Option
Agreement and a Share Option Agreement. Under the Share Option Agreement, in consideration of the payment to IL of £1 by Mr Jones, he was granted the option to subscribe for and be allotted 45% of IL’s shares. I will return to the Patent Option Agreement.12.On 12 June 2012, pursuant to his understanding of the Patent Option Agreement Mr Jones served IL with an Option Notice and £1 in cash. Mr Jones believed that this having been done, “Completion” within the terms of the Patent Option Agreement would follow, i.e. that within 7 to 21 days IL would deliver a written assignment of the IL Application to him. The 21 days were to expire on 3 July 2012.13.On 20 June 2012, without informing Mr Jones, Ben Gedroge contacted the UK IPO and withdrew the IL Application. On 22 June 2012 Ben Gedroge filed a new patent application, identical in all respects to the IL Application save that he added his own name as a joint inventor with Mr Jones. It was this application (“the IRL Application”) which resulted in the Patent.
The Witnesses
14.I heard evidence from Mr Jones, Mr Higham and Ben Gedroge at a trial in Manchester. I am sure that all three were doing their best to give truthful answers to the questions put to them.
IRL’s Analysis
15.IRL’s analysis of the sequence of events concerning the rights in the IRL Application and the subsequently granted Patent was the following.16.Mr Jones was the inventor. Therefore he was the person entitled to be granted a patent for the invention pursuant to s.7 of the 1977 Act.17.At the meeting of 18 October 2011, Mr Jones agreed to assign all rights in the invention to IL subject to the conclusion of other agreements. No rights were assigned to IL at that stage.18.On 25 November 2011 IL made the IL Application and was accordingly owner of the legal interest in the IL Application. Since Mr Jones was the party entitled to apply for a patent for the invention, he was equitable owner of the IL Application.19.On 22 December 2011 the parties entered into the Patent Option Agreement, the Share Option Agreement and an oral agreement by which Mr Jones assigned his IP rights in the invention to IL. The effect of the latter was that the legal and equitable interests in the right to apply for a patent for the invention were orally assigned by Mr Jones to IL and the equitable interest in the IL Application itself was assigned by Mr Jones to IL.20.IRL’s primary case is that service of the Option Notice by Mr Jones on 12 June 2012 could never have had any effect in law. No rights were assigned solely by reason of service of the Option Notice. All interests held by IL in the right to apply for a patent and in the IL Application itself remained with IL. IRL’s secondary case is that the same result was achieved because Mr Jones did not properly serve the Option Notice, for reasons discussed below.21.On 20 June 2012 IL withdrew the IL Application, so both legal and equitable title in it were extinguished. The legal and equitable interests in the right to apply for a patent for the invention remained in being, both still held by IL. Between 20 and 22 June 2012 both interests were orally assigned by IL to IRL.22.On 22 June 2012 IRL made the IRL Application at the UK IPO and so obtained legal and equitable title to the IRL Application. As holder of the legal and equitable interests in the right to apply for a patent for the invention, IRL was entitled to make that application. On 13 September 2017 the Patent was granted pursuant to the IRL Application. IRL was therefore then, and remains, the correct proprietor of the Patent.
Mr Jones’ Analysis
23.The following is the analysis argued on behalf of Mr Jones.24.At the meeting of 18 October 2011 Mr Jones agreed to assign his IP rights in the invention to IL in return for the option of a 45% shareholding in IL. That option was given to Mr Jones by the Share Option Agreement of 22 December 2011. In common with IRL’s analysis, counsel for Mr Jones said that the relevant IP right was the right to apply for a patent for the invention. Unlike IRL’s analysis, according to Mr Jones’ case this was a right within the meaning of s.30(6)(a) which could therefore only be assigned in writing. It followed that under the oral agreement of 18 October 2011 and following the provision of consideration on 22 December 2011, Mr Jones assigned the equitable interest in the right to apply for a patent to IL, but not the legal interest.25.Under the Patent Option Agreement Mr Jones was entitled to serve an Option Notice. Upon service, IL was required assign back to Mr Jones the IP rights in the invention – specifically the right to apply for a patent. The Option Notice was validly served. The effect of valid service was an assignment of the equitable interest in the right to apply for a patent back to Mr Jones. He thus held both legal and equitable interests from that point. He held them at the time that IRL made the IRL Application and still does now. The application made by IRL could only have been lawfully made by Mr Jones. Therefore pursuant to s.37(1) Mr Jones is entitled to a declaration that the Patent should have been granted to him and that he is the true proprietor of the Patent.
