June 2023 In a recent decision of the Patents Court, the judge found that the person who started infringement proceedings was not, in fact, the proprietor of the patent and thus did not have any rights in the patent to enforce. Similarly, the judge held the defendant liable for infringement of the patent despite the defendant claiming to be the proprietor. This decision highlights the problems that can arise when ownership of intellectual property is unclear.
Background
In the present case, two patents were granted in 2007 to Mr Price, who then granted an exclusive licence to Supawall Limited in 2008. Mr Price and Supawall Limited later sued Flitcraft Limited for infringement of their rights.
In defence, Flitcraft Limited argued that Mr Price was not the proprietor of the patents when infringement proceedings were initiated, and that Supawall Limited’s exclusive licence had been terminated by that date, as well. Flitcraft Limited also claimed to be the true proprietor of both patents. The court therefore had to consider who owned which rights since, under UK law, only the proprietor(s) of a patent and an exclusive licensee thereof can initiate infringement proceedings in respect of the patent.
Holding of the Patents in Trust
Flitcraft Limited began by arguing that Mr Price never truly owned the patents, but instead held them in trust for an organisation referred to as “the MTF Partnership”, the assets of which had been acquired by Flitcraft Limited before infringement proceedings were initiated. Flitcraft Limited argued that those assets included the two patents, and that it could not, therefore, be sued for infringement thereof.
The judge considered this argument, but ultimately held that there was insufficient evidence that Mr Price had held the patents in trust for the MTF Partnership. The judge therefore held that Mr Price had been the original proprietor of the patents, and thus Flitcraft Limited had not become the proprietor of the patents when it acquired the MTF Partnership’s assets.
Assignment and Termination Agreements
Flitcraft Limited then argued that, even if Mr Price had originally owned the patents, an assignment agreement had been executed in March 2011 transferring Mr Price’s interest in the patents (if any) to another company (Lightpeak Limited). Flitcraft Limited added that an agreement terminating Supawall Limited’s exclusive licence had been executed on the same day.
Thus, Flitcraft Limited argued that, when infringement proceedings were started several years later, neither Mr Price nor Supawall Limited owned any rights in the patents to enforce.
The judge reviewed both the assignment agreement and the termination agreement and noted that these had been signed, but not dated. The judge noted there is no requirement in the Patents Act 1977 for an assignment to be dated to be valid, but noted that the terms of both agreements indicated these would only become legally binding on the dates indicated therein. Since neither agreement had been dated, the judge concluded there could not have been an effective transfer of the patents from Mr Price to Lightpeak Limited or an effective termination of Supawall Limited’s exclusive licence in March 2011 caused by the signing of those documents.
Bankruptcy
In July 2011, Mr Price became bankrupt, and another person (Mr Craig) was appointed as his trustee in bankruptcy. Since Mr Price was the owner of the patents on this date, the judge held that ownership of the patents had been transferred to Mr Craig as a result of this appointment. The judge also held that, under the Insolvency Act 1986, ownership of the patents would have remained with Mr Craig when Mr Price was discharged from bankruptcy in 2015.
Accordingly, the judge held it was, in fact, Mr Craig that was the true proprietor of the patents when infringement proceedings were started, and that Mr Price thus could not have validly initiated infringement proceedings on that date. Mr Price’s claim was therefore dismissed since he had no rights in the patents to enforce.
Infringement
The judge also held, however, that Supawall Limited’s exclusive licence was still in force when infringement proceedings were initiated, and that Supawall Limited had thus validly started infringement proceedings against Flitcraft Limited. The judge therefore considered Supawall Limited’s claim and ultimately held that Flitcraft Limited had infringed Supawall Limited’s rights in one of the patents, but not the other.
Effect on the True Owner
The Patents Act 1977 requires that, when infringement proceedings are started by an exclusive licensee, the proprietor of the patent must be made a party to the infringement proceedings. The judge acknowledged this and noted that Mr Craig, despite being the proprietor, had not been made a party to the proceedings.
The judge expressed a view that it would be unfair to dismiss Supawall Limited’s claim simply because Mr Craig had not been made a party to the proceedings, and has thus invited the parties to make submissions on the matter before deciding how to proceed.
Conclusions
This decision highlights the importance of confirming the identity of the proprietor(s) of a patent before starting infringement proceedings, noting failure to get this right can result in a claim being quickly dismissed. This decision also confirms that failure to correctly identify the proprietor(s) early on can complicate matters downstream if it becomes apparent that another party should have been made a party to the proceedings, but was not.
This decision also emphasises that it is important to confirm who has the right to undertake infringing acts before working an invention claimed in a patent, noting that a party can be held liable for infringement if it undertakes such acts when it mistakenly believes it is the proprietor.
Finally, this decision shows just how important it is to properly complete documentation associated with ownership of intellectual property rights to ensure that documentation truly has legal effect.
