative approach to IP exploitation. He discussed the dilemmas facing many of today's businesses: whilst companies frequently struggle to achieve their desired growth rates using the conventional "strategic" growth models, innovation resources appear costly and cannot be guaranteed to produce future value for the company. However, by focusing on "today's core business", to the exclusion of new business, companies are limiting their potential. Generics have shown that a joint approach is more successful. To succeed, venture-based business development needs commitment from above in the form of "organisational enablers" whose task is to stimulate and manage the venture creation process and to ensure that there is positive interaction between the new venture and the core business. As the individual ventures emerge they must be managed entrepreneurially and expertly. It is the enabler's and entrepreneurial manager's job to encourage innovative behaviour, establish a funding mechanism and to implement processes to manage new ventures, which may involve performance measures and rewards, training and coaching of teams, specific processes, tools and techniques, (such as knowledge management). Generics have called the combination of the organizational enablers and the entrepreneurial management of ventures an Investment Engine. Using this model they have had many successful "venture" partnerships and they have shown that by using external sources companies have access to a much broader range of skills whilst also spreading the "venture" risk. Top QED Intellectual Property Limited / Fairfield Resources Internationalthe creation of a unique global licensing company. Scipher plc, the parent company of QED Intellectual Property Limited, announced the completion of the acquisition of Fairfield Resources International Incorporated, an intellectual property management business based in Stamford, Connecticut, USA and the combination of this business with QED. The acquisition gives QED a direct presence in the US, the world's largest producer and owner of intellectual property (IP) rights, and creates a unique global licensing company. Dr Stephen Potter, Commercial and Marketing Director of QED, described the company's birth and growth in a talk given to the LES London meeting in November 2001. He told the attendees that the next stage in its development would be to establish a presence in the USA. This milestone has now been achieved with the acquisition of FRI. The newly combined company helps its clients extract the maximum value from their IP portfolios on a global basis from its offices in London, Tokyo, Stockholm, and Stamford and Houston in the USA. It offers a principal service: Focused, proactive licensing, on a revenue sharing basis, of patents and other IP. It operates in both enforcement and in technology transfer and offers its clients "new revenue at no cash cost". Major clients include BT, Deutsche Telekom, Imagination Technologies, Simoco, Nortel, Lucent and Toyota Central Research. FRI was founded in October 1997. The management team consists of senior executives with outstanding records of generating substantial licensing revenues whilst within leading US corporations. Emmett J. Murtha, President and CEO of FRI, was previously the Director of Licensing at IBM, where he was responsible for world-wide licensing policies and practices. During his tenure, IBM's royalties from licensing its IP grew from $30m to over US$1bn per year. FRI has a proven track record in assisting its clients from North America, Europe and Japan to extract value from their extensive patent portfolios. Top The University of Warwick and UTEK Corporation AnnounceAlliance Agreement to Merchandise University Intellectual Capital January 11th 2002 UTEK Corporation (Nasdaq SC:UTOB) and the University of Warwick announced jointly today the signing of an Alliance Agreement for the purpose of transferring select University of Warwick technologies to the marketplace. Dr Ederyn Williams, Director of Warwick Ventures, commented that he was enthusiastic about working with UTEK and believed that their unique approach to technology transfer would help bring select University of Warwick technologies to the marketplace. Chief Executive Officer of UTEK Corporation, Clifford M Gross, said that he was looking forward to working with the University to assist in introducing their innovations to synergistic SMEs. The University of Warwick is one of Britain's leading research universities. The University has over 15,000 undergraduate and postgraduate students enrolled and employs more than 3,800 staff. It is an international research university and ranked 5th for research in the UK. Collaboration is a key element in Warwick's successful research program. Top New MembersCouncil has been pleased to welcome the following new members to the Society:
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