Our knowledgeable panel discuss the best – and most cost-effective – ways to protect valuable intellectual assets
editor, Insider – chair
Recently joined the travel search website Skyscanner from Dickson Minto to deal with some in-house legal aspects in addition to commercial and strategy work.
Partner in the IP and technology team at Maclay Murray and Spens. She helps clients in a variety of fields whose key assets are intellectual property.
Head of intellectual property team at the Royal Bank of Scotland, which protects all the IP of the RBS Group worldwide.
Chief executive of Scottish Life Sciences Association, which started 18 months ago with about 25 members and now has 110.
Member of the legal department at the Scotch Whisky Association, which is the trade association of the Scottish whisky industry. His job is to protect the geographical indication ‘Scotch whisky’.
Group legal counsel at bus and coach manufacturer Alexander Dennis Ltd. Ross Nicol Director in the IP and technology team at Maclay Murray and Spens – helps clients with strategies around protecting and commercialising their intellectual property.
Director in the IP and technology team at Maclay Murray and Spens and specialises in IP and IT dispute resolution.
Company solicitor at AG Barr – part of his job is protecting the IP around its brands.
QHow significant an asset do you consider your company’s or customers’ intellectual property to be and what steps are taken to protect and enforce it?
Taylor: IP is critical to our business. We are a soft drinks company so it’s important our products taste great and represent value for money. But the goodwill which our customers have for our products is also vital. Someone said ‘creativity is one of the last remaining ways of gaining an unfair advantage over the competition’. We try to be creative with our products and the way we market them and we look at the best ways of protecting that creativity. Primarily, that means seeking trademark protection for our products. In terms of enforcement, we will take action to enforce our trademarks if we believe they are being infringed and are proactive in identifying potential infringers.
McKelvie: Intellectual property has not been a main focus for our business. Alexander Dennis is a traditional manufacturing business. Recently we’ve become a little more fleet of foot in thinking about how we build the buses and the solutions we come up with, some of which do have the potential for protection. Picking up your point on goodwill and protecting the value in the business, we are looking at how we can perhaps leverage that value through licensing arrangements, partnership arrangements, joint ventures, things like that.
Brewster: For us the most important things in terms of IP is our brand and consumer confidence and this is becoming increasingly important because of our geographical expansion. We’ve recently opened offices in Singapore and Beijing and have taken out new trademarks to ensure coverage in the countries in which we operate. When we applied for the trademark of the Chinese translation of Skyscanner, we realised ‘Skyscanner’ did not translate well. This led us to trademarking a different brand in China and made us aware that one brand is not always appropriate for every country. We also have plans to open an office in the Americas, so protecting our brand and our intellectual property over there is on the radar. We have concerns about patent trolls in the US whereby companies that don’t trade collect patents in order to extract licensing settlements from companies that do trade, supposedly using the patent. This can result in a very costly court process so we’ve been looking at ways of limiting our liability there. In terms of patents, at the moment we have a European application pending and have plans to apply for more patents soon.
Low: I think intellectual property is absolutely fundamental. Scotch whisky has been made for more than 500 years and has been traded internationally for around 150 – throughout that time it has been taken to mean whisky from Scotland. On the strength of that it has built up a global reputation where annual exports now exceed £4bn. We know we cannot afford to lose its status as a geographical indication – it’s absolutely critical. The industry – very fortunately – sees the long-term picture and funds us as an association to both take action against infringers and seek better laws and definitions around the world to ensure we keep this valuable asset. On the back of that, our member companies, the Scotch whisky distillers and brand owners, have been able to build their brands. Johnstone: It is critical for us. If you don’t have it you don’t have a business really. There are some businesses that can trade without it, but they are still trading with know-how, so there is still intellectual property there although it may not be formally protected. Patent life for us is too short for the amount of money you have to invest.
