The method of assessing loss caused by a negligent patent agent was considered.
Held: As a negligence action and not an infringement action, the logical method for assessing damages was to evaluate the market price of the right to pursue the application, on the assumption that (as was conceded in that case on appeal) it would have been accepted without amendment by the Patent Office. In making the evaluation, the court would take into account the prior art, the likelihood of opposition or revocation proceedings and the possibility of competitors modifying their product to avoid infringement.
Buckley LJ said: ‘When a new device is introduced to the market its commercial use may well have experimental value from the point of view of the inventor or patentee for some time thereafter; but if the use of the apparatus is by no means experimental from the point of view of the customer I doubt whether it can be properly described as for the purpose of trial or experiment only’. And
‘In my judgment damages are not nominal, because the purchaser might well have been willing to pay something for a patent, which though vulnerable to attack and avoidance, nevertheless might prove some deterrent to competitors and some convenience to the patent owner. However, the patent would have been so vulnerable to attack on the grounds of invalidity and could have been so easily avoided that it is improbable that a purchaser would have been prepared to pay a large amount.’ and
‘In assessing damages it must be borne in mind that this is not an infringement action. What the plaintiff company suffered in consequence of the defendants’ negligence or breach of contract was the loss of whatever benefits might have accrued to the company if the application had been accepted by the patent office, as it is conceded it would have been if it had been put in order by 7 July 1967. As I have already pointed out, it does not follow from that concession either that the plaintiff company would certainly have obtained a grant of a patent, or that, if the company had obtained the grant of a patent, that patent could have successfully withstood revocation proceedings. Nor can we be sure what the claims of such a patent would have been, nor whether a competitor could easily have avoided infringing such claims. One method-and it seems to me to be the logical method-of arriving at an assessment of damages might be to attempt to quantify the price at which the plaintiff company could have disposed in the open market as between willing vendor and willing purchaser of its right to pursue its application on the assumption that it had been accepted by the Patent Office without amendment, for it was of this right that the company was deprived by the defendants’ negligence or breach of contract. Such a quantification cannot be an easy matter, for it necessarily involves forming a view of what the opinion of the supposed purchaser would be upon the various unknown factors which I have indicated, as well as of the value which the supposed purchaser would put upon the potential profitability of any patent he might succeed in obtaining.’
Templeman LJ said: ‘I agree also with my Lord that the appropriate method of assessing damages is to attempt to quantify the price at which the plaintiff company could have disposed in the open market as between willing vendor and willing purchaser of its right to pursue its application on the assumption that the application would have been accepted by the Patent Office without amendment. In my judgment it must however be assumed that the purchaser would have been prudent enough to make prior inquiries which would have revealed the Hotchkiss patent and that the purchaser would have bought the benefit of the application by the plaintiff company in the knowledge, or at least suspicion, that any patent granted in respect of Mr Andrew’s machine would be vulnerable to opposition proceedings or revocation proceedings and in any event could be avoided with ease by the use of fixed spacers.’
Judges:
Buckley LJ, Templeman LJ, Brightman LJ
Citations:
[1981] RPC 389
Cited by:
Cited – Kerr v Laurence Shaw and Associates Ltd (T/A Laurence Shaw and Associates (In Liquidation)) ChD 19-Mar-2010
The claimant sought damages, alleging that the defendant patent agents had failed to make a timely application for a Canadian patent.
Held: The evidence was conflicting, but the court found that the claimant had made a decision to limit his . .
Lists of cited by and citing cases may be incomplete.
Intellectual Property, Damages
Updated: 02 May 2022; Ref: scu.403477
