23 October 2005

Yorkshire Pudding: Paxman v Hughes

An all Leeds affair between Yorkshire's finest. Lupton Fawcett on one side and Walker Morris on the other (though their respective barristers came from London). And all for a fight over s.37 of the Patents Act 1977.

S.37 (1) provides machinery for determining who is entitled to a patent after it has been granted. It is generally regarded as the equivalent to s.8 which provides machinery for determining who is entitled to a patent application. However, one difference between s.37 and s.8 is that s.37 allows the question of whether any right in or under a patent should be transferred or granted to a third party to be determined by the comptroller. This case is about an attempt by one co-owner of a patent to use s.37 (1) to circumvent the rule in s.36 (3) that where two or more persons own a patent all of them must consent to a licence under the patent.

The application had been brought because the joint owners of a patent had fallen out. The invention had not been a success. One of the owners thought he might make it a success by licensing the manufacture of the invention to an Italian company, but the other wouldn't agree. Hence the application under s.37 (1) (c). The application was resisted on the grounds that:
(1) the comptroller did not have jurisdiction to make an order with extra-territorial effect;
(2) any discretion to grant licences under s.37 (1) (c) had to be consistent with s.36 (3); and
(3) as the parties had formed a company to work the invention, the proposed application would be a breach of fiduciary duty.
When the application came on before the hearing officer (Paxman v Hughes (23 May 2005)), he agreed with the respondent and struck it out.

The applicant appealed and Mr Justice Kitchin allowed the appeal remitting the case back to the hearing officer for directions for the further conduct of the case (see Paxman v Hughes [2005] EWHC 2240 (Pat) (21 Oct 2005). Grossly simplifying the judge's reasoning he was not persuaded that the proposed licence would inevitably amount to a breach of duty or that it was necessarily beyond the comptroller's jurisdiction to make the desired order.

It seems to me that an awful lot of brass has been spent on an invention from which neither party has made, or seems likely to make, any substantial return.

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