IP Entrepreneurs: the practical checklist

CITMA magazine in February 2017 published an article under this title with contributions from a panel of  trade mark attorneys who have started out independently. If this has inspired you, here is a more practical checklist (in no particular order). We have covered quite a few of these issues before so its always worth a read of the archives particularly Sally's Moving Series from 2015

Legal Structure

Sole trader or incorporate a company. A company keeps your business life separate from your personal life but if you are going to be regulated don't do anything clever with the shares or you may find yourselves a one man ABS. Creating a company is ridiculously easy but maintaining requires  a little more effort. It may be worthwhile using a company secretarial service who can help with . I use Goodwille.

Accounts

The article emphasised the value of getting a good accountant you can work with long term. Bookeeping is vital from day one and it makes sense to decide whether you will outsource that - maybe to your compnay secretarial service - or do it yourself.  Software is readily available and it helps if your accountant can read your data. After many years using Sage I have converted to the Clearbooks online system that can cope with multicurrency accoutants and is very handy for my EU IPO and EPO deposit accounts.

Bank

Keeping business money separate from personal money is vital so you will need a bank account. Thats not as easy as it was. A bank with a good online banking interface is useful for avoiding excessive costs. I use Barclays. I've tried Lloyds which was quite helpful in providing a debit card which is useful for paying fees on websites. Business credit cards may not be that easy to get hold of on day one.

Funding

You do need some start up funding and not just to live on before you start paying your own salary. Starting softly as a tied consultant to a former employer can minimise the sums required. If you are using your own savings then recording your loans is vital so you can pay yourself back once bills get paid.

Regulation

If you want to benefit from advertising yourself as Chartered you will need to deal with IPREG and that means creating your terms of trade consistently with their requirements and creating some policies and procedures.

Insurance

Even without regulation some professional indemnity insurance is desirable. PAMIA is the goto service for most pure IP attorneys. Other insurers are available. Don't forget to put a limitation of liability into your terms of trade too.

Office

You need somewhere to work especially if you intend to employ other people. A solo practitioner can work at home with a laptop at least to begin with.

Record Keeping

For a trademark or patent attorney having some way of maintaining records is important. I use Marco a system that Filemot licenses to others at very reasonable cost. its based on Microsoft Access. Today folk seem to want web based services like WebTMS and others are available. Please comment if you have your own recommendations.

Clients

This can be an issue. If you are coming out of employment, restrictive covenants will stop you workign for you old clients, but only for a period. Business networks, contacts of all sorts and advertising will find business. If you look at the number of "agents" names appearing in the UK Trademarks Journal that include the word "trademark" you will appreciate just how much business is driven today by GoogleAds. However these are expensive clients to procure, very price sensitive and seldom provide repeat business. Working all possible work referrers is the best method. Let your satisfied clients know that you would love it if they mentioned you to their contacts. If you dont ask for referrals you won't get them. Some say you need a website or use social media.

Payroll

The whole object of workingis to generate income so you need to pay yourself and contribute to your pension (even if you dont want to -its the law). HMRC has a lot of helpful information and tools for new employers including free payroll software to calculate PAYE and NIC.

 

 

Finding a Trade Mark (or even a Patent) Adviser

IPO IP Events

The UK IPO does an excellent job in promoting the benefits of intellectual rights to business. Its programme of events offers workshops round the country and also promotes some third party events for business, but professionals should keep an eye on it too. The consequence is that an increasing number of trade mark applicants are unrepresented. Some of these applicants are developing portfolios of significant size.

These go it alone business men sometimes save themselves some money on external advice but on other occasions, the exercise incurs expensive fees, takes up valuable management time that could be better spent and delivers inadequate protection. Recently I spotted a series of three separate trademark applications filed by a new business based in Bath. The first was plainly a pure description and has been withdrawn. The second, a simple logo, also withdrawn. The third an elaborate logo, now published. All marks included the geographical name so its clearly intended for a local business so a national monopoly might not be that helpful.  The other time a lack of representation may be a handicap is when an opposition comes in. The natural response of an unrepresented applicant can be to waste a lot of energy producing irrelevant evidence. A short session with an adviser is worthwhile when you need to assess an opposition threat.

How would this applicant have found a cost effective adviser? The first instinct would be to search the web and we know there are good trademark advisers in Bath and nearby Bristol as well as excellent solo members. Google delivers a reasonable result but does not distinguish between the unqualified advertisers and the regulated adviser.

Our business owner could have gone to the IPREG Find An Attorney site and found a very reliable result. He would not have discovered that opportunity in his Google results, but it is by far the best way to look for a local adviser.

You might expect the Chartered Institute of Trade Mark Agents to help you find a member. Not all registered trademark agents from the IPREG site are Chartered but all of those on the IPREG site are qualified and regulated.  There is a nice orange button marked Find an Expert on the site and that will lead you to a public search tool that delivers very unhelpful results on a map, so if that's what you get go search on IPREG.

Maybe its time CITMA went on a membership drive in order to help the unrepresented find helpful advice.

Sally Cooper gets worried about Phishing with some thoughts on Client Money

Keep dialling there must be one lawyer left?

As patent and trademark agents we have become all too familiar with the misleading invoice scams our client's suffer, but now there is a much bigger threat, especially for those of us who hold client money or even have our own funds in the bank. It's called phishing and might involve:

•  receiving a telephone call supposedly from your bank telling you that your account has been compromised and you need a new one.
• or more innovatively an email that purports to come from a supplier, perhaps an overseas agent, telling you of their new bank account details.

