Introduction
Following on from our previous article where we looked at the options to contest entitlement at the Australian Patent Office under the Patents Act 1990 (under section 36 and section 59). In this article we turn our attention to an entitlement dispute heard before the Federal Court, namely Vector Corrosion Technologies Limited v E-Chem Technologies Ltd [2022] FCA 188.
This recent Federal Court decision highlights the complexity of entitlement challenges in matters with substantial disputes regarding the relevant facts. Such cases are generally more amenable to being contested in the Federal Court than through an application to the Patent Office, particularly given the Court’s processes such as discovery of documents, joint expert evidence and cross-examination of witnesses.
Further, the entitlement challenge was made after the patent was granted, and therefore an Australian Patent Office entitlement challenge would not be available.
Background
The patent in dispute is Australian patent No. 2006224340 B2 titled “Treatment process for concrete” (the E-Chem patent), and relates to products and systems for the electrochemical protection of steel and/or prevention of corrosion in reinforced concrete structures.
The E-Chem patentwas granted on 18 November 2010 and its priority claims are dated March and October 2005, and January 2006. E-Chem Technologies Limited is the registered patentee of the E-Chem patent, which names Dr Davison, Mr Roberts and Dr Glass as inventors (the inventors). Prior to the filing of the E-Chem patent, in the period between 2002 and 2004, the inventors were employees of Fosroc. Dr Davison and Mr Roberts ceased to be employees of Fosroc on 14 July 2004 and 13 May 2004, respectively. Dr Glass (the “principal inventor”) ceased to be an employee of Fosroc on 8 March 2004, and established E-Chem in March 2004.
Vector Corrosion Technologies Limited (Vector) claimed that it is solely or jointly entitled to the E-Chem patent as a result of its purchase of a corrosion business from Fosroc International Limited and its related companies (Fosroc) in January 2009 pursuant to contracts including a deed of assignment and a sale and purchase agreement.
According to Vector, the inventive concept the subject of the E-Chem patent was conceived of by the inventors while they were employed by Fosroc, and (because the invention had been created in the UK) by operation of section 39 of the Patents Act 1977 (UK) the invention would belong to Fosroc. Further, Vector asserted that it purchased from Fosroc the rights in the invention claimed in the E-Chem patent under the relevant contracts.
Accordingly, Vector sought a declaration to that effect that it is the “eligible person” to whom a patent for the E-Chem invention may be granted, and that the Patents Register be rectified under section 192(2) of the Australian Patents Act 1990 (Cth) to record Vector as either the registered sole or joint owner of the E-Chem patent.
According to E-Chem, the inventors conceived of the inventive concept the subject of the E-Chem patent after they had ceased to be employed by Fosroc and while they were working for their new company, E-Chem. It would follow from this that Fosroc had no rights in respect of the invention and Vector could not purchase any such rights from Fosroc, as E-Chem always had those rights.
The principles relating to entitlement to a patent under Australian law.
After reviewing the relevant statutes, Jagot J outlined (at [17]) the relevant principles relating to entitlement, including the following:
- there is a distinction in the authorities between a discovery or an idea (an inventive concept) and the reduction of that inventive concept to practice;[1]
- the invention or inventive concept of a patent or patent application should be discerned from the whole of the specification including the claims;[2]
- “[r]ights in an invention are determined by objectively assessing contributions to the invention, rather than an assessment of the inventiveness of respective contributions. If the final concept of the invention would not have come about without a particular person’s involvement, then that person has entitlement to the invention. One must have regard to the invention as a whole, as well as the component parts and the relationship between the participants”;[3]
- “[t]he time at which the invention was developed and the person by which it was developed is to be ascertained by reference to the inventive concept of the invention so described. The time of invention, and the identity of the inventor will not be affected by the subsequent process of reduction to practice, some elements of which may have found their way into the claims in the application”;[4]
- “…determining inventorship involves a two-part inquiry. The starting point is to analyse the inventive concept of the patent applications. The next step is to consider whether…the alleged co-inventor, made contributions that had a material effect on the inventive concept”;[5] and
- that mere “general goals or a research plan to be pursued are not sufficient” to constitute the inventive concept.[6]
Under Australian law, the inventive concept is distilled from the whole specification, construed through the eyes of the person skilled in the art who possesses the common general knowledge (CGK) in that field. Inventiveness (as essential for patentability) and identification of the inventive concept (relevant to entitlement) are two distinct concepts.
