Thursday, 3rd November, 2011

If you take the fight, make it worth it

Increasingly businesses of all shapes and sizes are recognising what an important role Intellectual Property (IP) plays within their business. 

Often an IP right, like a trade mark, can be the most valuable asset of a business.

With greater understanding about what IP rights exists and what they protect, businesses are more readily entertaining the idea of litigation if they feel another has infringed their IP rights. It's not uncommon to regularly read or hear in mainstream media about a dispute affecting one of the many IP rights that exist. A recent example was the stoush about the RADLER trade mark.

But like with most things, before litigation is contemplated, there needs to be a full and thorough review of the facts. Not all situations are what they seem. In fact most often, they are different.

Getting all the facts at the outset enables a complete review of the strength of your position to be assessed alongside that of the "villain". A half baked threat of action often backfires and causes more damage to the "victim" rather than the 'villian".

It is not uncommon for a business through one of its eagle-eyed managers or a loyal customer to spot a potential misuse of your rights. Once informed, the business then contacts its lawyer,  announces there is a villain ripping off the businesses products  or brands and demands immediate action. Tempting as it is to floor the villain with a well-crafted "cease and desist" letter, there are some checks to make before threatening letters are sent, let alone proceedings commenced.

We outline below some of the checks that need to be made before your IP lawyer is contacted.

  • Find out exactly what the villain is doing.  Preferably get a sample of the villain's "rip off".  What is considered a bare faced rip off to you may be considered by a Judge, assessing matters in the cold light of day in a crowded market, to simply be fair competition.  It is surprising how often a product described by one person as "exactly the same as ours" is more accurately described as "competing with ours".
  • Find out all you can about the competitor's product.  Who designed it?  Where has it come from?  Is it imported or locally manufactured?  Who is selling it?  How long has it been in the market?  These issues are not only relevant to the relief sought, they may also help determined if there is a claim at all.  A product on the market before your product was designed is unlikely to have been copied from yours.  A brand in use before your own registration was filed or before you commenced to use your brand should not be said to be confusingly similar to your own brand.  Parallel importation of genuine goods is unlikely to infringe anyone's rights.
  • Find out all you can about the villain.  What business are they in?  Who owns the business?  How long has it been in existence? 
  • Check to make sure you own the rights you think you do.  This is not just a matter of ensuring the patent has actually been granted or that the registered trade mark was renewed.  It is necessary to check that there is a clear chain of title in the intellectual property right at issue and that you own it.  It is surprising how often when litigation is contemplated; chinks in a business's IP armoury come to light.  Copyright in a literary work rests with the author, not the commissioner (unless there exists an agreement to the contrary).  An assignment of copyright is not effective unless it is in writing signed by the assignor.  While you may have beneficial title in the IP rights, to bring proceedings you want to have legal title. A periodic audit of what IP rights you own should be undertaken regularly by every business.
  • Assess whether there is an infringement.  This will usually require considerable input from an IP lawyer.  The lawyer will require all the information you can gather and should bring the necessary level of informed objectivity to the questions at issue.
  • Realistically assess whether taking legal action is commercially worthwhile.  Once on board it is difficult to get off the litigation train.  For example, once you have sent notice of your patent, the response might be a revocation action you have to defend.  Make sure there is enough at stake to justify enormous amounts of executive time and you have a big enough fighting budget before the first missile is sent.
  • If the decision is made to warn the villain, select the best option.  Your IP lawyer can assist with this.  Often a strongly worded cease and desist letter is the best first approach but consider other options.  Is there a commercial relationship which can be exploited at the outset to bring pressure to bear?  Do you actually know the villain so that an 'owner to owner' meeting might produce useful results?  And be aware of the risks. Sometimes notification of the IP right rather than an overt threat is the best approach. Both the Patents and Designs Acts have an unjustified threats provision allowing the recovery of damages and an injunction arising from unjustified threats of proceedings  for infringement.  Unjustified threats also risk falling foul of the Fair Trading Act 1986.

Summary

If there is an imminent threat to your rights that may damage your business, then you have to act urgently and enforce those rights.  Speed is of the essence. If interlocutory relief is an option then there must be no unreasonable delay in seeking that relief. But urgency must be balanced against a complete understanding of the facts. Time spent at the outset when alerted to a potential infringement, promptly gathering the available information, checking matters are in order, getting objective expert advice, and preparing a strategy to resolve the issue will always pay financial and managerial dividends.

This article was published in Issue 701 of NZRetail Magazine.