Luxim Corp v Ceravision Ltd

This is an appeal brought by Luxim Corporation (“Luxim”) against the decision of the hearing officer (Mr P Thorpe) of the Comptroller-General of the United Kingdom Intellectual Property Office (“the Office”) dated 6 June 2006 (“the Decision”). Mr Thorpe refused a request by Luxim under section 12 (2) Patents Act 1997 that the Office should decline to deal with entitlement proceedings brought by Luxim in favour of the High Court. The other party to the dispute is Ceravision Ltd (“Ceravision”) whose position is that the Decision was correct for the reasons given by Mr Thorpe. The Comptroller would not normally intervene in such an appeal. However, the case raises a number of points of principle the determination of which is of concern to the Office. Mr Simon Thorley QC appears for Luxim; Mr Thomas Mitcheson appears for Ceravision and Mr Colin Birss appears for the Comptroller.

The main question at issue is the identification of the principles by which the Comptroller should exercise the discretion conferred by section 12(2) Patents Act 1977. Section 12 concerns questions relating to entitlement to foreign and convention patents. So far as relevant, it provides as follows:

“(1)

At any time before a patent is granted for an invention in pursuance of an application made under the law of any country other than the United Kingdom or under any treaty or international convention (whether or not the application has been made) –

(a)

any person may refer to the comptroller the question whether he is entitled to be granted (alone or with any other persons) any such patent for that invention or has or would have any right in or under any such patent or an application for such a patent; or

(b)

any of two or more co-proprietors of an application for such a patent for that invention may so refer the question whether any right in or under the application should be transferred or granted to any other person;

and the comptroller shall determine the question so far as he is able to and may make such order as he thinks fit to give effect to the determination.

(2)

If it appears to the comptroller on a reference of a question under this section that the question involves matters which would more properly be determined by the court, he may decline to deal with it and, without prejudice to the court’s jurisdiction to determine any such question and make a declaration, or any declaratory jurisdiction of the court in Scotland, the court shall have jurisdiction to do so.

(3)

Subsection (1) above, in its application to a European patent and an application for any such patent, shall have effect subject to section 82 below.”

Although section 12 is the provision in point in the present case, there are other sections of the Act which are in similar, but not identical terms, to which I need to refer.

Section 8 concerns determination before grant of questions about entitlement to patents. Sub-sections (1) and (7) are in materially the same terms as sub-sections (1) and (2) of section 12.

Section 37 concerns the determination of right to a patent after grant. Sub-sections (1) and (8) provide as follows:

“(1)

After a patent has been granted for an invention any person having or claiming a proprietary interest in or under the patent may refer to the comptroller the question –

(a)

who is or are the true proprietors of the patent,

(b)

whether the patent should have been granted to the person or persons to whom it was granted, or

(c)

whether any right under the patent should be transferred or granted to any other person or persons;

and the comptroller shall determine the question and make such order as he thinks fit to give effect to the determination.

…….

(8)

If it appears to the comptroller on a reference under this section that the question referred to him would more properly be determined by the court, he may decline to deal with it and, without prejudice to the court’s jurisdiction to determine any such question and make a declaration, or any declaratory jurisdiction of the court in Scotland, the court shall have jurisdiction to do so.”

A slight difference in wording can be seen between sections 8(7) and 12(2) on the one hand and section 37(8) on the other. In the former case, the Comptroller may decline to deal when it appears to him that the question would involve matters which would more properly be determined by the court whereas in the latter case, he may refer a question to the court when he considers that the question itself would more properly be determined by the court. In the former case, the focus is on the matter involved; in the latter, it is on the underlying question. It is not suggested, for the purpose of the present appeal, that anything turns on this difference so far as it concerns the correct approach to the exercise of the discretion. It remains the case, however, that the focus of the provisions is different when it comes to deciding what it is that must appear to the Comptroller if he is to decline to deal.

Section 40 provides for the award of compensation to an employee in respect of certain inventions. Jurisdiction is conferred “where it appears to the court or the comptroller” that certain conditions are fulfilled. By subsection (5) it is provided:

“If it appears to the comptroller on an application under this section that the application involves matters which would more properly be determined by the court, he may decline to deal with it.”

Section 61 makes provision for proceedings for infringement of a patent. Civil proceedings may be brought in the court by the proprietor of a patent in respect of any act alleged to infringe it. However, the proprietor and any other person may, under subsection (3), by agreement refer the question of infringement to the comptroller. Under subsection (5) it is provided (in the now familiar words) as follows:

“If it appears to the comptroller on a reference under subsection (3) above that the question referred to him would more properly be determined by the court, he may decline to deal with it and the court shall have jurisdiction to determine the question as if the reference were proceedings brought in the court.”

This wording is similar to section 37(8) in focusing on the question at issue rather than matters involved in the question.

Section 71 confers power (without prejudice to the court’s ordinary jurisdiction to make declarations) on the court and the Comptroller to make a declaration, in certain circumstances, that an act, or proposed act, does not, or would not, constitute an infringement of a patent.

Section 72 provides for the court or the Comptroller to revoke a patent on various grounds. Where an application is made to the Comptroller under this section and that application has not been disposed of, the applicant may not apply to the court under the section unless either the proprietor of the patent agrees or (see section 72(7)(b))

“the comptroller certifies in writing that it appears to him that the question whether the patent should be revoked is one which would more properly be determined by the court.”

This wording, too, is similar to section 37(8) in focusing on the question at issue rather than matters involved in the question.

Section 82 provides that the court shall not have jurisdiction and that section 12 shall not confer jurisdiction on the Comptroller to determine a question to which the section applies except in accordance with the provisions of the section. The section applies to a question arising before the grant of a European patent whether a person has a right to be granted a European patent or a share in one. However, the court and the Comptroller shall have jurisdiction to determine any question to which the section does apply (other than an employer-employee question) if either of the two conditions set out in subsection (4) are fulfilled.

The statute does not lay down any criteria by reference to which the Comptroller is to exercise the discretions conferred on him by sections 8(7), 12(2) and 37(8). The statute simply provides that he may refer a question to the court if it appears to him that the question is one which (section 37(8)) or involves matters (sections 8(7) and 12(2)) which would more properly be determined by the court. It is not necessarily the case that, in spite of the similarity of wording, the principles according to which each discretion falls to be exercised are the same; indeed, Mr Birss’s argument, to which I will come, effectively drives him to the conclusion that they are not.

All three sub-sections seem to involve a two-stage process. First, it has to appear to the Comptroller that the question would more properly be determined by the court; secondly, the Comptroller then has a discretion to decline to deal. It would not, however, be right , I think, to divide the overall exercise into two rigorously separated parts. It will inevitably, I think, be the case that many factors which make it appear to the Comptroller that the question would more properly be determined by the court are the very same factors which would lead him to conclude that he should decline to deal with it so that there will in effect be a single decision-making process. Further, the factors which make it appear to the Comptroller that the question would more properly be dealt with by the court may well go beyond matter related to the question as such. For instance, it seems to me to be perfectly permissible for the Comptroller, at the first stage, to take into account that the parties all wish the matter to be dealt with by the court. That is not, of course, a conclusive factor; but nor is it a factor which can be taken into account only at the second stage when it comes to exercise of the discretion. Thus, whilst a perfectly straightforward case involving little technical complexity might be one which could not, on any footing, be one which could appear to a reasonable Comptroller as raising a question which would more properly be dealt with by the Court, a case which could perfectly well be heard by the Comptroller or the court might be one which appeared to the Comptroller to be one which would more properly be heard by the court precisely because that is what the parties wish.

The practice of the Office in relation to a request to decline to deal is set out in paragraphs 2.77 to 2.82 of the Patents Hearing Manual. In paragraph 2.77, there is a straightforward reference to the statutory test. Then in paragraphs 2.81 and 2.82 appears the following:

“2.81

If the request is supported by both parties, the comptroller should normally decline to deal. If there is disagreement, the hearing officer must decide the matter. The most common reason for a request is that there are parallel High Court proceedings covering much the same issues, and it would be undesirable for the [sic] both the court and the comptroller to be deciding the same issues. However, other arguments may be advanced and the hearing officer will have to decide where the balance lies.

2.82

The comptroller will not normally decline to deal because the case is difficult or complex – see Aline Holmes v Gordon Baldwin BL 0/187/97.”

