The right of priority is created in a country, where a first application is filed, and can be potentially exploited in one or more other countries, by filing possible subsequent applications claiming priority of the first application.
When the right of priority is to be transferred a number of critical issues arise: when, how and under which law.
In recent case T 1201/14, the board of appeal concerned has issued an interesting decision illustrating the current approach used by the EPO.
The opposed European patent was granted for European patent application D2 that was filed after the publication date of novelty-destroying document A4 (i.e. August 2006).
Application P, from which European patent application D2 claimed priority, was filed on 28 July 2006, before the publication date of document A4. Application P was filed by the inventor. A first transfer of the right of priority from the inventor to Company 1 was validly performed. The appellant-Company 2 was only in a position to enjoy the right of priority from application P if it was the successor in title of Company 1 in respect of P at the filing date of European patent application D2.
Hence, the formal validity of the priority claim of the opposed patent hinged on the question whether the second transfer of the right of priority derived from application P from the then applicant Company 1 to the appellant-Company 2 was validly performed. That is, whether the appellant-Company 2 validly enjoyed the right of priority arising from application P under the EPC.
The board stated that the EPC contains provisions (i.e. Articles 87 to 89 in conjunction with Rules 52 to 54) which form a complete, self-contained code of rules of law on the subject of claiming priority for the purpose of filing a European patent application. The right of priority is defined in almost identical terms in Article 4A(1) of the Paris Convention.
In the board’s view, for a transfer of the right of priority from “any person” to a “successor in title” within the meaning of EPC to be considered valid, the transfer has to have been concluded before the filing date of the later European application claiming that priority. This is because the term “successor in title” in that provision refers to the person who has already filed (“has duly filed”) the first application but not yet the later European patent application (“for the purpose of filing”). The board held that this in turn directly implies that the succession in title must have already taken place when the later European patent application is filed.
Also, the board stated that the “right of priority” derived from a given first application is in itself a substantive property right, which is to be distinguished from the property right to the first application. As such the right of claiming priority from a first application may be transferred independently of the right to the first application up until the filing of the later European application claiming priority from it (at which time it becomes an accessory right to the underlying first application).
Hence, the substantive requirements derivable from the EPC for a valid transfer of the right of priority may be summarised as follows:
The successor in title with respect to the right to claim priority from a first application must prove that it indeed owned,
(i) before the filing of the later European application,
(ii) the right of priority relating to the first application for the purpose of filing the later European application claiming that priority.
The board further stated that, in general, an agreement on the transfer of the right of priority is concluded by means of a contract between the transferor (the original owner of the right of priority) and the transferee (the owner’s successor in title). This requires two corresponding declarations of the contracting parties, whether express or implied, regarding the subject-matter of the transfer. Thus, an implicit transfer of a particular right may be accepted when it is sufficiently clear that the parties formed an agreement and what they agreed.
As the EPC contains 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 entrusted with the procedure. In principle, the following national laws come into question in this context:
(a) the law of the country where the first application was filed (“lex originis”);
(b) the law of the country where the later application was filed (“lex loci protectionis”);
(c) the law of the country which is agreed upon in the relevant contract (“lex loci contractus”);
(d) the law of the country where at least one of the parties to the transfer has its residence (“lex domicilii”).
The board was aware that so far there is no established jurisprudence of the Boards of Appeal as regards the national law generally applicable to the question of the transfer of the right of priority. The formal requirements of different national laws for the transfer of intellectual property rights range from none at all (as e.g. under German law) to strict formal rules (as e.g. under US law).
In conclusion, where the applicants of the first application and the later European application are not identical, it has to be proven that the right of priority derived from the first application and claimed for the later European application was indeed transferred, before the filing date of the later European application, by the applicant of the first application to its successor in title, in accordance with specific formal requirements.
The appellant-Company 2 submitted a number of lines of arguments.
First, the appellant-Company 2 relied on the lex originis, i.e. US law, and submitted exhibit E5 as evidence that the transfer of the right of priority derived from US provisional application P had been concluded after the filing on 27 July 2007 of European patent application D2 but that the parties had defined the effective date of the transfer as 24 July 2007 by way of a so-called nunc pro tunc assignment (i.e. a contract concerning the transfer of a right, which contract is concluded later in time than the contractually stipulated effective date of the transfer).
