- Recording Assignments and Licences – Worth the Trouble?
Recording Assignments and Licences – Worth the Trouble?
Recording Assignments and Licences – Worth the Trouble?12 Mar 2018
It is established public policy that transactions such assignments of and licences under patents and registered trade marks should be recorded on the public register. The Patents and Trade Marks Acts both reflect this policy with provisions (s25(4) in the Trade Marks Act and s68 of the Patents Act) restricting a Claimant’s entitlement to recover costs where its interests under an assignment or licence were not recorded within six months of the transaction giving rise to them.
By way of example, s68 of the Patents Act provides that:
Where by virtue of a transaction, instrument or event to which section 33 above applies a person becomes the proprietor or one of the proprietors or an exclusive licensee of a patent and the patent is subsequently infringed before the transaction, instrument or event is registered in proceedings for such an infringement, the court or comptroller shall not award him costs or expenses] unless—
(a) the transaction, instrument or event is registered within the period of six months beginning with its date; or
(b) the court or the comptroller is satisfied that it was not practicable to register the transaction, instrument or event before the end of that period and that it was registered as soon as practicable thereafter.
In Schultz – v – Werit the Supreme court held that the provision operates to deny a Claimant recovery of costs attributable to infringing acts which pre-date recordal of the transaction; but permits recovery of costs attributable to infringing acts occurring after recordal. The section has received further judicial consideration in L’Oreal SA & L’Oreal (UK) – v – RN Ventures.
The case threw up a key issue concerning application of the law where there are affiliate Claimant licensor and licensees. The section states that “the court or comptroller shall not award “him” costs. The parties agreed that “him” meant (in this case) the exclusive licensee: L’Oreal UK. L’Oreal SA – the licensor – was the only party being billed for and paying the Claimants’ costs. Therefore, because L’Oreal UK – the exclusive licensee – was not paying anything, the Claimants argued section simply did not bite. Observing that applying the provision in this way would enable the Claimants to avoid the intended consequences of failing to record the exclusive licence entirely, Carr J exercised his discretionary power to deprive both Claimants of a proportion of their costs.
The key practice points are:
- The notable use of judicial discretion to give effect to what was stated to be public policy. Clever and intricate contracts, costs agreements and licensing arrangements clearly cannot be relied upon to frustrate that.
- Recordal of a transaction is always worth undertaking given the potential financial consequences
  UKSC 16
  EWHC 391 (Ch)
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