Intellectual property

In this chapter of our Annual Insurance Review 2018, we look at the main developments in 2017 and expected issues in 2018 with regards to intellectual property.

Key developments in 2017

The UK Supreme Court addressed important issues regarding patent infringement in Actavis v Eli Lilly [2017] UKSC. The case has already been applied by the High Court in MYLAN v Yeda [2017] EWHC.

Actavis clarifies how you should compare an allegedly infringing product/process with the patented invention claimed. Step 1: does the product/process infringe any of the claims in the patented invention using a normal interpretation? Step 2: does the product/process infringe the patented invention anyway because it only varies from the patented invention in a way that is not material? If the answer to either is yes,there is infringement.

MYLAN confirmed that you should continue to interpret the construction of patent claims in a purposive (not literal) way. Contrast this with how you interpret a commercial contract – the reason being that a patent is a unilateral statement by the patent owner (whereas a contract is a bilateral agreement).

The decisions bring the UK closer to the position in Germany on patent infringement. This will likely lead to the UK being seen as a more favourable jurisdiction in which to enforce patent rights and, subject to the delayed Unified Patent Court and Brexit, may result in an increase in patent claims in the UK. By contrast,US patent infringement claims have decreased as there continue to be more challenges to patent validity before the US Patent Office.

What to look out for in 2018

We continue to see an increase in the number of confidential information claims, as businesses become ever more alive to protecting their confidential information, including trade secrets. This trend will likely continue with the upcoming Trade Secrets Directive, which the UK must implement by 9 June 2018.

When the Directive is implemented, it will introduce a definition of a “trade secret” in UK statute for the first time. Companies in the UK must currently rely solely on either common law claims for breach of confidence or contractual claims. The Directive defines trade secrets as information that is secret, has commercial value because it is secret, and has been subjected to reasonable steps by the person in control of it to keep it secret.

Trade secrets and confidential information constitute an extremely valuable part of many business models,particularly those companies that are know how- and data-driven. We expect insurers to see an uplift in claims brought against former employees and directors who join competitors and/or start up competing businesses.

These claims may arise under a range of policies, including more traditional directors and officers policies where the ex-employee joins as a director of a competing business, and specialist intellectual property policies, which typically provide pursuit and defence cover. The claims may also involve cross-jurisdictional issues, with the Directive intended to harmonise the protections across the EU.

Download our full Annual Insurance Review 2018 for more insights.