NL - Biogen vs. Celltrion: Transfer of priority

Key points

• By way of exception, today's post is about a recent decision of a national court, namely the Court of Appeal The Hague (Judges Prof. Blok, Prof. Schaafsma and Prof. Van Nispen). The issue is whether the European patent in suit validly claims the priority of a US provisional application; in particular, the question is whether the transfer of priority from the inventors (as applicants of the US provisional) to the companies (the applicants of the PCT application resulting in the European patent) is valid. The Court first determines which law is applicable. Thereby the Court provides very detailed reasoning, starting from first principles, in order to find - rather surprisingly - that the matter is governed by the EPC rather than national law.
  
  The Court starts from the observation that the priority right is a right granted by the lex loci protectionis (and not the law of the country of filing the priority application), because the right of priority is part of the rules (of the country which grants the patent) concerning the grant and validity of patents. The lex loci protectionis is the EPC in this case about the validity of a European patent granted on a PCT patent application.
• The court leaves open whether the issue of transfer of priority is a matter of patent law  or a matter of property law because both give -always- the same result. In the former case, the lex loci protectionis applies. In the latter case, the property law aspects of IP rights are governed by the lex rei sitae (according to Dutch conflict-of-law rules), which is the law of the country where protection is requested (lex loci protectionis), i.e. again the EPC. (As a comment, so far the analysis appears similar the one of the German Patent Office in its fundamental decision on priority of 16 December 1905).
• The Court of Appeal then solves the tricky issues that the EPC does not seem to provide for property law rules for priority rights.
• The Court: "In the opinion of the Court of Appeal, the question of who can invoke the right of priority must be answered on the basis of an autonomous interpretation of the EPC instead of an explanation based on national law." (r.4.20)
•  The Court observes that the priority right can be transferred (conveyed) according to Article 87 EPC. The term "successor in title" in Article 87 indicates the assignee of the priority right, not the assignee of the priority-founding application. Moreover, the "successor in title" is not necessarily the same as the person having the right to the patent in the sense of Article 60 EPC, because the existence of the priority right does not require that the priority application has been filed by a person who is entitled to the patent.
• According to the Court, any formal requirements for a transfer of priority right are determined, autonomously, by the EPC (as lex loci protectionis), because the rules about priority are part of the common rules about the grant and validity of European patents and because disputes about priority may also arise in procedures before the EPO.
• Because the text of the EPC does not provide for any formal requirements for the assignment of the priority right, and taking into account the purpose of the right of priority (to facilitate the international filing of patent applications), the Court concludes that there are no formal requirements for the transfer (assignment) of priority rights under the EPC. In particular, there is no requirement of a written assignment document; this is different from what Article 72 EPC prescribes for the assignment of European patent applications. Nevertheless, the rules of evidence of the Court at issue (lex fori) apply for issues concerning the allowed means of evidence and the evaluation of the evidence.
• Having established this framework, the Court applies it to the facts of the case (r. 4.25 ff.), namely the question of interpretation of the purported assignment document (an employment contract of one of the inventors). The Court distinguishes between the conflict-of-law rules concerning the property law matters and concerning the interpretation of the assignment agreement at issue. The latter is a matter of obligations, such that the applicable law is determined (what is now) the Rome I regulation No. 593/2008. The Court finds that the contract is an effective assignment of the priority right.
• Disclosure: my colleague Martin Klok was involved as a patent attorney for the patentee(s).

Additional comments: see my post of 02.09.2019.


Court of Appeal The Hague 30 July 2019 (Biogen vs. Celltrion).
ECLI:NL:GHDHA:2019:1962 

Note: Edited machine translation; [...] :  anonymization by the Court; <...>: additions and edits by me, PJL. Alternative translation here.

<...> priority

4.4. The dispute over the claim to the right of priority focuses on the question whether Biogen can invoke that right on the basis of the priority application P1 <a US provisional application> although not Biogen, but [name 2] and [name 1] <inventors> have filed the priority application.

4.5. In answering that question, a distinction must be made between (a) the question whether and, if so, under what conditions, a person other than the person who submitted the priority application may invoke the right of priority, and (b) how agreements between Biogen on the one hand and [name 2] and [name 1] on the other must be interpreted. This distinction is important, because among other things,  those subjects are governed by different rules for determining the applicable law (conflict rules) and must therefore be answered in the present case on the basis of the law of different legal systems. After this, the court will determine per question (i) which conflict rule applies and which law applies according to that conflict rule, and (ii) how the relevant question under applicable law must be answered.

Question (a) (i): priority right, conflict law, applicable law

4.6. The debate of the parties is placed in the framework of the question of whether the priority right invoked by  EP 304 <the Europen patent in suit> has been transferred to Biogen. The parties thereby both assume that (via the Massachusetts law as chosen in the agreement between [name 1] and Biogen Idec Inc.) federal US law applies to that property law question. In view of the following, this assumption is incorrect in the opinion of the court of appeal.

