Factual and Procedural Background
This judgment concerns four appeals related to patent entitlement and a subsequent breach of confidence claim. The main appeals arise from judgments by Judge Fysh in 2003 concerning entitlement to patents in three groups, of which two were resolved or not appealed, leaving the "Thermal Printer" group as the focus. The parties are collectively referred to as Markem (claimants) and Zipher (defendants), with associated companies Tenzen and Claricom included under Zipher. The breach of confidence action additionally involves four individual defendants formerly employed by Markem who later joined Zipher.
The case centers on inventions relating to thermal printers used for printing variable information such as "best before" dates on packaging during the packaging process. Markem previously developed thermal printers, including the SmartDate 2i (intermittent) and SmartDate 2c (continuous) models, with known limitations involving clutch mechanisms and shuttle systems. Zipher was formed in 2000 by former Markem employees who developed an improved printer, the Zodiac, based on an innovative motor control system ("clever way") replacing clutches and shuttle mechanisms.
Patent applications for the Zodiac technology were filed by Zipher in 2000 and 2001, with two patents at issue: one granted ('326) and one pending ('602). The patent claims were drafted broadly by Zipher's patent agent under instructions from a senior Zipher employee formerly with Markem. Markem asserts entitlement to the patents based on prior work and ideas developed while the key employees were at Markem.
Procedurally, Markem initiated entitlement proceedings before the Patent Office and later in the High Court. A separate breach of confidence action was commenced later by Markem against Zipher and the individual former employees, which was challenged as an abuse of process for being brought after the entitlement proceedings rather than concurrently. The trial judge refused to strike out the breach of confidence claim, but that decision is now under appeal.
Legal Issues Presented
- Whether entitlement to apply for a patent under section 7 of the Patents Act 1977 alone can found a claim to entitlement to a patent under sections 8, 12, or 37 without alleging wrongdoing by the patentee or applicant.
- The extent to which validity of a patent or patent application is relevant in entitlement proceedings.
- The role and relevance of patent claims in entitlement proceedings—whether a claim-by-claim approach is appropriate.
- Whether the breach of confidence claim brought after entitlement proceedings constitutes an abuse of process.
- The procedural fairness of adverse findings against witnesses without adequate opportunity to respond, specifically regarding the rule in Browne v Dunn.
Arguments of the Parties
Appellant's (Markem's) Arguments
- Markem contended that the inventions claimed in the Zipher patents originated from work and ideas developed while the key employees were at Markem, entitling Markem to ownership or a share of the patents.
- They argued that section 7 of the Patents Act, which grants entitlement to apply for patents to inventors, supports their claim to entitlement under sections 8, 12, or 37.
- Markem suggested that the broad patent claims reflected Markem's prior concepts and that Zipher's claims were effectively appropriations of Markem's confidential information and inventions.
- In relation to breach of confidence, Markem argued that the claimants owed obligations of confidence and had misused trade secrets and confidential information in the patent applications and commercial exploitation.
- Markem contended that the breach of confidence claim was properly brought and should not be struck out as an abuse of process.
Appellee's (Zipher's) Arguments
- Zipher denied any wrongdoing or unlawful conduct in the invention or patent application process.
- They argued that section 7 entitlement to apply for a patent does not itself found entitlement to a patent application made by another without some breach of law or contract.
- Zipher emphasized that the key inventive concept ("clever way") was developed independently after the employees left Markem and was not derived from any confidential information.
- They challenged the adverse credibility findings against their witnesses, asserting procedural unfairness under the rule in Browne v Dunn, as the witnesses were not given a fair opportunity to respond to allegations before being disbelieved.