The solicitors regulation authority reports that no fewer than 50 solicitors firms have lost money this way.  Here is a BBC news story about one of them. Karen was a solo practitioner.

Sally Cooper Has drawn my attention to some very helpful advice at the Manchester Law Society is recently sent out to their members. I suppose it's to advertise their cyber security and risk conference on the 5 November. It is open to nonmembers if you really want to get scared and be persuaded to move to a cloud operator. However awareness of the risksand a few simple precautions should provide an effective defence.

• Be extremely cautious about phone calls from your bank. If you choose to ring them back, do it on another totally unconnected line
• If you have staff,train them to be aware of potential threats including bogus emails and suspicious requests for information and forbid them to make transfers without your consent.
• Doublecheck any new bank account details supplied to you for payments
• Be even more careful about money in your client account

Meanwhile IPReg has provided us with some more information about managing our client accounts and keeping client money separate. They have now confirmed this can just be a separate business account but if you can open a trust account do. This is what they are telling our clients about keeping on top of costs. It introduces the idea that the client must give informed consent if you are actually going to spend his advance payment on providing the services for him.

For those of you charging fixed fees in advance, you need to read this carefully. While they are stressing that there is no compensation available to your clients, they are also imposing an almost impossible burden of getting this informed consent. They are also providing an expectation to make refunds if the work is not completed for any reason. They're not giving any examples of why work might not be completed.  A few examples would have gone a long way to illustrate their thinking.

For example, I've agreed a fixed fee for preparing and filing a patent application. If the client changes their mind or fails to respond to my first draft what level of refund are they expecting under this policy?

It's more straightforward if the fixed fee is for something that is completed quickly like filing a trademark application. However, I also offer some clients a soup to nuts fee for trademarks. Are they going to expect a refund if there is an opposition. The terms need to be quite clear  that its fixed provided that there are no absolute grounds objections or oppositions, and if there are, there are no refunds. Our terms and conditions are going to burgeon, and what if somebody intercepts your email requesting bank account details for that refund?  Fortunately, by not handling the enormous sums dealt with by property lawyers we are a less lucrative target.

Affording Regulation

If you wish to object to your regulator, IPReg, increasing your practice fees, then by 7 September you need to email IPReg

Earlier this month you probably received an email about the 2016 business plan and budget. It contained a link to this page which includes a nice little letter from Mr Heap the chairman of our regulator, a draft business plan, draft budget and, significantly, a table showing the proposed increases in fees.

Now the proposed increases don't look much, but they do amount to 7% which in a time of 0% inflation is quite stonking. Due to the fact that everybody pays more than one fee the precise impact is going to vary from firm to firm.

I was surprised to see that attorneys who are retired or inactive are paying to remain on the registers £147 for one or £236 for two . I suspect they won't be for much longer. What is the purpose of being on a register if you are retired, so I suppose this means unemployed and looking for a job - so raising that fee is to encourage them into the unregulated world?

Stop Discrimination against Patent and Trade Mark Attornies

In 2014 I paid  as a solo practitioner with no employees £390 and next year they will want £459. If I could limit my practice to one or other of patents and trademarks, then I could make a saving. However, I'm not too sure why I am penalised for offering more comprehensive service to the consumer. This structure encourages over specialisation and should STOP

Amongst the more interesting things the draft  business plan promises is a policy on stale examinations. They've been promising this for a while (might even be a little stale itself) but I am not sure if it has anything to do with the notorious  CIPA biscuit pixies.

Under Communications they propose to meet with registrants at regular open meetings - which is the same as last year's plan but I can't recall any.


Another thing they intend to do is monitor the enterprise court small claims procedure which is intended to widen access to the lay applicant.  Lay applicants do not use regulated people, why am I funding this?

One thing that isn't there is any review of the Insurance sector. At present rule 17 requires any new entity requiring approval to use PAMIA. Isn't it about time they reviewed the market and approved at least one competitor?

While regulation is necessary it seems desirable that we should stop the cost of it escalating. The Chairman's letter acknowledges that mining into ABS structures costs money. This year perhaps their review of what they did will reveal that it had little regulatory benefit. If IPReg is really too small to be cost effective, it should be looking to merge. Put that in the business plan.

Amending your Business Structure

Many patent and trade mark agents in the UK were taken by surprise in the New Year to discover that they were ABS because someone other than a regulated person had an ownership interest. I understand that if you unwind this IPREG won't be pursuing you for illegal trading so there is likely time for agents to buy back the shares from their spouses or retire incoporated partners.
For the gospel on this do call the IPREG to make sure you have done it right.

The Agreed Fee and Your Client Account

Now that the  UK patent and trademark agents amongst us have heard from our regulator that there will be no suspension in the introduction of the new rules on client money that will commence on 1 January 2015, many of you will be polishing up your procedures manual.

The purpose of this post is to explain how Agreed Fees work. I mentioned them in my February 2014 post here.

The example I have in mind is that you have undertaken to do a piece of work for a client that involves substantial disbursements. This could be a foreign filing program for a trademark or a national phase entry program on a PCT application.  You have carefully worked out what you expect the disbursements to be because it's highly unlikely that the client will instruct you without knowing what he is in for. 

