IP strategy for FinTech Start-ups and SMEs - and Other Matters

 

Jane Lambert

On Monday the Intellectual Property Awareness Network ("IPAN") celebrated World Intellectual Property Day with a seminar entitled IP strategy for FinTech start-ups and SMEs. I was one of the speakers and I shared the platform with Alessandro Hatami, Fernando Da Cruz Vasconcellos, Xuan-Thao Nguyen and Janice Denoncourt. Amanda Solloway MP, UK Minister of State for Energy and Intellectual Property sent a recorded video message as did the Dean of Nottingham Law School. Well over 100 people attended the event and I noticed some very well-known names on the attendees' list.

I have been following the law of what is now called FinTech even longer than I have been practising intellectual property law.  Indeed, as I said in Celebrating World IP Day, (26 April 2021 NIPC News), it was FinTech that led me to intellectual property.   The reason for my interest is that I was legal adviser to VISA International for Europe, the Middle East and Africa in the early 1980s I discussed that time n my profile:

"Banks were developing electronic funds transfer systems which gave rise to many new legal issues on such matters as authentication, competition, privacy, software development transactions, telecommunications regulation and trans-border data flow. I wrote a number of articles and other publications including "Electronic Funds Transfer: the Emerging Legal Issues" for the Law Society Gazette in 1984 and contributed sections on computer contracts, data protection and electronic banking to Atkin and the Encyclopedia of Forms and Precedents. I also addressed The International Bar Association in Vienna in 1984 and the International Chamber of Commerce conference on electronic banking in Madrid in 1986."

In 1985 I answered an advertisement in Inner Temple for tenants for chancery chambers in my birthplace Manchester.  I was offered a tenancy and returned to independent private practice at the English bar.  However, I continued to write about FinTech and, occasionally, I was instructed in FinTech cases.

Prof Denoncourt invited me to contribute to Monday's webinar after I  had published a case note on Judge Melissa Clarke's judgment in Communisis Plc v The Tall Group of Companies Ltd and others [2020] EWHC 3089 (IPEC) (Fintech Patents - Communisis Plc v The TALL Group of Companies Ltd. 22 Nov 2020).  That was an action for the infringement of a patent for a method of generating a payment/credit instrument and a counterclaim for revocation on the grounds that the invention was not patentable and lacked an inventive step.  The learned judge held that the patent was invalid on both grounds and that the defendant's product did not infringe.  The reason I wrote about Communisis is that it was about FinTech and disputes over such patents are relatively uncommon, at least in the United Kingdom.

In Fintech Startups – is IP important? 12 Oct 2016 The FinTech Times. Manisha Patent noted:

"It’s worth observing the “unicorns” of the fintech world when considering IP. Of the top 35 unicorns, less than 25% have filed for one or more patents. This means that the average fintech is far from IP-intensive and more centered on commodified software technology than the mythology one would want to believe."

That was the case when I was at VISA during the 1980s and it remains the case now.  As I observed in Kalifa Review fails to mention Patents for FinTech Inventions on 26 Feb 2021 in NIPC Invention, the Kalifa Review of UK Fintech hardly mentioned intellectual property at all and it did not discuss the difficulties of patenting FinTech inventions.

I discussed some of those difficulties in How far (if at all) is it possible to protect Innovation in Financial Technology? in IP Yorkshire as long ago as 12 Aug 2014 and more recently in Protecting FinTech Invention on 27 April 2017 in NIPC Law.   In the first of those articles I wrote:

"The problem is that s.1 (2) of the Patents Act 1977 declares that

'the following (among other things) are not inventions for the purposes of this Act, that is to say, anything which consists of -
(a) a discovery, scientific theory or mathematical method;
(b) a literary, dramatic, musical or artistic work or any other aesthetic creation whatsoever;
(c) a scheme, rule or method for performing a mental act, playing a game or doing business, or a program for a computer;
(d) the presentation of information......'

Much of the technology used in the financial services industry are computer programs and their output consists of methods of doing business and the presentation of information."

