In statutory regimes the acquisition of the rights and thus also the assignment of the rights needs to be done shortly after the invention is reported to the employer, due to the time requirements in the laws. In contractual regimes, the assignment can be executed already prior to the invention being made, and basically also any time after that. However, there can be major implications for the late dating of an assignment also in contractual regimes, derived from the patent legislation. A decision from the UK patent court349 emphasizes the importance of an early date for an assignment, especially when the invention is patented in the name of someone other than the inventors. In the patent action the claimant was seeking revocation of a European Patent (UK). The defendant was the proprietor of the patent and counter-claimed for
348 As a practical note, as an alternative to traditional non-compete agreements it is possible to include into an employment agreement a so-called “garden leave” provision. The provision is a variation of a statutory notice period, which does exist in the U.S., and as such it is an extension to the term of employment. Employers place employees under non-compete restrictions on garden leave, to “tend their gardens”. Typically, the employees are relieved of their duties, but remain employed by the employer and therefore, cannot go to work for a competitor.
349 Edwards Lifesciences AG v. Cook Biotech Incorporated, High Court of Justice, Chancery Division, Patent Court. [2009] EWHC 1304 (Pat), Case No: HC08 C 00934.
infringement.350 The Patent was issued from an international PCT application filed on 31 January 2001, claiming priority from the priority application filed in the U.S. on 31 January 2000. The claim to priority was disputed by the claimant, a matter of some importance because, if priority was lost, then a later published document was considered a relevant prior art as it was published at a time between the priority US application and the later filed PCT application.351
The PCT application was filed in the name of the defendant company whereas the US priority application was filed in the name of three individuals as joint inventors. One of these inventors was an employee of the defendant when the invention was made, and thus the only interest the defendant had in the invention was via this employee’s contract of employment. It was accepted that this employee’s interest, such as it was, indeed belonged to the defendant. The rights in the invention from the two other inventors that were not employed by the defendant, however, were not assigned to the defendant until in September 2002, around 21 months after the PCT application was filed but before the patent was granted.352 The claimant argued that the priority claim was not valid since the defendant did not own the rights in the invention (made by at least two of the inventors), when the PCT application was filed and the priority claim was made. In other words, the defendant had no entitlement to claim priority at the date that they did so, based on the fact that the right of priority may only be enjoyed by the person who filed the priority application or his successor in title at the date the right to priority is claimed. The defendant argued that the relevant issue was that by the grant date of the European patent, all rights had been assigned to them and thus the defendant was entitled not only to be granted the patent, but also to a valid priority claim, and in any event the defendant had always owned its own employee’s interest to the invention in question. The judge disagreed and concluded as follows:
“In my judgment the effect of Article 4 of the Paris Convention and section 5 of the Act353 is clear. A person who files a patent application for an invention is
afforded the privilege of claiming priority only if he himself filed the earlier application from which priority is claimed or if he is the successor in title to the person who filed that earlier application. If he is neither the person who filed the earlier application nor his successor in title then he is denied the privilege.
350 Edwards Lifesciences AG v. Cook Biotech Incorporated, High Court of Justice, Chancery Division, Patent Court. [2009] EWHC 1304 (Pat), Case No: HC08 C 00934, 1.
351 Edwards Lifesciences AG v. Cook Biotech Incorporated, High Court of Justice, Chancery Division, Patent Court. [2009] EWHC 1304 (Pat), Case No: HC08 C 00934, 82.
352 Edwards Lifesciences AG v. Cook Biotech Incorporated, High Court of Justice, Chancery Division, Patent Court. [2009] EWHC 1304 (Pat), Case No: HC08 C 00934, 84-86.
Moreover, his position is not improved if he subsequently acquires title to the invention. It remains the case that he was not entitled to the privilege when he filed the later application and made his claim. Any other interpretation would introduce uncertainty and the risk of unfairness to third parties.”354
The defendant contended that this interpretation is inconsistent with section 7 of the UK Patents Act which distinguishes between an application for a patent and its grant. Section 7(1) permits any person to make an application for a patent. Section 7(2), on the other hand, restricts the persons to whom a patent may be granted to the inventor(s), to any person(s) entitled to the property in the invention when it was made or to the successor(s) in title to any such person(s). According to the defendant it follows that, as "any person", it was entitled to make the application for the Patent in January 2001 and, as the successor in title to all the inventors as a result of the assignment of September 2002, it was entitled to the grant of the Patent in April 2007. If this is the position in relation to a grant, then it must be the same in relation to priority.355 The judge concluded that the two sections of the UK Patents act deal with separate issues, the right to claim priority in the case of section 5, and the right to the grant of a patent in the case of section 7. He further concluded that section 5 has been framed so as to have the same effect as Article 8 of the PCT and therefore also Article 4 of the Paris Convention. He did not consider it permissible to interpret the Paris Convention in the light of section 7 of the Act. Section 7 provides a complete code as to those persons entitled to the grant of a patent. In the case of a successor in title, he must have derived the title by the date of the grant. There is no equivalent provision in Article 4 of the Paris Convention.356
Notably, despite an assignment as such possibly being valid even if executed years after the invention has been made, or after the resulting patent was granted, not all defects, such as a right to priority, can be cured retroactively. For PCT applications the conditions for a priority claim refer to the Paris Convention, more specifically the Stockholm Act of the Paris Convention.357 The latter article defines the conditions for the entitlement to priority, stating that a person who has filed a patent application for an invention or his successor in title shall enjoy a right of 354 Edwards Lifesciences AG v. Cook Biotech Incorporated, High Court of Justice, Chancery Division, Patent Court. [2009] EWHC 1304 (Pat), Case No: HC08 C 00934, 95. The judge further referred to Board of Appeal of the EPO having adopted the same approach to the interpretation of Article 87 EPC in two cases: J 0019/87 and T 0062/05.
