For the half-year to 31 December 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Rebecca Gulbul, Lucas Michels and Marie-Andrée Weiss.

Regular round-ups of the previous week's blogposts are kindly compiled by Alberto Bellan.

Friday, 4 December 2009

Mann interprets vegislation in blood-test patent appeal

'Who is that person?' was the question before the court in Shanks v Unilever plc and others [2009] EWHC 3164 (Ch), a decision of Mr Justice Mann in the Patents Court, England and Wales, yesterday. This dispute involved compensation for employee inventors whose patents are particularly beneficial to their employers, a topic which is again under scrutiny (earlier this year the quantum of compensation was the subject of Kelly and Chiu v GE Healthcare, noted by the IPKat here). Yesterday's decision however hinged on the interpretation of the Patents Act 1977, s.41 which provides, in relevant part:

"An award of compensation to an employee ... in relation to a patent or an invention shall be such as will secure for the employee a fair share (having regard to all the circumstances) of the benefit which the employer has derived, or may reasonably be expected to derive, from the patent or from the assignment, assignation or grant to a person connected with the employer of the property or any right in the invention or the property in, or any right in or under, an application for that patent ...
(2) ... the amount of any benefit derived or expected to be derived by an employer from the assignment, assignation or grant of–(a) the property in, or any right in or under, a patent for the invention or an application for such a patent; or
(b) the property or any right in the invention; to a person connected with him
shall be taken to be the amount which could reasonably be expected to be so derived by the employer if that person had not been connected with him".
In 1984 Shanks came up with an invention leading to a patent for measuring activities which was later used in blood testing kits for diabetics. In June of that year his employer, Unilever Central Resources, transferred the patent to Unilever plc for a nominal consideration. After an initially slow start, Unilever plc licensed its use to various persons and derived a satisfactory chunk of licence royalties in the region of £23m.

Having commenced proceedings for compensation under the Patents Act 1977, s.40, Shanks applied to admit a supplementary statement of case that required consideration of the true interpretation of the words 'that person'. According to the hearing officer, 'that person' referred back to a connected person, and thus referred to that specific person, modified only by considering what that specific person would have done if such a person had not been connected with the employer. He added:
"If a hypothetical person had been intended, the legislator could have said "a person" instead of "that person". As a matter of English, the use of the word "that" would seem to clearly indicate that the specific person previously identified is the one referred to".
He then refused the application either on the basis of treating the application as an application for an amendment which ought not to be allowed because it was unsustainable, or by the striking out of a claim that could not be maintained in law. The appellant appealed.

The issue for determination was whether the deemed counterparty to the hypothetical transaction was the actual counterparty with the connection element removed, but with all the other attributes of that person in place, or whether it should simply be treated as being a normal unconnected arms-length purchaser with no special attributes.

Mann J allowed the appeal. In his view Parliament, in using the formulation in question, had intended to refer to a notional non-connected counterparty operating in the appropriate market at the appropriate time. That understanding was not inconsistent with the assumption, in the case of other actual transactions leading to benefits, that an employer was likely to want to exploit the patent properly and not give away its benefits, even though the words used did not impose a positive obligation on the employer to do so. He added that the words 'that person' could not sensibly be taken as being the actual purchaser: to do so would risk introducing absurdity into the hypothesis, leading to absurdity in the result.

The IPKat thinks the judge got it right in terms of reaching a sensible result, but wrong in terms of imputing any sort of intention to the legislature at all. Anyone who can remember the events leading up to the inclusion of an employee invention code in the Patents Act 1977, and who can recall the reasons why it took the form it did, will know that the legislature had little or no idea what it was doing and may have passed the whole of sections 39 to 42 in a zombie-like legal vegitative state. Merpel says, is there a word for this -- vegislation, perhaps?

Blood tests here
Test your own blood here
Blood pudding recipe here
Cat blood donors here

2 comments:

Anonymous said...

caveat vendor! ... so, we might be soon seeing precautionary clauses in contracts relating to the disposal of IP which would try to allow the original "employer" to recover (from the purchaser of the IP) any later award to his inventor/employee, based on the quantum of profit from the purchaser's exploitation of the IP!

Anonymous said...

appeal just decided on this

http://www.bailii.org/ew/cases/EWCA/Civ/2010/1283.html

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