In the second article, I added:

"Most FinTech innovation will be software implemented. Software is difficult to patent in England and indeed the rest of Europe because of the exclusion of computer programs "as such" by s.1 (2) (c) of the Patents Act 1977 and art 52 (2) (c) of the European Patent Convention. Moreover, patents are expensive to get and maintain and even more expensive to enforce. There must be full disclosure as to how they work. A 20-year term is likely to exceed many times the economic value of the technology."

One of the grounds on which the claim in  Communisis failed is that the invention was not patentable as a mathematical method and program for a computer.  Communisis is therefore an object lesson as to why patents are not usually a good way of protecting FinTech innovation.

There are alternative ways of protecting such innovation.   Flowcharts, specifications, screen output, source and object code, manuals and the contents of databases can be protected from unlicensed reproduction by copyright.  The disclosure and use of sensitive technical or commercial invitation can be prevented by the law of confidence or the new Trade Secrets Directive (Directive (EU) 2016/943 of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (OJ 15.6.2016 L 157/1). Goodwill accruing to a brand can be protected by the registration of the brand name or logo as a trade mark. Finally, there is first-mover advantage.   

My colleagues' presentations were excellent.   One important takeaway for me was the lead that China has taken over the rest of the world in FinTech. That was stressed by Prof  Xuan-Thao Nguyen in her presentation but also mentioned by Alessandro Hatami in his. Prof  Xuan-Thao reminded the audience that China applies for some 1.4 million patents every year and has now supplanted the USA as the main user of the Patent Cooperation Treaty (see China Increases its Lead in International Patent Applications 11 March 2921 NIPC News).  She also mentioned the speed with which the Chinese courts can dispose of infringement and invalidity actions. China has effectively eliminated cash for most transactions.  Even beggars accept electronic payments there (see Beggars in China go cashless, but there's more than what meets the eye 2 July 2018 Business Today).

Our moderator on Monday was John Ogier who is Chair of IPAN.  He was previously Registrar of the Guernsey Intellectual Property Office. Guernsey has some curious intellectual property laws.  It is one of the few jurisdictions in the world to protect image rights (see Jane Lambert Guernsey's Image Rights Legislation 2 Jan 2013 NIPC Law and Kate Storey Guest Post - Kate Storey: Guernsey's Image Rights  8 Jan 2013 NIPC Law).  The article by Kate Storey is particularly interesting as she helped to draft the legislation when she was with Collas Crill.   Guernsey also has its own patent law even though it has no facilities of its own for examinations and searches.  The patents of any country that is listed in Sched. 2 to The Registered Patents and Biotechnological Inventions (Bailiwick of Guernsey) Ordinance, 2009 can be registered without any examination in Guernsey.   As I said tn Guernsey's Patent Law 18 Jan 2011 NIPC Law, China, India, New Zealand, Russia and the USAQ are listed as well as the EPC countries but not Australia or South Korea.

The evening finished with a Q & A.   I was asked what could be done to reduce the cost of enforcement.  I said that a lot had already been done with the adoption of Lord Justice Arnold's proposals in 2010. These limited trials to 2 days, recoverable costs to £50,000 for trial and £25,000 for an account on inquiry and damages to £500,000. I added that for most IP claims under £10,000 that could be tried in one day there was a small claims track. CPR Part 27.14 limited recoverable coss to a few hundred pounds. I recommended greater use of alternative dispute resolution such as ICANN's UDRP for domain name disputes, the IPO's opinion service for disputes over the infringement and validity of patents and the Company Names and the Company Names Tribunal. 

I reminded the audience that intellectual property law did not exist solely for the benefit of intellectual asset owners. The purpose of IP laws was to strike a fair balance between rights holders, consumers and competitors.  The high cost of litigation kept patents, trade marks and designs on the register which should not be there. 

Finally, I observed that the Unified Patent Court Agreement that Mr Boris Johnson himself had ratified in his capacity as Foreign Secretary on World IP Day 2018 would have reduced the cost of patent litigation considerably but that ratification had been reserved by none other than our fellow panellist Amanda Solloway MP on 20 July 2020. I had been looking forward to asking the Minister for the reason for that volte-face (see Jane Lambert Has the Volte-Face on the Unified Patent Court Agreement been worth it? 25 April 2021 NIPC Brexit). Sadly, the Minister was not there to justify herself.

