Flitcraft Limited & Ors v Philip Price & Anor

An exclusive licensee’s right to sue for patent infringement derives from section 67(1) of the Patents Act 1977. The mandatory requirement in section 67(3) to join the proprietor is essentially procedural. It prevents final relief without joinder, but does not render proceedings a nullity and may be cured by joinder after a liability judgment where the proprietor’s and defendant’s interests remain protected.

Separate claims by a proprietor and an exclusive licensee should ordinarily be treated separately in costs where they concern distinct causes of action and interests. Common costs may be apportioned broadly, including equally, then adjusted for issues peculiar to one claim.

Mr Price and Supawall sued Flitcraft for patent infringement, copyright infringement and passing off. Mr Price claimed as proprietor of two patents and Supawall claimed as exclusive licensee. The High Court dismissed Mr Price’s claim after finding that the patents vested in his trustee in bankruptcy, now the Official Receiver. It found that Supawall’s licence remained effective and that Flitcraft had infringed one patent, but initially the true proprietor had not been joined as required by section 67(3) of the Patents Act 1977.

The judge subsequently joined the Official Receiver and made costs orders. Flitcraft appealed the joinder, licence construction and costs consequences. Mr Price and Supawall appealed the costs apportionment and interim payments. The appeals arose from decisions including [2022] EWHC 3381 (Pat), [2023] EWHC 695 (Pat), [2023] EWHC 1222 (Pat) and [2023] EWHC 1746 (Pat).

1. Flitcraft’s appeal was dismissed. The costs appeal was allowed only to set aside the interim payment of £12,775.50 ordered against Supawall; it was otherwise dismissed.

2. Section 67(1) of the Patents Act 1977 gives an exclusive licensee the substantive right to sue. Section 67(3) is essentially procedural, although its mandatory terms prevent final relief being granted before the proprietor is joined. Its purposes are to permit a proper allocation of financial relief between proprietor and licensee and to protect the defendant from a later claim by the proprietor. Where those purposes can still fairly be achieved, the court may join the true proprietor after judgment. The omission did not create a new or inconsistent claim by Supawall, since its status as exclusive licensee did not depend on Mr Price being proprietor.

3. The judge’s discretionary joinder decision was not flawed. Mr Price’s false assertion of ownership destroyed his own claim but was immaterial to Supawall’s independent licence claim. The court distinguished the strike-out context in Summers v Fairclough [2012] UKSC 26. It nevertheless upheld the judge’s decision to reflect Mr Middleton’s false evidence in a reduction of Supawall’s recoverable costs.

4. Clause 9 of the licence regulated co-operation between licensor and licensee. It did not displace Supawall’s statutory right to sue, make a prior notice from Mr Price a condition of proceedings, or give Mr Price priority in any recovery.

5. The judge was entitled to treat Mr Price’s proprietary claim and Supawall’s licensee claim as separate for costs. They were distinct causes of action held by parties with distinct interests. Common costs could be apportioned between them and the 60/40 allocation, adjusted for substantial issues unique to Mr Price’s failed claim, was within the trial judge’s broad discretion.

6. Mr Price’s false claim properly attracted indemnity costs for the part of the process caused by his dishonesty. However, Supawall was plainly to be a net recipient of costs, so the interim payment ordered against it was set aside.

• Court of Appeal (Civil Division): Flitcraft’s appeal was dismissed. The costs appeal was allowed only to set aside the interim payment against Supawall: [2024] EWCA Civ 136.
• High Court, Patents Court: The liability judgment dismissed Mr Price’s claims but upheld Supawall’s patent claim in part, subject to joinder of the true proprietor: [2022] EWHC 3381 (Pat).
• High Court, Patents Court: Subsequent judgments dealt with joinder of the Official Receiver, costs, and interim costs payments: [2023] EWHC 695 (Pat); [2023] EWHC 1222 (Pat); [2023] EWHC 1746 (Pat).