Are you a patent joint owner? Pay attention to contract clauses

Background

Prior to the filing of any patents, the two joint owners in question executed an agreement (the “Agreement”) concerning a project called the “new speargun project” (the “Project”) for the development of a prototype speargun for underwater fishing. There was no provision in the Agreement on the economic exploitation of any potential patents (the “Patents”) that may have derived from the Project.

After a while, one of the two joint owners terminated the Agreement and, despite the objections of the other joint owner, continued to economically exploit the Patents, on un-agreed terms. Furthermore, he did not recognize the quota share of revenues deriving from the sale of the patented products, in favor of the other joint owner.

The Court of Appeal of Venice, was asked to decide if a joint owner of a patent can freely and independently exploit that patent, when there is a lack of any specific contractual provisions between the parties in this regard.

Joint ownership of patents under Italian law

Art. 6 of the Italian IP Code (IPC) provides that:

“1. If an IP right is owned by more than one person, the faculties relating to it are governed, unless agreed otherwise, by the provisions of the Italian Civil Code concerning joint ownership, as far as they are applicable.

1-bis If an IP right is owned by more than one person, the filing of the application for a patent or registration, the continuation of the patenting or registration proceedings, the filing of the request for renewal, if any, the payment of the renewal fee, the filing of the translation into Italian of the claims of a European patent application or of the text of the European patent granted or maintained in an amended or limited form and the other proceedings before the Italian Patent and Trademark Office may be carried out by any of said persons in the interest of all” (emphasis added).

The reference to Italian Civil Code set forth in Art. 6 above shall be read as to Artt. 1100 et seq. of Italian Civil Code on joint ownership.

Art. 1102, paragraph 1 of Italian Civil Code provides that:

“Each party may make use of the joint good, providing he does not modify its destination and does not prevent the other parties from making equal use of it in compliance with their right...”.

Decision of the Court of Appeal

First, the Court of Appeal clarified that the possibility for the joint owner to exploit the patent directly and exclusively against all subjects that do not own said patent undoubtedly constitutes the ordinary way to use the patent.

Moreover, according to the Court of Appeal, pursuant to Art. 6 of IPC and 1102 of Italian Civil Code, the joint owner shall feel free to make use of the patent even for an exclusively personal purpose, without the express authorisation of the other joint owner(s).

In the Court of Appeal’s opinion, this faculty could be denied only in the following cases:

• the implementation of the patented invention is modified (for instance, “as if the patented invention is used as a component of a different machinery”)
• the entry into the market of other joint owner(s) is hindered; or
• the joint owner(s) have executed an agreement which limits exploitation in favor of one joint owner(s) or provide for shared exploitations rights.

Reasoning to the contrary, still according to the Court of Appeal, would result in a total distortion of patent right as such.

Why is this decision important?

The judgment has been issued after an opposite precedent by the Italian Supreme Court (n. 5281/2000).

It has provided for the possibility that joint owners of a patent can exploit the patent(s) freely and independently, unless there are contractual provisions to the contrary. This places emphasis on the necessity of drafting precise and complete contractual provisions regarding relevant rights of exploitation and ensuring they are applicable for the entire duration of the patent.

It also seems this dispute arose from a mere contractual gap, therefore if you or your company own a patent jointly with others, it could be worth checking any relevant contractual relationships to avoid any doubts or future disputes.

However, it will be interesting to see how Italian case law will develop further, given the current conflict between the Court of Appeal of Venice and the Supreme Court. It is also worth noting that unfair competition rules shall need to be considered. Indeed, joint owners could be free to operate, only if they do not hinder the entry into the market of other joint owner(s).

Co-authored by: Martina Fossati