Presentation Margaret Briffa

B R I F F Acreative lawyers for creative business

Building Your Business Using Your IP

Margaret Briffa 2nd July 2008


Scaling up

• Manufacturing

• Licensing

• Joint ventures

• International IP rights and enforcement issues


Briffa Experience - trends

• An increase in the Dyson effect (Making Money while You Sleep)

• The problems of securing good money making licences

• The ease of access to foreign manufacturing countries and the need to compete on price

• Briffa’s Associated offices


Where to now?

• How do you want to expand your business?

• What do you want to spend your day doing?

• How much are you willing to invest? ( more investment required for manufacturing route)

• What level of risk can you live with?


Preparation

• You know about intellectual property assets

• You have taken into account the need to audit and possibly expand your registered intellectual property rights

• You know about the essential terms in the various commercial agreements you are about to make


Licensing

• Common way of expanding and extracting value from your intellectual property

• Can be a simple licence of a product you have designed already and are now hiving off for lciensing

• Can be a mixed design and royalty licence


A mixed design and royalty licence

• Accepting discounted hourly and daily rates and restriction of working for competitors

• In return for guaranteed man days and royalty payments


Is it still just you?

• Sole trader

• Partnership

• Company

• New company for new venture

– Checking ownership of assets• Where are they currently?• Where do they need to be?


Confidentiality

• NDA

• Formal agreement

• Letter Agreement

• Avoiding barriers to good relations


Agreeing commercial terms

• Finding out about your Licence

• Essential terms

– Heads of Agreement

– Full contract

– Negotiations

– Concluding contract


Licensing Considerations

Commercial:

• What are you licensing?• Exclusive, non exclusive,

sole?• In which countries?• Royalties?• Minimums?• Quality and brand

association?


Licensing Considerations

Legal:

• all terms which make the contract work, protect you against liability and ensure you get paid.


What are you licensing?

• Defining designs - attach or describe in detail

• Checking rights. Registering?

• Trade marks?

• Copyright

• Other elements - is there any consultancy or design element


On what basis?

• Exclusive - licensee, only the licensee and no one else

• Non-exclusive - licensee and anyone else you choose to license

• Sole - can plug the cash gap while Licensee gets sales to level


Geographical Scope

New Market

Limit

Intellectual Property Rights in

that Country


How much will you earn?

• How to approach royalty negotiation

• You are a 50/50 partner sharing profit

• Factors which change the weighting, investment in tooling (down), use brand name (up)

• Scaling royalties


Minimums?

• Minimums must be clear at time of signing for exclusive licence.

• two type of minimum, minimum payments and minimum sales.


Quality Control/Reputation

• What’s your involvement?

• Must have some controlWhat third parties do (or do not do) with or under your brand is crucial to maintaining its quality and integrity so:

• Goodwill - accrues to you

• Rules on the use and application • style guide • approvals• inspection and audit


Retaining Prestige

• 100,000 global licensees

• Cannot maintain quality centrally

• Difficult to police infringements

• Diffusion/sub-brand helps control quality of core brand


Other commercial terms?

• Consultancy

• Design Fees

• What designs will be provided, over what time, approvals procedure, limiting time invested in activity


Legal Stuff

• Looking after your ip, registrations and policing

• Your ip, so you retain control• A policing plan - react

appropriately • Keep alert for infringements• Regular internet searches for

infringing material • Take action • Insurance


International Intellectual Property

• Different intellectual property rights can achieve international protection in a variety of ways using National, European and International Systems:

• Automatically protected internationally

• Applying for global rights at start

• Extending UK rights

• Some rights are only protected in the UK


Patents• Territorial Right

• Can be very expensive

• Make first filing in the UK

• Gives you 12 month window to expand protection to other territories through the Patent Cooperation Treaty (can string out to 18 months)

• In this time need to get funding/investment through sponsorship or through finding a partner with deep pockets.


Trade Marks

• Territorial right• Register in UK and Europe in

one go• Register in other territories

around the world through international Madrid Protocol system.

• Can apply to territories directly• If have national right have 6

months priority period to extend


Design rights• Unregistered Rights protected in

UK and Europe automatically through Legislation.

• Registered Designs can be protected in UK and Europe.

• Hague System is an international system for protection of Registered Design Rights but has very few members and UK not a member.

• Generally need to apply to territories outside Europe directly.

• Have 6 month priority period to extend protection of design rights.


Confidential Information

• This is a national right which has been developed by the English Courts.

• Does not apply outside UK?

• But most territories will have some protection for confidential information.

• Better to protect confidentiality through contract which can be enforced against a party of any state


Expect and budget

• Most companies expect this and set aside budget to deal with it

• Why needs to be dealt with - retaining value in brand - public perception, safety (non fire retardant child pyjamas)

• Accept ongoing and may never stop entirely but action stops escalation


Termination

• Breach of essential term

• Failure to meet minimums

• Failure to make payments

• Failure to produce goods of adequate quality

• 30 day notice provisions to make good


Audit provisions

• Make royalty statements details

• Right to audit access information electronically

• Provisions financial information kept separately


Product liability

• Licensee to prove they have this in place


Sub-licensees

• Do you grant permission for?

• Where will licensee manufacture?

• Need to also protect in these countries e.g. China.


Manufacturing

• NDA

• Combined with protype/sample agreement

• Full manufacturing

agreement


Prototype Agreement

• Who owns what varies around the globe

• Agreement sure way of making sure you own rights in any prototype

• paying for samples

• conerns around fee samples or prototyping


Full Agreement

• Commercial and legal terms

• Commercial – what price per unit– scaled against tooling costs or

not– order and delivery system– quality assurances against

prototype– combined manufacturing

agreement with licence to manufacturer for own territory


Calling in help

• Lawyers will help you make an agreement that is worth something

• Can help you register appropriate rights

• Can deal with infringements


Is it easier said than done?

• Yes

• More info www.briffa.com