Chemicals company granted order for production of documents in dispute with Glasgow University over assigned technology

Chemicals company granted order for production of documents in dispute with Glasgow University over assigned technology

An IP judge has granted a request by a chemicals company that entered into a joint project with the University of Glasgow ordering the university to produce documents relating to activity by a linked company that it averred was using technology derived from patents previously assigned to it.

Deepmatter Ltd wished to take actions in relation to the enforcement of its rights in the technology assigned to it against the University Court of the University of Glasgow, and to that end sought for the defender to produce specified material. The defender maintained that the pursuer already had all of the information it reasonably required to take the actions it proposed and claimed that it was personally barred from asserting any rights it may have in the relevant patents.

The case was heard by Lord Sandison in the Outer House of the Court of Session. Manson, advocate, appeared for the pursuer and Tariq, advocate, for the defender.

Good faith and fair dealing

In August 2015, the parties entered into an Option and Royalty Agreement as part of a series of contracts linked to a research project and the licensing of certain technology. As part of those arrangements, the defender assigned to the pursuer its rights in some of the fruits of the research project, referred to as the “Assigned Technology”.

Later, the pursuer became concerned that the defender may have licensed certain patents, partly derived from the technology previously assigned to it, to another company called Chemify Ltd. The shareholders in Chemify included a holding company operated for the benefit of the defenders as well as Professor Leroy Cronin, the principal academic engaged in the research project involving the pursuer.

While the pursuer’s contract with the defender permitted the university to use the Assigned Technology for certain academic and research purposes, it averred that Chemify’s activities did not fall within the scope of that exception, as it was a commercial entity in direct competition with the pursuer. The pursuer therefore sought implementation of the obligations undertaken by the defender in terms of clause 11.4 of the 2015 agreement, and submitted it had a reasonable basis upon which to require the defender to provide the requested information.

Counsel for the pursuer further submitted that the clause allowed for the pursuer to seek to improve on the base of knowledge and material that it already had, even if that was already quire substantial. The joint intention was that the clause would be used in a manner consistent with good faith and fair dealing in contract.

On behalf of the defender, it was submitted that it had provided all information, documentation and assistance that the pursuer reasonably required to enable it to take legal advice in relation to the potential enforcement of the Assigned Technology. It was not the case that it should provide additional material just because the pursuer had asked, particularly given that Chemify was a competitor of the pursuer.

Apt criterion

In his decision, Lord Sandison said of the proper construction of the clause: “I accept the submission on behalf of the pursuer that we are here concerned with an obligation entered into against a clear background of expected good faith and fair dealing. Although the implications of the (in Scots law, as-yet nascent) concept of a duty of good faith in contracting have yet to be thoroughly worked out, it is clear that in this instance the parties were engaged in clause 11.4 in setting out the framework for future co-operation between them in the context of upholding the validity and efficacy of the rights which were being conveyed from the defender to the pursuer.”

He continued: “The language of clause 11.4 can easily be read in a manner consistent with its apparent purpose. I agree with Thompson J in Watney Mann Ltd v Langley (1966) that the phrase ‘reasonably required’ naturally falls to be read as focussing on the nature of the supposed necessity for the material requested rather than on the nature of the request for it - in other words, that it falls to be read as authorising a request for material which it is reasonably necessary for the pursuer to have in order to enable it to take any action in relation to the defence and/or the enforcement of the Assigned Technology.”

Setting out what was meant by the phrase as so construed, Lord Sandison said: “Something is reasonably necessary if a reasonable and prudent person placed in the position of the person with the power to make the demand or do the act in question would so consider it. I can see no reason why that would not be an equally apt criterion to apply in the context of the present case.”

He therefore concluded: “Subject to a few points of detail to be dealt with subsequently, [the pursuer’s] issues appear to be well within the scope of the concerns which a reasonable and prudent person might entertain if placed in the position of the pursuer. In principle, therefore, the pursuer is entitled to make the requests which it has made in furtherance of its right in terms of clause 11.4.”

Lord Sandison therefore granted the order sought by the pursuer, subject to some minor amendments to which the pursuer conceded.

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