ACRON INTERNATIONAL TECHNOLOGY LTD v. CHAN YIU WAI AND ANOTHER

HCA 1709/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1709 OF 2010

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J U D G M E N T

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INTRODUCTION

1.  This case primarily concerns the ownership of an invention which is the subject of a patent bearing an application no ZL200410091762.3, filed in the PRC (hereinafter referred to as “the PRC Invention Patent” and “the PRC Invention Patent Application” respectively).  The invention is called “A Method and Device for Fluid Purification” (“the PRC Invention”).

2.  On 31 August 2004 an application for a utility model patent in the PRC [No 2004200893770‑0] was made by the 1^st defendant Chan Yiu Wai and the 2^nd defendant Dr Law Sui Chun whilst both were employed by the plaintiff.  The PRC Invention Patent Application was made by the defendants on 26 November 2004, eight days after they had resigned from their employment with the plaintiff.

3.  The plaintiff’s case in broad form is that:

(i) The PRC Invention was made by the defendants during the currency of their employment with the plaintiff, and by reason of section 57 of the Patents Ordinance (Cap 514) (“PO”) it should rightly belong to the plaintiff.

(ii) The defendants have breached their duties as fiduciaries, and employees as well as their contractual duties to the plaintiff in filing the two applications in their own names.

(iii) By seeking to obtain a patent arising out of matters invented or discovered during the currency of their employment with the plaintiff, the defendants have further breached their aforesaid duties.

4.  The plaintiff seeks an order that the defendants assign to the plaintiff the patent eventually granted by the PRC authority on 7 January 2009, and an inquiry as to damages or an account of profits.

5.  Both parties have stressed that this is not a patent infringement case, nor does it involve trade secrets or the use of confidential information.

THE BACKGROUND

6.  The plaintiff is a Hong Kong company which was incorporated on 26 September 1995.  Its registered address was 4B Annex Building, Entrepreneurship Centre, Hong Kong University of Science and Technology (“HKUST”), Clearwater Bay, Kowloon.  The plaintiff was established under an Entrepreneurship Program of HKUST as a technology based start‑up company.  The 1^st defendant together with Dr Chao Yu Hang Christopher (“Dr Chao”) and Dr Law Kwok Yung Anthony (“Dr Anthony Law”) were the three initial shareholders; Dr Anthony Law and the 1^st defendant were the first two directors.

7.  There were subsequent changes to the shareholders and directors of the plaintiff, the same being mainly immaterial for present purposes.  However, the 1^st defendant transferred all his shares to other parties on 12 March 2002.  He had ceased to be a director on 9 February 2002. In March 2002 the 1^st defendant established Acron Intelligence Solutions Ltd (“AISL”) which was intended to spin off the administrative and sales part of the plaintiff’s business, so that the plaintiff could focus on scientific research and development.  However, AISL remained a shell company. AISL was a shareholder and director of the plaintiff until 5 October 2004.  Thus between about 9 February 2002 and 5 October 2004, the 1^st defendant was a shareholder and a director of AISL and attended the plaintiff’s board meetings on behalf of AISL.  In this capacity the plaintiff says that the 1^st defendant remained its de facto director.

8.  On or about 23 November 2004, the majority shareholding in the plaintiff (75%) was transferred to Mr Rudy Chan holding the same on behalf of RHT Limited.  Subsequently on 4 July 2005, Rudy Chan transferred his 75% shareholding to RHT Limited, which remains the majority shareholder in the plaintiff. Rudy Chan has been the plaintiff’s sole director since 5 October 2004.

9.  The 1^st defendant holds a Bachelor degree and a Master’s degree in mechanical engineering, both awarded by HKUST.  Between 1 February 2001 and 18 November 2004 he was, pursuant to a contract of employment dated 1 February 2001, an employee of the plaintiff.  He was initially employed as a research and development manager at a monthly salary of $15,000.  From September 2001 his job title was changed to project manager with a corresponding increase in salary.  He tendered his resignation from the plaintiff on 18 October 2004.

10.  The 2^nd defendant obtained her Bachelor degree and Masters’ degree in chemistry from HKUST.  She then proceeded to obtain her Doctor’s degree in chemistry at HKUST in 2001.  One of her fields of expertise is in the synthesis of zeolites.

11.  The 2^nd defendant was employed by the plaintiff from 1 October 2001 to 18 October 2004 pursuant to a contract of employment dated 1 October 2001.  She was initially employed as a research manager and from 1 January 2002 her job title was changed to research and development manager of the research and development department of the plaintiff.  On 16 September 2002 her job title was again changed to project manager of the operations department.

12.  Both the 1^st and 2^nd defendants tendered their resignations from the plaintiff on 18 October 2004, the same being formerly terminated on 18 November 2014.

13.  It does not appear to be contested that, without the plaintiff’s knowledge, consent or authorization, the defendants jointly filed the following five applications:

(i) As noted on 31 August 2004 they filed an application for a utility model patent in the PRC (No 2004200893770‑0).

(ii) As noted on 26 November 2004 they filed an application for an invention patent in the PRC (No 20040091762.3) claiming the priority date of 31 August 2004.

(iii) On 8 July 2005 the defendants filed an application under the Patent Cooperation Treaty (No PCT‑CN05.001003) relying on the above two applications as priority documents.

(iv) On 16 August 2005 the defendants filed an application to the Hong Kong Patents Registry (No 05107039.3) claiming the priority date of the PRC Utility Model Application (31 August 2004).

(v) On 12 August 2005 the defendants filed an application to the United States authority (No 11‑202,752) claiming the priority dates of the PRC Utility Model Application (31 August 2004) and the PRC Invention Patent Application (26 November 2004).

14.  The PRC Invention Patent was eventually granted on 7 January 2009.

THE NCCO PROJECT

15.  The plaintiff’s project that is relevant to the present proceedings was a project directed to the development of purification systems based on a process called Nano‑Confined Catalytic Oxidation (“NCCO”).

16.  May I say at the outset that there has, of necessity, been a lot of scientific evidence produced and discussed in this case.  At times this evidence has not been easy to follow and I am indebted to counsel from both sides for their careful and painstaking presentation of this evidence to the court, together with the evidence provided by each party’s expert.  It will be apparent in the course of this judgment that the court has dealt with some aspects of this scientific evidence in a somewhat summary fashion, in order to keep the issues as simple and straightforward as possible.  However, in attempting to reduce the scientific evidence to manageable proportions, the court has nevertheless carefully read the expert evidence and considered the same, together with the oral evidence from the experts, and indeed the scientific evidence referred to by the non‑expert witnesses.

17.  Although the parties have laid different emphasis on certain aspects of the NCCO process the basis of the process is not substantially in dispute. 

18.  NCCO involves a chemical process whereby pollutants (organic or otherwise) are adsorbed by molecular sieves with nanoporous or microporous materials, and catalytically oxidized.  The experts in this case have agreed that the process of catalytic oxidation is well known and established.

19.  Certain chemical molecular structures known as “molecular sieves” (adsorbent) are by nature effective in trapping contaminant gas molecules (adsorbate). Zeolite is one type of molecular sieve.  There are different types of zeolites.

20.  However, when molecular sieves are used alone, the pollutants adsorbed will eventually be released back to the atmosphere.  Therefore, to avoid the pollutants being released back, and to remove pollutants permanently, the plaintiff says that it applied NCCO in air purification systems by, inter alia, (1) use of molecular sieves for adsorption; (2) the introduction of oxidant by an oxidant generating device; and (3) oxidation within the confined space of the molecular sieves.

21.  On 29 April 2002, on the basis of an invention deriving from the NCCO Project, the plaintiff made an application under the Patent Cooperation Treaty titled “Air Cleaner Filter System Capable of Nano/Confined Catalytic Oxidation” (“the PCT Application”).  The named inventors were Dr Anthony Law, Dr Chao, the 2^nd defendant and Dr Lam.  The plaintiff was eventually granted a standard patent in Hong Kong on 29 May 2009 [No 1076446 (the Standard Patent)] with the term commencing on 29 April 2002.  The Hong Kong Standard Patent was duly registered on the same day.  Hence the application for the Standard Patent was made at the time when both of the defendants were still employed by the plaintiff.

