English High Court decides licence exclusivity question for first time
The English High Court has ruled that a patent licence can still be exclusive to a licensee when a third party has the option to also take a licence but has not done so.
It is the first time the court has ruled on the issue.
The dispute, decided on Thursday, December 14, was between Oxford Nanopore Technologies (ONT) and the president and fellows of Harvard College (Harvard), on the one hand, and Pacific Biosciences on the other.
Harvard and ONT had sued Pacific Biosciences for infringing European patent (UK) number 1,192,453, called “Molecular and atomic scale evaluation of biopolymers”, while Pacific Biosciences had tried to revoke it.
ONT, which licenses the patent from Harvard, said it was allowed to sue Pacific Biosciences because it is the exclusive licensee, highlighting that an agreed option for a third party to also take a licence has not been exercised.
However, Pacific Biosciences claimed the licence is not exclusive.
David Stone, sitting as a deputy High Court judge, said the parties agreed that if he found the licence to be non-exclusive, he should remove ONT from the proceedings.
“If I find that the ONT licence is exclusive, then it is agreed that I should enter summary judgment for the claimants on this issue,” he added.
Harvard and ONT originally entered into the licence in January 2008, but it has since been amended several times and was implemented in its current form in December 2015.
The original agreement was not used in evidence, Stone explained.
In the disputed agreement, clause 2.1.1.3 sets out some limitations, as the court noted:
“Pursuant to a collaboration agreement between Harvard and [X] (‘X collaboration agreement’), Harvard agreed to grant X upon request by X non-exclusive, transferable, royalty-bearing licence(s) under the encumbered exclusively licensed patent rights, to make, have made, use, offer for sale, sell, and import products that comprise or that incorporate any inventions covered by the encumbered exclusively licensed patent rights, and to practise any methods that comprise or that incorporate any inventions covered by any encumbered exclusively licensed patent rights (each, ‘[X] licence’).”
It added: “The licences granted to [ONT] under this agreement are subject to any [X] licences that may be granted to [X] (or its permitted assignee) upon [X’s] (or its permitted assignee’s] request in accordance with the terms of the [X] collaboration agreement.”
Stone said clause 2.1.1.3 requires Harvard to notify ONT should X (or its permitted assignee) request and be granted a licence.
According to Pacific Biosciences’ counsel, clause 2.1.1.3 renders the licence non-exclusive, because “being the only licensee is not sufficient to be an exclusive licensee—an exclusive licence must be ‘to the exclusion of all other persons’,” Stone explained.
The claimants’ counsel responded that while the licence gives the option for X to take a licence, “X has not yet done so, and hence the ONT licence remains exclusive to ONT at this time”, Stone said.
He said he was surprised to find that the court had never decided the question of whether a licence is exclusive within the meaning of section 130(1) of the Patents Act 1977 if a third party has not yet taken the option to take a licence.
“I was told that no assistance is to be gained from other areas of IP law, where the statutory regimes are different,” he said, adding that based on a review of various texts, he found the ONT licence to be exclusive.
“Given that finding, as agreed by the parties, I shall enter summary judgment on that point in the claimants’ favour.”
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