Patents - Bionome Technology Ltd v Clearwater

By Volker Prasuhn, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=8363375

 

Jane Lambert

Patents Court (Mr Tom Mitcheson KC) Bionome Technology Ltd v Clearwater [2024] EWHC 3155 (Ch) (9 Dec 2024)

This was an appeal from the decision of the Deputy Director of Patents, Huw Jones, sitting on behalf of the Comptroller-General of Patents, Designs and Trade Marks in an entitlement dispute.   As I said in How to Avoid Entitlement Disputes on 22 June 2024 in NIPC Inventors' Club, an entitlement dispute is a dispute over the right to apply for or own a patent.   I wrote about such disputes in Disputes over Ownership of Inventions on 6 Aug 2015 in NIPC South East.

The Dispute

In Okipa Ltd and another v Bionome Technology Ltd BL O/0410/24 3 May 2024, Mr Jones held that British patent GB2598881 and international patent application WO2021/191614 A1 for controlling the growth of vegetation ("the invention") were jointly owned by Bionome Technology Ltd.  ("Bionome") and John Russell Clearwater ("Dr Clearwater").  Bionome appealed against Mr Jones's decision.  The appeal came on before Tom Mitcheson KC sitting as a deputy judge of the High Court on 22 Nov 2024.  He handed down his judgment on 9 Dec 2024 (see Bionome Technology Ltd v Clearwater [2024] EWHC 3155 (Ch) (9 Dec 2024)).  By para [84] of his judgment, Mr Mitcheson dismissed Bionome's appeal.

The Collaboration Agreement

It was common ground that Dr Clearwater and one Dennis McCarthy ("Mr McCarthy") had invented the invention.  Bionome and Mr McCarthy argued that Bionome was entitled to the patent and international application because Dr Clearwater had entered into an agreement with Mr McCarthy and Mr McCarthy's son, Aaron Tindall ("Mr Tindall") in February 2019 to collaborate in developing weedkillers. Dr Clearwater subsequently fell out with Mr McCarthy and Mr Tindall.  Claiming that they were performing the collaboration agreement Mr McCarthy and Mr Tindall incorporated Bionome and applied for British and other patents.

Grounds of Appeal

Mr Mitcheson set out the grounds of appeal in para [15] of his judgment:

"First, it was said that the Hearing Officer had erred in his approach to the statutory presumption under s.7 Patents Act 1977. Second, it was said that he had erred in his approach to the construction of the Collaboration Agreement. As an adjunct to this it was said that the outcome of the hearing below was perverse because it left Dr Clearwater with a larger share of the Applications than Mr McCarthy or Mr Tindall. Finally, it was said that if the Collaboration Agreement contained a term assigning Dr Clearwater's rights in the invention to a new jointly owned entity, Bionome was held on trust by Mr McCarthy for Dr Clearwater (and Mr Tindall) and was therefore 'an entity jointly owned by the parties'."

Dr Clearwater filed a respondent's notice together with an application to adduce additional evidence.

Role of the Appeal Court

The deputy judge noted at para [18] that the parties had agreed that the appeal was a review and not a rehearing,   He recorded that he had been referred to para [2] of Lord Justice Lewison's judgment inVolpi v Volpi [2022] EWCA Civ 464; [2022] 4 WLR 48 on findings of fact:

"i) An appeal court should not interfere with the trial judge's conclusions on primary facts unless it is satisfied that he was plainly wrong.
ii) The adverb 'plainly' does not refer to the degree of confidence felt by the appeal court that it would not have reached the same conclusion as the trial judge. It does not matter, with whatever degree of certainty, that the appeal court considers that it would have reached a different conclusion. What matters is whether the decision under appeal is one that no reasonable judge could have reached.
iii) An appeal court is bound, unless there is compelling reason to the contrary, to assume that the trial judge has taken the whole of the evidence into his consideration. The mere fact that a judge does not mention a specific piece of evidence does not mean that he overlooked it.
iv) The validity of the findings of fact made by a trial judge is not aptly tested by considering whether the judgment presents a balanced account of the evidence. The trial judge must of course consider all the material evidence (although it need not all be discussed in his judgment). The weight which he gives to it is however pre-eminently a matter for him.
v) An appeal court can therefore set aside a judgment on the basis that the judge failed to give the evidence a balanced consideration only if the judge's conclusion was rationally insupportable.
vi) Reasons for judgment will always be capable of having been better expressed. An appeal court should not subject a judgment to narrow textual analysis. Nor should it be picked over or construed as though it was a piece of legislation or a contract."

