Phil Hitchen (Intellectual Property Solicitor)

“Most people regard tangible assets, such as premises and plant, and staff as material to business operation and success or failure. Of equal if not greater importance is knowing what intellectual property your business owns or licences and your rights.

Whether it be the name or logo you use; the design and supply details of your products or services or the software that records orders and delivery all involve intellectual property. You need to know what you have and protect it and exploit it or lose it.

Today is World Intellectual Property day and events and services are available to help you become more aware of what you have and what you need to do. The IPO, Business Link and other organizations also provide useful summary and practical information.

At Ralli we advise new and existing businesses, charities and not for profit organizations and individuals on their intellectual property and are always happy to meet you and discuss your requirements.”

Phil Hitchen - Associate

Ben Hoyle, Arts Correspondent at The Times reported yesterday that EON Productions, the producer of the James Bond films, has announced that the 23rd installment in the series has been postponed indefinitely because of the financial woes of its distributor, Metro-Goldwyn-Mayer (MGM).

If you are a corporate buyer or investor you are only going to buy or invest in MGM if it makes commercial sense and you will get a return.

If a major factor in MGM income stream is the rights from the “Bond” films a buyer or investor will want to know that those rights and income stream are in place.

If there were few potential buyers or investors in the current climate the possibility of buying or investing in an MGM which doesn’t have the rights or the income from them in terms of new content is going to be a major put off.

I would be saddened if it causes any further delay with “The Hobbit” which has already been delayed due to contract/IPR disputes.

It was reported in the Times yesterday that “MGM is $3.7 billion (£2.4 billion) in debt and has been up for sale since November. Now Michael Wilson and Barbara Broccoli of EON Productions appear to have run out of patience.

“Due to the continuing uncertainty surrounding the future of MGM and the failure to close a sale of the studio, we have suspended development on ‘Bond 23’ indefinitely,” they said. “We do not know when development will resume.”

One of the principal victims of the delay appears to be Pinewood, the venerable British studios where the Bond films are largely made and where weeks of shooting time now need to be filled at short notice. Pinewood referred all inquiries to EON yesterday, which would not expand beyond Wilson and Broccoli’s statement.

The other loser is MGM itself. As the longest running film franchise in the world the Bond series is one of the pivotal attractions to any prospective buyer of the studio. EON may now try to use the stalemate to engineer an exit from its relationship with MGM to a healthier distributor.

MGM has other assets — its name and roaring lion logo, the United Artists operations, a library with more than 4,000 titles and a stripped-back film and television operation. But it is Bond, and its stake in Peter Jackson’s two-part adaptation of The Hobbit, that were expected to be “the two big drivers of a deal”, Mr Goodridge said.”

Phil Hitchen - Associate

Marmite is today launching legal action against the British National Party after an image of the spread was used in a political broadcast without the company’s permission.

The famous jar appeared in the top left hand corner of the screen while party leader Nick Griffin was addressing viewers in a BNP general election broadcast on the web.

A spokesman for Marmite told Sky News Online:  “We want to make it absolutely clear that Marmite did not give the BNP permission to use a pack shot of our product in their broadcast.

“Neither Marmite nor any other Unilever brand are aligned to any political party.

“We are currently initiating injunction proceedings against the BNP to remove the Marmite jar from the online broadcast and prevent them from using it in future.”

Most manufacturers would welcome additional advertising for their products or at least would allow it in return for a fee but in the current climate when maintaining brand image and reputation can make or break a company it comes as no surprise that the manufacturers of Marmite do not want to be associated with a political party.

Without the name “Marmite” being used in the BNP adverts the manufacturers will have to show breach of trade mark or design (if the shape or label is registered), passing off or some other economic tort based on loss or damage to reputation and I would be very interested to know what legal basis they go for.

For example if I changed the label on a jar, took my own photo and put it on Ralli website would we receive a claim? Probably.”

Phil Hitchen - Associate

I recently read the news that Yorkshire Pudding makers, Roberts, Aunt Bessie’s and the Real Yorkshire Pudding Company are in talks over applying for EU protection on their products.

If the plan becomes law, only puddings baked in Yorkshire or Humberside could be called “Yorkshire puddings”, denying the same name to frozen food manufacturers overseas.

I often hear waiters on TV programmes ask diners who ask for Champagne if they want French Champagne. Given that all Champagne logically must be from that French region and anything else is sparking wine I find it amusing.

Joking aside given that certain products are very popular with consumers as a manufacturer if you can benefit from that goodwill to the exclusion of anyone else who doesn’t meet the geographical criteria then that’s great.

We had the Melton Mowbray Pork Pie application. Now we have the Yorkshire Pudding application. Don’t tell my wife but I am waiting for the Manchester Tart!

Phil Hitchen - Associate

My comments follow on from Sathnam Sanghera’s article in todays business section of Times Online (Found below).

It is a sad fact of life that whether you are dealing with a member of your family or a friend or with any other person (particularly in the course of a business) that it is often in everyone’s interests to record the transaction in the form of a clear and precise and reasonably comprehensive written contract setting out respective rights and obligations and which meets legal requirements.

