Plougmann & Vingtoft - EUIPO · 45 professional IP consultants • 36 experienced patent attorneys ... you still opt whether to go to court ... Best man to the job. GOVERNING LAW

Plougmann & Vingtoft

OHIM IP Mediation Conference 28th - 30th May, 2014

21 February 2013 1

Settlement Agreements

P&V | Operations

Established 1967 – 50 years with Intellectual Property

One of Europe’s largest IP consultancy firms

100 employees

45 professional IP consultants

• 36 experienced patent attorneys

17 PhDs

22 European Patent Attorneys

• 9 Master of Laws specialized in IP

Qualified staff of assistants/paralegals

Technology transfer office (tto)

Oslo Bergen

München

Madrid

Aarhus København

23. januar 2014 2 Boundless cooperation | Best man to the job

Eirik Øverland

• Attorney-at-law | Member of the Norwegian Bar Association

• Public Licensed Legal Mediator (Norway)

• 15 years with Intellectual Property

• Main industries Oil & Gas and Subsea

• Assisting clients with IP-strategies, IP operational matters, contracts and conflicts

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P&V | CV

Boundless cooperation | Best man to the job

SETTLEMENT AGREEMENTS What is?

Some Generics Some Specifics

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P&V | Topic and sub-topics


What is?

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P&V | Settlement Agreements | Sub-topic


• Voluntary private law dispute resolution between two or more parties (public, private, legal,

physical) – “the freedom to contract”

• Only if subject matter is outside of public law – e.g. regulatory statutes, penal law, public order provisions (no freedom to contract – adm procedure or court is mandatory).

• Alternative to lawsuit or a trial – the parties either forgoes their intention to sue or discontinues a lawsuit already filed, in exchange for a privately agreed resolution on the subject matter

• Manifested in a Settlement Agreement

• Basically a contract like any other contract

• Defines the parties, any conditions precedent, representations, covenants, warranties, and operative and remedial provisions the parties shall conform to in order to rectify the subject matter

• Nevertheless differs from other contracts on some issues, both in generics and in specifics, that may be critical

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P&V | Settlement Agreements | What is?


Settlement

Settlement Agreement

Some Generics

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• Make a draft during the negotiations, e.g. at least write down what the parties have agreed in re

main obligations (WHOW!)

• Sign the session draft to “close” it

• Avoid “back-negotiations”

• A contract always have ghost third party – the court that shall interpret and rule on the contract

• When drafting always have that third party in mind – verbiage should aim have the court interpret and understand contract in accordance with your intentions

• A contract is the private substitute for public law, and as with public law, the principle of legality applies. What the law does not prohibit, is allowed, and what the law does not make subject to it, is not subject to the law

• Similarly: Whatever is not incorporated into the contract, is not part of the contract • Therefore, get it all in, in details, and use the correct terms (what is “sub-branding”?)

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P&V | Settlement Agreements | Generics


Session Draft

The Ghost Third Party

Those Devilish Details

• Identify the right parties, they are not always who you think they are

The question is not who the parties are, but whom that shall have standing to sue under the contract

• U.S./Anglican law: Non-exclusive licensee no standing to sue. As main rule the rights holder (licensor) must sue. If rights holder is not damaged by the infringement, cannot claim damages. So the one that can claim damages, cannot sue, and the one that can sue, cannot claim damages

• But: anyone party to a contact has standing to sue on basis of the contract

• Any party that is supposed to have a standing to sue, must be made party to the contract

• Separate section or appendix with definitions where all terms and assets essential to the agreement are defined (rather too much than too little)

The definitions binds the parties – and not least the courts – to a specific interpretation of essential terms, and clearly identifies the assets in question

• Thereby avoid ambiguousness, post-administration, sub-conflicts and surrendering interpretation to the court

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P&V | Settlement Agreements | Generics cont.


PARTIES

DEFINITIONS

• Obligations are covenants, though normally not referred to as such. Covenants are (ongoing)

promises by one party to do or to refrain from doing something.

• three categories: Negative/restrictive covenants: refrain from doing Positive covenants: to do Financial covenants: related to financial performance or non-performance

• Get the obligations right, state clearly and plainly WHOW: WHAT exactly are the parties to do or refrain from doing?

(pay damages, transfer net profit, compensate for loss of license fee, hand over or destroy stock, discontinue sales or production, provide information or financial figures etc)

WHO exactly of the party/parties are to perform? (you, they, both?)

