PATENT LICENCE RECTIFIED FOR "UNILATERAL MISTAKE"

QR Sciences Ltd v BTG International Ltd, decided today by Mr Justice Park in the Chancery Division (noted in the subscription-only All England Direct), involves a point of construction of a patent licence. BTG acquires and exploits intellectual property and technology rights, especially patents. By an agreement in September 2002 it granted to QR, an Australian company, an exclusive licence to a large portfolio of patents spread across many different countries. By clause 14(4) QR secured the right to the assignment of the patents in certain situations. In March 2004 BTG told QR it was negotiating to sell or assign the patents to a third party. In an action brought by QR, issues arose as to

(i) whether as a pure matter of contractual construction of clause 14(4) BTG's negotiations with the third party triggered QR's right to sue;

(ii) whether clause 14(4) should be rectified so that QR's rights under it arose in circumstances where BTG planned to effect a commercial assignment of the patents as well as in circumstances where BTG was proposing to abandon the patents;

(iii) whether either of two proposals which BTG subsequently made to QR in March 2004 were sufficient to discharge BTG's contractual obligation and to satisfy QR;s contractual rights.

QR claimed that if, as a matter of construction, the clause provided obliged BTG to offer it a patent only in circumstances where it was proposing to abandon the patent, then that was a mistake, that the subclause was intended to apply at all times during the continuance of the licence and that the clause should be rectified so as to have that meaning.

Mr Justice Park held that, as a matter of construction, BTG's negotiations with the third party did not trigger any rights under the sub-clause. Such rights would have arisen in QR's favour if BTG had planned to abandon the patents, but not arise where BTG was proposing to assign them. However, QR was entitled to an order for rectification on the grounds of unilateral mistake. Finally, the March 2004 proposals were not really offers in a contractual sense: they were expressly made subject to contract and were not capable of being accepted so as immediately to create binding contracts.

The IPKat is a little cagey about rectification being ordered for unilateral mistake and looks forward to reading exactly what the trial judge had to say, once the full text is available. Merpel has just come up with a theory: interpretation cases in patent law, whether it's patent claims or patent licences that are being interpreted, are caused by someone not saying what they mean, or not meaning what they say. So why don't we all say what we mean in the first place, before we get to court ...?

Other QRs here , here and here