The decision
The principal issue between the parties was one of timing, that is, whether the inventors conceived of the inventive concept of the E-Chem patent while employed by Fosroc (i.e., from 2002 up to March to July 2004), or whether they did so after they had ceased to be employed by Fosroc and while they were employed by E-Chem.
After an extensive review of the CGK, Jagot J analysed the E-Chem patent to ascertain the inventive concept, and at [115] it was noted that the “heart of the invention” described in the specification and claims is the use of the same anode in two modes – in the first phase, for a short period, using a high impressed current (but not as high as the current densities of existing temporary treatments) supplied through an external power source to the anode and, in the second phase, using the same anode as a sacrificial anode to generate a continuous low galvanic current to maintain the passive conditions induced by the first treatment phase.
Evidence was provided by the inventors and the President of Vector relating to events and circumstances covering the relevant period, i.e., the critical period spanning the inventor’s employment at Fosroc, and then subsequently ceasing employment at Fosroc and establishing E-Chem in 2004. The email correspondence between the intellectual property manager at Fosroc and the inventors made it clear that the inventive concept was conceived of in the context of the inventor’s work leading up to and including one key project (the “Bell Street carpark”) between October 2004 and March 2005, after they had left Fosroc.[7] Additionally, the evidence made it clear that, in 2003 at Fosroc, one of the inventors (Dr Glass) was not considering the same problem as he was considering in 2005 in respect of the Bell Street carpark and thereafter.[8]
Vector had also alleged that Dr Glass withheld ideas he had developed while at Fosroc because of his falling out with his previous employer and as a result developed the inventive concept of the E-Chem patent while still being employed with Fosroc. Jagot J clarified that “it would be unrealistic to expect Dr Glass to look kindly upon those whom he considered had effectively made him redundant from Fosroc. … But he did not say he withheld ideas from Fosroc while still employed by it. To the contrary, the reason he would “not be developing anything for Fosroc any more” was because “[p]roduct development in the UK was hit by a sledgehammer from our new company owners in Dubai”. … His evidence that he “didn’t, at the time, want to give everything that was in my head or all my new ideas to this new owner any more because there was no reward” does not mean he withheld any idea – it means from his perspective the new owners had effectively discontinued his research and the research of the other scientists so he had no incentive to develop further ideas”[9].
In further support of Vector’s argument, Vector relied on Fosroc’s own patent applications to assert that the inventive concept of the E-Chem patent was conceived of by the inventors while they worked at Fosroc. In the period 2003-2004, Fosroc’s own patent application (Fosroc 2004 application) went through further iterations, culminating in a patent application in the UK filed on 29 April 2004 (after Dr Glass had left Fosroc) and titled “Sacrificial Anode Assembly”. In comparing the disclosure of the Fosroc 2004 application and the inventive concept of the E-Chem patent, Jagot J concluded that there “is no legitimate basis upon which the two phase notion or an impressed current can be grafted onto the Fosroc 2004 application … [and the] attempt to do so by Vector is a result of hindsight.”[10] Vector also pleaded reliance on a draft patent specification prepared in 2003 for a so-called Fosroc “two stage anode” (Fosroc’s 2003 two stage anode specification). This line of enquiry also failed, with Jagot J concluding that the sacrificial anode in Fosroc’s 2003 two stage anode specification has nothing to do with a sacrificial anode operating in two separate phases (first by impressed current and thereafter galvanically) identified as the inventive concept of the E-Chem patent.[11]
Ultimately, Jagot J concluded that the evidence supported the conclusion that the inventors developed (“in the sense of intellectually conceived of”) the inventive concept of the E-Chem patent starting in October 2004 and until February 2005, by which time Dr Glass knew the inventive concept and was confident it could be made to work. It was noted that substantial work thereafter was necessary to develop the invention further, but that the inventors had conceived of the inventive concept by 8 February 2005. Further, the inventors did not, at that time or thereafter, consider that the ideas they had formulated while working for Fosroc were material to the inventive concept of the E-Chem process.[12]
In relation to entitlement, it was therefore concluded that the inventive concept of the E-Chem patent was not conceived of by the inventors while they worked at, or in the course of their employment, at Fosroc, and that Vector is not an “eligible person” solely or together with E-Chem in respect of the E-Chem patent.[13]
Discretion
Vector asserted that the Patents Act 1990 (Cth) does not vest any discretion in the Court in relation to entitlement. While this issue was inconsequential as the evidence found that the “inventive concept” of the E-Chem patent was conceived after employment with Fosroc, Jagot J confirmed the Court did have discretion in determining entitlement disputes and clarified the operation of that discretion.
