Monthly Archives: March 2010

Intellectual Property – Make It Your Business

The last twenty or so years have seen a fundamental shift in the way in which businesses operate. With the impact that technology has had on the workplace, it’s now almost impossible to imagine the modern office without access to a-mail, letters being typed on PCs rather than word processors or typewriters and high-speed broadband allowing us to work on virtual networks rather than in one location.

All of this technology enables the average business to produce, use, store and get information to the public or its clients much more quickly and easily. It’s now probably more true than ever (if a vast over-simplification) that all you really need to get started in business is a PC, a mobile phone and ambition.

Unless you are that lone entrepreneur, the information that a business produces and stores can be contributed to and will almost certainly need to be accessed by your staff, the vast majority of whom will have PCs of their own and be generating their own content or accessing information belonging to third parties on a daily basis.

So what’s the problem?

Virtually every part of your business is impacted upon in some way by Intellectual Property Law. If your business has been using a name and generating goodwill under a brand, it can be protected by passing-off. If that name acts as “a badge of origin”, then it can be protected by a Trade Mark. If you have lists of customers and business plans, they can be confidential and protected from misuseIf you create an invention, it may be able to be protected by a Patent.

You get the idea. Virtually every business activity creates some form of Intellectual Property Right (“IPR”). IPRs are now more valuable than ever and can make up a huge part of the value of any business as and when it comes to be sold or finance raised.

A lender to, investor in or buyer of your business would look very carefully at how much of your business hinges on IPR – if it is not adequately protected then the value placed on your business could be much lower that what you thought. So it’s best to take time out regularly to assess the IPR being developed.Do speak to your professional advisors to help you decide what is a ‘must’ to protect before running the risk of dissipating all that time and effort in having grown your business.

Also, like any aspect of business, the creation and use of IPRs is not without risk. More than ever, staff use social networks and the number of claims in the Employment Tribunal dealing with confidential information or libellous comments posted by current or former employees is on the rise. Confidential information is removed from servers by employees when they leave. Company websites are “scraped” or their contents copied wholesale. E-Mail lists containing personal information make it into the public domain. Competitors purchase domain names which are similar to yours. Staff create documents which contain material copied from third parties.

 The list goes on. The point is that technology does make it much easier to create content which can lead to the creation of IPRs, but it also makes it much easier for them to come under threat of misuse or infringement. Taking a serious look at your business’ intangible assets not only protects your position, but helps prepare your exit strategy and can add value where you may never have thought it existed. Technology brings freedom, but the price of that freedom is, as always, eternal vigilance.

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Handbags At Dawn – Louis Vuitton fail in claim against Google over use of Trade Marks on the Internet

In a Judgment that has been nervously anticipated by both brand owners and the internet advertising industry, the European Court of Justice has ruled that Google’s policy of allowing third parties to buy advertising keywords which contain Trade Marks owned by existing brands is legal.

The phenomenally popular Google “Adwords” product, which displays advertising alongside search engine results based upon the search terms used, has been involved in a number of high-profile disputes since its launch as brand owners have objected to third parties’ ability to bid on “keywords” which contain their Trade Marks; Louis Vuitton’s case is the first to be referred to the ECJ for clarification on what has become an increasingly contentious area.

Google had previously blocked advertisers from using third party Trade Marks as a matter of policy, but changed its stance in the United States 2004, with England and Ireland following suit in 2008.

Google have argued in this and a number of other cases that they should not be held liable by brand owners for Trade Mark Infringement as they only provide the means for the advertisements in question to be displayed.

The ECJ has agreed with them, but has also confirmed that Trade Mark Infringement will take place where a third party’s advertisement suggests an economic link with a Trade Mark owner that could confuse normally informed and reasonably attentive internet users. If Google does not take immediate steps to remove the advertisement in question, then it could also be liable for infringement. This sets out the limits of the “mere conduit” defence upon which Google has relied in previous cases.

The case is of huge importance to Google as its entire business model has been built on advertising, which has proven increasingly successful against the backdrop of a general decline in print media. Brand owners, however, will probably see their rights severely curtailed – Trade Marks require a substantial investment to obtain and the internet enables infringement in a number of different ways. The purchase of keywords which contain Trade Marks allows a competitor to use the reputation of those marks to enhance their own profile, and even though Google has escaped liability, this judgment will more than likely see brands exploring new methods to police their image.

Pink Floyd v EMI – A Momentary Lapse Of Reason?