Aline Holmes v Gordon Baldwin was a decision of the Hearing officer in which an exercise of the discretion conferred by section 37 was in issue. It was argued that oral evidence would be essential in the context of serious allegations of dishonesty. Extensive cross-examination of perhaps 15 witnesses would be necessary. Further, their evidence would not be technical in any way, the invention being technically simple. There would be vigorous and prolonged cross-examination of one of the individuals closely involved (Mr Arnold). This was so particularly in the light of apparently inconsistent statements which he had given, giving rise to questions about the privilege against self-incrimination. There were also likely to be allegations of forgery, deception and perjury. Accordingly, it was argued that the Hearing officer might well consider that the case would be better heard by a judge.

The Hearing officer considered that it was correct, as had been submitted to him, that the Comptroller has great experience in hearing entitlement disputes. He considered that he

“must have very good reason for declining to deal with such an action particularly when the parties are not in agreement in that regard. I must genuinely believe that the matter would more properly be determined by the court, and not that it would merely be more convenient to the Comptroller to wash his hands of a particular case.”

In relation to the need to call many witnesses, the Hearing officer said that this in itself did not seem to be a valid reason for declining to deal; lengthy hearings and cross examination were becoming more common in proceedings before the Comptroller. The same could be said of discovery where the Comptroller is given express powers. He regarded resolution of factual issues and conflicts of evidence, including a claim of dishonesty, as quite usual in entitlement disputes. He accepted that a judge would have greater personal experience in hearing oral evidence and evaluating witnesses than a hearing officer adding “but for the Comptroller to decline to deal with a case merely for this reason would seem an abdication of responsibilities settled on him by Parliament in enacting section 37(1). It is clear each case must be considered on its merits”.

Then, referring to the allegation of perjury or forgery he concluded that this

“does not change the fundamental nature of the case to such a degree that I can say with certainty that the question which has been referred to the Comptroller, and which remains one of entitlement rather than one of whether any possible criminal act has occurred in preparation of the evidence, would be more properly determined by the court…….I have not yet been persuaded that he will be incapable of resolving the issues in this case, particularly in the light of the great deal of additional evidence which is foreshadowed to throw light on the circumstances surrounding the creation of the invention in question.”

One sees here a focus on the question referred, ie one of entitlement, rather than on matters involved in answering that question ie factual issues relating to forgery and perjury. That focus reflects the wording of section 37(8); but it would not reflect the wording of section 12(2) where the question is whether there are matters involved in the question which might more properly be determined by the court. Care must be taken in carrying across from a case decided on section 37 an approach to the exercise of the discretion to a case to be decided on section 12 in the light of the different, albeit similar, wording of the two provisions.

Quite apart from that, Mr Thorley submits that the Hearing officer applied the wrong test to section 37. The Hearing officer did not need to be able to say with certainty that the question would more properly be heard by the court: it only needed to appear to him that that was so. Further, it is not necessary to show that the Comptroller is incapable of resolving the issues; the question is whether the question would more properly be determined by the court. I agree with those submissions. It seems to me that, to adopt the language of the standard of proof, certainty requires something like “beyond all reasonable doubt” whereas appearance requires only something more akin to “a balance of probabilities”. Further, it is clear that the test is not that the Comptroller is unable to determine the issue; it is whether the court can more properly do so. Compare the position of different levels of the judiciary: a Master of the Chancery Division may be perfectly capable of deciding a large and difficult commercial dispute in the sense that he could do so fairly and competently. But in our hierarchical system, large and complex cases of great value are assigned to High Court judges. It can be said that the case is more properly to be determined by the High Court judge without saying that the Master could not do so. So too with the Comptroller; it is not a criticism of his ability if it is said that a case ought more properly to be dealt with by a judge.

Insofar as it lays down a test in relation to section 37, it seems to me that Aline Holmes v Gordon Baldwin lays down an incorrect test. Whether or not the comptroller can properly state, as he does in the Patents Hearing Manual, that he will not normally decline to deal because the case is complex, that decision does not provide the appropriate test.

I have been referred to a number of decisions of hearing officers concerning the exercise of the discretion to decline to deal. Mr Thorley suggests that they show a mind-set within the Office against declining to deal and, as a result, an over-restrictive test is being applied in practice. I do not think that these decisions help me to decide what, if any guidance, ought to be given about how the discretion is to be exercised.

Nonetheless I would mention two of these decisions: Eveline Wesby-Van Swaay and Actineon Inc BL 0/209/05 and Gerkros Boilers (Tipperary Ltd v Alley Enterprises Ltd BL O/105/07. The first of those was a case concerning section 12. After noting the most common reason for declining to deal being parallel proceedings, the hearing officer says this:

“Otherwise it seems to me, this discretion should be exercised with great caution, given the powers that parliament has given to the comptroller. It may well be that a judge has greater experience of resolving the issues in dispute but that, it seems to me, cannot be a deciding factor. I think it also material that proceedings before the comptroller are intended to enable parties to litigate disputes before a relatively informal – but nevertheless authoritative – tribunal, with any costs that the tribunal might award being to a large extent predictable.”

The reference to the predictability of costs is that, where a party has to pay the opposing party’s costs, those costs will, in an ordinary case, be scale costs – and not a particularly generous scale at that. Mr Thorley accepts that the experience which one can assume a judge to have is not a deciding factor; but he says, in my view correctly, that it is an important factor particularly where there are complex factual disputes to resolve. He also submits that it is wrong to come to a particular case with a predisposition that the power to decline to deal should be exercised with caution. Of course, it must be exercised carefully, but I think that the use of the words “with caution” imports more than care and indicates a predisposition not to exercise the power unless a strong case is made out. In other words, it is to adopt an approach which moves the test away from “appears” along the line towards, if not to reach the destination of, “certainty”.

More recently, Jacob LJ has had something to say about the exercise by the Comptroller of his discretion to decline to deal in the context of entitlement disputes in IDA Ltd v Metcalfe [2006] EWCA Civ 145 (“IDA”). In the background were allegations of breach of confidence. At paragraph 9 of his judgment (with which the other members of the court agreed), Jacob LJ said this:

“….There are indeed currently stayed proceedings in the High Court for breach of confidence. In future there should not be separate proceedings for entitlement and breach of confidence. Whether an issue is apt for determination in proceedings before the Comptroller or in High Court proceedings will depend on the circumstances of the case and, in particular, for instance on what relief beyond entitlement is sought.”

Then at paragraph 44, Jacob LJ made some observations about entitlement cases in general. These observations are unquestionably obiter. Mr Birss submits they do not reflect accurately the basis on which the Comptroller should exercise his discretion. Let me set out what Jacob LJ says:

“44.

Finally, we were told that in very recent years there has been (and are) a rash of entitlement cases before the Comptroller. No-one really knew why this jurisdiction (which in my time at the Bar was moribund) has recently come alive. There was some speculation about an increase in joint ventures, or an increase in the appreciation of the significance of patents. None of them really explain it. But for whatever reason, I think it is worth making some further observations about entitlement cases in general:

i)

Many disputes of fact are likely to arise – who thought of what and who suggested what to whom are the sort of issues where perceptions after the event are all too likely to differ, people being what they are. It is all too understandable that one man is likely to overestimate his input at the expense of others, even where he is fundamentally honest. Disputes about this sort of issue can readily become overheated and prolix.

ii)

Such disputes are all the more likely where the parties' relationship has not been reduced to writing – then complex questions as to implied legal relationships may themselves bedevil the dispute;

iii)

It is clearly unsatisfactory for a dispute to be in two different fora. So, as I have already said, if the Comptroller finds that there are (or are going to be) parallel proceedings for breach of confidence or contract in the Court (High or County) then, unless he is satisfied that resolution of the entitlement proceedings before him will resolve all matters between the parties, he should normally, at a very early stage, refer the dispute to the court using his powers under s.8(7) or the corresponding sections. And even if there are no parallel proceedings in the court, he should seriously consider making such a reference in complex cases. He did so, rightly, for instance, in Markem. The Comptroller's jurisdiction should be reserved for relatively straightforward cases.

iv)

In some cases it may make sense for the claimant to initiate proceedings virtually simultaneously before the Court and Comptroller – with a view to making an immediate application to the Comptroller for transfer. In that way the Court can be given all the powers conferred by s.8(2), powers which it would probably not have if faced merely with a claim for breach of confidence or contact.

v)

Parties to these disputes should realise, that if fully fought, they can be protracted, very very expensive and emotionally draining. On top of that, very often development or exploitation of the invention under dispute will be stultified by the dead hand of unresolved litigation. That may be the case here: there has not yet been any exploitation by either side, some 8 years after the original PCT application. It will often be better to settle early for a smaller share than you think you are entitled to – a small share of large exploitation is better than a large share of none or little.

vi)

This sort of dispute is particularly apt for early mediation. Such mediation could well go beyond conventional mediation (where the mediator facilitates a consensual agreement). I have in mind the process called "medarb" where a "mediator" trusted by both sides is given the authority to decide the terms of a binding settlement agreement. Such a power in effect already exists in the Comptroller once he has found a case of entitlement (see s.8(2)). But by then it will probably be far too late.”

