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Tuesday, 24 October 2017

T 1201/14: EPC's substantive requirements for valid transfer of priority right surprisingly substantial

Power failure this time
In T 1201/14 of 9 February 2017 (grounds published on 5 September 2017), the Board of Appeal 3.5.05 took the opportunity to clarify some aspects on the ever challenging assignment of the priority right for a European patent application.

The priority application was a US provisional filed by the inventor Sam Jiang. It was undisputed that Jiang had validly assigned the right to claim the priority of this application to ASUSTeK Computer Inc, Taiwan. What was disputed was whether ASUSTeK had validly assigned the priority right to the current patent proprietor Innovative Sonic Ltd, Mauritius. Whether the second assignment was valid was highly relevant because ASUSTeK had disclosed the invention in a change request to a standard setting organization which was published in the priority interval.

The Board first summarized the EPO’s case law on the applicable law to priority assignments. It concludes that the following substantive requirements for a valid transfer of the right of priority derive from the European Patent Convention (emphasis in original):
The successor in title with respect to the right to claim priority from a first application according to Article 87 (1) EPC 1973 must prove that it indeed owned,

(i) before the filing of the later European application,

(ii) the right of priority [which is an independent right] relating to the first application for the purpose of filing the later European application claiming that priority.
With regards to the formal requirements, no separate formal assignment "in writing" was required under the EPC. Since the EPC contained neither guidance as to the formal requirements for a valid transfer of the ownership of the right of priority nor conflict-of-laws provisions for that purpose, national law is commonly relied upon by the departments of the EPO. In principle, the following national laws come into question in this context:
  1. the law of the country where the first application was filed ("lex originis" ) ;
  2. the law of the country where the later application was filed ("lex loci protectionis" ) ;
  3. the law of the country which is agreed upon in the relevant contract ("lex loci contractus") ;
  4. the law of the country where at least one of the parties to the transfer has its residence ("lex domicilii")
The Board notes that there was no established jurisprudence of the BoAs as regards to the national law generally applicable to the question of the transfer (citing numerous decisions, see page 25 sq.). For readers hoping for clarification: sorry to disappoint you, because the Board held that under the facts of the case, it did not need to address the issue. All four lines of argument put forward by the patentee in support of its right of priority were deficient.

The patentee (appellant) first argued that it had had acquired the priority right under US law (lex originis). The assignment according to US law was signed after the filing of the European application. But, if US law was applicable to the transfer, this was irrelevant, because US law permitted retroactive assignments ("nunc pro tunc"). The Board did not disagree with this statement, but held it irrelevant: the EPC provided for certain material requirements for the transfer to be valid, among them that it had (actually) occurred prior to the filing of the subsequent application. This applied irrespective of which national law governed the formal aspects of the assignment.

The patentee also argued that there had been an implicit transfer by virtue of a general policy under German law (lex loci protectionis), the general policy being that all intellectual property relating to telecommunication standards should be transferred from ASUSTeK to the patentee. According to the Board, the burden of proof of the validity of the transfer lay with the patentee, and the applicable standard was "beyond reasonable doubt", as it was in control of all evidence. Later executed affidavits were admissible evidence under Article 117(1) EPC. But the Board neither found the general policy to be sufficiently clear with regards to the transfer of priority rights, nor had it been proven that the policy was actually generally complied with.

The "direct transfer under US law" argument failed because what was directly transferred was another application stemming from the same provisional application. This did not prove that the priority right for the application at issue had been transferred.

A long while after filing the grounds for appeal, the patentee introduced a fourth line of argument, an implicit transfer by virtue of a general policy under Taiwanese law (lex domicilii). This evidence was (i) late filed (Article 12(2) RPBA), but also (ii) insufficient to prove the transfer. It was insufficient mostly for the same reasons the implicit transfer under German law was insufficient. The Board, however, also added this rather important observation:
the board holds that even assuming that the right of priority and the right to file a later patent application claiming that priority were indeed in separable rights under Taiwanese law, as argued by the appellant, this could not override the substantive requirement as set out in point above, according to which the right of priority relating to a first application can be transferred independently of the right to that first application. Hence, contrary to the appellant's view, the board finds that the fact that a certain patent application ([such as the US provisional]) has been transferred on the basis of the alleged general policy does not necessarily mean - in the absence of any express or implied indication - that this transfer includes the right of priority derived from that application.
But, but, this one was supposed to make a lot of money :-(
This is quite important - the EPC’s substantive requirements for a valid transfer, namely that the right of priority as such be assigned, cannot be circumvented by the argument that the applicable national does not foresee an independent priority right. Whether this is correct is certainly open to question.

In sum, T 1201/14 provides an excellent summary of the EPO’s case law on the transfer of priority rights, but does not clarify which national law applies to the transfer of the priority right. It should make practitioners acutely aware that the EPC, despite appearances to the contrary, does contain substantive requirements for the transfer which apply irrespective of the applicable national law.


Kant said...

Presumably, the EPO's current obsession with assignments requiring proof of the right of the signatory to bind the relevant party will also be applied to assignments of priority.

Proof of the pudding said...

It is interesting to note that Paris Convention Article 4(B) uses the following language:
"any subsequent filing in any of the other countries of the Union before the expiration of the periods referred to above shall not be invalidated by reason of..."".

Conspicuously absent from this provision is a requirement for the subsequent filing to be made by the same person as referred to in Article 4(A). Could it be argued that this opens the door to the possibility of the right to priority being assigned after the date of filing of the subsequent application?

Tim Jackson said...

Proof of the Pudding, I think it's relevant that Article 4(B) begins with the word "Consequently". So surely it must be subject to the statement in Article 4(A) that the right of priority shall be enjoyed by the person who duly filed the first application, or his successor in title?

Proof of the pudding said...

Tim - you may be right. My comment was not really that serious, as it was really intended to establish whether all of my comments (as opposed to just those relating to the EPO) were getting "censored".

Kuifje said...

Well, I read the decision, and it appears logical, but have one overrding question, and I hope somebody can answer it.

In it says 'The successor in title ....must prove that it indeed owned...'

It is especially the requirement TO PROVE that bothers me. Where does this come from. What is its basis under the EPC? I don't see it.

If both the original owner and the successor in title certify that the transfer was effected on date X, to their satisfaction, and in a form which they found acceptable, what is the basis for a third party, or EPO, to doubt an effective transfer, and where is their basis to require proof.

As a summary this decision is nice...but still, I'd like to have seen a legal basis for the right of others to demand PROOF.

Anonymous said...

I also do not understand why they are so fuzzy about this topic. If you have two parties who consent that the priority right was transfered, where is the problem? In my opinion, this should only be an issue if the parties disagree in "you illegally hijacked my priority right for your own application"-type of situations.

Anonymous said...

Some years ago, a case that raised a similar issue came across my desk. It was shortly before I retired, so I don't know what the outcome was. It involved an EP application that we had been instructed to file by a US applicant who had acquired the rights in a US patent application that had been founded on a US provisional application followed by a regular US application claiming priority from the provisional. The US provisional was not explicitly identified by number in the assignment. I thought that this might affect the validity of the priority claim, because the regular US application was not the earliest application for the invention. From a discussion with the US instructing agent, it transpired that their practice was to ignore US provisionals when drafting assignments. This was in the early days of US provisionals, so the situation may not have been clear to them at that time.

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