Patents and trademarks in 2018


Financier Worldwide Magazine

June 2018 Issue

FW moderates a discussion on patents and trademarks in 2018 between Josep Montefusco at Clifford Chance, S.L.P., Douglas Sharrott at Fitzpatrick, Cella, Harper & Scinto, Bernardo Herrerias at Hogan Lovells, Abigail Woolhouse at Stratagem IPM Ltd, and Helen Cheng at Zhong Lun Law Firm.

FW: In your experience, are companies doing enough to manage their patents and trademarks effectively? What key considerations do they need to make?

Sharrott: Companies are sufficiently managing their IP, including patents and trademarks, despite the economic challenges they have faced over the past several years. IP management involves identifying important IP, including the company’s key technological advances and brands, obtaining and registering it, maintaining it, policing its infringement by third parties and, if necessary, enforcing it. A key consideration for companies is cost; worldwide IP management is expensive, and companies should thus allocate a realistic budget. There are internal company costs, like lawyer and paralegal salaries and docketing software, and external ones, like government fees, annuity payment company fees and outside counsel fees, to name just a few. And the cost for litigating IP, especially a US patent, can be significant. Other considerations include freedom to operate over third-party patents, trademark clearance and in- and out-licensing.

Montefusco: Managing patents and trademarks effectively is key to success. However, in practice, you may see a lot of differences in the way businesses manage their intellectual property (IP) portfolios. Having a sensible IP strategy in place is crucial. There are a number of important questions all companies should ask when managing their IP portfolios. What is important for the business? What is not? How can IP rights help achieve the strategic goals pursued by the company? If a trademark or patent is not key to attaining these goals, then the right decision is likely to be licensing it to ensure a valuable return on the research and development (R&D) investments made by the company. However, there are no general rules applicable to each situation. Different sectors, markets or countries could lead to different, but equally sound, decisions.

Herrerias: Some companies have a very well-managed IP portfolio and others could manage their patent and trademark portfolios more effectively. A crucial consideration for effective IP management is that securing a registration for your brand or a patent for your invention is just the first step. In order to be able to make effective use of your IP rights, those rights need to be used properly, monitored and enforced. If IP holders do not consider such steps, IP rights might end up not being enforceable. For example, in order to maintain your trademark, it needs to be used. In Mexico, a trademark becomes vulnerable to cancellation and thus becomes unenforceable, if the trademark holder cannot prove use of the mark as registered for an interrupted period of three years. In addition, if the mark is not used by the registered owner but by a third party or an affiliated company, a licence agreement should be registered before the trademark office in Mexico, otherwise the given use might not benefit the trademark owner.

Woolhouse: While some companies realise the importance of their IP portfolio and manage it effectively, most just file patents, trademarks and designs and do not regularly review or manage them. You would not put money in a pension and just leave it – most people pay someone to manage it – so why do that with valuable IP assets? Financial institutions are normally well aware of the value of intangible assets, and we see increased scrutiny of portfolios, with a robust look at portfolio breadth and IP strategy prior to funding. Due diligence can be a critical and crucial test of a company’s IP management, and is an inopportune moment for it to be found wanting. It is exceedingly difficult to pull together a coherent IP strategy if the foundations have not been laid properly. Companies need to keep constantly questioning their IP portfolio to make sure it is giving them value for money and is performing a function, be it protecting a product or USP, blocking a competitor or generating licence revenues.

Cheng: The level of IP management maturity varies among companies. In general, multinational companies are more sophisticated in managing IP assets while domestic companies, especially small and medium sized private companies, are less experienced in this aspect. The key to effectively manage IP assets is to implement tailored IP strategies. When formulating IP strategies, companies should consider not only short-term targets and their main business, but also long-term planning and other businesses of potential interest. Moreover, companies should establish internal policies to support IP management. For example, the People’s Republic of China (PRC) Patent Law allows employers and employees to agree on the ownership of work-for-hire inventions, as well as rewards and remunerations between themselves, but absent such agreement, default rules will apply. Therefore, companies should include relevant clauses in their corporate policies. Further, companies are recommended to provide regular training to familiarise employees with the IP strategies and policies.