Curtin: Like everyone here, it is crucial to our business. It is highlighted by the fact that when I joined RBS eight years ago they didn’t have a central team managing their IP. They realised they needed a central team right in the centre of things to get the strategy right, to work with businesses. Our policy is to basically get IP protection where we can through registration, whether that’s trademarks, patents, domain names and so on. We also litigate to protect our brands and we have done that recently in relation to our Direct Line brand, where we went to the Court of Appeal against a company called esure which was infringing Direct Line’s mouse on wheels brand we use as a buddy to the telephone on wheels brand. We also have various IP watching services that watch for the infringement of our IP globally and we look for new initiatives like the new generic top level domains.
Snedden: I tend to approach this question from the perspective of helping businesses enforce the IP rights they have, because I specialise in litigation and dispute resolution. One of the real challenges is that obtaining patent protection in certain sectors such as life sciences is so crucial to businesses, but the process of applying for, maintaining and then enforcing the patent can be very costly. The costs involved can be quite a challenge for small businesses. Also, applying for a patent inevitably involves publicly disclosing details of your technology. There is the risk a bigger competitor may use that information and infringe the patent on the basis that the small company is unlikely to have the means to enforce the patent. Arguably there’s not necessarily much point in having a lot of registered protection unless you’re going to be able enforce it.
QDo you consider that the UK system of patents and other forms of intellectual property protection provides assistance or acts as an obstacle to the development of your business and what changes to the system you would like to see?
Johnstone: We would like to get longer patent life. It is currently 20 years though you can get patent life up to about 25 years on an extension. But when 15 of them is going to be in development, you’re only going to get five years, maybe 10.
Low: Our experience in the UK is mainly to do with enforcement and generally I would say it’s a good system. It’s expensive, although we have been very interested in what’s been happening in the Patents County Court in England and Wales and the decisions coming out of there, so we think that’s an attempt to cut costs in smaller cases. There are probably two things that really frustrate us. One is a lack of joined-up thinking with the public authorities responsible for enforcing. Trading standards operate largely at a council level, and it is difficult to develop a nationwide strategy or nationwide campaign against a particular product. We also deal with HMRC, because the products we investigate are being smuggled. Individual trading standards authorities do a fantastic job in tackling fake ‘whisky’ and other spirits but we think there is a lack of somebody high up being able to coordinate efforts and a forum where stakeholders can save each other time and money by working together.
Curtin: The system for us is certainly important. Trademarked registration is particularly something we use. I think the European Union trademark system is a great facility and we have a lot of our brands registered as Community Trademarks. Patents is probably something that’s a smaller element for us, but it’s starting to increase. Probably one of the biggest headaches we have is around domain name abuse issues. We have a portfolio of 5,000 domain names and it’s a constant headache for us just trying to deal with third parties that register domain names and use them for fraud or other purposes. It seems the official bodies behind domain registrations don’t really get to the heart of what’s causing these issues – people can basically go off and register a domain name that incorporates your brand just for a few pounds and then use them for fraudulent purposes, or whatever. The launch of new generic toplevel domains is posing similar issues. Although the cost of applying for these new domains is very significant, there is a concern they could potentially harm brand owners’ interests and so we’re watching that carefully. We manage these issues through a third party provider, but I think it would certainly be helpful if governments, not just in the UK but elsewhere, looked at the issue and how it could be resolved better. It would also be helpful to have a joined-up IP system to help with trademark disputes that have global implications.
Snedden: In the UK some registered IP rights can be enforced either at the court or via the UK Intellectual Property Office (UK IPO) – in some cases the IPO can be a quicker and potentially cheaper route to dispute resolution. Some of the others have mentioned the Patents County Court in London. That’s not always the appropriate court to hear a dispute where the infringer is based in Scotland or where the harmful event is taking place in Scotland. The Scottish courts have specialist IP judges and a special procedure for IP cases. They have also brought in an optional procedure for IP cases which allows for such cases to be fast tracked. It’s also still possible in Scotland to get interim interdicts which are interim orders that you get at the start of a case to stop the infringing activities immediately, which can be a good tactic, particularly in trademark cases, as that can often result in a quick resolution. It’s still the case that most cases settle rather than go all the way to a fully defended trial.