Pink Floyd, one of the most popular bands of all time and responsible for such record-breaking “concept” albums as “Dark Side Of The Moon”, “Wish You Were Here” and “The Wall”, have won the right to prevent record label EMI from selling songs from their albums for download as individual tracks in a dispute which will be watched very carefully by both the music industry and online music retailers.

The claim started in April 2008, with the Band, who have been signed to EMI since 1967, alleging that they were owed substantial royalties from their label. Last week’s hearing saw further details of the dispute being made public, including the fact that it deals mainly with royalty payments for the online sales of Pink Floyd’s back catalogue through outlets such as iTunes.

That issue and many others have to be resolved, but in the meantime the High Court in London found that the most recent contract between Pink Floyd and EMI, signed before online music download services such as iTunes became popular and containing a clause stating that EMI had “no rights to sell any or all of the records as single records, other than with [the Band’s] permission”, should apply to downloads of their work sold online as well as physical copies.

Bands suing their labels is nothing new and Pink Floyd in particular are no strangers to litigation, either between the former members of the band in the case of frontman Roger Waters attempting to stop the remaining members from continuing to record under the “Pink Floyd” name in the mid 1980s or in claims made against them by third parties – such as the case of session musician Claire Torry, who took action against them in relation to her uncredited contribution to “The Great Gig In The Sky”, one of the best-known tracks on “Dark Side Of The Moon” which remains one of the biggest-selling albums of all time.

The hearing last week dealt mainly with the details of the contract between the Band and EMI. The point which they have made should be of very little surprise to their fans – the Band (pioneers of the “concept album”) have always wanted their albums to be listened to as a whole and fiercely resisted releasing singles from their earlier work apart from the notable exception of “Another Brick In The Wall, Part II” in 1980.

The issue here was over the interpretation of the word “record”, which EMI’s legal Team argued should only mean physical copies of the Band’s albums rather than online versions. The Judge found that the clause in question was meant to preserve the Band’s artistic control over their work.

Internet downloading, as well as being a source of major concern for the Music Industry, has opened up a whole new revenue stream for existing acts by exposing them to a new generation of fans who prefer to download to an iPod rather than listen to vinyl.

The Pink Floyd back catalogue is hugely valuable to EMI, second only to that of the Beatles-who have so far chosen not to make their work available for legal download except for on an Apple-branded USB drive at the end of last year for around £200. Many of the major artists who have so far refused to allow their work to be sold online as individual tracks, including AC/DC – whose album “Black Ice” was one of the biggest-selling releases of 2008, have done so either for the same reasons as Pink Floyd or the simple fact that they receive a lower royalty payment for songs sold individually.

It remains to be seen whether this case will lead to the return to popularity of Albums generally if the music industry bows to pressure from artists to sell their work as a whole, as one of the major selling points of online distribution remains that listeners can pick and choose individual songs by groups which they are discovering for the first time and with iTunes in particular offering a “Complete My Album” feature in recent releases of the software as well as the “Genius” tool which suggests similar artists that a user may like according to genre or popularity, there is a strong commercial argument that selling tracks individually may be more beneficial over the long term, acting as “trailers” for entire back catalogues which can now be purchased in one fell swoop.

This case is potentially of huge importance to the Music Industry, as many acts who negotiated deals with their labels before the advent of legal download services such as iTunes will probably be reviewing the terms of those contracts with a view to renegotiating royalty agreements for online sales. It must be said, however, that this case only deals with Pink Floyd’s own arrangements with their label rather than the industry as a whole and it remains to be seen how far-reaching its effect will be. So far, EMI have only been ordered to pay an amount towards Pink Floyd’s legal costs but the final award in unpaid royalties at the end of this case could be extremely high.

What has so far been absent from the case has been any mention of the Band’s “Moral Rights” in their back catalogue. Unless waived, Artists may use these rights to object to what they view as “derogatory treatment of the work which amounts to a distortion or mutilation or is otherwise prejudicial to the honour or reputation of the author or director”. George Michael chose to do so in the 1980s when the “Bad Boys Megamix” of Wham’s back catalogue was found to be capable of such a “mutilation”. One of Pink Floyd’s objections to EMI’s sale of their work is that parts of their songs were sold as mobile phone ringtones, in itself a hugely profitable market.

The chances are that the Moral Rights issue will have been dealt with in Pink Floyd’s most recent contract, but as more details of this dispute become public it will be interesting to see if this is the case given the Band’s history of monitoring how their work is exploited very carefully – their “Best Of” Album “Echoes” was famously mixed in such a way as to make it appear seamless, even though its individual tracks came from different albums made over a twenty-year period.