Assignment of the right to apply for the Patent
The law
26.Section 37 of the 1977 Act sets out the criteria which govern whether a party other than the registered proprietor of a patent is entitled to claim ownership: 37. (1) After a patent has been granted for an invention any person having or claiming a proprietary interest in or under the patent may refer to the comptroller the question— (a) who is or are the true proprietor or proprietors of the patent, (b whether the patent should have been granted to the person or persons to whom it was granted, or (c) whether any right in or under the patent should be transferred or granted to any other person or persons; and the comptroller shall determine the question and make such order as he thinks fit to give effect to the determination. … 27.Section 7 of the 1977 Act determines which person or persons are entitled to be granted a patent:
7.
(1)
Any person may make an application for a patent either alone or jointly with another.
(2)
A patent for an invention may be granted—
(a)
primarily to the inventor or joint inventors;
(b)
in preference to the foregoing, to any person or persons who, by virtue of any enactment or rule of law, or any foreign law or treaty or international convention, or by virtue of an enforceable term of any agreement entered into with the inventor before the making of the invention, was or were at the time of the making of the invention entitled to the whole of the property in it (other than equitable interests) in the United Kingdom;
(c)
in any event, to the successor or successors in title of any person or persons mentioned in paragraph (a) or (b) above or any person so mentioned and the successor or successors in title of another person so mentioned;
and to no other person.
(3)
In this Act ‘inventor’ in relation to an invention means the actual deviser of the invention and ‘joint inventor’ shall be construed accordingly.
…
28.When an invention is made a property right comes into existence, distinct from any subsequent right there may be in a patent application or patent. In Yeda Research and Development Co Ltd v Rhone-Poulenc Rorer International Holdings Inc [2007] UKHL 43, Lord Walker described this as an “inchoate property” in the invention (at [53]):“Before a patent has been granted for an invention there may be two (or even more) inventors, each of whom can claim to be the invention’s ‘actual deviser’ (the wording used in s.7(3) of the Act) because each has independently arrived at the same inventive concept. Until one of them has filed an application (and so long as none of them has altruistically or inadvertently published his invention so as to make it part of the state of the art) each has a sort of inchoate property in the invention.”29.Thus, upon an invention being made, a person or persons who satisfy s.7(2)(b), or if there are none the inventor or inventors under s.7(2)(a), acquire the right to file an application for a patent. That right is exclusive to them or, where it arises, exclusive to their successor or successors in title. Succeeding in title is akin to acquiring an inchoate property in the invention, the property being the right to apply for a patent.30.Section 30(6) provides: (6) Any of the following transactions, that is to say— (a) any assignment or mortgage of a patent or any such application, or any right in a patent or any such application; (b) any assent relating to any patent or any such application or right; shall be void unless it is in writing and is signed by or on behalf of the assignor or mortgagor (or, in the case of an assent or other transaction by a personal representative, by or on behalf of the personal representative). 31.The meaning of a “right” in a patent or patent application is defined in s.130(1) of the 1977 Act:“right”, in relation to any patent or application, includes an interest in the patent or application and, without prejudice to the foregoing, any reference to a right in a patent includes a reference to a share in the patent;32.It was argued by Mr Edenborough for IRL that a right in a patent or patent application does not include the right to file a patent application. Mr Keay for Mr Jones argued that it does.33.In Hartington Conway Ltd’s Patent Application [2004] RPC 6, Peter Hayward, Hearing Officer acting for the Comptroller said (his references to s.130(7) appear to have been intended to be to s.130(1)):“[64] There was certainly no formal assignment from Xtralite to XIRL. However, both sides accept that this is not conclusive, notwithstanding the provision in s.30(6) declaring that any assignment which is not in writing shall be void. That must be right, because what I have to determine under s.8 is whether the claimant:‘. . . is entitled to be granted . . . a patent for that invention or has or would have any right in or under any patent so granted . . .’and s.130(7) defines ‘right’ as follows:“‘right’, in relation to any patent or application, includes an interest in the patent or application . . .’which clearly extends to equitable rights and not just legal ownership.[65] In this connection, though, Mr Davis argued that s.30(6) did not in any case apply before any patent application had been filed. It was, he submitted, an exception to the general rule that contracts or gifts did not have to be in writing to be legally valid and so should, like all exceptions, be interpreted narrowly. Bearing this in mind, he argued that there can be no right in relation to a patent application within the meaning of the definition of ‘right’ in s.130(7) before a patent application has even been filed, and accordingly an assignment pre-application could be legally valid even though it was not in writing. Mr Campbell disagreed with this interpretation, arguing that s.30(6) did not require any particular document – e.g. a patent application – to be in existence. Its clear purpose, he said was to regulate the way in which monopolies can be transferred from one person to another, just like the similar provisions in the legislation on the transfer of land. The broad definition of ‘right’ in s.130(7) covered every situation, and in particular did not require a patent application to be in being.