INTELLECTUAL PROPERTY - SCOTTISH

PATENTS : HYDRAULIC FLUIDS : BRAKE FLUIDS : TESTERS : BOILING POINT : IMPROVEMENTS : DISTINCT DEVICES : ASSIGNMENTS : DEEDS OF ASSIGNATION : CHARGED ASSETS : LOANS : SECURITY : DISCHARGE OF OBLIGATIONS : INFRINGEMENTS : TITLE TO SUE : UNREASONABLE RESTRAINT OF TRADE : PUBLIC INTEREST : DOCTRINE OF ACCREDTION

The claimant had no title to sue for infringement of patent rights because the rights had been assigned.

NIGEL ALEXANDER BUCHANAN v ALBA DIAGNOSTICS LTD (2004)

HL (Lords Nicholls, Hoffman, Hope, Walker and Brown) 5/2/2004

The claimant patentee (B) appealed against the decision of the Inner House of the Court of Session (summarised below) on a preliminary issue that B had no title to sue the defendant (D) for patent infringement since he had assigned his patent rights. B was the registered proprietor of a 1996 patent for a fluid boiling point measuring device. B alleged infringement on D's part by the manufacture and sale of an implement called the brake fluid tester. D denied infringement but took the preliminary point that B had no title to sue because he had assigned his patent rights to an investor (M) who had in turn assigned them to D. M invested in B's company and in return for his loan took security in the form of a 1993 assignment of intellectual property rights, including improvements and extensions to the applications and patents. After B's company went into receivership M sold the charged assets, as the deed of assignation permitted him to do, to D in 1994. D's case was that B's 1996 patent was an improvement on the invention which passed to M under the deeds of assignation, with the result that the patent rights too passed under the deeds at the same time as the patent was granted under the doctrine of accretion. The Scottish courts held that B had no title to sue.

HELD: (1) The fact that B's personal obligations to repay M's loan were discharged on the sale of the charged assets did not affect the real rights of the assignees in the property charged by way of security and the doctrine of accretion applied. (2) The assignment of improvements was not an unreasonable restraint of trade. The purchaser of patent rights was reasonably entitled to protect the commercial value of his purchase by stipulating for the right to any improvements. It was not contrary to the public interest for inventors to be allowed to borrow money on the security of future rights. This was a bargain at arm's length between experienced businessmen. (3) The 1996 patent was an improvement of the previous invention and was within the deed of assignation. In the context, improvement should be given a broad and commercial meaning, rather than a narrow and technical meaning, in order to preserve the commercial value of the rights forming the principal security. On either basis the patent was an improvement.

Appeal dismissed.

Lawtel: 9th February 2004