Sectors

Services

Background
12 October 2022

Entitlement and The Importance of Assignment Formalities – lessons from Jones v Irmac Roads

Background

In 2009 Mark Jones developed an infra-red heater for road surfaces. In 2010, after facing financial difficulties, Jones was approached by Ben and Terry Gedroge with a proposal to start a new venture for the commercialisation of the heater.  The Gedroges established a limited company, Irmac Limited (‘IL’). At a meeting in October 2011, the Gedroges agreed to grant Jones a 45% share option in IL. In exchange for this, Jones orally agreed to assign his IP rights (including the right to apply for a patent for improvements to the heater) to IL. This was subject to the execution of further documents, including a patent option agreement which would mean that the IP would be reassigned to Jones if ‘if [IL] had not commenced active trading within six months from the patent application registration confirmation.’1

In November 2011, IL applied for a patent for the improvements to the heater in its own name, naming Jones as the sole inventor. The share and patent option agreements were formally executed in December 2011. Jones served notice under the patent option agreement in June 2012. On his understanding, that meant that IL should have provided a written assignment of the patent application and other IP back to Jones within 7-21 days. However, IL did not do this. Instead, Ben Gedroge withdrew the patent application, and caused IL to orally assign to a new company, Irmac Roads Limited (‘IRL’ – the Defendant in this case) and filed a new patent application in IRL’s name which was identical to the first application save that Ben Gedroge was also listed as an inventor on the basis of alleged improvements to the heater. The IRL application was contested and the case came before the Enterprise Court.

Applicable Legislation

The sections of the Patents Act 1977 which applied to this case are as follows:

S30(6):

Any of the following transactions, that is to say—

a) any assignment or mortgage of a patent or any such application, or any right in a patent or any such application;

shall be void unless it is in writing and is signed by or on behalf of the assignor or mortgagor (or, in the case of an assent or other transaction by a personal representative, by or on behalf of the personal representative)

S130(1):

“right”, in relation to any patent or application, includes an interest in the patent or application and, without prejudice to the foregoing, any reference to a right in a patent includes a reference to a share in the patent;

The Dispute

It is well known that assignments under the Patents Act must be in writing, so the key question was whether the right to apply for a patent was included in the definition of ‘right’ in s130(1). If it was, then the assignment of such would need to be in writing under s30(6).

Mr. Jones argued that as the sole inventor of the invention, he was solely entitled to ownership of the patent application and any subsequent granted patent.  He argued that only an equitable right to apply for the patent was assigned to IL in the meeting in October because the assignment was done orally. Therefore, he retained the legal right to apply. There was no written assignment and thus s30(6) was not complied with and legal title to the right to apply for the patent did not pass from Jones to IL. He further submitted that the patent option notice assigned the equitable interest in the right to apply back to him, thus giving him both the legal and equitable rights in such, meaning that he was the only person entitled to apply for the second (IRL) application.

Unsurprisingly, IRL’s counterargument was that the legal and equitable title in the right to apply for the patent application had passed from Jones to IL and from IL to IRL by the oral assignment.  This was because the right to apply for the patent was not covered by s30(6).  It also argued that the service of the patent option notice did not assign the equitable right back to Jones, and that the patent option notice had been invalidly served. IRL submitted it had the full right to apply for the patent. This is because the withdrawal of the IL application extinguished all legal and equitable title in the original application, but the right to apply for a patent still vested in IL, which was then orally assigned to IRL.

Court Decision

HHJ Hacon agreed with Lord Walker’s comments in Yeda v Rhone-Poulenc,2  which stated that the right to apply for a patent is distinct from the right in any subsequent application or patent. Lord Walker said that the right to apply for a patent is an ‘inchoate property.’3 HHJ Hacon found that the right to apply for a patent vests in the inventor, or in any successor in title to the inventor.4

HHJ Hacon also cited the UKIPO Comptroller decision in Hartington Conway Ltd’s Patent Application. He agreed with the Comptroller and the with Pumfrey J. on appeal,  that the right to apply for a patent is caught by s30(6), and so any assignment of such a right must be in writing. Accordingly, HHJ Hacon decided in favour of Mr. Jones – there was consequently no legal assignment, and so the legal right to apply for the patent remained with Mr Jones.  However, there was still the question of the equitable right, and whether that has been reassigned back to Mr. Jones by the patent option notice. As mentioned above, IRL argued that the patent option notice was invalidly served, and even if it was validly served, it would not cause an equitable assignment. HHJ Hacon disagreed with both these arguments, citing the approach to contractual interpretation given by Carr LJ in ABC Electrification v Network Rail Infrastructure, which stated ‘[w]hen it comes to considering the centrally relevant words to be interpreted, the clearer the natural meaning, the more difficult it is to justify departing from it.’  Accordingly, Mr. Jones was successful and the right to apply for a patent remained his alone.

Commentary

HHJ Hacon’s judgment gives a clear ruling that s30(6) of the Patents Act applies not only to patent applications and patents themselves, but also to the inchoate right in an invention and the consequential right to apply for a patent. This means that any contracts purporting to deal with such rights must be in writing. Assignments are often seen as simple things and simple documents are needed, but this case shows parties can engage in business and never fully realise what they have and have not assigned.

It is surprisingly common for assignments to have issues, because they fail to adequate record what is being assigned, because they are signed without sufficient authority, and very commonly they are assigned where the assignor lacks the authority to assign or in doing so undermines the pre-existing transfer of the right under a contract of employment.

The judgment also shows how important it is for the assignment agreement to adequately reflect the intentions of the parties. Professional advice at the time of an assignment is always a good idea, and it is significantly cheaper than attempting to untangle defects with regard to chain of title further down the line.

For more information please contact Partner, James Tumbridge (jtumbridge@vennershipley.co.uk), Robert Peake (rpeake@vennershipley.co.uk) and Benedict Sharrock-Harris (bsharrock-harris@vennershipley.co.uk).

1 Mark Jones v Irmac Roads Limited [2022] EWHC 495 (IPEC) at 9.

2 Yeda Research and Development Co Ltd v Rhone-Poulenc Rorer International Holdings Inc [2007] UKHL 43

3 Above n.1 at 28

4 Ibid at 29.

Authored by James Tumbridge and Robert Peake

Author(s)
Share