In the judicial enforcement of patents claiming priority of a previous application, it is often in dispute whether the priority has been properly claimed. The question arises if the applicant of the priority application and the applicant of the subsequent application are not same. The answer to this question may be of extraordinary importance. For instance, in the case of US priorities, the first filer and the second filer are often not identical. The reason for this can be found in US law from the time prior to the so-called "America Invents Act." US patent applications could only be filed by the inventor(s) themselves, even if a third party, such as the employer, was entitled to the rights to the invention.
I. General Aspects of the Priority Right
The transfer of the priority right generally presupposes that it occurs within the priority year. The date to which a patent application refers for determining the state of the art could be set back by one year if it is preceded by a first application from which a priority right can be duly deduced. The protection of the applicant in terms of priority is one of the most important mechanisms under the Paris Convention for the Protection of Industrial Property. For European patent applications, this mechanism is set out in Articles 87 et seq. of the EPC. The priority is of great benefit for the applicant. It protects him or her from any harmful prior art made available to the public between the filing date of the priority application and the subsequent European application.
However, the priority right must be actively claimed by the applicant under Article 88(1) EPC. The effects of the priority right will not materialize without declaring to the patent office that the priority of a previous application is claimed. The ineffectiveness of the priority is often discovered when the patent is enforced, i.e. at a time when a correction of the defect is no longer possible. This question was raised in a recent decision of the Federal Court of Justice of 4 September 2018 (X ZR 14/17 "Drahtloses Kommunikationsrecht").
According to a prevailing European view, the priority right emerges from the act of filing the first application. Consequently, the filer of the first application acquires the priority right. This does not necessarily coincide with the right to the invention. If the inventor and the applicant of the first application are identical, the priority right would not follow from the inventor's legal position; rather, it emerges through the inventor’s acting as the first applicant. The right to the invention and the priority right are thus independent rights.
Article 87 EPC assumes that the priority right is transferable by legal transaction. At least under German law, the holder of the first application and the subsequent applicant entitled to the priority do not necessarily have to be the same person. The priority right can thus be transferred to third parties as an isolated asset without any change occurring in the ownership of the first filing. To demonstrate the distinction between priority right and inventor's right, commenters in the literature often refer to the fiduciary relationship: If the applicant of the first application is a trustee, he is entitled to the priority right due to the act of filing the first application. On the other hand, the trustor who is materially entitled to the subject-matter of the application does not acquire that right.
However, in the absence of an explicit provision in an agreement concerning the transfer of the rights to the invention, one can in principle assume that the right to claim the priority has tacitly been transferred together with the rights to the invention. The latter, however, is only one possible interpretation of an agreement in the context of special circumstances. The interpretation could well also result in the priority right being transferred separately from the right to the invention. However, the substantive requirements to be met by the transfer or transferability of the priority right may vary depending on the applicable law.
II. Applicable National Law
The first question that arises in transnational cases is under which law the transfer of the priority right is to be addressed. The answer to that question is controversial so far. A narrow view required the written form of Art. 72 EPC for the transfer of the priority right. This was decided in T62/05. Today, the view expressed in T62/05 appears to be outdated. A more recent decision by the Board of Appeal of the EPO no longer intends to uphold the proof requirements of Art. 72 EPC. But, the reference for the applicable law remains disputed. In fact, there are three possibilities:
- the law of the subsequent application, i.e. the application of the law of the state where the subsequent application is filed, or
- the law of the state where the first/priority application was filed, or
- the law applicable to the legal relationship between the assignee and the assignor of the priority right, i.e. the law of the contract.
A reference to the law of the state where the subsequent application has been filed seems to be an inappropriate approach. In fact, at the time of filing of the first application, in most cases the countries for which a subsequent filing is to be made have not yet been determined. The recourse to the law of the state of the subsequent filing would lead to legal uncertainty. The law applicable to an existing right could only be established retrospectively, depending on the country in which the subsequent application is made.
In T205/14, the Board of Appeal of the EPO argued that the transfer contract should represent the constituting reference for determining the applicable law. According to the Board of Appeal, the reference to the law of the contract shall serve as reference because the parties are familiar with the laws of their legal relationship. This argument is based on practical considerations. It must thus not necessarily be decisive.