The key to effectively manage IP assets is to implement tailored IP strategies.
— Helen Cheng

FW: Have there been any recent legislative or regulatory developments in your region that will affect patents and trademarks going forward?

Herrerias: Mexico has improved its legal system in recent years to offer better protection for IP rights. Recent amendments to the country’s IP law entered into force on 27 April 2018. The most notable points of these amendments are related to industrial designs and patents, as well as denominations of origin and geographical indications. Such amendments include new provisions for the protection of geographical indications, as well as the change of duration of protection of industrial designs to five years, renewable by successive periods of five years up to a maximum of 25 years. Additionally, another package of reforms related to trademark protection in Mexico is still pending publication. These reforms are among the most important to Mexican IP law in recent years, and they include extensive changes, such as the protection for non-traditional trademarks, namely holographic signs, sound and smell marks, as well as amendments to the opposition procedure, recently incorporated into the legal framework.

Woolhouse: On World IP Day, 26 April 2018, the UK became the 16th Member State to ratify the Unified Patent Court Agreement (UPCA), which defines a new two-part patent system comprising the Unitary Patent (UP) and a new court, the Unified Patent Court (UPC). The UP will be a single patent right in up to 25 Member States of the EU and enforceable in the UPC by single judgement effective in all UPCA member states. Importantly, the UPC will also have jurisdiction over conventional European Patents. This system will endure and run alongside the UP, thus requiring proprietors to actively opt-out if they wish to avoid the UPC’s jurisdiction. It is quite possible that the UP and UPC could be in action before Brexit in March 2019. As it now stands, Germany is the only remaining mandatory party required to ratify before the new system can be brought into effect.

Cheng: China’s new Anti-Unfair Competition Law (AUCL) took effect on 1 January 2018, benefitting brand owners in battling against unauthorised use of trademarks. The new AUCL removes “counterfeiting another’s registered trademark” from its list of unfair competition activities, thereby clarifying the boundary between trademark infringement and unfair competition. Further, the new AUCL lowers down the previous “well known” and “unique” criteria to a “certain influence” criteria, extending protection to all business marks popular among relevant public, not just famous, brands. On the patent side, the State Council released the 2018 Legislative Plan on 2 March 2018, which calls for the review of the fourth amendment of PRC Patent Law at People’s Congress. Expected to be released by the end of 2018, this amendment aims to increase damage awards by introducing punitive damages and to reduce difficulties in proof by introducing a shift in burden of proof.

Sharrott: Over the past year, no significant patent or trademark legislation or rulemaking have been implemented in the US. However, several US senators introduced patent legislation in an effort to fix inter partes review (IPR) practice and other alleged shortcomings in patent law. For IPRs, the proposed legislation would harmonise both claim construction and the burden of proving invalidity, such as clear and convincing evidence, between the US Patent and Trademark Office (USPTO) and federal courts. It would also enhance discovery, permit certain interlocutory appeals and strengthen estoppel. The legislation also proposes broadening the scope of patent infringement, by widening the standard for induced infringement and permitting allegations of joint infringement through the elimination of the single-entity rule. Several patent law associations have also proposed changes to Section 101 of the Patent Law, to revise the scope of subject matter eligibility and resolve the alleged uncertainty created in this area by the US Supreme Court.

Montefusco: There have been material developments affecting the legal framework of patents and trademarks in Spain and Europe in the last few years. On 1 April 2017, a new Patent Act entered into force in Spain which aligned the country’s national patent rules with existing international standards. Applicants will no longer be able to choose to have their patents granted without substantive examination. This will result in stronger patents. In the EU, the system for obtaining European patents with unitary effect has not yet become applicable due to the uncertainty generated by Brexit and some constitutional law concerns raised in Germany. While the UK ratified the UPC treaty in April 2018, thus confirming that Brexit will not constitute an obstacle for the new system, it is unclear whether the German concerns will be sorted out shortly. The EU also undertook some reforms of its legal regime governing trademarks in late 2015, enacting a new Regulation and a new Directive. EU Member States are required to transpose the latter into their local laws by mid-January 2019.

You would not put money in a pension and just leave it – most people pay someone to manage it – so why do that with valuable IP assets?
— Abigail Woolhouse

FW: Could you outline any high-profile court cases that have surfaced your region over the last 12 months? What impact could they have on patents and trademarks?

