L'Oreal Societe Anonyme & Anor v RN Ventures Ltd

Section 68 of the Patents Act 1977 imposes a costs sanction for failing to register an exclusive licence within six months. The sanction applies to costs attributable to relief for infringements committed before registration, while costs attributable to post-registration infringements remain recoverable. Where a patentee and exclusive licensee jointly bring proceedings, the court’s discretion to award costs must reflect the statutory purpose of maintaining an accurate public register. The sanction cannot be avoided because the patentee pays the litigation costs or because the defendant suffered no prejudice. A proportionate deduction may be made using a broad apportionment, involving an element of rough justice.

The claimants succeeded in patent and registered design infringement proceedings. The first claimant was the patent proprietor and the second claimant was its exclusive licensee. The licence was not registered until 9 December 2016, although it had been granted substantially earlier.

The parties agreed that section 68 deprived the exclusive licensee of recovery of certain costs. The dispute was whether the patentee could recover those costs instead, whether the licence excluded the patentee’s right to sue, and what deduction should be made from the claimants’ overall costs. The court also considered the significance of validity issues and injunctive relief.

1. The court rejected the argument that the 2016 confirmatory licence excluded the patentee from bringing infringement proceedings. The earlier licence granted an exclusive right to exploit the licensed products, but did not transfer the exclusive right to sue. The later licence confirmed the licensee’s statutory right to sue under section 67 of the Patents Act 1977; it did not remove the patentee’s concurrent right.

2. Following and applying the Supreme Court’s analysis in Schütz v Werit [2013] UKSC 16, section 68 is directed to the public interest in an accurate and complete register. Its purpose is not confined to protecting defendants from litigation prejudice. The court should therefore exercise its costs discretion consistently with that statutory policy.

3. The patentee could not recover costs which the licensee was barred from recovering merely because the claimants were within the same corporate group or because the patentee had paid the solicitors. That would deprive section 68 of effective operation. No inquiry into subjective intention or actual prejudice was required.

4. The appropriate sanction was an apportionment. The court attributed 30 per cent of the patent-related costs to validity, leaving 50 per cent of the overall costs attributable to patent infringement. A 50/50 allocation between the two claimants produced 25 per cent attributable to each claimant. Applying the agreed 70/30 split between pre- and post-registration infringement resulted in a 17.5 per cent deduction from the claimants’ overall costs.

5. The value of future infringements prevented by the injunction was not a basis for reducing the section 68 deduction. Permission to appeal was granted because the case involved unusual principles and costs apportionment.

This was a first-instance decision. The court granted both parties permission to appeal from the costs decision.