A High Court case between a designer and a manufacturer reminds us of the importance of ensuring Intellectual Property licences are carefully worded and thoroughly understood by all involved.
The Claimant, Mr Damian Evans [Evans], is a designer of kitchen utensils and devices, best known for his design of the ‘Index’, the colour-coded chopping boards which are widespread in commercial and domestic kitchens.
The Defendant, Joseph Joseph LTD [JJL], is a well-known kitchenware and houseware manufacturer and Richard Joseph is co-founder and Managing Director.
In 2007, Evans and JJL entered a licence agreement where Evans licenced the intellectual property rights in his designs for kitchenware to Joseph Joseph LTD for commercial production.
Background
Earlier this year, a dispute arose between Evans and Joseph Joseph LTD over the meaning of certain words and phrases in the licence agreement concerning these design rights.
The background to this contract became a key factor in this case and the terms and phrases used throughout became a particular point of interest and were explored in the High Court judgement.
The Agreement stating JJL must use “best efforts to protect and defend” the designs in all territories “where the parties mutually agree it is beneficial”. Evans claimed JJL’s failure to renew the registrations of his designs breached this obligation.
The Court considered how a reasonable person with all the background knowledge would interpret the clause to determine the intention of the parties. The Court focused on the meaning of relevant words throughout the agreement to establish the overall understanding of the contract.
The parties asked the Court to clarify three elements of this clause:
1. Obligation to use best efforts to protect and defend
Evans argued JJL had an obligation to renew existing registered rights for their maximum renewable duration. However, JJL contended it had discretion to allow registrations to lapse.
The Court continued to determine the meaning of different clauses throughout the licence agreement. The judge confirmed “protect” and “defend” meant JJL had an obligation to preserve the rights. Intellectual property rights require renewal and failure to do so can lead to lapse. Therefore, not renewing the registrations could result in a negligence of protection. Consequently, the judge found Evans’s interpretation of the clause was broadly consistent with what a reasonable reader would understand and JJL did in fact have an obligation to renew the registrations. However, JJL was only obliged to do so where deemed beneficial.
2. The meaning of beneficial
The judge agreed registration was beneficial unless the other party could show it would not result in an overall benefit. The judge also stated consideration of cost was a relevant factor in determining how beneficial the registration was.
3. The meaning of ‘the Parties mutually agree’
The judge decided the parties were obliged to discuss in good faith whether the registration was beneficial with consideration of the other party’s position.
Lessons learned
This case highlights the importance of prudent and careful drafting. A clear and concise clause which reflects your understanding of the arrangement can help to avoid unnecessary and expensive litigation in the future. This is especially important for clauses which deal with the obligations of each party to the contract.
Hamlins helps clients protect their intellectual property rights and we draft contracts to best protect and effectively commercialise our clients’ position. To find out how we can provide you with the best protection in a commercial pursuit, please contact Matthew Pryke.
