Ian Laurence Thorogood v Nicola Leonardis
[2004] APO 8
•13 April 2004
OFFICIAL NOTICE
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No. 753281 and 95107/01, both in the name of Nicola Leonardis
Title: Platform elements and connectors (753281)
Construction components (95107/01)
Action: Requests under section 32 of the Patents Act by Nicola Leonardis
Decision: Issued 13 April 2004.
Abstract
T applied for four patent applications, with two of the applications being divisionals of one of the other applications. T entered into an agreement with L relating to the applications. The agreement is in writing, and refers to the parent applications by number. There is no explicit reference to the divisional applications. L seeks a determination that the divisional applications should proceed in his name.
1. Both T and L have signed the agreement, and there is no suggestion of fraud or special circumstances. The parties are taken to be bound by the terms of the agreement that they have signed.
2. The terms of the agreement are determined by construing the document. The factual matrix shows that T and L understood the natural meaning of a reference to a parent to include any divisional applications, leading to an ambiguity as to which applications are divisional applications. It is a matter of record that there are two divisional applications, and their numbers are 78208/01 and 95107/01. As a matter of construction, the agreement relates to all of the applications, both the parents and the divisionals.
3. The agreement is an assignment and not a licence. The language used in this regard is clear and there is no suggestion of ambiguity.
4. The divisional applications have been assigned to L, and are to proceed in his name.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent Application No. 753281 and 95107/01 in the name of Nicola Leonardis, and requests under section 32 by Nicola Leonardis.
BACKGROUND
Patent applications 78208/01 and 95107/01 were filed by Ian Laurence Thorogood on 4 October 2001 and 28 November 2001, respectively. On 11 September 2002 Nicola Leonardis requested that both applications proceed in his name (pursuant to section 113). A copy of a deed of assignment was provided as evidence of the transfer of entitlement. On 9 October 2002 the Commissioner notified Mr Leonardis that the applications were now proceeding in his name.
Application number 78208/01 was advertised accepted under the serial number 753281 on 17 October 2002. Two notices of opposition were filed: the first by Foamex Victoria Pty Ltd, and the second by Mr Thorogood. The oppositions are currently on hold, pending resolution of the section 32 matter.
On 16 January 2003 the patent attorneys for Mr Thorogood advised the Commissioner that they believed that the transfer should not have been recorded, as the evidence of assignment was inadequate. On 17 January 2003 a Deputy Commissioner informed all parties as follows:
"The respective requests to record the assignment of these two applications were explicit in their reference to the relevant applications. The assignment document provided in support of the requests was executed on 26 Jan. 2002 - that is, after the filing date of these applications. That assignment makes no reference to these applications - either by explicit reference by number, or by generic reference to applications related to those explicitly assigned.
I have consequently concluded that:
· the assignment document did not assign these two applications;
· there was no basis in law for the Commissioner to record the assignment, and the recordal was made in error; and
· the Official Record should be corrected by deleting the assignment and reverting the name of the applicant to Ian Thorogood."
On 23 January 2003 Mr Leonardis filed a request under section 32, requesting the Commissioner to determine the person who may proceed with the applications. The matter was set for hearing on 17 March 2004 in Canberra. Mr Leonardis was represented by Mr Howard Schulze of Collison & Co and Mr Eugene Reinboth of Donaldson & Walsh. Mr Schulze and Mr Reinboth appeared by telephone. Mr Thorogood was represented by Mr Paul Davis of Fisher Adams Kelly, who appeared in person.
THE EVIDENCE
Mr Leondardis' request was supported by declarations by Nicola Leonardis (including 30 exhibits), Beverley Grace Leonardis, Brian Marslen, Howard Kenneth Schulze, Peter Bayetto (including 1 exhibit), Alex Chiang and John Denis Blake. Mr Thorogood's evidence is two declarations by Ian Laurence Thorogood, dated 18 February 2003 (including 1 exhibit) and 31 May 2003. I have considered all of this evidence in making my decision.
THE APPLICATIONS
There are four applications that are relevant to the present action. For ease of understanding, I will lay out the relationship of the applications at this point.
Application number Filing date Serial number Relationship Status 75490/96 23/12/96 - Lapsed 71774/00 22/11/00 741142 Divisional of 75490/96 Ceased in November 2002 78208/01 4/10/01 753281 Divisional of 741142 Accepted, but under opposition 95107/01 28/11/01 - Divisional of 741142 Still being examined The applications in the present matter are both divisionals of petty patent 741142 (which is itself a divisional). For simplicity, I will refer to the applications in the present matter (753281 and 95107/01) as "the divisionals", and the earlier applications (75490/96 and 741142) as "the parents".
DECISION
There is no dispute that Mr Thorogood was entitled to apply for the divisional applications. The present matter relates solely to whether Mr Thorogood has transferred his interest in the divisional applications to Mr Leonardis. If the interest has been transferred, then the applications are to proceed in Mr Leonardis' name, and if it has not been transferred then the applications are to proceed in Mr Thorogood's name.
