Legal Updates

Intellectual Property: Patents - Assignment of Patents

In the case of QR Sciences Ltd v BTG International Ltd [2005], the defendant company, BTG, (a purchaser of intellectual property and technology rights, particularly patents) granted an exclusive licence to QR Sciences (an Australian Company), in September 2002 to use a large number of its patents subsisting in many different countries.

A clause in the licence agreement granted QR Sciences the right to assign the patents in certain circumstances. Clause 14.4 of the licence stated that: " throughout the term of the licence BTG will not assign any patent without first offering to assign such patent to QRS ".

In March 2004, BTG informed QR Sciences that it was negotiating an assignment of the patents to a third party. QR Sciences began proceedings against BTG. QR Sciences argued that clause 14.4 applied when BTG proposed an assignment of the patents as well as when BTG abandoned the patents and the Court should construe the clause to have this meaning.

The following issues arose during the action:-

• whether BTG's negotiations triggered QR Science's rights under clause 14.4; and
• whether BTG's proposals to QR Sciences in March 2004 discharged BTG's duty to offer the patents to QRS first.

The Court ruled:-

• BTG's negotiations with the third party to assign the patents did not trigger QR Sciences' rights under clause 14.4. If the negotiations had involved abandoning the patents, QR Sciences could have enforced its rights under the clause;
• BTG's proposals were made subject to contract and were therefore not contractual offers but only invitations to treat;
• BTG had not yet satisfied its contractual obligations to first make an offer to QR Sciences; and
• any offer by BTG to QR Sciences must be a contractual offer whereby QR Sciences had a reasonable time to consider the offer and respond.

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© RT COOPERS, 2005. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.