Markem Corporation & Anor v Zipher Ltd

Patent entitlement is a question of title, not merely of who could have filed an application. Under the Patents Act 1977, a claimant must identify an independent legal basis, such as contract or breach of confidence, giving it ownership of another person’s application or patent.

Entitlement proceedings are concerned principally with the information embodying the inventive concept, not with a mechanistic claim-by-claim comparison. A clear and unarguable validity objection may be considered, but a full validity inquiry is inappropriate.

A later claim based on matters which should have been raised earlier is not automatically abusive. The court must assess all the circumstances. Deliberately reserving a viable claim for later proceedings may, however, constitute an abuse of process.

Markem appealed from several judgments of HHJ Fysh QC in entitlement proceedings concerning thermal printer patents. The decisions, reported at [2004] RPC 233, [2004] RPC 264 and [2005] RPC 43, had granted Zipher and Markem various interests and consequential relief. The appeals concerned only the Thermal Printer group.

A separate appeal arose from the judge’s refusal on 26 January 2005 to strike out Markem’s later breach of confidence proceedings against Zipher and former Markem employees. The central issues were whether Markem’s earlier knowledge could establish entitlement, how validity and patent claims should be treated in entitlement proceedings, whether adverse credibility findings were procedurally fair, and whether the later confidence claim was an abuse of process.

Lord Justice Jacob delivered the judgment, with Lord Justices Mummery and Kennedy agreeing. The court allowed Zipher’s appeal in the entitlement proceedings, dismissed all cross-appeals, and allowed the appeal in the breach of confidence proceedings.

1. Credibility findings. The judge had made serious adverse findings against Mr Buckby and the named inventors without putting the essential allegation to them in cross-examination. The rule in Browne v Dunn (1894) 6 R 67, as explained in Allied Pastoral Holdings v Federal Commissioner of Taxation (1983) 44 ALR 607, required a fair opportunity to answer the proposed challenge. The reasons for disbelieving the witnesses were also inadequate. The findings were set aside and the evidence concerning the inventions and patenting process was accepted.
2. Entitlement. Sections 8, 12 and 37 of the Patents Act 1977 did not make the right under section 7 to apply for a patent an independent source of title to another person’s application or patent. The claimant had to show why the other applicant was not entitled to apply, wholly or alone. That normally required an independent rule of law, such as contract or breach of confidence. A claimant could not succeed merely by showing that it could have made its own application.
3. Validity and the claims. A full-scale validity inquiry was inappropriate, but the Comptroller could take account of a clear and unarguable invalidity point. An entitlement claim failed where the case advanced to establish entitlement necessarily accepted invalidity. The court rejected a claim-by-claim approach. Section 8 referred to the relevant information and rights in it, particularly the specific disclosure and the heart of the inventive concept. Patent-agent generalisation or claim limitation did not, without more, create inventorship. The proposed Datamax amendment was not introduced in the appeal, and no finding was made on the alleged invalidity of claim 1 of patent 2,369,326.
4. Abuse of process. The discretion under CPR 3.4 was governed by the broad, merit-based approach in Henderson v Henderson (1843) 3 Hare 100 and Johnson v Gore Wood & Co [2002] AC 1. The question was whether, in all the circumstances, the later proceedings misused the court’s process, having regard to finality, efficiency, genuine claims and harassment. Once Markem had the information needed to plead breach of confidence, it had to pursue the issue or abandon it. Keeping it in reserve until after the entitlement trial was an abuse.
5. Orders. The breach of confidence claims were struck out as an abuse of the process of the court.

• Court of Appeal (Civil Division): On [2005] EWCA Civ 267, Zipher’s entitlement appeal and the appeal against refusal to strike out the confidence proceedings were allowed. Markem’s cross-appeals were dismissed.
• Chancery Division (Patents Court): HHJ Fysh QC gave judgments on 4 July, 21 July and 1 August 2003, reported at [2004] RPC 233, [2004] RPC 264 and [2005] RPC 43. He made findings and orders concerning entitlement to the Thermal Printer patents. On 26 January 2005 he refused to strike out Markem’s subsequent breach of confidence action.