In order for an interest to be transferred there must be an agreement that is recognisable at law. The present case centres on a document that appears to be an assignment of the parent applications. The case turns on two points: does the reference to the parent applications include the divisionals, and have the divisionals been assigned or licensed. In order to understand the agreement, I will discuss the relationship between the parties and the manner of its creation, and then go on to look at the construction of the agreement.
1. Background to the agreement
The factual matrix in the present case is not complex. Mr Leonardis has provided extensive details of his dealings with Mr Thorogood. Mr Thorogood's evidence is very brief. His second declaration acknowledges the Leonardis evidence, and does not challenge most of that evidence. I conclude that Mr Thorogood agrees with substantially all of the facts as declared by Mr Leonardis (the significant point of disagreement will be discussed later). The relevant facts are as follows.
a) In January 2002 Thorogood and Leonardis met to discuss the patents held by Thorogood (Leonardis declaration, para 16 - 26).
b) On 2 January 2002 an agreement was drawn up between Thorogood and Leonardis in relation to patents held by Thorogood (Leonardis declaration, para 21). The agreement was not signed until 26 January 2002 to give Thorogood time to consider the agreement (Leonardis declaration, para 20). The agreement is quoted below (see paragraph 13).
c) The agreement was prepared by Leonardis' wife, who does not appear to be a lawyer or a patent practitioner (Beverley Leonardis declaration, para 4; first Thorogood declaration, para 4).
d) The parties were aware that divisional applications existed, and that they were for the purpose of extending the period of protection of the invention (Leonardis declaration, para 22; Schulze declaration, para 6; second Thorogood declaration, para 2, 3).
e) Both parties believed that the divisional applications were covered by the reference to the parent applications (Leonardis declaration, para 22; Thorogood does not refer to this point).
f) Leonardis took over the payment of all fees in relation to the parent and the divisional applications (Leonardis declaration, para 44).
g) Thorogood subsequently told many people that he has transferred his rights (although there may be confusion as to which rights) in the patent (without specifying which patents or applications: Blake declaration; Bayetto declaration, para 12; Marslen declaration, para 6 - 7; Leonardis declaration, para 33, 49) or the invention (Bayetto declaration, para 8; second Thorogood declaration, para 5, 6, 10, 12) to Leonardis.
The legal situation relating to the various patents and applications is a matter of record that is apparent from the files of these cases, and most of it is repeated in the evidence. Patent number 741142 is a petty patent, and consequently it has a much shorter life span than a standard patent. At the date of the agreement the petty patent would have been due to expire in November or December 2002 (depending on whether its term was extended). Divisional applications from the petty patent would be able to extend the protection for the same subject matter for a period of 20 years from the date of the earliest parent (i.e. till 2016). Consequently, the transfer of rights in the petty patent without rights in any divisional would be essentially valueless.
It is clear from the evidence that the parties intended to enter into a legal relationship with regard to the patents and applications held by Mr Thorogood. The parties considered the specific issue of the divisionals, and came to the conclusion that they were included by the reference to the parents. I am satisfied that the parties intended to deal with the divisionals. It is worth noting that it would have been commercially foolish to transfer rights in the parent that was about to expire, and not transfer rights in the divisionals that could continue for more than a decade. The fact that Mr Leonardis has provided payment of the fees in relation to the divisional applications is consistent with this conclusion. Mr Davis' submissions accepted that the parties intended to deal with both the parents and the divisionals.
The rights that the parties were intending to transfer is the subject of disagreement. Mr Thorogood declared that he believed that a licence was created. His first declaration says "I thought the agreement that I signed only gave Mr Leonardis the sole rights to manufacture and sell my invention" (para 7). In his second declaration he reiterates the notion that it was only the manufacturing rights. Mr Leonardis declares that the transfer was in relation to the full ownership. The other declarants are not entirely helpful on this point, as they do not specify what rights they believed were to be, or had been, transferred. I am left with a simple conflict between the evidence of Thorogood and Leonardis. In the end, it is not necessary to resolve this conflict.
2. The agreement
The agreement is a simple contract in writing dated 26 January 2002. The agreement is signed by both Mr Thorogood and Mr Leonardis. The agreement reads:
I, Ian Laurence Thorogood, hereby assign the sole rights of my patent no: 741142 and patent no: 75490/96, to Nicola Leonardis, for the remaining life of the said patents.
In return:
I, Nicola Leonardis, hereby agree to:1. Pay all costs associated with the upkeep of the said patents.
2. Market and promote the components of the said patents.
3. Handle all legal actions, if any, arising from infringement by others of the said patents.
4. Pay Ian Laurence Thorogood an agreed royalty on any products sold by Nicola Leonardis in relation to the said patents.There are two questions that need to be answered in relation to this document. First, what is the subject matter of the agreement, i.e. which patents and patent applications are covered by the agreement, and second, what rights have been transferred to Mr Leonardis.