It is worth noting that, so I am told by Mr Thorley, IDA took 6 days in court and there had been 4 antecedent applications. It may give one an idea of what Jacob LJ had in mind when he referred to complex cases.

Jacob LJ made reference to this point again in Yeda Research and Development Co Ltd v Rhone-Poulenc Rorer International Holdings Inc [2006] EWCA Civ 1094 where he said this at paragraph 69:

“Accordingly I would dismiss this appeal. I would add that, with the benefit of hindsight, it would have been better if the case, with all its complexities of fact and particularly law, had been transferred by the Office to the High Court at an early stage. I adverted to the desirability of transfer in complex cases in IDA v University of Southampton [2006] EWCA Civ 145 at [44 (iii)-(iv)]. This case brings out another advantage – that a tier of potential appeal is removed.”

It is paragraph iii) of the passage I have just cited from IDA which is of most relevance; in particular, the point of principle with which the Comptroller has particular concern is the final sentence of that paragraph where it is suggested that his discretion should be reserved for relatively straightforward cases. His concern is that the comments of Jacob LJ may be thought to lose sight of the legislation having conferred primary jurisdiction on entitlement issues to the Comptroller rather than the court, a concern developed by Mr Birss and which I will come to. It is important to read paragraph iii) in the context of the totality of Jacob LJ’s observations since, in the view of the Comptroller, there are some misunderstandings on Jacob LJ’s part which may have contributed to his coming to the conclusion which he did.

First, the reference to a “rash” of cases is not understood. Mr Birss produced some statistics (set out in his skeleton argument) with which no issue is taken by Mr Thorley or Mr Mitcheson. The position, based on available data from the Office, is this:

It is acknowledged that there have been a few longer and more complex entitlement disputes in the last three years, but Mr Birss submits that this does not detract from the fact that the Comptroller has in fact been handling complex litigation for years (for instance the licence of right cases that followed the 1949 Act patents having their terms extended to 20 years). As to that, the licence of right procedure – essentially a transitional provision – required that an application be made to the Office and there was no procedure whereby the Office could refer the matter to the court. In the exercise of that jurisdiction, the Office had to deal with a number of complex cases (some of which eventually found their way to the ECJ and/or the House of Lords). Mr Thorley gave me a short history lesson suggesting that no-one had foreseen that there were a number of extraordinarily valuable pharmaceutical patents which fell within the relevant provisions; in other words, it would not have been foreseen that the Office would need to deal with this type of complex case. That suggestion, assuming it to be correct, reinforces Mr Thorley’s submission that the involvement of the Office in these complex cases where there was no discretion to refer to the court, cannot be prayed in aid in relation to a case where there is a discretion to transfer. I consider that, even without that reinforcement, Mr Thorley’s point is a good one. As he says, the submission made by Mr Birss is resonant of “We can do it if me must” which certainly is not the statutory test.

I am not clear why it is said that this misunderstanding (if there was one) impacts on Jacob LJ’s observations at the end of paragraph 44iii). His perception of a “rash” of cases may have been one of the reasons why he considered that it would be helpful to say something about the exercise of the Comptroller’s discretion but it cannot, so it seems, to me, have had any impact on what he said. The correct approach to the exercise of the Comptroller’s discretion should, I would have thought, be the same whether there are 5, 10 or 100 entitlement cases each year. I certainly do not accept Mr Mitcheson’s suggestion that Jacob LJ’s approach is based on his observation that there had been a sudden rash of cases.

Secondly, Jacob LJ appears to suggest that the Markem case should be taken as an example of the Comptroller properly exercising his discretion to decline to deal. But in that case, his decision was supported by both parties and, by the time of the decision not to deal, the case was already before the court. Mr Birss says, correctly in my view, that Markem is not directly relevant to the question of when the Comptroller should decline to deal when one party resists that course.

Thirdly, an increase in the number of entitlement cases would not, in any case, lead automatically to the conclusion that the Comptroller should change the criteria by which he has hitherto been exercising the discretion. Such a change could only legitimately be called for, the Comptroller contends, if it could be shown that there were shortcomings in his ability to handle such cases successfully. The record of appeals against his decisions does not suggest that that is the case, as the following table (like the previous table, produced by Mr Birss without objection) shows in relation to appeals in entitlement cases under sections 8, 12 and 37 from 1994 to 2006:

I am not sure that the Comptroller is right to detect in Jacob LJ’s remarks a concern that the Comptroller might be handling a rash of cases which it is not appropriate for him to hear or that his track record is not good. That said, the three points made by Mr Birss are valid points but they do not, I think, lead to the conclusion that Jacob LJ would have qualified the conclusions which he reached

The second case referred to at paragraph 22 above, Gerkros, was a revocation action under section 72. It post-dates IDA. The hearing officer saw a number of parallels with Aline Homes and repeated the line that the discretion is one that should “be exercised with great caution, given the powers that parliament has given to the comptroller”. He does, however, recognise that it is necessary to strike a balance. But having done so, he states that the issues in question, although involved, are not foreign to proceedings before the Comptroller. There was insufficient to “shift the balance clearly towards the conclusion that it would not be right to decline to deal”. The Hearing officer also referred to IDA and in particular to what Jacob LJ said at paragraph 44iii). The response was simply “However, I am not persuaded from the evidence now filed by the defendant that this case is sufficiently complex from a factual perspective, to fall squarely within that class of case which his Lordship suggests in this paragraph should be referred to the court”. I am bound to say that this appears to be paying lip-service to Jacob LJ rather than addressing whether his test was the correct test and then applying it.

There is one other authority which I refer to: Cinpres Ltd v Tamworth Moudlings Ltd v Michael Ladney and James Hendry [1997] EWCA Civ 2174. Mr Birss relies on a well-known passage from the judgment of Peter Gibson LJ to illustrate the position, and value, of hearing officers in the judicial process:

“I readily acknowledge the judge's great expertise in the field of patents, but I have to say that I am troubled both by his general approach to the decision before him and by the specific details of his criticisms of the hearing officer, strongly and lucidly though they were supported by Mr. Wyand Q.C. for Cinpres. As I said at the commencement of this judgment, this appeal raises a familiar question. This court hears numerous appeals originating from decisions of tribunals of fact, not infrequently where the tribunal of fact is not a person with legal qualifications. Even when the tribunal has a legally qualified chairman, such as is the case with an industrial tribunal, this court has repeatedly said that when giving their decisions such tribunals are not required to create elaborate products of refined legal draftsmanship, and those decisions should not be subjected to detailed legalistic analysis or gone through with a fine toothcomb. The decisions must be read in a common sense manner and looked at in the round. Of course the parties are entitled to know from the decision the tribunal's basic factual conclusions and the reasons which have led the tribunal to its conclusions on those basic facts. But this court and other appellate courts read such decisions with a degree of benevolence which may not be accorded to the decisions of qualified judges. I see no reason why a different approach should be adopted in relation to appeals from hearing officers. They are not, so far as I am aware, legally qualified (see Allen & Hanburys Ltd. (Salbumatol) Patent [1987] R.P.C. 327 at p.374), though I hasten to add that if that be true of this hearing officer, he has concealed any lack of legal qualification in his decision, to which I would, for my part, pay tribute. Mr. Wyand suggested that it would be highly unusual for hearing officers to be faced with conflicts of fact on oral evidence. The hearing officer in this case was particularly experienced, as counsel on both sides agreed, and there is no reason to think that a factual dispute such as he found in the present case would be a novelty to him.”

That passage, however, is directed principally at what can be expected of a hearing officer in the manner of expression of his decision. I do not think it is otherwise of assistance in the present case.

Mr Birss supports a cautious approach by the Comptroller to the exercise of his discretion, who should continue to apply the established practice. The Comptroller has typically sought to exercise his discretion sparingly and in a manner consistent with the responsibilities placed on him by Parliament. He puts it this way (which I do not think was quite the approach in Aline Homes or Gerkros):

Mr Birss submits that, if the Comptroller were to decline to deal simply on the ground that a patent entitlement case is difficult or complex, that would be to abdicate the responsibility given to the Office and potentially to deny both parties of the benefits of conducting proceedings before the Comptroller. In that context, he observed, correctly I think, that a party’s motives for a request to the Comptroller to decline to deal may be complex in themselves. The motives could even include matters which veer in the direction of abuse of process, such as a desire to delay a conclusion or to make proceedings prohibitively expensive for the other side. He suggests that if the question of whether a case was complex or straightforward became a further means by which proceedings could be delayed and costs increased, it would be an unfortunate outcome for all involved.

