House of Commons - Explanatory Note
Patents Bill [HL] - continued          House of Commons

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Schedule 1 paragraph 9, sub-paragraph (4)

43.     Paragraph 9(4) provides a new section 130(5A), which puts a gloss on the term "amendment" (and cognate forms) wherever they appear in the 1977 Act. However, the gloss only applies to amendment of a patent, and so it does not include references to amendment of a patent application. The paragraph makes clear that amendment of a patent includes an amendment which limits the scope of the claims - and so limits the protection afforded by the patent. A limitation of the claims may be made under the existing provisions of the 1977 Act which allow for post-grant amendment (sections 27 or 75). Also, in the case of a European patent, the provision recognises that the claims may be limited at the EPO (under the new procedure to be introduced by Article 105a EPC 2000).

44.     The reference to amendment of a European patent in section 77(4) therefore applies equally to a European patent which is limited at the EPO. Thus, the limitation of the patent is treated as applying from grant. By virtue of section 77(6)(b) a European patent which has been limited at the EPO will be subject, before it comes into force in the UK, to the same translation requirements which apply to a European patent that has been amended during opposition proceedings. It is also clear that, by virtue of section 77(2), the provisions of the 1977 Act do not affect the operation of the new limitation procedure before the EPO. Furthermore, references in sections 58(6) and 62(3) to amendment under the 1977 Act are to be construed as including amendment or limitation before the EPO.

Clause 6 - Remedies in entitlement proceedings

45.     In proceedings under section 8 concerning entitlement to a patent application, one possibility is that the patent application in question will have been withdrawn, or refused under another provision of the 1977 Act, before entitlement has been finally determined. In these circumstances, the comptroller may allow the successful party (if they are not the original patent applicant) to file a new patent application, replacing the original one. The new application will be treated as if it were filed on the filing date of the original application - but only if the original application was published under section 16 before it was refused or withdrawn. If the original application was never published under section 16, the new application must take its own date of filing.

46.     Subsection (1) amends section 8(3)(c) to allow the new application to be back-dated, regardless of whether the original application was published or not. Thus, where the original application was never published, but the original applicant chose to disclose the contents of that application, this will no longer destroy the novelty of the successful party's later application. (Paragraph 4 of Schedule 2 makes an equivalent change to section 12, which concerns entitlement disputes over European and international patent applications).

47.     Subsection (2) amends section 11 to extend the protection available to the original applicant and licensees in the circumstances where a new application has been filed by an applicant who has taken advantage of the rights given by section 8(3). At present, the original applicant and any licensees who have begun to work the invention in good faith are entitled, under section 11, to a licence from the successful party to continue to do so. The amendment to section 11 will permit them to obtain a licence from the new applicant in respect of the new application.

48.     Subsections (3) and (4) ensure that any such licence is granted for a reasonable period and on reasonable terms, which in the case of dispute may on request be settled by the comptroller.

49.     These amendments also ensure consistency with the remedies available in proceedings concerning entitlement to granted patents under sections 37 and 38. (Paragraph 9 of Schedule 2 makes an amendment to section 38(3) and (5) to clarify that those provisions apply both when the successful party has opted to continue with the existing patent and when they have chosen to file a fresh application.)

Clause 7 - Restrictions on applications abroad by United Kingdom residents

     50.     This clause amends section 23 of the 1977 Act, with the effect that the restrictions on UK residents filing patent applications abroad will only apply to a UK resident who files an application abroad, the publication of which might prejudice national security or the safety of the public. The clause also limits the existing criminal offence (set out in present section 23(3)) so that he is only liable where he knows that, or is reckless as to whether, he is contravening the restrictions.

