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	Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Buchanan v Alba Diagnostics Ltd [2001] ScotCS 26 (6 February 2001) URL: http://www.bailii.org/scot/cases/ScotCS/2001/26.html Cite as: 2001 SCLR 307, [2001] ScotCS 26

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I have considered the Opinion of Lord Clarke and agree that, for the reasons which he gives, we should refuse the reclaiming motion.

[1] This is a reclaiming motion against an interlocutor of the Lord Ordinary (Hamilton) dated 30 June 1999 whereby the Lord Ordinary assoilzied the defenders from the conclusions of a summons directed against an alleged infringement by the defenders of the pursuer's U.K. Patent No. 2287321 (hereinafter referred to as "the 321 Patent") and upheld the defenders' fifth plea in law to the effect that the defenders were in any event in right of that patent by virtue of its being an "improvement" to a patent application published under the Patent Co-operation Treaty (PCT) bearing the publication number W090/12311 (hereinafter referred to as the "311 Application"), which patent application had earlier been assigned to the defenders.

[2] While there were one or two incidental matters raised by the pursuer in the course of the reclaiming motion (all of which have been dealt with by Lord Clarke) the two substantial matters argued before us were whether the Lord Ordinary was entitled to hold that the 321 Patent fell to be regarded as an "improvement" to the 311 Application and, if not, whether he was further mistaken in his view that a device manufactured by the defenders, ostensibly in reliance on their U.K. Patent No. 2298928 (hereinafter referred to as "the 928 Patent"), did not constitute an infringement of the earlier 321 Patent. On both these matters the Lord Ordinary has written a very full and careful opinion and, while at a late stage in the argument Mr. Buchanan sought to attack certain of his findings, in light of the unusual nature of the proof and what the Lord Ordinary has to say about the respective expert witnesses, Dr. Lockerbie and Dr. Campbell, I am quite satisfied that this was, and is, a hopeless quest. In the result, if Mr. Buchanan is to succeed in either branch of this reclaiming motion, he has to demonstrate that the Lord Ordinary misdirected himself, as matter of law, on his own findings in fact.

[3] I deal first, then, with the matter of whether the 321 Patent does, or does not, fall properly to be regarded as an "improvement" on, or to, the 311 Application. As to this, there was no question but that both inventions related to hand-held devices for ascertaining the boiling point of fluids such as - but not confined to - the brake fluid of a motor vehicle. There was also no question but that the meaning of the word "improvement" is open to construction in light of the wording of the particular deed by which it is assigned and perhaps, also, according to its more general context. The Lord Ordinary has dealt with the latter in his Opinion but I, for my part, cannot but notice that in the preamble to the relevant deed of assignation (No. 33/11 of Process) the assignation is said to proceed on the basis, inter alia, that "the Assignors are the proprietors of various patents in respect of an invention which relates to Brake Fluid Analysers ( 'the Patents')...". It is accordingly in that immediate context that there is subsequently assigned the various applications in respect of what ultimately became world-wide Patent 311 "and all improvements, prolongations and extensions and all know-how relating therein and thereto...." Bearing in mind, as I have said, that the patents in question claimed inventions for ascertaining the boiling point of fluids (albeit especially hydroscopic fluids) other than brake fluid, it seems to me that the preamble may thus provide guidance as to the area in which "improvements" were, or might reasonably have been, contemplated by the parties, namely the commercial application of the invention to Brake Fluid Analysers. If I am right about this, then it seems to me that the 321 Patent must undoubtedly be an "improvement" to the 311 Application for purposes of the deed in question. Both related to hand-held devices which could be used to test the boiling point - and thus the purity - of brake fluid, but the former, which envisaged a depth insensitive device, overcame the problem encountered by what I shall term the 311 device, namely the difficulty of placing the device at a specific depth within the brake fluid reservoir.

[4] On the assumption, however, that no controlling meaning for the word "improvements" can be gleaned from either the deed of assignation or the surrounding circumstances (in so far as disclosed in evidence), then, as I understood it, the central argument for Mr. Buchanan was that the 321 Patent, while heralding a device which better performed the function of a device manufactured in accordance with the 311 Application, nonetheless involved a quite different methodology and should thus not be regarded as an "improvement". The different methodology, it was said, involved the use of what I might call a "pocket of air" which had the effect of encapsulating the liquid to be tested and which thus overcame the disadvantage of the 311 device to which I have referred above, namely its dependence on being held at the correct level in whatever fluid reservoir was being tested. As to this aspect of matters, however, I am, myself, unable to fault the Lord Ordinary's approach at pages 102-107 of his Opinion which culminates in the finding, as matter of fact and degree, that "the advance made by the 321 Patent on the 311 Application was not so radical as to make those inventions, to use the words of P.O. Lawrence J. in Sadgrove v. Godfrey, 'quite distinct'." Moreover, even if it were open to this court to look at the matter entirely afresh, for the reasons so fully and clearly expressed by Lord Clarke, I, too, would have reached the same conclusion on this matter as did the Lord Ordinary.

[5] In light of the opinion which I have just expressed it is really unnecessary to enter into that branch of the submissions which was concerned with infringement. However, I would note, for the record, that in the end of the day - leaving aside any attack on the Lord Ordinary's findings in fact - Mr. Buchanan's submission on this matter was restricted to that narrated at p. 131 of the Lord Ordinary's Opinion, namely

On that matter, however, I am in entire agreement with both the Lord Ordinary and Lord Clarke that the whole purpose of the 321 patent was to claim an invention which involved the retention of fluid in a chamber until significant temperature measurement was completed as opposed, simply, to retention during the preparatory phase of its being heated up towards boiling point.

[6] In the result, I am of opinion that the respondents succeed on both the main branches of the reclaiming motion and that the reclaiming motion should accordingly be refused.

[1] The pursuer and reclaimer is Mr. Nigel Buchanan who was formerly the managing director and majority shareholder of Liquid Levers (Innovations) Limited ("Innovations"). On 1 December 1993 Innovations went into receivership. Thereafter the reclaimer, who is an inventor, continued to work for himself and, while doing so, he developed a brake fluid measuring device for which he made an application to the Patent Office for a United Kingdom patent at about the end of February 1994. The application was filed with a filing date of 1 March 1994 and it was duly published on 13 September 1995. In due course on 27 March 1996 the reclaimer was granted a patent number 2287321 ("patent 321").