Nicol: For my clients there are issues around costs. For smaller companies the cost of filing for registered IP protection can sometimes be really significant, even when you’re not talking about patents, which are expensive, but other forms of registered IP protection such as trademarks, which are cheaper. To file for trademark protection is relatively cheap if all you’re doing is filing in the UK, but if your business has global reach you’re looking at having to consider filing in all the territories that matter to you, maybe over one, two or three different brands, and that can become really expensive. When considering costs for larger companies which may be able to afford prosecution costs, what Richard says about systems being aligned globally becomes relevant. If you’re dealing with a large global organisation with a significant portfolio of trademarks all over the world, then if that group tries to reorganise its ownership and/ or internal use of the portfolio of marks – which may be for tax or other intra-group purposes – then the organisation is potentially faced with extra costs at the different trademark offices around the world. The transfer/licensing documents may have to be legalised and/or will be subject to various additional administrative approvals at a local level. Depending on the size of the portfolio the costs and time involved can be significant and that makes what should be a fairly simple intragroup process become incredibly expensive and time consuming and that then has to weigh into the decision whether to undertake the process at all.
QHas your IP protection enforcement strategy changed over the years? If so, how? And what strategy are you pursuing now?
Taylor: We’ve refined our enforcement strategy over the years and we will continue to do so. Part of that is ensuring we are supported by good trademark attorneys and we have a robust watching service in place. To my knowledge we’ve not had very many issues with enforcement abroad. The Russia case, which was fairly well publicised, is probably the best example. The background is that early this year we received notice from a Russian company which indicated it was challenging several of our IRN-BRU trademarks on the basis of non-use. We have marketed and sold IRN-BRU throughout Russia for ten years; it’s a popular soft drink. We also carried out an online search and it became apparent this company had initiated similar challenges against numerous wellknown trademark proprietors. In short, our view was the company’s claim had no merit. We hoped we would be able to deal with the challenge quickly. However, it proved costly and time-consuming to defend the challenge. This was partly due to a recent change in procedure which shifted responsibility for ruling on challenges of this sort from the Russian IP office to the Russian courts, which are probably still getting to grips with the new procedure – we may have suffered from that. The laws and procedures were alien to us so we were less sure of our footing.
QWhat would you advise companies to do in dealing with trademarks in Russia?
Bryce: My general advice is to have a strategy about what matters and what doesn’t, because every territory is so different. Russia and China are the emerging markets but from experience the trademark registration system is very different from the UK. Indeed in China, for example, it doesn’t matter that you have traded for years in China; its much more about first come first served. There is also a presumption that some of these emerging markets tend to favour the home player rather than the overseas parties. When entering into a new market companies should be clear that they are dealing with something a little bit alien – that is to say a different system and approach from the UK – and so they have to set their expectations accordingly and be minded that when they get involved in a new market that in the event they hit issues that they are going to see it through.
Low: Our strategy has remained pretty constant, but the territories we have to cover continue to grow. Particularly as a result of the WTO TRIPS Agreement on trade-related aspects of intellectual property, more and more countries are able to offer ways of enforcing your IP. And with the growing sales of Scotch more and more countries are importing it so we are always looking at new markets in new countries where we have to take action. One of the countries I’m responsible for is China, and we know we are never going to get into every town in China to find out exactly what’s on sale. But we do know counterfeiters are opportunists, they want to make a quick buck, and if we’re known to be aggressive in enforcing our rights, if we’re known to be straightforward and to back up whatever we say, the chances are people will move into other sectors which are not quite so aggressive, straightforward or organised. We find this has worked for us in a number of markets.
McKelvie: We consider ourselves very much a global business, but we don’t have registration for our brand names in all markets we move into and try to develop. I think the point you make that you’ve got to be prepared to see a dispute through to the end and making that decision at the outset is very important. We haven’t really changed our strategy from that point of view.
Snedden: Do you operate a watching service, Gordon?
McKelvie: We do, yes, we have recently changed suppliers as well but we do have a watching service.
