Patent entitlement – lessons to learn when engaging consultants and suppliers
A recent UK Intellectual Property Office (UKIPO) decision has given us further clarity on entitlement and the consequences of involving consultants in the development of inventions. The case concerned the design of a device for cleaning the inside of beer kegs, where the company with the idea used a consultant to develop the idea. The consultant company then sought a patent, and assigned it to a third company. A dispute arose as to who was entitled to the invention. The decision provides helpful clarity on the risks of assuming that you can split claims and inventive concepts out to support your claims to ownership, and the importance of clarity as to the ownership of rights where you involve consultants.
Background
Close Brewery Rentals Limited (‘CBRL’), provides a beer keg rental service, and had used an ultra-high-pressure (UHP) pump to clean its kegs on the outside, and kegs are normally cleaned internally with a caustic chemical. During September 2015, two of CBRL’s employees, Mr. Phillips and Mr. Cashman, had an idea to use a UHP system to clean the inside of the kegs. In early 2016, CBRL took steps to develop the idea by engaging a consultant in the brewing industry and entering into discussions with various pump suppliers. The consultant and supplier conducted evaluations of the UHP device under the direction of CBRL’s Mr. Phillips. CBRL determined that UHP water could indeed be used to clean the interior of kegs and casks to the required standard from these tests.
In Spring 2016, CBRL contacted MD Engineering Solutions Limited (‘MDES’) to build and design an operational device. CBRL filed and was later granted two patents for the UHP device, with Mr. Phillips named as the sole inventor. These patents were not in dispute. MDES filed a patent in May 2019 with its employees Mr. Hallas and Mr. Horsey named as inventors. This patent was granted as GB2571465B (‘GB465’) on February 18th 2020. GB465 was later assigned to Geco Holdings Limited (‘Geco’), a company set up by MDES to separate its intellectual property assets from its keg cleaning services. MDES later entered into liquidation.
In March 2020, CBRL initiated entitlement proceedings, asserting that it, rather than Geco, should be registered as the proprietor of GB465, and that Mr. Phillips and Mr. Cashman should be the only named inventors. Alternatively, CBRL argued that Mr. Phillips and Mr. Cashman should be named as joint inventors along with Mr. Hallas and Mr. Horsey of MDES/Geco.
The law on entitlement
Section 7(2) of the Patents Act 1977 (the ‘Act’) states that a patent for an invention may be granted to the inventor or joint inventors. Section 7(3) of the Act then defines an inventor ‘as the actual deviser of the invention’.
The leading authority on patent entitlement is the judgment of the House of Lords in Yeda Research v Rhone-Poulenc[1], in which Lord Hoffman stated that the word ‘actual’ in the Section 7(3) definition “denotes a contrast with a deemed or pretended deviser of an invention; it means, as Laddie J said in University of Southampton’s Applications [2005] RPC 220, 234, the natural person ‘who came up with the inventive concept’.”
The entitlement to patents that have already granted is dealt with by Section 37(1) of the Act, which states that:
After a patent has been granted for an invention any person having or claiming a proprietary interest in or under the patent may refer to the comptroller the question-
- Who is or are the true proprietor or proprietors of the patent,
- Whether the patent should have been granted to the person or persons to whom it was granted, or
- Whether any right in or under the patent should be transferred or granted to any other persons or persons;
And the comptroller shall determine the question and make such order as he thinks fit to give effect to the determination.
The Hearing Officer’s decision
In determining entitlement to GB465 the Hearing Officer began by identifying the inventive concept before moving on to consider who ‘actually’ devised the invention.
In asking himself how to determine the inventive concept, he looked at Section 125(1) of the Act:
For the purposes of this Act an invention for a patent for which an application has been made or for which a patent has been granted shall, unless the context otherwise requires, be taken to be that specified in a claim of the specification of the application or patent, as the case may be, as interpreted by the description and any drawings contained in that specification, and the extent of the protection conferred by a patent or application for a patent shall be determined accordingly.
He then confirmed that the starting point must be the claims of the patent in question, but of course s125 does suggest that there are some contexts in which it is not necessarily as simple as taking the invention to be that specified in the claims. This position is of course clear from the case law and allows for the inventive concept to be identified without being bound by the form of the claims.
The inventive concept and devising of the invention
Reviewing the case law, and in particular IDA Ltd. v University of Southampton[2] and Henry Brothers[3], the Hearing Officer highlighted the danger in dividing the claim into its component pieces and focussing on the particular elements that suited the parties’ own purposes. In his view, both parties had gone down the route of splitting the independent claim up and only focusing on the elements that suited them. The Hearing Officer noted that there is a danger in looking at a claim and dividing it up into its various integers and deciding which ones are individually novel and non-obvious and which are not, because it may be the case that the inventive concept is the combination of those integers. This, he said, was entirely consistent with Jacob LJ’s warning of the pitfalls of separately considering a myriad of sub-concepts in the University of Southampton decision.
The Hearing Officer also reminded the parties that it was not his job to determine which part of the claim, if any, makes the invention inventive, as that was a matter of establishing patentability, not entitlement. Nevertheless, and with this in mind he considered Jacob LJ’s comments in Pozzoli SPA v BDMO SA[4], which made it clear that identifying the inventive concept is not the same as identifying the inventive step, and that identifying the inventive concept comes first.
