Intellectual property issuesParis Convention
Is your jurisdiction party to the Paris Convention for the Protection of Industrial Property? The Patent Cooperation Treaty (PCT)? The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs)?
The United Kingdom is a party to the Paris Convention (in force since 1884), the Patent Cooperation Treaty (in force since 1978) and TRIPs (in force since 1995).
On a pan-European point, the European Union’s long-delayed ‘unitary patent package’ legislation, which would ultimately create a unitary patent right and a Unified Patent Court (UPC) for the European Union has not yet been fully ratified or implemented although, with the passing of the UPC legislation in December 2020 by the German Bundesrat, the UPC is now a significant step closer to realisation and could be up and running by 2022. The United Kingdom is a signatory and the UK government has ratified the UPC Agreement.
In July 2020, it was announced that the UK would withdraw from the Unitary Patent and Unified Patent Court project. Should the UP/UPC agreements be ratified at a future date and go forward without the UK’s involvement, UK businesses wanting to protect their inventions will still be able to make use of both the Unitary Patent and Unified Patents Court within EU countries which sign up to the new system. However, in the UK itself, options will be restricted to the UK courts and obtaining national domestic patents in the UK.Contesting validity
Can the licensee be contractually prohibited from contesting the validity of a foreign licensor’s intellectual property rights or registrations in your jurisdiction?
There is no outright prohibition on no-challenge (as to validity or ownership) clauses; however, licensors should be wary of being seen to restrict competition or restrict trade under article 101 of the Treaty on the Functioning of the European Union (TFEU). The Technology Transfer Block Exemption Regulation (TTBER) and its Guidelines provide a competition framework for patent, know-how and software copyright agreements by way of a block exemption to article 101.
Under article 5(1)(b) of the TTBER, no-challenge clauses (as to validity) relating to EU held intellectual property rights in non-exclusive licence agreements will not benefit from the block exemption, and will thus require individual examination for compliance with to article 101. Insofar as a no-challenge clause is contained within an exclusive licence agreement, while a blanket no-challenge as to validity clause is not exempted either under the TTBER a provision that provides a right of termination of the technology transfer agreement in the event of such a challenge is permitted.
The EU Commission views no-challenge clauses (to validity) as typically acceptable in the context of settlement agreements, under which a licence is granted of the subject intellectual property (IP) that has been in dispute.
Generally, the EU Commission does not regard a clause obliging a licensee not to challenge the ownership, as opposed to validity, of the licensed IP or technology rights as being restrictive of competition under article 101.
Notwithstanding Brexit, EU competition law (articles 101 and 102 TFEU) will continue to be relevant post-Brexit and will apply to agreements or the conduct of UK businesses that have an effect within the EU, in much the same way as agreements or conduct of US and Asian businesses are currently subject to EU competition law where their agreements or conduct affect EU markets. A UK participant in a global cartel will, therefore, continue to face investigation and fines by the European Commission.Invalidity or expiry
What is the effect of the invalidity or expiry of registration of an intellectual property right on a related licence agreement in your jurisdiction? If the licence remains in effect, can royalties continue to be levied? If the licence does not remain in effect, can the licensee freely compete?
Typically, it will be a term of an IP licence that it will terminate in line with the expiry or invalidity of the intellectual property right (IPR) in question. However, there are some nuances depending upon the IPR in question.
Patent licensors should be aware of the impact of EU competition law, since agreements that restrict the right of a licensee to compete after the expiry of the patent will be in breach of this legislation. Similarly, licences requiring indefinite payment of royalties or fees are likely to be in breach of competition law, although an ongoing obligation for payment exceeding the term of the patent may be permissible where it pertains to either fair reward for the patent holder (eg, in research patents, which may not ultimately bear fruit during their term, although their exploitation may be instrumental to any eventual commercial outcome), or is in relation to know-how associated with the patent. Note that licences that fall under the Technology Transfer Block Exemption (Commission Regulation (EU) No. 316/2014) will lose the benefit of the ‘safe harbour’ provided by the block exemption on the date that the last intellectual property right granted under the licence expires or becomes invalid (or, in the case of know-how, enters the public domain) and the terms of the licence will have to be assessed under relevant competition law on an individual basis. The TTBER will continue in force in the UK until 30 April 2026.Requirements specific to foreigners
Is an original registration or evidence of use in the jurisdiction of origin, or any other requirements unique to foreigners, necessary prior to the registration of intellectual property in your jurisdiction?