[2] The defenders and respondents are Alba Diagnostics Ltd. In his first conclusion the reclaimer seeks interdict against them from infringing patent 321 "by making, disposing of, offering to dispose of or keeping in the United Kingdom the invention forming the subject of the said patent and described and claimed in the specifications filed relative to the said patent and in particular by making, selling and marketing the Brake Fluid Tester which infringes the said patent." In the second conclusion the reclaimer seeks count, reckoning and payment in respect of the respondents' intromissions with the whole gains and profits which they have made since 1 March 1994 by the use of the brake fluid tester in infringement of the reclaimer's patent. Alternatively, the reclaimer seeks payment of £500,000. The parties' pleadings focus a number of issues but, in the Outer House, they agreed that the court should deal first with two of them and the Lord Ordinary therefore heard a proof which was limited to those two issues. The reclaiming motion was similarly limited.

[3] The first issue relates to the ownership of patent 321. The respondents assert that they, rather than the reclaimer, own the patent and that, accordingly, no acting of theirs can infringe any right of the reclaimer. This issue involves both matters of fact and matters of law. The second issue arises only if the reclaimer succeeds on the first issue and is indeed the owner of the patent. In that event the reclaimer claims that the respondents have infringed his patent and the respondents deny this. That issue also involves questions of fact as well as of law. The questions of fact which underlie the two questions overlap to a certain extent and the Lord Ordinary reached his decision only after hearing an extensive proof lasting nineteen days. While much remains controversial, it is possible to set out certain basic matters which are not in dispute.

[4] In 1989, while the reclaimer was working for Innovations, they applied for a patent for a device for testing the boiling point of fluids, especially of hydraulic fluid such as brake fluid. The application ("application 311") had a filing date of 30 March 1990 and a priority date of 8 April 1989. The application was published as WO90/12311 but the European Patent was not actually granted until 15 July 1998, i.e. more than two years after patent 321. It follows that in 1992 and 1993 the property of Innovations included application 311 but not the patent itself which had not yet been granted.

[5] In about May 1992 Mr. Lionel Mills had sold his shareholding in a company and had funds available for investment. He heard about Innovations and approached the reclaimer with an offer to invest in the company. At the first meeting between the two men Mr. Mills proffered a cheque for £500,000 but he then had second thoughts. The resulting dispute led to legal proceedings but these eventually led to an agreement which was embodied in a Minute of Agreement dated 20 August 1992 ("the Minute of Agreement"). In broad terms Innovations agreed to repay £100,000 immediately, while the balance was to represent an interest-free loan by Mr. Mills to Innovations, repayable on demand on six months' notice or after 31 December 1995. Alternatively, on the same notice, Mr. Mills was to have the right to convert his loan of £400,000 into an interest in the share capital of the company. By Clause 8 of the Minute of Agreement, the reclaimer and Innovations agreed to assign to Mr. Mills, as security for the loan, their rights to the brake fluid safety meter, details of which were annexed and signed as relative to the Minute. In the Schedule only two actual patents were listed, covering South Africa and the former East Germany. In addition various applications were listed, including application 311, which covered various European countries, including Great Britain.

[6] In implementation of the terms of the Minute of Agreement, in January 1993 Innovations and the reclaimer entered into an agreement with Mr. Mills to assign certain rights to Mr. Mills in security of his loan to Innovations. The agreement ("the first assignation") provided inter alia:

Among the applications listed in Part 1 of the Schedule was application 311. Part 2 of the Schedule contained an exclusive licence in terms of Clause 6.1, signed by Mr. Mills on 29 January and previously signed on behalf of the reclaimer and Innovations on 21 January 1993. Mr. Mills duly gave Innovations and the reclaimer

[7] It is common ground that, from the time of the Minute of Agreement until 1 December 1993 Innovations and the reclaimer operated under the terms of the licence. When, however, Innovations went into receivership on 1 December, by virtue of Clause 5.1.3 of the first assignation, the licence terminated forthwith. Mr. Mills then had the right under Clause 5.1 either to sell the Charged Assets or to retain them for his own benefit. At the hearing of the reclaiming motion, both parties seemed to assume that Mr. Mills chose to retain the Charged Assets but in fact it appears that he decided to sell them to the respondents, Alba Tools. This emerges from the terms of the assignation ("the second assignation") which Mr. Mills granted in favour of the respondents and which was signed on 8 and 9 May 1994. In the third "Whereas" of that assignation, the parties record that Mr. Mills, "as beneficial owner of the Patents and the Applications, has agreed to sell the Patents and the Applications by way of assignation to the [respondents], and the [respondents have] agreed to purchase and receive assignation of the Patents and the Applications," on the terms and conditions specified in the assignation. Clause 1 of the second assignation provided:

[8] When Mr. Mills sold the Charged Assets to the respondents in terms of Clause 5.1 of the first assignation, by that clause he was entitled to apply for his own benefit the whole sum of £5,000 paid by the respondents. But, while Mr. Mills was entitled to keep the proceeds of the sale, by Clause 5.3, as I shall have occasion to notice below, he had no further or continuing claim against Innovations or the reclaimer in terms of the first assignation "nor in respect of the Assignors' obligations hereunder" and was obliged to grant an unconditional discharge in respect of those obligations under the assignation and Minute of Agreement. In particular, of course, he had no further right under Clause 3 of the Minute of Agreement to claim repayment of the sum of £400,000 which he had lent to Innovations or, under Clause 4, to convert that debt into an interest in the shareholding of Innovations. In fact, we were told that in due course Innovations was wound up.

[9] The first element in the respondents' defence is based on the application of the terms of the two assignations. Put briefly, they claim that, when Innovations was put into receivership and Mr. Mills sold the Charged Assets to the respondents, they then became the owners of all those Charged Assets. Among those Charged Assets were "all improvements" to the patents and applications covered by the first assignation. The respondents claim that application 311 was among those Charged Assets and that, since the invention covered by patent 321 is an "improvement" on the invention covered by application 311, when it was eventually granted, patent 321 also fell within the terms of the Charged Assets. So, the respondents argue that, as owners of the Charged Assets by virtue of the second assignation, they rather than the reclaimer own patent 321. The reclaimer's action based on their alleged infringement of the patent is therefore irrelevant.

