Sir Stelios and easyJet disagree on airline core services

Brand licensing is the process of managing and creating contracts between the owner of a brand and the company who want to use it. The use of a Brand Licence has a number of benefits for both parties involved.

The Brand Licence between the founder of easyJet, Sir Stelios, and the easyJet airline represents just one of the high profile examples.

The 'easy' brand

EasyJet, the airline, started in 1995. As it became a brand Sir Stelios started to work on brand expansion and set up a holding company - easyGroup - in 1998 which owns the 'easy' brand and licenses it to all 'easy' branded businesses including easyJet plc. Its mission - ''to manage and extend Europe's leading value brand to more products and services, whilst creating real wealth for all stakeholders.''

In 2000, immediately before easyJet was floated on the stock exchange, easyGroup entered into a formal Brand Licence with the Company. A nominal royalty for the use of the 'easy' brand by easyJet was agreed. Stelios is now suing easyJet over services that can be offered under the 'easy' trademark on the basis that this is in breach of their Brand Licence agreement and the 'easyJet' name.

EasyGroup IP Licensing Ltd v easyJet Airline Company Ltd

The case concerns the interpretation of the Brand Licence. In particular the interpretation of specific provisions that were built into the Brand Licence with the intention of restricting the extent of use of the brand. One of these is the 75:25 rule on which the dispute hinges. The Brand Licence requires easyJet to focus on its core area of activity and only to extend its business to the extent that it is ancillary to its core activity by not more than 25% of its business. If it goes beyond this threshold then easyJet will lose the right to use the easyJet trademark and other relevant IP.

Critical to the outcome of the case is the court's judgement on the difference between ''core'' and ''ancillary'' airline services. Schedule 4 of the Brand Licence defines core activity as ''passenger transport in fixed wing aircraft' and easyGroup is arguing that sales of services such as food, travel insurance, car hire combined with baggage and priority boarding check-in fees should count as non-core as they are not integral to the 'core' activity. If the court accepts this argument then easyJet would be in breach of the Brand Licence agreement. EasyJet generated £238 million from checked in bags alone last year and on this basis is exceeding the 25% earnings ceiling for non-core activities.

However in their defence easyJet seek to adopt a wider interpretation of core activity - ''the business of an airline providing passenger transport in fixed wing aircraft.'' They argue that the above services are part of the main business and as such the items only have value when sold in connection with the plane ticket.

Since 2000 revenue streams have expanded to baggage, speedy boarding, charges for infants and an increase in food served onboard flights. Whilst easyJet's proposition that, on their own, activities like baggage check-in have no value is true to a certain extent in relation to priority boarding, baggage and check-in fees, which have no value outwith the context of air travel, that is not to say these are not core activities. On easyGroup's interpretation, priority boarding and baggage check-in are optional extras as consumers may opt to take hand luggage only. The verdict should be delivered later this month and will have a significant impact on the parties. It serves as an important reminder that Brand Licences are often a product of their time and future-proofing definitions can be challenging.

22 July 2010

The orange ambush of the World Cup

The two women who are alleged to have organised the stunt were charged with contravening South Africa's Merchandise Marks Act and could now face jail sentences of up to six months. Their crime - masterminding an ambush marketing campaign on behalf of Bavaria beer.

The incident itself did make the headlines and involved the attendance at the Holland versus Denmark game by thirty six women, all clad in orange mini dresses. The women entered the stadium dressed in plain clothes, and minutes into the game, quickly began to undress to reveal the orange mini dresses below. Predictably, the world's media turned towards them, capturing images which would grab the attention of editors around the globe. After a short spell of media coverage, the women were escorted out of the stadium as World Cup organisers considered them to be part of an ambush marketing campaign. It was later revealed that the orange mini dresses were at the time being given away free as part of a promotion by Bavaria beer in Holland.

Ambush marketing is not a new phenomenon and can infact be traced back to the 1984 Olympics where Kodak ran advertisements suggesting an association, when in fact Fuji were the official sponsors. Each major sporting event since then has been infiltrated by ambush marketeers hoping to gain maximum exposure at a fraction of the cost.

To prevent ambush marketing, South Africa had passed strict new laws to enforce FIFA regulations which prohibit the promotion of any brands other than official sponsors during World Cup games. As a result, all firms wishing to conduct promotional activity during World Cup games had to obtain official FIFA sponsor status. The aim being to prevent companies benefiting from the event without having contributed to the funding of it through the monies received in advertising revenues.

