Daniel Alexander KC says "no" on indemnity costs, blanket confidentiality orders and permission to appeal in Oxford University Innovation dispute

The AmeriKat ignoring you after being told
"no"

A few weeks ago, the IPKat reported on the decision in Oxford University Innovation v Oxford Nanoimaging [2022] EWHC 3200 (IPKat report here).  In that case (at a whopping 651 paragraphs), the Court held that students can, in certain situations, be “consumers” vis a vis a university under the Unfair Terms in Consumer Contracts Regulation 1999/2083) (UTCCR) but that in the contract before it the transfer of IP rights from students to the University was not unfair and thus did not fall foul of UTCCR.  The result being that money was due.  

For those non-UK based readers, after a judgment is handed down there is what is called the "consequentials" hearing (also sometimes referred to as "the Final or Form of Order hearing").  This was held last week before Mr Daniel Alexander KC sitting as a Deputy Judge of the High Court.  In the consequentials hearing judgment [2023] EWHC 138 , the Judge dealt with (1) royalty payments; (2) costs; (3) confidentiality; and (4) permission to appeal.

Of the most interesting to this Kat was the treatment of costs (well, some of them), confidentiality and permission to appeal. 

Costs

On costs, Oxford University Innovation sought indemnity costs from 12 June 2020.  The Judge was not persuaded that ONI behaved out of the norm to justify an indemnity cost assessment.  This was because:

1. Both sides engaged in settlement discussions, there was mediation and an Early Neutral Evaluation.  Although they were unsuccessful they did not show that ONI was not engaging with attempts to resolve the case.
2. Oxford University Innovation made Without Prejudice Save as to Costs (WPSATC) offers which required payment at the full royalty rate but forwent some interest (which was modest) and costs.  Because these were not made under Part 36 of the Civil Procedure Rules (and thus could not be treated as if they were), the Judge did not have to consider whether the judgment was at least as advantageous as the offer and thus costs consequences under Part 36.17 were to follow.  Although Merpel wonders why the offers were not also made under Part 36, the Judge nevertheless decided that the refusal of the offers by ONI was not "highly unreasonable" (as is the test under see White Book CPR 44.3.12, F & C Alternative Investments (Holdings) v Barthelemy [2012] EWCA Civ 843 at [70] (citing Kiam v MGM), Astex Therapeutics v AstraZeneca [2018] EWCA Civ 2444 at [61]-[78]).  This was because although the case would (or should) have appeared weak to ONI, there were genuine issues between the parties.  
3. The Judge further noted that assessing whether the offer should or should not have been accepted at those times and whether a reasonable party would have appreciated that it would not have done better at trial is hard to second guess.  The offer itself basically required full capitulation (albeit with a small savings of interest and costs).  It is not desirable to hold a defendant's refusal of folding in those circumstances to be conduct that is out of the norm.  
4. Oxford University Innovation made points about ONI's "relatively short" delay in filing documents post-judgment, delay in payment and in seeking permission to appeal.  ONI had also sought broad disclosure as part of one their original disclosure requests, but then settled for a more reasonable position and security for costs was ultimately given.  Again, as the Judge said, "nothing out of the norm and no justification for indemnity costs".

Confidentiality

Oxford University Innovation sought the standard CPR 31.22 Order which preserves certain documents as confidential after trial, notwithstanding that they have been considered by the Court.  These confidential documents and parts of documents were identified in a specific schedule.

The Judge commented that "[a]n order of this kind is conventional but should not be a rubber-stamping exercise."  The Judge said he considered the documents and witness evidence that explained why the material was confidential (the material referenced internal discussions and documentation of the Intellectual Property Advisory Group ("IPAG") of the University and Oxford University Innovation).  The information was therefore "genuinely commercially confidential" and "disclosure...could prejudice Oxford or a third party". 