[10] The Lord Ordinary resolved this issue in favour of the respondents. In doing so, he decided both that the invention covered by patent 321 was an "improvement" on the invention covered by application 311 and that the assignation had been effective to transfer the property in patent 321 even though the application for that patent was dated March 1994, some months after Innovations was put into receivership. In the hearing before us the reclaimer, who represented himself, concentrated on the first of those matters, arguing that the invention covered by patent 321 was not an "improvement" on the invention covered by application 311 and so was not caught by the assignation to Mr. Mills. That being so, it could not be among the assets which Mr. Mills assigned to the respondents. In advancing that argument the reclaimer accepted, quite unequivocally, that application 311 had formed part of the Charged Assets and that the application and the resulting patent had been assigned to Mr. Mills and, through him, to the respondents. Before us the reclaimer did not renew an argument which his counsel had presented to the Lord Ordinary to the effect that, since all the assignors' obligations under both the Minute of Agreement and the first assignation had been terminated on Mr. Mills' sale of the Charged Assets, the reclaimer had been under no obligation to take any steps under the first assignation to transfer patent 321 to the respondents when it was eventually granted in March 1996. For reasons which I explain when I come to deal with the matter at paragraph 39 below, it was none the less necessary for this court to consider the way in which the first assignation operated in respect of patent 321.

[11] Having sketched the background and the issues, I think it right, in the first place, to make some general observations regarding the reclaimer's position in this reclaiming motion. In the challenge which he brought against the Lord Ordinary's decision, he was faced with three considerable difficulties.

[12] The first was that he was appearing in the reclaiming motion on his own behalf in what was, on any view, a complex matter of both fact and law. A case relating to infringement of patents, save in exceptional circumstances, requires for its understanding and exposition considerable professional skill. There is a limit to which, in an adversarial matter of this kind, a court can assist an unrepresented litigant in making up for the lack of such skill. I should add that, to a very material extent, Mr. Clark who appeared for the respondents, assisted the court and the reclaimer by giving an objective account of the relevant legal principles before advancing the respondents' proposed interpretation and application of those principles.

[13] The second difficulty facing the reclaimer was that his attack on the Lord Ordinary's decision was, it seemed at times, an invitation to depart from the Lord Ordinary's findings on questions of fact and from his conclusions on credibility and reliability. It is impossible, however, for an appellate court to substitute for the findings in fact of the judge of first instance, and for his conclusions on credibility and reliability, their own views on these matters, simply on the basis of submissions made to them. The court would require to make a careful examination of those aspects of the evidence in the case which, the reclaimer maintained, showed that the Lord Ordinary ought to have arrived at different conclusions on material questions of fact and on issues of credibility and reliability. The reclaimer did not, however, seek to make that kind of detailed examination of the large volume of evidence which the Lord Ordinary had heard and considered.

[14] The third difficulty facing the reclaimer was the way in which the proof had been conducted. It appears clear to me that in advance of the proof, and during its progress, the main issues had either not been focused at all or had been focused inadequately, so that the proof was taken up with a great deal of evidence which was ultimately of limited, if any, assistance to the reclaimer in seeking to establish his case. In addition, it appears that both sides may have side-tracked the court into allowing the carrying out of demonstrations and experiments which the Lord Ordinary ultimately rejected as being of no assistance to him. The fact, however, that the demonstrations and experiments were allowed to take place, and the Lord Ordinary's observations that the reclaimer both could and should have carried out experiments before the proof so as to be in a position to advance the results as evidence, did, apparently, leave the reclaimer with a feeling of grievance that the Lord Ordinary had misdirected himself on what the reclaimer could, and should, have been in a position to prove and rebut. It was, however, simply impossible for this court to resolve or unravel these matters, even if they were germane (about which I have serious doubts) since the "experiments" or "demonstrations" were not recorded and so do not form part of the evidence in the case before us.

[15] Having made those general observations it appears to me that, as I have explained above, there are two broad questions which this court has to determine.

[16] In the first place, do the terms of the first assignation taken together with the terms of the second assignation mean that the pursuer has no right to pursue against the respondents a case of infringement of patent 321, since, in law, the respondents are the true owners of that patent? In the first conclusion of their counterclaim the respondents attempted to reflect their position on this question by seeking declarator that "British Patent No. 2287321 was granted to the wrong person in that it should have been granted to the defenders". While the Lord Ordinary found in favour of the respondents in relation to this issue, he nonetheless expressed some doubts as to whether a conclusion in those terms correctly reflected the true legal position. He, accordingly, proposed to put the case out By Order for discussion of the exact formulation of the declarator to be pronounced, but the reclaiming motion intervened before he could hear submissions on the point. Before this court the respondents sought to substitute a conclusion in the following terms "For declarator that on the date of grant of UK Patent GB 2287321 the right of the pursuer as proprietor of the said patent vested in the defenders". I am satisfied that a declarator in these terms would be appropriate, if the argument of the respondents regarding the effect of the assignations is otherwise sound. This first broad question I will describe as embracing the contractual question and the property issue.

[17] The second broad question arises only if the respondents fail to satisfy the court that the reclaimer has no right to bring infringement proceedings against them because of the effect of the assignations. The question is then whether, in that event, the reclaimer has, in the result, discharged the onus upon him to show that the respondents are engaged in activities or are threatening activities which involve an infringement of patent 321.

[18] The first question involves issues both of contractual construction and of the law in relation to the transfer of incorporeal moveable rights.

[19] The starting point in relation to this question is to decide whether the subject-matter of patent 321 falls to be regarded as an "improvement" within the terms of Clause 1.1 of the first assignation. That clause refers to "all improvements" relating to "the Applications" and, by virtue of the schedule to the assignation, the relevant applications include application 311. As I have explained, the issue in this case focuses on that application. The invention claimed in application 311 was "an indicating device for indicating the boiling point of fluid especially hygroscopic fluids such as hydraulic fluids, for example automotive brake and clutch fluid". The abstract of the application states as follows:

Those features are reflected in claim 1. The description in application 311 referred to certain prior art but stated that devices made in accordance with the prior art had the disadvantage of not being particularly accurate or of forming noxious vapours due to the evaporation of hydraulic fluid or both. Accordingly, it was stated in the description that:

[20] The device made in accordance with application 311 was intended to be used by testing the fluid directly in the fluid reservoir without the need for a sample to be removed and tested in laboratory-like conditions. It should be explained that the actual reading of the boiling point was to be carried out by the means of sophisticated electronic meters which would translate the message sent to them by the heating probe. The electronics did not form part of the invention for which a patent was sought. The effectiveness of the probe in such devices depended upon the operators using the devices plunging the probe into the fluid to a pre-determined depth. Unless the device was submerged to the correct depth, the conditions varied and this affected the reliability of the readings. The devices were sensitive to operator error in that respect. Their mode of operation was delicate and time-consuming. That was particularly unsatisfactory, having regard to the fact that the devices were meant to be used, for example, by garage mechanics carrying out periodic inspections of brake fluid in motor vehicles, in what were often cramped and poorly lit conditions.