The relevant law: It is well established that a contract requires four elements: offer, acceptance, consideration and intention to create legal relations. In the case of written contracts, these elements are often easily identified, and the problem becomes one of interpreting the terms of the agreement. The law on the construction of contracts is far from simple. It is accepted that where the words of the contract are free from ambiguity, then the plain, natural or common meaning is adopted. Evidence of the factual matrix surrounding the contract is admissible to assist in determining the plain or natural meaning of the terms in the contract. Where there is ambiguity in the language used, then extrinsic evidence is admissible to reveal the intention of the parties. (See Halsbury's Laws of Australia, para [110-2243] et seq).
Mr Davis referred me to some cases relating to contracts. In Wilton v Farnworth (1948) 76 CLR 646 the High Court considered the case of a document that had been signed without fully understanding its contents. The Court concluded that in the absence of fraud or some other special circumstances, a man is bound by the act of signature. In Petelin v Cullen (1975) 132 CLR 355 the High Court considered the defence of non est factum, and decided that it could apply when a person signs a document in the belief that it was radically different from what it was in fact, and the failure to read the document was not due to carelessness. Applying these principles in Allaway v Lancome Investments Ltd (2002) 58 IPR 346, the hearing officer found that an assignment deed was effective even though one party had failed to read and understand the document before signing due to their own carelessness.
It seems to me that where a person has signed an agreement, they are bound by the terms of the agreement (in the absence of fraud or special circumstances). However, it is always necessary to construe the terms of the agreement in accordance with the normal principles of law (as outlined in paragraph 15 above).
The factual matrix: The factual matrix has already been discussed above (see paragraph 9). The key point is whether both parties believed that the divisionals were covered by the reference to the parent applications (see point 9 e above). Mr Leonardis stated this explicitly. Mr Thorogood had the opportunity to disagree, and chose not to directly address the point. Mr Thorogood's second declaration indirectly supports Mr Leondaris' view, as he indicates that licences in relation to the divisionals had been created (for instance, paras 5, 8, 9, 10 and 12, although the language is not precise; note also point 9 g above in this regard). This leads me to the conclusion that Mr Thorogood must be taken to agree that the divisionals were included by a reference to the parents. The caveat is that Mr Thorogood believed that the agreement was a licence rather than an assignment. At the hearing, Mr Davis accepted that Mr Thorogood believed that the agreement was dealing with the divisionals as well as the parents.
Construction of the agreement: The agreement has been signed by both parties, and there is no suggestion of fraud or special circumstances. I consider that both parties must be taken to be bound by the terms of the agreement that they have signed.
The terms of the agreement are determined by construing the document. The document states that it is an assignment, and unambiguously refers only to the parent applications. There is no text that indicates that the divisional applications are included. I conclude that there is no patent ambiguity in the agreement. Mr Reinboth invited me to find that there was a latent ambiguity in the document, because the patents listed in the agreement are parents of divisional applications. I accept that it is legitimate to have regard to the factual matrix to determine the natural meaning of terms used in the agreement. If the natural meaning of a reference to a patent by number includes any divisionals of that patent, then there would be ambiguity as to whether any divisionals existed, and as to their identity (i.e. their application numbers). The factual matrix as discussed above was that the parties understood a reference to the parents to automatically include the divisional applications (see para 18 above). Having found an ambiguity, it is necessary to resolve it. This ambiguity can be resolved without reference to the intention of the parties. It is a matter of record that there are two divisional applications, and their numbers are 78208/01 and 95107/01. As a matter of construction, the agreement relates to all of the applications, both the parents and divisionals.
The final issue is whether the agreement created an assignment or a licence. The parties have different recollections of what was intended. The document uses clear language to describe the transfer: " hereby assign the sole rights of my patent no: …". To my mind, this is clearly an assignment, and no suggestion of ambiguity has been made by either party. Any suggestion by Mr Thorogood that he did not understand the meaning of the term "assign" would only be relevant if he came within the exceptions noted in the Wilton and Petelin cases. In the present case, Mr Thorogood appears to have made a mistake in believing he was entering into a licence - but he is bound by the clear terms of the agreement.
I am satisfied that the agreement is an assignment of the divisional applications (in addition to the parents). As a consequence, the divisional applications have been assigned to Mr Leonardis.
3. Determination
The patent applications numbered 753281 and 95107/01 are to proceed in the name of Nicola Leonardis.
4. Costs
Mr Leonardis has been successful in this action. It is appropriate that costs should follow the event. I award costs according to Schedule 8 against Ian Thorogood.
Dr S.D.Barker
Delegate of the Commissioner of Patents13 April 2004
Patent attorneys for Nicola Leonardis : Collison & Co
Patent attorneys for Ian Thorogood : Fisher Adams Kelly
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