Pre-filing disclosure of an invention is found to be in breach of equitable doctrine of confidence

Author: Saadat Nisar (Calleja Consulting Limited)

Threeway Pressings Ltd, UK Intellectual Property Office, BL O/124/12, 20 March 2012

Journal of Intellectual Property Law & Practice (2012), doi: 10.1093/jiplp/jps083, first published online: May 25, 2012

The disclosure of an invention did not constitute prior art and should be disregarded when it was made in breach of confidence within the six-month grace period up to the date of filing of the patent application.

Legal context

Broadly, this case raised three questions. First, was there an implied confidentiality agreement between the company and one of its directors who disclosed the invention before filing the patent application? Secondly, could this disclosure be deemed sufficient to anticipate the invention? Thirdly, could the disclosure be disregarded, based on the equitable doctrine of confidence?

Facts

Philip Stanley, Richard Perry, Paul Watkins and William Ford formed a company in 2006 for the design and development of an invention, an ‘Evacuation chair’, which envisaged a dual purpose arrangement for transporting a person downstairs. The product was to be manufactured by Threeway Pressings Ltd (‘TPL’). TPL applied for a patent for this invention. Ford, who was a TPL director, submitted observations under Section 21 of the UK Patents Act 1977. He alleged that, about two months before the filing of the application, the invention was disclosed to, among others, Staffordshire County Council in a meeting on 15 March 2007. As such, it lacked novelty and was not therefore patentable. Mark Crosby, the former Principal Access Officer for Staffordshire County Council filed observations supporting Ford's claim. Ford also initiated but withdrew proceedings under Section 8 of the Patents Act, claiming entitlement to the application as the true inventor.

TPL contended that there was an implied agreement that Ford would keep the invention confidential before the filing of the patent application. It placed reliance in this context on a declaration made by Stanley, indicating that the reason for non-signing of a non-disclosure agreement was the lack of agreement on financial matters rather than on the issue of confidentiality. In the same declaration, Stanley mentioned that Stanley, Ford and Watkins had all considered the issue of confidentiality for the project. There were also statements by Chadwick, Perry and Stanley on the record of the entitlement proceedings showing the existence of an implied non-disclosure agreement between Ford and TPL.

Unconvinced, the IPO examiner construed Stanley's statements to mean that, once the invention was in a suitable form to be presented to customers, this could be done without breaching confidence. According to the examiner, since Ford presented it in a sales meeting, it implied that the invention was suitable to be presented and entailed no requirement of maintaining confidentiality. Moreover, there was no evidence to suggest that Ford had agreed to keep the invention confidential before filing the patent application, or that any such arrangement was ever discussed with him. Further, the examiner observed that TPL was likely to have the knowledge of the meeting of 15 March 2007 as it provided diagrams and photographs of the invention to Ford and made no effort to prevent him from making the alleged disclosure. Accordingly, the examiner rejected TPL's case that there existed an implied non-disclosure agreement between the parties, finding the invention to be anticipated and therefore invalid for lack of novelty. TPL challenged this decision before the hearing officer, but declined a formal hearing and the matter was decided on paper.

Analysis

The hearing officer held on the evidence that the alleged disclosure took place. He noted that Ford had full knowledge of the invention (as accepted by TPL in one of its letters) and that the drawings supplied by Crosby were very similar to those forming part of the application. He also noted that the disclosure took place in a sales meeting, implying that it should be deemed sufficient on the balance of probabilities to anticipate the invention. Further, in the absence of a signed agreement and with no evidence to suggest that the terms of the agreement were agreed in any other way, the hearing officer concluded that the contractual obligation of confidence had not been breached.

The hearing officer, however, viewed the matter through another angle. He invoked the equitable doctrine of confidence in this case, under which an obligation of confidence may exist in certain circumstances, even though there is no contractual relationship between the parties. Referring to an earlier case (Coco v A N Clark (Engineers) Ltd [1969] RPC 41), he noted that the three elements necessary to establish breach of confidence under the doctrine are: (a) the information must have the necessary quality of confidence about it; (b) the information must be imparted in circumstances that attract an obligation of confidence; and (c) there must be an unauthorized use of that information to the detriment of the party communicating it.

The information in this case pertained to an invention and its disclosure before filing of the patent application could not only invalidate the application, but also allow someone else to apply for the patent. As such, the hearing officer found that the disclosed information possessed the necessary quality of confidence about it and first element of the doctrine was satisfied.

The hearing officer also observed that, at the time when Ford and his associates possessed information about the invention, they were likely to be fully aware that its disclosure, prior to the filing of a patent application, would harm the interest of a prospective applicant. This gave rise to an implied obligation of confidence upon Ford and his associates in accordance with the second element of the doctrine. In this regard, the hearing officer also considered a letter from Ford stating that he and Watkins were led to believe that a patent would be filed in January 2007, which prompted them to discuss the invention with potential clients and suppliers in February 2007. In the hearing officer's opinion, this submission lacked merit as Ford and the others should have acted diligently to ensure that the application had actually been filed before making the alleged disclosure. He explained that their belief that the application had been filed in January 2007 was not enough to discharge them from the obligation of confidence.

The hearing officer found that it was obvious to Ford and his associates that the disclosure, if made before the filing of the patent application, would prevent the applicant/inventor from obtaining the patent. In his view, this was sufficient to prove the third element of the doctrine.

Consequently, Ford was held to be under an equitable obligation not to disclose the invention prior to the filing of the patent application, which he breached. As the disclosure took place within the six months period immediately preceding the date of filing of the application, the hearing officer held that it should be disregarded under Section 2(4) of the Patents Act. As such, the invention was not found to be lacking novelty. With these observations, the case was remitted to the examiner.

Practical significance

The decision made it clear that, in the case of a confidentiality agreement, its scope and whether it was breached is determined by the law of contract. However, in the absence of a confidentiality agreement, a party may still be under an equitable obligation to maintain confidentiality in certain circumstances. The hearing officer found that someone possessing information constituting details of an invention, knowing that a patent could be obtained in respect thereof, would automatically be under an equitable obligation not to disclose it till after the filing of the patent application. The real effect of this decision is that in all patent matters where the parties lack any express or implied non-disclosure agreement, it would still be possible to argue that the invention was disclosed in breach of confidence. As such, it would be possible to disregard the disclosure in view of Section 2(4) of the Patents Act, provided that it was made in the six-month period immediately before the date of filing of the patent application. Thus this decision would facilitate patent applicants in meeting the novelty requirement.