Yeda Research and Development Company Limited (Appellants)
v. Rhone-Poulenc Rorer International Holdings Inc and others (Respondents)
25. If, therefore, the Court of Appeal had said that Markem needed to bring themselves within one of the rules of law mentioned in section 7(1)(b) and that they had failed to do so, the decision would have been entirely orthodox. Nothing more was needed. But the Court went much further and propounded a general doctrine that any claim to entitlement, even by someone claiming simply to have been the inventor, required reliance upon some "other rule of law". For this there is no warrant in the statute.
26. I think that the reasoning of the Court of Appeal involved a confusion of rules which go to the question of who is entitled to a patent and rules which go to the validity of a patent. The former are exhaustively stated in section 7(1). The latter are the well known and include the requirement of novelty, that the invention does not form part of the state of the art: section 2(1). By section 2(3), the state of the art includes matter contained in a patent application with an earlier priority date.
27. This rule of novelty is the only source, in English law, of the principle that if two people independently make the same invention, the "first to file" is the one entitled to a patent. In article 60(2) of the European Patent Convention the rule is stated expressly in those terms. But the important point is that the way this principle operates is not by supposing some meta-patent for which the two inventors are in competition and which is awarded to the first to file. The inventor first to file is the one entitled to a patent, not to the patent. The second to file is not entitled to a patent because the invention he claims lacks novelty by virtue of section 2(3): see Synthon BV v Smithkline Beecham plc  UKHL 59.
28. The "first to file" rule is therefore a rule about validity, not about entitlement, and it can only cause confusion to muddle them up. That, I fear, is what the Court of Appeal did in Markem. If A claims that his inventive concept has been patented by B, the following may have happened:
(a) B arrived independently at the same invention. In that case, B is entitled to the patent and A cannot apply to patent the same idea;
(b) A communicated the information about the inventive concept to B without imposing any duty of confidence. In that case, the information will have been communicated to the public and B's patent will be invalid for lack of novelty.
(c) A communicated the information to B in confidence. In that case, the patent will be valid and A can claim entitlement. He is entitled, not because B made his application in breach of a duty of confidence but because he was the inventor. The duty of confidence goes to the question of validity under section 2 and not to the question of entitlement under section 7.
29. In the present case it is accepted that if Rorer had not applied for the patent before publication of the Weizmann article, that would have made the invention unpatentable by either party. The same objection on the ground of lack of novelty would have applied if the draft had been sent to Dr Schlessinger without imposing any express or implied duty of confidence. And it is in general true that unless the information was communicated in confidence, there will not be a valid patent over which to argue. But that does not make the rules about validity part of the law of entitlement. In particular, in proceedings in which neither side is challenging the validity of the patent, there is no justification for requiring an applicant in a claim to entitlement to plead and prove allegations which are relevant only to the question of validity.
30. In this case, Yeda are not making a claim under section 7(1)(b) to be entitled under some rule of law to Dr Schlessinger's invention. They are saying that he was not the inventor under section 7(1)(a) and therefore neither Rorer nor anyone else can make a 7(1)(b) claim through him. Yeda say that the Weizmann scientists were the inventors under section 7(1)(a) and that they are entitled to claim through the Weizmann scientists under section 7(1)(c) as assignees. All this was clearly pleaded in their original statement.
31. My Lords, it follows that the first set of amendments was unnecessary and I need say no more about the comptroller's powers to grant them. I come next to the second set of amendments, enlarging the claim from part to full proprietorship. Lewison J said they should have been refused on the ground that they amounted to the assertion of a new cause of action after the expiry of the limitation period.
32. In holding that a claim to sole entitlement was a new and different claim, Lewison J and the Court of Appeal were particularly influenced by three matters. First, section 37(5) is intended to reflect article 23.3 of the Community Patent Convention:
33. The judge was impressed by the fact that article 23 deals with claims to sole entitlement in paragraph 1 and claims to part entitlement in paragraph 2. This, he said, indicated that they were regarded as different rights. But I do not think that such an inference is correct. Paragraph 2 appears to me to say expressly what would in any case have been implied in paragraph 1, namely that a "person entitled" includes a person entitled as to part. (Similarly, article 60 of the European Patent Convention says that "the right to a European patent shall belong to the inventor" and leaves it to be assumed that the singular includes the plural.) And paragraph 2 says that a person entitled to part of a patent may claim "in accordance with paragraph 1", which suggests that the paragraph was simply to elucidate the construction of paragraph 1.