In the board’s judgment, however, even if a retroactive transfer such as the nunc pro tunc assignment under US law invoked by the appellant-Company 2 was allowable under US law, it would not be acceptable under EPC provisions, because any natural or legal person can only then be considered a “successor in title” for the right of priority within the meaning of EPC provisions if it obtained that right from its previous owner by a transfer agreement concluded before the filing of the later European patent application, as also confirmed by the established jurisprudence of the Boards of Appeal and several decisions of national courts of the EPC Contracting states.
Given that the right of priority confers on its owner a benefit of an exceptional kind, it is of the utmost importance for third parties to have certainty as early as possible so as to be able to determine the patent application’s effective filing date and the relevant prior art, with its crucial effect on patentability. To allow a retroactive assignment of the right of priority would put individual parties in a position to change, at will and for the past, the effective date at which a substantive right arises. This, however, would not be in the public’s interest.
Even if US law somehow allows for a retroactive transfer, the board emphasised that this does not necessarily mean that the same is true for the EPC provisions: a provision of national law which is contrary to the EPC cannot be acknowledged by the EPO.
Also, the appellant-Company 2 submitted a second line of arguments based on an implicit transfer by virtue of a general policy under German law.
The appellant-Company 2 submitted that a general policy had been established between Company 1 and Company 2 and had been followed by both parties. By executing this policy the right of priority for the patent in suit was transferred to the appellant-Company 2. As means of evidence the appellant-Company 2 filed a number of affidavits (the content of which was contested by the respondent) signed by chairmen of Companies 1 and 2, a general counsel and a patent engineer of Company 1 almost five years after the filing date of European patent application D2, as well as a number of exhibits relating to emails and communications sent by Taiwanese and US representatives of Company 1 to employees of the same Company 1 and emails and communications sent by Taiwanese representative of Company 1 and the European representative of the appellant-Company 2 to employees of Companies 1 and 2.
As regards the applicable rules for assessing the evidence adduced, the board concluded the following: the burden of proving a valid transfer of the right of priority lies with the patent proprietor (appellant-Company 2) since it is the one claiming that right. This rule is all the more applicable taking into account that the patent proprietor (appellant-Company 2) alone has access to the relevant evidence when it asserts a concluded transfer of rights. Given that the appellant-Company 2 submitted no other – in particular no contemporaneous documentary – evidence, the board accepted the later-executed affidavits filed as admissible means of evidence. As to the standard of proof to be applied, the board held that the circumstances of the case required a proof “beyond reasonable doubt” (rather than a proof based on “balance of probabilities”). This is because practically all the evidence regarding the general policy lies within the knowledge and power of only one party to these inter-partes proceedings, i.e. the patent proprietor (appellant-Company 2) here, whereas the other party (respondent) was not in a position to present any counter-evidence.
As regards this second line of argument, the appellant-Company 2 relied on the lex loci protectionis, here the law of Germany as one of the Contracting States to the EPC. The board first accepted that German law allows for an implicit transfer of the right of priority, and that thus no transfer in writing is necessary. Yet, even assuming that German law was the applicable national law as regards the formal requirements for the transfer of the right of priority, and that thus no transfer in writing was necessary, the board nonetheless held that the appellant-Company 2 has not proven beyond reasonable doubt that it was the valid successor in title under the EPC.
In fact, the board was not convinced that the general policy covered the transfer of the right of priority for applications, as application P, which were already pending at the date when the general policy entered into force.
Also, the board was not convinced that the filing policy had always been complied with, since it was apparent to the board that it was not necessarily followed by the employees of both Companies 1 and 2 in every case.
Moreover, the board held that it was not clear whether the transfer from Company 1 to the appellant-Company 2 of the right to apply for a patent based on those applications did in fact include the transfer of the right to claim priority from them. Given that the right to apply for a patent based on an application and the right to claim priority from that application are independent and thus separable rights, the mere transfer of a pending application from one party to another does not necessarily mean that the associated right of priority is transferred between those parties too.
In particular, the board found that the mere fact that patent attorneys receive instructions from companies to file patent applications does not automatically demonstrate that the right to claim priority from a first application was already validly transferred between the parties before the filing date of the later application. Similarly, the mere ticking of the box in EPO Filing Form for the purpose of a declaration of priority with respect to application P at the same time as (rather than before) the filing of application D2 does not in itself constitute proof of a valid transfer of the right of priority. Rather, the filing of the declaration of priority in respect of a European patent application is an entirely formal requirement with the aim to duly informing the EPO and the public that priority had been claimed for the purpose of prosecuting the application in terms of search and examination. This, however, may not provide any guarantee regarding the validity of the claimed priority.