Similar measures will, and to a large extent already have been put in place for the 2012 Olympic Games in London and for the 2014 Commonwealth Games in Glasgow. The London Olympic Games and Paralympic Games Act 2006 creates the London Olympic association right which effectively gives the Olympic Games organisers the power to grant licences to authorised sponsors to use Olympic logos and particular words before, during and after the Olympic Games with fines of up to £20,000 being imposed to anyone who contravenes it.

Events such as the Olympic Games and the World Cup are hugely expensive to stage and countries therefore rely on sponsorship to fund them. This requires the imposition of strict laws to safeguard sponsors' interests and in turn aggresive enforcement. It is clear that event organisers must minimise opportunities for non sponsoring marketeers to profit from the exposure such events provide, if they are to maximise their funding. However with the publicity that comes with such events, opportunities are inevitably created and when the eyes of the world are upon such events, one thing is for sure, marketeers will be there. After all, there is no such thing as bad publicity.

22 July 2010

UK IPO launches green patent database

The ‘green’ database is intended to provide businesses with access to information on environmentally sound inventions thus supporting sustainable and responsible economic growth. The database is free to users, updated weekly and, at the date of writing, contains 108 entries.

Users of the database should, however, bear in mind that the database is just that, a database, and that the publication of "green" patent application details is not a licence to operate under those patents. The proprietary rights of the patent owners are no different from those of other patent holders. Moreover, the database is not intended to be a comprehensive record of all "green" patent applications but rather to consolidate details of all patent applications processed under the fast track ‘Green Channel’ scheme, which has been running since 12 May 2009.

"Green Channel" accelerated patent applications

Requests for accelerated "Green Channel" patent applications must be made in writing and set out clearly the ‘green’ focus of the product. Interestingly, the criteria for qualifying as a green invention are not defined. IPO guidance encourages applicants to provide "as much justification as is necessary".

Applicants may choose the area of the patenting process they wish to accelerate: search, examination, combined search and examination and/ or publication. No additional fee is payable in respect of Green Channel accelerated prosecution and the service is also available for applications made prior to 12 May 2009.

The UK IPO press statement claims that the Green Channel scheme reduces the time required for the granting of a patent to as little as nine months, compared to the average of three years.

EPO green classification system

The UK IPO announcement coincides with the release of a new clean energy database at the 32nd United Nations Framework Convention on climate change, during a side event on patents in clean energy. This database was created as part of a joint study on IP and climate change mitigation technologies carried out by the European Patent Office (EPO), the United Nations Environment Programme and the International Centre for Trade and Sustainable Development.

A new EPO classification scheme has introduced the code Y02, to be assigned to climate change mitigation technologies. This is divided into subclasses,  e.g. Y02C for "greenhouse gases - capture or storage/sequestration or disposal" and Y02E for "greenhouse gases - emission reduction technologies related to energy generation, transmission or distribution".

22 July 2010

Professor learns his lesson

Professor Weetman was employed by Newcastle University in 2007 on a short-term basis and claims that whilst there he redesigned a BSc module in biomedical sciences. Given the time and skill that he dedicated to this work, he believed he should retain copyright of his teaching materials (including PowerPoint slides).

In an email sent to the course supervisor at the time his contract was being negotiated, Professor Weetman stated that he would be unhappy if his slides were used by someone else in the future and that he wished to retain copyright over his materials. He believed that this email served as sufficient contrary agreement to supersede the general rule laid down in section 11(2) of the Copyright Designs and Patents Act 1988 that employers own the copyright in works produced by employees in the course of their employment.

Whilst this email was acknowledged by Newcastle University, no formal agreement was reached between the parties in respect of ownership of the intellectual property. As a result, the request contained in Professor Weetmans email did not form part of his contract of employment and the University retained copyright on all teaching materials, as was its standard policy.

Professor Weetman asserted that the presentations used by his successor included many of his original slides (complete with his typos). For a breach of copyright to have taken place, the law requires there to have been substantial copying of work that is protected by copyright, 'substantial' being considered on a quantitative rather than qualitative basis. The University acknowledged that although a number of the slides were similar, the majority of Professor Weetman's work had not been included. In any event this is an academic distinction given that the University will be regarded as the first owner of copyright in the work.

Often employers expect to own the intellectual property in employees' work. The law supports this but to be sure of their position employers will often include a wide clause in employment contracts to 'catch' any intellectual property created by the employee while he is employed. It is at this early stage that an agreement should be reached between the parties in respect of any alternative approach, particularly in an environment where colleagues frequently 'draw on' one another's work. As Professor Weetman has learned a hard lesson perhaps his experience will act as a lesson to others, reminding them to ask the crucial question - "can I have that in writing?".

22 July 2010