Recently, in Nippon v. Controller, the Delhi High Court intervened to rein in an unduly rigid view of proof of right adopted by the Patent Office. Explaining the judgement, Dipti examines how the Court dealt with proof of right, employer–employee ownership, and the premature invocation of Section 68, and what these moves mean for patent filing practice in India. Dipti is a penultimate-year student at Gujarat National Law University, Gandhinagar, with a strong interest in technology and intellectual property law.
Nippon v. Controller: DHC Sets the Standard for What Constitutes “Proof of Right”
By Dipti
In Nippon v. Controller, the Delhi High Court set aside the Controller’s order rejecting the patent application, finding fault with its conclusions on proof of right, the assignment agreement, and the employment agreement. While it may be tempting to characterise the decision as one dealing only with formalities associated with patent examination, the case is not merely about paperwork. The judgment is significant because it explains how the Patent Office should apply the formal rules when deciding who has the right to file a patent application.
In brief, the Controller rejected the application, because there was neither any separate assignment document in favor of Nippon nor was there any assignment from the legal representative of the deceased inventor. Setting the Controller’s order aside, the judgement explains: [1] what counts as proof of right under Section 7(2) of the Patents Act (“the Act”), [2] how employer-employee relationships affect patent ownership, [3] how far assignment formalities should go (especially when an inventor has died). In responding to these questions, the High Court shows where the Office went wrong. It particularly objected to the Controller applying the conditions on assignment under Section 68, which are usually applied after a patent is granted, at the filing stage. The Court also objected to the Controller insisting on a fresh assignment deed, instead of assessing proof of right under Section 7(2) based on the overall record and rejecting the employment agreement as proof of right. In this post, I critically look at how the Court dealt with proof of right, employer–employee ownership, and the incorrect application of Section 68, and explain what this means for patent filings in India.
Proof of Right under Section 7(2)
While filing its application for an invention titled “HIGH-STRENGTH STEEL SHEET AND MANUFACTURING METHOD OF HIGH-STRENGTH STEEL SHEET” Nippon did not file a separate assignment deed or an assignment from the legal representative of the deceased inventor, nor did it include the deceased inventor’s signature on Form-1, which led the Controller to reject the application. Interpreting Section 7(2), the Controller held that a proof of right (evidence showing that the applicant owns the right to apply for a patent) could only be shown through a signed assignment, or, where an inventor had died, through an assignment executed by the legal representative along with a death certificate. It also relied on Section 68 of the Act to hold that the assignment should be in writing, properly signed.
Setting the order aside, the Court distinguished between Section 7(2) and Section 68. It explained that while Section 7(2) deals with proof of right to file a prima facie entitlement of the patent, Section 68 prescribes formalities for an assignment of a granted patent; thus, the two operate at different stages and should not be conflated. The Court clarified that Section 7(2) does not demand conclusive proof of title of the kind required after grant under Section 68. By reading Section 7(2) this way, the Court adopted a purposive approach. It did not say documents aren’t important; it said the test at filing is contextual and evidentiary, not a final adjudication of title (interested readers can read Idhika Agarwal’s post on proof of right to know more about it.)
The Court’s reasoning is consistent with prevailing judicial reasoning on proof of right. Instead of looking for a single document, it examined the entire set of documents placed on record, like Form-1 signed by three inventors, the company’s Basic Regulations, and the Employment Agreement that was signed by the deceased inventor. (Interested readers can look at this post by Sejal Agarwal and Paazal Arora on these documents). By accepting these documents together, the Court looked at whether the record as a whole showed a clear and credible basis for the applicant’s right to file (moved away from a rigid, document-focused method).
The Court’s reasoning was explicitly cautionary. It stresses that the documents which are being relied upon are properly signed and genuine. The judgment strikes a balance as it avoids unnecessary rigidity, but it doesn’t accept weak evidence. In this way, the Court protects the dependability of patent records while also stopping the Office from taking an overly strict and narrow approach.
Employer-Employee Relationship
A flaw in the Controller’s reasoning was that they rejected employment contracts as proof of right. By taking the view that the employer-employee relationship has no relevance for patent ownership unless supported by a separate assignment deed, the Controller proceeded on the assumption that inventions do not vest in employers by default. Unlike the Copyright Act, 1957, where Section 17 provides for automatic vesting of copyright in an employer for works made in the course of employment, the Patents Act contains no such provision. As a result, ownership of employee inventions under patent law depends not on statutory presumption, but on contractual arrangements between the parties, a distinction that the Controller failed to adequately engage with. The Controller assumed that because the Patents Act does not automatically give ownership to employers, only a separate assignment deed could prove ownership, without checking whether the employment contract itself already dealt with this issue. The Court rejected this approach, and its reasoning is important, both legally and also in practical, commercial terms.
The Court viewed the employer-employee relationship as a contractual one that can assign rights over an invention, but only if the contract clearly addresses ownership. In this case, the Employment Agreement, including the company’s Basic Regulations, stated that inventions made by employees during their employment would belong to the employer or that the employee was required to assign such inventions. Contrast with the Gharda Chemicals case, where no duty to invent meant the employee retained ownership. The Court made it clear that ownership does not arise simply because someone is an employee; it arises from what the contract actually says about who owns the invention.
At the same time, the Court didn’t say that an employment agreement will always replace the need for an assignment. Instead, it examined the content of the IP clauses (especially Article 8 of the company’s Basic Regulations) to see whether they provided for inventions made by employees to vest in the employer. This helps in avoiding the assumption that all ‘service inventions’ automatically belong to employers. Ownership depends not on the employment relationship alone, but on how clearly and enforceably the contract is about invention-related rights.
For IP planning, the judgment reassures but also cautions employers. It confirms that carefully drafted employment IP clauses can be enough to show ownership at the filing stage. It warns that unclear, unsigned, or inconsistent documents will not meet the required standard.
Assignment and the Misuse of Section 68
This portion of the judgment definitely shows the Court pushing back against the patent office excessively formalising the question of entitlement at the filing stage. By demanding a new assignment under Section 68, the Controller, in a way, turned patent examination into a title verification exercise, while the law does not provide for such a requirement at the examination stage. The Court’s disapproval of this approach indicates an unease with a practice that puts the paperwork first and threatens to close the door to an application for mere technical reasons rather than testing real entitlement. Yet, the decision is not casual. The Court was only ready to put right the Controller’s decision because the employment contract was correctly executed, witnessed, and internally consistent. In fact, the decision highlights an inherent problem in patent examination where Section 68 is often used as an instrument at the wrong stage.
Ownership, Remand, and Judicial Restraint
Even though the Court was satisfied that the documents were enough to show that the claims over the future patents (if any) belonged to Nippon Steel, it intentionally did not decide issues of patentability or give a final decision on entitlement. Instead, it sent the matter back to the Controller. By doing this, the Court made it clear that its role was limited and that it was not meant to replace the Office. So the judgment corrects a procedural mistake without taking over the statutory functions of the patent authorities.
Conclusion
The Nippon Steel judgment addresses an overly rigid approach taken by the Patent Office, particularly regarding post-grant assignment requirements during the filing process. The Court rightly points out the need for a context-sensitive evaluation of Section 7(2) rights rather than a strict one. However, there is still a persistent issue with how patents are examined, as the assessments often remain too formal. The judgment does not fully resolve the confusion created by the Patents Act, which lacks clarity about employee inventions. Thus, the Nippon Steel judgment is more about correcting previous approaches than offering a final ruling.
