Dendron GmbH and Others v Regents of the University of California (Boston Scientific Ltd, Part 20 claimant)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Laddie,The Hon. Mr Justice Pumfrey,Mr Justice Pumfrey |
| Judgment Date | 19 May 2004 |
| Neutral Citation | [2004] EWHC 589 (Pat),[2003] EWHC 2771 (Pat),[2004] EWHC 1163 (Pat) |
| Docket Number | Case No: HC 03 No. C0229,Case No: HC-03-C00229 |
| Court | Chancery Division (Patents Court) |
| Date | 19 May 2004 |
[2004] EWHC 1163 (Ch)
The Honourable Mr Justice Pumfrey
Case No: HC-03-C00229
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr D Kitchin QC and Adrian Speck (instructed by Taylor Wessing) for the Claimants
Mr R Meade (instructed by Olswang) for the Defendants/ Part 20 Claimants and Target Theraputics, Inc.
Hearing dates: 6 th May 2004
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Approved Judgment
The claimants, to whom I shall refer as Dendron, seek to revoke European Patent (UK) 0803230, which stands in the name of The Regents of the University of California, the defendants to the action. I shall call them UC. UC counterclaim for infringement, and with them as claimant on the counterclaim is Boston Scientific Ltd, an Irish Company, to which I shall refer as Boston. Boston claims to be entitled to sue for infringement as exclusive licensee under the patent. Dendron claim that Boston is not the exclusive licensee under the patent but that another company, Target Therapeutics, Inc (Target) is the exclusive licensee. Dendron accordingly seeks orders dismissing Boston's claim and joining Target as the Claimant by the counterclaim.
On 24 th February 2004, I directed that: -
"The issue as to whether the Second Part 20 Claimant is the holder of an exclusive licence under the patent in suit within the meaning of the Patents Act 1977 be heard as a preliminary issue on the basis of the construction and effect of the licence agreements which have been produced to the Claimants… and that if, on the said application, evidence should be necessary to resolve the said issue, the said issue be stood over to trial and the Part 20 Claimants be liable to pay the Claimants` costs of the hearing of the preliminary issue unless the Court orders otherwise."
This is the judgment on that issue which I have heard argued on written evidence without cross-examination.
The origin of the commercial relationship between UC and Target lies in a licence agreement, which is said to be effective from the 30 th June 1990, which was amended by the parties in October 1995. Boston claim to be entitled to an exclusive licence under the patent by virtue of this agreement and of a further agreement between UC, Target and Boston dated 2 nd April 200It is convenient to set out the statutory background before considering the provisions of the agreement.
Statutory Background
The Patents Act 1977 contains a number of important provisions affecting licenses under patents. The basic principle is stated by Lord Diplock in his judgment in Allen & Hanburys Ltd v. Generics UK Ltd [1986] RPC 203 in the following terms
"A licence passes no proprietary interest in anything, it only makes an action lawful that would otherwise have been unlawful. In the context of the Royal Grant of Patents for Inventions it was a consent given by the proprietor of the patent to another person, the licensee, to do something that the patent entitled the proprietor of it to prevent anyone from doing except with his consent. This is the meaning which "licence" has borne throughout the UK patent legislation up to and including the Act of 1977. Apart from certain statutory prohibitions… such a licence, at any rate where it is granted by the proprietor of his own free will, may be subject to whatever limitations or conditions the proprietor thinks fit to impose. "
Notwithstanding that a patent licence creates no proprietary interest, subsection 30 (4) of the Act provides as follows:
"Subject to section 36 (3) below [which is concerned with co-ownership], a licence may be granted under any patent or any such application for working the invention which is the subject of the patent or the application; and –
(a) To the extent that the licence so provides, a sub-licence may be granted under any such licence and any such licence or sub-licence may be assigned or mortgaged; and
(b) Any such licence or sub-licence shall vest by operation of law in the same way as any other personal property and may be vested by assent of personal representatives. "
By subsection 30(7) an 'assignment of a patent … and an exclusive licence granted under any patent… may confer on the assignee or on the licensee the right of the assignor or licensor to bring proceedings by virtue of section 61 or 69 below for a previous infringement…'
Section 61 is concerned with the patentee's right to bring proceedings in relation to infringing acts, and section 69 confers a right to bring proceedings in relation to acts done before the patent was granted but after the application has been published. The position of the exclusive licensee in respect of infringement proceedings is assimilated to that of the proprietor by section 67, which provides as follows:
"(1) Subject to the provisions of this section, the holder of an exclusive licence under a patent shall have the same right as the proprietor of the patent to bring proceedings in respect of any infringement of the patent committed after the date of the licence; and references to the proprietor of the patent in the provisions of this act relating to infringement shall be construed accordingly.
