Oxford Nanopore Technologies Ltd & Anor v Pacific Biosciences of California, Inc & Anor

Whether a patent licence is exclusive is determined under English law by construing the relevant licence documents against the statutory requirement that the rights are conferred to the exclusion of all other persons, including the patentee.

The assessment is made at the relevant time and may change as contractual rights are exercised. A third party’s conditional right to call for a licence does not necessarily destroy exclusivity before the condition is fulfilled. However, where the third party has an unfettered right to obtain an overlapping licence merely by requesting it, the existing licence is non-exclusive. The burden lies on the alleged exclusive licensee to establish that status.

Oxford Nanopore Technologies Ltd and Harvard sued Pacific Biosciences of California, Inc and Pacific Biosciences UK Ltd for infringement of a patent. Oxford Nanopore relied on an exclusive licence from Harvard and therefore claimed standing under section 67(1) of the Patents Act 1977.

The licence granted Oxford Nanopore exclusive rights but preserved a third party’s absolute right, on request, to obtain an overlapping licence. That right had not been exercised. The defendants applied to strike out the claim or obtain summary judgment, and the parties agreed that the issue should be decided as a point of law. The central question was whether the unexercised right to obtain a licence meant that Oxford Nanopore’s licence was not exclusive.

1. Summary judgment. The court entered summary judgment for the claimants on the standing issue. Oxford Nanopore’s licence was an exclusive licence within section 67(1) of the Patents Act 1977.
2. Whether a licence is exclusive is a question of English law and depends on proper construction of the relevant document or documents. The contractual description of a licence as exclusive is not determinative. The party asserting exclusive-licensee status bears the burden of proving it.
3. The essential element is exclusion of all other persons, including the patentee or applicant. An exclusive licence may change into a non-exclusive licence, and exclusivity is assessed at the relevant time rather than once and for all. A licence may also relate to only one right under a patent, and more than one exclusive licence may exist in respect of different rights.
4. A licence granted to several entities is not exclusive merely because one controls the others. By contrast, an exclusive licensee may grant sub-licences to persons authorised by it.
5. The court distinguished between an actual licence and an equitable right to call for a licence. A conditional right to call for a licence may leave an otherwise exclusive licence intact until the contractual conditions are fulfilled.
6. The third party’s right in the present case was different from the conditional right considered in Illumina Inc v Premaitha Health PLC, because it was unfettered and could be exercised at any time merely by request. Nevertheless, the difference was insufficient to produce a different legal result. The third party had not requested a licence and remained excluded from working the invention. The licence was therefore exclusive at the relevant time.