Permavent Ltd v Makin

An interim injunction may be granted in a patent-entitlement dispute where there is a serious issue to be tried and the American Cyanamid considerations favour preserving the position pending trial. The court should assess the potential irreparable harm to each party and the balance of convenience, including the existing commercial status quo. Where the injunction prevents the registered owner from exploiting rights which the claimant continues to use, the injunction may be conditioned on running payments to the defendant, in addition to the usual cross-undertaking in damages. The payment should be realistic but need not be calculated with undue precision at the interim stage.

Permavent Ltd sought an interim injunction restraining Stephen Makin from transferring or licensing patents and patent applications relating to roofing products. The parties disputed ownership. Permavent relied on Makin’s former directorship and employment, alleged fiduciary and employment duties, the circumstances in which the inventions were made, and an email acknowledging that the patents should belong to Permavent. Makin relied, among other matters, on an exclusive patent licence which appeared to recognise his ownership. The central issue was whether interim relief should preserve the patents and the existing sale of products pending determination of entitlement.

The court granted the interim injunction, subject to conditions.

1. Serious issue to be tried. Applying the American Cyanamid principles, there was a serious issue as to whether the patents belonged to Permavent or Makin. The court could not determine the competing merits at this stage. The licence agreement and related correspondence presented difficulties for Permavent, while Makin’s ownership email, the connection between the inventions and Permavent’s business, and Permavent’s payment of prosecution fees presented difficulties for Makin.
2. Irreparable harm. Permavent faced a real prospect of irreparable or unquantifiable loss if Makin could dispose of or license the patents, particularly to a competitor. Makin would also suffer harm because the injunction would sterilise the patents and restrict commercial opportunities. However, Permavent’s potential harm was greater, and Permavent was better placed to compensate Makin if the injunction later proved unjustified.
3. Status quo and balance of convenience. The existing position was that Permavent continued to sell the relevant products, while Makin did not object in principle to that continuing. Preserving that position favoured an injunction. The proceedings themselves already created much of the commercial sterilisation, so the incremental effect of the injunction was relatively modest.
4. Running payments. In an appropriate bona fide entitlement dispute, an injunction may be conditional on the claimant making realistic interim payments to the defendant where the claimant uses rights formally registered in the defendant’s name. The injunction was therefore made conditional on quarterly payments of £2,500, broadly reflecting a 2% royalty on the relevant turnover, subject to later adjustment, together with the conventional cross-undertaking in damages.
5. Liberty to apply. Because the dispute formed part of wider proceedings, mediation was relevant, and the appropriate forum and trial timetable remained uncertain, both parties were given liberty to apply on or after 1 November 2017 for relaxation or increased stringency of the injunction or its conditions.