Some technology innovation businesses focus on intellectual property (IP) generation and are well aware of the threats from the outset. However, despite intangible assets now usually making up the major part of most company valuations, many businesses still deal with these issues reactively when they get thrust into focus by events, rather than proactively, and end up with an outcome which is both less positive and more expensive.

Why does this happen?

Well, to be honest, the issue is that it is not always easy to get IP strategy right, and particularly for the appropriate cost and level. Some attempts get bogged down in the detail and a lot of money is spent looking through the weeds without finding a clear path, while some businesses engage in consultancy which produces a nice sounding ‘strategy’ document that looks impressive in the annual report or at the Board but is painfully short on implementable details or specific value-adding output. Having experienced either in the past, or it simply not being clear what value is to be gained, often sensible (and perhaps cynical) business leaders under time and budget pressures understandably press ahead with the more tangible product development issues.

Let’s consider some typical scenarios involving a ‘moderately innovative’ company which doesn’t seek to be a cutting-edge disruptive player but nonetheless is routinely refining, updating and improving its products and adapting to expected customer requirements.

Perhaps the company considers it is simply adding automation, integration, connectivity and convenience features that users generally want, or it is improving manufacturing processes or product physical qualities. Occasionally, changes will be made which percolate up as being sufficiently distinctive that the company considers applying for a patent. At this point, it may transpire that for various reasons there are likely to be serious difficulties protecting what was thought to be interesting, which could be due to the technology area. For example, what can and cannot be protected in the field of software / AI / medical technology is often far from intuitive to someone who is not an IP expert in this area, or simply because it is a generally crowded field. However, it often turns out that the company did have some innovations along the way at the design stage that might not only have been protectable, but could even have been the basis for broader and more valuable protection but it is now too late as they have been disclosed or others have got there first. Moreover, some of the little tweaks that were dismissed or not registered (which were made to solve particular problems) could have been protected, and might have qualified the company for a tax break if patented.

Another worst-case scenario is that, whether by a benign means or by being the recipient of a threatening letter or court action, a company discovers that a competitor has patent protection for a feature after having spent time, money and effort developing and incorporating it into a product. At a late stage, the choices are unlikely to be attractive: either abandon / redesign the product; face the prospect of margin-destroying royalties, if even available; or worse – distracting and expensive litigation. It is often the case that early visibility of the situation might have enabled the design to be modified to reduce risk, and potentially protection could have been obtained which would have been valuable and possibly tradeable in a cross-licence with the competitor. The threat itself might have been relatively inexpensively cut down by opposing the competitor patent at the European Patent Office (EPO).

Benefits of considering an IP strategy early on

Now extensive searching for potential bad news is expensive and rarely worthwhile, but targeted intelligence on competitor IP may be simpler to obtain and can inform general business decisions. Identifying promising areas to develop and protect strategically (not simply reacting to what comes out at the end of the design process), and considering the IP angle early can identify less risky routes that are more protectable, might give rise to tax reductions and tradeable assets. Collectively this could make a company a more attractive acquisition target and a less attractive litigation target.

A number of companies opt to take IP more seriously after some successful early stage growth when new advisors and investors come on board. More often than not, it is discovered that many of the business’ good ideas were not protected appropriately at the time. A scrabble for second generation protection generally costs significantly more to obtain several narrow patents, each of which might be circumvented, than a broad patent covering key innovations in the first place might have cost.

How much does looking ahead strategically cost?

A fraction of what dealing with a surprise usually does. As little as half a day’s time of a handful of the right people (CTO, key technical/product people and an appropriately technically and commercially savvy IP advisor) appropriately prepared at the start of a new product development cycle can typically identify the more promising and less promising avenues before design commitment, and often generate potential IP in itself early on. This is particularly true for a small to medium size growing company: filing a number of strategically targeted patent applications can add value and can encourage otherwise likely litigious competitors to adopt a more constructive cross-licensing approach. To put in context, defending patent litigation costs may typically run into millions of pounds spent in short order at a time of a competitor’s choosing, whereas building a credible patent portfolio may cost a few tens of thousands spread over a few years, with timing adjustable to suit budgeting.

Sometimes the outcome of a strategic look ahead at IP is simply that there frankly is not much of a hard IP angle to the proposed new product activities. This knowledge, as well as usually being refreshingly inexpensive to acquire, is itself valuable in informing the likely speed of competition, appropriate branding and other marketing strategy to keep ahead.

As with most things in business, a little knowledge of the road ahead can be very valuable.

