WHEN PATENT DECISIONS ARE APPEALED; NINJA SWEEPS AWAY FANCIFUL DEFENCE

The IPKat has found two small patent-ish offerings on the free BAILII case access site. They are

Smith International Inc v Specialised Petroleum Services Group Ltd [2005] EWCA Civ 1357, a Court of Appeal decision delivered yesterday by Lord Justice Mummery (Jacob and Neuberger LJJ concurring).

Smith wanted to appeal against a decision that Specialised Petroleum's patent was not invalid for lack of novelty. There was a general prohibition on appeals to the Court of Appeal from the Patents Court on appeal from a decision of the Comptroller, but this case appeared to fall within each of the exceptions to that prohibition under the Patents Act 1977, s.97(3) since

* the Comptroller's decision had been given under s.72 of the 1977 Act and

* Smith was contending case that the decision of the trial judge (Lewison J) was wrong in law as he had misconstrued the patent in suit or the prior art or both.

If the provisions of the Access to Justice Act 1999, s.55 in relation to second appeals, and the Civil Procedure Rules (CPR), r.52.13, applied to the proposed appeal, Smith would need to show that the proposed appeal raised an important point of principle or practice or that there was a compelling reason to grant permission. However, if the Patents Act 1977, s.97(3) and CPR r.52.3 applied, permission could be granted if there was a real prospect of success or some other compelling reason why the appeal should be heard. The Court of Appeal was asked to consider whether the issue was whether s.55 the Access to Justice Act had impliedly repealed or limited s.97(3).

The Court of Appeal granted Smith permission to appeal. In its opinion

* Section 97(3) was a specific procedure laid down by Parliament for patent appeals; it had not been expressly or impliedly repealed by s.55.

* The effect of applying the general requirements of s.55 would be to cancel or render meaningless the power under s.97(3) under which the Patent Court granted permission to appeal to the Court of Appeal.

* It was difficult to imply legislative intention in a general measure that it was intended to repeal an earlier enactment which was particular, especially since the Access to Courts Act expressly repealed a similar provision for appeals from the Conveyancing Appeals Tribunal but said nothing about patent appeals.

* Accordingly "It is therefore unnecessary to consider whether the proposed appeal raises an important point of principle or practice. The application for permission to appeal is granted on the basis that the proposed appeal has a real prospect of success" (para.27).

The IPKat thinks this must be right, both in principle and in terms of the interpretation of the relevant provisions.

* * * * * * * * * * * * * * * * * * * * *

Finecard International Ltd (t/a The Ninja Corporation) v Urquhart Dyke & Lord) and Ajello [2005] EWHC 2481 (Ch), a Chancery Division ruling of Mr Justice Peter Smith on the Tursday of last week.

In these proceedings Finecard sought an order that a defence raised by Urqhart, a firm of patent agents, be summarily dismissed on the basis that it had no real prospect of success and there was no other compelling reason why the issue should have to wait until trial before it could be disposed of. In 1997 Finecard, a client of Urquhart, was granted an exclusive licence by Spring Form to exploit a patent in England and Wales, the licence being registered over a year later. In 1999 Finecard entered into a new exclusive licence agreement with Spring Form to exploit the same patent but on terms that granted Finecard increased rights. Urqhart, having been asked by Finecard to register the licence as soon as possible, did do two years later.

Under the exclusive licence Finecard, who as exclusive licensee had a statutory right to bring proceedings for any infringement of the patent, did so at a time when the licence had not yet been registered. At the infringement hearing the judge held that the 1999 agreement did not amend the 1997 agreement but replaced it. Accordingly Finecard could claim damages or an account of profit only during the period from when the 1997 agreement had been registered until the 1999 agreement was made. The court also held that the 1999 agreement contained a Californian choice of law clause.

Urqhart submitted that, since only the 1997 agreement had a Californian choice of law clause (the 1999 agreement applying New York law), the judge was wrong as he had not been told about the status of New York under the 1999 licence. If he had he known the true position, he would not have concluded that the 1997 agreement was of no effect as being substituted by the 1999 agreement. This being so, since Finecard had become an exclusive licensee by virtue of the 1997 agreement, which initially governed the relationship between the parties, and remained an exclusive licensee, the fact that it remained an exclusive licensee by virtue of the 1999 agreement meant that its interest in the patent did not have to be registered.

Peter Smith J granted Finecard the order it sought. He concluded as follows:

* If the judge in the earlier proceedings had he been told the New York position, he would not have come to a different conclusion as regards the two-year period when the licence had not been registered. Since the New York law only provided that the 1999 agreement operated from 1999, the judge's conclusion with regard to claims for infringement in the period between the making of the 1999 agreement and its registration would have been the same.

* The purpose of s.68 of the Patents Act 1977 was to provide a regime whereby people who asserted property rights in patents registered their rights so as to put the world on notice of their existence. The wording of s.68 was plain: it was the
instrument or other transaction or event upon which a person relied to enforce
his rights that had to be registered, not the status of the parties.

* The 1999 agreement granted an exclusive licence for the period starting with its date of commencement. This being so, Finecard had destroyed Urquhart's defence
since it could not be respectably argued that s.68 had the effect suggested by
Urqhart.

* The lack of registration put Finecard in a situation that the act of registration was designed to avoid, i.e. the creation of uncertainty as to who was entitled to enforce the patent.

The IPKat thinks this is right too. The defence was artistically conceived and well arrgued, but it was never going to survive a reality check.

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