Background

There has been another instalment in the ongoing dispute between an employer – Markem (M) and a company Zipher (Z) formed by M's ex-employees (E).

M makes printers. Between 1997 and 1999 it had an idea for a new printer, but could not develop it into a working model. E were involved in contributing to the idea. E subsequently left M and formed Z, where they developed a new printer, based on the idea, to a workable state. Z patented the invention.

In earlier entitlement proceedings the High Court intimated that the invention in claims 1 to 4 of the patent belonged to M. Therefore, in the hope of increasing its chances of success, Z gave an undertaking to the High Court that it would narrow some of the wider claims in issue in a specified way if it were found to be the owner of it. In particular it would narrow claim 1 by including within it the integers from claims 4 and 5 (the latter of which, in its words, amounted to the "clever bit"). Z's efforts were in vain because the High Court found that M was the owner.

The Court of Appeal over-ruled the High Court and found that Z owned the patent. It reasoned that entitlement must be based on a consideration of the inventive concept of the patent as a whole, and not the inventive concept of each claim. The undertaking given by Z was not recorded in the order of either court, nor was Z expressly released from its undertaking by the Court of Appeal.

Z, having confirmed its ownership of the patent, promptly sued M for infringement. M counterclaimed for revocation. Z applied to amend the patent to avoid the pleaded prior art (but not in accordance with its earlier undertaking as if it did so amend M's printer would not infringe). M contended that the court should not entertain Z's application to amend, since it was in breach of Z's undertaking to the court of first instance. Z contended that an undertaking given to the court is not enforceable unless it is recorded in the court's order.

Outcome

Undertakings – enforceable even if not in court order

Floyd J held that the undertaking had been given to the High Court and did not need to be recorded in the order to be enforceable. Therefore, Z should not be allowed to seek narrower or inconsistent amendments. Furthermore, if he was mistaken about the undertaking, all of the claims of the patent were nonetheless invalid on one ground or another.

Ability to refuse amendments – now only on procedural grounds, subject to abuse of process

Historically the English courts have had a wide discretion to allow or disallow amendments and to take the conduct of the patentee into consideration when exercising their discretion. Floyd J held that, following the enactment of the Patents Act 2004 (which requires the UK court to pay due regard to decisions of the European Patent Office (EPO)), the English courts no longer have any discretion as such. They must allow amendments provided that the procedural guidelines are complied with.

However, even though the procedural guidelines were complied with, Z was precluded from seeking to amendment due to its earlier undertaking to the court. To allow the application to amend to proceed in these circumstances would have been an abuse of process.

Prior art – information "made available to the public"

An invention will not be patentable if it has already been "made available to the public", or disclosed to someone who is free in law and equity to use that information. Here, the alleged prior art had been (i) disclosed by M to E under a duty of confidence, which had ended with E's employment contracts; and (ii) allegedly forgotten by E before that duty had ended.

With regard to (i), Z relied on a decision of the EPO. It stated that information will be prior art only if the person to whom the information was made available could, at the time of the information being made available, be treated as a member of the public. The mere cessation of this special relationship did not make the information available to "the public".

Floyd J considered the EPO's decision to be problematic, but found that E had forgotten the information (i.e. ceased to have it) before the duty ended and therefore it was not made available to the public in any event.

Comment

Floyd J's decisions on the undertaking and discretion do not make easy bedfellows. Floyd J stated he would have granted Z's application to amend had it not been for its earlier undertaking. What if the undertaking had been given to an English court, but at some later date during opposition proceedings before the EPO the new amendments were put forward? Would this forum feel bound by the English undertaking when considering the new proposed amendments?

With regard to information made available to the public, the judge's unease with the EPO's decisions is understandable. The classic example of prior art in England is a book, written in Sanskrit, held in a Tibetan monastery, but never read. For English courts this book is prior art.

It is difficult to square this with the EPO decision that information imparted under an obligation of confidence, but subsequently released from that obligation, is not part of the state of the art unless and until it is disclosed to another person not under a duty of confidence. Floyd J's decision that information is not part of the prior art if it is forgotten before the holder is released from his duty of confidence is, it is submitted, correct (as equivalent to the book being burned before anyone other than the author read it).

Finally, this line of cases should serve as a reminder of the benefits settlement can bring. Had they been able to resolve their differences, both Markem and Zipher would have had a distinct advantage over their other competitors. Instead, the end result of the substantial costs incurred by both sides is that any printer manufacturer can use the invention. Along the lines of what Pyrrhus once noted, one more such victory could utterly undo a patentee.