If you don’t then a contract may not exist or if it does may be uncertain and/or difficult to enforce or the law may apply terms to the contract or in place of it you may not like and which could have been excluded or varied. Even with a well drawn written contract you need to be reasonably satisfied with the other party and its ability to comply (including financial position) and know your remedies.

For example if a friend agrees to write a software program for your business your friend will own the subject matter created unless otherwise agreed in writing with you and may “hold you to ransom” over payment and/or use of that subject matter.

The days of the “gentleman’s agreement” or when a deal can be agreed with a nod and a wink or a handshake are almost gone.

Phil Hitchen is an Associate in the Company and Commercial Department at Ralli and specialises in business transactions, funding and IP/IT.

Sathnam Sanghera’s article: “Life, after the age of 30, is basically administration — and the enervating contents of my in-tray are an illustration of this. Here’s a letter chasing an unpaid invoice, caused by the incompetence of an insurance company. Here’s a receipt for two chairs from Habitat, which months after being ordered, still haven’t arrived. And here’s my employment contract. I was, I think, meant to have signed and returned it several months ago, but, unless this is a copy, I seem to have completely forgotten to do so.

Damn. At least, “damn” was my initial response. There followed the realisation that life has continued perfectly fine without it (money has been paid, work has been done), and the question: does the business world actually need contracts to function? Which might, on the face of it, sound like an insane proposition. After all, contracts are to business what salt is to cooking. Even Asian countries, where deals have traditionally been done on the basis of handshakes, are increasingly resorting to western-style contracts. The experts suggest that even if you borrow money from friends or family for business reasons, it is best to put the terms in writing. And history is littered with examples of business relationships that have foundered due to inadequate contracts.

The messiness of relationships between boxers and their managers, for instance, is often exacerbated by the lack of formal contracts, and then there’s Tony Wilson’s Factory Records. There were a number of things that contributed to the indie label’s demise, such as its decision to open The Haçienda nightclub and charge low prices for entrance and at the bar. But the main thing that did for it was that almost all of Factory’s bands, such as Joy Division, did not have contracts with the label.

However, there is an argument to be made in favour of conducting business in a looser fashion — an argument that Deepak Malhotra, an associate professor at Harvard Business School, made in an article published in the Harvard Business Review last year. In it he made the following three points. (1) Contracts are designed to reinforce trust and reduce risk, but when they’re too detailed or rigid, or when they send mixed signals, they can exacerbate the very problems they’re supposed to prevent. (2) Contracts that are too rigid can be problematic if they lock parties into arrangements that seem like a good idea at the time but don’t allow for important adjustments as circumstances change. (3) Many contracts include incentives such as performance pay, earn-outs and vesting schedules. However, in some contexts, such incentives can signal mistrust.

Sounds a bit theoretical and academic? Well, it’s not hard to think of people from the real world who are less than impressed by contracts. Warren Buffett, for instance, paid $1.5 billion for McLane Co, Wal-Mart’s grocery delivery unit, after a two-hour meeting with Wal-Mart’s chief financial officer and a handshake. “We did no due diligence,” the billionaire investor said afterwards. “We knew everything would be exactly as Wal-Mart said it would be.” Meanwhile, the Boeing 747 was in effect built on a verbal promise that Pan Am would buy the plane.

In Wide-Body: The Making of The Boeing 747, writer Clive Irving says that William Allen, president of Boeing, and Juan Trippe, founder of Pan Am, had a history of “talking each other into hair-raising deals without leaving any trace — for example, during a golf game or a fishing expedition”. However, this was apparently Trippe’s preferred style, not Allen’s, and to introduce an element of record to the transactions, Allen got into the habit of taping follow-up calls to Trippe. And when the moment came in relation to the 747 order, Allen was not at ease.

“Allen had got Trippe hooked,” writes Irving. “Trippe went on immediately to talk of Pan Am ordering ‘a large fleet of 25’ 747s. This was too much even for Allen, who tried to slow Trippe down … he suggested that Boeing and Pan Am could sit down and work out a ‘general expression of intent’. Trippe had no patience for vague expressions of intent: ‘The problem for us, how long? We’ve just got to step up.’ ”

In this short story we have an illustration of the many upsides and downsides of contracts. On the one hand, written agreements protect parties if things go wrong and provide a useful framework for engagement. But, on the other, drafting contracts slows business down — something Stephen Covey emphasises in The Speed of Trust: The One Thing that Changes Everything, with the words: “When trust goes down, speed goes down and cost goes up”. It also creates work for lawyers — in itself something worth avoiding — promotes bureaucracy and undermines trust by discouraging spontaneous displays of goodwill.

This last point is something that a decade-long study of outsourcing contracts by Warwick Business School demonstrated when it found that deals conducted on the basis of trust, instead of precisely worded agreements, could lead to benefits for both parties to the tune of as much as an additional 40 per cent of the total value of a contract.

Similar paradoxes afflict contracts of employment. They contain the implication that we work because we are obliged to do so, when most of us work because we want to work. The solution, I guess, lies in compromise: have contracts but keep them as short as possible, and, once they’re signed, forget about them. There’s an analogy to be drawn here with pre-nuptial agreements: in an ideal world, it would be nice not to have them, but, if you do, you should forget the document exists the moment you’ve signed it, and conduct your relationship on the basis of something more profound. Just remember to sign it, that’s all.”