355 Edwards Lifesciences AG v. Cook Biotech Incorporated, High Court of Justice, Chancery Division, Patent Court. [2009] EWHC 1304 (Pat), Case No: HC08 C 00934, 96.
356 Edwards Lifesciences AG v. Cook Biotech Incorporated, High Court of Justice, Chancery Division, Patent Court. [2009] EWHC 1304 (Pat), Case No: HC08 C 00934, 97.
priority.358 Further, each member country shall determine the latest date on which a declaration for a priority claim must be made.359
In the referred case, the relevant law in this respect was section 5 of the UK Patents Act.:
"5(1) For the purpose of this Act the priority date of an invention to which an application for a patent relates and also of any matter (whether or not the same as the invention) contained in any such application is, except as provided by the following provisions of this Act, the date of filing the application.
(2) If in or in connection with an application for a patent (the application in suit) a declaration is made, whether by the applicant or in any predecessor in title of his, complying with the relevant requirements of rules and specifying one or more earlier relevant applications for the purposes of this section made by the applicant or a predecessor in title of his and each having a date of filing during the period of twelve months immediately preceding the date of fling the application in suit, then-
(a) if an invention to which the application in suit relates is supported by matter disclosed in the earlier relevant application or applications, the priority date of that invention shall instead of being the date of filing of the application in suit be the date of filing the relevant application in which that matter was disclosed or, if it was disclosed in more than one relevant application, the earliest of them;360
The Act, as it existed at the relevant time, reflects that in order to enjoy the priority right for the subsequent filing made within the priority year, the applicant must be
entitled to the invention of the priority application at the time of filing the subsequent application. It is not a requirement that the applicant is the same for both
applications, so the priority application could have been filed also by the applicant’s predecessor. However, at the time of filing an application claiming priority from the earlier application, the applicant needs to have the rights to the invention in question. To conclude, even if an assignment is possible also retroactively, in the light of this case it is critical that any assignment document necessary to transfer the rights in a priority application or to assign the right to claim priority is dated before the applicant company makes the priority claim. This is because a patent’s entitlement 358 Paris Convention (Stockholm revision), Article 4, A(1).
359 Paris Convention (Stockholm revision), Article 4, D(1). 360 Patents Act of 1977, Section 5; Emphasis added.
to its priority date is often critical to the validity of the patent, in defining the date at which the prior art is assessed. Therefore, companies should be careful that any assignment documents, be them employment agreements assigning all the rights to future inventions to the employer or invention-specific assignments made after the inventions are made, are dated shortly after the invention was made, and at the latest prior to foreign patent applications being filed, in order to ensure valid entitlement to the priority right.
A recent case example from the U.S., where the lack of a sufficient assignment caused problems is an appeal case between Advanced Video Tech. LLC and HTC Corporation, which was decided on January 11, 2018.361 The single issue involved in the appeal was whether one of the three co-inventors of the patent362 had transferred her co-ownership interests in the patent under the terms of an employment agreement even if the underlying case was about infringing the patent in question. The dismissal of the infringement case was due to the lack of a valid assignment by a co-inventor not being consented to be a party to the infringement action and the appeal court confirmed the decision: An inventor who signs an employment agreement that provides (a) she “will assign” rights to inventions doesn’t assign them at that point of time363 or (b) that she “holds in trust” those rights doesn’t mean either assigning them364 and finally or (c) that she “quits claims” those rights doesn’t mean she assigns them365. Even if one of the judged dissented relying on the “intent” of the contract, the conclusion was that the employer did not have full ownership of the patent and thus not the right to sue the defendant in the case.
The referred cases are good examples of the pitfalls related to an assignment of the rights that can efficiently dilute utilizing a company’s otherwise durable assets. It is of utmost importance to sufficiently address the assignment as early as possible. Further, it is important to ensure that the assignment is valid from each co-inventor as the patent cannot be enforced without the rights to the invention as a whole. In the case Advanced Video Tech. LLC claimed that it obtained the rights to the invention from the co-inventor in question through a series of transfers, including an alleged transfer under the provisions of the employment agreement between the third 361 Advanced Video Tech. LLC v. HTC Corp. (Fed. Cir. Jan. 11, 2018).
362 U.S. Patent No. 5,781,788 titled as “Full Duplex Single Clip Video Codec”.
363 Advanced Video Tech. LLC v. HTC Corp. (Fed. Cir. Jan. 11, 2018), p. 6. The court relied on Arachnid, Inc. v. Merit Industries, Inc., 939 F.2d 1574, 1576 (Fed. Cir. 1991) (”will be assigned” language in a consulting agreement did not itself effect an assignment).
364 Advanced Video Tech. LLC v. HTC Corp. (Fed. Cir. Jan. 11, 2018), p. 7. See, e.g., Jim Arnold Corp. v. Hydrotech Sys., 109 F.3d 1567, 1578 (Fed. Cir. 1997) and Abraxis Bioscience, Inc. v. Navinta LLC, 625 F.3d 1359, 1366 (Fed. Cir. 2010).
inventor and the first assignee in the chain.366 The inventors were not employees of Advanced Video, however in the case the issue boiled down to the validity of the assignment in the employment agreement at the other end of the transfer chain. Indeed, the assignment can also take place through a series of transfers, in a chain. For the chained assignment to be valid, there needs to be an unbroken assignment of rights in the chain.