Central to Mr Birss’s argument is what he says the correct approach to the legislation actually is. He submits that the scheme of the Patents Act 1977 is to give the Comptroller primacy in relation to, or, to use different language, to confer on him the principal jurisdiction to determine, entitlement cases.

In this context he draws distinctions between infringement cases, revocation/compensation cases and entitlement cases. Thus he says that on issues of infringement, Parliament has given the Court primary jurisdiction under section 61; on issues of revocation and employee compensation, Parliament has conferred joint jurisdiction under sections 72 and 40; but on issues of entitlement, Parliament has given primary jurisdiction to the Comptroller. Thus:

This, it is said, is a clear and deliberate scheme laid down by Parliament in primary legislation. Accordingly, careful attention must be paid by me to this scheme when determining whether the hearing officer exercised his discretion properly and, if I am willing to do so, when setting guidelines for future cases.

In support of his argument, Mr Birss referred me to what was said by Mr Clinton Davis, then the Undersecretary of State for Trade during the second reading of the Patents Bill in the House of Commons on 25 May 1977. I do not propose to set out what he said not least because it does not seem to me to fall within the principles set out in Pepper v Hart by reference to which such statements are admissible in evidence. In any event, having actually read the passages, they do not, I consider, assist me in identifying any principles by reference to which the Comptroller should exercise his discretion. The passage perhaps demonstrates that Parliament was aware of the nature of the different jurisdictions, and the lesser cost which would be likely to be incurred in proceedings before the Comptroller, a proposition which I readily accept without the need to refer to Hansard.

Mr Birss submits that there does not appear to be any desire on behalf of users of the patent system in recent years to reduce the Comptroller’s jurisdiction in entitlement cases. He relies on two pieces of evidence. First, that the issue was not raised by users in the recent consultation on proposed changes to Patents Act 1977 which led to Patents Act 2004. Secondly, the number of requests that the Office receives asking it to decline to deal with an entitlement issue is relatively small in relation to the total number of entitlement cases, and is not increasing: see the Table set out at paragraph 29 above.

I do not find either of those points at all persuasive. The complexity or otherwise of most of the cases referred to has not been looked at in front of me. It may be that most of them were, by any standard, not complex and therefore appropriate, even on Mr Thorley’s approach, to be dealt with by the Comptroller. Further, even in a complex case, the parties may have good reasons for preferring the case to be dealt with by the Comptroller. I would not expect satisfied users to express concern in their responses to a consultation paper on this issue; and I do not find it surprising that those involved in the one case, or possibly two cases, where the Comptroller refused to decline to deal did not raise the issue (if, indeed, any of them responded at all).

Section 99 gives the Court power when determining any question, whether in the exercise of its original or its appellate jurisdiction under the Act, to make any order or exercise any power that the Comptroller could have made for the purpose of determining that question. The Court’s jurisdiction to determine any question and to grant declaratory relief is preserved by sections 8(7), 12(2) and 37(8); but that preservation does not extend the Court’s powers. Accordingly, the range of orders which the Court can make where it is exercising the statutory jurisdiction may, in some cases, be wider than the range available in the exercise of its ordinary jurisdiction, for example under sections 8(3), (4), 12(4), (5), (6) or 37(1). So far as concerns section 12, subsection (5) is particularly worth noting since it introduces the licensing provisions found in section 11, including the Comptroller’s powers under section 11(5). The extent of the court’s power to make declarations in relation to foreign patents is not clear, but those powers are certainly quite limited: see Terrell (16^th ed) at 3-79. Since the statutory jurisdiction of the court and its inherent jurisdiction are different, I do not really find the preservation of the latter in sections 8, 12 and 37 of any real assistance in identifying the correct approach to the exercise of the Comptroller’s discretion to decline to deal.

It can be seen from sections 12 and 82 that entitlement issues in relation to European patents on the one hand and other foreign patents on the other are dealt with differently. Under section 12, a question may be referred to the Comptroller but not the court. The court is only given statutory jurisdiction if the Comptroller declines to deal. In contrast, section 82(4) confers jurisdiction on the court to determine an entitlement question and, reading that subsection together with subsection (1), it seems that section 82 is self-contained so far as the court’s jurisdiction is concerned. The position may be different so far as the Comptroller’s jurisdiction is concerned. His primary jurisdiction is found in section 12 but section 82(2) says that section 12 shall not confer jurisdiction in the case of a European patent except in accordance with the section. Subsection (4) then confers jurisdiction in the two circumstances set out, in which case it appears that section 12 itself applies to confer jurisdiction on the Comptroller (but not on the court). Where it applies at all, section 12 applies in its entirety: accordingly, the Comptroller may decline to deal in the case of a European patent as much as in relation to any other foreign patent. So far as the court is concerned, it would appear from the foregoing that, in the case of a European patent, its jurisdiction is exercisable whether or not it appears to the Comptroller that the question would more properly be determined by the court. I do not know, and counsel had no explanation, the reason for this difference in approach between sections 12 and 82.

Moving away from the structure of the legislation, Mr Birss has two other submissions in support of the approach which he urges on me.

The first is what he describes as a small but important point. It is the difference between the costs regimes of the Office and the court. I do not need to say anything about High Court costs other than to remind myself of the risk to the losing party of having to pay his opponent’s costs in what are often large amounts even after applying the “proportionate and reasonable” tests applicable on an assessment. In contrast, the exposure of a losing party before the Comptroller is much less. He will, of course, have to pay his own costs, which are, however to a large extent, under his own control. But, importantly, the costs which he will have to pay to his opponent will usually be scale costs having nothing to do with what the opponent has actually spent, although “real costs” can be ordered eg where there has been misconduct. The exposure is thus predictable and oppression of one party by another in relation to costs is avoided. To that, Mr Mitcheson adds the point that a tribunal such as the Comptroller is by its nature less formal than a court and cheaper overall. I do not think that it necessarily follows that less formal means cheaper. In the present case, Mr Thorley suggests that the costs would not, in fact, be materially different as between hearing officer and court. Be that as it may, in other cases there could be a real difference in costs, not least because a party can be represented by an agent without the need to employ lawyers although whether he would actually want to do so in a case which is “complex” and not “relatively straightforward” might be questionable. I agree that the different costs regime is a factor which can be taken into account in the exercise of the Comptroller’s discretion. It may, however, on the facts of any particular case, carry no weight at all.

The second submission concerns the decision of the Court of Appeal in Markem Corp v Zipher Ltd [2005] EWCA Civ 267 [2005] RPC 31. Prior to that decision, it was not thought to be necessary, in entitlement proceedings, to prove a breach of confidence. The effect of Markem, as explained by Jacob LJ at paragraph 8 of his judgment in IDA is “to the effect that he who claims entitlement of another’s patent application or part of it, has to show that in law he is so entitled, typically by virtue of contract or breach of confidence”. Accordingly, Mr Birss says that this decision is important in throwing into focus the fact that, in entitlement cases, there will always be a need to look into the underlying merits. They will generally involve issues about confidential information, breach of confidence and breach of contract. The issues are not restricted to technical issues and simple issues of the “who said what and when” type: they are likely to raise complex factual issues commonly involving cross-examination. They frequently involve international elements – indeed, section 12 inevitably involves a foreign element. It would be entirely unsurprising to find that the hearing officer might need to be educated on questions of foreign law (both patent and non-patent law). The hearing officer might even have to decide such questions, although Mr Birss accepts that it is less common for a question of foreign non-patent law to arise for determination. In other words, it is now the very nature of entitlement proceedings that they will commonly involve matters which form the regular diet of the court; but that is not a reason for saying that such cases are more properly to be determined by the court, otherwise the Comptroller’s statutory jurisdiction will be unduly curtailed.

I agree, of course, that not all entitlement cases must inevitably be referred to the court because they all now involve the underlying merits. But a case which, before Markem, was thought not to be highly complex or even complex, may, as a result of the need to look at the underlying merits, become highly complex or complex. The test is the same in either case: does the question involve matters which would more properly be determined by the court. Equally, a case which before Markem was complex or highly complex because it did involve the need to look at the underlying merits, cannot, I think, transform overnight as a result of Markem into a case which is no longer complex or highly complex.