Woolhouse: In Spring 2018, CROCS shoes hit the headlines, highlighting the risks of worldwide disclosure for registered community designs (RCDs). If there is proof of prior disclosure anywhere, before the permitted 12-month grace period, the proprietor must show that this could not reasonably have become known to the relevant circles in the European Community. In this case, the proprietor’s argument that an international nautical trade fair constituted “an obscure prior art exception” did not help meet that burden of proof. The CJEU therefore considered the design was available to the public and consequently lacked novelty, rendering it invalid. It is noteworthy that a first disclosure outside the EU, as with this case, also removes the possibility of unregistered community design rights (UCDR) since no grace period is permitted. Ultimately, the lesson for applicants is to be wary that their RCD application must be filed within the 12-month period extending from any public disclosure, especially if that disclosure occurs outside the EU, such as via an internationally accessible website, or there will be no design protection at all.

Cheng: In December 2017, the Supreme People’s Court ruled on a high-profile retrial evolving from an invalidation action against an invention patent owned by Daiichi-Sankyo. The court held a Markush claim is a single technical solution, not multiple solutions for multiple compounds, amendments should not generate any compound with a new function or effect and that examination of inventive step should follow the three-step test. This case provides guidance on the drafting and examination of patent applications in the pharmaceutical industry. Also, recently, the Beijing IP Court held ‘XinHua Dictionary’, the name of the most authoritative Chinese dictionary, is an unregistered well-known trademark after considering comprehensive factors including degree of reputation, duration of continuous use, sales volume and advertising scope, and fully accepted the plaintiff’s damages claim of RMB 3m. This case clarifies rules for determining whether a commodity’s name that indicates product and brand simultaneously is distinctive as a trademark.

Montefusco: While the Spanish courts have been quite active in ruling on patent and trademark cases over the past 12 months, the judgment handed down by the UK Supreme Court on 12 July 2017 in the Alimta case is particularly noteworthy. In that case, the UK Supreme Court was called to apply not only its local patent law but also the patent laws of several European countries, such as Italy, France and Spain. Perhaps the most interesting aspect of this judgment was the reformulation of the well-known ‘Catnic’ test to determine infringement under the doctrine of equivalences. The Catnic test was created by the UK courts in 1982 and since then had generally been used by the Spanish courts, particularly in chemical patents, as a helpful method of ascertaining whether embodiments which do not literally fall within the scope of protection of the asserted claims should be regarded as patent-infringing under the doctrine of equivalents. However, it remains to be seen whether the Spanish courts will use the reformulated test in future cases.

Sharrott: On the patent side, the US Supreme Court recently issued two opinions which found IPR practice by the USPTO to be constitutional, and ordering the USPTO to review all challenged patent claims an IPR initiated. Accused infringers will continue to have the option to have an asserted patent’s validity, vis-à-vis prior art, decided by experienced and technically-savvy USPTO patent judges, rather than by lay judges and juries. Moreover, the USPTO has recently decided it will review all prior art challenges made in an IPR. On the trademark side, decisions by the US Supreme Court and the US Court of Appeals for the Federal Circuit struck down the scandalous, immoral and disparaging trademark registration bars of the Lanham Act as violations of the US Constitution’s First Amendment, meaning morally reprehensible trademarks can now be federally registered.

Herrerias: In a recent resolution of the Supreme Court related to trademark disputes, the compensation of damages due to unfair competition derived from the commercialisation of goods with a confusingly similar trademark was studied and analysed. The importance of this judgement was derived from the fact that there were no legal precedents related to the type of damages that may arise from the violation of IP rights and the manner in which such damages should be proved by the parties for obtaining compensation. IP law states the possibility of claiming damages and lost profits due to IP rights infringements, and, in no case shall the compensation be less than 40 percent of the public sale price of each product. The Supreme Court determined that, when calculating damages compensation, it must be verified that the damage, if applicable, is true, evident and qualitative in relation to IP rights infringement and that the proof of the damage is sufficient to condemn the alleged infringer to such compensation. Therefore, it is possible to conclude that the mechanism provided in the IP law is not automatic and damages arising from IP rights infringements must be proved in order to provide scope for compensation.