Some of these disbursements will be in overseas currencies so you've done the sums on today's exchange rate.  Your terms of business will have explained your client how you bill disbursements, which might for example include adding a percentage to cover the administrative costs.

If you want the money in advance then the simplest way forward to is to use an Agreed Fee. An "agreed fee" is one that is fixed - not a fee that can be varied upwards, nor a fee that is dependent on the transaction being completed. An agreed fee must be evidenced in writing. This definition comes from Rule 17.5 of the Solicitor's Accounts Rules. I see no reason why IPREG would not follow this example and when operating under those rules (which I did for many years, my firms relied on it a lot). You issue your VAT invoice (The best possible evidence in writing) for the agreed fee and when it's paid, its office money.   It never touches your client account. Simples. Even if your client can only afford to part pay the invoice that's fine, the part he can pay goes into your office account and stays there (SRA Rule 12.7 (c) (iv) is your authority if you need it). 

The downside of an agreed fee is that it is fixed. If exchange rates move against you, tough. Therefore, you might say to your client that you will do the work and bill it when you have complete certainty. This is fine if you have a lot of working capital. Again, you don't need to use a client account.

If however, you want to ask the client for a sum on account of costs generally, you can and must stash any such payment into your client account. You need to make it clear on what terms this sum of money is paid and what interest will be paid to them on it. I am a big fan of 0%.  When the time comes to issue an invoice for the work, you transfer payment from the client account into your office account. The downside of this is that it makes life awkward if you don't have very much working capital and need to use the clients money to pay the disbursements as you go along so that you are forever dipping into the client account. This really does need a good bookkeeper, so its not a plan for a solo. The best approach then would be to pay all the disbursements out of client account at the same time as you issue your invoice to the client. Do remember to make it clear on the invoice that you wish you exactly how much he now needs to pay you.  If you end up being overpaid then you have to put the overpayment into your client account or send it straight back.

Now that you can fix a renewal fee budget with a supplier like Envoy or get Valipat to help you manage the costs of a PCT national phase, the agreed fee is relatively risk free.

Rule 11 and opening your Client Account

I was pondering (as you do) whether the profession was ready for ABS licensing and client accounts. Back in February we were all told Rule 11 meant we had to have our client accounts open and ready for 2015. See my post at the time.

I was pondering because I happened to notice  a few days ago, on the SRA Question of Ethics page, a note about the operation of client accounts and how evil it was to have the interest paid into the client account because the interest on a general account is office money (at least in SRA land it is - IPREG may have other ideas but I doubt it). In any event the interest on the overpaid sum of £35 that came from an Australian client and which would have been lost in exchange rate differences and banking fees if I had paid it back was going into my client account. Oh woe! Now don't worry that client account has always been IPREG regulated so I wasn't about to get hung drawn and quartered as promised by the helpful Ethics police at the SRA. Even so I got in touch with my Bank (Barclays fortunately not a Building Society) and they have made me honest by directing the interest to my office account. OK so if you have set up your client account in readiness you too might want to check where the interest will go.

Meanwhile the Bar Standards Board have started an escrow service BARCO regulated by the Financial Conduct Authority. If you use that they charge you 1% but it seems to be capped at £250 per transaction. Presumably you have to pay that out of your funds rather than the client's so I'm not thinking of using BARCO myself for that overpaid £35. If you charged the £250 to the client would that be "protecting client money" - the tenth SRA principle.?

Next I heard from ITMA via their Chief Executive's Bulletin today (4 December 2014):

Unfortunately the current banking practice only allows true client accounts to be opened by a profession included in Schedule 3 of the Money Laundering Regulations 2007 and currently the IP profession is not included in this schedule making it difficult for those bound by the new rules to comply. The new Rules are due to come into force on 1st January 2015 and we have written, together with CIPA, to IPReg to request they delay bringing into force the new rules until it is possible for our relevant members to fully comply. We will advise as soon as we have any further information on this matter.

Its very easy to blame "banking practice" and I would be interested if others have found difficulty with the mainstream banks. I didn't and all litigators have needed to have client accounts for a while.

I was surprised to hear that postponement of the rules was being requested on my behalf. The bar has managed to prepare itself and given that we nearly always deal with business clients we should be able to manage a client account or credit risk  by now. Moreover delaying the new regime would presumably knock back those who are ABS and want to offer more co-ordinated business and IP advice to their clients.

Anybody know more about this? Please comment

Reviewing the Written SOLO Complaints Procedure

If you are regulated by IPREG you are required to have a written complaints procedure (Rule 12 of the Code of Conduct) if by the SRA, its an indicative behaviour (IB1.22 under client care ) rather than a micro-managed obligation.

Ways to Complain?

Since the only complaint adjudicated and published  by the Disciplinary Board of IPREG concerns the absence of such a document for which the the Board decided on 9 September 2013 that the agent had

"breached his professional obligations over a long period of time in a significant way and the Board therefore imposes a fine of £500 to reflect the serious nature of this breach " ( the Duck says yes really that's what it says - IPREG won't get rich this way especially as it did not ask for costs to the surprise of the Board )

It seems useful to consider what your complaints procedure might look like for a SOLO as opposed to a sole practitioner (who might have complaints arising from work done by his staff).

