In many European countries, a failure to register an assignment or exclusive licence of a registered trade mark or patent can lead to penalties for the rights-holder. In the United Kingdom this includes not being able to recover damages and/or costs when enforcing these rights. The English Court of Appeal in a recent ruling has given a broader interpretation of the sorts of transfers that must be registered in order to avoid these detriments, which now includes at least some transfers by operation of law. This decision highlights the importance of ensuring the attorneys responsible for a company’s intellectual property portfolio are fully informed about the nature of any transaction relating to that portfolio, in order to ensure that relevant transactions are registered in relation to each applicable intellectual property right.

A recent Court of Appeal case, Thorn Security Ltd (Thorn) v Siemens Schweiz AG (Siemens) saw Siemens bring patent infringement proceedings against Thorn. At first instance, Siemens succeeded in proving patent infringement and successfully defended a challenge from Thorn that they could not recover damages due to not registering an assignment of the patent. Thorn appealed on both counts.

Under English law, if an assignment or exclusive licence for a patent is not registered within six months of that transaction, then the proprietor of the patent can be prevented from recovering damages or the costs of infringement proceedings for any infringement occurring between the date of the transaction and its subsequent registration. Whether the penalty relates to costs or damages depends on the time(s) the infringement occurs. In 2006, English law was amended to prevent costs being recovered as opposed to damages. In this case, there had been a transfer of the patent under Swiss law.

However, the transfer did not occur via means that would be conventional in the United Kingdom. Instead there were a series of mergers under the Swiss Code of Obligations Governing Corporations. This led to all of the assets and liabilities of one party passing to the other, followed by the dissolution of the first company and a change in the status of the second company. The transfer of assets is therefore not achieved by means of an assignment per se, but by operation of the doctrine of universal succession under Swiss law. Because of the nature of this transaction, the judge in the first instance held that this was not an assignment for the purposes of the UK Patents Act 1977 (the Act) and decided therefore that the Swiss transaction was not one that needed to be registered in order to prevent recovery of damages. The judge recognised that this was an anomalous conclusion given that the purpose of this law is to ensure that the parties who actually own the patent and trade mark monopolies are the ones recorded on the register. However, based on the wording of the Act, the judge felt he had no choice but to reach this decision.

The Court of Appeal has now overturned the decision. In doing so, they have taken a more purposive interpretation of the law, having examined the reasoning behind this provision. They thus concluded that the intention behind the law must be maintained and that certain assignments by operation of law should be subject to registration. The Court of Appeal was at pains to point out that not all transfers of a patent or trade mark by operation of law will need to be registered, although no clear ruling was made on when this would not be required. Nevertheless, in this case, the mergers were transactions that should have led to a registration of the transfer of the patent in the UK Patent Register. Consequently, Siemens would have been prevented from obtaining damages for patent infringement, although this was ultimately moot as the Court of Appeal also overruled the first instance finding on infringement.

This case highlights the importance of ensuring any transaction that involves the transfer or exclusive licensing of patents and trademarks is brought to the attention of patent and trade mark attorneys in a timely manner, in order to ensure the registration of all relevant transactions. As seen in this case, a failure to do so could potentially lead to a loss of millions of dollars in damages or costs.