34. Perhaps of greater relevance than the Community Patent Convention, which has never come into force, is the Protocol on Recognition which forms part of the European Patent Convention: see article 164(1). Article 1 of the Protocol gives national courts jurisdiction "to decide claims, against the applicant, to the right to the grant of a European patent". This simple formation is what confers the jurisdiction exercised by the Comptroller under sections 8 and 12 and appears to be reflected in the question specified in section 37(1)(a).
35. Secondly, reliance was placed upon the fact that the addition of another joint proprietor and the complete replacement of a sole proprietor have different consequences for third parties. In the former case, any licences previously granted remain valid but in the latter case they lapse: see section 38. Nevertheless, in the latter case the licencee may be entitled to a new licence on reasonable terms (section 38(3)), so that the difference in consequences is not so clear as to justify a conclusion that part entitlement and sole entitlement should be regarded as different rights for the altogether different purpose allowing an amendment to the statement of case.
36. Thirdly, both the judge and the Court of Appeal relied upon the fact that the purpose of section 37(5), like any other limitation period, is to provide certainty and prevent stale claims from being asserted. For the benefit of third parties, notice of the reference must be entered in the register. But the notice is merely of the existence of proceedings to determine entitlement to the patent. It gives no indication of the extent of the claims being made by the referrer. And to say that a person reading the notice and sending for the statement (a public document) would be entitled to assume that it would remain unamended is to argue in a circle, because that would depend on the extent of the comptroller's powers to allow amendments.
37. I therefore have some difficulty with the notion that a claim to sole entitlement is a "new claim", different in kind from part ownership. As the Court of Appeal acknowledged, there could be no objection to a person who had made a claim to sole entitlement then amending to claim joint entitlement, which suggests that the claims are different in extent rather than in kind. But, be all that as it may, there is in my opinion a more fundamental objection to the argument that Yeda are making a new claim.
38. The concept of adding a new cause of action, or new claim, is derived by analogy from proceedings under the Civil Procedure Rules, in which proceedings are commenced by service of a claim form which must "contain a concise statement of the nature of the claim" and "specify the remedy which the claimant seeks": see CPR 16.2. Part 17 then contains rules about when a claim form may be amended to add a new claim after the expiry of the limitation period, which derive their validity from section 35 of the Limitation Act 1980.
39. The procedure for claiming entitlement to a patent might have been assimilated with that for making any other claim under the CPR. That seems to be what happens in Germany, where an application in parallel proceedings by Yeda to enlarge its claim from a 75% share to full ownership of the patent was disallowed on the grounds that a litigant cannot make a larger claim in reliance on the same limitation period unless his original process made it clear that the intention was to file a partial action (Teilklage) and that the claimant still intends to assert his full claim (auf seinem Gesamtanspruch beharrt). This appears, from the court's reference to a similar question concerning insurance claims, to be a general rule of German civil procedure rather than a speciality of patent entitlement claims.
40. United Kingdom law has, however, not taken this course. The commencement of proceedings under section 37(1) is not by making an ordinary civil claim but by the reference of the primary statutory question in section 37(1)(a) to the comptroller. Rule 54(1) of the Patents Rules 1955 provides that such a reference must be made on Form 2/77, which requires no more than the identification of the statutory provision under which the reference is made. Once the reference has been made, the comptroller is in my opinion seised of the statutory question and, unless the reference is withdrawn, he must determine it.
41. It is true that the reference must be accompanied by a statement setting out fully the nature of the question and the facts upon which the person making the reference relies. But that does not mean that the statement is analogous to a claim form asserting a cause of action. The referrer is not asserting a cause of action in the sense contemplated by the Limitation Act 1980 and the Civil Procedure Rules. He is making a reference; a procedure which is governed by its own limitation period and its own rules. Thus the question of whether a claim to full entitlement is a new or different claim is in my opinion irrelevant. The true question is whether amendment of the statement of facts would make the reference a new reference. In my view it plainly would not.
42. The limitation period is contained in section 37(5), which provides that an order transferring the patent shall not be made "if the reference was made" after the end of the two year period from the date of grant. The rule which allows the statement to be amended is rule 100 of the Patent Rules 1955, which provides that "any document filed in any proceedings before the comptroller may, if he thinks fit, be amended". In the present case, the reference was made within the two year period, identifying the statutory questions referred to the comptroller. The comptroller is still being asked to decide those questions. I have difficulty in seeing how any amendments to the accompanying statement can make it a different reference. The hearing officer, in allowing the amendment, said:
43. But he did not think that this was such a case. I would agree with the hearing officer that rule 100 gave him a very broad discretion which he has to exercise in accordance with what appears to be fair and just in the particular circumstances of the case. The effect of the reference was that the question of entitlement was squarely before the comptroller and he would have had jurisdiction, even if the statement had not been amended, to make orders which in his opinion reflected what he considered to be the relative contributions of the parties to the invention. Once one abandons the idea that a claim to full entitlement is a new reference with its own limitation period, I think it is clear that the hearing officer was entitled to take the view that it would cause no prejudice to Rorer if Yeda was allowed to assert what it claimed, on reflection, to be its full entitlement.
