Price v Elf Print Media Ltd & Ors

Under sections 40 and 41 of the Patents Act 1977, any compensation for an employee’s qualifying invention is payable by the employer. An employee cannot trace that statutory entitlement into the hands of directors or other persons alleged to have received the patent rights at an undervalue. A fiduciary claim belonging to the employer remains the employer’s asset and does not create a proprietary claim for the employee. Persons who hold relevant documents are not thereby necessary or proper defendants. Any necessary third-party disclosure can be obtained under the Civil Procedure Rules.

The claimant sought permission to appeal against an order of Pumfrey J striking out his claim against the second and third defendants, leaving his former employer as the only defendant. He claimed compensation under sections 40 and 41 of the Patents Act 1977 for an invention made during his employment.

He alleged that the employer had assigned the patent rights to its directors at a substantial undervalue, in breach of fiduciary duty, and sought to trace his statutory entitlement into their hands. Alternatively, he argued that they were necessary and proper parties because they held documents relevant to assessing compensation.

1. Application refused. The proposed appeal had no real prospect of success.
2. Sections 40 and 41 of the Patents Act 1977 place liability for any award of compensation on the employer. The employee therefore had no cause of action against the employer’s directors for statutory compensation.
3. Any claim arising from an undervalue assignment and breach of fiduciary duty belonged to the employer. It was an asset of the employer and could not be treated as property belonging to the employee or used by the employee to trace a proprietary entitlement.
4. The directors were not necessary or proper parties merely because they might possess documents relevant to calculating compensation. If disclosure from them became necessary, the Civil Procedure Rules provided a possible route for third-party disclosure without joining them as defendants.
5. The order was: permission to appeal refused, with detailed assessment of the applicant’s costs.

• High Court, Chancery Division, Patents Court: Pumfrey J struck out the claimant’s claim against Keith Pike and Susanna Pike on 1 February 2001.
• Court of Appeal (Civil Division): Lord Justice Aldous refused permission to appeal.