Mr Mitcheson said that he had also been referred to paras [46] to [50] of the Supreme Court's judgment in Lifestyle Equities CV and another v Amazon UK Services Ltd and others  [2024] UKSC 8, [2024] 3 All ER 93, [2024] WLR(D) 105, [2024] Bus LR 532:

"[46] This is another important matter, and it is appropriate to summarise the correct approach at this stage. A finding that an activity is or is not targeted at consumers in the UK necessarily involves an evaluation by the judge of a range of different facts and matters. It requires, in other words, a multifactorial assessment of the documents, the evidence and the submissions made by the parties. The evaluation is also one which, when made in that way, the trial judge is peculiarly well placed to carry out.
[47] Conversely, an appeal court is inevitably at a disadvantage, as Lord Hoffmann explained in Biogen Inc v Medeva plc [1997] RPC 1 at 4, and so, where the application of a legal standard such as negligence or obviousness involves no question of principle, but is simply a matter of degree, an appellate court should be very cautious in differing from the judge's evaluation.
[48] We consider that the position was well summarised by Lewison LJ in Fage UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5; [2014] FSR 29; [2014] ETMR 26 in these terms at para 114:

'Appellate courts have been repeatedly warned, by recent cases at the highest level, not to interfere with findings of fact by trial judges, unless compelled to do so. This applies not only to findings of primary fact, but also to the evaluation of those facts and to inferences to be drawn from them. The best known of these cases are: Biogen Inc v Medeva plc [1977] R.P.C. 1; Piglowska v Piglowski [1999] 1 WLR 1360; Datec Electronics Holdings Ltd v United Parcels Service Ltd [2007] UKHL 23; [2007] 1 WLR 1325; In re B (A Child) (Care Proceedings: Threshold Criteria) [2013] UKSC 33; [2013] 1 WLR 1911 and, most recently and comprehensively, McGraddie v McGraddie [2013] UKSC 58; [2013] 1 WLR 2477. These are all decisions either of the House of Lords or of the Supreme Court. The reasons for this approach are many. They include:
i) The expertise of a trial judge is in determining what facts are relevant to the legal issues to be decided, and what those facts are if they are disputed.
ii) The trial is not a dress rehearsal. It is the first and last night of the show.
iii) Duplication of the trial judge's role on appeal is a disproportionate use of the limited resources of an appellate court, and will seldom lead to a different outcome in an individual case.
iv) In making his decisions the trial judge will have regard to the whole of the sea of evidence presented to him, whereas an appellate court will only be island hopping.
v) The atmosphere of the courtroom cannot, in any event, be recreated by reference to documents (including transcripts of evidence).
vi) Thus even if it were possible to duplicate the role of the trial judge, it cannot in practice be done.'

[49] That does not, however, mean the appeal court is powerless to intervene where the judge has fallen into error in arriving at an evaluative decision such as whether an activity was or was not targeted at a particular territory. It may be possible to establish that the judge was plainly wrong or that there has been a significant error of principle; but the circumstances in which an effective challenge may be mounted to an evaluative decision are not limited to such cases. Many of the important authorities in this area were reviewed by the Court of Appeal in In re Sprintroom Ltd [2019] EWCA Civ 932; [2019] BCC 1031, at paras 72–76. There, in a judgment to which all members of the court (McCombe LJ, Leggatt LJ and Rose LJ) contributed, the court concluded, at para 76, in terms with which we agree, that on a challenge to an evaluative decision of a first instance judge, the appeal court does not carry out the balancing exercise afresh but must ask whether the decision of the judge was wrong by reason of an identifiable flaw in the judge's treatment of the question to be decided, such as a gap in logic, a lack of consistency, or a failure to take into account some material factor, which undermines the cogency of the conclusion.
[50] On the other hand, it is equally clear that, for the decision to be 'wrong' under CPR 52.21(3), it is not enough to show, without more, that the appellate court might have arrived at a different evaluation."

Mr Mitcheson stated at [19] that he had borne those principles in mind adding, in the next paragraph, that the hearing officer had had the opportunity to hear and assess the oral evidence of both protagonists and had made findings as to their demeanour and credibility to which he should give appropriate weight.

Jurisdiction

The learned deputy judge said at para [21] that s.7 of the Patents Act 1977 sets out the conditions under which a person may apply for and obtain a patent and that subsections (2) (b) and (4) were of particular relevance to the present dispute:

"7. Right to apply for and obtain a patent.
(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.
(4) Except so far as the contrary is established, a person who makes an application for a patent shall be taken to be the person who is entitled under subsection (2) above to be granted a patent and two or more persons who make such an application jointly shall be taken to be the persons so entitled."

