Does your property have a distinctive name or logo?

  • Assignment and/or licensing of trade marks may be relevant

Is there a website or an app associated with your property?

  • Assignment and/or licensing of domain names and app software may need to be considered
  • Ownership of website and app content may be important

Are there social media accounts that specifically relate to the property?

  • Transfer or de-activation of such accounts may be required

Introduction

Intellectual property (IP) issues are often low down on the list of considerations when acquiring or disposing of real estate. However, such issues may be important in certain transactions. In this guide we consider the more common issues that could arise.

What type of IP might be relevant to the acquisition or disposal of a property?

Trade marks

A trade mark is any sign, symbol, feature or get-up that is capable of distinguishing one business's or trader's product or service, from another's. A trade mark must be distinctive and not descriptive.

A trade mark may be unregistered or registered. If registered, the registration will cover specified goods or services. A registered trade mark gives the owner a perpetual right (subject to the payment of renewal fees every 10 years) to prevent others from using the same or a similar trade mark in relation to the same or similar goods or services subject to satisfying certain criteria eg if a similar mark is used on the same or similar goods or services, the proprietor of the registered trade mark needs to show that there would be confusion on the part of the public as to the origin of the goods or services.

A registered trade mark is a national right (ie a UK trade mark registration only provides protection in the UK). There are European Union Trade Marks (EUTMs) which provide a unitary right that extends throughout the EU but as a result of Brexit, following the date of expiry of the transition period (which is currently 31 December 2020), EUTMs will no longer provide protection in the UK. However, on the 1 January 2021, the UK Intellectual Property Office will create a comparable UK trade mark for an owner of an existing EU trade mark so that existing registered EUTMs will continue to be protected and enforceable in the UK. Entities which have applications for EUTMs which are ongoing at the expiry of the transition period will have a period of nine months from 1 January 2021 to apply in the UK for the same protection, relying on the filing date of the EU application for priority purposes. Even after the UK leaves the EU, UK businesses will still be able to register an EUTM which will cover all remaining EU Member States.

Examples of possible trade marks include: 

• the name of the property, eg a hotel or a shopping centre;

• a stylised representation of a name;

• a device or logo; or

• a combination of any of the above.

Domain names

It is debatable whether domain names are truly IP rights but they are commonly and conveniently dealt with as IP assets.

A business may own several domain names some of which will not be active in their own right but if entered into a computer re-direct the user to the business's main operative website or link back to the property's website (eg a shopping centre website). Inactive domain names could also be owned for defensive purposes to prevent others owning that domain name. A domain name may be used for internal business purposes only (eg for employee e-mail addresses).

Copyright

In general terms, copyright subsists in original creative or artistic works. Copyright protects the expression of an idea not the idea itself. Copyright protection applies to various forms of expression including literary works (including computer software and some databases), artistic works (including photographs), architectural drawings, plans and technical drawings and layouts.

Copyright may also subsist in models of buildings and the buildings themselves.

Copyright gives the owner rights to prevent copying but does not prevent the independent creation of similar works.

Copyright comes into existence on the creation of the relevant work and endures, in relation to most works, for a period of the life of the author plus 70 years.

In the context of a real estate transaction copyright issues may arise in relation to computer software, website content, photographs, layout plans and architectural drawings.

The first owner of copyright will generally be the creator of the work in question. However if the work is created by an employee during the course of his employment, his employer will be the first owner of copyright.

Database right

A database is a collection of independent works, data or other materials which are arranged in a systematic or methodical way, and are individually accessible by electronic or other means. Many businesses hold valuable information in databases. Copyright may protect a database as a compilation and protect the structure of a database (but not its contents).

There is also a separate database right which arises where there has been substantial investment in the obtaining, verification or presentation of the contents of a database. It is important to note that a database right does not arise in relation to the creation of data or information even if there has been substantial investment in its creation. Such database rights arise from a European Directive and are termed "sui generis database rights". This Directive allows sui generis database rights to accrue only to creators which are EU/EEA entities or nationals. As a consequence of Brexit, UK entities or creators will no longer satisfy this qualification requirement. The UK Government is replacing the right with a UK database right but these rights will no longer be recognised or enforceable in the EEA if the database is created post-transition (ie from 1 January 2021). However, databases in existence before that date will continue to be recognised in the EEA. Since databases are evolving things, it may be that a new database is created where databases are reviewed or added to after 1 January 2021, inadvertently losing previously accrued rights. In order to qualify for the new UK right, such databases would need to be created by a UK entity or national; similarly in order to qualify for protection under the sui generis database right in the EU/ EEA the creator would need to be an EEA/EU national or entity. Thus co-creation by both a UK and EU/EEA creator is recommended to maximise the rights accrued in the database.