Brewster: I wouldn’t say there’s been a formal strategy so far and that’s something I’m aiming to build. The informal strategy has been directly correlated to the growth of the company. The initial strategy was to register .net and .com and then register localised country domains for every country we created a market in. As our geographical market has expanded so quickly and we now have visitors from 223 countries, that’s a lot of domains to register and manage.
The drawback to the strategy of registering country domains is some countries are a lot more difficult than others to obtain a domain in and this leads to a lack of consistency in the brand message to consumers. In some countries, if you don’t have a local domain, you won’t be seen as a trustworthy site. In particular, following the opening of our Singapore office last year, we have been trying to secure country domains in as many countries in Asia as possible and in some countries we have encountered problems where you can’t actually get a domain until you’ve got a trademark or you’ve got a local presence in that country. Until we can secure the local domain, there is a worry we might lose out on consumers in that market or that someone local might see us coming and register that domain first. Of course, we then have our trademark protection to fall back on but in an ideal situation we should be able to register those domains first.
QWhat do you generally advise people about strategy?
Snedden: One of the biggest challenges these days is that there is much more online infringement. This has advantages and disadvantages – it is much easier to identify infringements taking place online as you can easily see what is being done, what products are being sold and so on. However, it also creates a lot of difficulties, such as enforcing judgments against infringers based overseas. Our firm has connections with firms all over the world, and an increasing number of cases which come to us are referred to our contacts around the world to ensure the case is brought in the most appropriate forum. There can be many different ways to resolve a dispute. For example, disputes relating to domain names can be resolved using domain name resolution procedures. These do not require court hearings to take place – they are online systems. In appropriate cases these can be a good alternative to court proceedings as they are more straightforward. The strategy for resolving any particular dispute has to be driven by what the client actually wants to achieve by taking action. Some clients may simply want the infringement to cease and it may be possible to achieve this by way of informal action, such as letters before action. However, if the infringer is unlikely to pay heed to attempts to resolve the dispute in correspondence, a court action may be more appropriate. Alternatively, the client may want to send out a clear message to the market place that it does not tolerate IP infringements, in which case the publicity that would be generated by a court case may be important to it. Other relevant factors in determining an IP enforcement strategy are the strength of the case and the financial position of the parties to the dispute.
Taylor: You need to carefully consider whether enforcement action is appropriate in the circumstances. It isn’t always a good idea to be heavyhanded because that can generate negative publicity – consider the criticism the London 2012 sponsors received for appearing overly sensitive about their brands. We pride ourselves on being a bit leftfield. That’s one of the reasons we believe our customers are so loyal and have such affection for our products. Given that, it would feel a bit hypocritical for us to prevent a local butcher from selling IRN-BRU and chilli flavoured sausages – that’s a real example. That said, we take a dim view of someone knowingly and shamelessly appropriating our branding in order to promote their own goods and services.
QDo you think the Hargreaves Review of Intellectual Property had teeth and was it practical?
Nicol: All IP reviews come with good intentions, but it ultimately comes down to what is implemented. There are some contradictions and practical issues which need to be addressed, for example on patents. On the one hand the report finds patents are taking too long to proceed to grant through the patent offices. It also suggests, to address patent thickets – that’s where there are too many overlapping patents in a sector – that there is a need to weed out unnecessary patents and get companies to focus on strategically important patents. The obvious question is, who undertakes that evaluation? If this is to be the patent offices then it simply adds more burden. If it is to be self-assessment I’m sure companies viewing patents as key to market position, such as Samsung and Apple, are quite happy to determine every one of their patents has significant value.
Low: One of the things that should be done, if the government is serious about the value of intellectual property, is to have a dedicated intellectual property minister who has a genuine interest in the subject matter. In recent times it seems very much that it’s a revolving door with many different people holding the post and it’s not a standalone post even for a junior minister. If any of these reports are going to be implemented there needs to be somebody who can lead the agenda.
Bryce: What’s been reassuring from today is, despite the fact we gathered people from disparate sectors, a lot of the issues people are facing are in common. The trend is that companies are now looking at things on an international basis – this raises the query as to whether a UK review of the system will ever be sufficient.