Re Brown Root McDermott Fabricators Ltd and Another's Application
| Jurisdiction | England & Wales |
| Judgment Date | 21 March 1996 |
| Date | 21 March 1996 |
| Court | Chancery Division |
Chancery Division.
Jacob J.
Nicholas Pumfrey QC and Stephen Brandon (instructed by Bristows Cooke & Carpmael) for the applicants.
Richard Miller QC (instructed by Norton Rose) for Stena.
The following cases were referred to in the judgment:
Abram Steamship Co Ltd v Westville Shipping Co Ltd ELR [1923] AC 773
Birchall v Bullough ELR [1896] 1 QB 325
Casey's Patents, Re Stewart v Casey ELR [1892] 1 Ch 104
Conybear v British Briquettes Ltd UNK [1937] 4 All ER 191
Eastern Distributors Ltd v Goldring (Murphy, third party) ELR[1957] 2 QB 600
Marx v Estates and General Investments Ltd WLR [1976] 1 WLR 380
Maynard v Consolidated Kent Collieries Corp Ltd ELR [1903] 2 KB 121
Nisbet v Shepherd ELR [1892] 2 QB 507
R v Fulham, Hammersmith & Kensington Rent Tribunal, ex parte Zerek ELR [1951] 2 KB 1
Saunders v Edwards WLR [1987] 1 WLR 1116
West London Syndicate Ltd v IR Commrs ELR [1898] 2 QB 507
Stamp duty - Rectification of Register of Patents - Whether unstamped documents could be relied on as defence to pending patent action -Stamp Act 1891 section 5 section 14 subsec-or-para (4)Stamp Act 1891, ss. 5, 14(4), Patents Act 1977, s. 68.
This was an application by the defendants ("McDermotts") in a patent action to rectify the Patents Register in order to raise a defence under s. 68 of the Patents Act 1977 to a financial claim for infringement by the plaintiffs ("Stena").
In 1989, by an agreement to assign, Stena bought a number of patents related to the pipe-laying business, four of which became the subject of a claim against McDermotts.
The original agreement ("A1") was sent to the Patent Office for registration but was returned because it was unstamped. A second document ("A2") was eventually executed after problems of valuing the patents had been resolved. Owing to the difficulty of ascertaining a market value, a well-known method based on the cost of obtaining them was agreed on.
A2 was presented to the Stamp Office for adjudication. Duty was paid based on the agreed valuation and A2 was stamped accordingly. A2 was then presented to the Patent Office and recorded on the register.
McDermotts contended that the register should be rectified on the ground that Stena were wrongly recorded as proprietors, since A2 was in breach of Stamp Act 1891 section 5s. 5 of the Stamp Act 1891 ("the 1891 Act"). It did not "truly set forth" all the facts and circumstances affecting liability to duty.
Alternatively, McDermotts contended that A2 was a nullity by virtue ofStamp Act 1891 section 14 subsec-or-para (4)s. 14(4)of the Stamp Act. A1 had vested the patents in Stena and thus, so far as A2 purported to do so, it was a nullity. Consequently the entry of A2 on the register was wrong and reference to it should be removed, leaving the original patentee on the register as proprietor.
Held, refusing the McDermott's application:
1. In the document A2, a bona fide valuation had been put on the assignment by the parties who were entitled, by Stamp Act 1891 section 58 subsec-or-para (1)s. 58(1) of the Stamp Act 1891, to apportion consideration "as they think fit" where many things were bought for a lump sum. While those wide words would not apply to a dishonest apportionment, a bona fide apportionment was enough to satisfyStamp Act 1891 section 5s. 5 of the Stamp Act. But even if Stamp Act 1891 section 5s. 5 had not been satisfied, such a mere irregularity would not have had the result that A2 was a nullity.
2. Although Stamp Act 1891 section 14 subsec-or-para (4)s. 14(4) was not a voiding provision, A1 could not be received in evidence to support a defence under s. 68 of the Patents Act 1977. The effect of Stamp Act 1891 section 14 subsec-or-para (4)s. 14(4) was that neither the Patent Office nor the court could take any notice of A1, nor of any secondary evidence of it, even if it was effective between the parties. A1 was not receivable in evidence. An unstamped document was not to be available "for any purpose whatever", including the purpose of a defence under s. 68 of the Patents Act 1977. A1 was unstamped and without consideration of A1, A2 remained a valid assignment.