44. I would therefore allow the appeal and restore the decision of the hearing officer to allow the amendments.LORD PHILLIPS OF WORTH MATRAVERS
45. For the reasons given by my noble and learned friend, Lord Hoffmann, I would allow this appeal.
46. I would also endorse the additional observations of my noble and learned friends Lord Walker of Gestingthorpe and Lord Neuberger of Abbotsbury.
LORD WALKER OF GESTINGTHORPE
47. I have had the privilege of reading in draft the opinion of my noble and learned friend Lord Hoffmann. I am in full agreement with it, and for the reasons given by Lord Hoffmann I would allow this appeal and make the order which he proposes. But because of the general interest of the point raised on Markem Corp v Zipher Ltd ("Markem")  RPC 31 I add some observations of my own.
48. Your Lordships are asked by the appellants to say, not that Markem was wrongly decided, but that the Court of Appeal (in a judgment of the Court delivered by Jacob LJ) reached the right conclusion, but by a faulty process of reasoning. The first step is to identify what statement of principle is in controversy.
49. Jacob LJ has himself identified the principle in two reported decisions in which he gave the leading judgment (or delivered the judgment of the Court) in the Court of Appeal. In University of Southampton's applications ("Southampton")  RPC 21, para 8, he said:
50. When the present case was before the Court of Appeal,  EWCA Civ 1094 he said (para 6):
51. The most relevant passage in the original Markem judgment is in para 78, after a reference to the "first to file" system:
52. These are, I think, the texts (expressed in similar but not identical terms, and qualified in the original judgment by "in the usual run of case") from which the disputed principle must be extracted. They may be compared with the statutory text in section 7 of the Patents Act 1977 ("the Act"), derived from article 60 of the European Patent Convention:
Section 7(2)(b) is no doubt the origin of Jacob LJ's references to "a rule of law." The rule of law most likely to be relevant in the generality of the cases is the rule (contained in section 39 of the Act) under which some (but not all) inventions made by employees belong to the employer. But in all three quotations Jacob LJ gave breach of contract or breach of confidence as examples of what he had in mind.
53. The passage which I have quoted from his judgment in Markem comes in the middle of a longer passage (paras 73-79) headed "Can section 7 itself found an entitlement claim?" Jacob LJ's short answer to that question is "No", for the simple reason that (para 77) "like nearly all countries (save for the USA) we operate on a first to file system." But that conclusion runs together two separate steps of legal reasoning. Before a patent has been granted for an invention there may be two (or even more) inventors, each of whom can claim to be the invention's "actual deviser" (the wording used in section 7(3) of the Act) because each has independently arrived at the same inventive concept. Until one of them has filed an application (and so long as none of them has altruistically or inadvertently published his invention so as to make it part of the state of the art) each has a sort of inchoate property in the invention. It has to be given shape and definition by the drafting of its specification (section 125(1) of the Act) and established in its full legal existence by the grant of a patent in terms of the final specification. Until then its life is precarious, like a caterpillar which may or may not reach maturity as a butterfly.
54. But when any of a number of independent inventors applies for a patent, his application becomes part of the state of the art (under section 2(3) of the Act) with the result that any subsequent application will fail for lack of novelty. The reason for its failure is not that the first applicant has somehow become entitled to any other potential application. So section 7 of the Act does, contrary to what was said in Markem, lay down requirements for entitlement in terms that are both necessary and sufficient.
55. In practice, disputes about entirely independent inventions made by two individuals (or teams) are unusual (though by no means unknown, especially in the highly competitive field of biotechnology). The disputes in Markem, Southampton and the present case all arose in circumstances in which there had been some sort of collaboration, and the correct legal analysis called for careful finding and evaluation of the facts.