IP rights monitoring allows the rights holder to learn about their competitors’ IP and so understand their market strategy and the market’s needs.
— Bernardo Herrerias

FW: What advice would you give to companies on patent protection and enforcement? How important is it to police and monitor IP rights in today’s global marketplace?

Cheng: Building up one’s own patent portfolio is fundamental to patent protection and enforcement. China provides patent protection for inventions, utility models and designs. Companies should reasonably design application strategies after considering the above available types of patents in connection with their own product structure. Furthermore, in creating integrated patent portfolios, companies should file secondary patents in addition to primary patents. Additionally, since today’s global marketplace is increasingly interactive and dynamic, companies should also monitor the developments of their industry peers. Upon detecting suspected similar patents or applications of a competitor, companies should perform analysis internally to confirm whether overlaps do exist. If confirmed, companies may search for prior arts and use them to proactively file third-party oppositions to limit the competitor’s scope of claims or hinder the granting process. Otherwise, companies are recommended to adjust their R&D strategies accordingly to avoid potential disputes.

Sharrott: Regarding patent protection and enforcement, I would advise companies to be sensible in how they allocate their limited funds. For example, they should seek patents on their crown jewel technologies before others. They should seek patents only in countries where they have the potential for significant sales or where they intend to manufacture, because foreign patents are costly to obtain and maintain. Companies should also consider whether to patent an invention at all, if keeping it as a trade secret is a viable option, especially in view of the robust Defend Trade Secrets Act of 2016. Enforcement through litigation is expensive and disruptive to business, so it should be done judiciously. That being said, it is still important to police and monitor IP rights, so that companies can determine patent and trademark infringement threats, evaluate their risk and decide whether further action needs to be taken.

Herrerias: The monitoring of IP rights is one of the key considerations to keep them enforceable and enable companies to benefit from their protection, as well as potential financial rewards. Continuous global and local monitoring is of crucial importance as it allows IP holders to detect whether their IP rights are infringed or about to be infringed by a third party. Detecting a potential infringement at such an early stage provides cost-effective enforcement options, and in the best case scenario, prevents the infringing product from entering the market. If actions are taken at a later stage, enforcement costs are usually much higher and much more time consuming. In addition, IP rights monitoring allows the rights holder to learn about their competitors’ IP and so understand their market strategy and the market’s needs, which can be a powerful strategic business tool.

Montefusco: Protection of the fruits of costly and time-consuming R&D continues to be crucial. Patents constitute an effective tool for turning part of those research efforts into effective and tangible competitive advantages. However, there are instances where keeping inventions secret may be a better option. Striking the right balance between registering the right patents and relying on secret know-how is not always easy, but paves the way to success. Budgets are limited, and companies must prioritise their enforcement objectives. Defining a sensible, business-oriented strategy and having a clear plan to implement it helps in making the right decisions. Retaining the right competitive intelligence and market surveillance services proves to be helpful, but being able to digest, understand and manage all the information and knowledge stemming from the marketplace still stands as one of the key aspects of any company’s policing and IP monitoring activities.

Woolhouse: For most innovative companies, patent protection is vital for success in maintaining their global market position and staying ahead of the competition. A patent provides a 20-year monopoly which is very attractive to investors and potential licensees. Moreover, a patent is a powerful legal tool to combat infringement of the patented technology and can be a significant deterrent to competitors. Careful strategic evaluation of key innovations and filing patent applications in a timely manner should be made routine. This should be balanced with the need to keep certain innovations ‘in house’ as a trade secret. A critical factor in obtaining a patent is that the invention must not be in the public domain. Therefore, it is vital that a company has a robust process for preventing publications before a patent application is filed. Developing a strategy of continuing development of proprietary technology and patent protection will go a long way to ensuring that the company remains a market leader.

Regarding patent protection and enforcement, I would advise companies to be sensible in how they allocate their limited funds.
— Douglas Sharrott

FW: In your opinion, should due diligence covering patents and trademarks form an essential part of M&A transactions? What are the main areas that acquirers need to address?