4.7. First of all, it must be stated that the right of priority is a right granted by the lex loci protectionis. The conditions for granting and revoking patents for a certain country are, after all, determined in accordance with Article 2 (1) of the Paris Convention (hereafter: PC) [footnote 1] by the law of that country, the lex loci protectionis. The right of priority, which relates to the reference date in the assessment of novelty and inventiveness, is part of the rules of the law of that country regarding granting and revocation of patents.    

4.8. In a case wherein a European patent is granted on the basis of an international application, such as EP 304, the lex loci protectionis is the supranational law of the Patent Cooperation Treaty [footnote 2] and the European Patent Convention (hereinafter: EPC) [footnote 3] , wherein the substantive requirements for patentability are exclusively determined by the EPC (Article 27, paragraph 5, Patent Cooperation Treaty). The EPC sets for the granting of a European patent inter alia a requirement that the subject matter of the patent is new and inventive in relation to the state of the art (articles 52-56 EPC) and stipulates that a European patent granted in violation of that condition is declared invalid (Article 138, first paragraph, under a,  EPC). The priority right governed by Articles 87 to 89 of the EPC forms part of those rules. Article 89 of the EPC stipulates that the right of priority has as effect that the filing date of the priority application is used as - in short - the reference date for the assessment of novelty and inventive step.  

4.9. The right of priority is therefore not, as the parties seem to assume, a right conferred by the legal system of the country where the priority application has been filed. After all, that legal system does not determine the conditions for granting and revoking the patent for which the later application <i.e. the priority-claiming patent application> is submitted, including the reference date for assessing the novelty and inventive step of the subject-matter of the later application.

4.10. Having established this, the question arises as to whether, and if so under what conditions, a person other than the person who submitted the priority application can invoke the right of priority.

4.11. It is important here how the priority right must be viewed. It is conceivable that this right should be seen as a patent law issue that concerns the question of who can apply for a patent under what conditions. On the other hand, it is also conceivable that the right of priority should be seen as a property right. In that case, a property law issue is involved, which concerns the question whether that property law is susceptible to transfer and, if it is susceptible to transfer, what requirements are imposed on transfer.

4.12. If the right of priority is seen as a patent law issue, then the lex loci protectionis applies to it. After all, this is a question concerning the protection (grant and validity) of a patent right. In the present case, the lex loci protectionis, as considered above, is the EPC.   

4.13. If the right of priority is seen as a property right, the question arises as to which law applies to its property law aspects. In accordance with a generally accepted international rule, Dutch private international law <conflict of law rules> provides that he property law aspects of a national intellectual property right are governed by the relevant national law. [footnoe 4] That is, in fact, the lex rei sitae. [footnote 5] This coincides with, and therefore amounts to, the applicability of the law of the country for which protection is sought (the lex loci protectionis). Therefore, contrary to what the parties suppose, in the present case, property law issues relating to the right of priority are not governed by federal American law, but by the EPC.    

4.14. The question of who can invoke the right of priority (either as a matter of patent law (first view) or on the basis of assignment (second view)) is therefore governed by the lex loci protectionis in both views. In the present case that is the EPC. 

4.15. The foregoing means that priority-claiming are filed in different countries, it must be determined for each country whether, and under what conditions, priority can be claimed. In many cases this will not lead to different outcomes, because the right of priority has been harmonized worldwide by Article 4 PC, which determines who will benefit from a priority right and under what conditions, and by Article 2, first paragraph, of the TRIPs agreement [footnote 6] which prescribes the treaty countries comply with, among other things, Article 4 PC. 

4.16. The fact that at the time the parties agree that someone else can file the priority-claiming patent applications, it may not yet be certain whether and, if so, in which countries, those priority-claiming patent applications will be filed, does not compel a different interpretation. If the parties wish to have certainty, they will have to find out who can invoke the right of priority in those countries where possibly a priority-claiming patent application will be filed, or they will have to wait until it is decided where the priority-claiming applications will be filed. The practical problems that this may entail cannot set aside the principle enshrined in Article 2 of the PC that a country itself determines the conditions under which it grants and revokes patents for its territory (within the limits set by treaties).

4.17. For the sake of completeness, the Court of Appeal notes that the right of priority cannot be regarded as a "claim" against a "debtor" within the meaning of Article 12 of the <Convention on the Law Applicable to Contractual Obligations 1980>  [footnote 7] and Article 14 of the Rome I Regulation. [footnote 8] These provisions on applicable law in the event of an assignment of claims are neither applicable by analogy. For example, the EPO cannot be compared with the debtor against whom a claim can be made. The right of priority can also be invoked after the patent has been granted, for example in an invalidity procedure; then that appeal is not made against the EPO. In that sense, the right of priority - insofar as it is to be regarded as a property right - is more comparable to an erga omnes right.  
   

Question (a) (ii): content of applicable law / eligibility for priority

4.18. It follows from the foregoing that the question of whether Biogen can invoke the right of priority must be answered on the basis of the EPC since it concerns a priority claim made in the context of the assessment of the validity of a European patent.