[21] In his invention in patent 321 the reclaimer had sought to overcome this problem. He did this by producing a device that involved the use of a casing which defined a housing, providing a lower housing portion in which the fluid to be tested was retained and an upper housing portion in which air was trapped through the action of side apertures. The trapped air formed an airlock, the pressure of which restricted the quantity of fluid in the lower part entering the device, when it was placed in the vessel containing the brake fluid, to the correct volume for testing, irrespective of the depth of the immersion of the probe into the fluid.

[22] The reclaimer sought to explain the difference between the devices embodying the invention in application 311 and devices embodying the invention in patent 321. According to the reclaimer, the means by which devices made in accordance with application 311 measured the boiling temperature of the fluid involved what was described as "a pulsating effect". The heating operation had to be carried out in such a way that enough of the fluid boiled to cause a pulsing. That pulsing, it was said, gave you the confidence that you had arrived at a correct reading of the boiling point. This last-mentioned feature is described in the description in application 311 as follows:

The reclaimer maintained that this pulsating effect constituted the essence of application 311.

[23] On the other hand, the reclaimer said, the essence of his device, which is the subject of the patent in suit, is that the fluid, whose boiling point is to be measured, is stabilised. This means that the depth at which the probe is inserted is less important and also that it is not necessary to boil the fluid and to have the pulsating effect. The reclaimer's position was that the essence of the 321 device was the removal of the depth sensitivity problem by reason of the arrangements whereby the fluid to be measured was trapped in a stable condition during the measurement process. He did not, however, maintain that the essence of the invention included the fact that the fluid did not require to be boiled.

[24] The question then is whether, even accepting what the reclaimer had to say with regard to the essence of the invention claimed in the patent in suit, that invention falls to be regarded as an "improvement" relating to application 311 in terms of paragraph 1.1 of the first assignation?

[25] In the field of intellectual property, in particular patents for inventions, there is nothing unusual in having a commercial agreement whereby one party will agree that the benefit of any improvement he brings about in respect of any past invention will belong to another. There is no absolute principle of public policy against such agreements. As it was put by Jessel M.R. in Printing and Numerical Register Company v. Sampson (1875) L.R. 19 Eq. 462 at pages 465 to 466,

[26] Nevertheless, agreements such as licences or assignations which provide for who is to have the benefit of "improvements" in relation to existing patents (or, as in the instant case, in relation to subsisting patent applications) may involve difficulties of construction because of the somewhat imprecise nature of the word "improvement" itself. Such agreements are discussed in Terrell on the Law of Patents fifteenth edition at paragraph 10.52 as follows:

In this passage, the writers envisage three possible means whereby these covenants will operate, namely by an agreement to assign the new invention or discovery, by the granting of a licence to it, or by communicating it to the other party in terms of a mutual arrangement. The writers continue:

At paragraph 10.53 the writers continue:

[27] There have been a number of reported cases where the word "improvement" has been construed in the context of an agreement relating to patents. In Linotype & Machinery Limited v. Hopkins (1910) 27 R.P.C. 109 at page 113 the Lord Chancellor, Lord Loreburn, said:

In the same case the Court of Appeal ((1908) 25 R.P.C. 665) held that, in the context in which the word "improvement" appeared, it was not to be limited to something that would be an infringement of the original patent assigned. In Valveless Gas Engine Syndicate Limited v. Day (1899) 16 R.P.C. 97 the defendant agreed to sell to the plaintiffs certain patents and the benefit of all inventions which the defendant might have made at the date of the agreement or be entitled to, or which he might thereafter make, "being for improvements upon the inventions the subject of any of the Letters Patent, or applications for the same" thereby agreed to be assigned. The patents in question comprised two patents of the defendant of 1891 for "Improvements in gas engines" and "Improvements in gas or vapour engines" respectively, and the benefit of an application which had been made in 1892 for a patent for "Improvements in gas engines". In 1895 letters patent were granted to the defendant for "Improvements in oil engines". The question before the court was whether the plaintiffs were entitled to the 1895 patent. In his judgment (16 R.P.C. at page 99) Smith L.J. explained that the gas and vapour engines described in the prior patents were, before the taking out of the subsequent patents, driven by means of gas and air introduced therein, by which means the required explosion was attained. These machines were, therefore, not in their mechanism adapted to the use of oil and air for the purpose of bringing about the mode of power. His Lordship went on to explain further that, since at the time gas was not universally obtainable and was, for the most part, obtainable only in towns, the use of the engines with gas being used was greatly restricted whereas, where oil could be used in the place of gas, the scope of use was largely increased and the engine became a matter of greater utility and value. Smith L.J. continued as follows (16 R.P.C. at page 100):

As I read that judgment, his Lordship was concentrating on the fact that the invention which was contained in the prior patents was something which was made more useful, or convenient, by the subsequent patent. That subsequent patent was therefore something which, in ordinary language, might be considered to be an improvement on the prior patents.

[28] It appears to me that a parallel may be drawn between the position in that case and the position which arises in the present case. According to the reclaimer, prior to his patent 321 invention, devices in the prior art in relation to temperature sensing of hydraulic fluids required care to be taken as to the depth at which the probe was placed in the fluid for accurate temperature readings to be made. This was the case with devices made in accordance with application 311. This feature was a disadvantage of such devices. The stabilising in the lower housing of the amount of fluid whose temperature was to be measured eliminated that disadvantage. This meant that devices which incorporated that feature of patent 321 were "of greater utility and value" (Smith L.J.) than the devices made in accordance with the prior art, including application 311. In Lord Loreburn's words the invention in patent 321 made the device "a preferable article in commerce".

