The Trial- Hill v Touchlight Genetics

 

Author Ciencias Españolas  Licence CC BY-SA 3.0 Source Wikipedia Commons

 

Jane Lambert

Patents Court (Michael Tappin KC sitting as a judge of the High Court) Hill v Touchlight Genetics Ltd and others [2025] EWHC 107 (Pat) (27 Jan 2025)

I previously discussed this litigation in Patents - Hill v Touchlight Genetics Ltd. on 11 July 2024.  I noted that it was an entitlement action, that is to say, a claim to ownership of certain patents and patent applications.   It was also an infringement claim in that the claimant alleged that the defendants had infringed the patents that she claimed. There was also a contingent counterclaim.  The action came before Michael Tappin KC sitting as a deputy judge of the High Court between 25 and 28 Nov 2024 and 3 to 4 and 10 to 11 Dec 2024.   At para [331] of his judgment in Hill v Touchlight Genetics Ltd and others [2025] EWHC 107 (Pat), which he handed down on 27 Jan 2025, he dismissed the claim and held that the counterclaim did not arise.

Parties

The claimant was Dr Vanessa Hill. She claimed to have invented a process for making dbDNA ("doggy bone DNA") known as the "Close-Ended Process" and a version of the Close-Ended Process where the starting material is doggybone DNA that is referred to as "the dbDNA Template Process".  Between November 1998 and April 2006, she held a post-doctoral position at Royal Holloway University.  From April 2006 to July 2007, she collaborated with a theoretical physicist on a project in an honorary position at Royal Holloway.

The first defendant was Touchlight Genetics Limited ("TGL"), an English company incorporated on 8 Nov 2007 to exploit Dr Hill's ideas.   She was appointed a director of the company on 16 Jan 2008 and was employed as its Chief Scientific Officer between early Sept 2008 and 20 Aug 2009.  She resigned as the company's director on 9 Nov 2009.  The second defendant, Touchlight IP Limited ("TIL"), was incorporated on 20 Oct 2014. It held the patents in suit.  The third defendant, Touchlight DNA Services Limited, was incorporated on 7 Dec 2015.  The deputy judge referred to the defendants collectively as "Touchlight." 

The Claim

Dr Hill claimed to have invented the Close-Ended Process and the dbDNA Template Process before her appointment as TGL's Chief Scientific Officer. Her employment contract required her to assign certain rights, but she argued that certain processes were excluded from the assignment.

TGL filed  PCT/GB2010/000165 for Dr Hill's invention on 5 Aug 2010, claiming priority from 30 Jan 2009.   The following patents and patent applications were derived from that PCT application:

• EP 2 391 731  B1 for the production of closed linear DNA; 
• EP 2 612 925  B1 for a kit for the production of closed linear DNA; 
• EP 3 150 722 B1 for the production of closed linear DNA;  
• US 2022/0372565 A1 for DNA vaccines; 
• CN 104911177 A for a kit of in vitro acellular process for the production of closed linear deoxyribonucleic acid DNA; and 
• HK 1215045 A1 for a kit of in vitro acellular process for the production of closed linear deoxyribonucleic acid DNA.

Dr Hill claimed to be jointly entitled to the patents and patent applications and sought registration as proprietor and a retrospective exclusive licence to her in respect of the operation of the processes between 20 and 45 degrees Celsius.   On that basis, she contended that her rights had been infringed for which she sought financial relief.

The Defence

Touchlight argued that Dr Hill had invented the processes after she had become an employee.  Alternatively, her service contract required her to assign those inventions to TGL if they had been devised before the agreement came into effect.  They also contended that Dr Hill's conduct and their reliance upon it gave rise to an estoppel preventing her from asserting any such rights as she might otherwise have had in the processes.  They pleaded that her claim was statute-barred. They submitted that Dr Hill's claims for financial relief must fail either because such relief would amount to unjust enrichment or because she had breached her duties as a director, which was the subject of a counterclaim.

The Issues

Mr Tappin directed himself at para [8] of his judgment that the first issue to be determined was whether Dr Hill had devised the Close-Ended Process and the dbDNA Template Process before or after her employment contract took effect.   If that issue were to be decided against her, her claim would fail.  If it were determined in her favour, it would then be necessary to decide whether her contract was effective to transfer to TGL all her rights or only those that had not been excepted from the assignment.  If the former, then again her claim would fail. If Dr Hill were to succeed on both those issues, then it would be necessary to consider Touchlight's estoppel case. If that failed, then it would be necessary to consider Touchlight's limitation defence and the relief claimed by Dr Hill, including her claim to financial relief and/or restitution, and Touchlight's arguments about the circuity of actions and the counterclaim.

