UK: Intellectual Property Rights And Patents. A Wealth In Ideas

Last Updated: 11 September 2008
Article by Jacqueline Needle

Do you believe that intellectual property (IP) rights, and patents in particular, are:

  • expensive,
  • irrelevant to small and growing businesses, and
  • difficult, if not impossible, to enforce?

If these are your views, you are in accord with the majority (70%) of non-patent holding smaller companies who took part in a research project in 2000 investigating the value of IP. The research established that only 30% of smaller companies in the UK, France, Germany, Italy, Spain, the Netherlands, Sweden and Finland had ever applied for a patent.

However, James Dyson founded a company, which, because of his successful use of the patent system, was enabled to manufacture and sell vacuum cleaners particularly profitably, and in the process he became a millionaire. Dyson licensed his patents to companies in other countries, most notably to a company in Japan, such that the worldwide manufacturing capacity for his cleaners was enhanced. Dyson was also able to keep versions of the vacuum cleaner made by competitors, most notably by Hoover, off the market.

Earlier, Ron Hickman used the patent system to great effect to enable him to earn money from his invention of the "Workmate". In recent years, Mandy Haberman's company has made and marketed the "Anywayup Cup" profitably, and success in enforcing her patents has seen a competitive children's drinking cup from Jackel International removed from the market.

  Difficult and expensive?

Individuals and companies can succeed and make money without involving themselves in IP issues. However, such an approach is not risk or expense free. There are many examples of companies who have ignored IP completely only to be accused of patent or trademark infringement. The champagne at a product launch party can taste very flat if an unexpected court injunction stops the launch in its tracks. The expense of dealing with such accusations, especially if the product has to be removed from the market, will be significant. Even worse, this unexpected expense could probably have been avoided.

IP does cost money, and if the issues are not understood, it can appear difficult. However, without IP, creativity cannot be captured and protected and it is this protection which enables ideas to be turned into wealth. The difficulties disappear with knowledge and Mandy Haberman, amongst many others, has criticised SMEs for not having at least one person in authority who has been educated in IP.

It is not necessary to spend money to obtain some IP rights. Copyright and unregistered design rights arise automatically. A company needs to keep the original software or design documents in a systematic way so that the date of origination can be established, and the creator or author identified. The company also needs to ensure that it owns rights it uses in its day to day business. For example, a company commissioning a logo design for its own use will not automatically own the copyright in the resulting logo. A specific agreement will be required to transfer the copyright from the designer to the company.

Patent Office records can be freely searched on the internet for information about the trade marks which have been registered. A company can avoid conflict problems by ensuring that their proposed trade mark or logo is not already registered by someone else.

It does cost money to pay professional patent attorneys to register trade marks and to draft and file patent applications, but the potential rewards are high. For the price of one full page advert in the "Daily Telegraph" it would be possible to cover the fees arising over a five year period to obtain grant of a patent for a new invention in a selection of four or five European countries, in the USA, and in Japan. The newspaper may be in the bin within 24 hours, whilst the patents could provide a platform for profitable trading for 20 years.

Irrelevant for SMEs?

All businesses, regardless of their size or trade, have competitors, and seek commercial advantages over those competitors. A small company coming into conflict with the rights of others does not have the commercial "muscle" that large corporations can use to force a settlement. IP rights might be the only weapons an SME can deploy in the event of a conflict. Effective use of IP could be vitally important to SMEs.

An SME using IP effectively will:

  • Have a person in authority who has adequate knowledge of IP issues;
  • Have routines in place to safeguard rights; and
  • Will seek professional assistance when required.

Have a person in authority who has adequate knowledge of IP issues

It will be seen that conflicts can arise, or rights can be lost, if appropriate action is not taken during the timescale of a project. A knowledgeable owner or executive can identify, and then avoid, any risk of conflict by undertaking searches. During any project the executive can also decide whether any of the ideas are so commercially valuable that protection should be sought.

