Delhi Counsel to Counsel: Building, Managing and Defending Your Intellectual Property Portfolio (2)

A recent Counsel to Counsel debate, held in India, discussed how in-house lawyers could establish a strategy for protecting their company’s intellectual property assets. In the second of our two-part summary of proceedings, speakers discussed which IP rights it was most important for them to protect, and also some common problems with enforcing the protection of those rights.

Deciding which IP rights to protect

The decision as to which IP rights should be protected is, of course, a decision that is specific to each company. This decision will depend on a number of factors, such as the rights available for protection in that particular jurisdiction, a cost/benefit analysis for protecting those rights when considered in relation to the revenues available, together with a consideration of which jurisdictions the company regards as most important for it to protect its rights in. For example, a company may wish to register its trademark in its key markets, but rely on less expensive “passing off” protection in markets where the product’s market share is likely to be marginal.

However, when making these decisions, the in-house counsel should always bear in mind the company’s strategic future direction. For example, if a company intends to expand into specific new markets during the lifetime of a patent, it should consider proactively registering that patent in those markets as a defensive measure. Here, outside law firms are often a useful resource during the registration process. Not only will they be aware of any subtle differences in patent protections between countries, but they can often relieve the administrative burden of carrying out multi-jurisdictional filings.

One speaker indicated that some companies are overly defensive in trying to protect their IP rights, thereby running up unnecessary expense while doing so. On occasions multiple registrations were justified on defensive grounds – if one patent for a specific product was successfully challenged, the surviving patents would continue to protect it. Nevertheless, one counsel recalled how companies occasionally went too far in this defensive stance, because they spend money on registrations that they simply did not need to. “I know people who register Indian trademarks in 14 different languages – but there’s no need for them to do this,” said one corporate counsel. “In India, if a trade mark is registered in English, it is automatically protected in translated form in all of the country’s official languages.” On this same theme, another speaker added, “It’s sometimes important for external counsel to tell their clients ‘no’ – there no reason to file for protection, just for the sake of it.”

Of course, some companies may simply take an ethical position on certain IP matters, and the in-house counsel’s IP protection strategy should reflect that. For example, some companies believes in “open source” software as a concept, so the strategy and budgeting of the in-house legal function should reflect that reality.

Others make a strategic decision to rely on operational rather than legal solutions to protect new inventions. For example, employees may not be given access to all the schematic data relating to a specific product, to ensure they are physically incapable of leaking comprehensive developmental data to the company’s rivals. Using secrecy/confidentiality measures or terms to protect IP can, of course, be an expensive exercise – not to mention logistically challenging. Another speaker said this approach may be high risk, because employees had a tendency to talk about things that they shouldn’t reveal.

Common problems

During the course of the debate, various speakers outlined specific administrative difficulties or regulatory uncertainties relating to IP protection. One of the most common complaints was how to extract relevant information from the companies’ own employees, in order to allow the legal department or external adviser to register or enforce specific IP rights. Another common concern was how counsel could manage subtle differences between different types of enforceable IP rights, both domestically and also in the international market. Just because one IP right can come into existence in one country, it does not follow that the same right exists in another. Or, if the right does exist, it may have slightly different requirements in different countries, in order to be enforceable.

Several speakers mentioned the importance of proper documentation when dealing with IP assets, especially in relation to M&A due diligence. Here, a common problem was the use of freelance subcontractors. For some, but not all, IP rights, ownership is – by default – held by an independent subcontractor, in absence of any specific contract to the contrary. As a result, some companies wrongly believe that they own specific IP assets, but in fact cannot prove that they do. In some due diligence investigations, this lack of clarity over ownership of rights could seriously affect the company’s value. “Each type of IP rights requires its own form of documentation,” said Harinder Pal Singh Bhullar, head of legal at Indus Towers Limited. “Corporations often make the mistake of lumping all IP rights together,” S Ramaswamy, head of legal and company secretary for JCB India Ltd. added, “There’s no substitute for proper documentation, whether people like that fact or not. If you need to get a signature from a contractor to assign their IP rights, do it now. Don’t wait until tomorrow, because it will never get done.”

On another topic, one in-house lawyer discussed how they believed their company had, in the past, simply been too zealous in relation to its IP enforcement programme. “We bought trade mark infringements right, left and centre – we didn’t even consider how much time we were spending on causing unnecessary hassle,” they said. But the company also learned the dangers of this scatter-gun approach – the hard way: “We tried to enforce proceedings against one small company, only to discover that they had been using the mark for hundreds of years – he could provide us with bills proving usage from 100 years before. When this happened, it was a real shock to the company,” the counsel recalled.

Takeaways

■ When considering what rights to protect, bear in mind the non-financial advantages associated with specific IP rights, such as the availability of specific courts or remedies, but avoid spending money on duplicate protection, especially if that protection brings no additional benefits.

■ In all IP enforcement matters, proper documentation is the key to success. Time spent up-front in ensuring the documentation is in place will save the company time and money if these documents are ever needed.

In the first part of our two-part summary of proceedings, speakers discussed attitudes within their own companies towards IP protection. They then discussed what arguments they should use to justify the time and effort required to embark in a successful IP protection strategy. To access this report, click here.