This article was published on Compare the Cloud in September 2019. 

Why do you need to have an IP strategy that is tailored to your business and commercial aspirations? In this article for Business & Innovation Magazine, we explain why an IP strategy is so important.

Intellectual property (IP) is a business asset that can have substantial value and can be used to give you a competitive advantage, build brand recognition and a reputation for innovation, generate income or secure investment and… basically… grow. Is your IP strategy looking its best?

Ask yourself these questions:

Do you know what IP your business has (or could have)?
It can’t add value to, or help to grow, your business if you don’t know it’s there.

Are you aware of all the unregistered IP rights that already exist within your business?
It is rare for a business to have no IP at all.

Do you know when to keep your ideas confidential, and when and how it is safe to share them?
Whether it’s a trade secret or a patentable invention, confidentiality can be a crucial part of your IP strategy.

Do you have registered IP for the key USPs of your business?
Strategic use of registered IP, such as patents, designs and trademarks, can protect your USPs to give you the competitive advantage to grow your business or attract investment.

Are you aware of the tax relief (named Patent Box) available against profits from sales of a patented product?
This applies to even a small part of the product and has the potential to offset, and even by far outweigh, the cost of obtaining a patent.

Do you know how your IP strategy can help to secure funding?
Whether you need to borrow against the value of your IP, secure grant funding or attract investment, the right IP strategy can help, whereas a weak or non-existent IP strategy can be detrimental.

An experienced patent attorney can usually help with at least some of these questions, and that is a good place to start. However, the simple fact is that your IP strategy may need to be considered from several different angles, using the right network of advisers. Mathys & Squire is able to provide a comprehensive and strategic IP management service through its Mathys & Squire Consulting team, in which our experienced IP management specialists help organisations of all types to realise meaningful value from their intangible assets.

This article was published in the September/October 2019 edition of Business & Innovation Magazine.

In this post from Mathys & Squire Consulting, we explain the importance of businesses identifying and valuing their intangible assets and intellectual property (IP) in order to maximise profits.

The value of IP is the exclusive right it provides to prevent others using your technology without your expressed permission (through a licence for example) and the potential future profits it can protect. These days intangible assets, of which IP is a subset, are forming an increasingly large part of a business’s value. In previous years the vast amount of a company’s value lay in its tangible assets such as buildings, machinery, equipment, etc. However, nowadays and with the ever-increasing number of new software-based companies covering a variety of sectors, the value of many companies may be comprised of up to 80% or 90% intangible assets. This is especially evident in the software sector, where early stage companies require little more than a few computers and don’t have the overheads of office space or equipment previously required by many businesses. The development and licensing of IP assets may be a successful business in itself, for example ARM Holdings, a Cambridge-based British semiconductor and software design company, which licences its IP to tech giants such as Apple and Samsung, was acquired by Softbank in 2016 for £24 billion.

Even within intangible assets there may be a split between disclosed intangible assets, which are often legally registered and enforceable rights such as patents, trade marks, and design rights – or undisclosed intangible assets, which may include trade secrets, proprietary know-how and processes developed within the company, brand recognition, supplier or client agreements and contracts or business relationships. Depending on the business and industry, these intangible assets may be just as pivotal in ensuring business profitability as disclosed tangible assets.

This brings us to the importance of correctly identifying and valuing your intangible assets. If these intangible assets, either disclosed or undisclosed, are so important to the development of the business and in ensuring business profitability, companies need to know the value of and leverage these assets wherever possible. Businesses of all sizes across all industries should seek to identify and value their IP for a variety of reasons, including:

1. Transactions – Company transactions such as restructuring, mergers & acquisition (M&A), divestments or insolvencies frequently involve the transfer or sale of intangible assets and IP portfolios. In order to determine the sale of this IP within the overall transaction, a fair market value of the IP must be determined.
2. Venture investment – Prior to investment in early stage companies, startups and SMEs before an IPO, venture capitalists (VCs) or other investors may ask whether a company has IP, and if so, how much it’s worth.
3. Licensing – You need to know the value of your IP and associated suitable royalty rates in order to negotiate IP licensing agreements.
4. Strategic R&D decisions – The value that IP has in the business versus its relative cost and how it supports the business’s products or services may help drive R&D decision making.
5. IP sale – If an IP portfolio is to be sold, the sale price can only be determined by understanding the market value of the IP portfolio.
6. Manage litigation – If you are entering litigation around a specific patent or trade mark, your business needs to know the value of that piece of IP in order to determine potential damages.