The client of a regulated SOLO must be able to complain and the only person he can complain to is you so terms of trade need to draw attention to that and indicate that for some clients (individuals and micro-enterprises as defined by the EU) there is a right to refer the complaint to the Legal Ombudsman (LEO) so bearing in mind that the complainer has to give you 8 weeks to deal with the complaint, this is what has to happen:

• identify the complaint as a formal complaint
• ask for the complaint to be set out in writing
• notify your insurer (its not a claim a this stage but its always good to put insurers on notice)
• acknowledge the written complaint and indicate when you will reply (2-4 weeks would seem to be reasonable depending on what investigation is needed and whether your insurer would like to review it)
• prepare a written response and resolution proposal including details of his LEO rights if any
• sleep on it
• send it
• follow up within 8 weeks of identification.

Obviously how it goes depends on the nature of the complaint. Larger firms refer the investigation and  response to a more senior partner which offers an independent eye as there can be a tendency for the person complained about to go "head in sand". As a SOLO you simply cannot do that. As well as notifying your insurer you could contact a trusted professional friend. This may well help with the resolution proposal. You might think your professional body could help. At the moment, I doubt it, but its certainly a service they could think about offering to members.

LEO has now handled a number of complaints from the IPREG - regulated but does not publish details.

Since the LEO compensation options are limited, expect a professional negligence claim if the client is after substantial compensation. As can be seen from the published judgement there is not much in it for the client when complaining to IPREG.

There is no copyright in that bulleted list.  I commend it to the public domain, if it is a literary work (which is doubtful). Please feel free to offer your own versions of this apparently essential document.

IPREG and its Ambitions

Rolls Building
the access door to UK patent justice

IPReg, the regulator of patent and trademark attorneys has recently published its proposed budget and  business plan for 2015. The regulated tend to think of IPReg as the maker of rules of conduct and the provider of discipline. However, its true role is quite different from that. Perhaps its primary purpose is to protect consumers, which includes micro-businesses, against the wiles of us nasty professionals. Nevertheless, we are funding it, so it is worth while understanding what we are funding them to do and whether it is in parallel, diverges from or is directly in conflict with our interests as professionals.

'Promoting and maintaining adherence to the Professional Principles' is is right at the bottom of the list of IPReg's objectives in their Plan.  One of the interesting ones higher up is 'Improving access to Justice'. I am all in favour of a improving access to justice. What I am not too sure of is whether the best way for me to do that is by paying IPReg to do research. They tell me with priority 2 they are going to commission and review research on uregulated intellectual property legal services and monitor the small claims track of the intellectual property enterprise court.

Personally, I would love to monitor the small claims track of the intellectual property enterprise court. I can do so by spending time in the Rolls Building and paying £7 to borrow the book listing claims issued for a few minutes. That's about as far as a member of the public can go. I hope IPReg have greater access.  In reality, the only way their small organisation which the chairman boasts in his 24 July letter is staffed entirely by part-timers, is to commission some external profit making organisation to do this. Universities are included even if they need the profit to maintain their over ostentatious buildings and other activities that don't result in a dividend to shareholders. Frankly how does financing research help and what can IPReg do with the evidence. We need to have a better understanding of where they are going with this and how it will impact on/benefit the regulated or the consumer.

The first limb of this research might be welcomed by the regulated profession as it may propvide detailed evidence of the competitive environment in which we live and work. Unfortunately, the huge growth in unregulated services is often to the benefit of the consumer. See for example Renewals Desk which recently attracted a lot of interest over on the IPKat blog. We can also expect more well qualified people to move away from the regulated profession simply to keep their own costs down. That chairman's letter promises us that our cost of regulation is about to go up. He says it compares favourably with that charged by other regulators such as the SRA (details of their proposed  fees for 2014-15 are here). The difficulty is that in order to provide access to justice I need to be regulated by both and the market I see is mainly for pro bono work.

Turning to the IPEC small claims track (which IPReg think is important enough to be a priority over IPEC as a whole or even the UPC which has been taking up CIPA's time at the moment), it is designed to allow trademark and copyright owners to get do it yourself justice without the need for expensive regulated advice. Since a good part of IPReg's work is regulation of patent attorneys and infringement of patents and registered designs is outside the scope of the small claims track, it is difficult to see why this minority area is a priority for IPReg. Moreover, is there a real need for consumers to have access to justice for trademark infringement?. No there is not. Only traders have trademarks. It's possible that a number of micro-businesses also guarded by the regulators are being bullied by brand owners on the small claims track and the possibility that this is doing injustice is certainly worthy of research and investigation but please not out of IPReg fees. The IPO (who already have IPEC research under way) and the Ministry of Justice are more appropriate entities to deal with such matters.

By the way there is one of those Consultation things on the IPReg budget and buiness plas so another task for ITMA and CIPA to get to grips with and we can see what CIPA did say after 18 September as they are now publishing consultation responses in one easy to find place.

Nobody is Friends with their Regulator

There is a disease known as consultation exhaustion. Yes we want to be consulted but no we don't want to spend our lives responding to consultations. Representative bodies like the Law Society and CIPA suffer greatly from it. I don't know the cure, but I can describe the symptoms.

Inbred Opposition (light touch?)

One particular symptom that worries me is Antagonism. The regulator proposes, and the regulated oppose. When the regulated are lawyers (for the purposes of this blog we are not talking about the European definition of lawyers but the English one which includes patent agents and registered trademark agents) they can readily dream up some grounds of opposition.

