Case Study 4: Giving our client the right ammunition

Late one afternoon, a client called with an urgent request. He owned a new internet-based sales company and told us that he held an exclusive licence in the EU to distribute a top-selling item of babycare equipment. The product was covered by a European patent owned by an Australian company.

Our client was due to fly out to Australia the next day because the licensor wanted to renegotiate the licence to get a bigger share. First, our client was eager to know the strength of the licensor's European patent. He was worried that the product's unexpected success in Europe would result in his company having to pay onerous royalties to the licensor. He wanted a quick opinion; indeed he needed that opinion before he left early in the morning. 

We downloaded, status-checked and reviewed the European patent immediately to reach an informal view. We were surprised to discover that the patent had very narrow coverage: it was limited to a version of the product that included some trivial functional features. Clearly the Australian company had scrimped on its prosecution costs and accepted narrow protection just to get a granted European patent.

That night, we phoned our client with detailed advice on his position and how he could use it to his advantage. We also urged him to argue that the success of the product in Europe was as much down to his marketing skills as the quality of the product or the patent. Armed with this knowledge, he was able to negotiate licence terms that were even more favourable to his company than before.