22.  The patent sought under the PCT Application was eventually granted in the United States, Europe, Japan and the PRC.

AN OVERVIEW OF THE PARTIES’ CASES

23.  The plaintiff has pleaded that the PRC Invention Patent Application incorporated the entire or a substantial part of the invention and claims under the PCT Application.  That the same belong to the plaintiff as the employer because it was made or discovered in the course of the defendants’ normal duties as employees of the plaintiff, and might reasonably be expected to result from the carrying out of their duties.  That the defendants have misappropriated the plaintiff’s property by filing the PRC Invention Patent Application, and had breached clauses 13 and 14 of their contracts of employment and their fiduciary duties by filing the PRC Invention and patent application without the plaintiff’s consent.  Furthermore, that the claims under the PCT Application clearly show that the subject matter of the PRC Invention Patent was based on and derived from the work, research, tests and experiments undertaken  during the course of the defendant’s employment with the plaintiff.

24.  The plaintiff relies in particular upon section 57(1) of the PO which provides:

“(i) Notwithstanding anything in any rule of law, an invention made by an employee shall, as between him and his employer be taken to belong to his employer for the purposes of this Ordinance and all other purposes if :-

(a) It was made in the course of the normal duties of the employee or in the course of duties falling outside his normal duties, but specifically assigned to him, and the circumstances in either case was such that an invention might reasonably be expected to result from the carrying out of his duties; or

(b) The invention was made in the course of the duties of the employee and, at the time of making the invention, because of the nature of his duties and the particular responsibilities arising from the nature of his duties, he had a special obligation to further the interests of the employer’s undertaking.”

25.  Hence, says the plaintiff, if there are any new or novel inventions or discoveries in the PRC Invention Patent, they belong to the plaintiff by virtue of section 57 of the PO as they were made in the course of the defendants’ employment with the plaintiff. 

26.  The defendants admit that the subject matter of the PRC Invention Patent involves the use of NCCO technology and thus there are similarities between it and the PCT Application.  However, the defendants plead that there are material differences between the PRC Invention Patent and the PCT Application and deny that the PRC Invention Patent incorporates anything belonging to the plaintiff.  The defendants say furthermore that the PRC Invention Patent Application was developed based on the skill, knowledge and research findings made by them, and in particular by the 2^nd defendant, which she had already incorporated in her publications, including articles and her PhD thesis, before she joined the plaintiff.  Thus say the defendants, it was not a by‑product in the course of their employment but was a duplication or an adaptation of the 2^nd defendant’s published articles and materials, the copyright of which belongs to her.  The defendants say alternatively that the plaintiff pursued an “invention policy” whereby any invention arising in the course of employment with the plaintiff would be treated as belonging to that employee.

THE ISSUES

27.  Counsel have helpfully provided the court with an agreed joint list of issues.  They are as follows:

(i) Whether the plaintiff has been engaged in the business of research and development of, inter alia, patentable and proprietary‑scientific processes and inventions, which were then to be developed into products or services that would be marketed for sale.  As sub‑issues:

(a) What constitutes “research and development” in the context of this case?

(b) Whether the plaintiff has been engaged in the business of research and development of “NCCO technology” and what is meant by “NCCO technology” in the context of the present case.

(The defendants have submitted that this issue is, on analysis, only a relevant matter in considering the issues under para (iii)(b) and (c) below.)

(ii) Whether the plaintiff has established its claim that the invention in the PRC Invention Patent registered originally under the joint names of the defendants (and currently registered under the sole name of the 2^nd defendant) belongs to the plaintiff pursuant to section 57 of the Patents Ordinance (Cap 514).

(iii) In considering the issue in (ii) above:

(a) When was the Invention made?  (The plaintiff takes a pleading point on this issue.)

(b) What were the scopes of the defendants’ normal duties during their employment with the plaintiff?

(c) Whether the Invention was made in the circumstances that an invention might reasonably be expected to result from the carrying out of the normal duties identified in (b) above?

(iv) If the plaintiff succeeds in claiming the ownership of the Invention under section 57 of the PO, whether the defendants have established a defence on the basis that any inventions arising from the employees’ course of employment with the plaintiff would belong to the employees (the alleged invention policy).  (The plaintiff again takes a pleading point on this issue.)

(v) If the plaintiff succeeds in claiming the ownership of the Invention, whether the order to transfer the PRC Invention Patent to the plaintiff or its nominees (or other ancillary orders if any) should be made against both the defendants, or the 2^nd defendant only.

(vi) Whether any of the defendants has breached:

(a) clauses 13 and 14 of the Contracts of Employment with the plaintiff;

(b) their duty of fidelity as employees to the plaintiff; and

(c) any fiduciary duty/duties (if any) owed by them to the plaintiff.

(vii) If the defendants or any of them has breached any of the said duties owed to the plaintiff:

(a) Whether the plaintiff has proved any consequential loss or damage?

(b) If not, whether the plaintiff is entitled to seek any order for damages to be assessed.

RELEVANT LEGAL PRINCIPLES

28.  There does not appear to be any Hong Kong authority which has considered the meaning of section 57 of the PO.  Section 57 is modelled on section 39 of the English Patent Act 1977.  There are also very few English authorities concerning section 39 of the English Patent Act 1977.  Counsel for both parties have submitted, and I agree that the leading authority in this regard is the English Court of Appeal judgment in LIFFE Administration and Management v Pinkava [2007] 4 AER 981 (LIFFE).

29.  There are two primary limbs to section 57(i) of the PO, that the plaintiff must prove in this case:

(i) That the Invention was made in the course of the defendants’ normal duties.

(ii) That the circumstances were such that an invention might reasonably be expected to result from the carrying out of such duties.

Both these limbs were considered in the LIFFE case.

30.  The plaintiff’s pleaded case is based on “normal duties” and not “specifically assigned duties”.

31.  With regard to normal duties, Sir Andrew Morritt in LIFFE at 1002 para 56 held:

“The source of an employee’s duty is primarily contractual though some of the terms are implied by law, CF Sterling Engineering Co. Ltd. v. Patchett [1955] 72 RPC 50 at 56 – 58. But the contract evolves in the course of time, such that in my view it is unsafe to have regard only to the terms contained in an initial written contract of employment. The actions of employee and employer in performance of the contract may give rise to an expansion or contraction of the duties initially undertaken by a continuous process of subtle variation. I do not think that any extra or different duties so undertaken should be regarded only as duties ‘specifically assigned’. It is quite possible for them in the course of time to have become ‘normal’. …”

32.  Jacob LJ held at 698 – 699 paras 97 to 99:

97: “It is against that background that one comes to section 39(i).  Both (a) and (b) focus on the employee’s duties (‘normal’ or ‘specifically assigned’) and a ‘special obligation’ to further the interest of the employer for (b).  How then does one ascertain the nature of the employee’s duties?  ‘Duty’ is the language of obligation.  As between the employer and the employee, the primary source of a duty are the terms of the contract.  What is it that he is employed to do must be the key question.  That is not the same thing as was suggested by Mr Tritton — what is his day to day work?  Take for instance a research chemist working on a cancer cure for the last 10 years. Suppose he came up with a cure for arthritis.  He could not seriously contend that he owned the invention because he was day-to-day working on a cancer cure.  His duty as a research chemist is clearly wider than his day to day work.”

98: “… on the other hand the contract cannot be sole arbiter of the duty … The ‘duties’ of s 39(1) are determined realistically.”

99: “Since one cannot go by the contract alone I do not think one can be too precise about how the duty is to be ascertained.  The contract and the general nature of the job both call for examination.  It is not possible to be too analytical about this.  In the end one is asking whether the employee is employed to try to innovate and, if he is, what general sort of areas his innovation duties cover.”

33.  In University of Western Australia v. Gray [2009] FCAFC 116 after referring to LIFFE held (page 35 para 152):

“The end of this inquiry is to ascertain whether, if at all, it was part of an employee’s engagement with his or her employer to utilize his or her ‘inventive faculty’ … in an agreed way or for an agreed purpose for the benefit of, or to further the purposes of the employer.”

34.  In respect of the second limb, that the circumstances were such that an invention might reasonably be expected to result from the carrying out of the duties, counsel for both parties stressed that the phrase used is “an invention” and not “the invention”.  This indicates that it is unnecessary that the employee is employed to make the particular invention in question. Furthermore, as stressed by the court in LIFFE an invention cannot mean any invention.  Jacob LJ held inLIFFE at pages 1012J to 1013B (102):

“What you can do is to conduct research in the hope of making an invention. And that, I think, is what this the requirement of section 39(i)(a) must be about. It uses ‘an invention’ not ‘the invention’ because it is saying that the employer will own any invention made from the carrying out of the employee’s duties if the circumstances are such that an invention might result. If an employee is employed to innovate, then it will normally follow that the provision is satisfied.”