Herrerias: Due diligence is crucial as it allows acquiring companies to assess which of the target’s intellectual property rights are owned and which are licensed. It can also help assess how IP is protected. Therefore, it is important to address the quality and quantity of IP assets for their monetary valuation, the processes for protecting and using such IP rights, the chain of title of IP rights ownership and whether any third party is, or is suspected to be, infringing such IP rights.

Montefusco: Patents and trademarks are becoming more and more important, particularly in R&D-driven sectors, such as pharmaceuticals and telecommunications. There are many cases where patents or trademarks are the key assets owned by the target and are the driving factor behind the takeover. In such cases, due diligence covering patents and trademarks is, of course, essential. Acquirers should double-check, among other possible issues, whether the ownership of the patents and trademarks is correctly recorded in the registries, whether there are any encumbrances charging these rights, whether renewal fees should be paid soon and if there are ongoing or imminent court proceedings that could impact their market value.

Woolhouse: Valuing a company’s assets is a core part of the M&A process, and it should not be forgotten that intangible rights, such as IP, may have more value than bricks and mortar, particularly with start-ups and virtual companies. Therefore, due diligence covering patents, trademarks, designs and copyright should be considered an essential part of M&A transactions. For companies that have yet to bring a commercial product to market, a significant proportion of the value of the company will be its IP. The potential purchaser will need to ensure that any existing patents of the target company adequately cover the first generation of products that are planned. Furthermore, it would be prudent to understand whether due consideration has been given to freedom to operate, meaning whether any third-party IP has been identified that could block entry to the market for the products under development. Even something as simple as checking the ownership and status of any rights can greatly affect the value.

Sharrott: Due diligence covering patents, trademarks, copyrights and trade secrets is essential to an M&A transaction. Acquirers should determine all involved IP, both pending and issued. Acquirers need to ensure that the seller actually owns the IP and has the right to sell or transfer it to the acquirer. All maintenance and annuity fees should have been paid and patent term extensions should have been applied for. Acquirers should check the status of all IP, and IP-related litigations and government proceedings, such as IPRs, re-examinations, reissues, oppositions and cancellations. All IP agreements, assignments, liens and licences should be gathered and reviewed, as well as freedom-to-operate opinions and other opinions of counsel. For US trademarks, Section 8 and 15 filings should be reviewed, as well as trademark use or lack thereof. All warning letters or other third-party assertions of infringement should be analysed.

Cheng: Whether IP due diligence is essential to M&A transactions depends on the main purpose of the transaction and the type of target company. When the transaction is driven by technology or the target company is an R&D company, special attention should be attached to patent due diligence. When the target company is mainly engaged in the business of manufacturing, brand services or consumer goods, due diligence covering the trademark portfolio will be more significant. When performing IP due diligence, ownership deserves the greatest attention, and acquirers should carefully analyse the chain of title between the target company and its affiliates. Furthermore, acquirers should also focus on the current legal status and the remaining life of the IP assets.

The best advice is to have an IP specialist on your team, with the required expertise to anticipate issues and possible areas of future disputes.
— Josep Montefusco

FW: Are you seeing any recurring themes in disputes arising from patents and trademarks? What steps should companies take as soon as a dispute surfaces?

Sharrott: Many IP litigations and other disputes involve overinflated accusations of wrongdoing and damages as plaintiffs tend to take a ‘kitchen sink’ approach. When this occurs, it is important to try to work with opposing counsel, or through motion practice, to whittle the accusations down to bona fide areas of conflict. As soon as a dispute surfaces that is likely to lead to litigation, a company should take immediate steps to preserve evidence by issuing a hold order to the potential witnesses and custodians of relevant electronically-stored information, paper documents and other evidence. In view of the high cost of US litigation, and especially discovery, companies should consider meeting face-to-face early in the dispute to discuss settlement. These meetings should preferably be between the companies’ decisionmakers. Alternatively, and typically after sufficient discovery has been taken, the parties should consider mediation or arbitration.

Woolhouse: The most important step is to seek professional advice immediately. This is invaluable as even the questions asked by a professional adviser can provide real clarity on the likelihood of success or failure of a claim. Some disputes arise unexpectedly, but in many cases the client is aware of the protagonist. Care needs to be taken in responding to any threats so that disputes do not escalate unnecessarily, even if the other side is already well known to the business. Once the dispute has arisen, it is critical to consider what your company needs as an outcome and what the other side is offering or threatening. Competitor intelligence is key at this stage. Knowing whether the protagonist’s actions are driven by malice, a need to stop the company’s activities or a need for money can make a significant difference in the options for resolution.