So far as IDA is concerned, Mr Birss does not submit that complexity is not a factor to be taken into account. But here there are different types of complexity – technical and non-technical, the latter including complex disputes of fact and issues of foreign law, particularly non-patent law. He says that Jacob LJ has drawn the line in the wrong place, or at least has not addressed the different types of complexity separately. He suggests that the line should not be drawn between a “complex” case and a “relatively straightforward” case; he says that, where complexity is the only, or the overriding, factor in the decision whether to decline to deal, it should be only “highly complex” cases which find their way to the court. On this approach, Jacob LJ’s obiter observations are not a full treatment of the problem and are, to some extent, founded on a number of factors which do not present the full picture. There is certainly no evidence, he says, to justify any concern – although I would say it is not clear that Jacob LJ had this concern – that the Comptroller is reaching incorrect decisions in entitlement cases or in any way conducting them other than competently and justly.

On this aspect of the case, Mr Mitcheson supports Mr Birss’s submissions and his conclusion that only “highly complex” cases should find their way to the High Court. He relies on paragraph 8 and 9 of Jacob LJ’s judgment in IDA which might be seen as a rather more Comptroller-friendly approach, where he says “Whether an issue is apt for determination in proceedings before the Comptroller or in High Court proceedings will depend on the circumstances of the case and, in particular, for instance on what relief beyond entitlement is sought”. Wishing to save himself from having to submit, if he could avoid it, that Jacob LJ is wrong in his approach as stated at paragraph 44iii) in IDA, he says that there are two interpretations of what Jacob LJ actually did say.

I have no doubt that the benevolent interpretation is incorrect. It is plain, to my mind, that Jacob LJ was saying something very different in paragraph 44iii) and, indeed, that interpretation would be inconsistent with what he said in Yeda. I do not need to address the extreme construction as just formulated. That is not what Jacob LJ said. He did not refer to the “very simplest cases”: he suggested that the Comptroller should consider making a reference in complex cases, adding that the Comptroller’s jurisdiction should be reserved for “relatively straightforward” cases. Further, I feel sure that he was only stating a general approach: the matter is, ultimately, at the discretion of the Comptroller and, whatever general approach is adopted, it is always possible that a particular case will require a departure from that general approach.

Mr Thorley draws attention to four sorts of issue which an entitlement dispute might throw up, and considers the suitability of a hearing officer to deal with them bearing in mind that he is a technical person not a lawyer:

In the context of legal issues, Jacob LJ’s comment at the end of paragraph 69 of his judgment in Yeda should be referred to – the advantage of the removal of a tier of potential appeal. Mr Mitcheson says that there is really nothing in this point. If the case is heard by the Comptroller, a second appeal to the Court of Appeal requires the permission of the court (in a patent case, it is the court rather than the Court of Appeal which deals with permission) in relation to which there is quite a high hurdle. That does not entirely meet the point. There always remains the possibility of permission being granted. More importantly, where the real issue, or one of the real issues, in the case turns on a difficult point of English law (and especially if it is a point of non-patent law), not only does that factor of itself point towards a referral to the court, but the removal of a tier of appeal also points to that course. Where the issue is one of law of sufficient complexity to think that the matter is one for the Court of Appeal at the end of the day, there is little point in a hearing officer spending time on the issue when the court will have to do so in any case. To be balanced against that is the possibility that the party which wishes the case to remain in the Office will not appeal from the hearing officer if he loses or, having won, from the court if he loses on an appeal by his opponent.

As to Mr Birss’ arguments based on the primacy of the Comptroller’s jurisdiction, Mr Thorley relies on the different approaches found in sections 12 and 82 which I have already noted. It is not a decisive point, but it is an indication that there is no overarching policy that, in entitlement cases, the Comptroller is the primary source of jurisdiction. See also further at paragraph 64 below.

A more important point is the distinction between section 8, 12 and 37 on the one hand and section 40 and 72 on the other. Each of those sections gives a discretion, in virtually identical words, to the Comptroller to decline to deal. But it is said where there is a single point of entry (ie one must start with the reference of a question to the Comptroller) a rigorous approach is to be adopted whereas, in contrast, a less rigorous approach is to be adopted where there is a choice of points of entry (ie one can start with the Comptroller or the court). The word “rigorous” is one used by Mr Thorley as contrasting with “cautiously”, “great caution” and “sparingly”.

I should remark here that it has formed no part of Mr Birss’s argument that the Comptroller should adopt the “rigorous” approach to the exercise of his discretion under sections 40 and 72. It would not be an attractive argument. One might think, in relation to a jurisdiction granted to both the Comptroller and the court, that a referral from the Comptroller should not be subjected to a (non-statutory) test of “highly complex case”. An applicant has a choice of where to start. If he starts in court, there is no power for the matter to be sent to the Office to deal with. If he starts in the Office, his opponent has the right to request that the Comptroller decline to deal so that the matter can be referred to the court. The principle, one might think, is to allow the opponent the opportunity of having the case removed to the court when that is the more appropriate forum, an objective achieved in practice by leaving the matter to the discretion of the Comptroller. At least in relation to these sections, the Comptroller ought not to be able to raise an unjustifiably high barrier.

However, the consequence for Mr Birss of accepting that that is not the correct test to apply under sections 40 and 72 is to recognise that virtually the same words are to be given different meanings in different sections – or at least the criteria by reference to which the decision to implement the discretion conferred by those words are different. He does not shrink from that. But Mr Thorley points out that the Comptroller himself has never in practice sought to draw the distinction which Mr Birss now draws (and which, therefore, presumably reflects the practice which the Comptroller seeks to adopt for the future). My attention is drawn again to Gerkros which was a section 72 case but one where the hearing officer viewed himself as applying the Aline Homes approach and expressly referred to the discretion as being one to be exercised with great caution. So, Mr Thorley says the Office has been applying the “rigorous” test across the board; it cannot have been doing so on the basis of statutory primacy of the Comptroller’s jurisdiction which goes to show the lack of merit in the argument.

Be that as it may, Mr Birss’s submission is that different tests do apply and he accepts that the wrong test may well have been applied in relation to sections 40 and 72 in the past. It is right to do so because of (i) the different ways in which jurisdiction is conferred ie whether there are one or two points of entry and (ii) the context of the different provisions, with the complex range of powers available where section 11 is incorporated compared with the simple position in regard to revocation under section 72 (either the patent is revoked or it is not) and the comparatively easy exercise which is required to be carried out under section 40.

One should not overlook, in this debate, the provisions of section 61. Infringement proceedings must be commenced in court. Mr Birss says, in his skeleton argument, that on issues of infringement, the Court has been given primary jurisdiction. On that footing, it might be thought that the less rigorous approach (or perhaps an even less rigorous approach) to the Comptroller’s discretion to decline to deal ought to be adopted as in the case of a dual point of entry under sections 40 and 72. However, it seems odd to me that the Comptroller should be more willing to decline to deal in a case where the parties have agreed that he should deal (it is only their agreement which gives him jurisdiction in the first place) than in a case where one party has decided to invoke his jurisdiction rather than that of the court (as under section 40 or section 72). The answer, I think, is that section 61 does not confer jurisdiction exclusively on the court. It allows the parties, by agreement to confer jurisdiction on the Comptroller, and in that context the position, when it comes to the Comptroller declining to deal, is closer to sections 40 and 72 than to sections 8,12 and 37 assuming that there is a difference of approach such as Mr Birss suggests

In my judgment, the scheme of the legislation does not lead to the result that different tests are to be applied in relation to different sections and different types of issue (sections 8, 12, 37 and 82 concerning entitlement, section 40 concerning compensation, section 61 concerning infringement and section 72 concerning revocation) when considering the approach which the Comptroller should take to exercising his discretion to decline to deal. In particular, I do not consider that the initial conferring of jurisdiction on the Comptroller was intended by Parliament to carry with it any predisposition to retain cases within the Office. There is, no doubt, a range of cases which could perfectly well be handled by either the Comptroller or by the court and in relation to which it could not be said that one, rather than the other, is the more appropriate forum, or at least in relation to which the appropriate forum is a matter on which reasonable minds might differ. I see the scheme of the legislation this way: Under sections 8, 12 and 37, questions are in the first instance referred to the Comptroller. He is then the arbiter about which forum is the more appropriate, with the default being that the case remains with him unless it appears to him that the question (or matters involved) is more proper to be determined by the court. The initial allocation to the Comptroller does not carry with it, in my judgment, the conclusion that something more has to be shown, for instance that a case is highly complex, before the Comptroller should decline to deal.