35.  Sir Andrew Morrit also rejected the argument that the invention under consideration must be “similar” to that which might reasonably be expected (para 77):

“The test is an objective test. It is to be applied in the light of and in consequence of the prior conclusion that the invention was made in the course of the normal or specifically assigned duties of the employee. I see no reason to imply any further condition or qualification to the effect that (i) the invention is similar to what might have been expected (ii) it provides a solution to a pre-identified problem, or (iii) it achieves or contributes to the achievement of the aim or object of the employee’s duties. The combination of the two statutory conditions is sufficient without the implication of anymore.”

36.  Sir Andrew Morrit further rejected the submission that the qualities of the particular employee, whether positive or negative are not relevant (para 78).

ANALYSIS OF THE ISSUES

Issue 1: The nature of the plaintiff’s business

37.  As noted the plaintiff’s case is that it has been engaged in the business of research and development of, inter alia, patentable and proprietary scientific processes and inventions, which were then developed into products or services that would be marketed for sale, including goods and services relating to the measurement and improvement of indoor air quality.  By way of their Re‑amended Defence, the defendants have denied the plaintiff’s description of its business, and have pleaded that neither of the defendants nor any other employee of the plaintiff had in fact conducted any research into “the constitution and nature of different types of zeolites”.

38.  The 1^st defendant supported this position in his witness statement and stated that he had done no research at all, and was not aware of any other research undertaken by other colleagues.

39.  The 2^nd defendant stated by way of her witness statement that “there was simply no research activities undertaken by the plaintiff”, when she joined.  Her position was that the general business of the plaintiff when she joined in 2001 was the provision of environmental consultancy services which included air quality measurements.

40.  I note that “research and development” is not a necessary requirement to a section 57 PO claim.  Nevertheless, it is important to try to identify the main aspects of the plaintiff’s business as the same will then assist in identifying the normal duties that were undertaken by the 1^st and 2^nd defendants.

41.  The plaintiff says that its research and development was conducted both in laboratory settings and in real world conditions, by means of work undertaken during actual projects carried out at its clients’ premises. Ms Rachel Lam who appeared together Ms Eva Leung on behalf of the plaintiff took the court to a number of research projects that the plaintiff was involved in during the currency of the defendants’ employment, which involved NCCO.  These projects were as follows:

(i) Indoor Air Impurities (“IAI”) and Indoor Air Quality (“IAQ”) in the work places of the Kowloon Canton Railways Corporation (“KCRC”) (Oct 2001).

(ii) Design and installation work of an air cleaning system in a shark fin shop located in Sheung Wan (April 2002).

(iii) Design and building a de‑odorizing system at Nan Cheung Roasted Meat Shop (2002).

(iv) Design and supplying odorizing systems at (over 100 sites) refuse collection points of various housing estates; Housing Authority (March 2004 – Nov 2004).

(v) Design and building of a de‑odorizing system at Ma Tau Kok Refuse Collection Point; Architectural Services Department (April 2004).

42.  The plaintiff submits that these projects not only involved the use of NCCO technology but also involved the research and development of NCCO technology in real world conditions.  The plaintiff points in particular to the work undertaken in Shark Fin Shop Project in April 2002, and the de‑odorizing system in Ma Tau Kok in April 2004.

43.  The plaintiff also points to a ventilation project at a mini gun range.  This project involved onsite measurement to determine how much air contaminant would be generated during practice at the gun range.  This involved the assessment of air profiles in two rooms with different airflow patterns, after which the air profile would be analyzed with the assistance of City University.

44.  There has been substantial evidence about the details of these various projects.  I have read and considered this evidence and the oral evidence of the witnesses relating thereto.  It is unnecessary to go into the detail of each of these projects in this judgement.  However, having carefully considered the evidence it is clear to me that the plaintiff was a small start‑up business which was run by a small group of highly educated persons with scientific backgrounds, who worked shoulder to shoulder in relation to these various projects at their clients’ premises to design and/or supply and/or build air purification/odorizing systems on an individual and tailor‑made basis.  In common sense this plainly incorporated research and experimentation in real world conditions.

45.  This view is fortified by the fact that there were (at least) five scientific articles which the plaintiff submitted for publication or to symposium for presentation in connection with its business.  These articles are as follows:

Article 1:	The use of Zeolite and Oxidant Generating Devices in Air Cleaning [the 2nd defendant is listed as an author].
Article 2:	Confined catalytic oxidation of volatile organic compounds by transition of metal containing zeolites and ionizer [the 2nd defendant is listed as an author].
Article 3:	Application of Nano‑confined Catalytic Oxidation (NCCO) Technology for Odor Removal in Dried Shark Fin Shop [the 2nd defendant is listed as an author].
Article 4:	Use of Confined Catalytic Oxidation Technology for Volatile Organic Compounds Control in Commercial Kitchens [the 2nd defendant is listed as an author].
Article 5:	A Case Study on the application of Nano‑confined Catalytic Oxidation (NCCO) Air Purification Technology on Ammonia Gas Removal in an Office Building [the 2nd defendant is listed as an author].

46.  Ms Lam of counsel has submitted, and I accept, that data in these articles was obtained from experiments carried out in these projects.  Ms Lam has noted, and I accept that in Articles 1 and 3, the data obtained, inter alia, from the experiment carried out at the shark fin projects was used.  In Article 2 data obtained from a repetition of the shark fin projects using another type of zeolite was used.  In relation to Article 4 data obtained from the experiment carried out at a project known as the Maxim Kitchen Project was used.  In Article 5 data obtained from the plaintiff’s project at an office building in Beijing was obtained.

47.  I note also in this context that the plaintiff had a close affiliation with HKUST.  The evidence establishes that the plaintiff provided a research grant to HKUST in support of the project “Development of Advanced Environmental Technologies for Indoor Air Quality Control and Assessment” (“Research Grant Reference AITL01‑02.EG01”).  This grant was acknowledged in all of the plaintiff’s aforesaid mentioned articles.

48.  The evidence further establishes that arrangements were in place to enable the plaintiff’s staff to access HKUST’s laboratory facilities.  Whether or not the 2^nd defendant herself conducted research in those laboratories on behalf of the plaintiff (a matter dealt with later in this judgment), the fact of the Research Grant and the access to HKUST’s laboratory are in my view consistent with the plaintiff’s case that it was engaged in the business of research and development of, inter alia, patentable and proprietary scientific processes and inventions.

49.  That this is so is reinforced by the plaintiff’s PCT Application. The abstract to the PCT Application reads as follows:

“The present invention is an air cleaner that uses molecular sieves, such as zeolite or other microporous/nanoporous crystalline materials with pore sizes range from 4A to 20A as a filter to remove contaminant gas. The contaminants are adsorbed into the porous materials along with ions clusters, or any other oxidant generated by a generating device within the system. The containment gas is then catalytically decomposed in the confined space of the pores. In one embodiment, transition metal is incorporated into the porous material and a heater is installed to substitute or accompany the oxidant‑generating device. When the heater is turned on, the contaminant is deposed with the pores of the materials with the transition metals acting as catalysts. Ultimately, the non/harmful by‑products are the small sized water molecules and carbon dioxide molecules. Growth of bacteria is also suppressed under a clean and dry condition.”

Having considered the abstract together with the contents of the PCT Application, it is in my view of itself compelling evidence that the plaintiff’s business included research and invention.  Mr Paul Lam SC who appears on behalf of the defendants has submitted that there was only one such application/patent produced between the years 2001 and 2004 by the plaintiff.  He submits that such paucity of patentable material is evidence that the plaintiff was not involved in the business that it claims.  I disagree.  The PCT Application went to the very core of the plaintiff’s business of air purification and was central to the types of projects that the plaintiff was involved in during day‑to‑day business.

50.  In conclusion I have no hesitation in finding that the plaintiff’s business involved the research and development of, inter alia, patentable and proprietary scientific processes and inventions, which were then developed into products or services that would be marketed for sale, including goods and services relating to measurements and improvements of indoor air quality, which included the research and development of “NCCO Technology”.  I accept Ms Lam’s submission that the process of NCCO in the plaintiff’s business does not merely denote scientific processes seen in isolation, but involves the application of the chemical processes into the field of air purification.

Issue 2 : Has the plaintiff established its claims pursuant to section 57 of the PO?

(a) What is the invention?

