The main purpose of the Intellectual Property Act 2014, which has now received Royal Assent, is to modernise certain aspects of intellectual property law "in order to ensure that the IP system operates more efficiently and is clearer and more accessible, thus increasing legal certainty" (taken from the Explanatory Note).

The Act primarily deals with patent and design laws but, significantly, includes provisions to allow the UK to ratify and implement the Unified Patent Court Agreement.  There are new criminal penalties for intentional infringement of registered designs, strengthening of the patent Opinions service and a new Opinions service for registered designs, as well as "improvements" to unregistered design right law. Provision is also made for a research exemption from disclosure in relation to freedom of information and for the automatic extension of certain existing copyright provisions to nationals of and works first published in other countries (without the need to include a list of countries and territories in an order).

It will be for the Secretary of State to make orders bringing the new measures into force, but it is expected that they will begin to come into force from October 2014, with all measures implemented by late 2015.

Key elements of the Bill: 

  • Patents   
    • New powers to enable the UK to implement the Unified Patent Court Agreement (UPCA)
    • Patent Opinions – Extension of power to revoke a patent; broader grounds for seeking an opinion, and Opinions on SPCs to be allowed 
    • Sharing information with overseas patent offices
    • Patent web link can replace patent number on products  
  • UK design right  
    • The repeal of first ownership of UK design rights for the commissioner  (transitional arrangements apply) 
    • Removal of the words "of any aspect of" from the definition of "design" that can be protected by UK design right 
    • Originality - "commonplace" to be limited to commonplace in qualifying countries 
    • Qualifying criteria –no more "qualifying individuals" 
    • Exceptions to be introduced such that acts done privately for purposes which are not commercial, acts done for experimental purposes and acts of reproduction for teaching or citation purposes will not be an infringement  
  • Registered Design   
    • New criminal penalties for deliberate copying of a UK or Community registered design 
    • New application of criminal penalties to partnerships
    • Extension to Community designs of the exemption from copyright infringement when legitimately using a registered design (under section 53 CDPA) 
    • Commissioner – no longer the first owner of UK registered design – employer still first owner in all cases
    • Applicants no longer need be the proprietor of the design 
    • Right of prior use to be introduced 
    • International registration procedures to be available for UK registered design (accession to the Hague Agreement)
    • Alignment of innocent infringement with the provisions under the Community design rights legislation 
    • Availability of an Appointed Person (as well as the Court) for appeals from the Registrar 
    • New Registered designs Opinions process (the scope of which may be extended to include other design rights such as the UK unregistered design right) 
    • Trading standards will have similar powers of enforcement for design offences as they have for copyright and trade marks 
    • Powers of forfeiture set out in relation to Registered design infringement  
  • Pre-publication research
    • New exemption from the Freedom of Information Act 2000 for pre-publication research  
  • Copyright
    • Extension of copyright to foreign works  
  • Reporting duty
    • The Secretary of State to annually report on innovation and growth in IP  

The Act

The Intellectual Property Act 2014 makes amendments to the Copyright Designs and Patents Act 1988 (CDPA), the Patents Act 1977 (PA) and the Registered Designs Act 1949 (RDA).

Many of the changes to the design law stem from the Hargreaves Review and have three main purposes: to help improve the enforcement of designs and understanding the design rights of others; to simplify design law and get the IP framework to better support innovation; and to improve processes associated with the design framework such as better provisions of information.

In relation to the changes to patent law, the objectives were to introduce an easier way for patent owners to provide public notice of their patent rights; to expand the circumstances in which the IPO may issue an opinion in relation to patents; to provide for the UPCA to be brought in to effect in the UK to establish the UPC; to allow the IPO to share information on unpublished patent applications with international partners to help reduce international patent backlogs and speed up patent processing; and further to correct minor aspects of the patents legislation to provide clarity and legal certainty to users of the patents system.

The Minister for Intellectual Property, Lord Younger, at recent BIS press release relating to the new Act commented:  ''Continued investment in intellectual property is vital to all businesses, as it contributes £16 billion to the UK economy each year. It is essential that we continue to work hard to create the right environment for them to flourish so we can benefit from their creative designs, inventions and ideas'', adding, ''I am confident that this Act will further strengthen our world-class IP system – from research to market – and to help businesses of all sizes continue to thrive''.  Progress in this area will be measured as the Act introduces a new reporting duty: the Secretary of State will annually report on the state of Intellectual Property law and the work of the IPO.

