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New authority from the Patents Court on unlawful distributions by companies


20 June 2021

A new judgment of the Patents Court in London contains an important discussion of the circumstances in which a transaction by a company will be treated as ultra vires and void as an unlawful distribution to a shareholder at common law. Meade J gave judgment on 17 June 2021 in Add2 Research & Development Ltd v dSpace Ltd and another [2021] EWHC 1630 (Pat), following a six-day remote trial in the Patents Court in London. The claimant sought damages for patent infringement.

Richard Fowler was led by Guy Burkill QC and appeared with Charles Brabin, both of Three New Square; they were instructed by Innovate Legal on behalf of the claimant.

The claimant was proprietor of a patent relating to electronic circuitry used in the automotive industry. The patent and associated rights had been assigned to the claimant by another company for no consideration, in circumstances where both companies were controlled by the same individual. The assignor had subsequently gone into liquidation. The defendants argued that the assignment was an unlawful distribution at common law and hence ultra vires the assignor and void. Meade J concluded that the original assignment was void, but that a subsequent assignment to the claimant by the assignor’s liquidator was valid. The claimant was thus entitled to bring the claim, although the court also concluded that the patent itself was invalid.

The full judgment on Bailii can be found here. A summary of the facts and reasoning on the unlawful distribution issue can be found here.

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Judgment was handed down on 17 June 2021 in Add2 v dSpace [2021] EWHC 1630 (Pat). Richard Fowler appeared for the claimant.

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