The Right to Improve a Patented Innovation

The House of Lords in Buchanan v Alba Diagnostics Limited [2004] UKHL 5 has reinforced a fundamental proposition in patent law that a purchaser of patent rights is reasonably entitled to protect the commercial value of his purchase by stipulating the constraints upon the right to make improvements.

The Right to Improve a Patent

The House of Lords has confirmed that if the purchaser or assignee of a patent was not given such a right, then – as was forthrightly put by Sir George Jessel MR in Printing and Numerical Registering Company v Sampson (1875) 19 Eq 462, 464 – it would lead to ‘the utter destruction of the value of the thing purchased’. This is because the vendor of the patent could "the day after he had sold his patent, produce something which, without being technically an infringement, and without being technically an improvement, might accomplish the desired object in some other way, and utterly destroy the value of that which they had purchased".

Meaning of Improvement

It was argued in Buchanan that if something could be shown to be a different invention of the vendor, then it could not be characterised as an improvement of the original patent which was purchased. Lord Nicholls stated, however, that "improvement" was not a term of art and can have wider or narrower meanings according to the context. In the context of a provision intended to preserve the commercial value of a patent (as was the case in Buchanan) the word should be given a broad and commercial rather than a narrow and technical meaning.

The Court held that a part for a machine (even if strictly another product) was an improvement if it can be adapted to the machine and it would make it cheaper and more effective or in any way easier or more useful or valuable or in any other way make it a preferable article in commerce, citing Lord Loreburn LC in Linotype and Machinery Ltd v Hopkins (1910) 27 RPC 109, 113).

Patent Improvement or Restraint of Trade

Another question which arose in Buchanan was whether such a "right to improvement" clause in a patent assignment agreement was a void restraint of trade clause. Lord Nicholls rejected the proposition relying on the statement of Lord Reid in Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1968] AC 269, 300 that "where two experienced traders are bargaining on equal terms and one has agreed to a restraint for reasons which seem good to him, the court is in grave danger of stultifying itself if it says that it knows that trader's interest better than he does himself."