The list above is an overview of the main uses for a valuation of intangible or IP assets, but there are many other situations in which it may also be prudent to have an indication of asset value prior to entering into any negotiations.

Before undertaking an intangible asset or IP valuation, there are a number of points that should be addressed:

• What is the purpose of the valuation?
• What are the assets to be valued?
• How do these intangible assets relate to the company activities?
• Is the company already generating revenue?
• What investment has been made to date to develop the protected technology?
• In the case of legally protected IP, what is the remaining lifetime of protection?
• What are the risks to the business in reaching its projected revenues?

The above and many other factors must be considered when valuing IP before coming to a fair market value of the IP. In all cases, the value ascribed to the IP is valid at that point in time and based on the information provided at that time. For example, the value of a patent today may change significantly if the technology it protected becomes obsolete tomorrow.  The above considerations will also have an impact on the approach used in valuation of the IP.

For earlier stage or pre-revenue companies, a cost approach may be chosen. This looks at the cost of developing the technology or a similar technology. While this offers a useful benchmark, it does not always offer a true indication of the potential of, and potential value of, that IP.

The most frequently used and often most reliable method of valuing intangible assets is a future income-based approach, which takes the potential future earnings based on the IP of interest and brings them to their current value, using net present value (NPV) calculations through the use of a discount factor (DCF), while also allowing for risks in the market, etc. This provides a range of values of the IP based on the projected future revenues.

There are a number of important factors which come to light when determining the value of a company’s intangible assets, including:

• Tax implications – Are the intangible assets to be transferred or sold?
• Company structure – Is the legal structure of the company best placed to manage and maximise the potential of the intangible assets?
• IP strategy and policy – Does the company have an IP policy in place in relation to intangible assets and is there a company strategy for the creation, management and potential licensing or sale of those assets?

In summary, as the global economy evolves and becomes ever more reliant on intangible assets, it is essential that businesses undertake IP auditing exercises to fully understand the intangible/IP assets they possess and how to fully utilise these assets to maximise profitability. These audits, further supported by robust IP valuations, help businesses make more informed commercial decisions and assist in business negotiations.

If your business needs assistance in identifying its intangible assets and gaining an understanding of their current value, please contact Mathys & Squire Consulting.

While intellectual property (IP) is absolutely key to the success of some businesses, it can be less relevant to others. Mathys & Squire focuses on conducting meaningful and worthwhile due diligence in a manner that is proportionate to the value of the IP in the context of the current and future commercial activities and the value of the transaction in question.

Where IP is peripheral, a simple validation that the IP exists and there are no formal issues may be all that is needed. However, where IP is critical to commercial success, such as where exclusivity or freedom to operate for a new product are essential, a thorough investigation into the value of the IP a company owns and its freedom to operate in view of third parties’ IP is required. Many transactions require some level of IP due diligence in-between. There are often various hypotheticals and unknown variables in IP, and so it is important to get the right level of strategically useful but proportionate, due diligence for each case.

Moreover, what can be more helpful than a simple overview of the current state of the IP is what the future potential of the IP is, and pragmatic advice on how to ensure the IP is best used to further and support the commercial aims.

Some transactions call for formal, detailed written reports, whilst for others informal reporting in person or by telephone is preferred.

Who should consider IP due diligence?

When entering into any transaction, be it a licensing deal, a business sale, or a decision to invest or to seek investment, IP may be relevant.  Almost all companies have some sort of IP, whether or not in the form of registered rights, and it is important to consider at least some level of IP due diligence before taking any significant business decision.

Are you looking to sell or license-out your own IP?
IP due diligence can be used to help promote your IP and ensure you receive what it’s worth.  Sometimes relatively simple adjustments to IP strategy can increase the value of the IP.

Are you looking to buy or license-in IP?
As well as checking that the IP rights you are acquiring are worth what you’re paying, you should consider what IP you already have and what effect this may have on the deal, e.g. cross-licensing opportunities that may be available.

Are you looking for investment in your company or for it to be acquired?
IP is important to investors and presented well can increase the value of your company.  Investors may ask difficult questions and it’s important to be able to answer these promptly and positively.

Are you looking to acquire or invest in a company?
Use IP due diligence to check the company has freedom to operate in its key markets and how useful the IP will be in keeping competitors out.  What could be the potential value of the IP and how can this best be realised once you have invested?

What does IP due diligence actually look at?