Take for example the opposition of the Law Society to the abolition of CPD  discussed here and now we have another bunch of oppositions  the Law Society has set out to the latest set of SRA consultations on what one would think was desirable deregulation.

The SRA suggested reducing minimum Professional indemnity insurance cover to £500,000. The Law Society opposes. IPReg does not have a minimum but except for litigators but suggests a £1 million. So patent agents have always had to think about what was an appropriate level of cover and I am sure that solicitors do too. As a solo practitioner, I have always included in my terms of trade a limitation of liability and I am afraid I hope to rely on it. Generally its to £1million and I haven't had any complaints. I received some terms from another firm today who were seeking to limit their liability to £5 million. So they can obviously afford bigger premiums than me. Perhaps they need them, the terms should have been sent to their client not me.  The Law Society is concerned that mortgage lenders will object to limitations of liability. Wouldn't it be better of the Law Society spent their time managing the expectations of such prospective clients than opposing the regulator.

For other matters your friendly Law Society opposes see here. In fact that doesn't seem anything that the SRA can do right, but there are a lot of closed consultations undergoing analysis.

In the current political environment, regulation is designed to protect consumers and business clients are expected to look after themselves. This has the desirable effect of meaning that for those of us who mainly deal with the business world, regulation can go back into the lightest touch box that we were used to.

Meanwhile, it would be nice if regulators and representative bodies could develop a slightly better relationship and just occasionally find some areas of agreement.

Abolishing CPD

The SRA Training for tomorrow WORDLE

The Solicitor's Regulation Authority (SRA) are proposing to abolish CPD. Strangely this has not met with universal delight. Having concluded that the burden of confirming CPD compliance and approving providers was an administrative burden too far, the SRA has been working on abolition. During March there were apparently) events and roadshow to publicise a consultation on the Options to replace CPD. On 21 May, they announced the results .

Despite the lack of support for the favoured Option 1 (only 9% preferred it) and overwhelming support for the status quo (with less knobs - Option 3) (50% or 35 respondents overall but 9 of 13 local law societies and 6 out of 9 of professional representative bodies including the Law Society).

It would seem that solicitors are in the habit of acquiring CPD points with "no real focus on the quality or appropriateness of the professional development that has been undertaken". Despite being professionals the SRA believes that we are box tickers, who have fallen victim to the whiles of the CPD providers including our own professional bodies who generate income by providing box ticking opportunities.

The idea is that the detailed CPD requirements are otiose, since the Code of Conduct already requires regulated entities and individuals to deliver competent legal services and train and supervise their staff.

Most significantly, for me, the Consultation recognises that competence arises from "informal learning through day to day work".  Certainly that is the main way that firms develop and spread competence within their organisations. Once you have gone SOLO though, does that work as well?. It does, but its not as easy as you don't really want to learn from mistakes, but we certainly still learn from experience (or at least I do.)

There is to be "Guidance" that will be of particular use to sole practitioners! We await that.

It seems to me that this new approach is to be welcomed. Do we want IPREG to follow suit?

One of the other options came from the gold plating pen of the micro-managers and suggested a obligation to write a formal reflective log at regular intervals. The image of a mirror finished piece of wood has been with me ever since.

What I would like to happen is that training providers would offer genuine and effective training and not simply hours. There are things I want to learn to do better but I know that sitting in the back of a lecture hall will not help. I envy the pupil barristers who get the opportunity to learn from older members of the bar, for example. Approval of providers has not made them effective. It will be interesting what effect abandoning these restrictions will have on the market.

Looking forward to your  thoughts.

Learn to litigate -- but not just yet

Once you've mastered these skills, you can
conjure up a patent attorney litigation course too

As British readers are all too well aware, the Intellectual Property Regulation Board (IPReg) is the regulatory body for patent and trade mark attorneys. This blogger has just been reminded that IPReg has in its wisdom introduced a new litigation requirement for recently qualified patent attorneys. The effect of this new requirement is that patent attorneys who were entered on the register after 31 December 2012 must now pass a IPReg-accredited basic litigation skills course either before they qualify or within three years from the end of the calendar year when they are first entered on to the register (see CPD requirements for litigators here).  Those already on the register by 31 December 2012 are deemed to have been granted the appropriate certificate and presumably have no need for any such requirements.

Two courses have been suggested by IPReg (here). One is a course at Nottingham Trent University, accredited by IPReg; the other is a possible course run by the Chartered Institute of Patent Attorneys (CIPA). Since the CIPA course has not yet been submitted for accreditation, it is not currently available. Although the Nottingham course has been accredited by IPReg, it is understood that the course will not be available before early 2015 at best -- and even then it will still subject to validation by the University (it's good to know that academic institutions are concerned about quality control when it comes to running courses under their auspices -- and brand name). 

The fact that the new regulations have been introduced without there being any course currently available to satisfy the new litigation requirements is bound to be a cause of some frustration and gnashing of teeth among newly qualified patent attorneys who, having passed all their professional exams, now face a new requirement which they are not able to fulfil.

Meanwhile, this is presumably cheery news for those whose names were inscribed on the register on or before 31 December 2012, and who will face that little bit less competition for now ...

Client Accounts for All

The new IPReg rule 11 that will come into force on 1 January 2015 requires all regulated patent and trade

mark agents to have a client account or ensure they never handle client money.

Here is the current rule

Rule 11 – Financial Matters
Regulated persons shall ensure that their professional finances are managed appropriately.

