Fordham 27 (Report 14): Priority

The second patent track session of the Fordham IP Conference was focused on the right to claim priority. More specifically, this session explored whether the EPO’s approach to priority claims is fair and right in law. The audience was very engaged with this topic, perhaps also because of its international implications.

Over to guest Kat, Alexander de Leeuw (Brinkhof) for the report on the patent priority session:

“Jennifer Jones (Bird & Bird), who moderated this session, explained that priority claims are treated differently across different patent systems throughout the world based on various policy arguments. This creates obstacles for applicants who seek protection for their invention abroad and sometimes leaves them without a valid priority claim. “If you’d asked me three years ago, I wouldn’t have said it was the most exciting topic, but I would have been wrong.”

Maximilian Haedicke (Albert-Ludwigs-Universität Freiburg) introduced the audience to the subject matter by stating that priority entitlement has “been in heavy discussion recently that involved prominent cases”. He sketched three scenarios in which priority entitlement has been questioned, and used color coding used in his slides to indicate whether priority can be validly claimed at the EPO:

• A, B, and C file a priority application and at the stage of the subsequent application, a fourth person, applicant D, joins in the application. Maximilian called this the “joint applicants” or “Humira” scenario, marked green.

• A, B and C file a priority application and only A and B claim priority in the subsequent application. Maximilian called this the “one applicant left behind” or “CRISPR” scenario, marked red.

• Employee inventors A, B and C file the priority application and the employer D claims priority in the subsequent application, without an express transfer of rights. Maximilian called this the “replacement of inventor by employer” scenario, marked orange.

The first scenario has been accepted by the EPO, stating that it is irrelevant whether additional applicants are listed. The second scenario was recently rejected by the EPO in the CRISPR proceedings, because it said that all applicants of the priority application would have to file the subsequent EP application. The third scenario leaves a lot of room for discussion, for example in cases of an implied agreement or transfer of equitable title.

As illustrated in the slide above, Maximilian questioned “whether this is really a fair balancing of interests or whether, just for formal reasons, valuable patents are not being granted”.

Tobias Bremi (Swiss Federal Patents Court) started his presentation with the remark that “battles on entitlement to priority are causing a lot of trouble and delays at the EPO, and the question is whether there is a way out of this.“ He then addressed whether the EPO was intended to assess the applicant’s entitlement to priority at all and, if so, what the correct interpretation of Art. 87 EPC is. 

As to the first point, Tobias explained that the “EPO is not competent to assess entitlement to priority issues,” referring to striking similarities with questions of entitlement to the patent application itself. “Once the formal requirements for claiming priority have been complied with, there is actually no legal basis for questioning entitlement, there is no legal basis for the EPO to ask for proof, and there is also no legal basis for finding a loss of the priority right.” According to Bremi, and with reference to the Travaux Préparatoires, “the general idea of the EPC was to keep the EPO completely out of entitlement issues as a matter of principle for a number of reasons and to leave that exclusively to the jurisdiction of national courts. It is for national courts to decide on entitlement issues when challenged by an allegedly entitled person.” In summary, “As long as the formalities encoded in the law have been complied with, entitlement is to be presumed by the EPO”.

Furthermore, Tobias expressly pointed out that “it goes against the general principles of property law that priority entitlement issues can be brought up by any third party before the EPO and not just by the one who is allegedly entitled.” This “opens up rather opportunistic and destructive battles on the validity of priority claims,” also referring to the Accord v RCT judgment of Mr Justice Birss. Tobias stressed that we should not simply continue an existing practice of law because we have been always been doing it like that. “We have been in dead-end situations before the EPO with priority issues in the past, with the exhaustion of priority, and with toxic priorities or toxic divisionals.”

As to the second point, the same/all applicant approach expressed by the EPO in T 788/05, Tobias explained that “if the EPO uses that approach, actually they apply the lex protectionis, the law of the country where protection is sought” to the priority applicants. However, “the gist of the Paris Convention is to reduce impediments for international protection.” By forcing applicants to comply with the law of the country of subsequent filing, these principles are in jeopardy. Regarding the CRISPR case, in which appeal is currently pending, Tobias is “still hopeful that they will reconsider in the next instance.”