• Formalities – What IP rights are there?  Are the formal requirements, such as recording ownership and payment of fees, in order? Which rights are granted and which are still pending? Are there any outstanding challenges, e.g. oppositions?   What is the lifetime of the IP?
• Geographical coverage – Where does IP protection exist? Is this appropriate, considering the key markets and placement of competitors? What options are there for extending IP protection to other territories?
• Validity – Are the IP rights valid?  If there are challenges, what likelihood do these have of success?  What scope might validly be granted for pending rights?
• Scope – Do the IP rights cover something commercially useful?  This may take into account the company’s own products and services and those of the competition. Are there easy design-arounds? Are there any pending rights that could be directed to cover other commercially useful products?

The value of IP

Many companies are unaware of the value of their IP, and in turn, how they can leverage these assets.  The experts at Mathys & Squire believe in providing commercial, pragmatic and proportionate advice for our clients in order to help them raise funding, improve the marketability of their company, prepare a solid exit strategy, or strengthen their position through acquisition.

Portfolio management

Whether our clients are licensing their IP rights to others, or are seeking investment funds, their IP rights will come under intense scrutiny.  Our business-focused approach to portfolio management creates IP that will withstand that scrutiny, and we will provide the expert advice necessary to present the value of that IP to prospective licensees and investors.

Our experience

From helping to identify and capture IP assets to assessing IP agreements, ownership, scope, infringement and enforcement, Mathys & Squire has assisted many organisations with due diligence on third party IP (leading to strategic acquisitions and in-licensing). We have also helped guide and defend companies through rounds of due diligence in applications for funding and prior to acquisition.

We work with our clients, from advising counsel as part of a large M&A transaction and assessing potential gaps in an IP portfolio that might hinder a future strategy, through to advising on profitable licensing deals and go-to market strategies. Our experience in developing IP portfolios, as well as litigating IP disputes, allows us to determine quickly if there are weaknesses in the portfolio. We have worked with our clients to identify IP assets that are undervalued, and ready for further development.

Due diligence projects often require a rapid response. We work quickly and efficiently to conduct a detailed examination of a portfolio and provide pragmatic advice, which takes into account the whole picture. To find out more about how we can support your due diligence project, contact us today.

A recent response from the German Federal Government to Parliament has made clear that Germany will not be ratifying the Unified Patent Court Agreement (UPCA) until the consequences of Brexit are confirmed.

In its response, the German government stated: ‘The question of the withdrawal of the United Kingdom from the European Union (so-called Brexit) and its implications for European patent reform play an important role in the further implementation process [of the] Unified Patent Court. The real and legal implications of withdrawing from the Convention must be examined and agreed at European level. This opinion is not yet completed, not least because essential factors of anticipated exit are currently unknown.’ (translated from German statement – here)

It has also been announced that Jo Johnson MP has been re-appointed as UK IP Minister. Given Mr Johnson’s support of the UK’s participation in the UPC during his time as IP Minister from July 2016 – January 2018 (i.e. immediately following the Brexit referendum decision), marking its importance to UK businesses and inventors, it is possible that he (and Prime Minister Boris Johnson) will be keen to find a way for the UK to take part in the long term.

For more information about these recent developments, or for any other general queries about the UPC, get in touch with Caroline Warren or your usual Mathys & Squire attorney.

Mathys & Squire LLP is Food & Drink Matters’ Company of the Month for August 2019. As one of Europe’s leading intellectual property law firms, Mathys & Squire has over 100 years of experience in helping clients protect their innovations and achieve their commercial goals. With 10 offices across the UK and Europe, the firm’s patent, trade mark, design, and litigation attorneys cover a vast range of technical fields, including the food and beverage sector.

Intellectual property (IP) is an important asset that has substantial value for any business and gives it a competitive edge. While the value of trade mark protection and branding is well-recognised in the food and beverage sector, seeking patent protection for a new food product or manufacturing process is not necessarily the first thing that comes to mind. Yet, obtaining a patent allows business owners to enjoy the just rewards of their R&D labour and to be the exclusive provider of the food product or process. By not exploring this option, important opportunities can be missed to seize upon a competitive advantage, which only highlights the importance of obtaining expert advice from Mathys & Squire.

There are a number of common misconceptions surrounding the patenting of food and drink products, and the experts at Mathys & Squire are actively debunking such myths. One such myth is that recipes are not patentable, when in reality they are so long as they solve a technical problem. For example, if a business develops a new process to manufacture food, which lessens the manufacturing time or improves efficiency, the process can be patented. Indeed, novel and non-obvious technical aspects of any food product, packaging and manufacturing methods/recipes can be patented.