Database right can be infringed if an unauthorised party extracts the whole or a substantial part of the contents of a database or repeatedly extracts insubstantial parts of a database. Database right lasts for 15 years. If there is a substantial change to the content of a database then the revised database may qualify for a new 15-year period of protection.

Sui generis database right (and the equivalent new UK right post- transition) can be infringed if an unauthorised party extracts the whole or a substantial part of the contents of a database or repeatedly extracts insubstantial parts of a database. Sui generis database right lasts for 15 years. If there is a substantial change to the content of a database then the revised database may qualify for a new 15-year period of protection (if this happened after 1 January 2021 this would also involve a reconsideration of the qualification issues set out above).

The maker of a database will be the first owner of the sui generis database right or equivalent new UK right. The maker for these purposes is the person who takes the initiative in obtaining, verifying or presenting the contents of the database and assumes the risk of investing in those activities.

Database rights arise from a European Directive which extends to the EEA. If there is a "no deal Brexit" there will be no obligation on the EEA countries to provide database rights to UK nationals, residents or businesses. UK owners of database rights may find that their rights are unenforceable in the EEA and will have to rely on other forms of protection (eg copyright where applicable).

IP due diligence

When disposing of a property, the seller will need to be prepared to respond to the buyer's queries in relation to the IP assets that are included in the sale. The seller should therefore undertake its own internal enquiries to identify relevant IP and any related issues and the buyer should raise queries that identify the IP issues, if any. The seller's internal enquiries and the buyer's request for information should be substantially similar and are likely to require the preparation of the following:

  • a schedule of all subsisting registered IP rights (and applications for registration) such as trade marks and domain names used in relation to the property that are owned by the seller;
  • details of all material unregistered IP rights such as unregistered names (including the name of the property), logos, copyright and/or database rights used in relation to the property that are owned by the seller;
  • details of any material IP rights used in relation to the property that are not owned by the seller and, if there are such rights:
    • details of the owner of such rights; and
    • the terms on which such IP has been agreed to be used in relation to the property (eg licences of trade marks, licences of copyright works such as website content);
  • details of any licensing arrangements to which the seller is a party (and not already disclosed above) whether as licensor or licensee in respect of material IP rights used in relation to the property, whether these arrangements are formal or informal including parties to such arrangements, duration, licence fees payable or receivable, territory (particularly if this is described as the EU) and any other material terms; and
  • details of any social media accounts (facebook, twitter etc.) used in relation to the property.

Issues to consider

Having ascertained the IP issues that are relevant to the transaction, the seller and the buyer will then need to consider how best to address them. We set out some examples below.

Names and logos

Are names and logos used in relation to the property?

A property, eg a shopping centre, may have a distinctive name and/or logo associated with it or with the services offered in relation to it. If distinctive names or logos are used then the seller should confirm whether such names/logos are registered as trade marks. Independent searches may be undertaken to verify the registration details.

For example, "THE GHERKIN" is registered as an EUTM in respect of a wide range of goods and services.

Are such names or logos or both to be transferred with the property?

The seller may not wish to transfer and the buyer may not wish to acquire the names or logos associated with the property. For example, the buyer may intend to operate the property under a new name.

If the buyer intends to continue using the current names and logos then the correct owner of the names and logos should be identified and an assignment prepared, if necessary. An assignment of an unregistered trade mark is not lawful unless the goodwill of the business in which the trade mark is used is also assigned. The selling entity that owns the real estate may differ from the entity that owns the names and logos. For example, large groups of companies often have a separate IP holding company which owns the IP relating to the group's businesses.

Recording change of owner

If registered trade marks are assigned to the buyer then the change of ownership should be recorded at the relevant registry. This usually involves completion of the relevant trade mark registry's standard form and the payment of a fee.

Restrictions on buyer

If the buyer is not acquiring the relevant names or logos then the seller may wish to include an express obligation on the buyer not to use them following completion, possibly subject to a short permitted transitional period during which the buyer can undertake re-branding of the property and removal of names and logos.

EUTM applications

Are there any pending EUTM applications? If the applicant wants protection in the UK then, within nine months from 1 January 2021, it should apply to register the same mark in the UK relying on the filling date of the EUTM application.

Websites and domain names

Websites and domain name issues can arise in a number of contexts in relation to real estate. For example, a specific website might be set up for the purposes of marketing and selling units in a property development. A website could be created as an information guide for a shopping centre.

If there is a website associated with a property then considerations will include:

  • Who owns the copyright in the content of the website?