Patents 

  • New powers to enable the UK to implement the Unified Patent Court Agreement:  Section  17 of the Act inserts new sections 88A and 88B into the Patents Act 1977 by which the Secretary of State may make an order to give effect to the UPCA in the UK (i.e. ratify the UPCA). The main areas which should be covered by such an order, for example provisions relating to the exclusive jurisdiction of the Unified Patent Court and for the payment of fees, are included. The section  also allows for minor amendments for alignment of certain provisions of the 1977 Act with equivalent provisions in the UPCA (as set out in the Schedule to the Act). Under subsection (6), any secondary legislation made under the new section 88A must be approved by resolution of each House of Parliament (i.e. not  simply by Statutory Instrument (SI)).
  • Extension of the powers of the Comptroller-General of Patents Designs and Trade Marks to revoke a patent on his own initiative: The Comptroller will be able to do so if an opinion concludes that a patent is invalid because the invention covered by the patent was either not novel or was obvious. According to the Explanatory Note to the Act it is envisaged that this additional power will only be exercised in the clearest of cases, where it is indisputable that the patented invention lacks novelty or an inventive step. The patent holder will have the opportunity to apply for a review of the opinion, and also to make observations or amend his patent before any revocation action is taken.
  • Broader grounds to seek Opinions may be possible: The Act amends  section 74A of the Patents Act 1977 to replace the specified grounds on which an opinion can be issued with a broader power to set out those grounds in the rules. Prescribing the grounds in the rules will enable these to be amended more easily in response to the demands of the users of the service.
  • Amends to Schedule 4A to allow Opinions to be requested on the validity or infringement of an SPC
  • Patent "link" can replace patent "number": The Act allows patent proprietors to mark their products with either the specific patent number(s) or a relevant internet link which takes the user to a website (or a specific webpage) which details the specific patent number(s) associated with the patented product.
  • Sharing information with overseas patent offices: The Act amends section 118 of the Patents Act 1977, allowing the IPO to send any patent office outside the United Kingdom such information about unpublished applications for patents as that office requests, subject to working arrangements that the comptroller has made with that office that must include confidentiality provisions. A patent office outside of the UK is defined as one that carries out the same functions relating to patents as the UKIPO. This amendment emerges in response to the fact that applying for a patent is often a lengthy and complex process, so much so that there is a significant backlog of patent applications in many patent offices. As a result, sharing information with overseas offices will be most useful when it can reduce the duplication of work, hence the IPO will not share information when it has yet to conduct any work in relation to the UK patent application. The Explanatory Note indicates that the section will prove most useful when the other office is dealing with an application which claims priority from a UK patent application (hence sharing information has the potential to reduce workload). Consequently, the other office will be required to specify what information is required and in relation to which patent application, identified by the application number. This is in line with the approach that the IPO takes when providing information to the EPO under section 118(3)(a) of the Patent Act 1977. 
  • Minor amendments to the Patents Act are contained in Schedule 1 to the Act.

Priority of patent applications: Paragraph one confirms that a patent application filed in a WTO country is of the same status, for priority purposes, as a patent application filed in the UK or any other convention country.

Third party rights: Paragraph two clarifies that third party rights (in the event that a patent application is terminated and subsequently reinstated) do not begin until the end of the period during which the patent applicant can request an extension of time to the period the applicant had failed to meet.

Time periods for entitlement action: Paragraph three extends the time period for a party who feels they are entitled to an interest in a patent so that it runs from, and includes, the date of grant (maintaining the current position) but finishes on (and includes) the corresponding second anniversary date at the end of the two year period. Thus for a patent granted on 2 October 2012, the time period for filing an entitlement action will now end on 2 October 2014, and not on 1 October 2014 (as it is under the current law.)

Attorney General not only represented by counsel: Paragraph four removes the requirement for the AG to be represented only by counsel before the courts in appeals relating to compulsory licences relating to granted patents, and allows representation by a person who has a right of audience. This gives consistency with the general rights of audience now in operation before the IPO and the courts in other types of appeals.

