Business plans can be the subject of IP rights protection

United Kingdom

Business plans are normally treated as confidential but are usually considered as the vehicle to obtain funding and not intrinsically valuable in their own right. The basis of the value of the underlying ideas in a business plan is rarely analyzed. However, in the course of the professional negligence case of Ball v Druces & Attlee, the High Court of England and Wales has stated that business plans can be the subject of IP rights protection.

The plaintiff, Jonathan Macartney Ball, was a co-founder of the Eden Project (the Project), an award-winning environmental tourist attraction near St Austell, Cornwall in the United Kingdom. He and co-founder Tim Smit developed the concept of the Project in a business plan that was used as the basis to obtain funding. Ball and Smit created the name and logo for the Project.

At an early stage of the now hugely successful Project, Ball retained solicitors firm Druces & Attlee to protect his position and to help establish an appropriate legal entity so that funding could be received. In January 1996, Druces & Attlee established the Eden Trust (the Trust), which was the eventual recipient of the funding. However, on the founding of the Trust, all of Ball's rights in the business plan vested in the Trust and his position became unprotected. He was at the mercy of the trustees who were legally bound not to reward past consideration.

Ball was later removed from the Project and subsequently started litigation against the Trust on the grounds that he had not been properly compensated for his work (particularly his work on the business plan) since 1994. The High Court in that case ruled that the rights in the business plan had passed to the Trust and Ball brought the instant suit against Druces & Attlee for negligence.

An issue arose as to whether Ball had significant and protectable IP rights arising out of the business plan. Druce & Attlee argued that the limit of the protection was to the name and logo devised by Ball which, without the funding that followed, were of no real value. The High Court had little difficulty in rejecting that narrow assertion. It held that the IP rights in the business plan consisted not only of the name and logo, but also of (i) copyright in certain drawings, and (ii) the intangible property and material gathered over the 15 months while Ball (and Smit) developed the business plan.

The outlines of the idea were released for public consumption to gain support but the details were not revealed. The court noted that, due to the substantial quantity of work and energy put into the business plan by Ball (and Smit), the business plan amounted to protectable confidential material.

Accordingly, the court held that even though a great deal of the work was done by others, Ball as the originator and coordinator of the business plan (with Smit) was entitled to all rights in the whole. The parties who had contributed were held to have given an unwritten exclusive licence to Ball (and Smit), which entitled both he and Smit to the benefit of the whole value of the business plan.

The court found Druces & Attlee liable for professional negligence and Ball was awarded approximately £2.1 million in damages, before credits for monies already received.

Larry Cohen, McDermott Will & Emery, London

Get unlimited access to all WTR content