Transfer of Priority Rights

The German Federal Patent Court held in a decision of 29 October 2010 (Eilunterrichtung just published, full reasons not yet online) that the priority right can be assigned independently of the application that forms its basis. It also held that the priority right must have been assigned before the declaration of priority, which may occur after the filing of the subsequent application.

That the priority right cannot be assigned retroactively is hardly a surprise (see Edwards Lifesciences AG v Cook Biotech Inc for the UK law on the issue). However, the assignment of priority rights is a minefield for another reason: which law should govern the assignment?

Most national courts seem to assume that it is the law governing the subsequent application, but this means that at the time of the assignment - when it is perhaps not yet clear in which countries subsequent applications will be filed - one has to take into account the laws of a great number of jurisdictions. And what if the priority right of a national application is claimed for a subsequent European application: does the European Patent Convention (EPC) then govern the assignment?

The case law of the Boards of Appeal of the European Patent Office (EPO) is contradictory on the last point. In T62/05, the Board held that the assignment of a priority right is governed by the same standard as the transfer of a European patent application under art. 72 EPC and therefore requires the signature of both parties and did not consider whether the law governing the priority application (Japanese law) should also govern its assignment. However, in J19/87, a legal opinion by an English patent barrister was sought on the point whether the transfer of the priority right in a UK first application from one English party to another English party required the signature of the assignee (it does not according to the opinion). Consequently, the assignment of the priority right in the UK application was held valid for the subsequent European application. In T1008/96, the Board held that the transfer of the priority right in an Italian first application from one Italian party to another Italian party had not been convincingly shown according to Italian law, again implying that the law governing the contractual relationship was applicable. Neither J19/87 nor T1008/96 are mentioned in the more recent T62/05, resulting in considerable legal uncertainty.

The consequences of applying the law of the subsequent application to the transfer of the priority right can be disastrous for patentees. French case law, for example, seems to require that the priority right is expressly assigned in writing; it is not assumed that it is assigned implicitly with the assignment of the first application. Under Swiss law, on the other hand, an assignment of the priority right can be inferred from conclusive action. In a case where the first application (U.S. provisional) had been assigned to a Swiss party and under Swiss law would have implied a valid transfer of the priority right, the assignment of the priority right was nonetheless declared not proven by the Tribunal de Grand Instance in Paris (TGI Paris of 30 January 2009, Magic Technologies vs. Swisscom).

Under US case law, a foreign application may only form the basis for priority if that application was filed by either the U.S. applicant himself, or by someone acting on his behalf at the time the foreign application was filed. In other words, while the foreign application must obviously be for the same invention and may be filed by someone other than the inventor, US law also requires that a nexus exist between the inventor and the foreign applicant at the time the foreign application was filed (CAFC, Boston Scientific Scimed, Inc. vs. Medtronic Vascular Inc.). Since in Europe, applications are generally filed in the name of the assignee, while US law requires filing in the name of the inventors, it must be shown that the assignee acted on behalf of the inventors at the time of filing, which requires to get the paperwork in order even before the priority application is filed.

Since a deficiency in the assigment of the priority right may be invoked by any third party and can prove fatal for the patent, an improper assignment is a disaster. It would be desirable that the law governing the contract underlying the assigment would also govern the assignment, to make the applicable law uniform and predictable. As long as national courts do not follow this rule, practitioners can only ensure that at least

1. the assignment of the priority right takes place before the subsequent filing (in the case of planned subsequent US applications: the nexus between the inventor(s) and the assignee is established at the filing date of the priority application),
2. the assignment of the priority right is explicitly mentioned in writing with reference to the details of the priority application, and
3. both parties sign the assignment document.

It may help to indicate which law should govern the assignment; however, if the courts of the country of the subsequent application apply the lex protectionis strictly, this may not help much.

Tobias Bremi, Vice-President of the soon to start working Swiss Federal Patent Court, has written an excellent article titled "Traps when transferring priority rights, or When in Rome do as the Romans do: A discussion of some recent European and national case law and its practical implications" in the epi Information 1/10 which covers more ground than this short blog post.