Commercial Law 2 – Intellectual Property

Some commercial electives include a brief introduction to Intellectual Property, while others offer a dedicated module on Intellectual Property Rights (IPR).

The commercial elective only touches on IPR lightly, but this is enough to understand the issues that commonly arise in commercial contracts. Because IPR frequently appears in transactional work, every commercial lawyer needs at least a basic grasp of the area.

However, IPR is a specialist field, and the commercial elective merely scratches the surface. Even so, this initial exposure is useful for understanding how IPR operates in practice.

IPRs are intangible property rights.

They are the rights to use, exploit and reproduce a unique idea. They can be sold, traded or licensed, and are often extremely valuable assets. IPR prevent competitors from copying distinctive products, such as the Coca-Cola bottle, and underpin the fight against film and music piracy. The commercial elective focuses on the different types of IPR and what each protects.

Different rights protect different types of ideas. The most familiar are patents and copyright, but design rights, performers’ rights and the tort of passing off also play important roles.

In the exam, you must understand what each right protects, how it is obtained and what it is worth. You may be asked to analyse a client’s business and identify potential IPR or advise on infringements. You do not need to memorise every detail, but you must know enough to spot IPR issues quickly. The following sections provide an overview of each right.

Patents

Patents protect inventions under a statutory framework.

Patentable inventions must meet strict requirements, and the registration process is complex, involving multiple stages and fees. Accuracy is essential. The technical specification defines what is protected and is scrutinised for patentability. Errors may invalidate the patent or allow competitors to exploit gaps in the claim.

The priority date determines when novelty is assessed and when infringement may begin. Inventors typically seek protection as early as possible. Patent agents often assist with applications.

Patents are granted for four years initially and may be renewed annually for up to sixteen further years, giving a total of twenty years. They can be sold, mortgaged or licensed, and are valuable assets where the invention is novel and commercially viable.

Infringement includes copying a patented product, offering a patented process in the United Kingdom, or importing or exporting a patented product or process. Remedies include injunctions, declarations of validity, damages, accounts of profits and delivery up of infringing goods.

However, groundless threats carry penalties, and a defendant unaware of the patent may avoid damages. Advising a proprietor to notify an infringer of the patent can prevent this defence without constituting a threat.

Copyright

Copyright protects original literary, dramatic and artistic works, sound recordings, films, broadcasts and the typographical layout of published editions. It is breached when a work is copied without permission.

Ownership does not always lie with the creator. Works produced by employees in the course of employment belong to the employer unless agreed otherwise.

Copyright can be transferred or licensed. Assignments must be in writing and signed and may be prospective. Copyright duration varies depending on the type of work. A publication right arises when previously unpublished work is published after the author’s death.

The Copyright, Designs and Patents Act 1988 (CDPA 1988) sets out infringements, including copying and communicating works to the public. Infringements may be primary, meaning direct copying, or secondary, meaning facilitation of copying. Remedies include damages, injunctions and, in some cases, criminal penalties.

Design Rights

Design rights protect the design of an object and fall under three regimes: registered design rights under the Registered Designs Act 1949, copyright and unregistered design rights under the CDPA 1988.

Copyright protects design drawings and models, but making a finished article does not infringe unless the article itself has copyright. Copyright protection is reduced if designs have been industrially exploited.

Registered design rights protect the appearance of a design, such as the Coca-Cola bottle or the Jaguar bonnet, provided it is novel and has individual character.

They last up to twenty-five years and must be registered at the Intellectual Property Office. Infringement includes making, offering or using a product incorporating the design. Remedies mirror those for patent infringement. It is a criminal offence to claim a design is registered when it is not.

Unregistered design rights protect functional designs, such as mechanisms, components and machine parts, provided they are original.

They do not protect methods of construction or features enabling an article to fit with others. They cannot prevent competitors making spare parts. Infringement includes making products to the design, creating design documents or reverse engineering. Remedies resemble those for copyright, but proving infringement is difficult due to the lack of registration. Additional protection through patents or copyright is advisable.

Trademarks

A trademark is a badge of origin distinguishing goods or services from one business to another.

The Nike swoosh, the McDonald’s M and the Windows logo are all trademarks. Smells, sounds and colours may be registered if they distinguish goods or services and can be represented graphically.

Infringement includes using identical or similar marks for identical or similar goods or services or using a mark in a way that exploits or damages the reputation of the original. Remedies include injunctions, damages and accounts of profits. Criminal penalties may apply where a trademark is used without permission for gain.

Passing Off

Passing off is a common law tort protecting trade reputation.

It occurs when a business knowingly misrepresents its goods or services as those of another, causing damage. The claim depends on the claimant’s goodwill. For example, a Scottish business named Bob’s Cars is unlikely to infringe a Cornwall-based Bobb’s Cars if consumers in Scotland have never heard of the original.

Practical Points and Exam Strategy

These rights are not exhaustive, but they are the main types encountered in commercial practice.

Remedies typically include damages and injunctions. However, identifying infringers can be difficult, especially in cases involving piracy or unregistered rights. Proceedings may be costly and time-consuming, but IPR remain valuable assets because they can be sold or licensed.

Parties may own or grant IPR without realising it. For example, distributors selling branded products may gain rights to use the brand. Contracts often include IPR clauses to prevent disputes or accidental licensing.

In the exam, you must identify all relevant IPR, explain how they are dealt with and assess potential infringements. Work through each type systematically and justify why a right does or does not apply. Many products contain multiple IPR.

A useful revision method is to take an everyday object and list all possible IPR.

A Kit Kat, for example, may have design rights in the packaging, a patent for the wafer composition, a trademark in the name and copyright in the design. It also has goodwill sufficient for passing off. Practising this helps you identify rights quickly in the exam.