51.  It is necessary first to identify the invention at issue, being the invention claimed by the plaintiff under section 57 of the PO. 

52.  The plaintiff says that the invention in question is the application of NCCO technology using specific molecular sieves in liquid purification as embodied within the patent granted to the defendant. 

53.  The defendants say that as the plaintiff seeks an assignment of the PRC patent, then pursuant to section 76(i)(b) of the PO, the invention shall be taken to be that specified in the PRC Invention Patent. Accordingly the invention is that specified in the 14 claims in the PRC Invention Patent.

54.  The PRC Invention Patent contains the following claims:

(i) Claims 1‑ 8 which relate to the fluid purification method.  Each of these claims contains identical wording save for the formulation or properties of the molecular sieves as follows:

“A fluid purification method, characterized in that: in an air purification system or water purification treatment system, an oxidant generating device and molecular sieve are implemented: (description of the formulation or properties of the molecular sieve); the said purification device comprise an oxidant generation device and molecular sieves, the oxidant which is generated by the oxidant device generator, together with the organic pollutants and the inorganic impurities are being adsorbed into the pores of the molecular sieves; the oxidant oxidizes the organic pollutants within the pores of the molecular sieves; the fluid was then being purified.”

(ii) Claims 9‑11 describe the material of the molecular sieve oxidizing agents and the similarity of properties.

(iii) Claims 11‑12 relate to a water washing device.

(iv) Claim 14 is as follows:

“An apparatus for fluid purification: a housing having an outlet and an inlet for the fluid; an oxidizing reagent generating device: a molecular sieve; and a circulating device; the oxidizing reagent generating device is located at an upstream position of said molecular sieve, the circulating device facilities said fluid to flow from upstream to downstream; characterized in that, a water washing device is further installed at an upstream position of the said molecular sieve, the said molecular sieve is selected from any of the following chemical with composition as …. (description of the formulation or properties of molecular sieves mentioned in Claims 1 to 8).”

55.  The plaintiff submits that the subject matter of the PRC patent was in essence the application of NCCO technology in fluid purification, with the use of molecular sieve and oxidant generating device as the core components for adsorption and oxidation of the pollutants.

56.  In this regard it is necessary to consider the expert evidence. The plaintiff called Dr Au Yeung who stated in his expert report:

“In my opinion, the system and the idea of the application of the materials in the Defendants’ patent are the same as the Plaintiff’s patent (the Hong Kong patent). The Defendants’ patent was developed from the Hong Kong patent.”

57.  In cross‑examination, Dr Au Yeung whilst maintaining his view that the system and the idea of the defendants’ PRC Invention Patent were the same as the plaintiff’s PCT patent, nevertheless, accepted that there were three points that were unique or novel in the defendants’ PRC patent.

(i) the fluid purification mentioned covered both aspects of gas and liquid;

(ii) the types of materials that could be used to achieve fluid purification were spelt out; and

(iii) the working mechanism used to achieve the purpose of purification was clearly set out.

58.  The defendants’ expert Ms Winnie Wong was initially of the opinion that the inventive steps in the PRC Invention Patent “were not in substance or any manner based on or derived from the Hong Kong Patent”.

59.  However, in cross‑examination, Ms Wong agreed first that there were the following 10 similarities between the PCT Application and PRC Invention Patent as follows:

(i) both concerned air purification;

(ii) both involved the use of an oxidant generating device;

(iii) both involved the use of molecular sieves;

(iv) the mechanism provided for pollutants to be confined in the pores of the molecular sieves;

(v) that the pollutants catalytically decomposed within the pores of molecular sieves;

(vi) the filter material specifies that the molecular sieves would be regenerating;

(vii) both involved the use of a fan;

(viii) both involved the use of an ionizer as an external oxidant generating device;

(ix) both involved the use of the pre‑filter; and

(x) both contemplated the option of a heater.

60.  In her expert report, Ms Wong had identified a number of differences between the plaintiff’s Hong Kong Patent and the PRC Invention Patent.  However,

(i) In relation to the first difference she agreed that the addition of water filtration does not the render application novel.

(ii) In relation to the second difference she agreed that the use of a heater was also envisaged in both applications.

(iii) In relation to the third difference she agreed that it was necessary to hold the synthesized molecular sieves in the system.

(iv) In relation to the fourth difference she agreed that a pre‑filter is also included in the defendants’ patent.

(v) In relation to the fifth difference she agreed that the diagram of the defendant’s patent also included a pump or a fan.

(vi) In relation to the sixth difference she agreed that adsorption and oxidation would be the mechanism described in the two patents.

(vii) In relation to the seventh difference she agreed that the key difference was that molecular sieves in the defendants’ patent were of wider application than the molecular sieves mentioned in the plaintiff’s patent, but that nevertheless there was a small degree of overlap.

61.  Ms Wong further acknowledged the first and second amended versions of the PRC patent were rejected by the PRC Patent Office on the basis that they were too similar to the PCT Application.  Ms Wong had no quarrel with the PRC Office’s assessment in this regard.

62.  Mr Lam SC has pointed to Dr Au Yeung’s agreement that without the amendments, the PRC Invention Patent would and could not have been granted.  Those amendments were made because the PRC Patent Office was not satisfied that the requirement of novelty had been met in the claims without such amendment.  Mr Lam submitted that it is beside the point that Dr Au Yeung described the amendments as “fine tuning” and submits that it was as a result of “rearrangements” that sufficient novelty was created.

63.  Both the experts, Dr Au Yeung and Ms Winnie Wong were of assistance to the court.  However, I found Dr Au Yeung’s evidence to be short, to the point, and compelling.  It is true that in some respects in cross‑examination he reconsidered and amended some of his views, but despite this Dr Au Yeung was not shaken from his view that the system and the idea behind the PRC Invention Patent were the same or at least substantially the same as the plaintiff’s patent. 

64.  By contrast, Ms Winnie Wong began her oral evidence at a disadvantage in that it became apparent that she had not even been provided with copy of the PCT Application before she had made her written report.  In fact, the first time she saw this application was during her evidence in court. The court allowed a short adjournment for Ms Wong to consider the PCT Application.

65.  As such, Ms Wong’s approach was to compare the entirety of the plaintiff’s Hong Kong patent which was granted long after the defendants’ had left the plaintiff’s employment, with “the inventive steps” of the PRC Invention Patent, instead of considering the defendants’ application together with the plaintiff’s PCT Application which would have illuminated the similarity between the defendants’ 2004 application and the plaintiff’s 2002 PCT Application, which was itself the basis for the plaintiff’s Hong Kong Patent.

66.  Ms Wong was a perfectly honest and straightforward witness but her evidence descended into some disarray and she was compelled to qualify the various differences she had outlined in her expert report as set out above. Furthermore, she readily admitted the various similarities put to her in cross‑examination, which similarities had not particularly featured in her expert written report.

67.  In my view the invention incapsulated in the PRC Invention Patent is strikingly similar to the subject matter protected under the PCT Application. The evidence establishes that by 2004 the plaintiff was experiencing severe financial difficulties, and was facing the prospect of being wound up. The 1^st defendant admitted that the PRC Utility Model Application and the PRC Invention Patent Application were made by the 1^st and 2^nd defendants to “safeguard the NCCO technology”, and that they intended to form a new company similar to the plaintiff.  Significantly neither the 1^st nor the 2^nd defendant informed Dr Lam, Dr Anthony Law, nor Dr Chao [or indeed anyone else] about the applications filed in August and November 2004.

68.  The evidence establishes that when it became apparent that the plaintiff was in trouble, the defendants decided to employ the NCCO technology embodied in the PCT Application secretly and for their own benefit.  It is significant that the PRC Invention Patent Application was thereafter refused (on 28 July 2006 and 9 March 2007) because it did not meet the requirements of novelty in that it was similar to the plaintiff’s PCT Application.  As the 2^nd defendant said in her evidence, she filed the application because she “had already spent much energy and applied (her) mind whole‑heartedly to promote the NCCO technology and everyone in the market would associate (her) with the NCCO technology when the idea came in their mind”…. And that she still “cherished this technology and did not want to forgo it.”

69.  I conclude that the similarities between the PCT Application and the PRC Invention Patent are compelling evidence that the invention was derived from the PCT Application.  I accept Ms Lam’s submission that it would be unrealistic to distinguish the “material chemistry” from the PRC Invention Patent because the “material chemistry” (ie the general description of formula and properties of certain molecular sieves) is deeply embodied into the system which is admitted by the defendants to be based on the NCCO technology.  