However, the Judge continued:

"However, I do not implicitly endorse a blanket claim of confidentiality on the part of the University or OUI in its records of discussions of its IP policies (whether at IPAG or otherwise) or information about how changes to such policies are developed. Material containing details of actual or prospective commercial deals/negotiations or more general material which may materially affect these may need continued confidentiality. However, this order should not be used to suggest that all aspects of policy discussion within the University – particularly historical - about how IP rights should be allocated or benefits shared between potentially interested parties (including the various parts of the University, researchers – employed or student, external funding bodies and other investors) should be kept from view. Some of these issues are matters of legitimate wider interest and debate."

Thus, the Judge determined that the "fairest way to balance the interests of open justice with commercial confidentiality" was to make the order sought but to provide parties and any other person with permission to apply to vary the order (with adequate notice) and Oxford (or Oxford University Innovation) with a corresponding chance to resist wider disclosure.

Permission to Appeal

Permission to appeal was refused, both on the grounds advanced by ONI relating to whether Mr Jing's low salary was relevant and should have been taken into account under section 39 of the Patents Act and on the basis of fairness under Unfair Contract Terms.  The Judge also considered whether there was any other reason for the case to be considered by the Court of Appeal - again, a "no".  The Judge commented:  

"To the contrary, there are good reasons for letting the case rest. I summarise them since the Court of Appeal may wish to understand why they reinforce my view that an appeal would have no value. The Main Judgment provides commercial certainty to all that the Licence remains in place, which is inter alia to ONI's and its investors' benefit. An appeal would potentially create pointless market uncertainty as to whether ONI would remain licensed in respect of its main product and on what basis.

Were the Court of Appeal to overturn the Main Judgment on the grounds suggested, that would open the door to further proceedings including as to what relief or remedy should be granted. On the assumption that an appeal succeeded, further proceedings would need to address the following (among other points, some of which are alluded to in the evidence and which are of very limited wider interest):

a. Whether a term of a university student IP agreement which was held to be unfair under the UCTD because it was in theory capable of being interpreted and applied unfairly but which was in fact fairly interpreted and applied generally (and in the circumstances of the case) should nonetheless be treated as rendering the whole of the agreement (or a licence agreement founded on the basis of its allocation of proprietary rights) void – and, if so, on what basis.

b. Whether OUI was entitled to some rights in the patents or other rights licensed under the Licence, including on the basis that the inventors including two other University employees may remain properly named and were actual devisers or were otherwise entitled under whatever law was applicable.

c. Whether or to what extent there was an impact on the Licence if some of the rights licensed under the Licence or other rights remained validly vested (or arguably validly vested) in OUI.

d. Whether any issues of estoppel or similar may arise to protect the position of both ONI and Oxford (or others) who had operated on the basis that OUI was entitled to the rights.

e. How benefits obtained by those taking under the various agreements were to be re-allocated by way of restitution or other doctrines from and to parties and third parties if the Licence was void or the UCTD rendered the DPhil Contract void.

Some of these points may raise issues of legal complexity. Contemplating them, some may think that I have only had to tackle the easy points to which this case could give rise. However, at least prima facie, even were my decision overturned for one of the Patent Families and/or other rights remained validly licensed, it is very unlikely that this would affect the validity of the Licence as a whole in the circumstances of this case. Moreover, not only Oxford but possibly third parties (such as other investors in ONI who may have an interest in ensuring that the Licence remains in place to ensure that ONI is not exposed to potential infringement claims) may wish to contend that it would be wrong for the English court to risk undermining ONI's business by voiding its key Licence ab initio."

Will have to wait to see if ONI applies to the Court of Appeal for permission in light of lengthy reasons from the first instance Judge as to why things are better off left alone.  In the meantime, the decision generates additional practice points:  (1) the level of bad conduct needed for indemnity costs to be award is high, so think about whether that threshold has been reached; and (2) ensure you proof up in evidence why, and in respect of what, information is confidential and why a continuing 31.22 Order is required.