This approach sits more comfortably with section 82 than the approach advocated by Mr Birss. Under subsection (4), the Comptroller and the court have concurrent jurisdiction. As I have explained, a reference to the Comptroller under that subsection is effected by invoking section 12 so that the Comptroller has the same discretion to decline to deal as he has in relation to any non-European foreign patent application. He must therefore apply the same test in exercising his discretion in relation to a European patent application as he does in relation to a foreign patent. It would be very odd, to my mind, if he were obliged to apply a strong test (eg highly complex) in relation to a reference of a question to the Comptroller when the same question is one which could be referred to the court in any case. Further, section 82 is a dual point of entry provision and, on Mr Birss’s argument, should be treated in the same way as sections 40 and 72. It is in fact the section 12 test which has to be applied. This suggests strongly that the correct conclusion is that the same test applies to all the provisions. In my judgment, that is the correct conclusion.

Further, I do not consider that the correct test is that the question or matter involved must be highly complex, to use the description adopted by Mr Mitcheson and Mr Birss; nor should the jurisdiction be exercised cautiously (in contrast with care after proper and serious consideration), or with great caution or sparingly.

The identification of the correct approach remains, however, a matter of difficulty. It is easy to say that the Comptroller should simply apply the statute. He must, of course, take into account all relevant factors and ignore all irrelevant factors. And he must weight them in the balance. But that really takes one no further. Nor do I think that it would assist to identify – and I certainly do not intend to embark on such a task – a list of potentially relevant factors let alone the weight which should be attached to them. That runs the danger of being at the same time as unhelpful as it might be helpful.

I said earlier in this judgment that the result of Markem could not be to transform a case overnight from being one which was complex into one which was not. I use the words “transform overnight” deliberately. I do so because there are no absolutes of complexity. Indeed, whatever words one adopts to describe the test, it is always a matter of judgment in the light of experience and the expertise to be expected of the person at whom the issue is directed (the hearing officer or the judge) where a case falls in the scale of complexity. This is a real issue in relation to the exercise of the Comptroller’s discretion because he has to make a judgment in the light of prevailing conditions about whether a question is one which would more properly be determined by the court. What was regarded as complex or highly complex ten years ago may not be so regarded today. This could be so not just because of an increase in expertise and knowledge but because complexity is being judged on a scale of relatives and not against a scale of absolutes. If the broad run of cases become, on average, more complicated with the median of complexity moving inexorably in the more complex direction, it might well be that a question which a year ago appeared to the Comptroller as more properly to be determined by the court would no longer so appear.

So, provided that one recognises that what is complex is not an absolute standard, I do not think that the Comptroller can go far wrong if he were to consider exercising his discretion whenever a case is complex; he is to be the judge of what is and what is not complex in this context. What he should not do is start with a predisposition to exercise his discretion sparingly, cautiously, or with great caution. Complexity can be manifested in various aspects of a question or the matters involved in a question and counsel have identified different areas to which different considerations may apply – technical issues, factual issues, patent legal issues and non-patent legal issues to name some. What may seem technically complex to a lawyer may not seem technically complex to a hearing officer; and, the other way, what may seem complex legally to a hearing officer may seem straightforward to a lawyer. It is for the Comptroller to judge how each relevant matter or question appears to him given its complexity. I do not read Jacob LJ as saying anything different from this in paragraph 44iii) of IDA either (i) when he refers to complex cases or (ii) when he says that the Comptroller’s jurisdiction should be reserved for relatively straightforward cases. The phrase “relatively straightforward” of itself involves a comparison or a scale. An involved technical issue may be relatively straightforward to a hearing officer; a legal issue which to a lawyer may be relatively straightforward may not be to a hearing officer, and may not, on that basis, so appear to the Comptroller.

Accordingly, I reject the submissions of Mr Birss and Mr Mitcheson about the principles governing how the Comptroller should exercise his discretion to decline to deal and in particular the submission that, where complexity is the only relevant factor, he should do so only in highly complex cases. However, what Jacob LJ said in one or two brief sentences about the general approach is not to be taken as legislation or even to represent a complete statement. It is a statement of a general approach which needs to be adapted to fit the facts of each case; in particular, the concept of complexity (or whether an issue is relatively straightforward) needs to be judged in relation to different areas where different issues can arise (eg, technical, factual, legal) and needs to be judged against the expertise and experience to be expected of a hearing officer as compared with that of a judge.

Paragraphs 2 and 3 of the Decision identify two sets of applications for patents published with the respective titles “Plasma lamp with dielectric waveguide” and “Microwave energised plasma lamp with dielectric waveguide”:

Ceravision claims to be the successor in title to various rights, including intellectual properly rights of Digital Reflections Inc (“DRI”); it claims that all or part of the inventions within those applications were devised and developed by employees of DRI in the course of their employment or by consultants working for DRI pursuant to commission and so now belong to Ceravision. Luxim argues that the inventions were the work of the named inventors and that there has been no breach of contract or confidence. By letter dated 31 January 2006, Luxim requested that these proceedings should be transferred to the High Court. The issue came before Mr Thorpe for hearing on 7 April 2006. He decided not to decline to deal with the case.

After setting out the relevant parts of section 12, the Decision contains a section headed “The nature of the discretion under 12(2)”. In the following paragraphs of this judgment, I shall pick up various references which help to establish the test which Mr Thorpe actually applied in the present cases, references which Mr Thorley submits show that he has not applied the correct test.

In paragraph 8, Mr Thorpe describes the past practice of the Comptroller. He does so, it seems to me, in a way which indicates approval rather than disapproval. Thus the Comptroller has generally exercised his discretion “cautiously recognising that parliament has given specific powers to the comptroller to hear entitlement disputes”. Reference is made to paragraphs 2.77ff of the Patent Hearing Manual and the circumstances where the Comptroller would normally decline to deal (ie cases where there are existing parallel proceedings or where the parties consent). He recognises that neither of those situations arises in the present case, although he makes reference to an ongoing interference action in the US.

In paragraph 9, he observes that it has also been the case that the Comptroller would not normally decline to deal simply because the case is difficult or complex. He then, in paragraph 10, refers to Mr Thorley’s suggestion that that approach might no longer be appropriate, given Jacob LJ’s comments in IDA, then setting out paragraph 44 of the judgment.

In paragraph 11 he rejects Mr Mitcheson’s suggestion that Jacob LJ was simply issuing a reminder that the Comptroller has power to transfer case. Then he says this in paragraphs 11 and 12:

“11……His [Jacob LJ’s] observations, which appear to be a response in particular to his experience in the IDA and Markem cases, raise a number of general points that are certainly worthy of wider debate. It is however not for me to engage in that debate. It is I believe sufficient for me to say that I do not believe that his comments require the comptroller to alter significantly the approach that he currently takes in deciding whether he should decline to deal with a case.”

12.

That approach is, as the Patent Hearing Manual explains, to look at all the arguments put forward in the particular case and decide where the balance lies. If having done that it is clear that the matter should more properly be dealt with by the court then I should decline to deal. Where however there is a clear benefit in the comptroller deciding the matter then I should obviously not decline to deal.”

He then goes on, in paragraphs 13 to 15, to consider the position were he to find that the case “could be dealt with equally by the comptroller and the court”. He concludes, at paragraph 15, in these words:

“Although it is perhaps slightly frowned upon these days to express any inclination towards “inertia” I think that it is clear from the wording of section 12(2) that I should consider transferring only where it is “more proper” for the courts to handle the case. In other words if all things are equal I should not decline to deal.”

Looking at paragraph 12, we see Mr Thorpe approaching the question as one of striking a balance. If the balance is clear one way or the other, there is no difficulty. The question here is the criteria by which Mr Thorpe considers the balance should be struck; one might ask Where is the fulcrum point for setting the scales? Thus, if the correct test is whether the case is other than complex or, to use the words of Jacob LJ, relatively straightforward, a different result will, in many cases, be obtained from that which would be reached if the test is whether the case is highly complex. It is clear to me that, in striking that initial balance, Mr Thorpe sees no reason to depart from the approach which the Comptroller has previously taken. He says that even what Jacob LJ says (which he notes is not binding on him) does not require a significant departure from previous practice. He refers, without criticism, to the need for a cautious approach in the light of the powers conferred on the Comptroller by Parliament – reflecting, in different words, Mr Birss’s argument about the primacy of the Comptroller’s jurisdiction. And, as one can see from the beginning of paragraph 12, he adopts the approach adopted in the Patent Hearing Manual without in any way qualifying what is found in paragraph 2.82, ie that complexity by itself would not normally be a reason to decline to deal. In effect, he adopts a test similar, if not identical, to Mr Birss’s and Mr Mitcheson’s “highly complex” case criterion.