This is in form an application for rectification of the Register of Patents. But the substance of the dispute is whether the applicants, ("McDermotts") have a significant defence to the financial part of the relief claimed in a pending patent action. In that action the plaintiffs ("Stena") sue McDermotts for infringement of four patents. One of these is shortly to expire. It is said to be the most important. So, if there is a defence to all or most of the financial claim, McDermotts will escape substantial liability at least on that important patent. Thus I think they have sufficient standing to be "persons aggrieved" (see s. 34(1) of the Patents Act 1977), even though this is not the normal type of rectification dispute between rival claimants to a patent.
Stena acquired the patents from a company called Santa Fe. It is said that in an attempt (now accepted to be bona fide) to comply with the formality provisions of the Patents Act 1977 and the requirements of the Stamp Act 1891Stamp Act1891 they lost their way in the jungle. The consequence is said to be that the entries in the Register of Patents for the four patents concerned are incorrect. In particular it is said the current entries recording Stena as proprietors are wrong, even though Stena are admittedly in fact proprietors. None of this would matter but for the provisions of s. 68 of the Patents Act, which is said to provide a defence to the financial claim.
Before proceeding further it is convenient to set forth the provisions of the two Acts so far as they are material. I am sorry that so much is necessary.
30(1) Any patent or application for a patent is personal property (without being a thing in action), and any patent or any such application and rights in or under it may be transferred, created or granted in accordance with subsections (2) to (7) below.
(2) Subject to section 36(3) below, any patent or any such application, or any right in it, may be assigned or mortgaged …
(5) Subsections (2) to (4) above shall have effect subject to the following provisions of this Act.
-
(6) Any of the following transactions, that is to say-
(a) any assignment …
shall be void unless it is in writing and is signed by or on behalf of the parties to the transaction … or in the case of a body corporate is so signed or is under the seal of that body.
(7) An assignment of a patent or any such application or a share in it, and an exclusive licence granted under any patent or any such application, may confer on the assignee or licensee the right of the assignor or licensor to bring proceedings by virtue of section 61 or 69 below for a previous infringement or to bring proceedings under section 58 below for a previous act …
32(1) The comptroller shall maintain the register of patents, which shall comply with rules made by virtue of this section and shall be kept in accordance with such rules.
(2) Without prejudice to any other provision of this Act or rules, rules may make provision with respect to the following matters, including provision imposing requirements as to any of those matters-
(a) the registration of patents and of published applications for patents;
(b) the registration of transactions, instruments or events affecting rights in or under patents and applications …
(3) Notwithstanding anything in subsection (2)(b) above, no notice of any trust, whether express, implied or constructive, shall be entered in the register and the comptroller shall not be affected by any such notice …
(5) Subject to rules, the public shall have a right to inspect the register at the Patent Office at all convenient times …
(9) Subject to subsection (12) below, the register shall be prima facie evidence of anything required or authorised by this Act or rules to be registered and in Scotland shall be sufficient evidence of any such thing …
(14) In this Act, except so far as the context otherwise requires- "register", as a noun, means the register of patents; "register" as a verb, means, in relation to any thing, to register or register particulars, or enter notice of that thing in the register and, in relation to a person, means to enter his name in the register; and cognate expressions shall be construed accordingly. [33(1) and (2) deal with priorities.]
33(3) This section applies to the following transactions, instruments and events:
(a) the assignment … of a patent …
34(1) The court may, on the application of any person aggrieved, order the register to be rectified by the making, or the variation or deletion, of any entry in it.
(2) In proceedings under this section the court may determine any question which it may be necessary or expedient to decide in connection with the rectification of the register.
(3) Rules of court may provide for the notification of any application under this section to the comptroller and for his appearance on the application and for giving effect to any order of the court on the application …
68 Where by virtue of a transaction, instrument or event to which section 33 above applies a person becomes the proprietor or one of the proprietors or an exclusive licensee of a patent and the patent is subsequently infringed, the court or the comptroller shall not award him damages or order that he be given an account of the profits in respect of such a subsequent infringement occurring before the transaction, instrument or event is registered unless-
(a) the transaction, instrument or event is registered within the period of six months beginning with its date; or
(b) the court or the comptroller is satisfied that it was not practicable to register the transaction, instrument or event before the end of that period and that it was registered as soon as...
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