70.  In short, I accept Ms Lam’s submission that it is clear that the invention incapsulated in the PRC Invention Patent is strikingly similar to the subject matter protected under the PCT Application.  I accept Ms Lam’s submission that the invention in question is the application of NCCO technology using specific molecular sieves in fluid purification as embodied within the patent granted to the defendants.

(b) When was the invention made?

71.  Counsel have submitted there is no direct authority that considers section 57 of the PO in relation to when an invention is “made”.  Mr Lam SC has submitted, as his primary position, that an invention is complete when the inventor has arrived at the final definitive idea or concept.  The final definitive idea or concept of the invention as specified in the 14 claims in the PRC Invention Patent appeared as a result of the last substantial amendment.  Thus the invention was made on or about 30 June 2008. 

72.  Ms Lam has objected to Mr Lam pursuing this point in that the same was never pleaded.  Ms Lam says that if Mr Lam is permitted to proceed with this point her client would have suffered prejudice in that “the whole tenor of the cross‑examination would have changed”, and that in short Ms Lam would have wanted to investigate and challenge Mr Lam’s position through expert evidence.

73.  I think, with respect, Ms Lam’s concerns are without merit.  I agree with Mr Lam that this is a legal issue arising from the primary facts and I cannot, with respect, see how Ms Lam could have improved her client’s position through further cross‑examination or the production of further expert evidence.  In these circumstances, I shall proceed to try to determine when the invention was “made”. 

74.  Mr Lam has noted that the PO does not define when an invention is made.  He submits however that the critical point is that an invention cannot be said to have been made unless it is completed.  He relies upon University of Western Australia v Gray[2009] FCAFC 116, in which it was said:

“An invention will be complete once the inventor has arrived at the final definitive idea or concept.”

I note however that there is obvious a difference between the word “made” and the word “complete”, and that this authority, whilst of some assistance, does not of itself answer the question as to when an invention was made.

75.  Mr Lam points to section 76(1) of the PO and submits that the claims set out in either the patent application or the patent granted are the written expression of the final definitive idea or concept of the inventor in respect of the invention, which is the subject matter of either the patent application or the patent granted.  Mr Lam then submits that unless there is evidence that the inventor has arrived at such final definitive idea or concept before he completed writing the claim in those documents, that it “makes good common sense” to hold that that invention was made at the time he completed writing such claims in those documents.”  Section 76(i) of the PO provides:

“For the purposes of this Ordinance

(a) an invention in respect of which an application for a patent has been filed shall, unless the context otherwise requires, be taken to be that specified in a claim of the specification of the application, as interpreted by the description and any drawings contained in that specification;

(b) an invention for which a patent has been granted shall, unless the context otherwise requires, be taken to be that specified in a claim of the specification of the patent, as interpreted by the description and any drawings contained in that specification.”

76.  Mr Lam further submits that the priority date of a patent application is not equivalent to or necessarily the date when the invention is made because an application for a patent may be amended. 

77.  Mr Lam accepts that the 2^nd defendant (on the 2^nd defendant’s case) started to prepare the PRC Utility Model Application a few days before 31 August 2004 and as such “it is fair to infer that the 2^nd defendant started to make the invention a few days before 31 August 2004”.  But Mr Lam then submits that the “crucial question” is when the invention was made in the sense that it was completed.  As noted Mr Lam’s answer to this is that the invention was made on or about 30 June 2008 after the last of the amendments has been made to the PRC Invention Patent Application. 

78.  Ms Rachel Lam, on behalf of the plaintiff, has submitted however that the drafting of a patent application is not of itself the process of “inventing an invention”.  She submits that an invention has to be invented before an application for a patent can be drafted. 

79.  In support of this position, Ms Lam submits that the validity of a patent dates not from the grant of the patent but rather from the deemed date of filing of the application (sections 38‑39 of the PO). That the term of protection and monopoly over the rights in question runs from the earlier date, ie the date of filing not of grant.  Ms Lam submits that to argue that the “invention” was only made long after the initial filing of the application is thus contrary to the basic understanding of what a patent is, and when protection should commence.

80.  Ms Lam notes that although amendments are allowed, both experts in this case accepted that a patent application, once filed, cannot be substantially amended such that it extends beyond the original scope. Ms Lam submits therefore that it is impossible for an invention to be gradually developed or somehow emerged into “a final definitive idea or concept” only after substantive amendments are made to the application or to the granted patent.  Ms Lam submits that such scope of amendment would not be allowed.

81.  Ms Lam points to the defendants’ experts evidence (Ms Wong) that the final amended version was a rearrangement and combination of the claims which appeared in the original version and, therefore, says Ms Lam, there was never any suggestion that by amending the patent application some new materials or new novelty had been added to the invention.  Ms Lam submits that the idea or concept of the invention has not been changed, in that one does not “create novelty” by merely rearranging the specification in an application for a patent. 

82.  With regard to section 76 of the PO, Ms Lam has drawn the court’s attention to the words “unless the context otherwise requires” contained both in section 76(i)(a) and (b) and submits that section 57 of the PO is an “otherwise” situation.  In this context Ms Lam has referred the court to the case of Markem Corp v Zipher Ltd [2005] RPC 31 at page 761, a decision of the Court of Appeal in England (this case was overruled on appeal but the following parts of this judgment relied upon by Ms Lam were not overruled). 

83.  The Markem case involved “entitlement proceedings” whereby a party can assert that a person who has applied for or who has been granted a patent is not the inventor (see sections 8 and 37 of the Patent Act 1977).

84.  The relevant part of section 8 the Patent Act 1977 provides:

“8 — (i) At any time before a patent has been granted for an invention (whether or not an application has been made for it)‑

(a) Any person may refer to the comptroller the question whether he is entitled to be granted (alone or with any other persons) a patent for that invention or has or would have any right in or under any patent so granted or any application for such a patent; or

(b) …. and the comptroller shall determine the question and make such order as he thinks fit to give effect to the determination.”

85.  At para 93 of the judgment, the Court of Appeal observed:

“Mr Watson relies upon section 125(i) [this is practically the same as section 76 of the Hong Kong PO] to submit that ‘invention’ as used in section 8 and the other entitlement provisions means what is claimed. But section 125 contains the key words ‘unless the context otherwise requires’. There are quite a lot of places in the Act where that is so, as we set out in more detail below.”

At para 100:

“So what then about section 8? Does ‘invention’ there mean what is claimed or does the context otherwise require? We think it must have some more general meaning than what is in the claims. The most obvious reason for that is that section 8 applies to situations where there are no claims at all — indeed even prior to a patent application. And applications themselves are not required to have claims. The question of entitlement can therefore arise before any claim exists and in principle must remain the same whatever claims later emerge …”

At para 101:

“Section 8 calls for identification of information and rights in it. Who contributed what and what rights if any they had in it lies at the heart of the inquiry, not what monopolies were actually claimed …”

At para 102:

“What one is normally looking for is ‘the heart’ of the invention. There may be more than one ‘heart’ but each claim is not to be considered as a separate ‘heart’ on its own. That is consistent with the view of Laddie J in University of Southampton’s Applications [2005] RPC 11.”

86.  The Markem case is of course not exactly on point with the issues in this case.  However, Ms Lam submits that the expression “unless the context otherwise requires” found in section 76 of PO applies to section 57 of the PO.  If this is correct then the “invention” referred to in section 57 does not mean what is claimed in the specification and section 76 does not apply.  Thus an “invention” can exist before the application is filed.  Ms Lam submits that section 76 of the PO is about when a monopoly is granted, not about the inventive concepts themselves.  In short, says Ms Lam, one does not look at the specific claims to identify the invention.  One looks, as the Court of Appeal has indicated in the Markem case at “the heart” of the invention, and says Ms Lam, the heart of the invention in this case is the application of the NCCO technology in fluid purification using specific molecular sieves.

87.  By way of reply Mr Lam SC accepted that there can be an invention even without a patent having been granted so that there can be a dispute at any stage, but reiterated that in the present case it is important to identify the invention which is the subject of the dispute.  As I understand it he submits that if the invention is embodied in the actual patent over which the plaintiff claims ownership, then the Markem case is unhelpful.  He submits that the Markem case unlike the present case was dealing with a situation where no patent had actually been granted. 

88.  I am, with respect, unable to accept Mr Lam SC’s position that the invention set out in the patent application or the patent granted is made at the time that the writing of such claims in those documents is completed.  I thus reject Mr Lam SC’s submission that the invention was made on or about 30 June 2008.