The approach of the Board of Appeal in T205/14 seems, at least at a first glance, to be inconsistent with the German case-law. In the “Fahrzeugscheibe” decision, the Federal Court of Justice takes the view that the laws of the state in which the first filing was made shall be used as the point of reference. In the "Drahtloses Kommunikationsrecht" decision of 4 September 2018 (X ZR 14/17), that approach is not explicitly abandoned. Nevertheless, the Court relativizes its previous view well to the effect that, although the laws of the state of the first application shall apply to the "transferability and the applicable formal and other provisions on effectiveness of the transition", the transaction itself must however be assessed in accordance with the respective laws of the contract, including the employment statute in case of an employer-employee relationships. Thus, the case-law of the Federal Court of Justice considerably approximates the case-law of the EPO.
The Federal Court of Justice's “differentiating” approach, which refers to the laws of the state of the first application as well as to the laws of the contract, as set out in the "Drahtloses Kommunikationsrecht" decision, is quite understandable. In fact, situations are conceivable in which recourse to the law of the state of first application makes sense. In France, for example, the priority right cannot be transferred independently of a domestic first filing. This special situation cannot be ignored in the analysis, while the legal relationship between the assignee and the assignor of the priority right is governed by the laws of the contract. In most cases, German law will not apply to the priority right and its transfer. If a US application serves as priority for a subsequent application, US law will apply in most cases. US law has then to be applied by German courts. While an employment agreement falling under US law may often be interpreted as meaning that the employee must assign all rights to his employer, this does not necessarily mean that the assignment automatically takes place. In practice, oftentimes such agreements are unclear and only relate to the US situation. This opens the door for challenging the priority right.
III. Temporal Aspect and Content of the Transfer
The effective exercise of the propriety right presupposes that the transfer of the priority right has taken place within the priority year. The transfer may only occur from the date when the priority right emerges, i.e. the date of filing of the first application. Before this date, there is no right that could be transferred. On the other hand, the priority right expires irretrievably at the end of the priority year. It will then no longer exist as a right and thus can no longer be transferred. An entitlement that is missing when the priority is claimed can therefore not be "restored" by agreement(s) after the priority year has expired.
According to the EPC rules, the declaration of priority can also be made after this date, i.e. within 16 months of the (earliest) first filing. However, this time limit concerns the formal procedure of claiming the priority right. It does not correlate with the substantive effectiveness of the transfer of the priority right. The priority year is the period during which the priority right must have been transferred. The transfer of the priority right could also take place after the filing date of the subsequent application, but only on condition that the transfer is still effectuated in the current priority year. It should be noted, however, that a dominant view requires that the transfer must necessarily be made before the subsequent application is on file. Even though a transfer of the priority right, which was completed during the priority year, seems to be sufficient to cure a missing entitlement when filing the subsequent application, it is recommendable to have completed an assignment in writing which needs to be signed and dated before the filing date of the subsequent application. In a single case the Federal Patent Court assumed that the transfer of the priority right was still possible even after the priority year, namely as long as the declaration of priority can still be made. However, this view is contrary to the clear wording of Article 87 EPC.
The effectiveness of the transfer of the priority right depends on the applicable law. Insofar as German law applies to the underlying legal relationship in accordance with the above criteria, the priority right is freely transferable, even without the application establishing the priority. The provisions of §§ 398, 413 of the German Civil Code can be applied to such transfer. The transfer must have taken place within the priority year. This is not questioned in literature and jurisprudence, except in the above-mentioned single decision of the Federal Patent Court.
The priority right must be proven by the patent proprietor if the priority becomes an issue in the course of opposition or invalidation proceedings, for instance if relevant prior art is found in the priority interval. According to general principles of procedural law, this obligation must be imposed on the patent proprietor. It is true that the priority right can also be transferred in an implicit manner. However, it is advisable to document the transfer of the priority right in a written document.
Also, in its recent decision, the Federal Court of Justice did not question that a transfer contract must be proven by the patentee. This case concerned the transfer of a priority right from an employee to the employer with subsequent transfer to a third party. The requirements for proving the conclusion of the transfer agreements seem to have been set low in favor of the patent proprietor in the case discussed there. The court found that the mere reference by the employee to a first US application including the overall circumstances and interests between the parties could be sufficient for an offer (declaration of intent) to transfer the priority right. As the mere reference to a first US application is nothing other than a report of knowledge, the overall circumstances and interests of the parties, including the special situation following the German employee-invention act were decisive for the court’s conclusion.
Although the facts on which this decision is based have turned out well for the patent proprietor, one should never neglect the contractual side of the transfer to avoid the creation of an irreparable defect in the application procedure which cannot be cured anymore in subsequent infringement proceedings.