[29] I should add that this approach is also reflected in the judgment of Collins L.J., in the same case. He also stressed the need to approach such questions in not too narrow or technical a way. His Lordship said (at page 105):

[30] The Court of Appeal in the Linotype & Machinery Limited made the same point in a slightly different way in holding that an improvement of a patented machine included any machine which, while retaining some of those essential or characteristic parts of the machine which are the subject of the monopoly claims, yet by addition, omission or alteration better achieves the same or better results. In giving the judgment of the court (25 R.P.C. at page 670), Buckley L.J. put matters this way:

It seems to me that those words might also be adapted to the present case. By providing for the stabilising of the fluid whose temperature is to be measured, the patent in suit achieves, in a better way, the same result as the invention which was the subject-matter of application 311, viz. the measuring of the temperature of hydraulic fluid by an operator using a hand-held measuring device applied to the vessel containing the fluid in question. Just as Smith L.J. said in the Valveless case that the required explosion was the sine quâ non of the invention, I consider that it would not be illegitimate or inappropriate to say that, in the present case, the sine quâ non of both the invention in application 311 and the invention in patent 321 was the measuring of the temperature of hydraulic fluids by an operator, using a hand-held measuring device applied to the vessel in which the fluid in question is contained, the measurement being of an amount of the fluid which becomes contained in the device. If that is correct, then on this approach also, patent 321 falls to be treated as an improvement in relation to application 311.

[31] I reach the same result if I look at the same matter from a slightly different angle. In the Linotype & Machinery Limited case, in the House of Lords, Lord Loreburn discussed the change between the original and subsequent patents and said (27 R.P.C. at page 113):

That dictum demonstrates that a difference in a feature or features in an invention, however substantial or great, may still be regarded as an improvement if it may be applied to, or added to, or made a substitute for a part of, a previous invention in order to make that original invention a better invention. In other words, to exclude something from being an improvement in the context of such an agreement, it is not necessarily sufficient to show that there has been a significant change in the make-up of the machine and/or the way in which it is operated. When, however, the differences are of such a character as to make the resulting machine a quite distinct thing, then one has moved from the world of improvement - and the world of differences in feature or features - to the world of differences in kind.

[32] Davies v. Davies' Patent Boiler Limited (1908) 25 R.P.C. 823 is an example of a case where the court found that one had indeed passed into the world of differences in kind. In this case, Swinfen Eady J. held that a patent of 1907 for "improvements in and relating to water tube boilers" was not an "improvement" on a patent of 1903, which was also said to be for "improvements in and relating to water tube boilers". Having heard evidence relating to the issue, he said (at page 829) that the evidence was all the one way and all to the effect that the design of the 1907 patent was "different from beginning to end". His Lordship therefore concluded (at page 830) that the "invention", the subject of the 1907 patent, "is not an improvement on the 1903 patent, but a separate and distinct invention and it does not come within the language of the agreement as an improvement".

[33] Drawing the line between the two classes of case may, on occasion, be difficult, and, as the Lord Ordinary put it, will no doubt involve questions of fact and degree. The Lord Ordinary reached the view that the invention in patent 321 fell into the category of improvement rather than of a distinct thing. In the light of the authorities I have just discussed, I am indeed satisfied that it cannot be said that the invention in patent 321constituted something quite distinct in character from, rather than an improvement on, the invention in application 311. In particular it cannot be said that, if the invention in patent 321 were embodied in a machine, it would produce a machine quite different in character or kind from that which would result from the embodiment of the invention in application 311. Rather, the invention in patent 321 could be said merely to produce a machine which did the duty of measuring the temperature of the relevant fluids in a better way.

[34] While, therefore, I myself would have reached the same conclusion as the Lord Ordinary, the question of what constitutes an improvement in any given case is a matter pre-eminently for determination by the judge of first instance, in the light of the evidence placed before him. It is, accordingly, not the kind of issue in relation to which an appeal court should readily seek to substitute its judgment for that of the judge of first instance, unless he has clearly misdirected himself in some material way.

[35] During the hearing of the reclaiming motion there was some suggestion that, when dealing with the construction of the term "improvements" in the first assignation, the Lord Ordinary might indeed have misdirected himself. Obviously, the question of whether something constitutes an "improvement" must ultimately depend on the construction of the particular agreement in its context. But the authorities do contain some general guidance on the approach which should be adopted. In Linotype & Machinery Limited Buckley L.J. sought to set out the approach to the construction of the word "improvement" where it appears in an agreement of the kind with which the present case is concerned. His Lordship said (25 R.P.C. at page 671):

Having considered the differences between the original patent and the subsequent patent, his Lordship continued:

Guidance on the approach to be adopted was also given by the House of Lords in National Broach & Machine Company v. Churchill Gear Machines Limited [1967] R.P.C. 99. Their Lordships were considering the construction of an earlier agreement whereby improvements developed by a licensee in a patent licence agreement were to be communicated to the licensor during the currency of the agreement. One of the issues before their Lordships was the determination of the precise time at which any such improvement was to be communicated to the licensor. Lord Upjohn, with whom all the other judges agreed, declined to put any gloss on the word "improvements" beyond saying that it "must be construed through the eyes of a reasonable man reasonably well versed in the relevant engineering techniques" (at page 110). He subsequently said that the word had to be "interpreted through technical eyes".

[36] In view of what is said in these authorities, it is a slightly unsatisfactory feature of the present case that the Lord Ordinary's opinion does not, on its face at least, actually say that he addressed the question in the manner indicated by them. More particularly, he does not expressly say that, when arriving at his conclusion on this aspect of the case, he first considered and assessed the technical opinion evidence as to the differences between application 311 and patent 321 and then applied the language of the assignations to that evidence. Notably, at pages 102 to 108 of his judgment, when he does compare and contrast the features of the respective documents, he does not actually say that he is doing so, having been instructed in these matters by experts experienced in the art. I accept, however, as counsel for the respondent submitted, that this is ultimately a matter of presentation and that, having regard to the terms of his opinion as a whole, the Lord Ordinary must indeed have reached his view about the technical and engineering differences between the two application 311 and patent 321 in the light of the expert evidence which was led in the proof. As to the Lord Ordinary's treatment of the context in which the word "improvement" appears in the present case and the wording of the relevant deed which occurs at pp. 107-108 of his opinion, I can detect no error in his approach. I am, accordingly, satisfied that there has been no misdirection by him that enables this court to look at the matter afresh.

