Commercial Disputes

Design rights – what are they and who owns them?
7 July, 2017

Design rights – what are they and who owns them?Whilst most people have heard of copyright and trademarks, design right is another type of intellectual property right that can be useful to bear in mind where you have designed a functional product.  You don’t need detailed drawings in order to attract protection, and you don’t even necessarily have to register it.

Design right protects the appearance of a purely functional product with no aesthetic appeal e.g. agricultural tools or clothes pegs.  The default position is that the designer (the person who created the design) is the first owner of design right in his or her work.

You can register your design with the Designs Registry for a fee of £50 (if filed electronically), and your right then lasts for 25 years from the date of registration, subject to the payment of 5-yearly renewal fees (£70 per renewal if filed electronically).

Unregistered designs last for the lessor of (i) 15 years from the end of the calendar year when the design was first recorded in a design document or (if earlier) from when the article was first made to the design; or (ii) 10 years from the end of the calendar year when articles made to the design were first made available for sale or hire.

Example: You designed an original rubber moulded foot for supporting hardware in industrial applications in March 2012, and have a drawing of the foot that you sketched at the time.  You then made a prototype of the foot in February 2013, following which you began manufacture on a larger scale and launched the product in June 2015.  Your unregistered design right protection would last until 1 January 2026, which is 10 years from the end of the calendar year when you first made the product available for sale.

Even though you, as the original designer, own the design right, if you intend to sell the product you should ensure that your sale contract or terms and conditions retain that right, and that you do not inadvertently transfer this to the purchaser.  It is worth double-checking your sale documentation for this and making sure that your (well-drafted) terms and conditions apply to the sale.

If you have any queries about design right protection contact Jo Ford on 01732 224033 or joanna.ford@cripps.co.uk.


Giving notice of intention to appoint administrators – case update
12 June, 2017

Before putting a company into administration directors may have to serve notice of their intention to appoint an administrator – this is a legal requirement if the company has Qualified Floating Picture of the High CourtCharge Holders (QFCHs). In practice, however, a notice of intention was often filed where there was no QFCH, although it was somewhat unclear whether this would confer on the company a 10 business day moratorium against all legal claims.

The Court of Appeal’s recent judgment in the case of JCAM Commercial Real Estate Property XV Ltd v Davis Haulage Ltd has received much attention. The court said that serving a notice of intention to appoint an administrator would be an abuse of process if there is no “settled” (i.e. real) intention to do so.

In this case, four notices were served back-to-back in order to protect the company against legal claims while the directors pursued a CVA. The court was advised that it was not uncommon for notices to be served in a “parallel process” to attempts to enter a CVA on the basis that, if the CVA proposal fails, an administrator can be appointed as ‘plan B’. As only “small” companies have the benefit of a moratorium during a CVA proposal, companies have tended to serve notices of intention to appoint an administrator as a means of bringing about a moratorium pending either a CVA or the appointment of an administrator.

Whilst much has been made about the fact that a director must first have settled in their mind the decision to actually appoint an administrator, the court also made another point: It is not possible to give a notice of intention to appoint an administrator if there are no QFCHs. So, no matter how “settled” your intention to appoint administrators is, if there are no QFCHs ultimately the moratorium is not available.

How, then, can a director protect a company from claims by creditors if there are no QFCHs? If administration is the likely route, the only thing to do is to make the appointment of administrators straight away. Once an administrator has been appointed the company will have the benefit of a statutory moratorium.

And what about CVA proposals made by medium and large companies? Unless the company is “small” no moratorium is available while a proposal is being considered. The old practice of protecting the company’s position via a parallel administration process is no longer available: If there is a QFCH and you do serve notice of your intention to appoint an administrator, it follows from the Court of Appeal’s decision that you cannot also have an intention to enter into a CVA.

If a “medium” or “large” company has no QFCHs, is trying to decide between the CVA and administration routes, and is faced with a significant and imminent legal claim, the immediate appointment of an administrator may now be the only real option.