Mathys & Squire has extensive experience working with food and beverage businesses in order to maximise the effectiveness of their IP protection. With a range of specialists having chemical, biological, and engineering backgrounds, the team can advise on every aspect of the process through to market, whatever the food or beverage product.

The firm has been working with start-up companies, SMEs, and multinationals, including household names such as Warburtons to protect their food and beverage innovations. The impressive nature of the clients that Mathys & Squire has maintained over the years is a testament to its quality of service.

In the last year alone, the firm has seen a somewhat dramatic expansion, with new offices opening in Munich, Oxford and the Midlands. The new offices have seen the introduction of multiple new members of staff, each bringing their own experience and expertise to the table.

While the firm’s expertise in the food and beverage sector has been the primary focus of this article, Mathys & Squire is not restricted to one particular sector, and serves a broad range of clients working in the fields of IT and software, life sciences, chemistry, and engineering. For example, Mathys & Squire has a proven track record in representing pharmaceutical, biotechnology, aerospace, agri-tech, clean-tech, semiconductor, sports, medical device, telecoms and media clients, which it does so in a manner that suits the clients’ unique strategies and business models.

For more information on how we can help your food business, contact food & beverage expert David Hobson or get in touch with us on 020 7830 0000.

This article was published in the August 2019 edition of Food & Drink Matters (page 19).

In order to safeguard your work, and to work profitably in the future, it is worth considering the importance of creating a formal IP strategy early on to prevent loss of investment and time.

Align IP strategy with business strategy

80% of a business’ value is in its intangible assets. With this statistic in mind, it makes undeniable sense to base the strategic framework of a company around those assets and other IP issues. Trying to segway an IP strategy into your existing business plan may prove a little less than effective, as trying to protect innovation after you have already begun work could leave you vulnerable to finding out someone else was there before you.

It should not be assumed that most businesses have arrived at their current status through ruthless planning; it is far more believable that natural, organic growth has got them to where they are. Therefore, when considering IP strategy, it would make the most sense to start with an analysis of the business’ internal organisation to identify any potential assets that may have been overlooked.

When doing this, it is important to be aware of the different business frameworks you may fall within as they will present different challenges, for example:

• SMEs – this size of business tends to have better opportunities to integrate a robust IP framework within their business strategy. While growing, it can be easier to adopt policies.
• Corporates – by this point in their life-span, these businesses could be expansive and ungainly. Due to this, it is vital to have clarity around IP strategy. Either strong in-house IP counsel or an excellent relationship with an external firm is strongly advisable.

Carry out an IP audit

Don’t just include the basics here, such as a schedule of registered intellectual property including patents, trade marks, design registrations and plant variety rights. Think about the things that the audit should help determine, e.g:

• any unregistered IP rights within the business;
• gaps in your current protection;
• any existing risks (internal systems, ownership and conditions of use);
• any existing opportunities that there is no strategy around – the protection needs could be broader than the current business model; and
• whether any of your current spend is trying to resuscitate property past its sell-by date.

IP creation

Making sure the right firm, or internal team, is at the heart of your IP creation is invaluable. Growing a business with poor or no IP strategy, or a weak position, may be expensive. You may find your organisation going down the route of trying to protect the wrong things or developing an unprotectable product or, worse still, launching a product that is protected by someone else’s rights, which, down the line, may have to be discontinued.

Investing in any cost-heavy marketing campaign without a clear approach to IP, both your own and other businesses, could be ruinous; think reputation and budget. If you miss out on what could have been a lucrative opportunity due to previously unidentified IP issues, you could live to regret it!

What to do next

Depending on your business, there may be one or several different types of applicable IP, but what needs to be considered is which type(s) of IP will best protect your business model and aspirations. To find out more about what your options are when creating a formal strategy for your intellectual property, why not get in touch with our friendly team today at Mathys & Squire. With experts working across a wide variety of fields, we are able to help you create an ongoing protection plan to keep your IP safe and secure no matter what happens in the future.

A version of this article was published in Entrepreneur & Investor Magazine in April 2020.

In April 2019, the EU granted the UK government a six-month extension to the Brexit deadline (exit day is now 31 October 2019) to obtain parliamentary approval for the Withdrawal Agreement which was agreed in November 2018. The new UK government, under the leadership of Boris Johnson, has little more than two months to reach an agreement or leave the bloc without one. Johnson vowed to leave the EU on 31 October, with or without an agreement.

Any agreement will have an impact on the protection afforded to EU trade mark and design rights.  The UK government has issued guidance notes (see here) and draft legislation (see here) which set out how EU trade mark and UK/EU design rights will be treated in the event of a no-deal Brexit.