[37] For all these reasons I am satisfied that on this aspect of the case the Lord Ordinary was entitled to reach the conclusion which he did. It follows that he was entitled to hold that patent 321 constituted an "improvement" in terms of Clause 1.1 of the first assignation. The reclaimer's attack on this aspect of the Lord Ordinary's judgment must accordingly fail.

[38] Having reached the conclusion that the patent in suit constitutes an improvement on application 311 in terms of paragraph 1.1 of the first assignation, I must next consider what rights, if any, this gave the defenders in terms of the Minute of Agreement and the two assignations. The conclusion of the Lord Ordinary was that patent 321 is an improvement within the meaning of the first assignation and that the defenders are the persons truly in right to it. See his Opinion, p. 112.

[39] This chapter of the case involves a consideration of the terms of the Minute of Agreement and of the assignations. It also requires consideration of the law of assignation in relation to future incorporeal rights. It is only fair to the respondents to acknowledge that neither in his pleadings nor in his submission before this court did the reclaimer seek to contend that the Minute of Agreement and the two assignations could never, as a matter of law, have the effect of conferring on the defenders a right of property in improvements on application 311. In order, however, to clarify the legal basis of the defenders' right to defend the claim of infringement arising from these agreements, and so to determine the appropriate form of conclusion in the defenders' counterclaim, it was necessary for the respondents to explore these matters in submission before us.

[40] At the very outset counsel for the respondents placed his submissions on this matter in the context of what was said by Sir George Jessel M.R. in Printing & Numerical Registering Company v. Sampson L.R. 19 Eq. at page 464:

As previously noted, his Lordship went on to say (at pages 465 to 466):

Counsel for the respondents pointed out that in that case such arrangements were held not to be contrary to public policy. Applying the considerations discussed by the Master of the Rolls, counsel submitted that there was nothing inappropriate or unusual in the circumstances of the present case in the parties arranging that the property in the "improvements" in application 311 should belong, not to their inventor, but to Mr. Mills. I accept that. The remaining questions are simply: what were the means by which this was sought to be done and were they effective?

[41] In dealing with these questions, it is appropriate, in the first place, to have regard to Clause 8 of the Minute of Agreement. It is, inter alia, to the effect that

Included among what were described in the attached schedule as "Pending Patents in 'Brake Fluid Analyser'" was application 311. In paragraph 6 above I have already referred to the preamble in the first assignation and to Clauses 1.1. and 1.3 thereof. As I noted previously, in the schedule attached to this assignation, once again, there was set out a list of what are described as "Patents and Pending patents in 'Brake Fluid Analyser'" and included among the pending patents was application 311. Counsel for the respondents submitted that the effect of these contractual arrangements was that if patent 321 fell to be regarded as an improvement in relation to application 311, the reclaimer could not frustrate or impede recognition of Mr. Mills, or his successors in title by virtue of any assignation granted by him, as the proprietor of that patent. Indeed counsel submitted that, on the patent being granted to the reclaimer, the property rights in it vested in the defenders. The effect of the contractual arrangements was to bring about an assignation of future rights. This was something which was competent, according to the law of Scotland.

[42] In support of his submission counsel referred to a number of authorities. He began with the case of Carter v. McIntosh (1862) 24 D. 926 where the court held that a bill of exchange drawn on, but refused to be accepted by, a party who held funds which had not vested but came afterwards to vest in the drawer, was, as a precept or mandate to pay, a good assignation of the funds in the hands of the drawee, when they subsequently vested. By analogy, the first assignation in the present case was a good assignation of patent 321 to the assignee when the patent was granted to the reclaimer. Reference was also made to the case of Kirkland v. Kirkland's Trustee (1886) 13 R. 798 at page 805 where Lord President Inglis quoted with approval the following proposition from the earlier case of Trappes v. Meredith (1871) 10 M. 38 at p. 40:

In Miller v. Muirhead (1894) 21 R. 658 at page 660 Lord Rutherfurd Clark said:

It might be said that the implication of law referred in the last sentence of that passage is reflected in the express provisions of Clause 1.3 of the first assignation to which I have referred above. In Reid v. Morison (1893) 20 R. 510 at page 512 Lord Rutherfurd Clark referred to "an expectancy" or "spes successionis" or "acquirenda" in a manner which indicated that they are to be treated, in law, as the same in respect of the manner in which they may be transferred. At page 514 his Lordship said:

[43] Having regard to those authorities, I am satisfied that the Lord Ordinary was justified in holding, at page 102 of his Opinion, that

It appears to me that the authorities clearly recognise the competency of an assignation of acquirenda which has the effect which the Lord Ordinary describes. I am also satisfied that the parties to the first assignation intended that any new patents which constituted improvements in terms of the assignation should devolve, as a matter of property, to Mr. Mills or his assignees when they came into existence. As I have already concluded that the Lord Ordinary was entitled to hold that patent 321 constituted such an improvement, in my judgment, the respondents are entitled to declarator in terms of the reformulated conclusion unless some other provision of the contractual agreements or some other principle or rule of law precludes this.

[44] In this regard there was discussion, before this court, as to the effect of Clauses 5.3 and 5.4 of the first assignation which I have set out in paragraph 6 above. The question arose as to whether the effect of these provisions was to bar the respondents from asserting a right to patent 321 in the circumstances where Mr. Mills had sold and assigned the patents and applications to Alba Tools Ltd. in May 1994. I am satisfied that they have no such effect. These clauses, in my judgment, were designed simply to discharge the reclaimer and the other assignor from such of their continuing personal obligations under the agreements as were as yet unfulfilled or outstanding at the time of the events specified. They did not have any effect on rights in the assignees which had already been assigned by the assignors. In particular, they did not result in the respondents becoming in some way barred from enforcing those rights. The right to the acquirenda, including patent 321, was one which came into being at the time when the assignation was granted. By virtue of that right, the right of property in patent 321 vested in the assignees, by operation of law, when the patent was granted to the reclaimer. These effects operated without the need for any actings on the part of the reclaimer.

[45] Before the Lord Ordinary the reclaimer had argued that the Minute of Agreement and the first assignation were unenforceable as being in restraint of trade. He also raised this matter before us. I am prepared to accept that such agreements and the assignations of such rights are not, in principle, completely exempt from being tested against the principles of law in relation to restraint of trade. I say this notwithstanding the dicta of the Master of the Rolls in the passage in the Printing & Numerical Registering Company case which I have quoted in paragraph 25 above. In relation to this question, however, the Lord Ordinary's approach at page 110 of his Opinion was to the following effect:

In my opinion, no argument was advanced before this court which would, in any respect, call into question the soundness of the Lord Ordinary's approach to this matter.

