In a decision last week that should hearten inventors around the world, the British High Courts have upheld Neuftec Limitedâ¿¿s license rights against a claim by Oxonica Energy Limited, a wholly owned subsidiary of Oxonica PLCâ¿¿the UK-based nanomaterials company.

The case revolved around the Enviroxâ¿¢ formulation, which is advertised as â¿¿a fuel borne nanocatalyst for diesel engines which reduces fuel consumption with savings of 5-10% and reduces particulate emissions by up to 15%.â¿¿

According to the news release relating the courtâ¿¿s decision, problems began in October 2006 when Oxonica told Neuftec it had produced an 'alternative' to the patented Enviroxâ¿¢ formulation and that Neuftec would therefore not be eligible for continued royalty payments.

When informed of this decision, Neuftec struck out on its own to market the product. As a result, Oxonica in February 2007 initiated legal proceedings against Neuftec initially to keep the company from competing with it and to claim that that sales of of the so-called 'Envirox 2' were not caught by the terms of the Neuftec licence and therefore should not trigger royalty payments by Oxonica. It later dropped the non-compete claim, but maintained its case against making royalty payments.

In a 40-page judgment, the judge ruled that "...royalties are payable in respect of any product, process or use falling within the scope of any claim of the PCT application as appended to the License Deed, and nothing else. Envirox 2 is a Licensed Product as defined, and attracts royalties accordingly. The claim fails and the counterclaim succeeds...".

There has been no word as of yet whether there will be appeal of the decision. In the meantime, this decision marks the end of one of the more intriguing legal cases to come out of the world of nanotechnology and IP disputes.

The result seems to indicate that efforts to develop an 'alternative' to patented product that you have a license agreement with and subsequently avoid royalty payments can be a tricky business.

In a striking coincidence, the Envirox product proved disappointing in testing by Petrol Ofisi, the Turkish national oil-and-gas company, after Oxonica had informed Neuftec that it had developed an alternative to the patented product