IP UPDATE
- A cautionary note to consider trade mark protection in China
- Be wary of ambiguous licensing provisions
A cautionary note to consider trade mark protection in China
Serious consideration should be given to registering a trade mark in China, even if it is only being applied to products that are being manufactured there solely for export.
If the trade mark is not registered in China, there is a risk that a third party could obtain conflicting rights which would then prevent the continued application of the mark to goods or packaging in that country.
This raises a further issue. In China, if no use is made of a registered trade mark in relation to the goods for which it is registered, for a continuous period of 3 years, the registration will become vulnerable to cancellation. However, use on products destined for export is sufficient to serve to support the registration of the trade mark locally. It is not, therefore, necessary for the goods to enter the market in China in order to maintain the registration of that mark there.
Be wary of ambiguous licensing provisions
The recent case of Oxonica Energy Limited v Neuftec Limited highlights the importance of taking care when drafting licence agreements to consider what the agreement is actually meant to cover, and to then ensure this is what is clearly set out in the licence agreement. It shines a light on a number of commonly seen problems in licences that have perhaps been drafted somewhat mechanically, without keeping the end in mind, or by someone not fully familiar with the nature of what it is that is being licensed. In particular, it cautions against the use of “boiler plate” clauses without consideration as to what they are intended to mean in the specific context.
Neuftec had granted Oxonica a licence to use both their patent rights and know-how, in which royalties were payable based on the manufacture, use, or sale of the“licensed products”. But there was no clear definition of what constituted a licensed product, nor was there a clear definition of the know-how being licensed.
The licensed product was defined as “any product, process or use falling within the scope of claims in the licensed application or licensed patent”. However, a patent application is commonly amended during prosecution to make it narrower. Should this result in a licence agreement whereby the field of products that are licensed gets smaller over time? The know-how remains the same. Equally, would sales and acts in countries where there is no patent count as licensed products?
The judge indicated that he had changed his mind a number of times on what the licence meant. In the end, however, he decided that it meant a duty to pay royalties on all uses and products in all countries, so long as the main agreement was still in force, for uses and products that fell within the original, as-filed, PCT patent application. This provided a convenient yardstick against which to measure the know-how imparted to Oxonica. However, this interpretation arguably puts greater value on the know-how rights than the patent rights as it does not take into account where patent rights remain in force, or their breadth.
A key point to note from this judgement is that the actual intent of the parties is not the correct consideration when deciding the interpretation of an unclear agreement. Instead, the licence must be interpreted to determine what a reasonably informed, neutral third party would think the licence meant, knowing the background knowledge available to the parties, but not motivated by trying to assess their intent.
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