[46] The reclaimer sought to attack the enforceability of the assignation by reference to Article 81 of the E.C. Treaty. No notice is given of any such case in the pleadings. It was not raised before the Lord Ordinary. For its proper consideration such a point would have required full and appropriate pleading, the leading of appropriate evidence and full submissions thereon. In fact, all that was put before us was an assertion that Article 81 had the effect of rendering the agreement void. I am therefore quite satisfied that the reclaimer is not entitled even to attempt to attack the enforceability of the assignation on that basis.

[47] Lastly, the reclaimer sought to attack the effectiveness of the first assignation by pointing out that by Clauses 6.1 and 6.2 Mr. Mills purported to grant an exclusive licence to the two assignors. It was, the reclaimer maintained, impossible for there to be the grant of an exclusive licence to more than one person. This, again, apparently was not a matter discussed before the Lord Ordinary, nor is it foreshadowed in the pleadings. For that reason alone I do not consider that the court can now entertain it. Any argument that the provisions regarding licensing in some way rendered the assignation as a whole ineffective would have required notice and full argument which was not provided by the reclaimer.

[48] In the whole circumstances I am not persuaded that anything has been placed before this court which has the effect of disqualifying the respondents from claiming the right to patent 321.

[49] For the foregoing reasons, in my judgment the reclaiming motion falls to be refused and the respondents are entitled to decree of declarator in terms of the amended conclusion in their counterclaim.

[50] Having decided against the reclaimer on the issue of "improvement", the Lord Ordinary noted that the issue of infringement did not arise for decision. Nevertheless, in view of the amount of time which had been devoted to this issue, he went on to address it and to express his conclusions upon it. The infringement issue is the second broad question which I identified above. It was debated before this court, on the hypothesis that the reclaimer succeeded in having the Lord Ordinary's decision on the "improvement" issue reversed. That hypothesis has not materialised but, following the approach of the Lord Ordinary, I too consider it appropriate to say something about the infringement question.

[51] The Lord Ordinary held, correctly, that in an infringement case the onus is on the pursuer to prove that the defender's activities constitute an infringement of his patent. As the Lord Ordinary also correctly recognised (Opinion, p. 123), in any such case the comparison is between the claims in the pursuer's patent, as properly interpreted, and the device made and sold by the defender. Happily, the proper approach in law to the interpretation of patents was not really a matter of dispute before us. The Lord Ordinary referred to Section 125(1) and (3) of the Patents Act 1977, Article 69 of the European Patents Convention, Conoco Specialty Products (Inc.) v. Merpro Montassa Limited 1992 S.L.T. 444, Catnic Components Limited v. Hill & Smith Limited (1982) R.P.C. 237 and Improver Corporation v. Remington Consumer Products Limited [1990] F.S.R. 181. The cumulative effect of those provisions and authorities is that the interpretation of a patent specification is a matter for the court, having regard, in the first place, to the wording of the claims, but having regard also to the description and the drawings. The overall approach to construction is a purposive one and not a literal one and, in giving the patent such a purposive construction, the court should have regard to the understanding of persons with practical knowledge and experience in the kind of work in which the invention was intended to be used. That was indeed the approach which the Lord Ordinary applied.

[52] Unfortunately, if the approach to interpretation is left to one side, the Lord Ordinary was not well served by the way in which both parties tackled the task of comparing the claims in the reclaimer's patent and the respondents' devices. For the most part indeed, the parties were addressing a different test, i.e. a comparison between devices made by the reclaimer and devices made by the respondents. This aspect of the case was also taken up, apparently, to a very great extent, with the respondents seeking to establish that their devices operated with a so-called "weir effect" and with the reclaimer seeking to establish that no such effect occurred. Before this court at least, counsel for the respondents accepted that establishing the existence of such a weir effect was crucial for the respondents if they were to avoid being involved in an infringement of patent 321. That concession was, perhaps, not altogether surprising when it is clear, not least from Answer 4 in the closed record, that from the outset of this action the respondents had sought to avoid the case of infringement made against them by relying on the existence of the weir effect. It appears to me that the respondents were, moreover, offering to establish that the weir effect occurred not only in some extraordinary operation of their devices but in their ordinary operation in normal circumstances. To that extent the Lord Ordinary's statement at page 140 of his judgment - "the onus resting as I have held on the pursuer, I am satisfied that he has failed to prove that the weir effect does not occur in normal circumstances" - is unhappily expressed. While the reclaimer had to prove infringement, it was not necessary, in my judgment, for him to prove that the weir effect did not operate in normal conditions. Rather, it was critical to the respondents' positive case that it did operate and, accordingly, it was for them to prove that.

[53] As identified by the Lord Ordinary, the issue between the parties on the weir effect was whether, in the course of the operation of the respondents' device in normal circumstances, there was, on boiling, an overflow of liquid from the inner chamber through the cranked passage, the upper annular space and hence the aperture in the outer casing, with cooler liquid being drawn into the inner chamber from below. Before the Lord Ordinary counsel for the reclaimer spent a great deal of time trying to disprove that the weir effect operated at all in the respondents' device or, at least, that it operated in what might be described as normal conditions. This would appear to indicate that, at that stage, those representing the reclaimer considered that this might be necessary, if the infringement case was to be established. Despite that, before this court the reclaimer's position was that the weir effect was completely irrelevant to the issue of infringement. More particularly, his position was that the infringement of the patent in suit arose simply because, during the time while the fluid in the inner chamber of the respondents' device was being heated from cold towards boiling point, it was retained in that chamber by reason of the air in the space above it and the position of the apertures in the outer casing - a feature which was shared with any device made in accordance with the patent in suit. Following that approach it was, the reclaimer contended, beside the point to consider whether the weir effect existed or how or when it operated. In approaching matters on this footing the reclaimer was, as I understand it, following the position which his counsel had put at the forefront of his submissions at one stage of the argument before the Lord Ordinary and which the Lord Ordinary had rejected. (See Opinion, p. 131)

[54] On this point the respondents' position was that, while the initial retention of the fluid in the inner casing by reason of the air in the space above it and the position of the apertures in the outer casing might be features common to both the respondents' device and the invention claimed in patent 321, this did not in itself mean that infringement of the patent was established. One had to consider what it was that was being claimed in patent 321 as the monopoly right.