     51.     Subsection (1) amends section 23(1) by limiting its application to situations where new section 23(1A) applies. Existing section 23(1) prohibits a person resident in the UK from filing, or causing to be filed, a patent application abroad without written permission from the comptroller of the Patent Office, unless an application for the same invention has been filed in the Patent Office. If such an application has been filed not less than six weeks earlier, and there are no directions in force prohibiting or restricting publication, or the communication of the information in the application, then the person may file an equivalent application abroad. Such directions are given where publication of the information might be prejudicial to the defence of the realm (although this will be changed to "prejudicial to national security" by paragraph 7 of Schedule 2) or might be prejudicial to the safety of the public. Thus section 23 presently prevents an application being filed in another country until it has been assessed whether or not this would amount to the communication of sensitive information. If the assessment is that publication or communication of the information would be prejudicial, then directions would be imposed under section 22 and an application could not be filed outside the UK. However, very few applications are assessed to be prejudicial to the defence of the realm (only 100 or so out of 25,000 to 30,000 applications annually). The effect of making existing section 23(1) only apply where new section 23(1A) - having the effect explained below - applies will therefore lift the restrictions in section 23 from the vast majority of UK residents wishing to file a patent application outside the UK.

     52.     Subsection (2) inserts new section 23(1A), which sets out the circumstances in which section 23(1) will continue to apply. The first circumstance (section 23(1A)(a)) is where an application contains information which relates to military technology or for any other reason its publication might be prejudicial to national security. The second circumstance (section 23(1A)(b)) is where an application contains information which if published might be prejudicial to the safety of the public. Thus, where applications are not about information relating to national security or the safety of the public, the restrictions in section 23 on filing applications abroad will no longer apply.

     53.     Subsection (3) inserts a new section 23(3A) which limits the circumstances in which a person is liable for the criminal offence provided by existing section 23(3). The criminal offence applies where a person files, or causes to be filed, a patent application in contravention of section 23. The scope of this offence will be narrowed as a result of the limitation of the scope of section 23 by the changes made by subsections (1) and (2) above. However, new section 23(3A) will also limit culpability for the offence to only two situations. The first is where the person knows that filing the application, or causing it to be filed, would contravene section 23. The second is where the person is reckless as to whether filing the application, or causing it to be filed, would contravene section 23. This provides a safeguard where a person acting in good faith believes that the restrictions in section 23 (as amended) do not apply to his patent application, but he is wrong. Thus a person will not be guilty of a criminal offence as a result of a mistake made in good faith.

Clause 8 - Term of patent and periods allowed for payment of renewal fees

54.     Subsection (1) substitutes a new section 25(3). Under the current section 25(3), a patent which expires for non-payment of the renewal fee expires at the end of the period prescribed for payment of the fee. The new section 25(3) permits an expiry date to be prescribed which is different from the last day of the prescribed payment period, provided that it falls within the final month of that prescribed period. It is envisaged that the date prescribed for expiry will continue to be the anniversary of the filing date, but that the period prescribed for payment will run until the end of the month in which that date falls (and begin three months before). For example, if the anniversary of the date of filing is 18th June, the renewal payment period will run from 1st April to 30th June; but if the payment is not made by 30th June the patent will be deemed to have expired on 18th June.

55.     Subsection (2) makes a consequential change to section 25(4) (which allows a further period of grace for the payment of a renewal fee). Under section 25(4) as amended, the period of grace runs until the last day of the sixth month to begin after the end of the period prescribed for payment. However, given that it is intended that the latter period will run until the end of the relevant month, the period of grace will continue to consist in an additional six-month period. Thus, if the prescribed payment period ends on 30th June, the period of grace for late payment will run until 31st December.

56.     Subsection (3) makes a similar change to section 28 (which permits the restoration of lapsed patents in certain circumstances).

57.     Subsection (4) amends section 46 (applications for an entry in the register that licences are available as of right), by substituting a new section 46(3)(d) and inserting a new subsection (3B) after section 46(3A). The effect is that (when the powers to prescribe are exercised as indicated above) it will continue to be the case that a patent must be made available for licences of right before the anniversary of the filing date, if the patent proprietor is to take advantage of the reduction by one half in the renewal fee payable for the following year. For example, if the anniversary date is 18th June, the proprietor will have to make licences of right available prior to that date if the renewal fee (payable by 30th June) is to be halved.