The United Kingdom has no special requirements for the registration of IPRs owned by foreigners, or for the registration of IPRs originating in another jurisdiction. The registration of IPRs originating outside or held by entities based outside the United Kingdom should follow the UK’s standard registration processes.Unregistered rights
Can unregistered trademarks, or other intellectual property rights that are not registered, be licensed in your jurisdiction?
An unregistered right may be licensed, or assigned, to the extent that it can be defined in such a way as to grant sufficient certainty as to the scope of that property right. Unregistered trademarks are not uncommon in the United Kingdom and are often licensed, as they are easily delineated and can be protected under the common law tort of passing off, thereby giving a licensee comfort as to the value of its licence. Similarly, licences of registered trademarks will typically incorporate reference to the attendant unregistered rights associated with that trademark, such as any goodwill accrued to it and copyright in logos. Future or potential rights can be licensed prospectively.Security interests
Are there particular requirements in your jurisdiction to take a security interest in intellectual property?
IPRs are property rights and are, therefore, capable of being subject to the usual security interests under English law. There are no requirements unique to the grant of security over IP, which may be mortgaged or subject to fixed or floating charges in the usual manner.Proceedings against third parties
Can a foreign owner or licensor of intellectual property institute proceedings against a third party for infringement in your jurisdiction without joining the licensee from your jurisdiction as a party to the proceedings? Can an intellectual property licensee in your jurisdiction institute proceedings against an infringer of the licensed intellectual property without the consent of the owner or licensor? Can the licensee be contractually prohibited from doing so?
Subject to the provisions of any licensing agreement, there is nothing in UK legislation to restrict a foreign owner or licensor from commencing proceedings without joining the UK licensee. There is also nothing to prevent a licensee from initiating proceedings without the consent of the owner or licensor, subject to the licensee having standing to issue the proceedings. The position in respect of patents is prescribed by legislation. Under section 67 of Patents Act 1977 (PA 1977), a licensee may only bring proceedings in respect of a patent to which it is the exclusive licensee, and in the event that it does so the patentee must either be joined as a claimant, or if it is unwilling to do so, as a defendant (provided that, if the patentee does not enter an appearance as defendant, it shall have no liability in costs). An exclusive licensee under section 67 of PA 1977 may be awarded damages or other relief. Recent case law has clarified that an exclusive licence that is subject to the right of a third party to request a non-exclusive licence remains an exclusive licence for the purposes of section 67 of PA 1977 until the third party exercises its right. Conversely, care should be taken in the case of a grant of a 'co-exclusive' licence to closed group of licensees (eg, a corporate group). Such licences may represent a grant of a group of non-exclusive licences only.
Section 46 of PA 1977 provides that a licensee under a ‘licence of right’ may require a patentee to issue proceedings to prevent infringement, and if the patentee does not do so within two months, may commence proceedings itself, joining the patentee as a defendant (although without cost liabilities unless entering an appearance). A licensee may be prohibited from exercising the above rights by agreement with the licensor.
The Trade Marks Act 1994 (TMA 1994) sets out similar provisions in respect of trademarks. Section 31 of TMA 1994 provides that where an exclusive trademark licence states that the licensee has the same rights as if the licence had been an assignment, the licensee shall be able to bring proceedings in its own name. Where the exclusive licensee and proprietor of the trademark have a concurrent right to bring infringement proceedings, they can both sue, but must both be made parties in order to protect a defendant from being sued twice for the same infringement. Where the proprietor is joined as a defendant to proceedings, they will not be liable for costs unless they take part in the proceedings. The obligation to join the proprietor/exclusive licensee and the proprietor’s ability to avoid liability for costs can be contracted out of by the proprietor and the exclusive licensee. For non-exclusive trademark licensees and exclusive licensees where the licence does not grant a right to bring an action in the licensee’s name, section 30 of TMA 1994 entitles the licensee to call on the proprietor to take infringement proceedings in respect of any matter which affects the licensee’s interests, unless the licence excludes this right. If the proprietor refuses to bring proceedings or fails to do so within two months of being requested, the licensee may bring proceedings in its own name. Once again, the proprietor must be joined as a party to the proceedings, and if added as a defendant, is not liable for costs unless they take part in the proceedings.Sub-licensing
Can a trademark or service mark licensee in your jurisdiction sub-license use of the mark to a third party? If so, does the right to sub-license exist statutorily or must it be granted contractually? If it exists statutorily, can the licensee validly waive its right to sub-license?