[55] Counsel for the respondents submitted that, if one applied a purposive approach to the patent in suit, it was clear that the invention was concerned with measuring the boiling point of hydraulic and other fluids. The retention of the fluid in the lower chamber in a stable condition was for the purpose of the measurement of the boiling point of the liquid. The fluid, even when heated, remained "trapped" in that static condition. When properly understood, therefore, the purpose of the patent was not simply to claim an monopoly in an invention which retained fluid in a chamber prior to the sensing of the temperature of the fluid being heated. Rather, the claim was in respect of an invention to retain fluid in a chamber until significant temperature measurement had been completed. The Lord Ordinary had interpreted the claim in patent 321 in that way. Having quoted the relevant passage from the description in the patent, the Lord Ordinary observed (Opinion, pp. 126 - 127):

It followed, as the Lord Ordinary had held, that the devices manufactured by the respondents did not infringe that patent because, by contrast with the invention in application 311, they did not involve the continued trapping of the liquid up until, and including, the point of measurement of the boiling point of the fluid. On the contrary, counsel contended, in the respondents' devices once boiling of the fluid has begun - and before temperature measurement is completed - the fluid inside the lower housing portion is no longer trapped but begins instead to circulate continuously and may be exchanged with the main body of fluid outside the housing.

[56] The position which counsel for the respondents advanced in argument before us was foreshadowed in Answer 4 for the respondents where they averred that their device

Counsel for the respondents accepted that this alleged difference between the invention in patent 321 and the respondents' devices was critical to their defence to the action. The Lord Ordinary had therefore been justified in saying that if the weir effect, as described in the passage from the pleadings that I have just quoted, had occurred only after all significant temperature measurement had been completed, the respondents' device would have infringed patent 321.

[57] The ultimate questions, therefore, on this aspect of the case are as follows. Firstly, did the Lord Ordinary apply the appropriate test when he interpreted the patent in suit? Under reference to the relevant authorities, I have already reached the conclusion that he did. Secondly, can it be said that, nevertheless, in the application of that test, he in some way misdirected himself? Thirdly, did he have a sufficient evidential basis for holding that

(a) the respondents had established that a weir effect operated in their device;

2. that that effect operated before temperature sensing by the device was

[58] On the second question, the reclaimer said nothing which would suggest that the Lord Ordinary misdirected himself in applying the relevant test. He made it clear that he was adopting a purposive approach, having been instructed in the course of the proof by persons with relevant practical knowledge and experience, including the pursuer and Mr. Mills. Since he approached matters in that way, I do not consider that it can be said that he misdirected himself in reaching the conclusion which he did with regard to what was claimed in patent 321. He expressed the matter in the negative when he said at page 131

The point might possibly have been made even more clearly if the Lord Ordinary had inserted the word "simply" before the word "claim" but the overall thrust of his reasoning is clear. He concludes that a purposive approach to the construction of the patent argues against the reclaimer's position that the monopoly claimed was infringed by any device in which, during the phase while the fluid was being heated from cold towards boiling point, it was retained in an inner chamber by reason of the air in the space above the chamber and the position of the aperture in the outer casing. It follows that a device would infringe the patent in suit only if the fluid were retained in that way until the temperature measurement had been completed.

[59] As to the third question, having regard to the Lord Ordinary's Opinion read as a whole, I am satisfied that he did have before him evidence, that he was entitled to accept, which supported the respondents' contention that (a) a weir effect operates in their devices and that (b) it operates before the temperature sensing operation is completed. As to the existence of the weir effect itself, the Lord Ordinary relied on the evidence of the respondents' principal independent technical witness, Dr. Campbell, who, we were informed, is a physicist. He was described by the Lord Ordinary as "an impressive scientific witness, readily prepared to re-examine in the light of new material assumptions which he had earlier made or conclusions which he had earlier reached". While, as the Lord Ordinary recognised, Dr. Campbell had conducted no experiments specifically directed to the existence or otherwise of the weir effect, he had observed the defenders' device operating in experimental circumstances and, on that basis, he gave evidence which supported the respondents' case that the weir effect did indeed occur. As far as can be gleaned from the Lord Ordinary's opinion, Dr. Campbell was cross-examined by counsel for the reclaimer, not on the basis that the weir effect never occurred but on the basis that it did not occur in normal operation of the defenders' device. While it appears that under cross-examination Dr. Campbell at times made certain concessions which, as the Lord Ordinary put it, "negatived or tended to negative the existence of a weir effect in the normal operational range of the defenders' device", ultimately his position was that the weir effect did occur in the normal operation of the reclaimers' device. The Lord Ordinary accepted Dr. Campbell's final position and nothing put before this court has shown that he was not entitled to do so.

[60] In relation to the time at which the weir effect operated, the Lord Ordinary was apparently faced with a choice between the reclaimer's own evidence on this point and that of Mr. Mills. The Lord Ordinary preferred Mr. Mills on this matter, noting that the pursuer at one stage testified that he was not really able to say when, within the heating cycle in the respondents' device, the relative measurement was taken. Once again, nothing placed before this court established that the Lord Ordinary was not entitled to prefer Mr. Mills on this point to the pursuer. This was quintessentially a matter of fact for determination by the Lord Ordinary who saw and heard the witnesses. Accordingly, in my judgment, the respondents were well-founded in submitting that the reclaimer had failed to establish any misdirection on law or any error of fact behind the Lord Ordinary's conclusion that the respondents' substantive defence to the case of infringement was well-founded. Had it been necessary so to do, therefore, I would have refused the reclaiming motion on that basis also.

[61] In conclusion, I would simply add that, in reaching the view which I have about the infringement question, I have done so, as I must, having regard only to the way in which the case for the reclaimer was apparently presented and argued before the Lord Ordinary and on the submissions made before this court. For the reasons I have given, I have not detected, from what was contended before this court by the reclaimer, any error or misdirection by the Lord Ordinary in the way he dealt with the material put before him and the conclusions he drew therefrom. That is not to say that, had the reclaimer's case in relation to the question of infringement been put before the Lord Ordinary in a different way or upon a different evidential basis it, would still inevitably have failed.

[62] To summarise, for all the reasons given, I would refuse the reclaiming motion and grant decree of declarator in terms of the amended conclusion in the respondent's counterclaim.