Payment of a renewal fee following restoration: Paragraph six clarifies that a party must pay any outstanding renewal fees where a European (UK) patent which has been revoked by the Board of Appeal is subsequently restored after a successful appeal to the Enlarged Board of Appeal. The patent holder does not pay the renewal fees during the period when the patent is revoked, and this amendment has clarified the previous uncertainty as to whether a payment is required in the event of restoration.

UK Design Right

  • The repeal of first ownership of UK unregistered design rights by a commissioner: The Act aligns UK design right with Community registered design and Community unregistered design, where the first owner is the designer rather than the commissioner.  The same changes are also implemented for UK registered design ownership (see below). There are knock-on amendments to references to "commissioner" in this part of the Act so that qualification can no longer occur by reference to a commissioner (only an employer) etc. As the Explanatory Note puts it, this "removes the situation in which a UK right is automatically owned by whoever commissioned the design, and an EU right (which includes the UK in its scope) is instead automatically owned by the designer. It brings UK design law into line with UK copyright law, and means that the initial ownership of closely related rights will no longer end up with different parties".
  • Transitional arrangements: These changes in relation to the designer as first owner are not retrospective (either actually or contractually). The changes do not apply to a design created before the commencement of the section of the Act that makes these changes, nor do they apply if there is a contract between the designer and the commissioner relating to the commission of the design which was entered into before the commencement of this section (even if the design, is created subsequently to the commencement of the section). 
  • Removal of the words "of any aspect of" from the definition of a "design" that can be protected by UK  unregistered design right: This is intended to limit the protection for trivial features of designs, by making sure that protection does not extend to "any aspect" of part of an article. The Explanatory Note says that it is expected that this will reduce the tendency to overstate the breadth of unregistered design right and the uncertainty this creates, particularly in relation to actions before the courts.
  • "Commonplace": The requirement for a design to be "not commonplace" in order to qualify for design right is to be limited to commonplace in qualifying countries, in order to provide clarity on the geographical coverage of the assessment to be undertaken. This change is not retrospective. Under section 1(4) of the new Act, it only applies to designs created after the commencement of subsection (3), which makes the change. 
  • Tweaks to qualifying criteria: Simplifying and expanding the concept so that those who are economically active in the EU – and those countries to which qualification has been extended by Order (see the countries listed in S.I. 1989/1294) - may qualify. The Act removes the definition of qualifying individual and "qualifying person" has been amended to mean "an individual habitually resident in a qualifying country, or a body corporate or other body having legal personality which (i) is formed under the law of a part of the UK or another qualifying country and (ii) has in any qualifying country a place of business at which substantial business activity is carried out''. The requirement that benefitting companies be formed under the law of the UK or another qualifying country was removed in draft versions of the Bill, but was re-introduced on Parliament's final reading. Thus, the only real substantive change in the definition is to remove the citizenship requirement that is part of the current qualifying individual definition.

The definition of 'qualification by first marketing' is more significantly changed by the new Act. Whether a design qualifies under this subsection will now depend on the country in which the sales took place and the person who did the marketing having the status of a 'qualifying person'. It will no longer be a requirement that that person has exclusive authorisation to market articles in the UK, thus broadening the scope of the section. The definition of "qualifying country" has not been altered.

  • Exceptions for private acts, experiments and teaching: The Act provides for exceptions to design right infringement for (a) an act which is done privately and for purposes which are not commercial; (b) an act which is done for experimental purposes; or (c) an act of reproduction for teaching purposes or for the purpose of making citations (provided that (i) the act of reproduction is compatible with fair trade practice and does not unduly prejudice the normal exploitation of the design, and (ii) mention is made of the source). A key rationale for the changes is to encourage teaching and innovation in the design sector. Notably, the exception for acts done for experimental purposes will allow designers greater freedom to innovate by taking inspiration from current designs. From the Explanatory Note to the Act, it is clear that these exceptions are intended to be similar to those found in relation to copyright. However, particularly in light of recent changes to the copyright regime (see our IP ebulletin of 3 June 2014), they are less extensive.