There is no statutory right to sub-license in UK legislation, and both section 30(4) PA 1977 and section 28(4) of TMA 1994 refer to sub-licences being grantable only insofar as is provided for in the relevant head licence. The Copyright, Design and Patents Act 1988 (CDPA 1988) is silent on rules for sub-licensing copyright but, in light of the above, it is likely that no such right will be implied unless specifically contemplated within the head licence. Licences should in any event deal expressly with sub-licensing rights to avoid later dispute or inference, for instance, where a licence is to ‘all the rights under the patent’.Jointly owned intellectual property
If intellectual property in your jurisdiction is jointly owned, is each co-owner free to deal with that intellectual property as it wishes without the consent of the other co-owners? Are co-owners of intellectual property rights able to change this position in a contract?
In contrast to many other jurisdictions, such as the United States, in the United Kingdom, co-owners of IP are significantly restricted in the way they can deal with and exploit co-owned IP without the consent of the other co-owner or owners.
In relation to copyright the general rule is that the author of a work is automatically the first owner of copyright in it (section 11(1), CDPA 1988). Pursuant to section 16(2) and 173(2) of CDPA 1988, in the UK, a joint owner of copyright cannot license or exploit a copyright work without the consent of the other joint owner. Where a jointly owned right has been licensed by one owner, the other ‘non-licensing’ owner would be free to sue its co-owner for infringement (Cala Homes South Ltd v Alfred McAlpine Homes East Ltd) CDPA 1988 does not expressly deal with the right of a co-owner to assign its share of jointly owned copyright, although it has been asserted academically that it is possible for a co-owner to assign its interest. This uncertainty regarding assignment can be dealt with expressly between the parties by contract.
In respect of patents, PA 1977 provides that patents may be jointly owned, and each patent owner will be free to work the patent for him or herself. However, section 36(3) PA 1977 provides that a joint owner of a patent may not without the consent of all other joint owners:
- grant a licence under the patent;
- assign his or her share of the patent;
- mortgage his or her share in the patent; or
- amend the patent specification or apply for an amendment.
The ability for a co-owner to exploit the patent is, therefore, significantly limited. Again, this may be varied by contractual agreement between the parties. A similar position exists in respect of trademarks under the TMA 1994. Co-owners of trademarks may exploit the mark themselves without the consent of the other co-owners but may not license, assign or charge the mark without consent. These points illustrate the shortcomings of joint ownership without further agreement.
Broadly speaking, the above statutory positions can be varied by express agreement between the parties in a contract; however, practical and drafting difficulties may often arise in trying to foresee, and provide for, any possible permutation of future exploitation by each of the parties.First to file
Is your jurisdiction a ‘first to file’ or ‘first to invent’ jurisdiction? Can a foreign licensor license the use of an invention subject to a patent application but in respect of which the patent has not been issued in your jurisdiction?
The United Kingdom is a ‘first to file’ jurisdiction. Patent applications are considered personal property under section 30 of the PA 1977 and, accordingly, grants of rights may be made out of them.Scope of patent protection
Can the following be protected by patents in your jurisdiction: software; business processes or methods; living organisms?Software
While software is an excluded and non-patentable category under section 1(2)(c) of PA 1977, UK case law is pulling away from the certainty of this, since the courts have considered whether the software creates a meaningful technical effect. The IPO has issued guidance based primarily upon the judgments in Aerotel Limited v Telco Holdings Ltd and ors , Symbian Limited v The Controller of Patents  and HTC Europe Co Ltd v Apple Inc , indicating that where software meets certain signposted criteria around technical effect, it will be patentable, subject to the other usual requirements.
Additionally, computer code as well as the images, text, video and sound present in any user interface of the software may be protected by copyright, and databases within software may be protected by database rights.