Justice Jagot found that when Vector first asserted entitlement to the E-Chem patent in January 2019, there was a significant delay as the claim could have been made at any time from 2009 to 2011 when it had possession of the contracts of employment of the inventors. The inference accordingly was that Vector did not do so at the time because Vector assessed that it was not in its overall commercial interests to do so.
Justice Jagot stated that “[i]n seeking to obtain the most commercial advantage it [Vector] could between 2009 (or, at the latest, 2011) as against E-Chem Vector sat on its hands in respect of its entitlement claim for 10 (or 8) years while the respondents invested an enormous amount of time, money and effort in developing and commercialising the E-Chem hybrid process invention including in Australia. By its unreasonable and inordinate delay Vector would obtain a substantial and unjustified windfall benefiting from the time, money and effort of the respondents (at no charge to Vector). The resulting prejudice to the respondents borders on the incalculable. It is 10 (or 8) years of their working lives. Not only would they lose (or have to share, if joint entitlement was found) the fruits of their time, money and effort over that entire period, but they would also bear the lost opportunity burden. They could have been focusing on other inventions and commercial opportunities to their benefit during those 8 or 10 years but did not do so as no-one had ever asserted entitlement to the E-Chem hybrid process patents before.”
As such, the discretion ground was also determined against Vector as Jagot J found that the Court would decline to make any order regarding entitlement.
Purchase Agreement
Similar to the discretion issue, Jagot J found that the assignment issue was not relevant. Nevertheless, the following observations were made.
Her Honour found that the purchase agreements and assignments were immaterial because the assignment listed the rights attaching to the “Patents” owned by Vector from Fosroc a schedule. The schedule did not include any patent within the E-Chem hybrid process patent family.
As such, Vector has also failed on the assignment ground.
Significance
Challenges to granted Australian patents must be made in court (generally, the Federal Court of Australia).
For significantly complex technical matters, determining the “inventive concept” can be difficult. This would typically require exchanges of expert and factual evidence followed by a technical primer in which the experts retained by both parties agree to what would form part of the common general knowledge of those skilled in the art, how the relevant technology works and what technical terms mean. This can form the basis for the Court to determine, with the benefit of submissions from the parties’ legal representatives, the “inventive concept” and ultimately entitlement to the patent in suit.
During Court proceedings, compulsive processes such as discovery and subpoenas are available and witnesses who give written evidence on affidavit are required to be available for cross-examination. Courts also have the jurisdiction and expertise to resolve complex legal questions such as those arising under contract, the Australian Consumer Law or in equity. These factors render court proceedings relating to entitlement significantly more dynamic, and expensive, than entitlement challenges to patent applications (pre-grant) in the Australian Patent Office.
Finally, entitlement issues and rectification of the Register of Patents are at the discretion of the Court. Accordingly, where there has been undue delay in commencing proceedings, the Courts may be reluctant to rectify the register even when the third party is entitled to the patent. This is because this action may prejudice the patentees such as the time, money and energy spent developing the technology and commercialisation.
[1] University of Western Australia v Gray (No 20) [2008] FCA 498; (2008) 76 IPR 222 (Gray FC) at [1419]–[1443].
[2] citing Polwood Pty Ltd v Foxworth Pty Ltd [2008] FCAFC 9; (2008) 165 FCR 527 at [60], affirmed in University of Western Australia v Gray [2009] FCAFC 116; (2009) 179 FCR 346 (Gray FFC) at [222].
[3] JMVB Enterprises Pty Ltd v Camoflag Pty Ltd [2005] FCA 1474; (2005) 67 IPR 68 at [132] cited with approval in Polwood at [53].
[4] University of Western Australia v Gray (No 20) [2008] FCA 498; (2008) 76 IPR 222 (Gray FC) at [1443].
[5] Kafataris v Davis [2016] FCAFC 134; (2016) 120 IPR 206 at [62].
[6] Polwood at [45].
[7] at [155].
[8] at [166].
[9] at [160].
[10] at [280].
[11] at [295].
[12] at [204] to [205].
[13] at [358].