On the evidence before him, the Hearing Officer found that the inventive concept was broadly as had been advanced by Geco in the proceedings, although the Hearing Officer did not include the specific water pressure range stating that he was “not writing a patent claim but rather trying to establish entitlement.”
The Hearing Officer noted that Lord Hoffman had found in Yeda Research v Rhone-Poulenc that UKIPO hearing officers have wide discretion in entitlement cases to consider what is fair and reasonable in the circumstances, notwithstanding the scope of the pleadings. The Hearing Officer had to decide if the inventive concept was devised before CBRL approached MDES, or was it only the technical input of MDES to turn the idea into reality that brought the inventive concept into being?
The parties took different views of the inventive concept. CBRL contending that it was:
“the provision of a device for internally cleaning kegs and/or casks by dispensing water therein within a pressure range of between 150,000kPa and 275,000kPa.”
Geco, argued that the inventive concept was:
“an automated device for internally cleaning kegs and/or casks, including an inlet and a separate outlet, automatic clamping and automatic cleaning with an ultra-high-pressure water lance at a pressure between 150,000kPa and 275,000kPa.”
The Hearing Officer took account of his views that the parties had focused on the parts of the claims they felt suited them, and had wrongly looked at them from a validity (i.e. novelty and obviousness) perspective and not entitlement. Accordingly, they had made mistakes in the way they divided the content of the claims, and so he formed the view that the inventive concept was:
“an automated device for internally cleaning kegs and/or casks, including an inlet for introducing a keg or cask to be cleaned and a separate outlet for outputting the clean keg or cask, an automatic clamp for holding the keg or cask during cleaning, and a lance which is automatically inserted into and removed from the keg or cask and dispenses ultra-high-pressure water to clean the internal surfaces of the keg or cask.”
Based on CBRL’s evidence as to what was requested of the consultants and reports on the tests, the Hearing Officer concluded the invention was devised solely by CBRL’s employees. He focused on what he called the ‘heart of the invention’ and said it was “the idea of cleaning kegs and casks internally by inserting a lance and dispensing ultra-high pressure water, preferably at 250,000 kPa but if not then somewhere in that region. That aspect of the inventive concept, in my view, was unquestionably contributed by Mr Phillips and Mr Cashman (CBRL’s employees).”
In reaching this decision, the Hearing Officer considered the comments of Christopher Floyd QC (as he then was) in Stanelco Fibre Optics Ltd.’s Applications[5] concerning who is the ‘actual deviser’ of an invention. In Stanelco, the judge said that a person who simply comes up with vague ideas or pipedreams is not the ‘actual inventor’ but where “the worker comes up with and communicates an idea consisting of all the elements in the claim, even though it is just an idea at that stage, it seems to me that he or she will normally, at the very least, be an inventor of the claim.”
On the evidence, the Hearing Officer found that CBRL had told MDES what it was trying to achieve with the invention, and had paid MDES to develop the idea into a working prototype device. Whilst CBRL did not have a fully worked up proposal and no actual working device they offered more than just an initial vague prompt. CBRL knew that what they were asking MDES to undertake was technically feasible. They had already seen the UHP lance being inserted into and removed from a keg using a robot, and they knew that the water at UHP provided adequate cleaning without damaging the kegs/casks.
Consequently, we can take from this that on entitlement if you have a clear idea and seek to test it but have not reduced it to a technically feasible form, that does not matter; the invention remains that of the deviser of the theory. The Hearing Officer considered the fact that not only had CBRL’s employees first had the idea of using UHP water to clean the kegs, but they had gone further and tested their hypothesis to see if their idea would work. Consequently, the invention was entirely from CBRL and the consultant was only helping perfect it operationally. As a result, the Hearing Officer ordered that CBRL be named the sole proprietor of GB465 and of any applications claiming priority from GB465.
Comment
This case is a useful reminder of the importance of taking care when engaging third party suppliers and consultants to develop inventions. In order to avoid disputes such as this, it is vitally important to be clear in the contract who has rights resulting from the development. Furthermore, only the people who devised the invention by contributing to the inventive concept should be named on patent applications. We recommend that when engaging consultants and service providers to develop an invention, clear written agreements are put in place, which expressly state that the intellectual property in the deliverables and services will transfer to the commissioning company immediately upon creation. It’s also important to keep contemporaneous records of what was done, when and by whom.
A copy of the decision can be found here.
[1] Yeda Research and Development Company Ltd. v Rhone-Poulenc Rorer International Holdings Inc. & Ors [2007] UKHL 43
[2] IDA Ltd. & Ors v University of Southampton & Ors [2006] EWCA Civ 145
[3] Henry Brothers (Magherafelt) Ltd. v Ministry of Defence and Northern Ireland Office [1997] R.P.C. 693
[4] Pozzoli SPA v BDMO SA [2007] EWCA Civ 588
[5] Stanelco Fibre Optics Ltd.’s Applications [2004] EWHC 2263.