It is not unusual for a website to be created by a website developer or a marketing agency that has been contracted to provide services to the seller or the seller's group. The terms of engagement should be reviewed to determine who owns the copyright in the website content. If the developer has retained ownership of copyright and licenses the use of that content to the seller then it will need to be determined whether that licence may be transferred to the buyer.

  • Does the buyer want to acquire the right to use the website content?

If the copyright is to be transferred to the buyer then the parties must both execute a written form of assignment. This may be included in the sale and purchase agreement or could be a standalone assignment.

If the seller's rights are licensed to it by a third party copyright owner then that owner may need to be approached to confirm that the licence may be transferred to the buyer.

  • Who owns the domain names?

Domain names can often be held by someone other than the seller. For example, domain names are often applied for by an employee who gives his or her name as the registrant. Sometimes a web developer applies for the domain name and gives its name as registrant. On occasion the name of the registrant does not exactly match that of the seller (eg the registrant is "ABC" rather than "ABC Limited"). On line Whois searches no longer reliably provide the details of the registrant for a specific domain name due to restrictions under the General Data Protection Regulation. The seller should provide evidence of ownership of any domain names (e.g. screen shots of the domain name account showing details of the registrant) and appropriate warranties relating to ownership of domain names.

  • Transfer of domain names

If the domain name is to be acquired by the buyer then the seller should assign or procure the assignment of it to the buyer. A transfer document may not be enough. It will be important to ensure that the buyer also acquires all the relevant information (such as domain name account passwords) to effect the change of ownership.

  • Retention by seller of websites/domain names

The parties should consider the practical implications if the seller retains the website/webpages/domain names. Even if the ownership of these assets is not to transfer then the buyer may want to impose a restriction on the seller from continuing to use these assets.

If the seller is continuing to use the website/webpages/ domain names the buyer may require that arrangements are put in place to re-direct users to the buyer's own website.

Social media accounts

The principles applying to domain name and websites broadly apply in the same way to social media accounts. Thus a prudent buyer will want to know whether there are any social media accounts (facebook, twitter etc.) associated with the property being acquired and whether these are to be transferred to it.

The transaction documentation should include provisions dealing with any such media accounts and the practicalities for arranging the transfer.

If the buyer does not want to acquire social media accounts then it may wish to include obligations on the seller to de-activate the relevant accounts.

Apps

An app is a software program which has been designed to run on a mobile device. It is therefore likely to be a simpler program than one running on a desktop computer, but it is still run through its computer code, both source code and object code. A purchaser may wish to acquire an app associated with a relevant property or development.

As an app is a computer program, copyright will protect the computer code. An app is likely to have been created by a software developer that has been contracted to do so by the seller. As such, the terms of that contract should be reviewed to determine who owns the copyright in the code. If the developer has retained ownership of the copyright and the seller uses it under licence, then the terms of the licence will need to be reviewed to ascertain whether that licence may be transferred to the purchaser.

Copyright will also be relevant for other elements of the user interface of the app such as text, graphics, pictures and music. The app may also make use of trade marks, databases and domain names, which are particularly key where apps are launched through a mobile browser and are thus fundamental to the operation of the app.

The principles applying to websites and domain names broadly apply in the same way as to the content of an app, and a purchaser wishing to acquire an app should ensure that the transaction documentation includes provisions dealing the transfer of the content, as well as the rights in the app itself. If the purchaser does not want to acquire an associated app, then it may wish to include obligations on the seller to remove the app from app stores and to no longer offer updates or support to its existing users.

Copyright in designs and plans 

By convention, it is usually the case that architects and engineers do not assign the copyright in their drawings and plans to the person or entity for whom they have undertaken the design work. Architects and engineers tend to permit use of their works by licence instead. It is important to be aware that it is an infringement of copyright to:

• copy plans and design drawings in 2D (ie redrawing, scanning, photocopying);

• copy plans and design drawings in 3D (ie constructing a property according to a plan);

• extend a property in the same style;

• make a copy of a property itself;

• copy a model of a property (ie making drawings from it or building to its design); and

• copy part of a property/model (ie copying an internal feature).

Thus, a licence from the author of the drawings or plans (who has retained copyright) will usually be required if the buyer intends to modify the plans, modify the property, re-build the property or extend the property.

If there is no express licence then a licence is likely to be implied for the purposes of completing the construction of a property and repairing, maintaining and renewing it but not to extending the property in the same style as the original.

The buyer should ensure that it acquires such rights in any plans and drawings as are owned by the seller and if these are not sufficient for the buyer's purposes further discussion and negotiation involving the relevant architect or engineer (as applicable) may be required.