England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		23/11/2006

Mr Justice Mann :

1. As recorded in my principal judgment in this case, this is a claim under section 37 of the Patents Act 1977 for a declaration that the claimant is entitled to be registered as proprietor of a patent. That issue had been determined against the claimant in earlier proceedings, but the claimant sought to avoid the consequences of that by alleging that the earlier judgment on the point was obtained as a result of perjured evidence with which the defendant was complicit. I held that there was indeed perjury, but the defendant was not sufficiently complicit with that perjury to be affected by it. In those circumstances the claim for the declaration failed.
2. The claimant ("Cinpres"), represented again by Mr Peter Prescott QC, now seeks to make a further claim under section 37 in relation to the patent notwithstanding that it has failed to obtain the declaration of sole ownership that it sought in the action. Mr Prescott says that in the circumstances it is open to me, under section 37, to grant a licence to the claimant "to continue doing what it has been doing in the past", to quote from Mr Prescott's skeleton argument. He says that Cinpres has been practising or licensing the invention (or variations of it) ever since 1985. Section 37 is concerned not only with ownership; it also embraces claims to licences. It would be fair in this case, in the light of the "theft" of the patent, to grant a licence. The breadth of the jurisdiction under section 37 is said to be demonstrated by Yeda Research v Rhone-Poulenc [2006] EWCA Civ 1094 at para 13:

"This does suggest that there may be a jurisdiction to grant even an ousted patentee a licence. But, even if there is, it would often not be a proper exercise of the Comptroller's discretion, having decided that a person had no entitlement whatsoever to a patent which he had applied for in breach of someone else's legal rights, to decide that nonetheless that person (or his licensee) should have a licence under the patent. Things may, I suppose, be different if the ousted patentee has in good faith made a considerable investment in the invention, particularly if the true owner had stood by for a number of years allowing this to happen."

3. Melea responds to this by making three points. First, it says that the essence of my principal decision is that Cinpres is bound by the estoppels arising out of the 1996 decision. That includes the finding about whether the invention had been "stolen". It is therefore not open to Cinpres to say that the invention has nonetheless been stolen so it should be entitled to at least a licence. In other words, the estoppels operate to prevent the grant of a licence as much as to prevent a declaration that Cinpres was entitled to the patent. Second, it says that the claim for a licence ought to have been pleaded, and it was not, so significant evidence was not led. Indeed, not only was a claim to a licence not pleaded, it was actually amended out at an earlier stage of the action. To allow it to be reintroduced would offend against the principles in Henderson v Henderson (1843) 3 Hare 100. Third, section 37 would not allow the grant of a licence anyway. Entitlement claims have to be founded on a breach of a right and no such right has been infringed in the present case (in the light of my finding that the previous 1996 decision stands and binds). There are no parallels with Yeda, and the real answer to the entitlement of an ousted patentee is sections 38(3) to 38(5).
4. Cinpres's riposte to this is that there is no issue estoppel as to whether Mr Hendry "stole" the invention because it was open to a party to dispute a decision which would otherwise give rise to an issue estoppel if further material relevant to the correctness of the previous decision had become available and would not previously have been revealed by due diligence – Mills v Cooper [1967] 2 QB 459. Mr Hendry's perjury could not have been discovered before he admitted it. The pleadings point is said to be a bad one because it is open to the court to allow an amendment until the final order is actually drawn (which it has not been, in the present case), and in any case this is an odd point for Melea to take bearing in mind it was itself allowed at the trial to amend to introduce a case of joint entitlement on terms that that point would, if necessary, be decided after judgment on the perjury point. On Melea's third point, a breach of right is necessary only to establish entitlement; it does not mean that a licence cannot be granted – see Hughes v Paxman [2006] EWCA 818. Cinpres is still claiming a proprietary interest and therefore comes within the wording of section 37.
5. The starting point for resolving this dispute seems to me to be to consider the effect of section 37 itself. It reads as follows (so far as material):

"(1) After a patent has been granted for an invention any person having or claiming a proprietary interest in or under the patent may refer to the comptroller the question –

(a) who is or are the true proprietor or proprietors of the patent;

(b) whether the patent should have been granted to the person or persons to whom it was granted;

(c) whether any right in or under the patent should be transferred or granted to any other person or persons;

and the comptroller shall determine the question and make such order as he thinks fit to give effect to the determination.

(2) Without prejudice to the generality of subsection (1) above, an order under that subsection may contain provision –

(a) directing that the person by whom the reference is made under that subsection shall be included (whether or not to the exclusion of any other person) among the persons registered as proprietors of the patent;

(b) directing the registration of a transaction, instrument or event by virtue of which that person has acquired any right in or under the patent;

(c) granting any licence or other right in or under the patent;

(d) directing the proprietor of the patent or any person having any right in or under the patent to do anything specified in the order as necessary to carry out the other provisions of the order."