 Registered Design

  • Extension to Community designs of exemption from copyright infringement when legitimately using a registered design: Section 53 CDPA provides that those using a design registered in the UK under the Registered Designs Act 1949 (RDA), in good faith and with permission from its owner ("in reliance" on it) are not subject to infringement of any associated copyright. Currently it does not refer to Community registered designs which also cover the UK. The Act extends this existing defence so that it also applies to registered Community designs in addition to UK registered designs.
  • Commissioner – no longer the first owner of UK registered design: This was already so for Community registered and unregistered design under the Community Designs Regulation 6/2002 (the Regulation).  Employers remain first owners in all cases.
  • Applicants no longer need be the proprietor of the design: The Act amends section 3 of the RDA by removing the requirement for the applicant to be the proprietor of the design. This brings UK law into line with the way the Regulation deals with applications for registered designs.
  • Right of prior use to be introduced - A new section will be added to the RDA which provides a limited defence where a third party acts in good faith in the use of a design that is subsequently registered by another. The Explanatory Note says that this will allow third parties to continue using the design according to preparations they they have already made, without fear of someone being able to stop them at a later date and jeopardising their investment. Similar rights are provided under the Regulation (see Art 22) so this is intended as a harmonisation. However, this right of use will be limited: "New section 7B(1) means that the protection for the third party only applies to the use that they have already made of the design; and new section 7B(5) means that there is no right to, for example, sell the design to another."
  • International registration procedures now available for UK registered design (accession to the Hague Agreement): Previously, designers could only access the Hague registration process via Community design registration (as the UK had only acceded to the Hague Agreement via its membership of the EU). Section 8 of the Act empowers the Secretary of State to accede to the Hague Agreement, subject to Parliamentary approval of any draft order (i.e. not simply by Statutory Instrument (SI)). Accession will mean that international registration procedures are available specifically for UK registered designs, allowing UK businesses to save costs by tailoring registration to specific territories, an improvement on the current blanket position where international registration can only be used to gain protection across the entire EU. 
  • Alignment of innocent infringement provision with that for Community design rights: The Act amends the provisions of section 24B RDA which relate to the potential financial liabilities that may be faced by a person who innocently infringes a UK registered design. The Explanatory Note says that the changes have been driven by the fact that there are different potential financial liabilities between the innocent infringement of UK registered designs and those of Community designs, even though both are valid in the UK, "specifically, damages and/or an account of profits may be sought against an innocent infringer of a Community design but neither can be sought against an innocent infringer of a UK registered design. The amendment to section 24B of the RDA results in a proprietor of a UK registered design being able to seek from an innocent infringer some or all of the profits made because of the infringing activity, but not any wider form of financial damages". 
  • Use of the Appointed Person (as well as Court):  New section 27A provides a new route of appeal against decisions made by the registrar relating to designs. It offers those involved a choice of using either a person appointed by the Lord Chancellor (after consultation with the Secretary of State) (an "Appointed Person") or the court, and reflects the system already in place for challenging trade mark decisions of the registrar. Sections 30 and 31 RDA, on costs and evidence, will apply to proceedings before an Appointed Person just as they apply to proceedings before the registrar, with the aim to provide a quicker and cheaper alternative to the courts. The Explanatory Note indicates that legal professionals, such as IP Barristers, are the persons who might expected to be appointed, though further details of the appeals process will need to be provided for in regulations (which could also cover UK unregistered design right). Crucially, the Act provides for the Appointed Person to make a referral to the court in specified circumstances, such as where there is a point of general legal importance involved, or where the registrar or any of the parties before the registrar requests that the referral be made.
  • New Registered Designs Opinions process:  A new section 28A will be inserted into the RDA, a power for the Secretary of State to provide for a non-binding opinions service for designs, similar to that which already exists for patents. The opinions service will cover UK registered designs and its scope may be extended to include other design rights such as the UK unregistered design right. There is provision for the details of this service to be included in regulations (by resolution to be approved by each House of Parliament). The Explanatory Note says that this could include, for example, circumstances where the registrar will not be required to give an opinion and also the information and fees that should accompany an application for an opinion. Neither the Registrar nor any IPO official will incur liability under the service (as is the case for official actions under trade mark and patent law).
  • New criminal penalties for deliberate copying of a UK or Community registered design: A new section, section 35ZA, is inserted into the RDA, making the deliberate copying of a UK or Community registered design a criminal offence, and specifying the circumstances under which the offence applies.  The offence will only apply to designs registered prior to the copying, not to those registered after the copying has taken place. For a criminal offence to take place, intentional copying in the course of business to make a product exactly to the copied design or with features that differ only in immaterial details will need to be proven. Parliament added the word 'intentional' to the final version of the Act to clarify the type of copying to which the criminal offence applies. This is a high threshold (particularly in light of the criminal burden of proof: beyond all reasonable doubt) and reproducing a design unintentionally will not be caught.

