Six top tips on how to avoid and resolve disputes as to who is entitled to a patent

A fair proportion of the disputes that the Comptroller (or chief executive officer) of the Intellectual Property Office has been asked to resolve since 1998 are entitlement disputes. 

What are "entitlement disputes?"
These are disputes over who is entitled to apply for a patent for an invention or who is entitled to a patent that has already been granted. These disputes can arise in a number of ways.  Folk who have collaborated in creating the invention may fall out over which of them of any is the real inventor of the invention or they may disagree as to the terms of their agreement to work together. The Intellectual Property Office offers a mediation service to resolve all kinds of intellectual property disputes but if the parties choose not to use it or if mediation fails then the Comptroller has a team of officials known as hearing officers who decide the dispute on his behalf in accordance with the Patents Act 1977 and the general law.

The Comptroller's Powers
The Comptroller can decide:

• who is entitled to apply for a British patent for an invention under s.8 of the Act;
• who is entitled to apply for a patent other that a British patent under s.12; and
• who is entitled to a British patent that has already been granted under s.37.

If he decides that a patent has been granted to, or applied for by, the wrong person he has a wide range of powers for putting things right.

Who can apply for a Patent?

Anyone can apply for a patent but s.7 (2) (a) provides that a patent shall be granted primarily to the inventor or joint inventors. However, that paragraph is subject to s.7 (2) (b):

"in preference to the foregoing, to any person or persons who, by virtue of any enactment or rule of law, or any foreign law or treaty or international convention, or by virtue of an enforceable term of any agreement entered into with the inventor before the making of the invention, was or were at the time of the making of the invention entitled to the whole of the property in it (other than equitable interests) in the United Kingdom."

Most entitlement disputes turn on who was the  inventor and whether there is a contract term or other rule of law that entitles someone other than the inventor to apply for a patent.

Who is the Inventor?
The first step is to determine who is the inventor.

S.7 (3) of the Act provides that an “inventor” in relation to an invention means the actual deviser of the invention.  That prompts the question "what is the invention?"  Although for most purposes that question can be answered by looking at the numbered paragraphs at the end of a patent specification known as "the claims" (see "How to read a Patent" 2 Aug 2013 IP London) that cannot apply to a patent application where there have been no claims or indeed where there is not yet even an application. In Markem Corporation and Another v Zipher Ltd. [2005] RPC 31, [2005] EWCA Civ 267 the Court of Appeal decided that the invention is the inventive concept and the inventor is the person who came up with that concept.  As Lord Justice Jacob put it at paragraph 101:

"It would be handy if one could go by the claims, but one cannot. s. 8 calls for identification of information and the rights in it. Who contributed what and what rights if any they had in it lies at the heart of the inquiry, not what monopolies were actually claimed."

The starting point may be the specification and the circumstances in which the invention was created. The inventor is the person who identified the problem and came up with a solution.

Is there any relevant Contract or Rule of Law?
The next step is to determine whether there is any contract or rule of law that entitles someone other than the inventor to apply for or be granted the patent.

The most common reason why someone else might be entitled to an invention is that the inventor was employed. S.39 (1) of the Patents Act 1977 provides that if the inventor was employed in a capacity in which he might reasonably be expected to invent something or if he was an executive director or had some other special obligation to further his employer's business then the invention and the right to apply for a patent for the invention  would belong to the inventor's employer. In all other cases the invention will belong to the employee.  However, that is subject to the terms of employment that the inventor and his employer have actually negotiated though it has to be said that most contracts of employment provide for the employer to take his employee's invention.

As that may be a little unfair where the employee is modestly paid and the employer earns a lot of money from the invention s.40 provides for employee to be compensated over and above his pay and perks where the invention is of outstanding benefit to the employer but that is a topic for another discussion.