Mr Micheson said that that was all confirmed by Mr Justice Arnold in para [66] of his judgment in KCI Licensing Inc v Smith and Nephew plc [2010] EWHC 1487 (Pat).  He observed that Mr Justice Arnold had been referred to paras [17] to [22] of the House of Lords' decision in Rhone-Poulenc Rorer International Holdings Inc v Yeda Research and Development Co Ltd [2007] UKHL 43; [2008] RPC 1.  There was no dispute that the hearing officer had had power to determine the dispute and make the appropriate orders under s.8 and s.12.

First Ground of Appeal

Bionome argued that s.7 (4) of the Patents Act 1977 established a statutory presumption that could only be overcome by evidence from Dr Clearwater, that Dr Clearwater had not adduced such evidence and had therefore failed to rebut the presumption and that the hearing officer had fallen into error by failing to make a finding to that effect.   The deputy judge rejected that submission at [26]:

"It is correct that the section creates a presumption, but once a prima facie argument has been raised by the claimant, the tribunal should proceed to decide the issue on the balance of probabilities on the basis of the evidence proffered by the parties. That is what the Hearing Officer did in the present case. I reject any notion that s.7(4) creates some sort of additional evidential hurdle or burden for a claimant that goes beyond this. It provides a presumption to be applied by the granting authority, but once a dispute has been initiated the normal civil standard of proof and burden applies. Further, it is clear that the Hearing Officer did not decide the case on the basis of who had satisfied the burden of proof – which is only usually necessary in the absence of evidence. That was not the case here, as both sides had supplied evidence and witnesses. There is nothing in this first argument on appeal."

Second Ground of Appeal

The crux of the appeal was the construction of the collaboration agreement. The dispute between the parties was whether the agreement amounted to no more than an expression of intention to assign the patent rights at some point in the future once certain steps had been carried out or whether it was an agreement assigning or at the very least agreeing to assign the rights without further condition.  Dr Clearwated argued for the first construction adding that those steps had never been carried out.  Bionome argued for the latter.

The deputy judge said the issue turned on the construction of the collaboration agreement approached through the usual principles of contractual interpretation.   He reviewed its provisions between [32] and [40].  He considered the hearing officer's construction between [41] and [49].   He assessed that construction taking account of Bionome's contentions between [50] and [58].  He concluded at [59] that the hearing officer correctly construed the collaboration agreement as not amounting to an assignment or an agreement to assign. As a result, he upheld the hearing officer's decision to add Dr Clearwater as a joint applicant.

Third Ground of Appeal

Having decided the second ground of appeal in Sr Clearwater's favour it was not strictly necessary to consider the third.  As the issue had been argued before him, Mr Mitcheson decided to rule on it,  The hearing officer had held no trust had come into being because Bionome which held the patent applications was not jointly owned.   

Bionome had criticized that finding on the ground that the hearing officer had restricted his consideration to the legal ownership of Bionome and had failed to deal with the beneficial title.   Had the collaboration agreement obliged Dr Clearwater to assign his interest in the invention to the company it contended that the conditions for the creation of a trust would have been established.  

While agreeing that it would have been an error to disregard beneficial ownership and that the hearing officer's reasoning might have been clearer, Mr Mitcheson was satisfied that the hearing officer had not made such an error.  He concluded at [75] that the collaboration agreement did not establish a trust, and nothing that the parties did before the incorporation of Bionome and the filing of the first patent application changed this, either through conduct or by deed.

Respondent's Notice

Having decided the case in Dr Clearwater's favour it was unnecessary to consider the respondent's notice.  Had it been necessary to consider it the deputy judge would have allowed evidence of the grant by Bionome of an exclusive licence to a third party which would have been inconsistent with the collaboration agreement.  He was satisfied that the evidence sought to be adduced met the criteria set out in Ladd v Marshall [1954] 1 WLR 1489 CA. As the exclusive licence came to Dr Clearwater's attention only in July 2024 when the Bionome sought to have it registered, the evidence could not have been obtained with reasonable diligence for the hearing before the hearing officer.

Comment

The only contentious issue of patent law was whether s.7 (4) of the Patents Act raised a presumption and if so its nature and effect.   Both the hearing before Mr Jones and the appeal before Mr Mitcheson demonstrate the proper approach to construing a contract.  There is also guidance on the formation of trusts.   Anyone wishing to discuss this article may call me on 020 7404 5252 during office hours or send me a message through my contact form at all other times.