What we can say about the case at this stage is that any act who signed a deal with their label which did not specifically deal with the sale of their music online should now consider whether that original contract is still fit for purpose. If not, then their labels may well try to “Run Like Hell”, rather than “Have A Cigar”.

UPDATED: Not-So-Sweet 7 – Sugababes sued by former members over rights to Band name

In a case which will be watched closely by the recording industry and by bands in general, UK girl band the Sugababes are being sued by former member Keisha Buchanan over the rights to use the group’s name.

The group formed in 1998, with the original line-up of Siobhan Donaghy, Mutya Buena and Keisha Buchanan finding limited success (although their first album contained four top 40 hits) before their commercial breakthrough in 2000 after Donaghy was replaced by Heidi Range for their first Number 1 single “Freak Like Me”.

This incarnation of the group lasted until 2005, when Buena left to pursue a solo career. Her successor, Amelle Berrabah, was selected by the group’s management and was part of their most commercially successful period, peforming on several chart-topping singles and albums.

September 2009 saw the latest line-up change with Buchanan leaving the Band in favour of former Eurovision contestant Jade Ewen to a huge backlash from both critics and fans over the continued use of the “Sugababes” name; the Guardian in particular claimed that “the Sugababes don’t exist as a band”.

The latest twist in the ongoing soap opera is Buchanan’s claim, which according to tabloid reports will see her attempt to “claim a stake in the Sugababes brand, which has grown into a multi-million pound business empire”. The story is developing quickly, and it has now come to light that Buchanan, Buena and Donaghy have applied for a Community Trade Mark over the band’s name.

If successful, the original line-up would have a monopoly over its use and the current line-up would need to find a new identity.

This kind of dispute is a long-standing legal tradition amongst some of the UK’s biggest musical exports; it happened to Fleetwood Mac in the 1970s, Pink Floyd in the 1980s and Black Sabbath over the course of last year. As Bands continue to evolve into Brands and generate new revenue streams in ways that simply weren’t even thought of when their line-ups first came together (in this case, the Sugababes name is already licensed for use on products as diverse as Dolls and Footwear), the use of their identity will probably only become more and more fiercely-contested.

The legal issues behind all of this are, by turns, both very simple and very complicated. Forming a Band is, under English law, entering into a “Partnership at Will”, and if there is no agreement between the original partner members as to how profits generated by and goodwill in the band’s name should be split, then the default provisions of the Partnership Act 1890 will apply and both the profits and liabilities will be shared equally. Similarly, Partners can’t be “expelled” from a Partnership At Will without an explicit written agreement and this kind of Partnership can be “dissolved” by one of its members at any time who must, according to the 1890 Act, participate equally in its management (in this case, Buchanan has gone on record to say that she was “forced out” of the group.

It’s always better to draw up your own bespoke Partnership Agreement to deal with these kinds issues as the 1890 Act is in dire need of an overhaul. It’s hard to believe that the Band wasn’t advised on this and that there won’t be a well-drafted agreement in place already, but the Court gave some very valuable advice on this area in the 2003 case of Byford v Oliver and Dawson, which involved the remaining members of 80’s British Heavy Metal band Saxon registering their name as a Trade Mark without the involvement of original frontman “Biff” Byford, who claimed that the Trade Mark should not have been granted on the basis that he owned a percentage of the goodwill in the “Saxon” name.

In this case, Oliver and Dawson had actually tried to prevent Byford from using the name and although at first instance the Trade Mark Registry ruled in their favour on the basis that each band member owned goodwill in its name and that it was simply a matter of whoever registered the name first would own the Trade Mark, Biff Byford had the last laugh.

Byford took his case to the Court of Appeal, where the late Judge Laddie found in his favour, ruling that a band was, without any other agreement a partnership at will and that any goodwill attached to its name belonged to the original partnership jointly rather than to one individual.

If a band splits up, then a Partnership at Will comes to an end unless there is some kind of agreement to the contrary, meaning that no-one can use the name without the permission of the original members. So, the likely outcome here if there isn’t any agreement in place would be that the current line up can’t continue to use the “Sugababes” name.

In any event, if the Trade Mark Application is granted in favour of the original line-up, then they would be the only group who could use the name. This would be disastrous for the latest line-up, although there is a small window of time in which an opposition could be filed. Based on the “Saxon” case, however, it’s doubtful whether an opposition would be successful.