6. It seems to me that its principal purpose is to resolve conflicts between genuine proprietary claims. Entitlement is dealt with in sub-section (1). Subsection (2) gives examples of the relief available to someone who has established that they come within those entitled by subsection (1). The first question is, which persons fall in that category?
7. First, sub-section (1) enables relief to be given to adjust the position between those "having" proprietary claims. That is all understandable at that level. If those sharing an interest in property cannot agree what should happen to or in relation to it, the Comptroller decides the question and is given a reasonably free hand in deciding what to do. If I am allowed to invoke a parallel, there is a clear parallel in courts of equity giving directions in relation to property owned jointly or in common. This is what happened in Hughes v Paxman, and Jacob LJ drew attention to the parallels with general property co-ownership law in paragraph 17 of his judgment.
8. That does not help much in the present case, because for present purposes Cinpres does not have a proprietary interest in the property. However, the sub-section also provides for those "claiming" a proprietary interest as well. Cinpres makes its claim because it is a person who claims to have an interest in the patent. Again, there is a level at which it is plain the jurisdiction operates beneficially and sensibly in relation to claims. Where there is such a claim, the Comptroller determines the claim, and where the claim is somehow held to be good, he can make orders which give effect to that claim and adjusts matters between the parties accordingly. This may, I suppose, involve giving one party the patent and the other a licence – see subsection (2)(c).
9. But that does not provide assistance to Cinpres in this case, because that scenario presupposes that the claim has been held to be good, at least to some extent. That does not apply in the present case because the estoppels arising out of the 1996 decision mean that the claim to the patent is bad. Melea is entitled to the patent, and Cinpres is not. That is the issue that was litigated, and which I decided against Cinpres. If it is to succeed, therefore, Cinpres must be able to say that it was a claimant, its claim has failed but nevertheless it is entitled to ask for, and the Comptroller is entitled to give it, a licence under subsection (2)(c).
10. I do not consider that section 37 works like that. For a claimant to an interest to be able to have a remedy it must have some element of legitimate claim. If it is determined not to have such claim then section 37 does not give jurisdiction to give some sort of consolation prize because fairness demands it. I think that the matter can be tested in this way. Suppose that in the present case Cinpres had assessed matters and realised that, for the reasons that I have given in my judgment, a claim to the patent would fail because of the 1996 patent, so it did not try to assert such a claim. Suppose that it then nonetheless went straight to section 37 and asked for a licence because Mr Hendry had "stolen" its patent. Would it be able to make such a claim? In my view it would not. It would not be claiming a proprietary interest in the patent, and therefore would not come within the opening words of the section. It would be making its application on the footing that it could not claim a proprietary interest. That demonstrates why it would not qualify.
11. That being the case, does it make a difference that it made a claim and failed? I do not see why it should. The purpose of the section is to give effect to claims to a proprietary interest so far as sustainable. If the claims are held to be bad, then the applicant ceases to be a claimant for these purposes, and section 37 is not available to it. Once it is held that the applicant has no claim he falls outside the section in the same way as one who does not assert the claim in the first place. That seems to me to reflect the wording and the logic of the section. It also prevents prizes being available to those who have the nerve to run a bad claim but not to those who are sensible enough not to.
12. In reaching this conclusion I have, of course, borne in mind what Jacob LJ said in Yeda, cited above. I do not think that that compels me to a contrary conclusion. First, what he said was very guarded – he refers to a "suggestion" that there may be jurisdiction to grant an ousted patentee a licence, and goes on to consider the position "even if there is" such a jurisdiction. That is nothing like a finding that such a jurisdiction exists. Second, he is considering the position of an ousted patentee, not a person who has been determined to have no proprietary interest at all; though I accept that this distinction may not be particularly relevant since a patentee who is ousted because he should never have had the patent in the first place may be in the same position as a claimant who turns out not to have claim. Third, and more importantly, his last sentence indicates that he may be thinking about ousted patentees who have managed to mount a claim to a form of interest, because it outlines a set of facts which could well give rise to an estoppel which could give rights akin to proprietary rights in other contexts if not in the context of patents. If that is right, then the ousted patentee would to that extent be a genuine claimant with a genuine proprietary, or perhaps quasi-proprietary claim.
13. The effect of this is that Cinpres cannot bring itself within section 37 so as to be able to claim a licence notwithstanding the failure of its proprietary claim. Once its proprietary claims fails, albeit because of an estoppel, it ceases to be a claimant and the rest of the section is not available to it. I would add that its position is not affected by the use of emotive words like "stealing" in relation to this patent.
14. This conclusion makes it unnecessary to consider the pleading point which Mr Purvis takes against Cinpres, but I will deal with it shortly. He points out, correctly, that this alternative claim is not pleaded, and only emerged after the judgment. This is rendered all the more striking by the fact that a claim to a licence originally appeared in these proceedings (it was a claim to a perpetual royalty free licence with the right to grant sub-licences) and was taken out by amendment before trial. Even now there is no pleading, and no suggestion has been made as to what the terms of the licence should be. In other words, it is said to be far too late to take the point now.
15. I think that Mr Purvis is right about this. It is too late to introduce (or re-introduce) this point. It was said by Mr Prescott in his submissions that Cinpres has been practising this invention ever since 1985. However, there was little or no evidence about that. There was no evidence about what the significance of this licence was to the business of either party, and nothing on which I could form a view as to what licence, if any, was appropriate if I had jurisdiction to order one. To consider that would involve a further hearing with further evidence. It is too late to seek to do that now, at this stage of the action when the argument is turning on the consequences of my judgment. If it was to be raised it ought to have been raised before. The difficulties are compounded by not knowing what the target is in terms of the licence said to be required (which is another aspect of the problems arising because the point has not been pleaded).
16. I do not think it necessary to consider the arguments based on estoppel, and I shall not do so.