For the reasons given earlier in this judgment, I do not consider that that is the correct test.

There is one other point to make in relation to paragraph 12. Mr Thorpe refers to a case where it is “clear” that the matter should be referred to the court. I think he must be intending to identify all those cases where, having carried out the balancing exercise, it appears to the Comptroller that the case would more properly be dealt with by the court. What it does not cover is cases where there is a doubt (even a residual doubt) about which way the balance tips. It is that sort of case, I think, which Mr Thorpe is then intending to deal with in paragraph 13. In that paragraph, although he considers cases which “could” equally well be dealt with by the Comptroller or by the court, I think he is really intending to deal with cases which have not been got out of the way applying paragraph 12. It is in that context that he said what he did in paragraph 15. I think he is saying no more than that in cases where the Comptroller considers that a case could equally properly (rather than “could”) be dealt with by either the Comptroller or the court, it cannot be said that it appears that the case could more properly be dealt with by the court.

That Mr Thorpe was applying a test different from that advocated by Jacob LJ and from that which I have attempted to articulate earlier in this judgment, appears from certain other parts of the Decision.

First, paragraph 27: in this paragraph, Mr Thorpe is discussing the issue that Californian limitation laws (and the related question whether those laws bar relief in the UK) may need to be considered in this action. Mr Thorpe states:

“Even if it is new, I am not persuaded that it is something that necessarily, or even more properly, should be handled by the Court. I have no doubt it is an interesting question. But I do not believe, nor did Mr Thorley appear to argue, that it is a question that a hearing officer would not be able to determine (although he did suggest that a High Court judge might be more familiar with the issue of limitation)…..”

Secondly, his conclusion at paragraph 33:

“33.

So what can I conclude? Firstly, it seems to me that [the fact that] the issues in question – although complex – are unlikely to be that foreign to proceedings before the comptroller. There might conceivably be issues that are new, not just to the comptroller but also probably to patent entitlement disputes in general. However, I am not persuaded that any new issue, or for that matter any old issue however complex, that is likely to arise in this case could not be handled justly by a hearing officer. The hearing officer will also be assisted to some extent by what appears to be significant documentary evidence.

34.

Equally, I do not believe that the likelihood of appeals on any new points of law or on any other aspect of the decision can be an overriding factor towards declining to deal

35

Therefore on balance I do not believe that the case could be more properly handled by the court and therefore I make no order to decline to deal with this reference.”

[I have put square brackets round what I think must be words included by mistake.]

Having reached the conclusion that Mr Thorpe did not apply the correct test, I must now exercise the discretion myself: the parties do not wish me to remit the matter to the Comptroller.

Mr Thorley has taken me to Ceravision’s Statement of Case and in particular to paragraphs 13 which highlight the involvement of a Mr Smoler (an external consultant with DRI who it is said had conceived of all of the inventions subject to the proceedings by 19 December 1999) and paragraphs 18 to 28 which set out Ceravision’s case concerning the involvement of Tenco, the circumstances in which it is said that the concept of the waveguide lamp concept was disclosed to Tenco and what happened at certain key meetings. He also took me to The Engineering Services Agreement made between DRI and Tenco at the end of March 2000. After that, he took me to Luxim’s counterstatement which, as he put it, has “House of Lords” written all over it. I take that simply as a submission that the matter is complex and possibly even highly complex. I shall make up my own mind in due course about whether the matters are ones which would more properly be determined by the court than the Comptroller.

Mr Mitcheson took me to some additional material including some notes made by

The aspects of the case which, in the view of Luxim, warrant a referral to the court are set out in a letter to the Comptroller dated 20 February 2006. Mr Thorpe deals with those aspects in paragraphs 19 to 32 of the Decision under the two headings Complexity and Cost of Proceedings, complexity being by far the most important of the two.

The letter identifies 15 issues which might arise in the action. Mr Thorpe records that in his submissions to him, Mr Thorley argued that some of those issues taken on their own would justify a decision to decline to deal. Accordingly, Mr Thorpe did, indeed, look at a number of those issues in isolation and asked himself whether each issue, taken by itself, would be enough to make it more appropriate to refer the question to the court. However, one must remember the statutory wording which, in the case of section 12, is whether the question involves matters which would more properly be determined by the court. In my view, it is the cumulative effect of the issue involved by reference to which the issues of referral must be judged. The fact that a question involves, say, three issues each of which taken in isolation would not make it appear to the Comptroller that the question involved matters which would more properly be determined by the court does not mean, when those three issues are taken together, that the overall appearance is the same. The question involves three matters which, taken together, may well make it appear to the Comptroller that the question does involve matters which would more properly be determined by the court.

The list of factors relied on are slightly differently described in the Grounds of Appeal. There are 11 of them:

I shall examine what Mr Thorley and Mr Mitcheson have to say about these matters, but before I do so I should mention three preliminary matters which Mr Mitcheson raises.

First, he reminds me of the specialist nature of the Office as a jurisdiction: its hearing officers have considerable experience, not only dealing with patent matters generally, but also with these sorts of entitlement dispute. That, of course, is true. But it must also be remembered that the specialist jurisdiction is subject to the appellate jurisdiction of the court and also that the very existence of the discretion to decline to deal is an indication that the court is the more appropriate forum in certain cases. There is a dispute about the criteria for referral to the court, but whether cases to be referred are to be identified as highly complex or merely complex, there is a general recognition that there is a hierarchy in which the court sits on top of the Office. Parliament could have taken a different approach: it could have regarded the Office as the more appropriate tribunal in all cases, recognising that technical issues are present in all, or nearly all, cases, leaving appeals to the court only on matters of law. It did not do so.

Secondly, Mr Mitcheson refers to paragraph 176 of the Patent Office Manual where it is observed that “tribunals such as the comptroller are expected to be a less formal and cheaper forum than the High Court”. This, he says, is one of the main reasons that Ceravision wishes to retain the case in the Office. I have already considered the question of costs in considering the principles by reference to which the discretion is to be exercised. On the facts of the present case, I doubt that the actual costs incurred by each side will be significantly different. The same issues will need to be argued, the same disclosure will need to be given and the same documents examined; and the same representation will be used – Counsel will appear for both sides so that this is not an action where a patent agent will argue the case for Ceravision. I do accept, of course, that Ceravision’s exposure to any liability in respect of Luxim’s costs is greater in the court than before the Comptroller.

Thirdly, Mr Mitcheson refers to the interference proceedings in the US. I understand that the proceedings there are well in advance of the corresponding process in this country with a final hearing expected in November of this year. He points out that many of the preparatory tasks for any UK proceedings will already have been carried out in the US and a duplication of effort will be avoided. I do not understand what turns on this since those factors apply equally in relation to proceedings before the Comptroller and proceeding in court. It is perhaps a point which rests simply on the fact that the approach of the US Patent Office in terms of disclosure and expense is more akin to that of the Office than of the court. Mr Thorley accepts that there is some overlap between the interference proceedings and the English proceedings, but points out that the former concern only one group of the patents which I have mentioned. He says, in any event, that the existence of the interference proceedings is irrelevant to the question of transfer from the Office to the court.

I turn now to the 11 factors just listed.

Factors a. and b. It is clear that important events in question took place several years ago, possibly as long ago as 1999. Some of the events involved a number of people whose evidence will be relevant. The witnesses’ recollection of these events will need to be tested in cross-examination. Mr Thorley says that it is plain that the courts are more accustomed to dealing with conflicting evidence of events that happened long ago and if necessary in assessing credibility. Recently, documentation has been discovered in the US intervention proceedings which will have an impact on piecing together the hitherto fragmentary documentary evidence and in refreshing the memories of those concerned. Both sides are seeking disclosure in relation to which interim applications are likely. Mr Thorley submits that the procedure of the Office does not really lend itself to this. He notes that it took over a month to arrange for the hearing on the application to transfer and two months for a decision to be given.

Mr Mitcheson responds to the submission that the Courts are more accustomed to dealing with conflicting evidence of events that happened some time ago by saying that this is not accepted as correct in the realm of entitlement disputes. On the contrary, he says that hearing officers are likely to have considerable and recent experience in dealing with the issue of who invented what and when. Indeed, Mr Thorpe, in addressing this issue, said that cross-examination is a common feature of entitlement disputes and that hearing officers have built up a considerable experience in hearing oral evidence, including that relating to events that occurred some time ago and of evaluating the reliability of such evidence. Mr Mitcheson says there is no justification for going behind what Mr Thorpe has to say about this.

