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Tuesday, 19 February 2013

The Strange World of IP Consents

Opening this evening's seminar, "The Strange World of IP Consents", generously hosted by Olswang LLP in its lovely Holborn office, Mark Anderson (right, Anderson Law LLP and IP Draughts) addressed the concept of the covenant not to sue. This subject has been principally developed in US law, particularly within the context of voluntary cessation of proceedings, rather than as an integral part of IP law as a form of licence.  Such covenants might be viewed as onerous by trustees in bankruptcy, if they are bound by a prior covenant -- but even if a covenant not to sue might be set aside as onerous, there is an exception in favour of the continued validity of a licence granted by the bankrupt business in favour of a third party.

There are some some legal differences between covenants not to sue and licences, Mark explained, even though their de facto effect may be broadly the same. Where there might be a legal requirement to register an IP licence, there is no equivalent obligation for covenants not to sue. Licences may contain explicit and implicit warranties, but covenants not to sue are unlikely to be so endowed. The doctrine of exhaustion of rights will deem goods put on the market by a licensee as being freed from the control of the IP rights, while this does not apply to covenants not to sue.

What about the position of both regarding property right? A licence may enjoy various incidents of property, such as being capable of assignment, while covenants not to sue are more likely to be personal and not enforceable against the world.  In the US, there is largely a consensus that IP licences are property, though other jurisdictions may recognise this with a lower degree of certainty.

Concluding with some general conceptual observations, Mark offered some thoughts as to what licences and covenants actually mean. At this point he handed over to Neil Wilkof (left, Dr Eyal Bressler & Co, and the IPKat weblog), speaking on peaceful coexistence in the minefield of trade marks.  Starting with the observation that trade mark law regulates what business are already doing for themselves, Neil addressed the terminological issues arising from the use of the terms 'coexistence agreement', 'prior rights agreement' and 'delimitation agreement'.

Is the coexistence agreement a creature of relative grounds oppositions, or is there more to it? Ronald Coase created one of the greatest notions of all time, Neil roared: that if there are no transaction costs the most effective form of transaction is that entered freely into between businesses. Neil then moved on to consider the "dirty little secret" of confusion: coexistence agreements, paradoxically, are at their most effective at the point at which they most greatly tolerate the likelihood of confusion. There are both public and private interests at stake: must a coexistence agreement eliminate all confusion before it is allowed, or is it right to let it live even if it does not eliminate all likelihood of confusion?

Coexistence has temporal and spacial dimensions too: the likelihood of confusion which an agreement seeks to avoid may expand or contract as markets metamorphose and converge, and an agreement may contemplate either a "no-man's-land" within which neither trades, or overlapping spheres of commercial activity. An agreement may focus on any element of trade mark activity, from registration onwards, and may do no more than clarify ambiguities without resolving them.

The PowerPoints of the respective speakers will be posted on this weblog as soon as this Kat has been able to get his paws on them.

1 comment:

Suleman said...

I was very interested in Neil's point of a consent agreement possibly leading to an estoppel if it could be read as admittance of no confusion existing between particular marks.

Tying that in with the concept of a covenant not to sue, I'm interested in the concept of general undertakings not to sue anyone for infringement, where a company might declare it will not sue anyone developing insulin analogues for example. I believe this could be the basis of patent rights coexisting with open innovation projects.

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