Legal Updates

Intellectual Property – Patents – Grants of Rights to Third Parties

A patent can be owned jointly. However, under s.36 of the Patents Act 1977 (“the Act”) each  proprietor can use the patent for his own benefit without the consent of or the need to take account of the other proprietors but, under s.37 of the Act, if a proprietor wishes to licence the patent i.e to allow a third party to use the patent, he/she must either gain consent from the other proprietor or apply to the comptroller for permission to exploit the patent.

In Paxman v Hughes [2005] EWHC 2240 (Pat), the relationship between the joint proprietors of a patent for making a type of drinks cooler broke down. Mr Paxman and Mr Hughes were both directors of Trim Cool Limited, a company which they incorporated to produce a cooler under the patent.

 
Mr Paxman, the inventor, sought an order from the comptroller to grant a licence to third parties to make and supply drinks coolers under the patent.  Mr Hughes opposed the application and contended that the comptroller had no jurisdiction to make the order sought on the following grounds:

 

â–ª     the order required an extra-territorial jurisdiction which did not fall within the comptroller’s jurisdiction;

â–ª     under s.36 and s.37 of the Act, the comptroller had no jurisdiction to permit a co-proprietor to grant commercial licences to third parties contrary to the wishes of another co-proprietor; and

â–ª     Mr Paxman’s fiduciary duties as a company director prevented him from seeking this order.

 
The hearing officer struck out the case because the order sought was in breach of Mr Paxman’s duties as a company director. Mr Paxman appealed on the grounds that the hearing officer erred in his findings.

 
On appeal it was held that:

 
â–ª     Mr Paxman was applying for the order as the inventor who was seeking to exploit the invention;

â–ª     Mr Paxman was therefore not applying in his capacity as a company director and hence was not necessarily breaching his fiduciary duties;

â–ª     the comptroller did have the authority to allow the applicant to grant a licence to a third party under s.37 of the Act; and

â–ª     the comptroller had a wide discretion to decide upon restrictions which would protect the other proprietor.

Comment: This case is an example of how problems may arise with co-ownership of intellectual property rights. It is therefore advisable to have a written agreement that delineates the rights of co-owners.

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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.