Have routines in place to safeguard rights

Any proprietary information of commercial value should be identified and kept confidential. Employees should be made aware that such confidential information must not be divulged. Measures may be taken to restrict the availability of confidential information within a company, and departing employees should be reminded that their duty of confidentiality will remain even after they have left. Both the recipe for Coca-Cola and the exact composition of the batter for Kentucky Fried Chicken are still known to only a handful of people.

A majority of those made rich with the assistance of IP, such as James Dyson and Ron Hickman, have had ideas or inventions which have been patented. A patent can only help if it is valid, and a valid patent can only be obtained if the patent application is filed before there has been any public disclosure of the invention. It is essential that any new idea of potential worth is kept totally confidential to the company during the early stages of design or development. At some time a positive decision should be made as to whether patent protection is likely to be required. If it is decided that patent protection is not warranted then public disclosure can be made, but it should be realised that putting the idea in the public domain also dedicates it to the public as the right to obtain patent protection in most countries has been given up.

Seek professional assistance

It is important to get the patenting decision correct, especially if a project is thought to be of potential value to the company. Not only must an invention be new to be patentable, it must also be non-obvious compared to what is already known. However, many inventors will wrongly define the final result of their labours as obvious, perhaps because they see it just as the consummation of days or weeks of everyday work.

The patentable invention also has to be of industrially applicable subject matter and not in the list of entities which are explicitly excluded from patent protection. The inexperienced are often heard to exclaim with certainty: "you can't patent that".

If the invention has taken time and money to develop, will take further resources to get into the market, and is forecast to have a future, it would be wise to take professional advice. In such circumstances there is a very high chance that the invention will be patentable. Even if the patent attorney advises that an invention is not generally patentable, other protection options may arise. For example, the significant differences between European and US patent laws mean that products which cannot be patented in Europe can be patented in the USA.

Alternative forms of protection, such as a Community registered design, may also be available and might be commercially useful.

IP rights are difficult to enforce

It is commonly said that patenting an invention is a waste of time because the company will not be able to afford to enforce the patent. However, less than 1% of all patents are involved in any dispute, and it is the existence of the patent, rather than of the invention, which provides the wealth generating opportunities.

If a product newly on the market is successful it will soon attract the attention of competitors. They will want to provide their own versions and thereby share in the potential profits. If the product is not patented, the competitors are free to use the idea, although they cannot make a slavish copy. Domestic, electrically powered, air fresheners were put on the UK market one September some years ago as the "new, ideal Christmas gift". By October there were in excess of ten competing devices available such that the originator's Christmas market was literally decimated.

If the new product is patented, or is the subject of a patent application, the majority of businesses will pause before rushing to develop rival versions. Even large business is reluctant to get involved in patent litigation without good commercial reasons. It may be that a competitive product can be developed that "gets around" the patent, but that will require the competitor to spend time and money with no certainty that they will succeed. When Xerox introduced the first generation of copying machines, they had a worldwide monopoly for the 20 years for which their patents existed without having to take action for patent infringement. As soon as the patents expired numerous competitive photocopying machines were launched.

The competition is attracted by success, and so infringement actions are generally about inventions which make money. This profit stream alone might be enough to enable a patent action to be funded, as was the case for both James Dyson and Mandy Haberman. It is also possible to take out legal expenses insurance to fund such actions.

In the past, patent infringement actions in the UK had to involve three types of professionals, namely patent attorneys, solicitors and barristers, and were therefore alarmingly expensive. The Patents County Court was set up to provide affordable patent litigation. It has enabled costs to be reduced considerably by allowing a patent attorney to act alone, and by requiring more focus on the issues.

More recently appropriately qualified patent attorneys, referred to as Patent Agent Litigators, have been given rights allowing them to litigate in the mainstream English courts, up to and including, the House of Lords. This reduces the numbers of professionals needed in a case. There have also been changes in practice in these courts which have streamlined procedure and required the issues to be simplified. We are now in an era where patent infringement actions, whilst never cheap, can now be undertaken for a much more reasonable cost.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Jacqueline Needle
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