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Resolving the conflicting opinions of different Controllers on the acceptance of Employer-Employee (EE) Agreement as a valid 'proof of right' to file a patent application, the Delhi High Court quipped that procedural laws are intended to subserve and not to subvert the cause of justice. The Court stated that procedural laws are instruments that facilitate rather than obstruct adjudication. Allowing the appeal in Nippon Steel Corporation vs The Controller Of Patents C.A.(COMM.IPD-PAT) 10/2025, the Court set aside the refusal order of the Controller based on the sole reason that an employment agreement would not serve as a valid proof of such a right to file a patent application in India.
Facts of the Case
Amongst many other patent applications, Nippon Steel Corporation filed a patent application for a "High-strength steel sheet and its manufacturing method". Four inventors were named in the application, all of whom were employees of Nippon Steel. During the prosecution, one of the inventors, Kohichi Sano, passed away. The Patent Office raised multiple objections in FER, including that proof of right had not been established in respect of the inventor Kohichi Sano. Form-1 was signed by the remaining inventors with declarations and its internal "Basic Regulations regarding Intellectual Property", which provides that intellectual property created by employees vests in the company.
The Patent Office rejected the application on the ground that Nippon Steel had failed to establish "proof of right" under Section 7(2) of the Act with respect to the inventor, Mr. Sano. It was further stated that the applicant failed to satisfy the requirements under Sections 6(1)(b) and 6(1)(c) of the Act. Post the rejection, Nippon preferred an appeal against the impugned order before the Delhi High Court.
Case of the Appellant
According to the Appellant even after filing an Affidavit along with the Employer-Employee Agreement dated July 1, 2021 ("EE Agreement") between the applicant and Mr. Sano to demonstrate that, as per Mr. Sano's contractual obligations, the Intellectual Property Rights ("IPR") arising from his employment would vest in the applicant, the Controller in this case refused the application. The appellant contended that this agreement showed that rights in inventions developed during employment stood assigned to the company.
The appellant submitted that the respondent had erroneously stated in the impugned order that an employment contract cannot be considered as valid proof of right. The appellant argued that the Patent Office had accepted similar declarations and employment agreements in several other patent applications filed by the company involving the same inventors. According to the appellant, since they met the requirements raised by the respondent and complied with Section 7(2) of the Act, the impugned order was liable to be set aside, and the appeal should be allowed.
Reply of the Respondent Controller
The respondent Controller maintained that the Patent Act does not provide for any provision to substantiate the validity of an EE Agreement. Without any specific IPR transfer clause for a particular invention, it cannot be considered valid proof of right under Section 7(2) of the Act, especially in the case of a deceased inventor. The respondent contended that in the absence of a signed assignment or a clear contractual stipulation for the transfer of the subject patent, the employer cannot assert ownership over the IPR related to these inventions. The respondent argued that the EE Agreement, without the explicit IPR transfer clause, could not be considered as the appellant's right to file the subject application under Section 7(2) of the Act. According to the respondent, since the appellant failed to satisfy the objections raised under Sections 6(1)(b), 6(1)(c) and 7(2) of the Act, the subject application was correctly rejected.
Court's Analysis and Findings
The main question before the Court was whether the EE Agreement and Declaration would be sufficient to establish 'proof of the right' under Section 7 of the Act. According to the Court, the appellant had filed the subject application by way of assignment of right and must furnish the 'proof of the right' to file the subject application. The Court looked into provisions under Section 6 and observed that if the assignee files the application, Section 7(2) of the Act requires the applicant to provide 'proof of the right' to make the application within the prescribed period.
The Court ruled that Section 6(1)(b) of the Act does not bar the assignee from filing an Employment Agreement entered into between the Employer (assignee) and Employee (inventor) to comply with the requirement of 'proof of the right' under Section 7(2) of the Act. The Court also examined the prevailing practice of the Patent Office in similar patent applications filed by Nippon and found that the respondent's reason for refusal of patent application for want of proof of right goes against the established practices being followed by the respondent, wherein employment contracts are considered as valid evidence of proof of right where providing a fresh assignment deed/executed application Form 1 is not feasible due to the particular facts and circumstances of the case.
Citing the ruling of the Supreme Court in Kailash vs Nanhku & Ors. [(2005) 4 SCC 480], wherein it was held that:
"All the rules of procedure are the handmaid of justice. The language employed by the draftsman of processual law may be liberal or stringent, but the fact remains that the object of prescribing procedure is to advance the cause of justice. In an adversarial system, no party should ordinarily be denied the opportunity of participating in the process of justice dispensation. Unless compelled by express and specific language of the Statute, the provisions of the CPC or any other procedural enactment ought not to be construed in a manner which would leave the court helpless to meet extraordinary situations in the ends of justice...."
The High Court ruled that 'when construed harmoniously with the accompanying declarations, the EE Agreement sufficiently establishes and addresses the ownership of IPR vested thereunder'. The Court observed that the EE Agreement bore the duly executed signature of the deceased inventor, Mr. Sano and had been further attested by a guarantor, thereby lending additional legal sanctity to the document.
Further, the acceptance of appellant's six different patent applications having the same four inventors, which were also supplemented with the same declaration and EE Agreement, showed that the respondent had applied the correct procedure in other identical applications. The Court, therefore, observed that the reasons provided in the impugned order were not sustainable and the order was liable to be set aside in the peculiar facts and circumstances of the case.
Decision of the Court
The Delhi High Court allowed the appeal and set aside the impugned order. The Court directed the Respondent to examine the subject application and pass appropriate directions for the grant of the subject patent in accordance with the law.
Concluding Remarks
This case highlights procedural variances within the patent office during patent application assessment. This was evident from the fact that, in six of the similarly placed applications of the appellant, the respondent considered employment contracts valid evidence of the appellant's right and allowed the patent. This means that patent office procedure should be applied liberally to meet the ends of justice. The Court's ruling reaffirms that the object of prescribing the procedure should be to advance the cause of justice, and no party should ordinarily be denied the opportunity of participating in the process of justice dispensation. This ruling will now set to rest the conflicting opinion surrounding the requirement of proof of right under Section 7(2), where providing a fresh assignment deed is not feasible.
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