(2) In awarding damages or granting any other relief in any such proceedings the court or the comptroller shall take into consideration any loss suffered or likely to be suffered by the exclusive licensee as such as a result of the infringement, or, as the case may be, the profits derived from the infringements, so far as it constitutes an infringement of the rights of the exclusive licensee as such.
(3.) In any proceedings taken by an exclusive licensee by virtue of this section the proprietor of the patent shall be made a party to the proceedings, but if made a defendant or a defender shall not be liable for any costs or expenses unless he enters an appearance and takes part in the proceedings."
Thus, subject to the requirement that the patentee should be a party to the proceedings, and subject to the qualification on the right of the exclusive licensee to recover damages imposed by subsection 67(2), the exclusive licensee is in as good a position to start proceedings for infringement and to prosecute them to judgment as is the patentee.
There is no requirement that an exclusive licensee be registered as such as a condition of commencing proceedings for infringement. Rather, the Act imposes (in section 68) a restriction on the exclusive licensee's right to recover damages in the event that the " transaction, instrument or event" by which he becomes exclusive licensee is not registered within six months of its date. Non–registration does not affect his rights to recover costs or his right to an injunction. Thus, the register is inconclusive, and identifying an exclusive licensee depends entirely upon a proper construction of the document or documents by which he claims to be exclusive licensee.
By section 130(1) of the Act, which is the interpretation section, the term "exclusive licence" is defined as meaning
"a licence from the proprietor of or applicant for a patent conferring on the licensee, or on him and persons authorised by him, to the exclusion of all other persons (including the proprietor or applicant), any right in respect of the invention to which the patent or application relates, and "exclusive licensee" and "non-exclusive licence" shall be construed accordingly".
Thus, it is clear that any person upon whom an exclusive licence satisfying these words is conferred may commence proceedings for infringement.
A number of preliminary observations may be made in relation to this definition. The first is that the licence need not be a sole licence. The words "or on him and persons authorised by him" seem to me to contemplate a licence which confers upon the exclusive licensee a power to sub-licence. The essential element of the transaction appears to be the exclusion of all other persons including the patentee or applicant. Second, in my judgment the section cannot be contemplating a once and for all assessment. Take, for example, a licence that confers upon the licensee a straightforward exclusive licence to make use and sell objects falling within a claim. An exclusive licensee can expect to have to pay a higher royalty than a non-exclusive licensee, and his licence may well include a "best endeavours" clause or clause to a similar effect. Such licences not infrequently confer upon the patentee a power to convert the licence into a non-exclusive licence if minimum royalty provisions are not satisfied. If the patentee exercises such a power by notice, then of course the erstwhile exclusive licensee loses that status, and, it seems to me, must lose his power to bring proceedings.
I can now turn to the transactions in the present case, since it is only with an examination of them that the point of real difficulty in the present case can be appreciated.
Boston Scientific Ltd`s licence.
On 30 th June 1990, UC conferred upon Target a licence. The document is entitled " Exclusive License Agreement for Treatment for Intracranial Aneurysms with an Endovascular Guide – Wire". By clause two of this licence, which I shall refer to as the "Target Licence",
"2.1 Subject to the limitation set forth in this Agreement, [UC] hereby grant to the [Target] a licence under [UC`s] patent right to make, have made, use, and sell Licensed Product and to practise Licensed Method.
2.2...
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