My brain hurts. Just tell me what this case means…

Doing his usual Saturday morning trawl through recent cases on BAILII, IP Draughts today stumbled across the case of Accord Healthcare Ltd v Research Corporation Technologies, Inc [2017] EWHC 2711 (Ch) (07 November 2017).

In the middle of the case report (starting at paragraph 53), Birss J goes into some detail on the subject of rights of priority and assignments of inventions.  Oh no, not this subject again! Why? Because, in the words of the judge:

Accord took a wide range of points prior to the trial but by the opening its case came down to a single point.  Accord contends that the assignment of 4th February 1997 only took effect as an assignment of the bare legal title to the invention and priority claim.  What it did not do was assign the equitable or beneficial title to that property to RCT.  That equitable or beneficial title was with the University of Houston (“Houston”).  It may (or may not) have ended up with RCT later but that does not matter.  Accord submits that as a matter of law, what is required for the priority claim to be accepted in this court at this trial is that the substantive right to priority, also known as the equitable or beneficial title to that right, was with the correct party on the correct day.  The correct party was RCT and the correct day was 17th March 1997 when the international application was filed.  Accord contends that this did not happen and so the claim to priority should fail.

In very simple terms the issue that sometimes comes up is this:

  1. You file a patent application (PA), claiming the priority date of an earlier application (EA).
  2. But at the time you make PA, you were not the owner of EA. So how can you claim the priority date?
  3. If you are later party to a back-dated assignment of the EA (known in the US by the Latin name of nunc pro tunc assignments), is this good enough, if you weren’t the owner at the time that PA was made?

The isssue in the Accord case seems to be a variation on this theme, but the same underlying question arises. On the law, Birss J quoted the decision of Kitchen J in the landmark, 2009 case of Edwards v Cook Biotech, where he said:

In my judgment the effect of Article 4 of the Paris Convention and section 5 of the Act 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. 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.

Nunc pro tunc! Squawk!

The Edwards case caused much fluttering in the dovecots of US patent firms, where backdated assignments seem to have been the norm.

Later UK cases qualified the Edwards case, by focusing on the English law distinction between legal ownership and beneficial ownership (a distinction that seems not to exist in the laws of many countries). In Accord, at paragraph 69, Birss J quotes himself in an earlier case (HTC v Gemalto) where he said:

Mr Mellor submitted that this [Arnold J’s reasoning in KCI] showed that as long as an applicant had, at the relevant date, what English law would characterise as a beneficial title to the invention, even if the bare legal title had not been acquired, then the applicant was a successor in title in the relevant sense. I did not understand Mr Tappin to dispute that and I think he was right not to. In my judgment if the relevant person has acquired the entire beneficial interest in the invention at the relevant time then that should be enough to satisfy the law.

Birss J cites various English patent cases to show that this is the current position under English law. This line of thinking is a bit of a fudge, as it may be possible to show beneficial ownership in the absence of a formal assignment document. It only works in countries where the law recognises a distinction between legal and beneficial ownership (a common law concept) such as England and the USA.

In Accord, Birss J heard evidence on US law from a galaxy of stars, including several retired US patent judges and Mr Chisum of Chisum on Patents fame, about beneficial ownership and what was required under US law to transfer it. On the facts, he held that RCP was the beneficial owner of the priority right at the time it made the later patent application. So, Accord failed in their challenge to the assignment.

On the priority right issue, IP Draughts thinks Accord simply affirms the position in Edwards v Cook, as softened by the later cases that allow beneficial ownership of priority right, and gives guidance on what this means in the context of US patent rights.

But this subject seems unnecessarily complex and convoluted. The simple solution is to make sure you obtain an assignment of the priority application (formally, in writing, etc) before you file a later application. IP Draughts would be interested to know whether US patent attorney firms have changed their practice since the Edwards case, so as to get their clients to execute assignments at an early stage, or are still relying on executing them after the event.

 

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