The Timing Issue

The learned deputy judge referred to the question of whether Dr. Hill had devised the Close-Ended Process and the dbDNA Template Process before or after her employment contract had taken effect as the "timing issue."   

Before considering the evidence, Mr Tappin reminded himself of Mr Justice Leggatt's dicta in paras [15] and [23] of his judgment in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm), [2020] 1 CLC 428 and between paras [65] and [70] of his judgment in Blue v Ashley [2017] EWHC 1928 (Comm) on evidence based on recollection between para [25] and [28].  He also recalled Lord Justice Floyd's observations on that dicta judgment in para [88] of his judgment in Kogan v Martin [2019] EWCA Civ 1645, [2020] ECDR 3, [2020] EMLR 4, [2020] FSR 3. He directed himself at [28] that when assessing the evidence of witnesses of fact, he needed to consider it in the light of the available documentary evidence (with the caveat that there is a distinction to be made between commercial cases with abundant documentation and other cases with very little), any facts which may be agreed and bear in mind the risk of their evidence being affected by the passage of time and the process of litigation, their motives both at the time and at trial, and any inherent probabilities.

Mr Tappin discussed Dr Hill's evidence between paras [29] and [32], the evidence of Touchight's witnesses of fact in paras [33] and [34] and the evidence of the parties' experts between [35] and [40]. He described the Close-Ended and dbDNA Template processes between [41] and [49].  He summarized Dr Hill's evidence as to how she came to invent and disclose the processes between [50] and [65]. He noted at para [65] that his next step was to work through the contemporaneous documents in chronological order to address Dr Hill's case.  He discussed key documents between [66] and [183] and whether anyone other than Dr Hill contributed to her inventions between [184] and [207].

After taking into account all relevant documents and oral testimony, the deputy judge concluded at para [209] that it was more likely than not that the Close-Ended Process and the dbDNA Template Process were conceived after early September 2008, specifically in early November 2008. Indeed, in his lordship's judgment, that was highly likely to have been the case.  He listed his reasons in para [210].  As Dr Hill had been TGL's director and employee at that time, her claim failed.

The Contract Issue

The deputy judge called the question of whether Dr. Hill's service contract required her to assign her rights to inventions that she had to TGL the "contract issue."   As he had decided the timing issue in Touchlight's favour, he did not need to determine the contract issue.  He did so because it had been fully argued by the parties.

After consodering the judgments of the Supreme Court in Rainy Sky SA v Kookmin Bank [2012] 1 All ER 1137[2012] 1 Lloyd's Rep 34, 138 Con LR 1, [2011] UKSC 50, [2012] 1 All ER (Comm) 1, [2012] ICR 1, [2011] WLR 2900, [2012] BLR 132, [2012] Bus LR 313, [2011] 1 WLR 2900, [2011] 2 CLC 923, [2011] CILL 3105 Arnold v Britton [2015] 2 WLR 1593, [2015] AC 1619, [2015] UKSC 36, [2016] 1 All ER 1, [2015] HLR 31, [2015] WLR(D) 247 (in particular paras [15] to [21] of Lord Neuberger's) and Wood v Capita Insurance Services Ltd 2017] CILL 3971, [2017] 4 All ER 615, 171 Con LR 1, [2017] AC 1173, [2017] WLR(D) 220, [2017] UKSC 24, [2017] 2 WLR 1095 and of the Court of Appeal in ABC Electrification Ltd v Network Rail Infrastructure Ltd [2021] BLR 97, [2021] TCLR 1, [2020] EWCA Civ 1645, 193 Con LR 66, Mr Tappin listed the following principles in para [213]:

"i) The court's task is to ascertain the objective meaning of the language which the parties have chosen in which to express their agreement.
ii) The court does so by focusing on the meaning of the relevant words in their documentary, factual and commercial context. That meaning has to be assessed in the light of (1) the natural and ordinary meaning of the clause; (2) any other relevant provisions of the contract; (3) the overall purpose of the clause and the contract; (4) the facts and circumstances known to or assumed by the parties at the time that the document was executed; and (5) commercial common sense.
iii) The court should disregard subjective evidence of any party's intentions.
iv) In striking a balance between the indications given by the language and the implications of the competing constructions, the court must consider the quality of drafting of the clause.
v) Textualism and conceptualism are tools available to the court to ascertain the objective meaning of the language which the parties have chosen to express their agreement. The extent to which each tool will assist the court in its task will vary according to the circumstances of the particular agreement.
vi) Where there are rival meanings, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other.
vii) Commercial common sense is not to be invoked retrospectively. It is relevant only to the extent of how matters would or could have been perceived by the parties, or by a reasonable person in the position of the parties, as at the date of the contract. The court must be alive to the possibility that one party may have agreed to something which with hindsight did not serve its interest.
viii) When interpreting a contractual provision, the court can only take into account facts or circumstances which existed at the time the contract was made, and which were known or reasonably available to both parties."

