Factual and Procedural Background
This opinion arises from patent infringement proceedings concerning EP (UK) No 1,192,453 ("the Patent"). The Claimants, comprising Company A and The University, sued Company B for infringement, while Company B counterclaimed for revocation of the Patent. The University is the registered proprietor of the Patent. Company A claims standing to sue as an exclusive licensee under the Patent, relying on section 67(1) of the Patents Act 1977, which allows an exclusive licensee to bring infringement proceedings in its own name.
The central procedural context is an application by Company B seeking to strike out Company A’s claim or, alternatively, summary judgment against Company A on the basis that Company A lacks standing as an exclusive licensee. The key legal issue is whether the licence granted to Company A (the "Company A Licence") qualifies as an "exclusive licence" under section 130(1) of the Patents Act 1977, given that a third party ("X") has an option to obtain a licence but has not yet exercised that option.
The parties agreed to have this legal question determined at the summary judgment stage to avoid unnecessary costs and delay. The facts regarding the licence and the option granted to X are agreed. The licence was granted by The University to Company A on 18 December 2015, and includes a clause permitting X to request a non-exclusive licence under certain patent rights. X has an absolute right to request such a licence, but has not yet done so.
Legal Issues Presented
- Is a licence an "exclusive licence" within the meaning of section 130(1) of the Patents Act 1977 if a third party has an option to take a licence under the patent but has not yet exercised that option?
Arguments of the Parties
Appellant's Arguments (Company B)
- The licence held by Company A is not exclusive because it is not "to the exclusion of all other persons".
- The third party X has an unconditional right to a licence on request, meaning X is not excluded.
- The statutory definition in the Patents Act requires actual exclusion, not merely the absence of other licensees at a given time.
- Distinguished this case from authorities where exclusivity could be lost by the patentee’s action, emphasizing that here a third party can unilaterally end exclusivity by requesting a licence.
- Relied on the distinction in Illumina Inc v Premaitha Health PLC that conditional rights to a licence do not negate exclusivity, whereas the absolute right of X does.
Appellee's Arguments (Company A and The University)
- The Company A Licence is currently exclusive because the option granted to X has not yet been exercised.
- Exclusivity is assessed at the relevant time, not prospectively.
- Accepted that if X exercises its option, exclusivity would be lost from that point onward.
- Relied on the authority of Dendron GmbH v University of California (No 3) for the proposition that a licence may be exclusive until an event occurs that renders it non-exclusive.
- Argued that the licence excludes all others, including X, until X requests a licence.
- Distinguished the absolute right of X from the conditional rights discussed in Illumina, emphasizing that the option is presently unexercised.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Dendron GmbH v University of California (No 3) [2004] EWHC 1163 (Ch); [2004] FSR 43 |
Definition and characteristics of an exclusive licence under section 130(1) of the Patents Act; exclusivity assessed by proper construction; exclusivity can change over time. |
Guided the court to assess exclusivity at the relevant time and to apply a proper construction of the licence document. The court accepted that exclusivity may be lost upon an event but must be assessed at the present moment. |
| Illumina Inc and Ors v Premaitha Health PLC and Anor [2017] EWHC 2930 (Pat) |
Clarified that conditional rights to a licence do not negate exclusivity until conditions are fulfilled; exclusivity can coexist with reserved rights subject to conditions. |
Used as a comparative authority to distinguish conditional rights from the absolute right of X. The court found the ONT Licence closer to the conditional scenario in Illumina and thus held it to be exclusive currently. |
| Courtauld's Application [1956] RPC 208 |
Distinction between an actual licence and an equitable right to call for a licence. |
Accepted the distinction but found the case of limited assistance due to different facts and legislation. |
| Price Meats Limited v Barclays Bank plc [2000] 2 All ER (Comm) 346 |
Support for deciding certain legal questions at summary judgment to save costs. |
Supported the procedural approach of deciding exclusivity as a pure point of law at summary judgment. |
| ICI Chemicals & Polymers Limited v TTE Training Limited [2007] EWCA Civ 725 |
Support for summary determination of legal issues without evidence. |
Supported the procedural approach. |
Court's Reasoning and Analysis
The court began by noting that the question of whether a licence is exclusive under section 130(1) of the Patents Act had not been previously decided in this court. The statutory definition requires that an exclusive licence confer rights "to the exclusion of all other persons, including the proprietor".
The court accepted the parties’ agreement that exclusivity must be assessed at the relevant time, not prospectively, and that the onus is on the licensee to prove exclusivity.
In construing the Company A Licence, the court noted that it grants Company A exclusive rights subject to an option allowing X to request a licence. X’s right to a licence is absolute and unconditional, but X has not yet exercised it.
The court compared this situation to the Illumina case, where conditional rights to a licence did not negate exclusivity until conditions were met. Here, although X’s right is absolute, the court found the difference between an absolute right exercisable on request and a conditional right with a low hurdle to be slight.
Applying the principles from Dendron, the court held that exclusivity depends on the current situation. Since X has not yet requested or received a licence and is currently excluded from working the Patent, the licence held by Company A remains exclusive at this time.
The court rejected the argument that the mere existence of an option to licence X renders the licence non-exclusive at the present moment. The court emphasized that exclusivity can be lost if and when X exercises its option, but until then, exclusivity subsists.
Holding and Implications
The court held that the licence granted to Company A is an exclusive licence within the meaning of section 67(1) of the Patents Act 1977 despite the existence of an unexercised option held by X to obtain a licence.
As a result, the court granted summary judgment in favour of the Claimants on the issue of Company A's standing as an exclusive licensee.
The direct effect of this decision is that Company A remains a proper party to the infringement proceedings and may continue to sue in its own name. The court did not establish any new legal precedent beyond applying existing principles to the facts. The decision clarifies that an exclusive licence is assessed based on current exclusivity, not contingent or potential future licences.