This article for Managing Intellectual Property’s IP Stars – written by Mathys & Squire expert trade mark attorneys Margaret Arnott, Harry Rowe and Daniel Ramos – sets out a summary of some of the main changes proposed by the UK government in the event of a no-deal scenario (although any future agreement would no doubt seek a greater degree of reciprocity between the UK and the EU), as well as the potential impact of these changes.

EU registered rights on exit day

All registered EU trade marks (EUTMs) and community designs (RCDs) existing as at the exit date will be protectable and enforceable because the UK IPO will create equivalent new UK rights called ‘comparable UK trade marks’ and ‘re-registered UK designs’, respectively. These equivalent rights, which will be created on the exit day, will be recorded on the UK registers and treated as if they had been applied for and registered under UK law.

No fee will be required, and the equivalent rights will benefit from the same filing, registration and priority dates as the EUTM/RCD from which they derive. These rights will be treated as fully independent UK rights and will need to be challenged, assigned, licensed and renewed separately from (or in addition to) the original EUTM/RCD.  After the exit date, any EUTM/RCD proprietor may opt out of holding an equivalent UK right (subject to certain conditions).

Pending EU applications
IP owners with pending EUTM/RCD applications as at the exit date will have a nine-month window within which to file an application for an equivalent UK right. So long as the application is made within this period, applicants will be able to claim the earlier filing date or any priority date of the corresponding EUTM/RCD. In contrast to comparable UK trade marks or re-registered UK designs, these applications will be treated as new UK trade mark or design applications, which will require the applicant to pay a fee and will be examined under UK law.

RCDs for which publication has been deferred as at the exit date (it is possible to defer the publication of an RCD at the EUIPO for up to 30 months) will also be treated as if they were pending RCD applications (although there will be no examination by the UKIPO, because the RCD will have already been examined by the EUIPO).

International registrations
International trade mark registrations and international design registrations designating the EU, which have protected status before the exit day, will be treated in the same way as EUTMs/RCDs. In the case of an international trade mark designating the EU, a comparable trade mark (IR) will be created. In the case of an international design registration protected in the EU, a re-registered international design will be created. These new rights will be treated as if applied for and registered under UK law as national rights, and will share the filing and registration dates of the international registrations from which they originate; as a result, they will need to be renewed separately from the international rights from which they derive.

International trade mark/design registrations designating the EU that have not yet achieved protected status immediately before the exit date will be treated in the same way as pending EUTM/RCD applications (subject to some differences relating to subsequent trade mark designations). The UK IPO has published notices (here and here) on how these equivalent rights will be identified on the register.

IP agreements and ongoing litigation
Any assignment or licence agreement that has been granted in relation to an EUTM/RCD pre-Brexit will continue to have effect across all EU member states including the UK, unless the agreement states to the contrary. Similarly, any ongoing infringement proceedings in the UK courts relating to EUTMs/RCDs as at the exit date will continue as if the UK were still a member of the EU; the UK court will retain the power to grant remedies in relation to any unauthorised use of the comparable trade mark/re-registered design as if it were the original EUTM/RCD. The remedies available to the UK courts will, however, be limited in scope to the UK, and the UK courts will no longer be able to grant pan-European injunctions. Furthermore, counterclaims for invalidity will apply only in respect of the comparable trade mark/re-registered design rather than the original EUTM/RCD as a whole.

Unregistered rights

Continuing unregistered designs
Any unregistered community design (UCD) existing prior to the exit date will continue to be protected in the UK for the remainder of its three-year term as a ‘continuing unregistered design’ (CUD). As with RCDs, this right will be automatically created on exit day. Importantly, the validity of a CUD will not be impacted if the underlying UCD arose from the disclosure of the design in an EEA member state outside of the UK. As with EUTMs/RCDs, any assignment, licence or legal proceedings that involve a UCD will remain effective as if the UK were a member state of the EU, although the remedies available will be limited only to the UK.

