UK Rights Of Co-Owners in a Patent
This article was taken from the Venner Shipley Newsletter edition 20
Under uk practice, patents can be granted to co-owners, who need not necessarily be the inventors. Conventional wisdom was that the rights of co-owners in a UK patent were determined primarily by Section 36 of the UK Patents Act, which provides that each co-proprietor may exploit the patent themselves, but that no co-proprietor can grant a licence under the patent without the consent of the other co-proprietor.
However, in the case of Derek Hughes v Neil Paxman,(1) the Court of Appeal upheld a decision by the High Court to allow a patent co-owner to force another co-owner to grant a licence under the patent.
In his judgment, Lord Justice Jacob discussed the provisions of Section 36 and said that ‘this default position can produce very different commercial situations for different co-proprietors. For instance, one may be an individual with no manufacturing capacity or capital whereas the other may be a formidable industrial empire. In such a case the latter co-proprietor could happily exploit whereas the former could not. In another scenario neither co-proprietor may have the wherewithal to exploit the patent. Unless they can agree though it will be deadlock with the practical consequence that the patent cannot be exploited at all.’
Lord Justice Jacob turned to Section 37 of the Patents Act. This allows the Comptroller of the UK Patent Office to decide whether any rights under a patent should be transferred or granted to another person. This is primarily intended to deal with patent ownership disputes and provides that the Comptroller may grant a licence or other right under the patent. The co-owner of the patent in question, a Mr Paxman argued through his representatives that he was entitled to use Section 37 to seek a licence for exploitation of the patent by a third party. Lord Jacob agreed and said ‘I cannot imagine for a moment that Parliament could have intended it to be possible that exploitation of an invention could be frustrated by a deadlock situation. The whole point of the patent system was and is to encourage innovation and the exploitation of inventions.’
Thus, it was held that Mr Paxman was entitled to request grant of a licence to a third party before the Comptroller. The judge noted that ‘the Comptroller is compelled to act rationally, fairly and proportionately and have regard to all the circumstances of the case.’
Sometimes, co-inventors file a patent which is granted in their joint names, as co-owners. It is important that they understand fully their rights and obligations as co-owners because the patent can last for up to twenty years and their originally common objectives may diverge over time. Co-owners of patents should now note that not only can each co-owner exploit the patent without the consent of the other, but they can also ask the Comptroller to grant a licence to a third party without the consent of the other co-owner in certain circumstances to achieve a fair exploitation of the invention.
1. [2006] EWCA Civ 818, 23 June 2006