We are happy to present to you a guest post by Sejal Agarwal and Paazal Arora, students of the ILS Law College, Pune. They take notice of the increasingly common practice in patent filing of not including a Proof of Right; and examine the common defence of most institutional applicants, that pre-existing Employment Contracts sufficiently provide this Proof of Right. They argue that this defence should not hold up because submission of Form 1/Assignment Deed is compulsory to safeguard the interests of inventors and that the Patent Office should undertake a stricter scrutiny. (Long post follows)
What constitutes a valid proof of right for filing patent applications in India?
Sejal Agarwal and Paazal Arora
Given a conjoint reading of Section 6 and Section 7(2) of The Patent Act, 1970 along with Rule 10 of the Patent Rules, 2003, it is imperative to submit a ‘Proof of Right’ when an application for a patent is made by virtue of an assignment of the right to apply. Most of these patents are assigned by the inventors to the companies who are their employers. A proof of right is required to be submitted to show that there has been a valid assignment in favour of the assignee. The Manual issued by the Patent Office in 2011 in its Rule 03.01 specifies that such a ‘Proof of Right’ has to be furnished by way of either Form 1 or an Assignment Deed. In circumstances where the signatures of the inventors cannot be obtained on the Form 1 or Assignment Deed, such companies submit employment agreements as ‘proof of right.’ Through this post, the authors analyse whether it is compulsory to submit a Form 1/Assignment Deed or are surrounding circumstances taken into consideration while establishing a valid proof of right.
Most multinational companies include a clause in their contract of employment stating that “All IP generated by the employee in the course of his employment shall belong to the Employer.” There is a possibility that once the issue of non-submission of a valid ‘proof of right’ comes to the court, these companies may try to enforce such clauses to show a valid assignment in the absence of signatures, especially when such inventors are untraceable or dead. In such an eventuality, should the courts consider such clauses to act as a valid proof of right?
There have been several allegations in the recent past that most patent applicants do not follow the practice of filing the ‘proof of right’ in case of assignment of patents, and generally no objections are raised in this regard by the Patent Office. The Sugen case, covered on the blog, discussed the issue of ‘proof of right’ under section 7(2) of The Patents Act, 1970. The Form 1, filed by Sugen, for its Sunitinib patent, is available here and as you can see, the Form 1 does not bear the signature of a single inventor. It has the signature of only the patent agent involved in the process. The filing of a patent application by a multinational pharmaceutical company without even establishing its title to the invention generated quite the debate at the time. Many arguments were advanced and the carelessness of the Patent Office was also not ruled out as a possibility.
Though this ground of ‘proof of right’ was not raised in the revocation proceedings and the patent was revoked on other grounds, this analysis is relevant as in the absence of a valid assignment the invention is still to be credited to the true and first inventor and not the company applying for the patent. It is a well-established principle in the English Courts that the fact that an invention made by the employee should belong to the employer depends on the contractual relations, express or implied, between the employer and the employee. The Ayyangar Committee Report which gives us a well-articulated insight into the regulatory mind-set with respect to patent policy in the 1970s only states that the consent of the ‘true and first inventor’ is required and is sufficient as proof of assignment under Section 7(2) of the Act. There is no mention of how such consent needs to be obtained, i.e. by way of mandatory submission of Form 1 or Assignment Deed or Employment Contract. Though the U.S. and English Laws also aim to safeguard the interests of inventors, they do not have such lengthy procedures. Even in the U.S. the signature of the employee is a mere formality to remind the employee of his obligation under the Employment Contract. If the employee refuses to sign or is not traceable then one can easily proceed in the absence of his signature by filing a petition under 37 CFR § 1.47(a). In light of these, the provisions of the Indian Act give a wide meaning to ‘proof of right.’ Since the Manual issued by the IPO interprets ‘proof of right’ under S. 7(2) to be filed mandatorily either by way of Form 1 or an Assignment Deed, has it overstepped the Act and tried to constrict its provisions? It is a point to consider that the Manual, an executive document may have gone the extra mile to make the patent law of the country stricter and more pro-inventors. At a time when big multinational companies seem to be trying to unjustly benefit and exploit individual inventors by imposing upon them such terms, which may go to the extent of exempting the company from all liability under the contract, then, in such a scenario should such Standard form of Contracts act as a valid consent of the ‘first and true inventor’? Such forms of contracts are known to be of a nature where the employees have an unequal bargaining power with the employers. It is necessary in such circumstances that the interest of the inventors must be protected and that can only be done by virtue of a Form 1 or an express stipulation by way of an Assignment Deed which takes the consent of inventors for each individual invention. This has been recognised and provided for in the Manual.
The Patent Office therefore, should be stricter with regards to acceptance of Assignment Applications, as later on at any point of time, a patent application can be challenged on ground of ‘wrongful obtaining of patent’ by way of revocation proceedings under Section 64(1)(c) of the Act. The fact however remains that since the very objective of the Patents Act is to safeguard the interest of the ‘true and first inventor,’ a patent which grants a monopoly right to the inventor and generates large amounts of revenue, needs extra care and caution to be exercised with regards to its ownership. So it’s time that the Patent Office stops sleeping over its responsibilities and acts in accordance with the law so that the interest of the inventors is not prejudiced and such inventors are encouraged to disclose their inventions without fear.
 Anemostat (Scotland) v. Michaelis, (1957) RPC 167; Triplex Safety Glass Co. Ltd. v. Scorah, Vol. LV RPC Page 21; Patchett v. Sterling Engineering Co. Ltd., Vol. LXXII, RPC, Page 50; Section 7(2)(b) of UK Patent Act, 1977.