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Start planning early to avoid costly patent legislation
[June 21, 2006]

Start planning early to avoid costly patent legislation

(Western Mail Via Thomson Dialog NewsEdge) With the Blackberry and the iPod each having been involved and continuing to be involved in patent suits in the US over recent months Lee Fisher, a partner specialising in intellectual property law at Morgan Cole considers the impact of these cases on Welsh technology businesses and the lessons that can be learnt

INTELLECTUAL property lawyers are often heard to say 'Where there's a hit there's a writ!' referring to the fashion for musicians or lyricists to appear almost from nowhere and claim income from hit singles.

It seems, however, that it's not just a passing fashion in the music industry with probably the two most recognisable gadgets of the 21st century finding themselves embroiled in court proceedings in the United States relating to patent rights.

The owners of Blackberry, Research in Motion (RIM), recently announced annual sales of over $2bn, and there are now estimated to be over five million Blackberry users worldwide.

The iPod is thought to be one of the key factors behind the rejuvenation of Apple Computer Inc which itself recorded record annual revenues in excess of $14bn last year.

With figures like these it is perhaps therefore no surprise that other businesses are keen to seek their slice of the revenue by arguing that they effectively 'got there first'.

Faced with the potential threat of having to withdraw their technology from the market Canadian-based RIM paid the US company NTP a $612.5m settlement following a lengthy four-year court battle over the technology used to forward emails to Blackberries.

Perhaps unsurprisingly to those who follow US patent law, less than two months after the settlement in March, RIM, now saddled with a reputation of settling claims against it, faces a claim from another US base rival, Visto, once more claiming patent infringement in relation to the technology underlying the Blackberry.

It seems therefore that the growing number of executives on the move who rely on Blackberries cannot yet breathe a sigh of relief.

While there are certain differences between the patent law in the United States and that in the United Kingdom the basic principles behind the law are the same.

Patent law is based on a 'bargain' with the Government. On the inventor's side the inventor provides the Government with information about his new invention which is then published worldwide. In return for this the Government provides the inventor with a period of monopoly for 20 years during which other parties will generally not be allowed to make, import, sell or use for commercial purposes the invention.

Patent protection can be granted to either a product or a process, for example a method of doing something, although there are certain exclusions, such as scientific theories, which are not patentable.

To be granted a patent the inventor must show that the invention is new in the sense that the invention has not been discovered elsewhere by somebody else and is not obvious to a reasonably skilled man in the particular field in question.

As in the US, patent cases in the UK are time-consuming and notoriously expensive both in terms of legal fees and the damages which might ultimately be payable.

So what steps can a business take to avoid such litigation? Well the answer is that a business needs to be planning as early as possible in the lifecycle of a product.

Any business which relies on innovative products or technologies (and most other businesses too to a lesser degree) needs to have a policy in place to ensure that not just its patent rights, but all intellectual property rights, are protected and that it does not infringe other rights.

Ensure that relevant staff are trained so that they can identify where a right may exist. When identified a right should be protected. The cost is minimal compared to the associated revenue which can be lost by allowing competitors into the market place.

All businesses should have who someone takes responsibility within the organisation for developing intellectual property, preferably at board level.

Businesses should consider whether the rights can be licensed to other businesses, possibly in different market or geographical areas, to increase revenue.

If the right is not being used at all it may be worth considering an outright sale. Finally if the business needs capital and there are limited fixed assets intellectual property rights are increasingly being used as security to raise additional finance.

Enforcement and protection of your rights through the courts should be an eventuality which every business has contingency plans in place for. As the right increases in value and market awareness it is inevitable that others will attempt to copy it, or even claim that it is a copy of theirs.

If a business does not feel it will have the funds to run or defend such an action it may wish to consider putting in place intellectual property right insurance to cover its liability.

Review the rights of your business regularly. Ensure that ideas within the business are being captured and recorded and protected where necessary. If there are rights that are not being utilised by the business consider their sale.

These steps should be viewed as an investment for the future and ultimately will lead not only to an increase to the asset value of the business but also to the revenue generated.

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