10 November 2005

Patent Agents: Mutant Ninja Defences

A patent point of sorts came before Mr Justice Peter Smith today. In Finecard International Ltd (t/a the Ninja Corporation) v Urquhart Dyke & Lord [2005] EWHC 2481 (Ch) (10 Nov 2005) The claim was a negligence action against a firm of patent agents but it required his lordship to construe s.33 and s.68 of the Patents Act 1977.

The issue arose as follows. The claimant company had been granted an exclusive licence for a patent on 1 July 1997 which it registered on 9 Dec 1998. On 9 Sept 1999 it was granted a new licence for the same patent which was backdated to 1 July 1997. It instructed its patent agents to register the new licence on 12 Jan 2000 but they did not actually do so until 2 July 2001. In the meantime, the claimant brought proceedings against various defendants for infringement of that patent which were successful. However, because the second licence was registered late the claimant was refused damages for infringement for the period between 9 Sept 1999 (when the second licence superseded the first) and 2 July 2001 (when that licence was actually registered). Mr Justice Peter Smith noted that the claimant alleged that this delay in registration had cost it nearly £1.32 million.

The reason that damages were refused for the period between 9 Sept 1998 and 2 July 2001 was that s.68 of the 1977 Act provides:
"Where by virtue of a transaction, instrument or event to which section 33 above applies a person becomes the proprietor or one of the proprietors or an exclusive licensee of a patent and the patent is subsequently infringed, the court or the comptroller shall not award him damages or order that he be given an account of the profits in respect of such a subsequent infringement occurring before the transaction, instrument or event is registered unless:
(a) the transaction, instrument or event is registered within the period of six months beginning with its date; or
(b) the court or the comptroller is satisfied that it was not practicable to register the transaction, instrument or event before the end of that period and that it was registered as soon as practicable thereafter."

Accordingly, the claimant sought the lost £1.32 million from its patent agents.

Part of the patent agents' defence was that the claimant fell outside s.68 because it did not become an exclusive licensee upon the execution of the second licence. It merely got a more extensive licence. The hearing before Mr Justice Peter Smith was an application for summary judgment on that part of the defence under CPR Part 24.

The defendants resisted the application on a number of interesting grounds. One argument was that the second licence did not automatically destroy retroactively any of the rights under the first agreement in the law of New York which governed that agreement. That argument did not cut a lot of ice with the learned judge. He accepted the claimant's argument that the point was irrelevant because the defendants' retainer was to shield the claimant from any risk of liability. In any case, the defence had to fail because the only contract that could have given the claimant title to sue at the material time was the 1999 agreement. Accordingly, he struck out the defence.

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