It is important to note that self-employed contractors and consultants are not "employees" for the purpose of s.39 and there is no presumption that the person who commissions product design or development work gets the right to apply for a patent for an invention that may result from the work. If that is what the parties' wish they should set that out in their commissioning agreement. Many product design consultancies but nor all have terms and conditions that set out who is to own the intellectual property in their design and development work.

Essential Reading
The Intellectual Property Office has published a useful booklet entitled Patents Deciding Disputes which you should read before issuing proceedings.  You should also consult the Patents Act 1977, the Patents Rules 2007 and a series of directions on the conduct of proceedings known as Tribunal Practice Notices which are archived on the IPO's old website at the National Archives.

Procedure
The person who seeks a decision from the Comptroller under s.8, s.12 or s.37 of the Act is known as "the claimant". He starts the procedure by filling in Patents Form 2 and setting out his case in a separate document known  as the "Statement of Grounds" which are filed with the Intellectual Property Office.  If the other side ("the defendant") wants to defend the proceedings, that party will file a document known as a "Counterstatement" setting out the terms that are admitted, those that are not admitted, those that are denied and any special defence that is relied upon. The Statement of Grounds and Counterstatement are known as statements of case and examples of both statements of case are provided in the Patents Deciding Disputes booklet.

After statements of case have been filed and exchanged a hearing officer may produce a preliminary evaluation setting out the issues and how he expects them to be determined. This is not an official decision and the parties are free to disregard it if they so choose though if they do so unreasonably they may increase their liability to costs. The purpose of the preliminary evaluation is to facilitate negotiation or mediation including mediation by the procedure mentioned above.

If the parties cannot settle their dispute on of them may request directions at a hearing before a hearing officer known as a "case management conference" or "CMC" which can usually be conducted by telephone. The hearing officer will set out a timetable for the filing and exchange of evidence and such other directions as the parties may require. Evidence is normally filed by witness statement an example of which appears in the booklet.

Many disputes can be decided on paper without the need for a hearing and that will reduce the costs that the unsuccessful party has to pay. However, if there is a dispute over the facts or there are complicated arguments over the construction of a contract or the law a hearing may be ordered.  These usually take place with the hearing officer sitting at the Intellectual Property Office main office in Newport and the parties addressing him or her by video link but if witnesses have to be cross-examined the hearing officer will travel up to London or some other venue to conduct the hearing. In recent years I have represented clients in Leeds and Manchester as well as Newport and London.

The hearing officer usually delivers judgment some 6 to 8 weeks after the hearing.

Costs are awarded on a fixed scale which covers a modest proportion of the successful party's costs unless the hearing officer believes that a party has behaved unreasonably in which case he or she may award the successful party more.

Appeals from the hearing officer lie to the Patents Court which is part of the Chancery Division of the High Court of Justice.

Practical Tips for avoiding and resolving Disputes
Although less stressful than High Court litigation it is obviously better to avoid going to the Comptroller at all if possible.

1. Inventors should keep a notebook or other record in which they set out every step they take in identifying a technical problem and finding a solution. Ideally, the pages should be numbered consecutively and every entry dated, timed and signed. That helps the parties and, if necessary, the Comptroller and the courts to identify the invention and the person who should take the credit for it. It is a very useful discipline and it was a virtual requirement for an American patent when the US Patent and Trade Mark Office granted patents to the first to invent rather than the first to file.
2. If 2 or more people agree to collaborate whether as a research and development team, consultants or contractors or as investors it is a good idea to set out who is to own any patents or other intellectual property that may result from the collaboration and in what shares. You can do it yourselves but it would be safer to get a patent attorney or specialist solicitor or barrister who can accept instructions under the Public Access Rules to draw one up for you.
3. Product design and development consultants and companies that outsource a lot of their design and development work should provide for the ownership of any intellectual property that may result from such work in their terms and conditions of business or as the case may be terms and conditions of procurement. Such terms could also provide for cost effective dispute resolution procedures such as mediation and expert determination.  Again, that is something with which patent attorneys and other specialist lawyers including ourselves can help.
4. If a dispute does arise take specialist legal advice as soon as possible. A good lawyer or patent attorney can advise you of the strength of your case and your options for resolving the dispute.
5. As legal advice and representation can be expensive it often pays to get before the end legal indemnity insurance that covers intellectual property disputes. Most legal indemnity policies exclude such cover but there is a growing market for such insurance and premiums are beginning to fall.
6. Make sure that you are fully aware of the law relating to your business so that you can take key decisions in good time.  We hold regular seminars and publish briefings on all aspects of IP for business owners and managers as well as legal professionals.