Here is the amended rule

Rule 11 – Financial Matters
Regulated persons shall ensure that their professional finances are managed appropriately.
Every regulated person must ensure that they have in place appropriate controls, procedure and records and also sufficient and appropriately qualified staff and/or other resources to ensure that clients always receive a high standard of service in relation to the management of client money.
In the event that a regulated person receives money from a client, other than by way of payment of fees or disbursements incurred but including money on account for fees or disbursements paid up front, they should ensure that such money is held on trust for the client in an account which is entirely separate from the regulated person’s or the firm’s professional business accounts In the event that money is held on trust for a client the registered person’s terms of business should deal with the issue of the ownership of the interest earned on the money held on behalf of a client.
Every regulated person must ensure they comply with all legislation pertaining to “money laundering” and “proceeds of crime”

CIPA have already run one webinar reported at Page 49 of the January 2014 CIPA Journal  and another is on its way to scare you. Its on the 4 March starting at 12:30 and for a mere £30 plus VAT or £45 if you are not a CIPA member you can book it online. It is also supported by ITMA and hopefully trademark agents qualify for the £30 rate.

Having come from practice as a solicitor I opened a client account early on. It did take some time to get the bank to understand that it must be designated a client account and they could not raid it for arbitrary charges, but that is all sorted now. Post 2008, the banks are a bit better at recognising the need for client account designation. The mainstream banks now seem to be more up front about their offerings. Here is Lloyds and here is Barclays. For most patent and trademark agents you want to make sure it stays open with a zero balance. The client accounts of property solicitors were always attractive to banks, but I suspect that for most of the IPReg regulated, the odd payment  of €300 costs may be the best it sees.

The one thing that the rule makes clear is that if you collect your PCT nationalisation fees or the anticipated costs of the foreign filing programme for a trade mark client in advance it should go into the client account. If you don't have a lot of working capital or you don't trust the client, this advance collection is necessary. When practicing as a solicitor, I found the provisions under the then Law Society rules about agreed fees very helpful. These are still recognised by the SRA see their Rule 17.5 

A payment for an agreed fee must be paid into an office account. An "agreed fee" is one that is fixed - not a fee that can be varied upwards, nor a fee that is dependent on the transaction being completed. An agreed fee must be evidenced in writing.

Therefore if you specify a fixed fee for the service and bill it up front, it does not need to enter the client account. If you want to do a final accounting, then its provide the credit and bill afterwards or ask for a payment into your client account.

The obvious thing to say in your terms and conditions is that interest is not paid and any interest earned is yours.

The one area where it would be helpful to have some guidance from IPREG is what about refunds made by OHIM and the EPO direct into your deposit account and therefore mixed with office money. It is a matter of British competitiveness that we should not be disadvantaged relative to our European competitors. Up till now I have felt that IPREG regulation saves me from anguishing about this issue too much. Can we make it clear in our terms of business that such refunds are refundable only at our discretion. For OHIM refunds, the amount is €350 but for abandoned EPO applications that have gone un-renewed the amounts can be significant. If the non- renewal is because the foreign start up has gone into administration, the  client may be another law firm who is not too keen to receive  difficult to allocate funds.

Hopefully most firms who have not already got a client account will find it possible to open one during 2014.

Another requirement is that we must have  "sufficient and appropriately qualified staff" . Is that meant to rule out solo practitioners. Lets hope not!

Paying Professional Subscriptions

New Year brings not just fireworks but constant demands for professional subscriptions. The season starts with the solicitors who are smart enough to get in early before we have done the Christmas shopping . You got a window from 16 Sep and 31 Oct 13 to do it on line and confirm your CPD and insurance.

CIPA were pretty smart this year and sent their invoices out on a Wednesday just before the holiday. Then they sent them  again on Sunday. Mine came by email. Its not so easy to spot you are sending things out twice with email as opposed to snail mail.On Monday came an apology.

I am a Chartered Engineer too and the IET send me a postcard in the mail in early December I think it was and direct debit the subscription from my Bank on the first available date in January. They have been doing this for a while. Canny these engineers.

Almost as smart are the European Patent Institute  who allow you to have the obligatory €160 taken from your deposit account with the EPO but not until February.  They send you a nice paper reminder in the post at the end of the year. It is multicoloured and double sided, without that we might get away with €155.

AIPPI who at a modest £110 deliver the best value for money of all send a frantic email early in the New Year hoping you will send the necessary by bank transfer to reach them before 31 January so they can pay the mother organisation. This is a great improvement. They used to need cheques and they will still take such payments.

ITMA have also moved over to the direct debit system and are debiting theirs in January and had it all organised and members warned about the amounts late in November. Sadly at £432 they are only £8 short of being the most expensive honour.

So this just leaves IPREG. They are following the SRA model and want us to go on line. In November they wrote and said we were going to pay on line. We can now go on line to confirm we did our CPD in 2013 and that is a painless experience once you have logged into your IPREG Pro account.  For the rest we are told there will be 4 phases in total. I am going to get a  two week “slot” immediately following issue of my activation code. You see its quite obvious you cannot be a really smart IP practitioner unless you can meet short deadlines set at short notice.