 


Ransomware: Don’t be held hostage to your contractual obligations
12 June, 2017

Last month’s WannaCry ransomware attack affected more than 230,000 computers in over 150 countries. High-profile victims Warning sign for hackingincluded the NHS, Nissan, FedEx, Telefonica, and Renault. But many thousands of others were also hit. The effect was crippling.

The impact

An immediate loss of IT systems and equipment would present a huge problem for most businesses. If goods cannot be produced or services cannot be rendered, customers will nevertheless expect you to meet your contractual obligations to them.  If you do not then you may be on the receiving end of a claim for damages.

A good excuse?

As the victim of a cyber-attack, could you rely upon the fact that your inability to meet your obligations was not your fault? In legal terms, this is an argument that the contract has been frustrated by your inability to perform it.

In simple terms, the answer is probably not.  Frustration cannot be argued when the contracting parties can foresee that a particular problem might occur. If a risk – such as a ransomware attack – is foreseeable, the law assumes that it is covered by the contract.  

Furthermore, frustration cannot be argued if the problem has arisen because of a party’s own negligence.  Accordingly, if your IT security is not up to scratch then you may not be able to rely on this doctrine.

A solution?

Include a force majeure clause in your contracts that excuses one or both parties from their obligations if specific events such as a “cyber-attack” or “IT failure as a consequence of malicious third party software” occur.

Subject to ensuring that this clause is incorporated into the contract and not unreasonable (click here for a more detailed discussion of these aspects https://www.cripps.co.uk/ransomware-using-contractual-terms-protect-consequences/) this provides a first line of defence against claims of damages from disappointed customers.


Private parking “fines” – do I have to pay?
2 June, 2017
by: Cripps

You find a handy parking space in a supermarket car park while you go for a long lunch.  It says that parking is restricted but you are in a rush and don’t read the notice.  A couple of weeks later you get a notice through the post saying you owe £100 because you overstayed the 2 hour limit.  Do you have to pay?

The simple answer is probably yes!

By parking on the land you are entering into a contract with the owner of the land on the terms set out in the notice.  One line of attack is to say that the notice was not properly drawn to your attention and therefore you were not made aware of the terms of the contract.  This will only work if you can show, for example, that the notice was hidden by foliage or vandalised so that you could not read it.  Otherwise you will be taken to have read and understood the contents of the notice, even if you did not bother to do so.

A second line of attack has been to attack the charge as being a penalty.  Historically the courts have refused to enforce clauses imposing a charge for a breach of contract which does not reflect real loss or is disproportionate.  In a recent challenge to a private parking fine it was argued that a penalty of £85 was disproportionate to the breach (which was a short overstay of a time limit).  The case went to the highest court in the land and the decision went in the favour of the parking owner.  It was held to be the legitimate protection of the parking owner’s rights.  

So the moral of this story is always read the notice!


Think twice before making threats
30 May, 2017

Enforcing intellectual property rights is not without risk.

What’s the risk?

The holder of registered patent, trade mark or design right can be held liable for making a ‘groundless threat’ of infringement proceedings against a potential infringer under the ‘Threats Provisions’ contained within legislation.

Under the Threats Provisions, if a claim of groundless threats is made, the burden of proof reverses and the rights holder has to then prove the validity of their rights. The party wrongfully threatened can potentially obtain an injunction, an award of damages, and/or a declaration of unjustified threats against the threatening party.

The Threats Provisions were introduced primarily to protect retailers/traders (so called potential ‘secondary infringers’) from the aggressive approaches of rights holders.

The law as it stands on groundless threats is inconsistent in its application, creating an uncertainty which can result in communications to infringers at times being over-cautious, lacking the desired impact.

New Law

The ‘IP Unjustified Threats Act 2017’ was granted Royal Assent in April, and is planned to come into force later this year. The Act encompasses existing case law and provides further clarity and consistency with regard to the Threats Provisions

Avoiding Risk

To minimise the risk of falling foul of the Threats Provisions any claim of infringement should be seriously considered and analysed before any threat is made. Avoiding the common pitfalls of the Threats Provisions should ensure that as a Claimant you do not inadvertently become the Defendant!


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