Further Information

If you want to discuss any of these issues you can  call me during office hours on 01484 599090 during normal business hours or message me through my contact form. You can also get in touch through Linkedin, Facebook or twitter.

How Small Businesses in Yorkshire can protect their Intellectual Property

The Patents County Court Small Claims Track from Jane Lambert


I have spent most of my career at the intellectual property bar championing small and medium enterprises in the North of England.  Until very recently I would encourage their solicitors and patent and trade mark attorneys to issue proceedings in the Leeds or some other Chancery District Registry unless the claim related to patents, registered or registered Community designs, semiconductor topographies or plant breeders' rights.   The reason I did that is that is that the chancery judges in Leeds have been every bit as good as those in the Royal Courts of Justice - at least since Richard Scott was appointed Vice-Chancellor - and it is nearly always cheaper and more convenient for a business owner and his solicitors in Yorkshire to litigate in Leeds than traipse down to London.

Nearly all these cases were claims for injunctions and in almost every case the action was settled on undertakings or when the claimant obtained or was refused an interim injunction.   In very few of those settlements did the defendant agree to pay any damages at all to the claimant.   In the few cases where he or she did so agree, those damages seldom exceeded £5,000.   It is very rare for an intellectual property claim to go to trial and rarer still for there to be an account of profits or inquiry as to damages.   Indeed, I have had only one brief for an inquiry and that took place in London before Master Bragge.

It follows that many, if not most, of those cases could have been brought before the small claims track of the Patents County Court had it existed at the time.   That jurisdiction has power to grant injunctions and other relief in any intellectual property claim provided that the claim for damages is less than £5,000 except claims involving patents, registered or registered Community designs, semiconductor topographies and plant breeders rights which must still be brought in the Patents Court or the multitrack of the Patents County Court. Thus the small claims judges could hear claims by an inventor against a prospective licensee or investor for the breach of a non-disclosure agreement, an established trader against an upstart competitor who has adopted a similar trade name and labelling or a small manufacturer whose nifty merchandise has been knocked off.

The costs that can be recovered in the small claims track are very low:   up to £260 if counsel or solicitors have been instructed in relation to an injunction plus the costs of issuing proceedings which ranges between £35 and £120 depending on the amount of damages sought and compensation for travelling and loss of earnings for attending a hearing.   Accordingly, the risks are very low which means that intellectual property owners cannot be stymied by security for costs applications.   The procedure has been simplified in that there will be limited disclosure, the strict rules of evidence are relaxed, evidence need not be given on oath, cross-examination can be limited and anyone can represent a party at a hearing even if he or she is not qualified as a lawyer or patent or trade mark attorney.   Indeed, many cases are likely be disposed on on paper.

The Ministry of Justice has appointed no less than five district judges and deputy district judges to this new small claims track of a very high calibre, including the head of litigation of a mobile phone manufacturer, the legal adviser to the Society of Authors, a former partner of Linklaters and a former partner of Barlow Lyde & Gilbert (now Clyde & Co,).   Clearly, the Ministry expects the court to be busy and by the quality of its appointments it has shown that it means business.   As counsel I have great confidence in all of those judges.