Clause 9 - Co-ownership

58.     This clause amends subsection 36(3) in order to clarify the rights of co-owners in respect of amendment and revocation of their patent, in the circumstances in which they make no agreement between themselves on these matters. Unless the co-owners have agreed otherwise, they will have to act jointly if they wish the patent to be amended. Thus one co-owner will not be able to act unilaterally to amend the patent without the agreement of the others.

59.     Similarly, unless the co-owners agree that it should be possible, one co-owner will not be able to seek revocation of the patent against the wishes of the others. This is particularly relevant in entitlement disputes over the patent. Consider that A and B are the original patent proprietors, but C is found in entitlement proceedings to be a rightful co-owner, instead of B. C will not be entitled to have the patent revoked on grounds of wrong entitlement, unless A consents to this. The remedy, under section 37, is for C to be added as a co-owner to the existing patent and B to be removed. If A and B are both found to be wrongly entitled, and C and D are found to be the rightful co-owners, the patent can be revoked and a new application filed provided C and D both agree to do this.

Clause 10 - Compensation of employees for certain inventions

60.     Section 40 provides for compensation to be awarded to employee-inventors in certain limited circumstances. The invention must have been patented, and must belong to the employer (or rights in the invention or the patent must have been assigned to the employer by the employee). Furthermore, the employee must at present show that the patent for the invention has been of "outstanding benefit" to the employer (or in the second case that the benefit to the employee is inadequate in relation to benefit derived by the employer from the patent). Thus compensation cannot be awarded unless it is shown that the benefits in question result from the invention having been patented, rather than merely from the intrinsic merits of the invention itself: see the judgment of the Patents Court in Memco-Med Ltd's Patent [1992] RPC 403.

61.     Subsections (1) and (2) of this clause provide a limited extension of the scope to claim such compensation, by substituting a new section 40(1) (and making a corresponding change to section 40(2)(c)). Although, as at present, compensation may be awarded only in respect of inventions which have been patented, it will no longer be necessary to show that the benefit in question flows from the patent itself (as opposed to the invention). Such benefits flowing from the patent will continue to be taken into account; however, if the invention has been beneficial for other reasons, those benefits may now also be taken into consideration. What constitutes an outstanding benefit will continue to depend on such factors as the size and nature of the relevant undertaking, which may be the whole or a division of the employer's business.

62.     Subsections (3) to (5) make consequential changes to section 41, which lays down how the amount of compensation awarded under section 40 is to be assessed. Subsection (6) makes consequential changes to section 43.

63.     Subsection (7) ensures that, for the purposes of assessing benefits under section 40(1) or (2), and for the purpose of calculating the amount of compensation under section 41, those benefits which arise after the relevant patent has ceased to have effect (whether by expiry, surrender or revocation) cannot be taken into account.

     64.     Subsection (8) is a transitional provision which ensures that the amended provisions do not apply to existing patents, nor to a patent for which an application is made before the amendments come into force.

Clause 11 - Enforcement of damages

65.     This clause inserts a new subsection (7) into section 61. This will enable any award of damages by the comptroller in infringement proceedings to be recovered through the enforcement mechanism of the county court in England and Wales (or the equivalent mechanisms in Scotland and Northern Ireland). The party to whom damages are owed will therefore be able to recover them without having to bring fresh proceedings to enforce the award. This amendment also makes the mechanism for the recovery of damages consistent with the mechanisms by which an award for compensation may be enforced under section 41, and costs or expenses may be recovered under section 107.

Clause 12 - Threats of infringement proceedings

     66.     Section 70 provides a remedy for any persons who are aggrieved by groundless threats being made to bring infringement proceedings. In certain circumstances they may bring a claim against the person making the threat (including a claim for damages). This clause amends section 70 to further limit the circumstances in which such a claim may successfully be made.

