LAW: Pharmacy and IP – what’s the link?

Pei Li Kew discusses legal and administrative procedures in relation to intellectual property rights that contractors need to be aware of…

In many cases, a pharmacy’s most valuable asset is its NHS contract. This is what buyers are paying for – the right to provide pharmaceutical services commissioned by the NHS and be reimbursed for the medicines dispensed.

However, a pharmacy consists of more than just an NHS contract and when buyers look for a pharmacy to buy, they will also examine these other areas – the pharmacy’s customer base, its staff, the property it operates from – to name a few – because these are all also crucial to a successful pharmacy.

In this day and age, another important consideration is the pharmacy’s intellectual property (IP) i.e. the pharmacy’s rights to certain types of information, ideas, and forms of expression. At the most basic level, this includes the trade mark in the name of the pharmacy, because all pharmacies will have a name by which they distinguish themselves from other pharmacies. The more well-known the name, the more valuable this form of IP is – mention ‘Boots’, for example, and most will have an instant association with the largest pharmaceutical retailer in the UK.

There is also IP in the patient management systems, dispensing systems and accounting or payroll systems used by pharmacies. These are often provided by third parties who license the software in these systems to pharmacies, so that although the pharmacies may have the right to use these systems, the IP rights will remain with the third parties. Another common piece of IP is in a pharmacy’s website. Not all pharmacies will have websites, and some others may only link to websites operated by the NHS or networks they are members of. However, for those pharmacies who have their own bespoke websites

– including distance selling pharmacies

– the IP in the website can be an important consideration to buyers who are weighing up a purchase of the pharmacy.

Where the pharmacy’s website is an important asset to the business, it is important to ask the question of:

Pharmacy website

Often, it is not the pharmacy who will have developed its website in-house. It may have asked a third party (e.g. a website developer) to develop its website and/or register the website address. There are marketing agencies who do this for many businesses, or an employee or personal friend of the pharmacy owner may have done this.

A common pitfall to watch out for is the assumption that the IP in the website automatically belongs to the pharmacy. Some marketing agencies’ terms may expressly provide that the IP in their creations belong with the agency and not the customer they have developed the website for, and do not contain an ongoing license for the pharmacy to continue ‘using’ the IP if the pharmacy decides to end its relationship with the agency.

With employees, provided they have developed the website in the course of their employment with the pharmacy, then there is an assumption that the IP belongs to the pharmacy. However, there is no such similar assumption where the developer was not an employee (e.g. a personal friend, or the owner itself).

If the pharmacy does not own the IP in its website, this can be addressed in advance of the sale or purchase. For unregistered IP, a deed of assignment can be drawn up which assigns the IP from the current owner to the pharmacy. For registered IP, there will also be an extra step of notifying the registrar (e.g. for registered trademarks, the relevant registrar such as the UK Intellectual Property Office).

Domain names

Linked to, but separate from a pharmacy’s website, is its website address (also called the domain name). These can be obtained very quickly and cheaply from various domain registrars online, and it is not uncommon for a business to buy different variations of a domain name which all lead to one main website, just to ensure that no one else buys a domain name that looks or sounds similar to business’s name.

Another common pitfall is where the domain name to be registered under the actual name of the person who went online to buy the domain name from the registrar (such as an employee, a personal friend, or the pharmacy owner itself).

This means that the IP in the domain name belongs to that person and not the pharmacy, and would be like a homeowner (the pharmacy) living in a house, where the address of the house (the domain name) is owned by another person (the person who registered it).

This is a relatively simple issue to address and can be done by applying to the domain name registrar to transfer the domain name to the pharmacy itself, but it is not an instant process and is therefore best done in the early stages of a sale or purchase.

Legal compliance

A final point of interest to any buyer is the legal compliance of a pharmacy website, as the buyer will want to ensure that there are no hidden possibilities of fi nes or messy investigations or disputes due to non-compliance of the law. There are three main areas to consider here. Firstly, compliance with data protection laws. If the website uses cookies to store information about website users then it must have an up-to-date cookie policy.

For websites that go further than cookies (e.g. contain a function for users to register online or book appointments), the website must also have an up-to-date privacy policy which sets out the reasons for the collection of users’ data, how it will be stored, and what it will be used for.

Secondly, for pharmacies which are companies, the website must set out its name, company number, and registered office address.

Thirdly, for pharmacies which engage in distance selling, the website should also contain the pharmacy’s terms and conditions of sale which clearly sets out the terms for delivery, returns, pricing, and so on. Given the consumer-facing nature of pharmacies, it is important that these terms and conditions also comply with consumer law.

(The above is a general overview and we recommend that independent legal advice is sought for your specific concerns. If you require further information in relation to the points raised in this article you should contact Pei Li Kew a solicitor at Charles Russell Speechlys LLP in the Corporate team. Pei Li can be contacted on peili.kew@crsblaw.com)