first_img Mark Chacksfield (instructed by Bond Pearce) for the claimants; Robert Deacon (instructed by Hansel Henson) for ESPL; MH did not appear and was not represented. H was the inventor and owner of a patent granted on 1 May 2002. In July 2009, H granted EM Ltd (EML) an exclusive licence under the patent. EML was owned and run by the Black family, in particular JB and SB. In 2010, EML decided to set up a new company, ESP Ltd (ESPL) as the vehicle to buy the patent. On 5 February, H executed an assignment of the patent to his company, MAD Ltd (MAD). On 22 February, an agreement, embodied in a written agreement signed on that date, was reached between MAD and EML to sell the patent to EML. The agreement had four parties, namely MAD, EML, ESPL and H. The agreement included a provision for assignment of the patent from MAD to ESPL expressly in consideration of the payment of £80,000 (see clause 2.1) and the relevant payment terms (see clause 4.1). Clause 7.2, provided that if any three consecutive sums under the agreement remained outstanding for more than 90 days cumulatively, the assignee should, on demand by the assignor, forthwith provide to the assignor an executed assignment of the patent back to the assignor or its designate in registrable form. On the same day the agreement was signed, MS Ltd (MSL) started a claim in the Patents County Court to revoke the patent (the main proceedings), claiming ownership of it. H and MAD contended that the patent belonged to them. EML contended that the patent belonged to it as it had purchased it from MAD for £80,000. From the date of the agreement until April, all the relevant payments were made. However, the May payment was not made. On 9 June, EML wrote to H requesting a repayment holiday to enable it to continue the legal fight with MSL over the validity of the patent. In that letter, EML was saying that it could not afford to fight EML in court and pay the instalments due. H did not accept EML’s proposals. The June payment was not made and on 22 June, the matter came before the county court for a case management conference. In the course of the main proceedings, the question of who the proper parties were arose and it was ordered that the defendants were to be H, EML and JB. The judge refused to order ESPL to be made a defendant but directed that it would be named as a defendant if ESPL became registered proprietor. At that stage, the register showed H as proprietor and EML as exclusive licensee. None of the subsequent transactions had been registered. On 13 July, SB sent another email to H about the payments, proposing a way forward. H did not accept those proposals. In the event, the July payment was not made. On 5 August, MAD and H entered into an agreement with MH plc (MH), a company associated with the claimant company in the main proceedings. Under the agreement with MH, inter alia, the debt owed by EML (at that stage totalling £15,000) was assigned to MH along with the right to receive the remaining monthly payments. Consideration for the assignment of the contract debt (including the right to future instalments) was £15,000, paid by MH to MAD. On that same date, MAD sent a notice pursuant to clause 7.2 requiring ESPL to reassign the patent to MAD. On 10 August, MAD sent another notice of assignment of the debt to EML. That letter included a copy of the assignment of the debt to MH signed by H on behalf of MAD. No payment was made by EML and the patent was not assigned. Following the failure by EML to make the August payment, MH served a statutory demand on EML pursuant to section 123(1)(a) of the Insolvency Act 1986. On 17 September, EML paid the outstanding debt to MH and MH accepted the payment. After that, ESPL continued to make payments of the instalments due under the agreement. The payment due in January 2011 was three days late as a result of the weekend. However, a second statutory demand was served on ESPL by MH for that payment. ESPL never assigned the patent back to MAD. MAD’s case was that ESPL was obliged by clause 7.2 to execute a reassignment of the patent back to MAD. MAD sought specific performance of the contract to achieve that objective. On 7 April 2011, it was ordered that the question of who the correct defendant to MSL’s claim for revocation of the patent was, should be tried as a preliminary issue. There were three camps claiming ownership of the patent, namely: (i) MS Ltd (the claimant in the main proceedings); (ii) H and MAD; and (iii) ESPL and its associated companies. That issue was tried as a part 20 claim in the main patent proceedings, with H and MAD as claimants and ESPL as the defendant. By that time, MAD had settled its differences with MSL, whereas EML had not. Consequently, if MAD owned the patent and should be defendant to the main action, the revocation action would cease as those parties were agreed. However, if ESPL owned the patent and was the correct defendant, the revocation action would continue. EML contended that clause 7.2 was not engaged at all. It argued that the way in which MAD calculated the days had been wrong. It argued that by 5 August 2010, the clause had been engaged because by that time three consecutive sums under the agreement had remained outstanding and the cumulative total number of days the payments had been outstanding had been more than 90. MAD’s calculation was that by 5 August, the relevant number of days was 133, with the result that the patent should be reassigned to MAD. EML denied that clause 7.2 had been engaged at all. It contended that the way in which MAD calculated the days was wrong. If the relevant days were calculated in a manner EML contended for then the number by 5 August would only have been 11 or 12. EML further contended that even if MAD was correct about the way in which clause 7.2 worked and therefore correct that it had been engaged, there were a number of further defences. Against that background, the following issues fell to be determined, including: first, the true construction of clause 7.2, both in terms of the triggering event and its place in the contract as a whole: if EML was right, then the case did not get off the ground. Secondly, the doctrines of waiver and affirmation, as raised by EML, and in particular the effect of the acceptance of EML’s payments by MSL. In respect of those doctrines, EML contended that the right to enforce the clause had been waived or that EML’s ownership of the patent had been affirmed on the basis that, in the full knowledge that the payments had not been made, MAD had assigned the debt and the right to future instalments to MH and had stood by while MH had demanded and accepted the payments from EML. The claim would be dismissed. (1) MAD’s alternative construction of the clause was the right one. Three payments had to be outstanding, but a relevant day was a day on which a payment remained outstanding. That was what the word ‘cumulatively’ in clause 7.2 was intended to achieve. The accumulation was to aggregate outstanding days for one payment together with days for another and for a third. Once the total passed 90 days, the clause was triggered. Consequently, on that basis, MAD had the right to call for a reassignment when it had done so on 5 August 2010 (see [51] of the judgment). (2) In the instant case, on 17 September 2010, EML had proffered the outstanding sums due and they had been accepted. From EML’s point of view, it had offered to pay and had paid the money which had been due as a contract debt at that time. In substance, the party with whom it had contracted had been affirming the contract by accepting the money. At that point, the right to demand reassignment pursuant to clause 7.2 had come to an end (see [59] of the judgment). ESPL would be entitled to be named as defendant to the main revocation action (see [69] of the judgment). Petition for revocation – Validitycenter_img Horler and another v Everseal Stationery Products Ltd: Patents County Court (Judge Birss QC sitting as a judge of the Patents County Court): 21 October 2011last_img read more

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