Musicians should always look into getting a Partnership Agreement drafted to deal with what happens to the band name (and profits which the group generates) in the event of a split and if not, it’s clear that any remaining members will not be able to register a trade mark against the name and carry on regardless with a monopoly to stop anyone else from using it. It’s going to be very interesting to see how and when the other members of the original line-up become involved but one thing is certain – this dispute is going to get “Ugly”.

Not-So-Sweet 7 – Sugababes sued by former member over rights to Band name

In a case which will be watched closely by the recording industry and by bands in general, UK girl band the Sugababes are being sued by former member Keisha Buchanan over the rights to use the group’s name.

The group formed in 1998, with the original line-up of Siobhan Donaghy, Mutya Buena and Keisha Buchanan finding limited success (although their first album contained four top 40 hits) before their commercial breakthrough in 2000 after Donaghy was replaced by Heidi Range for their first Number 1 single “Freak Like Me”.

This incarnation of the group lasted until 2005, when Buena left to pursue a solo career. Her successor, Amelle Berrabah, was selected by the group’s management and was part of their most commercially successful period, peforming on several chart-topping singles and albums.

September 2009 saw the latest line-up change with Buchanan leaving the Band in favour of former Eurovision contestant Jade Ewen to a huge backlash from both critics and fans over the continued use of the “Sugababes” name; the Guardian in particular claimed that “the Sugababes don’t exist as a band”. The latest twist in the ongoing soap opera is Buchanan’s claim, which according to tabloid reports will see her attempt to “claim a stake in the Sugababes brand, which has grown into a multi-million pound business empire”.

This kind of dispute is a long-standing legal tradition amongst some of the UK’s biggest musical exports; it happened to Fleetwood Mac in the 1970s, Pink Floyd in the 1980s and Black Sabbath over the course of last year. As Bands continue to evolve into Brands and generate new revenue streams in ways that simply weren’t even thought of when their line-ups first came together (in this case, the Sugababes name is already licensed for use on products as diverse as Dolls and Footwear), the use of their identity will probably only become more and more fiercely-contested.

The legal issues behind all of this are, by turns, both very simple and very complicated.  Forming a Band is, under English law, entering into a “Partnership at Will”, and if there is no agreement between the original partner members as to how profits generated by and goodwill in the band’s name should be split, then the default provisions of the Partnership Act 1890 will apply and both the profits and liabilities will be shared equally.

Similarly, Partners can’t be “expelled” from a Partnership At Will without an explicit written agreement and this kind of Partnership can be “dissolved” by one of its members at any time who must, according to the 1890 Act, participate equally in its management (in this case, Buchanan has gone on record to say that she was “forced out” of the group. It’s always better to draw up your own bespoke Partnership Agreement to deal with these kinds issues as the 1890 Act is in dire need of an overhaul.

It’s hard to believe that the Band wasn’t advised on this and that there won’t be a well-drafted agreement in place already, but the Court gave some very valuable advice on this area in the 2003 case of Byford v Oliver and Dawson, which involved the remaining members of 80’s British Heavy Metal band Saxon registering their name as a Trade Mark without the involvement of original frontman “Biff” Byford, who claimed that the Trade Mark should not have been granted on the basis that he owned a percentage of the goodwill in the “Saxon” name.

In this case, Oliver and Dawson had actually tried to prevent Byford from using the name and although at first instance the Trade Mark Registry ruled in their favour on the basis that each band member owned goodwill in its name and that it was simply a matter of whoever registered the name first would own the Trade Mark, Biff Byford had the last laugh.

Byford took his case to the Court of Appeal, where the late Judge Laddie found in his favour, ruling that a band was, without any other agreement a partnership at will and that any goodwill attached to its name belonged to the original partnership jointly rather than to one individual.

If a band splits up, then a Partnership at Will comes to an end unless there is some kind of agreement to the contrary, meaning that no-one can use the name without the permission of the original members. So, the likely outcome here if there isn’t any agreement in place would be that the current line up can’t continue to use the “Sugababes” name.

Ironically, Mutya Buena has recently applied for a Trade Mark in the name, although this apparently does not form any part of Buchanan’s claim.

Musicians should always look into getting a Partnership Agreement drafted to deal with what happens to the band name (and profits which the group generates) in the event of a split and if not, it’s clear that any remaining members will not be able to register a trade mark against the name and carry on regardless with a monopoly to stop anyone else from using it. It’s going to be very interesting to see how and when the other members of the original line-up become involved but one thing is certain – this dispute is going to get “Ugly”.