HOW exactly are the party/parties to perform? (through specified bank account, destruction facility, close down production, disclose information, grant access)

WHEN exactly are the party/parties to perform? (DEADLINES!)

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OBLIGATIONS

• State clearly what constitutes breach of the agreement

Non-payment (off course) Failure to provide necessary cooperation (access to information, access to facilities, locate

stock) Failure to comply with deadlines (destroy stock, discontinue sales or production, disclose

information) Failure to confirm as agreed (third party destruction) etc

• Divide the “triggering” situations into (a) material breach (immediate and full termination of agreement), and (b) non-material breach (affects agreement partially, may be rectified upon written notice)

• Right to file lawsuit based on the agreement • Original standing to sue (now including licensee’s standing to sue) • Restore discontinued lawsuit (Tomlin order) • Liquidated damages

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BREACH

REMEDIES

Some Specifics

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• Use a preamble, at least in complex settlements

• Should identify and describe subject matter in “shorthand”

• Why use preamble: Helps identify and “lock” the subject matter Informs a third party of the essence and the scope of the subject matter Helps the court with a basis for understanding and interpreting the contract

• If settlement concerns a discontinued court action, identify the court action in the preamble

• Just use the traditional: WHEREAS, A has distributed and sold a product in consisting of/marked with/carrying the following features etc

WHEREAS, B has contested the distribution and sale claiming that the Product is infringing against B’s patent/trademark/design/common law rights (by lawsuit Acme Court Docking No. XXXX)

AND, WHEREAS, the parties find it in their mutual interest to seek an out-of-court/amicable settlement concluding all claims and demands submitted and presented by the Parties etc

NOW, THEREFORE, the Parties has agreed to settle the dispute amicably on the following terms

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P&V | Settlement Agreements | Specifics cont.


PRAMBLE

• Normally separated between material breaches and non-material breaches (can be rectified

upon 30, 60, 90 days written notice)

• Settlement agreements already meant to rectify a breach of rights, contract etc. You want it settled, and not spend time administering the settlement.

• Preferably, if possible define all breaches as material breaches Strong incitement to comply with the agreement Don’t’ have to spend time issuing warnings, rectify, warning, rectify Even if defined it as material breach, you still opt whether to go to court

• Go for liquidated damages (or avoid if you’re the «other» party)

• Incitement to comply with the agreement

• Simplifies procedure Court just have to test the term(-s) qualifying for liquidated damages If terms are in place, no need for negotiations on level of damages

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MATERIAL BREACH

LIQUIDATED DAMAGES

• Eternally or with limited survival?

• Are you best served with confidentiality?

Limited confidentiality (need to inform the market)

damages, admissions, obligations no – right to announce settlement yes

No confidentiality (brand owner needs to show force)

Full public disclosure damages, admissions, obligations - for max scare

• U.S./Anglican law “four corners principle” does not apply in (most of) Europe

• The UNIDROIT Principles of International Commercial Contracts Article 4.3: “(…) regard shall be had to all the circumstances, including: (a) preliminary negotiations between the parties”

• Principles of European Contract Law Article 5:102: “In interpreting the contract, regard shall be had, in particular, to: (a) the circumstances in which it was concluded, including the preliminary negotiations”

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CONFIDENTIALITY

FOUR CORNERS – NOT IN EUROPE

• If both parties are nationals, governing law and legal venue is given • If separate nationals, (if you can’t get your own country) choose neutral third country • In matters of size, use arbitration as long as possible (London, Stockholm) • Africa, Latin-America, Middle-East: ALWAYS neutral third country or arbitration

• Settlement is submitted to court to be "rolled into a court order” • Court may issue a modified order to “achieve justice” in the case • A party in breach of the settlement may be held in contempt of court, rather than be subjected

to civil claim for the breach

• Court order staying court action on terms agreed between the parties included in a schedule to the order

• Either party can apply to court to enforce the terms of the order, avoiding need to start new proceedings

• Terms of the schedule is not part of the (public) order, may remain confidential

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P&V | Settlement Agreements | Specifics


GOVERNING LAW & LEGAL VENUE

«Rolled into a court order» – U.S. and Canada

«Tomlin Order» – UK

PLOUGMANN & VINGTOFT

THANK YOU!

Oslo Bergen

München

Madrid

Aarhus København

23. januar 2014 17 Boundless cooperation | Best man to the job

Documents

Plougmann & Vingtoft - EUIPO · 45 professional IP consultants • 36 experienced patent attorneys ... you still opt whether to go to court ... Best man to the job. GOVERNING LAW