Dr Hill's service contract was made on 8 July 2008 and came into effect when TGL received £300,000 equity investment in early September. Clause 11.2 of the agreement provided:

"[Dr Hill] acknowledges that [TGL] is the sole owner of any and all Intellectual Property Rights and insofar as any of the Intellectual Property Rights are not vested in [TGL] and in consideration of the salary payable to [Dr Hill] under the terms of this Agreement, [Dr Hill] assigns to [TGL] with full title guarantee, the entire copyright (including future copyright) and all other rights and interests of whatsoever nature in and to the Intellectual Property Rights and any products of the Employment together with the right to take proceedings and recover damages and obtain all other remedies for past infringements in respect thereof throughout the world for the full period of copyright (and of any analogous rights) and all revivals renewals extensions and novations thereof and thereafter (so far as possible) in perpetuity, together with the rights to the same in any manner and through any media as [TGL] shall in its absolute discretion decide."

"Intellectual Property Rights" were defined as:

"all rights in or arising from industrial and intellectual property rights including without limitation patents trade marks and/or service marks (whether registered or unregistered) registered designs unregistered designs copyright and database right and rights of a similar nature by whatever name they are known in any country of the world together with any applications for any of the foregoing in any part of the world and the copyright in all drawings plans specifications designs and computer software and all know-how and confidential information created by [Dr Hill] in the course of the Employment together with all such rights, applications, copyright, know-how and confidential information relating to the Projects owned or created by or in the knowledge of [Dr Hill] prior to the commencement of the Employment".

"Projects" were defined as:

"the projects based on the use of thermophilic bacteria described in the Information Memorandum issued by [TGL] in April 2008 and any other projects which [TGL] and [Dr Hill] agree should be included within this definition".

The "Information Memorandum" referred to two specific projects which were mentioned in para [222]:

"(1) Novel gene based treatments for bacterial infection.
(2) Novel processes for the rapid production of superior DNA vaccines."

The novel gene based treatments for bacterial infection were to be the lead project and would commence as soon as laboratory facilities had been established.

Clause 8.1 prohibited Dr. Hill from working for any other undertaking during the course of her employment, subject to Clause 8.2, which entitled her to be involved in academic research in relation to matters other than the Projects, provided that this did not prevent her from properly discharging her duties under the agreement.

Clause 11.1 stated that:

"[Dr Hill] acknowledges that she is in a position of special responsibility and under a special obligation to further the interests of [TGL]. Accordingly any discovery, invention, secret process or improvement in procedure discovered, invented, developed or devised by [Dr Hill] during the Employment (and whether or not in conjunction with a third party) and in the course of [Dr Hill's] duties affecting or relating to the Projects or (subject to Clause 11.7) otherwise relating to the business of [TGL] or any other Group Company or capable of being used or adapted for use in it, shall immediately be disclosed by [Dr Hill] to [TGL] and subject to such rights as [Dr Hill] may have under the Patents Acts 1977 and 2000 will belong to and be the absolute property of [TGL] and shall not be disclosed to any other."

Clause 11.7 recorded that:

"It is accepted that [Dr Hill] will continue to be involved (outside the course of the Employment) in academic research in relation to matters other than the Projects and it is agreed that any intellectual property rights arising in relation to such research will belong to [Dr Hill]."

Mr Tappin set out his findings as to the factual matrix as of 8 July 2008 (that is to say, the circumstances in which the service contract was made) between paras [225] and [233].  He directed himself at [249] that his task was 

"to ascertain the objective meaning of the language which the parties have chosen in which to express their agreement, by focussing on the meaning of the relevant words in their documentary, factual and commercial context, having regard to (1) the natural and ordinary meaning of the clause; (2) any other relevant provisions of the contract; (3) the overall purpose of the clause and the contract; (4) the facts and circumstances known to or assumed by the parties at the time that the document was executed; (5) commercial common sense."

He concluded that the natural and ordinary meaning of clause 11.2 is that it assigned to TGL all Dr Hill's rights relating to the Projects, being those based on the use of thermophilic bacteria described in the Information Memorandum. Neither the Service Agreement itself nor the description of the projects in the Information Memorandum limited those rights. The overall purpose of the clause and the service contract was to ensure that TGL had the rights which it needed to take the Projects forward, including, but not limited to, rights which could form the basis of patent protection.  For those reasons, the deputy judge agreed with Touchlight's construction of the agreement. 