Supplementary unregistered design
As UCD protection will no longer cover the UK post-Brexit, the UK  government will create an equivalent UK unregistered design right called a ‘supplementary unregistered design’ (SUD), which will provide protection in the UK post-exit date to both 3D and 2D designs equivalent to that which they would have previously benefited from under the UCD regime. SUD protection will sit alongside existing UK unregistered design right protection, which remains unchanged. According to the UK government, the term of, and conditions for, protection for a SUD will be ‘similar’ to those in respect of a UCD; however, SUD will only provide protection within the UK and will only be created if a design is first disclosed in the UK or another qualifying country/territory. Furthermore, the invalidation of a UCD post-exit date will have no effect on the corresponding SUD in the UK. There is, however, some uncertainty over whether it will be possible for designers to obtain both UCD and SUD protection for designs. In order to benefit from UCD protection in the EU, a design must be first disclosed in the EU, whereas in the UK designers will only benefit from SUD protection if a design is first disclosed in the UK.

It is therefore not clear at present whether simultaneous disclosure in both the UK and the EU will give rise to both UCD and SUD protection, or whether designers will have to choose between either UCD or SUD protection. Either way, post-Brexit, designers will need to consider carefully when and where they first disclose their designs. That said, the UK government has suggested that the position may change if an agreement is reached with the EU on unregistered design protection in the future, e.g. first disclosure in the EU may establish SUD and vice versa.

UK unregistered design right
UK design right will function alongside CUD and SUD protection after exit day. Under the current law, a UK design right can be established by an individual who is resident in the EU, or a business formed under the laws of an EU member state, where first disclosure of the design occurs in an EU member state. However, after the exit date, disclosure in the EU will no longer create a UK design right – qualification for a UK design right will be limited to persons residing in and businesses formed under the laws of the UK or a qualifying country. Where qualification is a result of first marketing, disclosure must have taken place in the UK or a qualifying country. As with SUD protection, the UK government has suggested that this may change if a future agreement is reached with the EU.  

Exhaustion of rights

The rights conferred by EUTMs/RCDs are exhausted after products bearing an EUTM or manufactured to the specification of an RCD are put on the market in the EEA by the owner of the EUTM/RCD or with its consent. As a result, right holders are unable to control the resale and distribution of genuine products in the EEA (although there are a number of exceptions to this rule).

After the exit date, the UK government has suggested that it will continue to recognise the EEA regional exhaustion regime. As a result, there will be no impact on those importing goods into the UK from the EEA. Businesses will, however, be unable to parallel import goods from the UK to the EEA; such action, without the right holder’s consent, would constitute an infringement of the right holder’s IP. This is likely to have considerable practical implications for those exporting in parallel to the EEA, since they will need to obtain consent from right holders to continue to do so. Read the government’s guidance notice on exhaustion here.

Rights of representation

At the time of writing, the referendum result is yet to have an effect on the rights of UK practitioners to represent their clients before the EUIPO.  In a no-deal Brexit, UK representatives will lose their right of representation before the EUIPO on exit day. With many firms considering the contingency of opening an office in the EEA from which to represent clients, the EUIPO recently clarified its position with respect to professional representatives proving their eligibility to act before the EUIPO post-Brexit.

In the instance that a UK practitioner requests the transfer of their establishment to another EEA member state, or requests an additional representative ID, the EUIPO may request evidence that the requestor is conducting ‘real and effective’ business from the new address. This is to ensure that the new address is not merely a post office box or address for service.

The EUIPO has issued guidance on the type of evidence which will be accepted as proving that real and effective business is being undertaken. Evidence should not be limited to the mere existence of premises, but should show that the practitioner(s) is/are working from the new office. Examples of evidence previously accepted include official company incorporation documents, employment contracts and official evidence of tax establishment. However, the EUIPO emphasises that each case will be considered on its own merits and that, whilst a single piece of evidence would likely be insufficient, a combination of evidence will improve the chances of the new address being accepted.

In contrast to practitioners listed as ‘professional representatives’ before the EUIPO, there is no requirement for a ‘legal practitioner’ to be a national of an EEA member state. Therefore, any practitioner with a qualification recognised in another EEA member state may be entered onto the EUIPO’s database of legal practitioners. That said, the practitioner would still have to comply with the requirement of having a real and effective business establishment in an EEA member state to be able to represent clients before the EUIPO.

The EUIPO has taken the position that it will refuse any request for exemption from the nationality requirement prior to Brexit where the requestor is a UK national. It is clear, therefore, that the ability to continue to represent clients before the EUIPO will be very much dependent on the UK government’s ability to negotiate an agreement which preserves this right. Alternatively, UK practitioners will need to jump the various hurdles set by the EUIPO in order to obtain an address in the EEA which is considered a real and effective business address, as well as obtaining an equivalent qualification in an EEA member state.