     67.     Subsection (2) replaces existing section 70(2) with new section 70(2) and (2A). These new subsections essentially restate the existing section 70(2), which lays down the conditions for obtaining the relief claimed, but then provide a limited additional defence for a patent proprietor, or other person, who is being sued for making such groundless threats. Under the existing section 70(2), a patent proprietor (or anyone else) who is sued for making groundless threats may successfully defend themselves by proving that the person threatened was in fact committing an infringing act. However, such a defence will fail if the person threatened can show that the patent is actually invalid in a relevant respect (so that he has a defence to the allegation of infringement).

     68.     New section 70(2) and (2A) gives the person being sued for making groundless threats an additional defence in these circumstances. Where the patent is found to be invalid, the defendant will not be liable if he can show, firstly, that an infringement of the kind alleged was taking place, and secondly, that he did not know or have reason to suspect, at the time he made the threats, that the patent was invalid. New section 70(2A) makes clear that the onus continues to be on the person bringing the claim to show that the patent is invalid, once the infringing acts have been established. It also makes clear that the onus is on the defendant (e.g. the patent proprietor) to show that such infringing acts were taking place, and that he did not know, and had no reason to suspect, that the patent was invalid.

69.     Subsection (3) substitutes a new section 70(4) which extends the protection against claims for groundless threats which is currently available under the existing section 70(4). Firstly, the provisions of the current section 70(4) are retained in the form of new section 70(4)(a). Thus it remains the case that a person (e.g. the patent proprietor) is protected from a claim under section 70 as long as he threatens someone with infringement proceedings only in respect of an act which is alleged to consist of making or importing the patented product for disposal or of using the patented process (sometimes called acts of "primary" as opposed to "secondary" infringement). However, under the new section 70(4)(b) the protection is now extended to threats to bring proceedings in respect of any other act of infringement - such as selling or stocking the patented product or offering the patented process for use - provided that the person being threatened has made or imported that product for disposal (or used that process).

70.     Thus where the proprietor is unsure whether the person he has found is manufacturing or importing the product, or using the process, under dispute he can (as at present) safely make threats only in respect of alleged acts of primary infringement. However, if the proprietor has found the person who is manufacturing or importing the product for disposal (or using the process) he is now free to raise with that person any alleged infringement (whether primary or secondary). In neither case is it necessary to establish that the behaviour in question actually infringes the patent.

71.     Subsection (4) substitutes a new section 70(5), thereby enlarging the definition of acts which cannot be construed as a threat to bring proceedings. These now include (a) providing any purely factual information about the patent (and not as at present merely the notification of its existence); (b) making enquiries to find out if there has been a primary infringement and, if so, by whom; and (c) making assertions about the patent for the purpose of making such enquiries. Thus it is envisaged that an enquirer will be able to make assertions regarding an alleged primary infringement, as part of his attempt to trace the primary infringer; but assertions regarding an alleged secondary infringement would not necessarily be excluded from the definition of "threat". Whether an assertion does in fact amount to a threat can of course be decided only by considering all the relevant circumstances.

72.     Subsection (5) inserts a new section 70(6) which will provide a defence to a claim under section 70 in certain limited circumstances, even where a threat is made against an alleged secondary infringer. Thus it may be that someone has already made his best endeavours to discover the identity of the alleged primary infringer, but has not met with success. In those circumstances, it will be possible for the proprietor to approach, for example, a retailer or stockist, in order to get the infringement dispute resolved (and in doing so threaten the latter with infringement proceedings). However, to enjoy such a defence, the person making the threat must have notified the person he threatens of the efforts he has made to trace the alleged primary infringer.

