Whose Patent Is It?

Will a flawed R&D agreement for developing innovative herbicides jeopardize the success of a subsequent patent application?

In the Bionome matter, the court in England was called upon to resolve a dispute between parties who engaged in a joint research and development project and later disagreed over patent ownership.

Dr. John Russell Clearwater invented an innovative and environmentally friendly method to control unwanted vegetation growth. In early 2019, Dr. Clearwater initiated a joint research and development project with Dennis McCarthy and Aaron Tindall. The project’s goals were to evaluate the efficiency of the method, improve and optimize its processes, and assess its commercial potential.

The parties entered into a collaboration agreement to regulate their relations. The agreement envisioned the establishment of a company and stipulated that the parties would seek legal advice on the type of company to establish and how to transfer intellectual property rights to it.

In March 2020, McCarthy established Bionome Technology Limited and filed patent applications in Bionome’s name.^[1]

A jointly held company, as envisaged by the original agreement, was never established. Consequently, Clearwater claimed ownership rights to the patents. The UK Patent Office accepted his claims, and Bionome appealed.

Bionome’s Appeal

Bionome raised three main arguments:

1. Statutory Presumption: According to Section 7(4) of the UK Patents Act, the patent applicant is presumed to be the owner.
2. Transfer of Rights: The collaboration agreement transferred Clearwater’s rights to Bionome.
3. Trust: McCarthy established the company as planned and held its shares in trust for all the parties.

Clearwater’s Response

Clearwater argued that:

• The agreement did not include an explicit transfer of rights.
• The preliminary conditions for transferring rights were unmet.
• The jointly held company, as originally planned, was never established.

Court Decision

The court emphasized the importance of clear and precise wording in agreements concerning intellectual property and the necessity of an explicit transfer of rights. It held that:

• The agreement lacked express language effecting an immediate transfer of rights, reflecting instead an intention for a future transfer contingent on the establishment of a jointly held company.
• The preliminary conditions for transfer were not met.

The court also rejected the claim of a trust arrangement, stating that:

• The existence of an express trust was not established.
• A future undertaking to create a trust was insufficient.
• No adequate documentation was presented to substantiate trust arrangements.

As a result, the appeal was dismissed, and it was determined that Dr. Clearwater remained a co-owner of the patents alongside Bionome. The court highlighted the risk of continued litigation to the economic value of the invention and recommended alternative dispute resolution methods.

Remarks

The Bionome case serves as a reminder of several fundamental principles in research collaborations:

1. The critical importance of precise and clear drafting in intellectual property agreements. An IP strategy should be formulated before entering into agreements with research partners.
2. The need to distinguish and regulate rights in prior knowledge that each party brings to the project (Background IP), on the one hand, and in any knowledge developed during the project (Foreground IP).
3. Mechanisms for transferring rights must be explicitly defined. It is essential to differentiate between contractual language for an immediate transfer and language committing to a future transfer.
4. If trust arrangements are intended, they must be thoroughly documented.

In line with the court’s recommendation, alternative dispute resolution methods, such as mediation or arbitration, hold particular importance in intellectual property disputes.

Final Note for Patent Law Enthusiasts

As the method was invented before the collaboration began, McCarthy could not be considered its inventor and, absent the collaboration agreement, could not claim ownership of the invention. His claim of making an inventive contribution to improving the method was rejected.

Thus, while the agreement did not result in Clearwater transferring all his rights to the company founded by McCarthy, it granted McCarthy partial ownership of the intellectual property in the national patent application. This allowed McCarthy to remain at least a co-owner, even if not a co-inventor, of the invention.

^{[1] UK priority patent application GB2004292.5 dated March 20, 2020 (granted in July 2024 as patent GB2598881), international patent application  GB2021/050727 (published as WO2021/191614) claiming priority from the priority application and national phase applications of the international application, including European patent application number 21722972.3.}