89.  In my view the expression “unless the context otherwise requires”, found in section 76 of the PO applies to a consideration of section 57(i) of the PO.  Ms Lam’s submission that an invention has to be invented before an application for a patent can be drafted accords with common sense.  The reference to the making of an invention in section 57 of the PO is unburdened by any requirement that there be any claim or indeed a patent application.  The invention can be made before any claim exists.  I accept Ms Lam’s submission that one looks for “the heart” of the invention and that does not depend upon if and when an application is eventually filed.  And that calls for an identification of the information and an analysis of who contributed what.  It is the process of “inventing the invention” and the evidence relating to that process which in my view is crucial, and not the drafting of a patent application.

90.  Mr Lam SC’s fallback position is that the invention was made in August 2004.  And in this context I have noted Mr Lam SC’s concession that it is fair to infer that the 2^nd defendant started to make the invention a few days before 31 August 2004.

91.  Ms Lam however submits that the court does not need to put an exact date on the making of the invention but submits that the court looks at the process of the making of the invention in order to be satisfied that it was made during the currency of the defendants’ employment with the plaintiff, and in effect was made before the termination of their employment in 2004.

92.  There will of course be cases where the exact date of the making of an invention can be ascertained.  However, where this is not possible I accept Ms Lam’s submission that the court looks at the process of the making of the invention in order to determine if it is ultimately satisfied that whatever the “date” of the invention, it was nevertheless made in the course of a defendant’s normal duties, and in circumstances where the invention might reasonably be expected to result from the carrying out of such duties.  This is the situation in the present case.  

(c) The 1^st defendant’s normal duties

93.  Mr Lam SC has correctly identified three questions concerning the application of section 57(i)(a) of the PO, to the facts of this case; they are:

(a) What were the defendants’ normal duties?

(b) Was the invention made in the course of their normal duties?

(c) Was the invention made in circumstances where an invention might reasonably be expected to result from the carrying out such duties?

94.  The plaintiff’s case is that the 1^st defendant’s normal duties included research and development of, inter alia, the application of NCCO technology in purification.  The plaintiff further submits that the 1^st defendant’s normal duties, as research and development manager and as project manager, included scientific “data collection”, “project management decision” and “system specifications”, all of which, says the plaintiff, were essential duties in the plaintiff’s business that would lead to the discovery of inventions. 

95.  The plaintiff further points to the fact that the 1^st defendant was the holder of a Master’s degree in air quality assessment and was one of the “bosses” in the plaintiff.  That he was a co‑founder of the plaintiff and a director who was responsible for several important projects.  Furthermore, that he was the co‑author of three of the articles referred to in this judgment. The plaintiff also points to the 1^st defendant’s employment contract which stated that his job was “research and development manager” of the research and development department. 

96.  The 1^st defendant says that he did not undertake any research or study during his employment with the plaintiff, whether in relation to NCCO or in other areas. 

97.  In considering this issue, the court takes a realistic approach that is not over analytical.  In the end one is asking whether the employee is employed to try and innovate and if he is, what general sort of areas his innovation duties cover.  In her closing submissions, Ms Lam dealt with the 1^st defendant’s involvement in the plaintiff’s business projects.  In doing so, she described the 1^st defendant’s involvement in those projects as “in charge of the on‑site experiment” (in relation to the Gun Range Project).  In relation to the Shark Fin Shop Project, “he collected samples from the shop for further experiment in the laboratory”; that it was “clear that the 1^st Defendant was heavily involved in the measurement and management of research projects”; that the 1^st defendant “has been heavily involved in the management of the Plaintiff’s business and administration”; that his duties involved “oversight and coordination”. 

98.  In my view this is not the language applicable to a person employed to try to innovate. 

99.  Considering the evidence as to the 1^st defendant’s duties, both realistically and not in an overly analytical fashion, I find that the defendant’s normal duties were in the context of an administrator, coordinator and an organizer.  In other words, I cannot conclude that he was employed to try to innovate.  Furthermore, I accept his evidence that he allowed his name to be placed on the various academic articles identified in this judgment, and was not in any substantial sense an author of their content. 

100.  The plaintiff’s claim against the 1^st defendant based on section 57 of the PO fails.  In conclusion the 1^st defendant’s normal duties were not those from which any invention was made, or indeed might be reasonably expected to result therefrom. 

(d) The 2^nd defendant’s normal duties

101.  In his evidence Dr Anthony Law stated:

“While the 2^nd Defendant’s academic background and expertise were in relation to zeolites, she was not familiar with NCCO before she joined the Plaintiff. In fact, it was Dr Chao and I who came up with the idea of applying zeolites on the NCCO process, and the reason why the Plaintiff hired the 2^nd Defendant was exactly because the Plaintiff wanted to further develop this idea and put it into practice by utilizing the 2^nd Defendant’s expertise on zeolite and on the basis that she would work on the Plaintiff’s proposed NCCO project utilizing her knowledge. As expected, the 2^nd Defendant studied and conducted research, testing and experiments for the development of the NCCO technology in accordance with the Plaintiff’s instructions and as part of her job duties.”

102.  I found Dr Anthony Law to be a reliable and truthful witness.  Mr Lam SC has criticized some aspects of Dr Anthony Law’s evidence as being inaccurate or at times untruthful.  I have borne in mind that the witnesses in this case have had to recall matters which occurred some 10 to 15 years ago.  I have considered Mr Lam’s criticisms of the quality of Dr Anthony Law’s evidence and I reject them. 

103.  I find that the plaintiff’s purpose in employing the 2^nd defendant was that described by Dr Anthony Law.

104.  The 1^st and 2^nd defendants are husband and wife, although during their employment with the plaintiff they were unmarried and worked together as colleagues.  Although in his witness statement the 1^st defendant asserted that the 2^nd defendant was not involved in any research for the plaintiff, in cross examination he agreed that what he had said in his witness statement was incorrect.  He further agreed that the 2^nd defendant “was tasked and involved in research for the plaintiff’s clients involving NCCO and zeolites.” 

105.  As noted the 1^st defendant holds a Master’s degree in mechanical engineering and was a founding member of the plaintiff.  The evidence establishes that between 2001 and 2004 he worked closely with the 2^nd defendant and would plainly be aware of why the plaintiff employed her and what her duties were.  In my view his admission above lends weight to Dr Anthony Law’s evidence as to the purpose of employing the 2^nd defendant. 

106.  The 2^nd defendant was heavily involved in a number of the plaintiff’s NCCO related projects.  This involvement is to be considered together with her admissions that:

(a) before joining the plaintiff she had no practical experience regarding NCCO or air purification; and

(b) in respect of each project she adapted the NCCO technology to suit the individual client’s needs.

107.  As noted considerable court time was spent on the detail of these various projects, the content of which the court has considered but which it is unnecessary to repeat in detail.  In summary the evidence establishes that in relation to the proposed Zeolite Plant for Synthesis of Zeolite, the 2^nd defendant was the chief coordinator of this project, she prepared the SERAP application for funding, led the finalization of the drawings of the pilot plan, recognized the need to conduct experiments to convert powder into pellet form, and performed tests on NaP1 after joining the plaintiff.

108.  In relation to the Shark Fin Shop Project, the 2^nd defendant was in charge of the experimental set up and implementation, and indeed carried out experiments in relation to the project.  A technical report was prepared in part on the basis of the experiments carried out, and I accept that at very least the 2^nd defendant was aware of and approved the content of this report, although I cannot be sure that she was the actual author of the report. 

109.  The Maxim Kitchen Project involved the 2^nd defendant conducting analysis of zeolite and the electronic precipitates although the same appears to have been criticized by Dr Chao as “not scientific”. 

110.  In relation to the Ma Tau Kok Project the 2^nd defendant was the project manager who wrote the proposal to ASD, decided upon the zeolite filters that were needed, and performed analysis to assess the effectiveness of the system. 

111.  I have also considered the email from Dr Lam which indicates that the 2^nd defendant was tasked with working schedules for a project labelled P1, and performed laboratory tests to verify the concept of NCCO in relation to a project labelled P2. 

112.  The 2^nd defendant’s participation in the plaintiff’s projects must also be considered in the context of her association with HKUST. 

113.  The 2^nd defendant’s position is that even if she had performed research during the currency of her employment with the plaintiff, that research was conducted in the capacity as an employee of HKUST. 