Further, Mr Mitcheson points out that the main witnesses will have had the advantage of having been through the evidence and documentation recently in the interference proceedings and will have been tested in cross-examination. They will therefore have more familiarity than if they were coming in cold. Mr Mitcheson clearly thinks that this assists his case, presumably because some of the complexity will be well-understood by the time of hearing in this country. But I think it cuts both ways. All the witnesses will be acutely aware of the precise importance of what they say and of what they said before; indeed, one can expect that any departure from what they said before will itself be raised in cross-examination. I can well see that the task of the tribunal of fact might be more difficult, rather than more simple, as a result of the US hearing.

Be that as it may, it is not just the experience of hearing officers which has to be brought into the balance. Unless complexity were to be disregarded altogether (which no-one suggests is correct), the question once again comes down to where it is appropriate to draw the line. The fact that a hearing officer has the experience which Mr Thorpe has identified does not mean that the complexity of those matters in a particular case can never by itself be enough to make the case one which would more properly be determined by the court. It may (or may not – it is not necessary to say) be the case that a hearing officer has wide experience of hearing disputed entitlement cases involving cross-examination and issues of credibility; that does not mean that a particular case is not more properly to be dealt with by the court. The question for me is which side of the line the present case falls, applying the test which I have identified rather than the approach advocated by Mr Birss.

Mr Mitcheson puts forward two responses to Mr Thorley’s submissions on disclosure. First, he says that matters may take just as long in the High Court. I can see that that might be so: but it is always open to a party to bring matters before the court much more speedily than that if necessary. Secondly, he says that the fact that discovery and witness statement have already been provided in the US proceedings should narrow the scope of dispute on disclosure in the present proceedings. There is certainly something in that point. For my part, I attach little weight to the different disclosure regimes in the two tribunals.

Factor c: Mr Thorley says that there a number of legal issues which are novel or complex or both. They include:

In response to that, Mr Mitcheson says that obligations of confidence arise in the majority of entitlement cases and it is not understood why the court would be in any better a position to decide this than the Office. Nor is it understood why the trustee point, the US bankruptcy point or the limitation point are more suitable to be dealt with by the High Court than the Office. He says that the impact of Californian law is neutral as between the Office and the court.

It is not suggested that the need to resolve a question of Californian law in the present case gives rise to any difficulties of private international law. I venture to suggest that such questions would be more properly determined by the court than the Comptroller; such questions are notoriously difficult.

However, a disputed question of Californian law is something which, in principle, is capable of resolution by a hearing officer like any other dispute in respect of which expert evidence is adduced. However, the question, as in relation to factual evidence and cross-examination, is not whether hearing officers now have experience of such issues (ie of resolving points of foreign and English non-patent law) but whether a case which gives rise to such issues ought to be referred to the court. Mr Mitcheson’s submission seems to me to be redolent of an approach which says “can do therefore will do”. He is careful to avoid saying that expressly, because that is a wrong approach. But to say it is not understood why the court should be any better equipped than a hearing officer to determine the points which actually arise in the present case suggests that, if the hearing officer is equally equipped, he should not refer it. Here, again, I come back to the fact that it is no part of Mr Thorley’s case that the Comptroller cannot deal with the case justly and competently: it is simply a question of the level at which the case should be determined given its complexity. As I see it, the issues of foreign law, and the consequences for English law, are complex. Although Mr Mitcheson has explained to me why he considers the issue to be relatively straightforward, I can see that there is scope for real argument and the need for expert evidence on Californian law (which has not yet been procured). Further, I do not perceive the issue of English patent law as easily resolved as he suggests. Although standing by itself it might be a question which would properly be left to the hearing officer, when coupled with the issues of Californian law, I see the range of legal issues taken together as being matters of some complexity.

Factors d, e, f and g: Mr Thorley says that these really all follow on from what has already been discussed above. There will be a significant amount of factual evidence, with many witnesses. The documentary record is not complete and will not obviate the need for oral evidence and cross-examination. Both sides require disclosure (a matter I have already mentioned in relation to Mr Mitcheson’s preliminary points). Expert evidence will be necessary on Californian law and may be needed on technical issues (although the last of those does not point in favour of the court rather than the Comptroller). Mr Mitcheson says that this is not an unduly complex dispute. The technology is not particularly difficult and the usual issues of who invented what and when, and who said what to whom, arise for determination. The areas of dispute are constrained, relating to what was disclosed over a limited period of time and in relation to uncomplicated technology. The focus will be on two key meetings. The case is miles away from a truly complex case such as Markem, which involved six different patents with two sets of technology and with two separate High Court actions for breach of confidence and contract.

Factor h: the time estimate is 5-6 days if heard by the court which Mr Thorley says reflects the substantial nature of the case. Mr Thorpe took the length of hearing into account in his decision. Mr Mitcheson says that, contrary to what is suggested by Luxim, it appears that there will be a handful of key witnesses who will be required to give evidence in relation to two key meetings. This is within the ambit of an ordinary entitlement dispute and does not justify transfer.

Factors i, j and k: Mr Thorley says that there has been delay by Ceravision in launching its proceedings. Luxim needs a prompt resolution of the proceedings (although it will not have been lost on Luxim that its appeal from the Decision may, in the event, have resulted in a less speedy resolution than had matters been left to proceed in the Office). Mr Mitcheson points out that delay cannot really play any part given that the postponement of the current appeal before me was by agreement. In any case, he says that Ceravision were entitled to see whether the EPO would actually grant any patents to Luxim before issuing entitlement proceedings in the UK. And he points to the chronology to show that, to the extent that anyone is to blame for delay, it is Luxim. I think that, generally speaking, delay which is not substantial or a clear abuse of process carries little weight. In the present case, it is a factor which plays no part in my decision; even if it were to do so, it would not have any affect on the result.

As to appeals, I have touched on this in considering the general principles applicable. Further, both parties regard the case as important to them – although I suspect that could be said almost universally in relation to parties to any patent dispute. I can see that the case is particularly important to Luxim since it has spent a number of years developing the product; if Ceravision is correct in its case, it will effectively close down Luxim’s business.

Ceravision’s patent attorney has stated that Ceravision does not wish to lose an extra tier of appeal which, Mr Thorley says, suggests strongly that the case may go to appeal if Ceravision were to lose. Of course, it would be for Ceravision to decide, in that event, what to do when it knows the findings of fact which the tribunal, be it the Comptroller or the court, has made. But the desire to retain the extra tier of appeal is, I think, only consistent with more than a fanciful possibility of an appeal being pursued as far as possible (in the light of the permissions to appeal which will be required). I would add that I see some tension between this desire to keep tiers of appeal open and a desire to be protected from the adverse costs orders in court as compared with before the Comptroller. Finally, Mr Mitcheson says that although the case is important to both parties, neither is a large company and given that, the Office is the appropriate forum.

Taking account of all of the submissions made to me, the documentary material to which I have been referred and the factors I have addressed, I conclude, applying the test which I have earlier identified, that, for the purposes of section 12, the question referred to the Comptroller appears to me to involve matters which would more properly be determined by the court and in the exercise of any discretion which I have, I would direct that this matter should not proceed further before the Comptroller. This conclusion is consistent with Mr Thorpe’s own conclusion, found in paragraph 33 of the Decision, that the issues in the question are complex. Since, in my judgment, Mr Thorpe has applied the wrong test, I do not need to decide whether his decision is one which could be effectively challenged had he reached it after applying the correct test. Accordingly, I allow the appeal from the decision reached by Mr Thorpe.

In case I am wrong in the view which I have expressed about the correct test, I need to decide whether, applying the test which he did, Mr Thorpe’s decision can be overruled. To do that, I would have to be satisfied that no reasonable Comptroller/hearing officer could have reached the decision which Mr Thorpe reached (it not being suggested that he failed to take into account all relevant matters or took into account irrelevant matters). The question is whether Mr Thorpe “has exceeded the generous ambit within which a reasonable disagreement is possible”: G v G [1985] 1 WLR 1507 at 1523.

In my judgment, he would not have exceeded that generous ambit. I reach that conclusion on balance. Were it not for the (important) question of Californian law and the consequences for the application for the Patents Act 1977, I would regard it as clear that his decision could not be challenged. However, the difficulty of those legal questions push the case very close to the limit of the range of reasonable decisions, but not, I think, over the edge.