A lively debate followed, portraying an image of disbelief with many members of the audience that priority can be lost over simple formalities such as who is named on the applications or a faulty transfer of rights. Counter-arguments were made by some of the German attendees.

Rian Kalden (Court of Appeal of The Hague), speaking in her personal capacity, agreed with Tobias that the EPO should not be dealing with issues of priority entitlement. Rian acknowledged that the consequence of losing priority could be the introduction of new prior art, but argued that “there seems to be less justification to be very formalistic about this.” As an example, Rian referred to the situation in which the right to claim priority is not expressly transferred before the subsequent application is filed.  According to Rian, “why would such a formalistic approach be justified if it is clear between, for instance, the employee and the employer that it has always been the intention that the invention would be transferred?” Furthermore, she questioned whether it is “justified that anybody could question the validity of the transfer of priority” or whether this should be limited to the allegedly entitled person “which is also under national law only available to the real owner of the invention.” Rian also pointed out that the EPO “does not have any conflict-of-law rules.” This can lead to uncertainty.

Although Aloys Hüttermann (Michalski Hüttermann & Partner) expressed “sympathy for the concept that if one applicant is the same, then the priority claim is not lost”, he disagreed with Tobias, stating that “it is “When in Rome, do as the Romans do.” So if you want to have a patent in Europe, you should play by the European rules.” Aloys feared that if the priority assessment moves to national courts it will get really complicated. Tobias noted in response that there is no “when in Rome do like the Romans do” – in fact, the Paris Convention intends to allow priority applicants to obtain protection in other countries by following their own rules. Klaus Grabinski (Federal Court of Justice, Karlsruhe) marked Tobias’ approach as “revolutionary” and stated that entitlement to priority only comes up in case of intervening prior art, in which case “it really makes a difference, and to just go on with the opposition makes no sense.”

Lennie Hoffman (Former Second Senior Lord of Appeal in Ordinary) said “I really wanted to add to Rian’s analysis, with which I entirely agree, that if the priority application and the application to the EPO are in respect of the same invention, it follows that somebody is entitled to priority. It seems very strange that a third party who makes no claim to that priority should be able to obtain it.”

Another Dutch judge, Edger Brinkman (District Court of The Hague), agreed that it seems unfair for a party to lose priority over formal issues brought by an unrelated third party. He argued that the standard of proof is also relevant for this discussion, referring to the up to the hilt standard in prior use cases. “I am using this as an argument saying that they should not maybe be as strict when deciding whether there is priority and be more lenient” and grant priority “if there is a good reasoning for granting priority.” Edger also highlighted that this is particularly something that happens a lot for U.S. patents.

As to the issue of faulty transfers, Rian expressed her personal view that “a lot of harsh consequences can already be solved if the EPO would allow retroactive effect agreements. In situations where the first applicant truly had the intention to transfer the priority right to the subsequent applicant, that could then be repaired even later on. I don’t think anybody would have any interest that that should not be possible.“ Joachim Feldges (Allen & Overy) however questioned “why should that exception be made in a system where we have all the formalities you have to live with and to comply with and you can cure the priority retroactively?”

Disbelief was expressed by Annabelle Bennett (Former Judge of the Federal Court of Australia, Sydney), who said that she is “finding this really hard to understand, because it seems to me this is a classic example of form over substance. Surely it is ridiculous that people would lose priority where you’ve got common inventors. […] it seems incomprehensible to me, quite frankly, that people are losing their patent for this sort of strict formality that surely the wits of judges and sensible-minded people — and, Tobias, congratulations — should be able to get over this.”

She was supported by Trevor Cook (WilmerHale) who mentioned “unfortunately the Paris Convention does not have direct effect.” He then echoed Annabelle’s point of “this being a triumph of form over substance.” According to Trevor this is a real problem. “It is a problem that has only really arisen in recent years. It is a problem in satellite litigation which we have to find a solution for in Europe. It actually strikes me that Tobias Bremi’s solution is quite an interesting and attractive way of avoiding that particular problem.”