Clause 13 - Opinions by Patent Office as to validity or infringement

73.     The 1977 Act makes available a number of ways in which disputes regarding patents may be resolved in proceedings brought either before the courts or before the comptroller. For instance, the monopoly rights granted by a patent may be enforced in infringement proceedings brought under section 61. The validity of the patent may be challenged either as a defence in such proceedings, or in proceedings for the revocation of the patent under section 72; and issues of both infringement and validity may be decided in the context of proceedings for groundless threats, brought under section 70. Furthermore, the question whether an act or a proposed act constitutes an infringement of a patent may be decided in proceedings brought under section 71 (and questions of validity may also be raised in such proceedings).

74.     In relation to validity, among the points most frequently litigated are the issues of novelty and inventiveness (section 1(1)(a) and (b)), which often involve the assessment of complex and difficult questions of fact. Resolving such issues can be very costly for the parties concerned.

75.     This clause accordingly makes available a new procedure for exploring issues of infringement and validity, which (while not leading to their final determination) is intended to be of value in resolving actual or potential disputes. The new procedure will enable the comptroller to issue, on request, non-binding opinions on questions of validity relating to novelty or inventive step, and on questions of infringement. The ability to request such opinions from a neutral body should be helpful to parties who wish to settle disputes without launching full proceedings. However, it will also be possible to seek such opinions where there is no actual current dispute. For example, a person might want an opinion about whether a certain activity would infringe a patent, before investing resources in that activity; and a patent proprietor might want an opinion about whether "prior art" of which he has just become aware is relevant to his patented invention, before he decides whether to amend the scope of his patent. It is envisaged that a fee will be charged for providing an opinion.

76.     Subsection (1) inserts new sections 74A and 74B into the 1977 Act providing for such a procedure to be put in place. Much of the detail, however, is left to be laid down in rules made under the existing powers to regulate procedural matters given by section 123. It is envisaged that a simple, quick procedure will be prescribed, involving in most cases only the exchange of written submissions. It is intended that a request for an opinion will be notified to the patent proprietor (where he has not himself made the request) and may also be notified to other persons. If the request is granted, notice of that fact will be entered on the register of patents (as will notice of the opinion itself when it is delivered). Any interested person will then be able to submit observations on the issues raised in the request. It is envisaged that the full text of the opinion, once it is delivered, will be open for inspection on the public file. If the findings contained in the opinion are superseded by subsequent litigation (or by a subsequent opinion), appropriate details will be entered on the register.

77.     New section 74A(1) and (2) defines the scope of the new procedure. An opinion may be requested as to whether any act constitutes or would constitute an infringement of a patent, and as to whether (or to what extent) the patent is invalid. However, opinions on validity are limited to the question whether or not the invention is patentable, either because it is not new or because it does not involve an inventive step (within the meaning of section 1(1)(a) or (b)). An opinion may be requested in relation to any patent under the 1977 Act, except one which has been revoked. Accordingly, an opinion on infringement can be given even in relation to an act that has not taken place, and an opinion on infringement or validity can be given even in relation to a patent which has expired. Thus an opinion can be requested which will help someone decide whether it is safe to engage in a particular activity, or which concerns activity that might have taken place before a patent has expired. An opinion on validity may also be requested where the patent has been surrendered (for instance if a licensee wishes to argue that licence fees should be repaid).

78.     New section 74A(3) requires a request for an opinion to be granted, except in prescribed circumstances or where the comptroller considers that it would be inappropriate to do so; in those cases an opinion may not be issued. It is envisaged, for instance, that a request will not be able to be granted while the issue in question is being litigated in other proceedings, or where the request is considered to be frivolous or vexatious.

79.     New section 74A(4) ensures that an opinion does not have binding legal effect for any purposes. As noted above, it is intended that the procedure for delivering opinions will be as simple and quick as possible. This is intended to increase the likelihood of an opinion being helpful in assisting the early settlement of disputes; but an opinion based on such an abbreviated procedure will not be permitted to make final binding determination of the issues concerned. However, that would not prevent the fact that an opinion had been given from being referred to in subsequent proceedings.