I am debating whether it makes sense to continue paying both CIPA and ITMA. They have a big challenge ahead to justify their continued separate existence. The Law Society has cleverly not yet separated itself from the SRA budget but is still doing a sterling job for its members for example by ensuring recently that solicitors can continue their right of audience in the Enterprise Court

Pipe Down

I was speaking to a trainee patent agent and asked what he thought of the new IPREG examination proposals that we have mentioned here and here. He gave me the view of his principal. This shows commendable loyalty and what might reasonably expected of a devoted apprentice who lives in the blissful hope that all wisdom resides in his master.

However it has to be acknowledged that while his master is probably a master of claim drafting and patent prosecution, he may be a mere amateur when it comes to examination and qualification procedures that provide an adequate safeguard for the public. It is true that the students are also amateurs in this eclectic sphere, but if left unpressurised they can provide IPREG with insight into the practical issues they expect may be imposed on them by the new rules.

Regrettably the fact that students are taking the QMW course without training contracts in hope is offering encouragement to  IPREG in their plans. That does of course mean that the profession is restricted to an input filtered by an academic institution or the larger firms capable of sponsoring students.

Is there any evidence of the skills and aptitudes that are needed by business in their patent providers?

On Examinations, Boards, Independence and Diversity

I have been reading the exchange between CIPA and IPReg over the creation of the new patent examination board (PEB)  for 2014 onwards. Now that ITMA have made other arrangements for the qualification of new trade mark agents in the UK,  the JEB or Joint Examination Board is due to die. Some who have been unhappy with its results may rejoice.

If you are a CIPA member you can find the exchange in the latest CIPA journal at Page 359. The whole sequence is provided by IPreg for all here.  I read it as acrimonious and critical. Its not a correspondence I would find encouraging as a prospective new entrant to the profession. Since there is nothing there for 2014, candidates who fail to qualify as UK patent agents this year might be concerned. Most will be focusing the European Qualifying Examination administered *independently* of the Institute of Professional representatives before the European Patent Office (epi )by the EPO. The names and faces of the lay members of the European structure are not immediately obvious to me.

I was also sent yesterday a link to the Draft 2014 Business Plan of IPreg and the Annual report 2012 which is a nicely laid out document with the previous 2012/3 Business Plan  at the end of it and a separate Education Plan.  The Draft plan does not refer to education at all and the budget seems overwhelmed by the possibility of another disciplinary hearing. Now CIPA have appointed an education officer but we apparently need a Chairman of an Independent PEB to write letters to IPreg and the PEB needs to have lay members who have control so no more will senior partners be able to appoint their sons and daughters and train them to follow in their footsteps. Patent Agency is to be lay-controlled. I am not sure what laity is likely to be interested. Are they educationalists who profit, Patent Office officials who suffer from patent agents, inventors who pay them, infringers who pay them for justice, the public who want drugs and mobile phones on the cheap and might prefer there were no patent agents or patents at all, politicians or diplomats. Who should have this job and how can they set an exam if they are laity?  I clearly don't understand the system at all.

Nevertheless as a solo practitioner it might be fun to take on a trainee. Today that is impossible, because you would be expected to pay for their professional development but you know their long term career is not with you. Any trainee here would have an interesting year or so that would benefit them and their next employer. There is not a great incentive to employ them to send them off on expensive out of office PEB/IPreg prescribed courses. So this avenue into the profession that might allow some diversity is closed at present while we squabble about which notepaper to write letters on. Thank Heaven for the gloriously efficient European Patent Academy. It is not independent but it is getting on with the job and its prices are affordable its just a shame that European Patents are not affordable for many of our clients.

Would you employ a trainee today?

Who should or does chair the PEB?

Regulating Client Money

One of the major difficulties I encountered in managing an IP practice as a Solicitor was compliance with the detailed acounts rules. At present those regulated by IPREG have a delightful concise Rule 11.

"Regulated persons shall ensure that their professional finances are managed appropriately."

If you are acting as a litigator it is a little more complex but in either case "money on account for fees or disbursements paid up front" can sit in the Office account. Possibly many patent and trademark agents do not even have a client account. However Financial Matters are one of the areas set to change under the latest proposals and we are beginning to see detail coming in that will make our terms of trade get ever longer and the duties of our Head of Finance ever more elaborate. So we may get:

"In the event that a regulated person receives money from a client, other than by way of payment of fees or disbursements incurred, but including money on account for fees or disbursements paid up front, they should ensure that such money is held on trust for the client in an account which is entirely separate from the regulated person’s or the firm’s professional business accounts.

In the event that money may be held on trust for a client, a registered person’s terms of business should deal with the issue of ownership of interest earned on money held on behalf of a client."



Running Away with Client's Money by Ian Burt et al

It may well be that there is no other way than to require the client account. However money can be recived for a client from the EPO and OHIM as refunds of fees and this necessarily becomes mixed with office money in deposit accounts. Many of us will have different ways of dealing with this and the client will usually be told what they are if and when it arises.   The matter is further complicated by the fact that that money is in Euros and we account in sterling. Nothing so far has appeared in the Code about the vexed question of how to convert unpaid disbursments in foregin currency into sterling. It has been common practice to include a profit cost uplift here. Even if you try to make a genunine pre-estimate of actual cost my rule (Xe rate +5% plus £10) won't be yours and indeed if your charges for currency conversion are higher than £10 nor should it be.

If you are a client where there are substantial disbursments its best to discuss policies in the engagement process. However it is worth remembering that cutting costs in one area often results in them appearing elsewhere so the overall cost is the one that needs to be fair.

