Employees' Inventions: Parsons v Convatec Ltd.
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Patents Court (Mr Justice Zacaroli) Parsons v Convatec Ltd [2023] EWHC 1535 (Pat) (26 June 2023)
This was an application by an employer to strike out or summarily dismiss part of its employee's claim for compensation under s.40 of the Patents Act 1977. S.7 (2) of the Patents Act 1977 states that a patent for an invention may be granted primarily to the inventor except where a rule of law or contract entitles someone else to claim the invention. One such exception is provided by s.39 which entitles employers to claim their employees' inventions in certain circumstances. Most employees who are expected to invent something in the course of their employment enjoy generous salaries and benefits but there are some inventions that are so valuable to the employer that it is just to reward the employee with something extra. S.40 makes provision for such rewards which are known as "compensation".
The Claim
The claimant was an analytical chemist who worked on antimicrobial dressings and plasters for Convatec Ltd. He alleged that some of his work contributed to inventions for which patents were subsequently granted. He contended that those patents were of such outstanding benefit to Convatec that it was just that he be awarded compensation by his employer. Convatec rejected his contention whereupon he launched these proceedings on 5 Sept 2022,
The Application
Convatec appears to have applied to strike out the claim under CPR 3.4 (2) (a) (although para [15] of the transcript of the judgment refers to CPR 32.42 (a) which does not exist) and CPR Part 24. It relates to the following patents or families of patents:
- Bray 2003
- Bowler, Jacques and Parsons 2002
- Bowler, Parsons and Walker 2004
- Percival, Bowler and Parsons 2007, and
- Bonnefin, Bugedo, Parsons and Thompson 2013
The application came on for hearing before Mr Justice Zacaroli on 8 June 2023. His lordship delivered judgment on 26 June 2023 (see Parsons v Convatec Ltd [2023] EWHC 1535). At para [16] of his judgment, he said:
"The approach to summary judgment is summarised in the seven principles set out by Lewison J in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at §15:
'i) The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 2 All ER 91;
ii) A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8]
iii) In reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman
iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10]
v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;
vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;
vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.'"
(2) The claimant was not named as an inventor;
(3) The claim was barred s.9 of the Limitation Act 1980.
Bowler, Jacques and Parsons 2002 and Bowler, Parsons and Walker 2004
It was common ground that the patents had been revoked more than a year before the commencement of proceedings amd that the prescribed period for bringing a claim had expired. No action could proceed without a renewal of the limitation period which the judge considered below.
"The approach to summary judgment is summarised in the seven principles set out by Lewison J in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at §15:
'i) The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 2 All ER 91;
ii) A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8]
iii) In reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman
iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10]
v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;
vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;
vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.'"
Bray 2003
In or around 1999-2000, Convatec was in a joint venture with a company called Acordis Speciality Fibres ("ASF"). The claimant came up with the idea of producing a partial and homogenous conversion of a Hydrocel fibre to a silver/sodium Hydrocel fibre (without degrading the physical form) by the rapid and simultaneous addition of the Hydrocel fibres to a carefully managed solution of aqueous/alcoholic silver nitrate. The invention was patented by ASF, and known as Bray 2003 but was exploited by Convatec, When Convatec acquired the share capital of ASF, it also acquired that patent.
Convatec applied to strike out the claim on the following grounds:
(1) The patent was granted to ASF, not Convatec;(2) The claimant was not named as an inventor;
(3) The claim was barred s.9 of the Limitation Act 1980.
As to the first ground, Mr Justice Zacaroli noted that there was nothing in s.40 that required a patent to be granted to the inventor's employer. The section required a patent to be granted and, prior to 2005, the patent had to benefit the employer. Both requirements could be satisfied without the employer's actually owning the patent.
Similarly, there was nothing in s.40 that required the employee to be named as an inventor. All that was required was for the employee to have devised the invention. The claimant claimed to have done that
As to the third ground, s.9 did not apply to claims under s.40 of the Patents Act 1977. The parties agreed that the claim had been brought within the period provided by that section.
It was common ground that the patents had been revoked more than a year before the commencement of proceedings amd that the prescribed period for bringing a claim had expired. No action could proceed without a renewal of the limitation period which the judge considered below.
Percival, Bowler and Parsons 2007
Convatec argued that the claim was barred under s.9 of the Limitation Act 1980 and that the invention had not yet been out to productive use. The judge rejected the s.9 point for the same reason as before and held that an invention that has not yet been put to commercial use can still be beneficial to a patentee.
Bonnefin, Bugedo, Parsons and Thompson 2013
The claimant claimed to have thought of strengthening the needle-punched nonwoven fabric of the gelling fibre in wound dressings with non-gelling yarn stitching. Convatec argued that the patent application was filed after the product had been put on the market. Consequently, there could be no benefit from the patent. The judge held that the first issue was one of fact that could only be resolved after a trial. Moreover, nobody had ever brought proceedings to revoke the patent.
Extension of Time
It was common ground that the judge had unfettered discretion to extend the limitation period but it was also agreed that it had to be exercised judiciously, The action had been brought between 5 and 8 years after the expiry of the limitation period and no good reason had been given for the delay. In the circumstances, there was insufficient reason to extend time. It followed that the claims in relation to Bowler, Jacques and Parsons 2002 and Bowler, Parsons and Walker 2004 should be struck out.
Comment
Claims by employees for compensation under s.40 of the Patents Act 1977 are rare even though s.10 of the Patents Act 2004 has removed some of the difficulties. Strike-out and summary justice applications by employers where the facts pleaded by an employee are assumed to be true are even rarer. This is not the first dispute over an employee's inventions that has come before the courts this year. Entitlement to an employee's invention was an issue in Oxford University Innovation Ltd v Oxford Nanoimaging Ltd [2022] EWHC 3200 (Pat) (23 Dec 2022). It will be one of the issues that I shall discuss in my contribution to our chambers' IP Uodate seminars in London on 18 Sept 2023 and Birmingham on 25 Sept 2023 (see Latest Developments in Intellectual Property Law 20 Aug 2023 NIPC News). Anyone wishing to discuss this case may call me on 020 7404 5252 during office hours or send me a message through my contact form.
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