Anyone wishing to discuss this article or any of the topics discussed in it should call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.

Branding - Catching Them Young

Court Room at the Bangkok KidZania

Author ProjectManhattan
Licence Creative Commons Attribution-Share Alike 4.0 International

Source Wikipedia KidZania 

On Friday, the son of my former ward celebrated his 8th birthday. For a birthday treat his parents and I took him to the London KidZania which describes itself as "An Indoor City Run by Kids." Located in the Westfield shopping centre in Shepherds Bush it consists of 75,000 square feet of replica child size shops and offices on two floors where children aged between 4 and 14 can try their hands at all sorts of occupations.

Children and their accompanying adults pass through immigration where they are issued with wristbands. Activities are paid for with kidZos which is KidZania's private currency though food and drink have to be purchased in sterling.  Activities for adults are limited to queueing with children, watching their role play, consuming refreshments and riding a bus.

Like a lot of children's attractions, KidZania is a transatlantic concept, but from Mexico rather than the United  States.  The first KidZania opened as  La Ciudad de los Niños (Kids' City) in Mexico City in 1999.  La Ciudad was rebranded as Kidzania in 2006 when a second children's city was opened in Monterey. The Mexican company KidZania S.A.P.I. de C.V. has registered the word KIDZANIA as an EU trade mark for a wide range of goods and services in classes 6, 16, 20, 21, 25, 41, 42 and 43 with effect from 3 Jan 2003. It also holds many other trade marks and trade mark applications relating to KidZania around the world.

The company has franchised KidZania theme parks in 20 countries, mainly in Latin America (Brazil, Chile, Costa Rica and Mexico) and Asia (India, Indonesia, Japan, Kuwait, Malaysia, Philippines, Saudi Arabia, Singapore, South Korea, Thailand, Turkey and the United Arab Emirates).  So far, there are none in the United States and only three in Europe (Lisbon, London and Moscow) bit that is about to change with planned openings in Chicago, Dallas, New York and Paris.

Activities offered at the London KidZania are branded by Alder Hey Children's NHS Foundation Trust, Aljazeera Media Network, the Bank of England, British Airways, Cadbury, Costa, Dorsett International, Eat Natural, Gourmet Burger Kitchen, Global, H & M, Hamptons, Innocent, K-Market, Metro, Middlesex County Cricket Club, Mission Deli, Nintendo, People's Dispensary for Sick Animals, Roland, Snazaroo, The Original Tour and other organizations.  Alder Hey hospital, for example, allows children to role play as baby care nurses, paramedics and even surgeons.  Cadbury instructs them in chocolate making. 

About the only role plays for which no provision was made in London was the law which I would have found strange as a child for I knew that I wanted to be a barrister from a very early age. However, Wikipedia reports that there is a court at the Bangkok KidZania and there are others in other cities. 

The investment of some of those brand owners is impressive.  British Airways, for example, has contributed part of an aircraft fuselage and flight simulation equipment and many members of the KidZania staff wear British Airways uniforms.  Clearly, those brand holders see marketing or other opportunities in KidZania.

Our 8 year old tried his hand at print and TV journalism with Metro and Aljazeera, chocolate making with Cadbury and flight training with British Airways among other activities.  There was quite a lot of queueing for one or other of his parents during which time I relaxed in Costa's coffee shops. I also watched him perform in Aljazeera's TV studio and I have a new keyring with a photo of the little boy in an airline pilot's uniform.

Anyone wishing to discuss this article or the legal protection of branding generally by trade mark registration, the law of passing off, geographical indications or otherwise should call me on 020  7404 5252 during usual office hours or send me a message through my contact page.  I should also like to wish all my readers a very happy New Year.

IP and Fashion: the Consequences of Brexit

UK and the remaining Member States

SourceWikipedia

Jane Lambert

Last month I conducted a seminar on IP and fashion for MBL Seminars in London.  As the fashion industry relies on EU trade marks and registered Community designs more than most I have published on article on the effect of Brexit on the IP rights used in that industry.