Keeping it simple means keeping no client money, but that forces you into valuing disbursments so lets all head of to the Banks looking for client accounts that won't deduct charges. Dont forget to tell your clients that such money accrues no interest due to them.

Of course if IPREG give guidance on all this we are all compelled to operate the same way and that will likley be the Solicitor's way and may be anti-competitive. Remember the Red Book.

The ABS arrives at last..or does it

In this structure in Serjeant' Inn, I once worked
before it took on this alternative form

The Ministry of Justice marked the entry into business of the Solicitor's Regulation Authority as an ABS regulator on 3 January 2012, with an inspirational  press release . Amongst other good and proper things, the Minister suggests

"Customers will find legal services more accessible, providing a much more competitive and efficient service."

 It is unlikely that many sole practitioners will be transforming themselves into ABS with SRA regulation. Although the SRA team reports that they are ready and waiting, it looks as if the customers may have to wait at least another six months before they can go knocking for real services onto an ABS door, as that is how long it is going to take the SRA to make a decision on your application ( if they don't decide to extend the time to 9 months).  Should you be interested in applying  this is the link you need along with at least £2000 for the initial fee to get your application looked at.

The awesome regulatory burden is likely to deter existing law firms who merely want to improve and modernise their management structures. The Lawyer magazine reports that the insurance company Admiral might constitute itself as an ABS as a workaround to recover some profits to replace those lost when the referral fee ban was introduced. Frankly, this probably wasn't what the Ministry of Justice had in mind, when they began this well-intentioned initiative to bring modern management practice into the legal world by abolishing the rule that only lawyers can manage lawyers.

Across the Atlantic, I was amazed by this piece in which the IBM Gen Counsel Robert Weber rails against the possibility of such structures being introduced into the US market. In his view investment isn't needed because there already exists global law firms, who are market leaders without having needed external investment. I am sure that his law firm suppliers won't mind the barriers to new entrants remaining high.

IPReg is already applying to the Legal Services Board to become an ABS regulator in its own right and it is likely that any IP practice or new business support firm offering low-cost IP business advice that Hargreaves wants to see (see my earlier post here) will prefer to use that regulator.  Incidentally, if you want a closer look at how this whole process works, there are currently vacancies on IPReg for professional members at £320 a day. More information here

IP litigators: you are hereby consulted!

Are you an IP litigator in search of something to read? Have you any personal experience of the CIPA Higher Courts Qualification Regulations or the ITMA Trade Mark Litigator and Trade Mark Advocate Certificate Regulations that you're bursting to share? If so, the Intellectual Property Regulation Board (IPReg) Consultation on Replacement of the CIPA Higher Courts Qualification Regulations and the ITMA Trade Mark Litigator and Trade Mark Advocate Certificate Regulations may be just what you're looking for.

If you want to respond to the consultation document, you can email IPReg Chief Executive Ann Wright here. The consultation closes on 17 October 2011 after which the respective professional regulatory boards  will
consider responses, prepare a draft regulation and then issue a further consultation so that interested parties can comment on the wording of the draft regulation before it is finalised and submitted to the Legal Services Board for approval.

If you don't want to respond, read this document anyway.  It's short (15 sides, inclusive of the bits you don't need to read), well-written and devoid of the unnecessary artwork and acreage of white space that seems to accompany so many print-out-and-read documents emanating from the public sector. It also contains a useful potted history of IP litigation and representation over the past couple of decades or so.

The Life of a Regulator

It's all about organisation

The morning's email brought a copy of the recently published Annual Report 2010 from IPReg - the regulator of most patent and trademark attorneys. It is one of the smaller regulators that come under the aegis of the Legal Services Board. 
These smaller professions have proudly boasted that they hardly ever have any complaints and could self regulate very well before this new regime came into force. Therefore it comes as something of a surprise that the report indicates that there have been far more requests for guidance on conduct by attorneys in relation to the activities of others attorneys than from the public. They say:
"We are concerned that we should not to be used as leverage in what may be, essentially, a commercial dispute e.g. over “ownership” of client following.
Whatever the source of the complaint, however, we are obliged to follow the same processes and this is a cost to the profession as a whole."

In short, if you want to keep the fees down, don't come to IPReg to resolve your restrictive covenant problems. Frankly, it is unprofessional for a partnership not to be able to manage its business discreetly when it is necessary for staff and partners to be reduced. Yes the recession is really hitting the IT profession now as decisions to put off maintaining intellectual property can no longer be delayed by our clients. As the EPO office actions become more contentious and the Appeal Board decisions later or arbitrary, it's harder to justify the investment.  Its better for the country if our clients stay in business even if we don't.

Alternative Business Structures (ABS)

The Report also indicates that one of the issues facing IPReg this year is whether it should be an ABS regulator. Personally, I was surprised that the Law Society and the Solicitors Regulation Authority had so much difficulty in deciding that they would regulate ABS. Neil Rose covers the decision very well in his Guardian article. Surely it is now increasingly clear that lawyers are good at practising law but bad at running businesses and that the law like every other business should be professionally managed. In short, it seems to me an ABS is the only legal business a consumer or a business should want to enter into a relationship with. Of course, dealing with a SOLO practitioner or a barrister is the exception because you are buying a personal service. Personally, I hope that IPReg will take the plunge and become an ABS regulator. Otherwise I foresee Patent and Trademark attorneys once more joining the great unregulated and the British Standard won't really help.