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Does governing law matter?
Parties are free to choose the law governing their agreement, which can be the law of a party's place of business. However, in most cases, it is not recommended to choose a so-called neutral law, ie the law of a jurisdiction with which the parties and their agreement have no connection or link. Indeed, a choice of neutral law may complicate the situation since, in addition to this law, mandatory provisions of local law (related to public policy) can also apply.
Is arbitration or mediation preferable to litigation?
Mediation is an informal, nonbinding and strictly confidential process in which the parties work with an impartial third party, the mediator, to resolve their dispute. The mediator does not decide the case but rather helps the parties reach a mutually acceptable solution. All parties must of course agree to submit the dispute to mediation. It should be noted that even if they agree, they are free to stop the mediation process at any time. The idea is for the parties to remain in control at all times.
Mediation is not appropriate in all cases, but it will often be a valuable alternative to litigation, namely:
- where cost is an issue;
- where a speedy resolution of the dispute is desirable;
- in cases involving a business relationship;
- where confidentiality is of the essence.
In arbitration, the case is decided by one or more impartial arbitrators in a final, binding arbitral award. Unlike litigation, the parties may require the arbitrators to have specific expertise, eg, in a specific area of technology, and can contractually limit the issues subject to arbitration. Arbitration is generally efficient in terms of timing but can be very costly.
The efficiency and speed of litigation vary, depending on the subject-matter of the dispute, the type of proceedings and the judicial district.
What can I do to avoid litigation or best prepare for it?
It is important to anticipate future events, insofar as possible, and to keep clear, well-organised files in order to have everything ready should litigation arise.
Where can I find basic information about litigation?
In the event of litigation in Belgium, it is probably best to discuss your options with a lawyer. Please find below, however, some basic information on litigation:
- Proceedings start with the service of a summons on the defendant. The summons must contain a brief statement of the claim(s). Additional claims can be introduced at a later date, provided they are based on facts disclosed in the initial summons.
- The case will be introduced at a preliminary hearing ("introductory hearing" or "hearing for direction"). It is common practice to fix a timetable for the exchange of written submissions at this hearing. If the parties cannot agree on a timetable, the court will set one.
- The procedure is mainly a written one, and the parties' arguments are developed in written submissions.
- The defendant must file its written submissions first and usually has the last word and hence the right to file the last submissions.
- Once all arguments have been exchanged in writing, the parties will have the opportunity to defend their case during a hearing. Oral arguments are generally relatively short, and the parties must focus their pleadings on the essence of their case or defence.
How can I best avoid litigation if the contractual relationship does not evolve in the right direction?
Are the terms of agreements imposed on us reasonable? How can I verify whether the terms of an agreement are reasonable and balanced?
Contracting parties should always strive for a win-win scenario when entering into a long-term contractual relationship. Reasonable and balanced terms should be at arm's length (ie the price is fair and real) and fairly reflect both the value of the agreement and the risks taken by the contracting parties, in light of the purpose of the agreement. For instance, an exclusive licence for IP implies greater consideration than a non-exclusive licence. Likewise, it is reasonable for a licensor to request a minimum royalty in exchange for exclusivity.
Where can I obtain advice on choosing the most appropriate IP protection and the cost thereof?
Advice regarding appropriate IP protection can be obtained from lawyers, trademark agents and patent attorneys. For technical aspects, it will be necessary to consult a patent attorney.
How do I know if an invention is patentable?
An invention is patentable if the subject matter is not excluded from the scope of patent protection (eg, software as such), it is new and inventive compared to prior art, and capable of industrial application. The advice of a patent attorney will be necessary as this stage. A patent attorney will be able to conduct a search of prior art to determine, for instance, whether an invention is both novel and inventive.
If not, can it be otherwise protected?
At present, there is no specific form of protection for know-how under Belgian law. However, know-how can be protected under general rules of tort. Changes are expected in this field, as the European Commission issued on 28 November
2013 a Proposal for a Directive on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure.
If an invention is patentable, is a patent the best option? In other words, which is best for my company: IP or trade secrets?
Patent protection, if available, may not always be the best option. If a company is in need of funding, a patent may be required to attract investors. However, in other cases, it may be advisable not to apply for a patent and keep the information confidential, especially if the patent could easily be circumvented. Much will depend on the specific facts of the case.
Which IP/know-how do I need for my company's business? Do I have the right agreements in place in order to ensure that the IP rights/know-how used to conduct my company's business are (co)owned or duly licensed by the company?
It is important to first determine the IP needed to conduct the company's business.
The first relevant question is whether the required IP is proprietary or not.
With proprietary or self-developed IP, the main concern is to ensure that all IP rights and know-how developed within the company are duly owned by it. Certain types of rights are automatically transferred from the employee to the employer upon creation, while others (eg, copyright) must be specifically assigned in the employment contract. A similar approach should be adopted for subcontractors and consultants.
IP which is necessary but not proprietary must be licensed in. This can be either a very simple process (eg, a shrink-wrap licence for Microsoft Office) or a highly complex scenario (eg, a licence granted by a university for a specific technology, patent, etc). Spin-offs, for instance, are usually dependent on a licence granted by a university or research centre which is often exclusive to a specific field and determines the spin-off's possible activities and partnerships with third parties. The main concern with licensed-in IP is therefore the scope of the licence. It must be at arm's length, in view of the company's business needs. Consideration is another important issue, especially for a company in the start-up phase.