56. In Markem six individuals (including the managing director) had over a period of about eighteen months moved from the principal United Kingdom subsidiary of Markem Corp to work for a new company, Zipher. Both companies made thermal printing machines. In particular Mr McNestry, an engineer, left Markem in April 2000 to join Zipher and within two months (the precise period is unclear, and unimportant) was the principal contributor to an invention which improved the performance and reliability of thermal printing machines. In entitlement proceedings the first-instance judge disbelieved much of the evidence called on behalf of Zipher (even though it had not been challenged, and no contrary case had been put to the witnesses) and held that some of the relevant patents were owned by Markem and Zipher jointly. The Court of Appeal reversed many of the judge's findings of fact, emphasising that no breach of confidence was alleged against any of the individuals who had moved from Markem to Zipher. They were using their own talents, not Markem's trade secrets. Certain materials which had come into existence while they were at Markem (the "Adkin memorandum" and documents relating to two meetings) were little more than "wish lists", not evidence that Mr McNestry's invention had been made while he was at Markem and "re-invented" later.
57. In these circumstances I am inclined to think that the passage in Jacob LJ's judgment headed "Can section 7 itself found an entitlement claim?" was hardly relevant to the case before the Court, as well as being over-compressed in its reasoning. Cases of concurrent but entirely independent invention are comparatively rare, and on no possible view was Markem such a case: Mr McNestry and the others had worked successively for both rival companies.
58. In Southampton there was an informal collaboration between a consultant in the field of magnetic powder and a university professor of entomology, in developing a new method of killing insects such as cockroaches. A patent application was made by the professor and another individual nominated by the University. In entitlement proceedings started by the consultant's employers the hearing officer decided that the invention had two inventive concepts (relabelled by Laddie J as the "banana skin" effect and the "sticky poison" effect), that those inventive concepts had been devised by the consultant alone, and that the application should be transferred to the claimants. Laddie J allowed the University's appeal and ordered the professor and his colleague to be reinstated as co-inventors on the grounds that the hearing officer had underestimated the width of the inventive concepts, and that it had not been proved (so as to displace the presumption in section 7(4) of the Act) that the entomologists had not contributed to the inventive concepts.
59. The Court of Appeal reversed this decision and restored that of the hearing officer because (para 35) "what . . . Laddie J overlooked is that their 'contribution' amounted to no more than adding the common general knowledge in the art." Again, the case turned on the different views taken by successive tribunals as to what the inventive concepts were, and who devised them. A novel argument was advanced in the Court of Appeal (paras 40-44) based on the notion of tracing confidential information into some other intellectual end-product but it was summarily and in my view rightly dismissed. The different evaluations of the facts made by Laddie J on the first appeal and Jacob LJ and the other members of the Court of Appeal on the second appeal did not, so far as I can see, have anything to do with any new principle said to have been established by Markem. Throughout the case the real issue was identifying the inventive concepts behind the invention.
60. In the present case it is possible-I express no view at all about it, since it would be wholly premature to do so-that the fact-finding tribunal may in due course find that Professor Schlessinger, in providing the antibody for the purposes of the tests, did no more than provide the equivalent of "common general knowledge in the art" and (despite the statutory presumption) did not contribute to the inventive concept of the claimed invention. If that were to happen he would not be the inventor, or a co-inventor, within section 7(2)(a), and any alleged breach of confidence would be strictly irrelevant to the entitlement claim.
61. In what circumstances, then, does section 7(2)(b) of the Act entitle a claimant "in preference to the foregoing [sc the inventor or joint inventors]?" I have already noted one important instance: where there is an employment relationship falling within section 39 of the Act. An enforceable contractual term as to the ownership of future inventions is another example, expressly mentioned in section 7(2)(b). An inventive individual may agree (perhaps with a manufacturing company of which he is a paid consultant but not an employee) that any inventions which he makes during the next five years will belong to the company, and that contractual obligation will displace his primary claim under section 7(2)(a) as regards any invention which he makes within the contractual period.
62. The role of breach of confidence requires rather closer examination. The misappropriation and misuse of confidential information which does not amount to an invention may give rise to claims for an injunction and damages or an account of profits, but cannot affect title to an invention. As already noted, in Southampton the Court of Appeal rejected the notion (based on the Roman law doctrine of confusio) that confidential information which eventually led to the making of a patentable invention (but was not itself an invention) could affect entitlement to the invention. Where a patentable invention is imparted in confidence (for instance, as part of a process of peer review) it does not amount to publication since (in the hallowed words used by Bowen LJ in Humpherson v Syer (1887) 4 RPC 407, 413) the recipient of the information is not "free in law and equity to use it as he pleased." If the recipient were to abuse the confidence and apply for a patent himself, his application ought to fail, not because of breach of confidence as such, but for the simpler reason that he was not the inventorhe was a pirate. In such a case the true inventor would, because of the improper nature of the disclosure, have a six-month period of grace in which to make his own application (section 2(4)(b) of the Act).