114.  Dr Anthony Law gave evidence that the plaintiff funded a position in the Department of Mechanical Engineering in HKUST to enable, inter alia, the plaintiff’s staff to access the HKUST’s laboratory facilities for the plaintiff’s own research purposes.  Furthermore, that the 2^nd defendant’s salary or at least part of it was provided by way of the research grant made by the plaintiff to HKUST. 

115.  It is not denied that the 2^nd defendant conducted laboratory experiments using the facilities at HKUST.  There was plainly a very close connection between HKUST geographically, (the proximity of the plaintiff’s office at HKUST), financially, and with the personnel involved with the plaintiff. 

116.  During the currency of her employment with the plaintiff, the 2^nd defendant may well have been involved in matters related to HKUST and not to the plaintiff. However, I find upon the evidence that this was a secondment arrangement and that the 2^nd defendant did make use of the HKUST laboratories for the purposes of research and experimentation for and on behalf of the plaintiff during her employment with the plaintiff. 

117.  In relation to the 2^nd defendant’s normal duties I find that the same involved, inter alia, innovative research and development of the NCCO technology as demonstrated by her involvement in the plaintiff’s various work projects and the various articles relating to NCCO which were published in academic journals and/or which were presented to the public.  As noted I find the 2^nd defendant’s affiliation with HKUST on a secondment basis, was to enable her to access the HKUST’s laboratory facilities to enable research to be applied to the plaintiff’s projects. 

(e) Was the invention made in the course of the 2^nd defendant’s normal duties whilst employed by the plaintiff?

118.  The 2^nd defendant’s position is that she was possessed of all the necessary knowhow to be able to write the 2004 applications prior to joining the plaintiff.  The 2^nd defendant relies in particular on the content of her PhD thesis and journal papers and claims that the schematic arrangement and the application of the NCCO technology in air purification was “actually something very simple”.  I note that many inventions once made are in hindsight then regarded as something very simple.

119.  With regard to the 2^nd defendant’s PhD thesis the defendants’ expert, Ms Wong in answer to questions from the court agreed that the 2^nd defendant’s PhD thesis had nothing to do with purification systems.  Furthermore, the 2^nd defendant’s journal paper likewise had nothing to do with purification systems.  In cross‑examination, Ms Wong agreed that neither the PhD thesis nor the journal paper involved any research as to the construction of an air purification device. 

120.  In respect of the 2^nd defendant’s PhD thesis and journal papers I conclude that whilst the same demonstrate that the 2^nd defendant was an expert in certain aspects of material chemistry, I am not satisfied that her theoretical knowledge would have enabled her to write the 2004 applications prior to joining the plaintiff. 

121.  It was conceded that the 2^nd defendant had no practical experience in applying NCCO technology in air or fluid purification before joining the plaintiff.  I have reviewed the nature of the plaintiff’s business, the reasons why the 2^nd defendant was employed by the plaintiff and the normal duties of the 2^nd defendant during the currency of her employment.  I have no hesitation in rejecting the 2^nd defendant’s contention that the discovery of the invention was solely her discovery and unrelated to her employment.  I have no doubt that the invention was made in the course of the 2^nd defendant’s normal duties with the plaintiff.

(f) Reasonable expectation

122.  The next question is whether the circumstances were such that the invention might reasonably be expected to result from the carrying out of the 2^nd defendant’s duties.  I accept Mr Lam SC’s submission that it is insufficient to show that an employee’s duty included a duty to innovate, rather it is also necessary to consider what sort of areas his or her innovation duties covered. I also note the submission made by both counsel that the consideration is of “an invention”, and that an invention is to be reasonably expected from the carrying out the employee’s duties even if the particular invention was not. Furthermore, that the qualities of the particular employee are relevant to this analysis.  In short, the essence of the test for reasonable expectation is whether an invention, regardless of whether it is the invention in question or an invention similar to the invention in question, might reasonably be expected from the carrying out of a defendant’s duties taking into account the qualities of the defendants. 

123.  As to the 2^nd defendant’s qualities she was an expert not only in zeolite but also in molecular sieves and material chemistry.  She was a research assistant and later visiting scholar at HKUST, and had a substantial participation as project manager in the research projects identified in this judgment, in which connection she was also the co‑author of the five articles set out herein. 

124.  In addition to this, the 2^nd defendant insisted in her evidence that she was the author of the PCT Application.  There was some dispute as to this, but I proceed on the basis that the 2^nd defendant is correct in this.  I have noted that the PCT Application bore striking similarities to the applications made by the defendants’ in 2004 and indeed to the PRC patent that was eventually granted.  It is in my view unnecessary to find that the PCT Application and the invention at issue are the same.  It is however in my view instructive to consider the content of the PCT Application in the context of the 2^nd defendant’s normal duties and what might reasonably be expected to result therefrom.  In short, and according to the 2^nd defendant, she was able to pen the PCT Application in 2002 during the currency of her employment with the plaintiff. That the content of the PCT Application was strikingly similar to the applications made by the defendants’ in 2004 is, in my view, supportive of the scope of the 2^nd defendant’s duties, and of whether the invention might reasonably be expected as a result of the carrying out of those duties. 

125.  Having considered all these matters, I conclude that the invention might reasonably be expected to result from the carrying out of the 2^nd defendant’s normal duties.  Furthermore, I reject the defendants’ argument that the novelty of the patent lies in the area of materials chemistry of the molecular sieves, and that the same was not reasonably to be expected from the 2^nd defendant’s normal duties.  The invention is not in regard to materials chemistry per se but rather relates to the molecular sieves as utilized within a fluid purification system. 

126.  In conclusion, the plaintiff succeeds in its PO section 57 case against the 2^nd defendant.

The alleged invention policy

127.  This defence is based upon an alleged conversation between Dr Anthony Law and the 2^nd defendant in around January or February 2002 during office hours, in which Dr Anthony Law is said to have told the 2^nd defendant:

“What you have done would belong to you and you would own any invention which you have done with us.”

128.  Dr Anthony Law has denied making any such representation to the 2^nd defendant.  As noted I found Dr Anthony Law to be a truthful and reliable witness.  However, this is not the end of this matter.  Mr Lam SC has now argued this matter on the basis of “contracting out”.  Ms Rachel Lam has objected to this approach on the basis that the same has not been pleaded, and says that the defendants are not entitled to raise this at such a late stage.  With respect I disagree with this submission.  The issue of this alleged agreement has always been at the front of the defendants’ case, and simply because Mr Lam now characterizes this as a “contracting out situation” is in my view not a matter that needed to be pleaded in this way.  Nor does the same in any way prejudice the presentation of Ms Lam’s case. 

129.  Mr Lam has pointed to a 2002 Assignment whereby the inventors recorded in the PCT Application, which included the 2^nd defendant, agreed to assign the right to use the invention in a catering kitchen exhaust system to Chevailer Acron Ltd.  In the recital to that Assignment it is stated that the inventors, including the 2^nd defendant, were the owners of the invention under the PCT Application.  The consideration for that Assignment was HK$1. 

130.  Mr Lam also points to a draft assignment in 2004 to be executed by the four inventors for the purpose of assigning the previous invention covered by the PCT Application from them to Acron. 

131.  Mr Lam has also relied upon a number of emails which he says helps to explain the purpose of the draft assignment and also a back‑to‑back assignment whereby Acron would assign the same subject matter to RHT. 

132.  In short, Mr Lam submits that these assignments demonstrate that the invention covered by the PCT Application was regarded as, inter alia, belonging to the 2^nd defendant. 

133.  In his witness statement, Dr Anthony Law in relation to the 1^st assignment said that:

“It was merely a double confirmation and acknowledgment that the invention existed and the inventors no longer owned any intellectual property rights in the said invention and that it belonged to the Plaintiff. This explains the reason why the consideration of such assignment was nominal (i.e. HK$1.).”

134.  In relation to the draft assignment in 2004 Mr Rudy Chan, a witness called on behalf of the plaintiff, said this:

“The intended assignment by the inventors of the said intellectual property rights was not a recognition that the inventors owned the rights personally. Having been advised by my legal advisers, it was merely to prevent future disputes by the inventors as to the ownership of the said rights.”

