Markem Corporation & Anor v Zipher Ltd

Entitlement to apply for a patent does not itself establish entitlement to another person's patent or application. The claimant must establish an independent legal basis for title and show why the other person was not entitled to apply alone. The inquiry concerns the invention disclosed, contributions to it and rights in the information used. It proceeds by identifying the inventive concept rather than allocating individual claims. Clear and unarguable invalidity may be considered, and an entitlement claim inherently asserting invalidity must fail.

Witnesses must receive a fair opportunity to answer challenges to their truthfulness. A later claim which could have accompanied earlier proceedings requires a broad assessment of abuse of process. Knowingly reserving an available claim, without seeking directions, may unjustly harass defendants and constitute abuse.

The Markem companies manufactured thermal printers. Several former employees joined Zipher, where a new ribbon-drive system was developed and patented. Markem claimed entitlement to parts of Zipher's patents by relying on earlier discussions and documents produced during those employees' employment. It expressly advanced no allegation of breach of confidence, contract or another independent legal duty in the entitlement proceedings.

Judge Fysh QC allocated individual patent claims between the parties and granted consequential relief. His judgments were reported at [2004] RPC 233, [2004] RPC 264 and [2005] RPC 43. Zipher appealed and Markem cross-appealed. The appeals also challenged adverse credibility findings made against Zipher's witnesses.

Markem subsequently sued Zipher and four former employees for breach of confidence on substantially the same facts. The defendants appealed against Judge Fysh QC's refusal to strike out that action. The central issues concerned the legal foundation and proper method of determining patent entitlement, fairness to witnesses, and whether the subsequent action abused the court's process.

1. The court allowed Zipher's entitlement appeal and dismissed all the cross-appeals. It also allowed the appeal in the subsequent action and struck out Markem's breach of confidence claims as an abuse of process.

2. The adverse credibility findings were procedurally unfair and inadequately reasoned. The witnesses had not been challenged on the allegations that they knew of, remembered or used the earlier proposal. They therefore had no opportunity to explain. The rule in Browne v Dunn applied squarely. The judge's reasons also conflicted with unchallenged evidence and failed to evaluate material circumstances. The witnesses' account of the invention and patenting process had to be accepted (paras 49–70).

3. Section 7 of the Patents Act 1977 did not itself found an entitlement claim under section 8. A claimant had to establish title through another rule of law and explain why the patent applicant was not entitled to apply alone. Earlier possession of an idea, or an ability to make an independent application, was insufficient. Former employees could use information they were legally free to use in making inventions for themselves or a new employer (paras 77–85; 107).

4. The Comptroller could consider clear and unarguable invalidity when exercising the statutory discretion. Entitlement proceedings should not become a full inquiry into disputed validity. Where an entitlement case inherently asserted or accepted invalidity, it must fail. The court declined to determine the separately disputed validity questions (paras 87–90; 109–110).

5. The entitlement inquiry concerned information disclosed and the rights in it. Section 125(1) primarily addressed the extent of protection, and its contextual qualification prevented claims from determining entitlement. Ordinarily, the inquiry should identify the heart of the invention from the specific disclosure. Patent drafting, generalisation and claim limitations did not create separate inventive contributions. The approach in Stanelco Fibre Optics v. Bioprogress was endorsed, subject to the qualification concerning inherent or accepted invalidity. General wishes without a practical embodiment did not establish the invention claimed here (paras 91–106).

6. Under Johnson v Gore Wood & Co, abuse required a broad assessment of all circumstances, rather than an automatic inference from the availability of an earlier claim. Markem possessed the necessary information before the entitlement trial. It should have pursued or abandoned the confidence issue, or disclosed its position and sought directions. The earlier stay did not reserve that issue for later litigation. The defendants and court had been denied a choice about resolving all issues together. Successive proceedings increased overall costs and unjustly harassed the defendants. The refusal to strike out was plainly wrong (paras 113–116; 125–132).

7. The proposed patent amendment was refused. Advertisement and an opportunity for public opposition would have been required. Specific amendment proceedings before the Comptroller were the appropriate course (para 109).

• Court of Appeal (Civil Division): In [2005] EWCA Civ 267 , allowed Zipher's entitlement appeal, dismissed the cross-appeals, and allowed the defendants' appeal against refusal to strike out the subsequent breach of confidence action.
• High Court, Chancery Division (Patents Court): Judge Fysh QC determined the entitlement proceedings in judgments dated 4 July, 21 July and 1 August 2003, reported respectively at [2004] RPC 233, [2004] RPC 264 and [2005] RPC 43. He allocated claims in the disputed thermal-printer patents and granted consequential relief. On 26 January 2005 he refused to strike out the subsequent breach of confidence action and refused permission to appeal.
• Comptroller: Markem initially referred entitlement questions to the Patent Office. The entitlement proceedings were transferred to the High Court and commenced there on 9 December 2002.