Whilst the UK IPO/government have set out in some detail the Brexit plans for trade mark and design rights, the policy of the new UK government under Boris Johnson to leave the EU on October 31, with or without any withdrawal agreement, means that it is imperative that rights holders and UK trade mark practitioners alike formulate a strategy to address the real possibility of a no-deal Brexit. With respect to the latter, this may lead to UK firms merging with European firms in order to meet the real and effective business requirement. To learn more about rights of representation, read the note published by the Chartered Institute of Trade Mark Attorneys (CITMA) here and the EUIPO’s notice in April 2019 here.

This article was originally published on the IP Stars website in August 2019.

Thursday 5 September 2019
1:00 – 2:30pm (EDT) | 6:00 – 7:30pm (BST)
Register here (early registration discount deadline Friday 16 August)

Join Mathys & Squire Partner Hazel Ford and a panel of patent attorneys in this live webinar with interactive Q&A which will guide patent counsel through overcoming the challenges of obviousness in biologics patent claims in the US, Europe and China. The panel will examine the similarities and differences between claim types that have the best chance of success, and discuss recent case law and critical issues that arise.

Topics of discussion will include:

The following key issues will also be covered during the webinar:

• What evidence should counsel provide to support its assertion of nonobviousness in biologics patents?
• How can counsel overcome the inconsistency in the EPO’s treatment of biologics patents?
• How can patent counsel guide applicants during patent application drafting to reduce the likelihood of rejection?

For more information and to register, click here.

Last week many of us were excited to learn of Franky Zapata’s achievement in crossing the English Channel on a jet-powered flyboard. If you haven’t yet seen footage of the flyboard, click here to watch a full video of it in action. Whilst flyboards have been around for a few years now, this recent breakthough is a standout achievement, as it also involved a mid-air refuelling stage during the cross Channel flight.

The team at Coller IP is frequently sought out to answer questions about innovations. In this case, we wondered: are there any patents behind this fantastic flyboard?  The answer is: yes, including US Patent filings US20180208312A1, Systems and Methods for Improved Flight Control, and US20190161188A1, a Device for Propelling a Passenger (an image of which is below – figure 2A).

In fact, there are a range of flyboard patents by Franky Zapata, but this article will focus on the turbojet implementation. The patents also provide for a seated version of the device – i.e. a hoverbike variation (perhaps reminiscent of the Speeder Bike from Star Wars). We expect this version will allow more fuel to be carried, thus enabling longer journeys to be made.

Are there other patents like this? If so, what are they like? In our analysis, we found that most patents in this relatively small sector are currently focussed on propeller technology or use some form of water thrusting. Other jet patents tend to focus on jetpacks where the jets are located on the back of the user. One propeller example is from Canadian company Skykar (US20140097290A1):

Elsewhere, in China, the Jiangsu Digital Eagle Technology Company has developed a “Flying Skateboard” (US10245500) as shown below:

Larger companies have few filings in this sector, with Toyota being an interesting exception (US6969027):

Toyota’s focus on the vertical take-off and landing apparatus (shown above) demonstrates its commercial interest in this sector. It also shows that there is scope for innovation beyond the transport mechanism itself –i.e. a structure that assists flying users to land safely without injuring themselves, as it seems that landing can often be a challenge for such devices.

Returning to intrepid inventor Franky Zapata, he has been actively filing patents for many years, beginning in circa 2012. His first patents related to thrusting a passenger into the air using water (where the water used is below the elevated person). While this is undoubtedly great fun, it is limited by the requirement to use the device over water. Commercially, we note that earlier Zapata inventions have been kept under the control of the ZipH20 and Zapata Holding companies, while his latest patents are filed by ZipAir. This multi-company strategy makes sense as the market for water thrusters is very different from the much wider and more substantial market opportunities presented by the turbojet thruster.

Conclusion

Whether we are looking for a faster way to travel or simply because we want to whiz around as if we are using a hoverboard in Back to the Future II, it is hard not to admire the flyboard. One word of caution though is that just like any technology, it can be used for good or bad. On Bastille Day, Franky Zapata could be seen toting a rifle as he flew around Paris. While on the one hand an agile, hovering soldier could be useful, particularly if you need to enter or exit a conflict zone quickly, the idea of a terrorist or criminal using such technology is concerning. As for the patents, we fully expect that Franky Zapata will continue to develop exciting innovations to create new options for personal transport and look forward to following his work in this area, as well as the work of other innovators in this sector in the coming years.

If you have an IP strategy project that you need expert advice on, speak to a member of our team today. Our experts can provide you with detailed information about any industry (not just relating to flyboards!), as well as your competitors and what they are working on in this area.