Oil patent tug of war heads for appeal

Southampton University is to appeal against a ruling that took ownership of a crucial patent away from one of its most promising spin-off companies.

In a move that a leading intellectual property lawyer said could cost the spin-off dearly, the university will appeal against a decision by the Patent Office to pass ownership of the patent to a Norwegian oil company.

Researchers at Statoil had come up with an idea for detecting oil reservoirs beneath the sea.

But the company needed a piece of kit available only at Southampton. They approached the university's National Oceanographic Centre and, according to the Patent Office, Statoil and the university signed a contract that included provision for IP ownership.

A collaboration ensued between the university and Statoil. Tests on the oil-detection process proved successful and, in 2001, Southampton academics Martin Sinha and Lucy MacGregor filed a patent for the process.

They went on to found spin-off company Offshore Hydrocarbon Mapping in 2002, based on electromagnetic imaging techniques for surveying the sea bed for oil and gas. The patent was included in its portfolio.

The company floated successfully on the Alternative Investment Market in March 2004 - just after the patent was granted. The enterprise is seen as the most important development in oil exploration in 30 years and, with the enthusiasm investors showed, its financial prospects appeared exceptional.

But Statoil challenged the patent entitlement, saying the academics added nothing inventive to the process and claimed full ownership. Southampton countered that Statoil had come to them with an obvious idea that could not have been realised without the input from Southampton.

At the end of July, the Patent Office overturned its decision to grant the patent to Southampton.

Barbara Halliday, Southampton's director of legal services, said: "The university is preparing Grounds of Appeal to challenge a decision it regards as wrong."

Dave Pratt, chief executive of Offshore Hydrocarbon Mapping, said he did not believe the decision would have an immediate effect on the company but since the decision the share price has halved.

It is the second time Southampton has challenged a patent entitlement. Last year it took a dispute over a pest-control patent to the High Court and lost.

Neil Bradshaw, director of enterprise at Bristol University, said that litigious activity could be seen as a positive sign, demonstrating that universities were producing potentially lucrative IP.

But a leading IP lawyer warned that the decision, which could cost the university hundreds of thousands of pounds, could be extremely damaging. Trevor Cook, of law firm Bird and Bird, said: "I've seen investors just walk away from messy entitlement disputes."

caroline.davis@thes.co.uk