A recent decision of the Australian Patent Office illustrates the risk of placing too much trust in related party transactions.
The decision addressed a dispute between Crisalis International Pty Limited (“Crisalis”) and C2 Water (SPV) Pty Limited (“SPV”) regarding the ownership of a patent titled “Apparatus, system and method for desalination of groundwater”. Crisalis was owned by a Dr Barber, who was the sole inventor of the desalination technique.
SPV was formed to commercialise the invention developed by Crisalis, and, before the dispute, Dr Barber was also a director of SPV.
As the Delegate said:
The assignment agreement specified a completion date of 31 January 2023, but no payment was made by this date. Later in 2023, there was a falling out between Dr Barber/Crisalis and SPV, and Crisalis sought rectification of the Register of Patents, claiming that the transfer was invalid due to non-payment of the assignment fee.
This request was unsuccessful, with a Delegate of the Commissioner of Patents finding that the patent was correctly assigned to C2 Water (SPV) Pty Limited on the completion date.
In reaching this conclusion, the Delegate considered evidence showing that Crisalis was aware of the risks and chose to proceed with the agreement as drafted. This included ignoring advice that “The assignment itself should be tied to the payment of the assignment fees”; and “if the rights are assigned and you are not paid, the patent rights do not automatically revert to you. Rather you would be limited to a breach of contract claim.”
The Delegate concluded that as Crisalis had ignored this advice, Crisalis were content with the wording and could not claim that the agreement was contingent on payment. As a result, the request for rectification was denied, and costs were awarded against Crisalis.
This case highlights the importance of contractual terms and serves as a reminder to parties involved in related party transactions to look beyond the current relationship between the parties.