Estoppel

Had Dr Hill succeeded on the timing and contract issues, Touchstone would have contended that Dr  Hill was estopped from denying that her rights in the Close-Ended Process and the dbDNA Template Process had been assigned to those defendants.  They relied on four types of estoppel: estoppel by convention, estoppel by acquiescence, estoppel by representation and proprietary estoppel.

The deputy judge said at [256] that it was convenient to structure his consideration of the facts by reference to the three limbs of any estoppel case which were identified by Touchlight:

"Limb 1:
- Estoppel by convention: Was there a common assumption as to the rights enjoyed by Touchlight which 'crossed the line' between the parties?
- Estoppel by representation/proprietary estoppel: Was there a representation (or implied promise) emanating from Dr Hill (whether by words or conduct, and whether explicit or implicit) as to the rights enjoyed by Touchlight?
- Acquiescence: Did Dr Hill know that Touchlight was acting in the belief that it was entitled to apply for and hold the patents in issue, and did she stand by in silence when she was under a duty to speak up?

Limb 2: Did Touchlight rely upon Dr Hill/did Dr Hill induce Touchlight to alter its position?

Limb 3: Has Touchlight suffered detriment by reason of the matters set out above?"

Mr Tappin considered the evidence on Limb 1 between para [258] and para [302].  Hr found that Dr Hill shared the view that TGL owned all the rights in the inventions that were disclosed and claimed in the priority application and the PCT application up to 2012. It was only in statements made in February and March 2012 that she made clear to TGL that she no longer held that view and instead asserted a claim to inventions operated under mesophilic conditions.

Limbs 2 and 3:   The learned deputy judge considered the evidence on those limbs between [305] and [315]. He held in [310] that TGL had relied on Dr Hill's approval of the filing of a patent application on 30 Jan 2009 and that TGL incurred expenses in terms of staff, premises and laboratory expenses, as well as patenting until early 2012.  He left several issues unresolved, such as whether the effect of estoppel would be permanent or suspensory, but he believed his findings would be sufficient to enable the Court of Appeal to determine any estoppel issue and formulate the appropriate relief.

Limitation

Touchlight relied on s.37 (5) and (9) of the Patents Act 1977 in response to Dr Hill's claims to  EP 2 391 731  B1,  EP 2 612 925  B1 and EP 3 150 722 B1.  As it was not necessary for Mr Tappin to decide the point, he declined to do so.   In case there was an appeal, he held that the words  "unless it is shown that any person registered as a proprietor of the patent knew at the time of the grant or, as the case may be, of the transfer of the patent to him that he was not entitled to the patent" required Dr Hill to show that TGL or TIL knew that they were not entitled to those patents.   In his view, she did not come close.

Unjust Enrichment

 Dr Hill claimed a share of the licence fees or royalties that third parties had paid to TGL or  TIL for licences that they had granted on the basis that she was a joint proprietor of those patents.  She argued that such payments were made under a mistake of fact and/or law, namely that TGL and/or TIL were the sole proprietors of the Patents and in a position to grant such licences without her consent.  The deputy judge referred to Richard Meade QC's decision in BSI Enterprises Ltd v Blue Mountain Music Ltd [2014] EWHC 1690 (Ch):

"...the Claimants' claim in restitution, if it exists at all, is right at the fringes of a developing part of the law and I do not think it would be right or useful to make a decision about the boundaries of such a claim on the basis of the somewhat incomplete argument I have received, in circumstances where I have already dismissed the Claimants' claim on conventional grounds."

Mr Tappin decided to take the same course in view of his findings on the timing and contract issues.

Counterclaim

Touchlight argued that if Dr Hill's actions were to succeed, they would have a counterclaim for breach of her duty as director of TGL and unjust enrichment.  Neither party addressed Mr Tappin on the law.   As he had decided the timing and contract issues, he did not consider it necessary to lengthen his judgment by addressing the contingent counterclaim.

Comment

This was an unusual entitlement action in several respects.  First, it was contested in the Patents Court rather than before a hearing officer in the Intellectual Property Office.  Secondly, there was no dispute as to the identity of the inventor.  The main issues were whether she devised them while she was an employee of a company that she helped to set up to exploit her inventions and whether she had assigned any of the inventions that she may have created before she became an employee.  Thirdly, there were issues in this case, such as estoppel, circuity and limitation, that occur rarely in proceedings of this kind.  

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