The prospect of external investment in intellectual property firms is set to soar after the Intellectual Property Regulation Board (IPReg) won the support of the Legal Services Board (LSB) to become the third alternative business structure (ABS) licensing authority.
The LSB will now recommend to the Lord Chancellor that he designate IPReg as a licensing authority, meaning firms of patent and trade mark attorneys will be able to operate as ABSs under its oversight.
IPReg – which is the joint regulatory body for the Chartered Institute of Patent Attorneys and Institute of Trade Mark Attorneys – already regulates firms with a similar structure to ABSs as trade mark and patent attorneys have for some years been able to have up to 25% external ownership, the highest profile of which is AIM-listed Murgitroyd. They have since benefited from transitional provisions in the Legal Services Act 2007.
The LSB said it was satisfied that IPReg “has already demonstrated its capability as an approved regulator and has researched and planned for additional resources to fulfil its role as a licensing authority”.
IPReg chairman Michael Heap told Legal Futures that “central to our thinking” when deciding whether to become a licensing authority “was the loss for all time of regulating ABSs if we did not approach the changes in a positive way”.
Existing ABS-type firms could have sought regulation from the Solicitors Regulation Authority, but the individual attorneys would have continued being regulated by IPReg, which could have caused “confusion and detriment”.
Mr Heap added: “The real issue was the opportunity for all firms to take advantage of the possibilities now open. These opportunities included injections of capital and talent.
“In IPReg’s view, it would have been a disservice to the IP community to close off the route to greater commercial freedom and to say to those go-ahead firms, ‘find someone else to regulate you’.”
IPReg has now achieved “a positive result for the IP community, consumers, and over time a benefit to UK plc”, he said.
Roger Burt, president of the Chartered Institute of Patent Attorneys, said: “This makes a lot of sense. Having IPReg as the licensing authority for ABSs will benefit consumers as well as the legal profession. It should remove a potential obstacle to firms of patent attorneys merging with other providers of legal or professional services. This could widen consumer choice and enhance the service provided to business.”
Catherine Wolfe, president of the Institute of Trade Mark Attorneys, added: “It’s taken the IPReg team, led by Ann Wright, many months of hard and good work to get this far. It has been a complicated and demanding process and we are delighted to hear that the Legal Services Board is making this recommendation.”
The LSB should also announce this week whether the Institute of Chartered Accountants in England and Wales has been successful in applying to become a regulator of probate services and an ABS licensing authority, and if the Chartered Institute of Legal Executives will be able to grant members independent rights to conduct conveyancing and probate.