- Zipher contended that the breach of confidence claim was an abuse of process because it was brought after the entitlement proceedings, which covered substantially the same factual background, and should have been raised concurrently.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Faccenda Chicken v Fowler [1985] FSR 105 |
Definition of trade secrets protected by breach of confidence after employment ends ("Chicken 3" and "Chicken 4" categories). |
Rejected suggestion that patent claims were inherently confidential trade secrets; no breach of confidence case advanced in entitlement proceedings. |
| Browne v Dunn (1894) 6 R 67 |
Rule requiring cross-examination of witnesses on material contradictory evidence before adverse credibility findings. |
Held that the Judge erred in making adverse findings without giving witnesses opportunity to respond; evidence accepted for appellants. |
| Johnson v Gore Wood & Co [2002] AC 1 |
Principle against abuse of process; parties must bring all related claims in one proceeding unless special circumstances justify otherwise. |
Applied to strike out breach of confidence claim as abuse of process for being brought after entitlement proceedings covering same facts. |
| Henderson v Henderson (1843) 3 Hare 100 |
Parties must bring forward all aspects of a case in one litigation to avoid multiple suits. |
Supported the application to strike out the subsequent breach of confidence claim. |
| Greenhalgh v Mallard (1947) 2 All ER 255 |
Abuse of process includes raising issues that could have been raised earlier. |
Referenced in support of abuse of process analysis. |
| Barrow v Bankside Agency Ltd [1996] 1 WLR 257 |
Finality in litigation and prevention of vexatious multiple proceedings. |
Reinforced the principle of striking out claims that should have been raised earlier. |
| Stanelco Fibre Optics v Bioprogress [2004] EWHC 2187 (Ch) |
Inventorship determined by inventive concept, not mechanistic claim-by-claim analysis. |
Supported the court's rejection of claim-by-claim entitlement approach. |
| Great Lakes Carbon's Patent [1971] RPC 117 |
Validity may be considered in entitlement proceedings if clearly and unarguably raised. |
Accepted that invalidity of claims is relevant where clearly demonstrated. |
| English v Emery Reimbold [2002] 1 WLR 2409 |
Requirement for adequate reasons in adverse credibility findings. |
Referenced in relation to procedural fairness and adequacy of reasons for adverse findings. |
| Brisbane City Council v Attorney General for Queensland [1979] AC 411 |
Abuse of process doctrine and its proper application. |
Supported the broader abuse of process principles applied. |
| Manson v Vooght [1999] BPIR 376 |
Balancing plaintiff's right to litigate and defendant's protection from multiple proceedings. |
Considered in assessing whether breach of confidence claim was abuse of process. |
Court's Reasoning and Analysis
The court first addressed the factual background and found that the key inventive concept underlying the Zipher patents was developed independently by former Markem employees after leaving Markem, notably the "clever way" motor control system devised by the employee referred to as Mr. McNestry. The broad patent claims were drafted by the patent agent under instructions from Zipher personnel and reflected a natural generalisation of this specific inventive concept, not derived from any confidential information of Markem.
The court accepted that Markem did not allege any wrongdoing such as breach of confidence or contract in the entitlement proceedings and rejected any insinuation to the contrary, emphasizing that entitlement claims under the Patents Act require some legal basis beyond mere prior knowledge or ideas discussed at a former employer.
In applying the Patents Act 1977, the court held that entitlement to apply for a patent under section 7 does not alone found a claim to entitlement to a patent application made by another under sections 8, 12, or 37. A claimant must show that the other party was not entitled to apply due to breach of law or contract. The court stressed that freedom of employment and research is protected where no confidential information is misused.
The court further held that validity of a patent or application is relevant in entitlement proceedings if clearly and unarguably challenged, as it would be illogical to transfer rights in an invalid patent. The claims themselves are only one factor in entitlement proceedings; the focus is on the inventive concept and the information disclosed, not a mechanistic claim-by-claim analysis.
Regarding the adverse credibility findings made by the trial judge against key witnesses, the court found these to be procedurally unfair under the rule in Browne v Dunn, as the witnesses were not given adequate opportunity to respond to allegations before being disbelieved. The court accepted the witnesses' evidence and rejected the adverse findings.
On the breach of confidence claim, the court found that Markem had all necessary information to bring such a claim well before trial but chose not to do so, instead pursuing entitlement proceedings first. The court held that this constituted an abuse of process under the principles established in Henderson v Henderson and Johnson v Gore Wood, as the breach of confidence claim arose from the same factual background and should have been brought concurrently to avoid harassment and inefficiency.
The court concluded that the trial judge erred in refusing to strike out the breach of confidence claim and that it should be struck out as an abuse of process.
Holding and Implications
The court allowed the appeal concerning the entitlement proceedings, dismissing all cross-appeals, and allowed the appeal against the refusal to strike out the breach of confidence claim, ordering that claim to be struck out as an abuse of process.
The direct effect is that Markem's entitlement claims to the Zipher patents based solely on prior ideas or knowledge without alleging wrongdoing fail, and the breach of confidence claim is precluded due to procedural abuse. No new legal precedent was established beyond the application of existing principles on entitlement, procedural fairness, and abuse of process. The decision reinforces the requirement that entitlement claims must be founded on legal rights and that parties must bring all related claims together to avoid harassment and inefficiency in litigation.