Please note that even if certain tools are publicly available (such as open-source software), there may be specific obligations connected to their use or incorporation in subsequently commercialised goods or services.
Am I the (co)-owner of these assets?
- Are the correct agreements in place to ensure that all IP rights/know-how in works created by employees/subcontractors vest in the company?
A clause providing for the transfer of IP rights should be included in each employment contract in order to ensure that rights which do not automatically vest in the employer are transferred to the company. A similar clause must be included in any agreement entered into with an external subcontractor.
When cooperating with a university professor, the company should ensure that the professor is indeed entitled to transfer any IP rights arising from the parties' cooperation. It should be noted that university professors are often bound by an agreement with their university, preventing them from transferring IP rights to anyone other than the university.
The developer of a website should transfer all rights in the website, artwork and possible databases developed for the company. If no provision is made to this effect, problems may arise at a later stage when it is necessary to adapt or change the website.
- Where can I find high-quality models for a management agreement, employment contract, consultancy agreement, service agreement, distribution agreement, etc?
A standard agreement will never perfectly meet the parties' needs. Therefore, whilst templates can of course be used, parties should always try to ensure that the agreement in place reflects as closely as possible their actual business needs. Although agreements will always, to a certain extent, be customised, certain clauses are key to the R&D environment, namely:
- confidentiality and non-disclosure provisions (see also Question "Do I have the right agreements in place in order to ensure that my confidential information/know-how is duly protected and kept secret?"), to protect business and trade secrets,
- a noncompete clause, if the employee, manager or contractor acquires confidential information, the use of which on behalf of a competitor would prove detrimental to the company;
- a non-solicitation clause, which forms an important part of a retention policy and prevents employees, managers, consultants and distributors from poaching the company's talent;
- an IP transfer clause, aimed at ensuring that the company owns IP rights in creations of employees, managers and consultants.
For self-employed contractors (such as independent managers, consultants and distributors), particular attention should be paid, when drafting agreements, to the risk of recharacterisation of the agreement as an employment contract (see also Question "Are any contracts at risk of recharacterisation?"). The agreement should in particular emphasise the self-employed nature of the relationship, the absence of subordination of the contractor (manager, consultant or distributor) to the company, and the contractor's freedom to organise his or her work and working time.
If I do not own the necessary IP/know-how, how can it be licensed in? What important points should I bear in mind when negotiating a licensing agreement?
IP/know-how can be licensed in by entering into a licensing agreement.
Every licensing deal is unique. You should however always carefully consider the following:
- the scope of your rights under the licence (eg, exclusive or nonexclusive, field of use, territory, duration, right to sub-license); and
- the financial terms for use of the assets.
The use of open-source software gives rise to certain legal risks, especially so-called "copyleft software". For instance, pursuant to the General Public License (GPL) terms, if a company includes such software in its own it must allow its software to be made available to any third party under the same GPL terms.
Are there any regional/national/European subsidies from which my company can benefit? What are the caveats in this regard?
Several types of subsidies exist for companies investing in innovative technologies. The most important regional subsidies are the following :
- For Flanders: IWT (www.iwt.be)
- For Wallonia: Portail de la Recherche et des Technologies en Wallonie (http://clusters.wallonie.be – http://recherche-technologie.wallonie.be)
- For the Brussels-Capital Region: Innoviris (www.innoviris.be and www.innovativebrussels.irisnet.be)
For Flanders, Innovatie Centrum (http://innovatiecentrum.be) proposes advice and support to obtain financing. Agentschap ondernemen (www.agentschapondernemen.be) also provides advice and support to companies seeking loan financing (eg.
STARTEO, PMV Mezzanine).
The Walloon Region has a cluster policy, and subsidies may be obtained if the research project falls within the scope of a so-called competitiveness cluster (http://clusters.wallonie.be/federateur-en/walloon-competitiveness-clusters.html?IDC=349).
For research projects that fall outside these clusters, subsidies can be applied for directly with the Walloon Region.
At the European level, the new EU research and innovation program applicable over the next seven years (2014 to 2020) is called Horizon 2020. More information, including about participation requirements, can be found at http://ec.europa.eu/research/participants/portal/desktop/en/home.html. Horizon 2020 supports in particular SMEs (eg, the SME instrument and the EUREKA/Eurostars Joint Programme).
What does litigation involve in terms of time and costs?
Regular proceedings on the merits generally take 12 to 18 months.
If there is a need for swift relief (a showing of urgency and irreparable harm), summary proceedings can lead to a decision within two to four months, on average. In some cases, it is also possible to apply for relief on an ex parte (unilateral) basis. Accelerated proceedings on the merits (so-called cease-and-desist proceedings), where available, can lead to a decision on the merits in two to six months' time.
At the appellate level, proceedings take much longer (18 to 24 months or more depending on the judicial backlog).
The costs of litigation will depend on the complexity of the case. On average, the costs range between EUR 15,000 and EUR 55,000 or more.