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Copad SA v Christian Dior Couture SA

06/05/2009

The Advocate General's opinion in this case considers whether a trade mark owner's rights are preserved where a licensee is in breach of the terms of its licence.

Facts: Dior was concerned that its licensee had sold goods marked with the Dior trade marks to discount stores in breach of a term of the licence agreement, which prohibited such sales. Dior argued that it should be able to enforce its trade mark rights in respect of these goods as it had not consented to their sale. It also argued that the prestigious image of its marks had been harmed by the marketing of branded items to discount stores and claimed to have legitimate reasons to oppose the further commercialisation of these goods.

The AG considered Article 8(2) of the Trade Marks Directive which permits the proprietor of a trade mark to invoke the rights conferred by that trade mark against a licensee who contravenes the terms of its licence with regard to, inter alia, the quality of the goods manufactured or services that the licensee provides. More particularly, the AG considered whether owners could assert their rights where the reputation for quality of goods meant that sale through discount outlets would result in damage to the trade mark's reputation.

AG's opinion: the AG's opinion indicated that breach of a licence term by selling trade marked items to a discount retailer would only enable the trade mark owner to enforce its trade mark rights if such sales would detrimentally affect the reputation of the mark insofar as it related to the quality of the goods. It remains to be seen whether the ECJ will follow the recommendations of its Advocate General in this instance.


Flexible working rights extended

08/04/2009

Under The Flexible Working (Eligibility, Complaints and Remedies) (Amendment) Regulations 2009, as of 6 April the right to request flexible working arrangements from employers was extended to parents of children under the age of 16. Previously, the right only applied to parents of children aged up to 6 and disabled children aged up to 18.

Under the "flexible working regime" employees may make a request for flexible working arrangements to be put in place to allow them to meet their childcare obligations, or their carer responsibilities in respect of disabled or sick adults.

An applicant must satisfy the following conditions:

  • The employee must have worked continuously for his employer for a minimum of 26 weeks at the date of application
  • The request must be made in writing.
  • No similar requests for flexible working arrangements should have been made within the preceding year
  • The application must be to enable the employee to care for the child/dependent adult
  • The employee must come within the statutory definition of "relative" or "partner".
Procedure: An employee may claim compensation of up to eight weeks' pay (i.e. up to a statutory cap of 2,800) in the event of a failure to comply with the required procedure.

Employers have the right to refuse a request for flexible working arrangements in the event that they have a clear business reason for doing so. The permitted business reasons for declining a request include the burden of additional costs, detrimental effect on the ability to meet customer demands, inability to reorganise work among existing staff, and planned structural changes amongst others.

An employer should be wary of ignoring a request from an employee returning from maternity leave, even if the employee has failed to follow the prescribed procedure, as the employee may nevertheless be able to claim indirect sex discrimination.


Recent Court of Appeal decision highlights limited application of "no waiver" cl

05/03/2009

The Court of Appeal has held in Tele2 International Card Company SA and others v Post Office Limited [2009] EWCA Civ 9 that, where a party is aware of a default giving rise to a right to terminate a contract, continued performance of that contract may lose the innocent party the right to terminate for that default if it "has communicated its election [to affirm the contract] to the other party in clear and unequivocal terms".

Facts: the innocent party delayed in exercising its right to terminate a contract until a year after the breach had occurred. It continued to perform the agreement during the interim period, did not notify the party in default of the breach and did not reserve its rights. The contract contained a standard waiver clause which provided that:

"In no event shall any delay, neglect or forbearance on the part of any party in enforcing...any provision of this Agreement be or be deemed to be a waiver thereof or...in any way prejudice any right of that party under this Agreement".

Decision: the Court of Appeal held that:

  • Where a party is aware of a default giving rise to a right to terminate, continued performance of the contract may lose the innocent party the right to terminate for that default where that party "has communicated its election [to affirm the contract] to the other party in clear and unequivocal terms." The facts of this case amounted to a clear affirmation of the contract; and
  • A waiver clause such as the one in the contract in question did not preserve the innocent party's rights; these had been lost as a result of the affirmation. The Court of Appeal said that, even if the waiver clause had specifically included wording saying that the doctrine of election by affirmation should not apply, it doubted that such language would be effective to exclude the doctrine from operating.

    Implication: this case highlights the importance of sending a "reservation of rights" letter once a breach of contract is evident. It should state that any delay in exercising the right to terminate does not constitute a waiver or affirmation of the breach. This should serve to ensure that continued performance of a contract in the face of a breach cannot be construed as an election to affirm the breach.


    First successful employee invention claim

    15/02/2009

    In Kelly and Chiu v GE Healthcare Limited, the English High Court awarded two research scientists compensation amounting to GBP1.5 million under section 40 of the Patents Act. This is the first reported decision where an employee has successfully claimed compensation from an employer where that employee made an invention belonging to the employer for which a patent was granted and that patent was of outstanding benefit to the employer.

    Facts: Drs Kelly and Chiu were research chemists employed by Amersham International plc (which was taken over by GE Healthcare Limited) (Amersham ). They, as part of a team, developed radioactive imaging agents and were named (with other individuals) on a number of patents as inventors of a successful compound which formed the basis of the radioactive imaging agent, Myoview. Sales of Myoview have exceeded GBP1.3 billion since its launch.

    Under section 40(1) of the Patents Act 1997 (prior to its amendment by the Patents Act 2004) an employee who has made an invention which belongs to the employer and for which a patent has been granted may claim compensation from the employer. The patent must be of outstanding benefit to the employer (having regard among other things to the size and nature of the employer's undertaking) and that by reason of those facts it must be just that the employee should be awarded compensation.

    Decision: Floyd J held that "outstanding" means "something special" or "out of the ordinary" and more than "substantial", "significant" or "good". The benefit must also be something more than one would normally expect to arise from the duties for which the employee is paid. Floyd J found that the patents were of outstanding benefit to Amersham and that it was just to award Drs Kelly and Chiu compensation.

    A successful claim under section 40(1) entitles the employee to a fair share of the benefit which the employer has derived, or may reasonably be expected to derive, from the patent. Various factors determine the amount of compensation to be awarded including:

    • The employee's duties, remuneration and advantages he derived from his employment or in relation to the invention
    • The effort and skill devoted to the invention
    • Any contributions made by third parties; and
    • The contributions made by the employer.
    Floyd J found that the "absolute rock bottom figure for the benefit from the patents" was GBP50 million but stated that he had no doubt that the real benefit to Amersham was much greater. Compensation in the amount of GBP1 million was awarded to Dr Kelly and GBP500,000 was awarded to Dr Chiu.

    It is also notable that under section 40(2) of the Patents Act, an employee may claim compensation where an employee assigns, or grants an exclusive licence, to rights in an invention or in any patent or application for a patent for the invention to an employer and the benefit derived by the employer from the contract of assignment or licence is inadequate in relation to the benefit derived by the employer from the invention or the patent for it or both.


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