Moreover, the appellant-Company 2 submitted a third line of arguments based on a “direct transfer” of the rights associated with a US non-provisional application D1 from the inventor to the appellant-Company 2 on 27 July 2007 under US law, as evidenced by two inventor’s transfer declarations.
The board held that the mere fact that those rights (“entire right, title, and interest”) relating to a subsequently and independently filed application such as D1, which claimed priority from application P, were “directly” transferred to the appellant-Company 2 cannot establish that this necessarily included, for the European patent application D2, the transfer of the right to claim priority from application P.
Finally, the appellant-Company 2 submitted a fourth line of arguments based on an implicit transfer by virtue of a general policy under Taiwanese law.
In particular, the appellant-Company 2 submitted this fourth line of argument, along with related exhibits, for the very first time in its response to the respondent’s letter of reply, i.e. long after filing its statement setting out the grounds of appeal.
The board recalled that the Rules of Procedure of the Boards of Appeal establishes that a board’s discretion in admitting any amendment to a party’s case (including late-filed arguments) “shall be exercised in view of inter alia the complexity of the new subject-matter submitted, the current state of the proceedings and the need for procedural economy”. The board pointed out that, taken as a whole, the Rules of Procedure of the Boards of Appeal make it clear that the parties’ complete case must be submitted at the outset to ensure fair proceedings for all concerned and to enable the board to start working on the case on the basis of both parties’ complete submissions. Hence, the board held that this new line of argument could and should have been presented with the statement setting out the grounds of appeal, given that the applicability of Taiwanese law was already discussed in the opposition proceedings.
As to the substance and prima facie relevance of this fourth line of argument, the appellant-Company 2 relied on the lex domicilii, i.e. Taiwanese law in this case.
The board held that, even if Taiwanese law were to be accepted as the law governing the assessment of the general policy and the formal requirements for a valid transfer of the right of priority, the outcome of such an assessment would not be different from that of the appellant’s second line of argument, as a result of a lack of substantiation regarding the content of the underlying evidence. This is because (a) the general policy failed to cover the transfer of the right of priority for application P or (b) the general policy was not always complied with. Moreover, (c) the general policy did not indicate the transfer of the right of priority for “pending applications” such as application P. As to observation (c), the board held that even assuming that the right of priority and the right to file a later patent application claiming that priority were indeed inseparable rights under Taiwanese law, this could not override the substantive requirement according to which the right of priority relating to a first application can be transferred independently of the right to that first application. Hence, the board found that the fact that a certain patent application (such as application P) 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.
Consequently, the board decided not to admit the fourth line of argument.
In conclusion, the board judged that – irrespective of the issue of the applicable national law with regard to the present transfer of the right of priority – the appellant-Company 2 was not able to sufficiently establish that the right of priority arising from application P was validly transferred to the appellant-Company 2 before the filing of European patent application D2. Thus, the priority claim for European patent application D2 was invalid, and A4 belongs to the prior art thereof causing the related European patent to be revoked due to lack of novelty.
The author of this article deems that the law applicable to the transfer of the right of priority is not the one of the country where priority is then claimed, because the right is constituted by the filing of the first application and must be transferred before being exercised, i.e. before the filing of the subsequent applications claiming the priority of the first application, and the transferor and transferee generally have no relationship with the country where priority will be claimed. In addition, it would be impractical to sign a priority right transfer agreement for each country where the transferee will have the right to exercise the priority right that meets both formal and substantive requirements of each single country concerned.
Given the lack of relationship of the right of priority with a specific territory, it is our view that the law applicable to the validity of a transfer of the right of priority can be identified in the same way as provided for by the EU Regulation Regulation 593/2008 of 17 June 2008 (Rome I) concerning the law applicable to contractual obligations. In other words, the transfer of the right of priority should be governed by the law chosen by the parties or, in the absence of choice, by the law of the country of residence of the applicant for the first application, i.e. the transferor of the right of priority.
However, in view of the lack of certainty about the law applicable to a transfer of the right of priority, some practical guidance is necessary.
The author of this article deems that the safest procedure is to transfer the right of priority through a written agreement expressly mentioning the right of claiming priority of the first application (and possibly the countries for which it is transferred), signed by the transferor(s) and the transferee(s) before the filing date of any subsequent application claiming priority from the first application, and expressly indicating the law applicable to the transfer agreement.
Andrea Scilletta, IP attorney – see Full decision