So, how do you or your solicitors use this new tribunal?   I gave a brief guide in the above presentation to Sheffield Inventors Group on 1 October 2012 which you can download.   If you missed it I shall give the same presentation again to the Liverpool Inventors Club at the offices of QualitySolicitors Jackson & Canter at 88 Church Street in Liverpool on 29 October at 17:00.   If you want to attend you can book on-line or call Michael Sandys of QualitySolicitors Jackson & Canter on 0151 282 1700.   Admission is free but as space is limited you will need a ticket.

If you don't want to negotiate the M62 or the start of the Merseyside rush hour here is a step by step guide as to what to do:

1. Ask the other side nicely to stop whatever they are doing.   You need to send a letter before claim in accordance with Annex A of the Practice Direction - Pre-Action Conduct.  You must be careful how do that otherwise you could end up getting sued yourself for groundless threats as indeed could your solicitor if he does not know much about intellectual property. I kid you not.  I have given some guidance as to how that can be done in "IP Dispute Resolution in England and Wales: why sending a US style “Cease and Desist Letter” or old style “Letter before Action” may not be a good idea" JD Supra 13 Jan 2012 and I have even drafted a model letter before claim for a design right dispute.  You are likely to be better off getting a barrister, solicitor or patent or trade mark attorney to draft such a letter for you and I will do one for you or your solicitor for a fixed fee if you want to get in touch. You are likely to be even better off if you get a specialist solicitor to put it on her notepaper and, if you don't have a specialist solicitor in Yorkshire, Kate Reid of Pemberton Reid sends letters drafted by me on her stationery for an extra £100 + VAT.  I have arranged with solicitors and patent and trade mark agents in other parts of the country to offer similar deals to my clients.
2. Issue your claim form out of the Rolls Building    A claim form is what we used to call a writ and blank forms can be downloaded from HMCT Service website or obtained from the Court. You have to issue it out of the public counter of the Rolls Building off Fetter Lane in London and pay the fee that I mentioned above.   The claim form must be accompanied by particulars of claim which should set out your claim in detail.  In addition to specifying your right, how it has been infringed and the remedy you require you must say that you have complied with the Practice Direction - Pre-Action Conduct and that you want this case to proceed in the small claims track.   Again, this is tricky and you main need some help.   Again, I am happy to settle particulars of claim for a fixed fee if you would like to contact me,   You must then serve the claim form with the particulars of claim and a response that on the other side or get the court to do it for you.   It is very important that you serve all the paperwork or you case will stall and any order or relief that you may be granted will be set aside.
3. Wait for the other side to respond.   They have a fixed time to lodge their defence and any counterclaim against you the duration of which will depend on whether you complied with the Practice Direction.   If they don't lodge their defence in time you can apply to the court for judgment in default of defence which will probably require a hearing if you want an injunction.   If they do respond in time the court will give directions which may include fixing a date for a final or a preliminary hearing.   You must comply with all the directions of the court within the time specified if you want to get into or remain in the judge's good books.    
4. Attend the Hearing    Unless the judge has indicated that your case is suitable to be disposed of in writing and everyone has agreed you must attend the hearing which will take place in the Thomas Moore Building in the Royal Courts of Justice which is a few hundred yards from the Rolls Building.   The judges of the Patents and Patents County Court have said in their guide that they will sit in London for the convenience of the parties and to save costs but I have only known a few occasions when they have done so.   You should have enough notice of the hearing to book a saver ticket and a Travelodge so it is hardly going to break the bank if you go to London and you should get some of your dosh back if you win.   Also, you and your Mrs. (or hubby) can combine a trip to the court with a visit to some of the other attractions that the Smoke has to offer.

If you want to learn more about this small claims track there is loads of info including links to my other articles and other guidance at "Patents County Court - the New Small Claims Track Rules" 20 Sept 2012 in my IP/IT Update blog.   You can also give me a bell on   0113 320 3232 begin_of_the_skype_highlighting            0113 320 3232      end_of_the_skype_highlighting or send me a message through Facebook, Linkedin, Xing or twitter or indeed my contact form.