Wednesday, 24 August 2011

Judge decides royalties -- and rules on the cost of drafting an IP licence

A news flash from Anti Copying in Design -- ACID -- reports that one of its members, Temple Island Collection, scored an early victory against New English Teas in the first of a two-part intellectual property case heard in the Patents County Court, England and Wales, which readers can find at [2011] EWPC  21. ACID says:
"Having settled the original dispute about the infringement of its iconic "Red Bus" image a dispute arose about the exact scope of settlement. ...

The first [issue for Judge Birss QC to settle] was the Royalties due under the settlement. New English had agreed to pay 5% of the trade sale price of all past and pending sales of the first image. Later, New English attempted to reduce the royalty on "multi-packs" by 66% on the basis that of the three items in the multipack only one featured the first image. Temple disagreed, saying that it was clear that the parties had in mind a 5% payment on the sale price of the product sold which included the image. Judge Birss QC agreed with Temple, the parties had not invented some complicated mechanism to decide the royalty and Temple's reflected the parties' intentions when viewed objectively.

The second issue was the amount of costs payable (by New English) for drafting a licence agreement, the rival figures being £500 and £2000. Judge Birss QC accepted Temple's submission that the time taken to draft the licence was not the only factor but that other factors, such as expertise and the value of the document to the parties, were relevant and awarded £1500.

The third issue was as to whether or not the settlement required New English to enter into a formal licence, and whether that licence should include an 'open book' accounting term. This depended upon Judge Birss QC analysing correspondence between the two parties' representatives, and he ruled there was no requirement to enter into a formal licence. The Judge however indicated that he would have included an open book term had he found a licence was required.

New English have had to pay over £14,000 to Temple Island for royalties and the licence agreement as well as a previous unpaid amount in costs ..."
It's good to see a trial judge getting stuck into the financial details so decisively, particularly in what was effectively a case management conference. This blogger can't recall a previous occasion in which a judge had to consider the cost of drafting a licence, either.  Can readers, particularly those from other jurisdictions, comment the cost of drafting on the facts of this case?

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