Even if intention is proved, various conditions must apply in order to establish that an offence has been committed, for example, establishing that the person accused acted without the consent of the registered design holder, knew or had reason to believe that the registered design in question had been copied, and acted in the course of carrying out business activities. According to the Explanatory Note to the Act, in practice, the offence will not apply if the defendant can show reasonable grounds for believing the design in question was invalid or that their design did not copy it, of that their use of the design was merely incidental to the carrying on of the business.

If the criteria for the offence are satisfied, then the consequences will be serious.  The offence will carry with it a fine and/or a prison sentence of up to ten years, and will be triable, on summary trial (in a magistrates’ court) or a trial on indictment (in a Crown court). The offences, including the mode of trial and penalties, reflect existing criminal sanctions for trade marks and copyright (see Trade Marks Act 1994 s. 92; Copyright, Designs and Patents Act 1988 s. 107).

  • Offences committed by partnerships: The Act amends section 35A RDA to deal specifically with offences committed by partnerships. Proceedings for an offence alleged to be committed by a partnership must be brought against the partnership and any fine must be paid out of partnership assets. Each partner will also be guilty of an offence in their personal capacity, bar a partner who is proved ignorant or attempted to prevent the commission of the offence.
  • Trading standards and Forfeiture: Trading Standards will have similar powers of enforcement for design offences as they have for copyright and trade marks. Powers of forfeiture allowing, in certain circumstances, a court to authorise the removal of copies of registered designs, or items which have been used to make them, from the premises of people under investigation, will be introduced. These copies may later be destroyed or passed on to another person in order to be recycled or re-used in some way.   

Pre-publication research

  • Exemption for research: A new section, 22A, will be added to the Freedom of Information Act 2000 (FOIA) exempting information obtained in the course of, or derived from, a programme of research if certain conditions are met. The programme must be continuing with a view to publication, and disclosure before this date would prejudice either: (i) the programme, (ii) the interests of any individual participating in the programme, (iii) the interests of the authority who holds the information (iv) the interests of the publishing authority if different. 

The new section 22A will not be included in the list of absolute exemptions in section 2(3)  FOIA thus it is subject to the requirement that, in all circumstances of the case, the public interest in maintaining the exemption must outweigh the public interest in disclosing the information. Each case will be decided on its own merits, and should the balance fall in favour of the exemption on the facts, the new provisions should allow researchers in 'public authorities' (a wide definition under Schedule 1 FOIA, including many NHS bodies) to more easily validate and analyse their work before putting it into the public domain. So as not to undermine the purpose of the new section, under subsection (2), public authorities will not be obliged to confirm or deny if they hold exempt information if doing so would likely prejudice the four factors outlined above.

Copyright

  • Recognition of Foreign Copyright:  The Act amends numerous sections of the CDPA, extending qualification by reference to author (s.154), country of first publication (s.155) and to place of first transmission (s.156). The Act inserts a large number of countries and territories directly into the text of the CDPA .  Moreover, the wording of section 159 means that in many cases protection will automatically extend to new signatory states without the need for a new order.

Countries and territories that will be incorporated into the CDPA by the new Act are: ''members of the EEA (European Economic Area); the Channel Islands; the Isle of Man; Gibraltar; and countries that are signatories to specific international conventions namely: the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations, the Berne Convention for the Protection of Literary and Artistic Works and the World Intellectual Property Organisation Performances and Phonograms Treaty''.  

Reporting duty

  • The Secretary of State will be required to report annually on innovation and growth in IP under the new legal obligation set out in section 21 of the Act. The report will consider how the activities of the IPO, and how legislation relating to IP, have contributed to the promotion of innovation and economic growth in the UK. The section does not prescribe the precise content of any report, as the policy objectives of the IPO will likely change over time, but the Explanatory Note sees the reporting duty as a tool for increasing transparency and sharpening the focus of the IPO towards innovation and growth. The report is likely to focus on several factors such as: legislative changes and pre-legislative work, policy development and the main outputs of the IPO's economic research programme. It will contain data to support the assessments made