Montefusco: Compliance with patentability requirements, particularly with inventive step and sufficiency of disclosure, is a recurrent theme in litigations where defendants do not dispute infringement and rely on the invalidity of the patent as their sole defence. In recent years we have also seen an increase in disputes where the right to priority claimed by a patent has been challenged. Still in the patents arena, there has been a rise in disputes concerning standards essential patents (SEPs) and negotiations of FRAND licences. Trademark disputes have covered a wide range of issues. Parallel imports, risk of confusion and association and challenges of the effective use of the trademark by its holder are issues typically at stake. Ideally, companies should not be taken by surprise when a dispute surfaces. The best step to take is always prevention and businesses should be prepared for the worst-case scenario well ahead of any dispute arising, whether you are on the rights-holder side or if you are accused of infringing them.

Cheng: Overall strategic planning as well as evidence production are two major recurring themes in litigating patent and trademark disputes in China. Both general strategies and specific measures will vary between cases aiming at a favourable court ruling and cases aiming at acceptable settlement. Therefore, when facing a patent or trademark dispute, companies should first review the facts, and analyse the parties involved and their legal relation. If the company decides to first file a lawsuit, it should consider whether the ultimate purpose is to win or settle the case to determine effective strategies. Moreover, China applies the rule “the one who makes the claim bears the burden of proof” and does not adopt the US-type evidence discovery. Therefore, plaintiffs need to preserve evidential materials before case filing. Lastly, to formulate useful strategies and implement them effectively, companies are recommended to involve IP lawyers at a relatively early stage.

Herrerias: The main problem is counterfeiting of IP. To effectively protect exclusive rights, companies should periodically audit their patents and trademarks portfolio, in order to identify key IP assets and monitor competitor marketing and any potential infringements. It is therefore essential that employees involved in monitoring activities are trained to spot signs of potential infringing activity in relation to critical IP assets. The initial action can range from a cease and desist letter and an offer to enter licence negotiations, to filing an administrative procedure, a criminal action or a preliminary injunction. In Mexico, counterfeiting is an administrative infringement, and because of the poor quality of the copied products and the danger to consumers, including health matters, Mexican laws have upheld a system of criminal sanctions trying to diminish and gradually stop the problem.

FW: What advice would you give to companies on contractual issues surrounding patents and trademarks? What key clauses should be included in contracts to account for the possibility of future disputes arising from an agreement?

Montefusco: The best advice is to have an IP specialist on your team, with the required expertise to anticipate issues and possible areas of future disputes. Among many others, I regard as important clauses those clearly defining the IP rights which are the subject of the contract, which party will retain ownership once the contract is terminated and under what conditions, whether future disputes will be pursued in court and which courts specifically, or whether the dispute will be subject to arbitration. And in the case of licences, what are the rights and obligations of the licensor and licensee, in the event of infringement of the licensed IP rights by third parties, the indemnification in case of infringement of third parties’ rights, and so on.

Woolhouse: With the best will in the world, relationships may change and disputes arise under any agreement, and it is therefore prudent to determine how these are handled between parties to a contract during drafting. The inclusion of detailed dispute resolution clauses that are pre-action protocol compliant is advisable to try and formulate a mechanism for disputes to be settled without resorting to litigation. Clauses relating to warranties, indemnities and liability should also be carefully negotiated to prevent disagreements over who might be liable in particular circumstances. It is also advisable to try to negotiate governing law and jurisdiction in a company’s own country of residence to limit litigation costs and uncertainty that can arise from enforcing contractual provisions overseas. Finally, it should be set out clearly what is to happen if the contract is terminated early for any reason, or even upon simple expiry. There should be no possibility for the other side to continue to use the contractor’s IP without permission.