[66] I agree with Mr Campbell. The definition in s.130(7) is broad, and its natural meaning seems to me to embrace the right to file an application for the grant of a patent, because that is a right in relation to an application. This interpretation is also consistent with the broad provisions of s.8(1) , which expressly give me the power to determine rights to patent applications at any time before grant and specifically ‘whether or not an application has been made’. The definition of s.130(7) reads straight into the language of s.30(6)(a), which refers to ‘any assignment of … any right in … [an] application [for a patent]’, and it therefore follows that s.30(6) must bite on assignments prior to the filing of a patent application.”34.On appeal, Hartington Conway Ltd’s Patent Applications [2004] RPC 7, Pumfrey J approached this in a different way, but there is no doubt that he endorsed what Mr Hayward had said:“[24] It follows from the words ‘and no other person’ in s.7(2) and from the fact that the entries on the register are not conclusive evidence of title that title to a patent must be traced from one or other of the persons specified in ss.7(2)(a) and 7(2)(b). …[25] … The nature of a patent is described in s.30 . The essential right associated with a patent is the right to bring infringement proceedings, from which the monopoly conferred by the patent springs. The right to bring proceedings is conferred by s.61 of the 1977 Act upon the ‘proprietor of the patent’. In my view, the word ‘proprietor’ does not mean ‘registered proprietor’ and it follows that the statutory right of action is conferred on the person who can trace his title in the manner that I have indicated. Section 30(6) requires the specified transactions to be written. A chain of transfers accordingly will demonstrate the devolution of the title to the patent to the person claiming to be entitled to it. … [34] Hitherto I have not in this judgment paid tribute to the care evidently expended by the hearing officer on his decision. It seems to me to be a decision sound in all material respects, and I endorse it.”35.Mr Edenborough argued that the Hearing Officer and Pumfrey J were wrong. He focussed on counsel’s proposition in Hartington Conway, recorded in the penultimate sentence of paragraph 65 and accepted by the Hearing Officer, that the clear purpose of s.30(6) was to regulate the way in which monopolies can be transferred from one person to another. Mr Edenborough said that the Hearing Officer had been right to accept this proposition. Yet the right to apply for a patent is not a monopoly right. Two persons may separately make the invention. They both acquire the right to file an application, showing that the right cannot be characterised as being necessarily a monopoly right.36.I agree that the right to apply for a patent is not perforce a monopoly right. To that extent the Hearing Officer was led astray. But the mistake formed no necessary part of his reasoning. He was of the view that ‘right’ is broadly defined in s.130(1), that it includes the right to apply for a patent, and that the definition read on to s.30(6). As I have said, Pumfrey J approached the matter in a different way, arriving at the conclusion that tracing a successor in title to the right to apply for a patent means following the devolution in title by a line of transactions and he ruled that s.30(6) requires these transactions to be in writing. I respectfully agree. The right to apply for a patent is a ‘right’ within the meaning of s.30(6)(a) and can only be assigned in writing.
This case
37.Since there was no written assignment, the legal interest in his right to apply for the Patent was never assigned. However, at the meeting of 18 October 2011 Mr Jones agreed to assign the right for consideration. The consideration was subsequently given, at which point the equitable interest in the right passed to IL. An agreement to assign property – here the inchoate property in the right to apply for a patent – will cause the equitable interest in that property to pass even if the legal interest remains unassigned, see Baxter International Inc v Nederlands Produktielaboratorium voor Bloedtransfusiapparatuur BV [1998] RPC 250 at 253-254.38.The next issue is whether that equitable interest ever passed back to Mr Jones.
The Patent Option Agreement
39.The Patent Option Agreement included the following:
“ 1. In this Option Agreement:- ‘Conditions’ means the commencement and continuation of trading activities by [IL] or any subsidiary (as such term is defined by sections 1159 – 1160 of the Companies Act 2006) of [IL] within six months of the date of allocation of the pending patent application number to the Patent; ‘Completion’ means the performance by [IL] and [Mr Jones] of the obligations respectively assumed by them in Clause 4; ‘Option’ means the option granted to [MJ] by this Agreement as set out in clause 2; ‘Option Notice’ means a notice in substantially the form set out in Part 2 of the Schedule intimating [MJ’s] election to exercise the Option in terms of clause 3.1; ‘Option Period’ means the period commencing six (6) months from the date of allocation of the pending patent number to the Patent. ‘Option Price’ means £1.00. ‘Patent’ means the prospective patent (and all associated intellectual property rights associated with such prospective patent) which has been applied for in the name of [IL] and which has been allotted pending patent application number 1120383.3. ‘Rights’ means all of the rights and intellectual property rights associated with and including the Patent that belong to [IL] as at the date of the exercise of the Option. … 2.
Option :- In consideration of the payment by [Mr Jones] to [IL] of one pound (the receipt of which is acknowledged by [IL]) subject to the Conditions not having been satisfied within the prescribed period specified therein, [IL] now grants to [Mr Jones] the Option to require [IL] to assign to [Mr Jones] all of the Rights at any time during the Option Period. 3.