Birss J in Accord v Research Corporation Technologies attempts to cut the red tape on the right to claim priority

The AmeriKat reaching for an earlier priority date

Oh, priority.  You very important, but often (very) dull beauty.  For patent litigators, we (and our experts) step back in time to the priority date - often the filing date of the application - to assess validity.  However, applicants can claim an earlier priority date than the date of filing.  This is called the "right of priority".  To do so, certain conditions have to be satisfied, but if you meet them you can claim an earlier priority date, with the benefit that you kick out a bunch of often unhelpful later dated prior art. So if you can maintain priority - great - but if you lose it - hold on tight.  The Patents Court has been wrestling with priority in judgments, seemingly more frequently lately (although, it may be that we are just paying more attention).  Tristan Sherliker (Bird & Bird) reports on a recent decision of Mr Justice Birss in Accord Healthcare Ltd v Research Corporation Technologies Inc [2017] EWHC 2711 on the issue.  Over to Tristan:

"Despite the formal processes behind it, IP is a pretty forgiving area of law. The English Chancery courts have existed for centuries specifically to avoid the bureaucracy and inequity found in other parts of the judicial system and, true to form today, they are not known for letting red tape get in the way of a good monopoly right. So what then of the forgotten child of patent law, the right to claim priority? A mere formality, it risks undermining the validity of an entire patent or patent family. So can we cut the red tape and make it good in equity? Finally we have an answer.

The problem

The position following Edwards v Cook [2009] FSR 27 is this: When an applicant claims priority from a patent filed by a third party they must, at the time of their patent filing, own the substantive right to make that priority claim. The red tape comes in partly because nobody except patent lawyers cares about this right, but significantly also because there’s no takesy backsies: you can’t make good on it afterwards by subsequently acquiring the rights. Either you have the substantive right at the relevant date, or you’ve lost the priority claim.

Since inventors rarely sit silently for a year after their initial filing, loss of priority claim normally brings in a wealth of new prior art leading to the patent’s invalidity. This bites most often (but not always) when an employer is claiming rights from the invention of their employee, where the employee was the original applicant. It is especially common where the priority document is a patent filing (or provisional filing) in the USA, where the practice was a baited trap for priority applicants: it used to be that only the inventors themselves could apply for patents.

It’s a quick fix to clear the problem:  it is now well understood by those who care about it that a short assignment document recording a transfer of rights is a good plan, complying with any additional national laws that apply.  Unfortunately, though, patent law is retrospective and this whole issue wasn’t really on anyone’s radar until 2010 when Edwards v Cook was confirmed on appeal. I also understand that US practice continued baiting the same trap until 2012. So bearing in mind the duration of patent protection, the issue is likely to keep popping up for another decade or more before we clear the backlog and may still continue in future.

In the balance between red tape and equity, who will win out?

Cliffhanger: Gilead

The Court of Appeal left us a cliffhanger on this point last year in Idenix v Gilead [2016] EWCA Civ 1089 (see IPKat post here) where it was alleged that a patent was invalid over its own priority document, for anticipation. The reason? That’s right – it was argued that there was a mistake when assigning the substantive priority right.

It was discussed obiter whether the assignment had to be made good in formal law, or whether a simple equitable transfer could be implied to cure the red tape. This was not immediately clear because the point arises from the Paris Convention, which may or may not permit of equity. Answering the points argued, Kitchin LJ (who sat at first instance in Edwards v Cook) gave a “provisional view” that the equity was good enough; and that the Paris Convention leaves the mechanism for transfer of title to the relevant national law. However, he stopped short of making any finding of substance on this, saying:

“nevertheless, it emerged during argument that there may be other materials and decisions which bear on this issue and to which our attention has not been drawn. Accordingly… it seems to me that it is better left to be decided in another case.”

After that cliffhanger, the next instalment is now here, and the questions can be resolved.

The resolution?

For the patent in suit in Accord Healthcare Ltd v Research Corporation Technologies Inc , there was a valid assignment of the relevant rights in 1997, the month before the claim to priority was made. On its face therefore, the rights were assigned.

Normally the right to claim priority analysis would stop there, but an interesting argument was run by the claimant, Accord. They said that the document was limited to an assignment of the bare legal right; and that the equitable right to the invention was owned by another entity – in this case, the University of Houston. The “substantive” right, Accord said, was the equitable right and not the mere legal title. The patent was therefore invalid over its own priority document, which of course disclosed the same invention.

Breaking down not one but two formalistic barriers, Birrs J both agreed and disagreed with Accord. He held that the term “substantive title” in the case law did indeed refer to the division between legal and equitable title, saying:

“When the cases refer to the applicant holding the substantive right and title to the invention, they are referring to this legal/equitable distinction.  

“In my judgment Accord is right in law that following from those principles, a person who at the relevant time and under the relevant applicable law, acquired only the bare legal title to an invention and not the equitable title, when the equitable title is held by another, does not then hold the substantive right and title to the claim to priority.” 

However, on the facts he found that the problem had been overcome: under the US laws governing the rights of a bona fide purchaser for value (35 USC §261) and taking into account the circumstances at the time, on those facts the title had passed and the priority claim was still valid.

Leaving it open for a sequel

True to type, the (Chancery) judge found a way to make things right and avoid the red tape. He was however unsatisfied with the way of things, and said as much, giving two suggestions as to how the higher courts might address the matter:

1. Institute a sui generis law for priority rights in Paris Convention countries equally, regardless of whether those states recognise a legal/equitable distinction. In this proposal, flaws in the title still could not be fixed retrospectively. However, the judge acknowledged that this suggestion does not sit happily with the equitable/legal distinctions made in the later cases following Edwards v Cook. 

2. Alternatively, another suggestion was to apply the same approach and the same applicable law to the priority claim as applies to ownership of the invention and the right to the patent. In a case in which there is some doubt about the claimant’s title to the patent itself, the suggestion is that title has to be perfected by the judgment of the court – for example, ensuring that the legal owner must be joined to the proceedings (see Baxter v NPB [1998] RPC 250). For this suggestion, the judge commented that "[t]he moment the title to the patent matters is judgment. In this case the moment the priority claim matters could be said to be the judgment." It therefore seems that this suggestion may permit the patentee to repair a position after the event if to do so would be equitable, so long as done before judgment.  

The judge offered these proposals as mere suggestions - he was clear that in coming to his decision he applied the law as already settled (albeit with some new explanation of matters not previously explicit). Yet given his dissatisfaction, perhaps things are not quite so settled yet, and we might find more interesting developments if this goes through to an appeal."