Cheng: IP transactions mainly include IP licensing and assignment. In China, patent or trademark assignments must be registered with the competent governmental authority before officially taking effect. As official procedures often take several months, parties should contemplate the use of IP rights during the transitional period. As the assignment may fail to pass official examination, parties should also add clauses to stipulate the alternative arrangement in this case. With respect to IP licensing, key clauses include those that address the nature – exclusive or non-exclusive – territory and term of the licence, and licensor’s representations and warranties regarding the validity, enforceability and stability of the licensed IP. Furthermore, clauses addressing governing law and dispute resolution should be included to account for future disputes. Considering the difficulties in enforcing foreign court judgments in China, parties should consider choosing either litigation in China or international arbitration for dispute resolution in light of the judgment or arbitration award enforcement issue.

Herrerias: Obviously there are several issues to consider when drafting contracts involving IP rights, which strongly depend on the nature and purpose of the contract. That said, key aspects will, in most cases, be IP ownership and confidentiality. Many IP contracts involve the participation of several parties and their employees, working on the creation and development of a certain product or business model. This may cause conflicts as to which party will be the owner of the different IP rights involved. In order to avoid misunderstandings, which can result in costly disputes, it is essential to clearly define ownership over the IP rights. Another very important issue is to keep the agreement and any information surrounded by the involved IP rights strictly confidential. This is particularly true if the agreement includes an invention which has not yet been patented. In this case, confidentiality is of paramount importance as lacking confidentiality puts patent protection at risk.

Sharrott: I would advise a company that any contract should protect its business objectives, and that IP protection is just one of them, albeit a critical one. A contract may include provisions relating to any involved IP, for example ownership, licensing, scope and duration, confidentiality, transferability, and, if applicable, patent marking. These contracts should include a dispute resolution clause, specifying ways to cure a dispute informally prior to invoking arbitration or litigation. Dispute resolution should preferably result in a legally enforceable decision from an arbitrator or court; thus, clauses that only require mediation or expert determination may ultimately be insufficient. Arbitral bodies usually provide model clauses identifying arbitration law and procedure, and the contracting parties specify the number of arbitrators, and the place and language of arbitration. The contracting parties should also specify choice of law and venue to be used in any future litigation.


Josep Montefusco has vast experience in multijurisdictional disputes, mainly involving patents, utility models, trademarks, unfair competition and termination of distribution and agency agreements. In the field of patents, he represents pharmaceuticals multinationals, defending their intellectual property rights in the form of chemical-pharmaceutical patents from infringement in Spain and defending multinationals against patent invalidity actions filed by defendant entities in the form of counterclaims. He can be contacted on +34 93 344 22 00 or by email:

Douglas Sharrott is a partner at Fitzpatrick, Cella, Harper & Scinto. He chairs the firm’s telecommunications and networks and medical devices industry groups, and is a member of the firm’s trademark practice group. He / She can be contacted on +1 (212) 218 2208 or by email:

Bernardo Herrerias leads Hogan Lovells’ intellectual property practice group in Mexico, advising national and foreign parties for more than 30 years in trademarks, copyrights, patents, litigation and other IP related matters, including confidential information. Also, he provides counselling and enforcement of IP rights, leveraging an active synergy with customs, the Patent and Trademark Office, the Office of the Attorney General, and other IP-related authorities. He can be contacted on +52 55 5091 0000 or by email:

Abigail Woolhouse is a chartered trademark attorney and European trademark attorney. She began her career in private practice, moving to ICI in 1999 to take on responsibility for various trademark portfolios within the ICI Group and management of the domain name portfolio. As head of trademarks, she has also been involved in the resolution of many disputes and remains committed to resolving conflicts by agreement, rather than taking a purely contentious line. She can be contacted on +44 (0)1223 550 740 or by email:

Helen Cheng is an equity partner whose practice areas include intellectual property, litigation and arbitration. She is admitted to practice in the People’s Republic of China and New York State, as well as the Chinese Patent Bar. Chambers & Partners states that she has “deep professional knowledge and very solid methodology”. She is praised by clients for “her business acumen as well as her communication skills and strategic approach”. She can be contacted on +8621 6061 3058 or by email:

© Financier Worldwide



Josep Montefusco

Clifford Chance, S.L.P.


Douglas Sharrott

Fitzpatrick, Cella, Harper & Scinto


Bernardo Herrerias

Hogan Lovells


Abigail Woolhouse

Stratagem IPM Ltd


Helen Cheng

Zhong Lun Law Firm

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