135.  Ms Lam has submitted that Dr Anthony Law and the other staff of the plaintiffs were not lawyers.  They were scientists who were not familiar with the legal effect of patent applications.  Furthermore that the nominal consideration in the sum of HK$1 provided in both assignments demonstrated that they were intended to be merely formal documents to confirm that the ownership of the invention was held by the plaintiff.  In respect of Mr Rudy Chan Ms Lam submits that he was a potential buyer of the plaintiff who had no knowledge of the plaintiff’s internal policies or conversations and was advised by his lawyers that the signing of the RHT assignment was “merely to prevent future disputes by the inventors as to the ownership of the said rights”.

136.  I found Dr Anthony Law and Mr Rudy Chan to be truthful witnesses.  I note that none of the assignments nor the emails relied upon by Mr Lam referred in any way to an invention policy, or indeed any assertion that inventions made by an employee would belong to that employee.  I accept that both Dr Anthony Law and Mr Rudy Chan were acting through an abundance of caution in order to try to avoid future legal disputes over the ownership of the PCT Application, or the patents granted pursuant to the PCT Application.  In any event, the assignments do not in my view go anywhere to establishing the alleged invention policy contended for by the 2^nd defendant. 

137.  This view is reinforced by the fact that the 1^st defendant who at the material time was the 2^nd defendant’s colleague and later became her husband, was never made aware of the alleged invention policy during the time that he was employed by the plaintiff, and that the 2^nd defendant had not told him about the invention policy.  If there was such a policy this would be surprising as the 1^st defendant was a co‑founder and director of the plaintiff since 2001, and was one of the principal managers in the plaintiff’s operation.  He was also responsible for staff management. 

138.  Furthermore, the 2^nd defendant’s primary case is that she was not engaged in the business of research and development and had never seen her colleagues undertake research.  This too is inconsistent with her position that there was nevertheless an invention policy.

139.  I have no hesitation in rejecting the 2^nd defendant’s allegation of an invention policy.  I find that Dr Anthony Law did not make the representation contended for by the 2^nd defendant, and that there was no contracting out as now asserted by the counsel on behalf of the defendants.

THE CURRENT POSITION OF THE 1^ST DEFENDANT

140.  The 1^st defendant ceased to be an owner of the PRC Invention Patent on 12 February 2014.  In these circumstances Mr Lam SC submits that no order can now be made against the 1^st defendant in relation to that patent. 

141.  Ms Lam submits however that the 1^st defendant continues to hold “any and all interest in the PRC Invention Patent on trust for the Plaintiff”.  Furthermore that the 1^st defendant’s interests “cannot properly have been assigned or transferred to the 2^nd defendant by the removal of the 1^st defendant’s name, as such transfer or assignment was in the absence of the plaintiff’s consent. 

142.  I cannot agree with Ms Lam’s submissions.  It is a matter of fact that the 1^st defendant is no longer a registered owner of the PRC Invention Patent.  The court does not make orders in vain, and it would be a fruitless exercise to make an order against the 1^st defendant to transfer to the plaintiff a patent in which he no longer in my view has any legal interest.  However, that is not the end of the matter as the 1^st defendant’s position as to breach of duty, damages and costs still falls to be considered.

THE PLAINTIFF’S CLAIMS BASED ON THE DEFENDANTS’ ALLEGED BREACH OF DUTIES

143.  The plaintiff says that the defendants are in breach of their employees’ duties of fidelity and also their fiduciary duties.  In short, the plaintiff say that the defendants had put themselves in a position of conflict with the plaintiff by making the PRC Utility Model Application in August 2004 for the purpose of “preserving” the NCCO technology for their own interests.  Furthermore that they are in breach of their employment contracts in particular clauses 13 and 14 of those contracts.

144.  Mr Lam SC submits that the gravamen of the plaintiff’s complaint is that the defendants should have disclosed to the plaintiff and sort its prior consent before submitting the Utility Model Application on 31 March 2004 whilst still employed by the plaintiff.  That real issue is whether they had a duty to disclose the Patent Application by virtue of the terms of their employment contracts, their duties of fidelity, or their fiduciary duties. 

145.  Having found that the plaintiff succeeds on the basis of section 57 of the PO, I find that the defendants were in breach of clause 14 of their contracts of employment with the plaintiff.  Both the 1^st and the 2^nd defendants were placed in senior managerial positions within the plaintiff and were intimately involved in the business of the plaintiff. Furthermore, I accept Ms Lam’s submission that the 1^st defendant in his capacity as a director of AISL, remained a de facto director of the plaintiff.  In my view, the defendants owed fiduciary duties to the plaintiff and plainly put themselves in a position of conflict with the plaintiff in making the PRC Utility Model Application in August 2004.  Furthermore, the defendants filed the Invention Patent Application only eight days after their termination of employment with the plaintiff, and I accept the plaintiff’s submissions that the defendants have misappropriated and misused the plaintiff’s property, including the rights to the Invention under section 57 of the PO.

146.  The plaintiff has claimed damages and an account of profits.  Whether or not the defendants were in breach of their employment contracts or in breach of their duties of fidelity and/or fiduciary duties to the plaintiff, there is in my view simply no basis upon which an order for damages or an assessment of damages, nor an account of profits can properly be made.  No probative evidence was placed before the court of any damage suffered by the plaintiff as a result of any breach of duty by the defendants towards the plaintiff. Furthermore, no proper basis for the making of an order for an account or an inquiry was placed before the court. 

147.  The plaintiff’s claim for damages and/or an account of profits is dismissed. 

CONCLUSION

148.  There will be an order that the 2^nd defendant execute at her sole cost and expense all necessary forms and documents to unconditionally and irrevocably assign and/or transfer to the plaintiff, or any person or entity designated by the plaintiff, the Invention Patent granted in the People’s Republic of China (Patent No: ZL200410091762.3) titled “A Method and Device for Fluid Purification”. 

149.  There shall be an order that the plaintiff shall indemnify the 2^nd defendant against all cost and expenses that she has incurred in applying and maintaining the PRC Invention Patent, including but not limited to the application and processing fees paid to the PRC Patent Office or Authority, the fees to the patent agents and the annual fees:

(a) The 2^nd defendant shall within 14 days hereof make, file and serve an affidavit or affirmation stating the particulars and amounts of cost and expenses that she has incurred in applying for and maintaining the PRC Invention Patent with documentary proof insofar as available.

(b) If the plaintiff agrees to the total sum stated in the said affidavit or affirmation, the plaintiff shall pay the said sum to the 2^nd defendant within 14 days thereafter.

(c) If the plaintiff does not agree to any of the amounts and/or the total sums stated in the said affidavit or affirmation, the 2^nd defendant shall take out a summons within 14 days thereafter returnable before a master in chambers pursuant to this order for further directions to determine the amount of the costs and expenses that the plaintiff shall indemnify the 2^nd defendant.

COSTS

150.  The court is mindful that the plaintiff has failed in its section 57(1) PO application against the 1^st defendant.  Ms Lam however submits that the 1^st defendant registered himself as an owner of the Patent, and wrongfully laid claim to the plaintiff’s Invention for a period of about 10 years.  Furthermore that although the 1^st defendant’s name has recently been removed from the plaintiff’s patent, that the plaintiff was not notified of this until 5 September 2015 (a matter agreed by Mr Lam SC). Ms Lam submits in effect that in these circumstances the plaintiff had to continue with its action against the 1^st defendant.  Ms Lam submits that the removal of the 1^st defendant from the Patent is no more than a device to “wriggle out of the liability properly owed”. 

151.  I accept Ms Lam’s submission that it was correct for the plaintiff to continue with its action against the 1^st defendant, at least until 5 September 2015.  The defendant has wrongfully continued to lay claim until that date, to the Invention, and it was thus necessary to proceed against him to dislodge this claim.  Furthermore, I have concluded that the plaintiff has established that the 1^st defendant breached his duties of fidelity and fiduciary duties as well as breaching his contract of employment.

152.  However, regard must be had to the fact that the plaintiff’s main thrust against the 1^st defendant was its section 57(1) PO application, in which the plaintiff has failed.  In these circumstances that I make an order that the 1^st defendant will pay fifty percent of the plaintiff’s costs of and occasioned by this action up until 5 September 2015 to be taxed if not agreed.  Thereafter I make no order as to costs.

153.  In respect of the 2^nd defendant I make an order that the 2^nd defendant shall pay the plaintiff’s costs of and occasioned by this action, to be taxed if not agreed. 

154.  The above costs are orders nisi to become effective within 14 days of the date of this judgment, unless either party gives notice within 14 days of the date of this judgment of an intention to be further heard upon the matter of costs. 

155.  The court extends its thanks to counsel in this case for their able assistance.