80.     New section 74A(5) requires an opinion to be prepared by an officer of the Patent Office holding the position of examiner. These are the officers who carry out the search and examination of patent applications under sections 17 and 18.

81.     By virtue of the new section 74A(6), when read with section 101, the requester of an opinion will have the right to be heard before the request is refused; but no other person will have the right to be heard on the question whether the request should be granted. This is intended to prevent unnecessary delays in a procedure which is designed to be simple and rapid.

82.     New section 74B(1) enables provision to be made for the review of an opinion in proceedings before the comptroller. It is envisaged that a review will enable a full hearing to be obtained on the merits of the issues raised by an opinion. Such a review may be requested only by the proprietor or exclusive licensee of the patent. The details of the procedure will be laid down in rules, and new section 74B(2) makes clear that certain matters, in particular, may be prescribed in those rules. Under new section 74B(2)(a), such matters include the circumstances and time period in which an application for a review may be made.

83.     New section 74B(2)(b) and (c) enable provision to be made concerning the relationship between such proceedings for review and other proceedings relating to the same issues. In most cases, the existing procedures under the Act will provide a sufficient means of reviewing the conclusions reached in an opinion. Thus where a person disagreed with an opinion that a patent is valid, they would be able to seek revocation of the patent under section 72. Where a person disagreed with an opinion that a certain activity infringes a patent, they would be able to seek a declaration of non-infringement under section 71. A patent proprietor who disagreed with an opinion that certain activity does not infringe a patent would still be able to bring proceedings under section 61, if there is evidence of such activity; and an opinion that a patent is not valid could also be addressed in the proceedings for infringement. In contrast, where there is no such existing or apprehended activity, the proprietor would have available no existing mechanism for seeking a reconsideration of an opinion that the patent is invalid or that a particular act does not infringe the patent. In any event, there is likely to be a substantial overlap between the matters which will be addressed in proceedings for the review of an opinion, and matters which can be addressed in the existing procedures under the Act, or (in the case of a European Patent designating the UK) in proceedings before the European Patent Office.

84.     Accordingly, new section 74B(2)(b) makes it clear that rules may lay down the circumstances in which relevant issues are to be decided in proceedings other than those for the review of an opinion (for instance, in proceedings which have been brought under existing provisions of the Act - such as sections 61, 71 or 72). Where no such proceedings have been brought, so that the relevant issues are to be decided in review proceedings, new section 74B(2)(c) will enable the latter to be treated, in appropriate cases, as proceedings brought under existing provisions of the Act. This will, for instance, enable provision to be made for treating proceedings for a review as revocation proceedings brought under section 72 for the purposes of giving relief under that section.

     85.     Except where expressly provided in section 97(4), there is a right of appeal to the Patents Court, under that section, from any decision of the comptroller under the Act. A decision consequent upon the review of an opinion may accordingly be appealed to the Patents Court. In certain cases such an appeal may be inappropriate (for instance where the result of the review was merely to set aside the opinion). The new section 74B(2)(d) therefore enables the right of appeal to be excluded in appropriate cases.

86.     Subsection (2) amends section 74 to make it clear that proceedings for an opinion or for the review of an opinion are not, as such, to be regarded as proceedings in which the validity of a patent is put in issue. Accordingly, questions of validity may be considered in the context of such proceedings, notwithstanding the exclusive list of proceedings in which the validity of a patent may be put in issue which is laid down by section 74(1) and (2). However, that would not prevent the validity of the patent from being regarded as put in issue where (by virtue of rules made under section 74B(2)(c)) proceedings on a review were treated as proceedings under section 61, 71 or 72.

87.     Subsection (3) amends section 32(2) to ensure that rules can provide for relevant matters relating to opinions to be entered on the register of patents. By virtue of section 32(2)(e), rules will then also be able to make provision for the publication and advertisement of such matters.

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Prepared: 20 April 2004