In that article, IP and Fashion: the Effect of Brexit 10 July 2016 4-5 IP, I have referred to art 50 of the Treaty of European Union which provides that the EU Treaties and all legislation derived from them will cease to apply from the coming into force of the withdrawal agreement or two years after our giving notice to withdraw whichever occurs soonest. It follows that all EU legislation will fall away upon our leaving the EU but there will be a difference between legislation enacted by Parliament to give effect to EU directives and regulations made by the EU institutions.

Legislation made to give effect to EU directives such as out Trade Marks Act 1994 and the Registered Designs Act 1949 will remain in force because they are Acts of Parliament but regulations such as the EU Trade Mark Regulation and the Community Design Regulation will fall away immediately. As a result EU trade marks and registered Community designs will cease to apply to the UK, unregistered Community designs will dissolve and the courts of the UK will no longer have jurisdiction in EU trade mark and Community design disputes.

That will require a thorough review of all agreements relating to those rights and in some cases renegotiation and re-drafting. Inevitably legal costs will rise appreciably though these may be offset by costs savings here and there.  I shall be discussing these and other changes resulting from Brexit in a seminar in September. If in the meantime you wish to discuss any of these developments call me on 020 7404 5252 or contact me through this form.

If the examiner says "no" - ex parte hearings in the Trade Marks Registry

Jane Lambert

According to the Intellectual Property Office's Facts and Figures for 2012 and 2013, the IPO received 41,524 trade mark applications in 2013 and granted 35,256 in that period. Clearly, most trade mark applications go through without any problem but there are some that do not either because the examiner (the IPO official who considers trade mark applications) objects to an application or a third party decides to oppose it.

Hearing 

In either case, there may be a hearing before an official representing the Head of the IPO (referred to as "the Registrar" rather than "the Comptroller" in trade mark matters) who is known as a "hearing officer". A hearing to consider an examiner's objection is known as an ex parte hearing because only the applicant for the trade mark attends the hearing.  A hearing to resolve an opposition is an example of an inter partes hearing because both the trade mark applicant and the opponent take part. The rest of this article will be on ex parte hearings.

Why might an examiner say "no"

Any sign may be registered as a trade mark so long as it can be represented graphically and can distinguish goods or services of one undertaking from those of other undertakings. Graphical representation means some form of writing whether in letters, numerals or both. Most signs that can be recognized by the senses can be represented graphically but there is one great exception. Nobody has yet found a way of expressing in writing a smell. In addition, there are some signs that are not registrable for various other reasons. For instance, a sign may be devoid of any distinctive character or it may consist of or contain a protected national or international emblem such as the royal coat of arms or Olympic rings. The grounds upon which an examiner may object to an application are sometimes called "absolute grounds of refusal" and these are set out in sections 3 and 4 of the Trade Marks Act 1994.

What happens if the examiner objects

If it appears to the examiner that the requirements for registration are not met, he or she has to inform the applicant and give him or her an opportunity, within such period as the examiner may specify, to make representations or to amend the application. If the applicant is represented by a trade mark attorney or other professional intermediary there is usually an exchange of correspondence which often results in a solution that meets the examiner's concern. If those concerns are not met within the prescribed time, the examiner has to refuse the application under s.37 (4).

The Hearing

If the application is refused the applicant's only recourse is to request a hearing before a hearing officer. Although this is a judicial proceeding and governed by law it takes the form of a referral to a senior official. Often the only persons present are the applicant or his representative and the hearing officer.  Such hearings can take place at the IPO's premises in Newport, by video conference or even by telephone. Applicants can also ask for a decision to be made on the basis of written representations. An applicant may represent him or herself or instruct an attorney to appear on his or her behalf. If a difficult point of law is involved the applicant may want to instruct a barrister.

Appeal

If the applicant fails to persuade the hearing officer he or she may appeal to the High Court or a lawyer appointed by the Lord Chancellor under s.77 (1) of the Trade Marks Act 1994 known as the "Appointed Person". If the applicant appeals to the court the Registrar is entitled to appear by counsel in which case the applicant risks paying the Registrar's costs if the appeal is unsuccessful.

Further Information

The IPO has published some very helpful guidance in Trade mark disputes resolution: hearings 20 May 2014.

Should anyone wish to discuss this article or trade mark law in general, he or she should call me during office hours on 020 7404 5252 or send complete my contact form.