Settlement of IP Disputes José-Miguel Lissén Arbeloa Milan, 28 November 2017
Background to the dispute 1. Española de Software, S.A. 2. Française de Logiciels, S.à.r.l/Fra-Logi Ibérica, S.L. 3. PI proceedings on trade mark, patent and trade secret infringement – Court of Valencia – PI hearing to be held soon 4. Settlement discussions ongoing
Context (I) Christmas season – the Three Wise Men/Magic Kings
Context (II) Spanish children write a letter explaining how they have behaved throughout the year and with a list of what they want 1. Penalty clause
Context (III) If naughty …
Letter to the Three Wise Men (I) 1. Obligation to cease and desist 2. Removal and destruction of infringing devices, packaging and advertising materials 3. Compensation for damages 4. Liability of Defendants for third party infringements
Letter to the Three Wise Men (II) 5. Dismissal without prejudice 6. Effects of settlement agreement: worldwide and self-enforcing 7. Open to offer a non-exclusive license to Defendants, although (i) restricted to pen drives, (ii) excluding manufacturing activities for third parties (iii) and competitors and (iv) with an enforceable trade secrets protection clause
1. Obligation to cease and desist (i) Do no use limitative wording on device definition “…. including any other devices comprising the following features …” Do not use a limitative wording “… any act of exploitation of the devices, including but not limited to the import, manufacture, sale, offer to sale, distribution, storage for those purposes, advertising of the devices in the territory of ...”
1. Obligation to cease and desist (ii) Purpose – to avoid a conflict on the scope of the prohibition Example
2. Removal and destruction Source of devices Declaration that the infringer does not possess any devices / calendar with removal and destruction dates and protocol at the infringer’s expense Identification of customers/retailers and stock Certificate of destruction If not fulfilled, penalty payment
3. Compensation for damages Categories € per device manufactured/imported Investigation, evidence-gathering, C&D letter, rectification costs Means of payment/calendar first-demand bank guarantee If breached, penalty clause in terms of € per day, better than € per device
4. Extent of liability (i) Suggested “related company” clause “The right holder shall be entitled to bring actions against the Defendants in the event that they fail to fulfill the obligations contained in this agreement directly through a related company. For the purposes of this clause, a company shall be considered a related company if it is (co)owned, (co)represented, or (co)managed by a natural or legal person who is(or was) a shareholder, or who has(or had) a position recorded in the Companies House, in any of the Defendants”.
4. Extent of liability (ii) Freedom to act against retailers “The parties expressly agree that the right holder is free to act against any third parties that offer, commercialize and/or stock for these purposes the devices”.
5. Dismissal without prejudice Difference between dismissal of lawsuits with or without prejudice in a judgment Purpose: to avoid the res judicata effect in a any later action in case of breach Local law is particularly important regarding the dismissal of lawsuits as part of settlement agreements and their effects
6. Effects of the settlement agreement Worldwide – not bound by territorial scope and subject- matter of the IP proceeding before the Court of Valencia (limited to Spain) Court-approval of settlement agreement effects procedure
7. If license granted, check ... (i) Definition of licensed rights Definition of licensed products and rights granted Exclusivity No-laundering Field of use Territorial scope Sublicensing Duration Assignability
7. If license granted, check ... (ii) Subsidiaries included? Change of ownership clause “This agreement is personal to the licensees, and the agreement and the licensed rights granted hereunder are not assignable, whether in conjunction with a change in ownership, merger, acquisition, the sale or transfer of the parties business or assets, without the prior written consent of the licensor”
7. If license granted, check ... (iii) Royalty calculation scheme – lump sum - € per device could be a great option!, reporting method Penalty payment Quality control Competition law implications If licensed rights to include trade secrets, effective protection program to be implemented by licensee Applicable law and dispute resolution system
Better call your lawyer, Better call your lawyer, otherwise all you might get is …
Grazie José-Miguel Lissén Arbeloa jmlissen@ga-p.com
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