Business methods are similarly excluded from patent protection under section 1(2)(c) of PA 1977. However, they are subject to the same IPO guidance as software, and in the wake of Aerotel, business methods have been found to be patentable where they have a demonstrable technical effect above and beyond their methodology.
Directive 98/44/EC (the Biotechnology Directive) as implemented in Schedule A2 of PA 1977 states that a biological product or a process relating to biological material may be patented, subject to several exceptions within the field. These include any inventions pertaining to the human body, cloning, any industrial or commercial use of human embryos and essentially biological processes (used to create plant or animal varieties).Trade secrets and know-how
Is there specific legislation in your jurisdiction that governs trade secrets or know-how? If so, is there a legal definition of trade secrets or know-how? In either case, how are trade secrets and know-how treated by the courts?
On 9 June 2018, the United Kingdom implemented the EU Trade Secrets Directive (Directive (EU) 2016/943) that harmonises trade secret protection throughout the European Union. Information is a trade secret if it:
- is secret;
- has commercial value because it is secret; and
- has been subject to reasonable steps to keep it secret.
The meaning of ‘reasonable steps’ will be developed as the courts apply this law. Labelling something a trade secret is unlikely to be enough of itself.
Trade secrets and know-how can also be effectively protected under the United Kingdom’s ‘law of confidence’, a common-law doctrine. It is generally accepted that for information (including trade secrets) to be protected under the common law of confidentiality, three requirements must be met, as set out in Coco v AN Clark (Engineers) Ltd  FSR 415, which are:
- the information itself must have the necessary quality of confidence;
- the information must have been imparted in circumstances importing an obligation of confidence; and
- there must be an unauthorised use of that information to the detriment of the rights holder
It is not a requirement that a given recipient enters into a nondisclosure agreement, although it is indicative of a relationship of confidence. If a recipient then discloses that information in breach of that confidence, legal action can be taken by the owner. Trade secret owners may bring claims under the common law for breach of confidence or misuse of confidential information in addition to or as an alternative to a claim under the implementation of the Trade Secrets Directive.
Parties will often enter into agreements when transferring trade secrets or know-how between each other for any purpose expressly protecting the use and handling of the information, and setting out the indemnities in respect of their loss or misuse. It is also common in such agreements to include an express reference granting the right to seek an injunction as first recourse in the event that the information is lost or misused. The courts have been willing to grant injunctions in recognition of the importance of trade secrets. Under English law, trade secrets, know-how and confidential information are not classed as ‘property’ as such. Accordingly, rights in the same are enforced under the laws of tort rather than property.
Does the law allow a licensor to restrict disclosure or use of trade secrets and know-how by the licensee or third parties in your jurisdiction, both during and after the term of the licence agreement? Is there any distinction to be made with respect to improvements to which the licensee may have contributed?
Parties are free to contract so as to restrict the disclosure of trade secrets to third parties, and will ordinarily do so. Confidentiality provisions will typically be drafted to survive the agreement and be severable, as disclosing parties will wish to protect their trade secrets indefinitely, rather than just for the term of a given licence; any loss of confidentiality in the future will limit the capacity of the disclosing party to monetise that information going forward.
Parties are similarly free to contract with respect to the confidentiality (and other rights) associated with any follow-on work or improvements that a licensee might make, but should be aware of competition law restrictions on exclusive grant-backs of IPRs.Copyright
What constitutes copyright in your jurisdiction and how can it be protected?
UK copyright law is set out in CDPA 1988, although works published before that date will be subject to the law in place at the time of their creation (the Copyright Act 1956 and the Copyright Act 1911). Although there is some nuance in the application, generally a work that is original and permanent (ie, has been recorded in some way) will be automatically protected by copyright provided that it falls within one of the following categories:
- literary, dramatic, musical or artistic works;
- sound recordings, films, broadcasts or cable programmes;
- typographical arrangements of published editions; and
It remains arguable, based on EU case law that becomes 'retained EU law' as at 1 January 2021, that the approach of the CDPA to confine copyright to works within a closed list, is incorrect. Copyright protection lasts for 70 years from the end of the year in which the last creator of the work dies, although for some of the above categories the period is shorter. Although there are no publication or registration requirements for UK copyright, it is advisable to maintain a record of a work’s creation, should ownership disputes arise.
Law stated dateCorrect on
Give the date on which the information above is accurate.
27 January 2021