The IP Act – a false economy?

The IP Bill recently received royal assent and became the IP Act 2014. The act is part of wider reforms intended to support innovation and add a headline-grabbing figure of up to £8 billion to the size of the UK economy by 2020. This article summarises the most significant changes to UK law relating to both patents and designs brought about by provisions in the act that will start to come into force from October 1 2014. It is intended to make the UK IP system clearer, more cost effective and more accessible, particularly for small and medium-sized enterprises (SMEs). 

Patents
Unified Patent Court and unitary patent
The act enables the United Kingdom to bring into effect the Unified Patent Court, the forum for enforcing the long-awaited unitary patent. The unitary patent system will offer UK businesses significant efficiency gains when protecting their inventions by allowing them to:

• secure a single patent valid in 25 EU member states, with savings in translation costs of up to £20,000 per patent compared to the currently available systems; and
• enforce that patent at the Unified Patent Court, rather than in a series of national courts. 

However, these tempting cost-saving measures come with the risk of the EU-wide loss of the patent if a counter-claim for revocation succeeds. It therefore remains to be seen, when the unitary patent finally becomes a reality, whether businesses will take up the benefits that it offers, particularly for their most commercially significant inventions.

Product marking
Businesses will now be allowed to identify their patented products simply by providing a web address on those products, rather than a potential myriad of relevant patent or patent application numbers. This common-sense measure will reduce the cost burden on patent holders in updating manufacturing processes for marking products and packaging in response to changes in patent status. It will also give third parties easy access to up-to-date patent information for a given product.

Patent Opinions Service
The act extends the scope of the Intellectual Property Office (IPO) Patent Opinions Service, including bringing supplementary protection certificates within its remit. Potentially of more significance, particularly to SMEs, is that in clear-cut cases where an opinion prepared by the Patent Opinions Service reveals that a patent is not new and inventive, the act empowers the IPO to revoke the patent.

This provision is intended to reduce the cost burden of bringing revocation proceedings on third parties. It should also remove invalid monopolies in the United Kingdom, giving businesses more freedom to innovate. Patent owners are nevertheless assured that the IPO is obliged to provide an opportunity for them to file observations and/or amendments to save their patent from revocation.

Designs
Protection for registered designs
In recognition of the importance of designs to the UK economy, the act makes infringement of a registered design a criminal offence in certain circumstances. This brings the sanctions available to owners of registered designs into line with those currently available for owners of copyright and trademarks. Those who deliberately copy a registered design may be punishable by a fine and/or a prison sentence of up to 10 years.

Safeguards have been included to ensure that the new criminal penalties extend only to those who have blatantly copied a registered design. However, innocent infringers have not escaped the attention of the legislature and may now be pursued for an account of profits (although damages remain unavailable), bringing consistency with the remedies available for infringement of registered Community designs.

Ownership
The act brings the UK position on the ownership of commissioned designs into line with EU law and copyright legislation: the default owner of a design will now be its designer, not its commissioner. However, the provisions relating to employer ownership of designs created by employees in the course of their employment remain unchanged. Businesses commissioning designers should ensure that written agreements dealing with the ownership of the resultant designs are in place before work commences.

Other changes to registered and unregistered designs
A number of other changes have been made to design law to reflect existing measures in the Patents Act, harmonise with EU law and provide legal certainty for businesses. These include the following:

• The coverage of an unregistered design right has been simplified and tightened to clarify what is protected to both designers and third parties.
• Third parties acting in good faith will be able to continue using a design that is subsequently registered by someone else, without fear of being stopped as a result of the registration.
• UK businesses seeking to use the Hague international design registration system will now be able to specify the individual EU territories in which they want their designs protected.

Finally, the new Design Opinions Service will be introduced to help parties to resolve disputes by obtaining an impartial opinion on the strength of their position without resorting to costly litigation.

Comment
The new measures sit alongside initiatives such as the Patent Box as part of government efforts to benefit businesses that use the UK IP system. However, it is not yet apparent whether rights holders will take up the opportunities offered – for instance, by favouring the cost savings offered by the unitary patent over the lower-risk, currently available patent systems. It is also interesting that the act focuses on upgrading the law relating to registered designs – an instrument of protection often overlooked by many rights holders as being of lower value to patent rights.   

It therefore remains questionable whether these measures will contribute towards meeting the ambitious targets for economic growth, although the efforts to increase accessibility to and reduce the complexity of the IP system must be a step in the right direction.