4.19. The EPC must be interpreted in light of the criteria set out in Articles 31 to 33 of the Vienna Convention on the Law of Treaties of 23 May 1969 (hereinafter: the Vienna Convention). [footnote 9] Pursuant to Article 31 (1) of that treaty, a treaty must be interpreted in good faith in accordance with the ordinary meaning of the terms of the treaty in their context and in the light of the object and purpose of the treaty. It follows from the third paragraph of that Article that, in addition to the context, account must also be taken of any subsequent use in the application of the treaty which has resulted in agreement between the Contracting Parties on the interpretation of the treaty. This means that the prevailing opinion in the case law and literature of the treaty countries also forms a primary means of interpretation for the interpreting the treaty. 

4.20. In the opinion of the Court of Appeal, the question of who can invoke the right of priority must be answered on the basis of an autonomous interpretation of the EPC rather than an interpretation based on national law. After all, the starting point is that the EPC creates a law, common to the Contracting States for the grant of patents  (Article 1 EPC). As has already been considered above, the right of priority is part of that common law. In the context of an invalidity procedure against a granted European patent, such as the present procedure, the assessment <of patentability> is to be made on the basis of the common rules regarding patentability. The rule of Article 2, paragraph 2, of the EPC that the European patent in each of the Contracting States for which it is granted is subject to the same provisions as a national patent granted by that State does not apply to the extent that the EPC provides otherwise ( Article 2, second paragraph, EPC). The EPC determines otherwise for the grounds for invalidity. Article 138 of the EPC provides that the European patent with effect in a Contracting State can only be declared invalid on the grounds set out in that provision, including the grounds that the subject of the European patent is not patentable under Articles 52 to 57 of the EPC.

4.21. It is clear that the right of priority under Article 87 of the EPC can be transferred to a person other than the person who filed the priority application. Article 87 of the EPC explicitly stipulates that the applicant of the priority application 'or his legal successor' has a right of priority. The same follows from Article 4(A), first paragraph, of the PC. This also states that the applicant for the priority application 'or his successor in title' has a priority right. Partly in view of the fact that, according to the preamble, the EPC is a special agreement within the meaning of Article 19 of the PC, it must be assumed that the Contracting States intended that Article 87 of the EPC should not deviate from Article 4(A)(1) of the PC.

4.22. It must be assumed that the term 'legal successor' refers to the person to whom the right to priority has been transferred, instead of the person to whom the priority application has been transferred. It follows from Article 87(3) of the EPC and Article 4(A)(3) of the PC that if the priority application is duly filed, the right of priority shall apply, regardless of the further fate of the priority application. This underlines the independence of the right of priority. In addition, the priority right provided for by the Paris Convention aims at facilitating the filing of patent applications in international situations. It is incompatible with that objective that the priority right can only be transferred together with the priority application. Such a requirement would prevent several legal successors from submitting one or more priority-claiming patent applications in different countries.

4.23. Finally, it must be assumed that the 'legal successor' within the meaning of Article 87 of the EPC does not necessarily coincide with the person who is entitled to the European patent within the meaning of Article 60 of the EPC. The creation of the priority right does not require that the priority application has been filed by the person who can claim the right to the patent. It is sufficient that a filing date can be given to the priority application (Article 87 (2) and (3) EPC and Article 4(A), second and third paragraph, PC). If it is not required that the person who files the priority application can claim the right to the patent, that requirement cannot be made imposed on his legal successor either.

4.24. On the basis of the foregoing, it must be concluded that the right of priority under Article 87 of the EPC can be transferred to a legal successor. Now that the EPC and the PC do not impose any restrictions on the method of transfer, it must be assumed that also the person who has been transferred the priority right by special title <i.e. an assignee> may also be regarded as 'legal successor' within the meaning of Article 87 of the EPC, in other words, that the right of priority under Article 87 of the EPC is - from a property law point of view - amenable to transfer. This opinion is supported by the decisions of the Technical Boards of Appeal of the European Patent Office. They came to the same judgment in a series of judgments. [footnote 10] It is also assumed in German case law [footnote 11] and a considerable part of the literature [footnote 12] that a right of priority with regard to (the application for) a European patent can be transferred separately. The case-law [footnote 13]and literature [footnote 14] concerning the Paris Convention and national patents also point in this direction. UK case-law assumes that the right of priority is transferable, but it is assumed that the right can only be transferred to the right to the patent within the meaning of Article 60 of the EPC. [15] 
    

Question (a) (ii): content of applicable law / formal requirements

4.25. It remains to be seen whether all aspects of transfers of priority rights are determined, autonomously,   by the EPC. For the following reasons, in the opinion of the Court of Appeal, the question of which formal requirements must be complied with in order to establish that a person who has agreed with the applicant of the priority application that the priority right is transferred to him, is a "successor in title" within the meaning of Article 87, must be resolved on the basis of autonomous interpretation of the treaty.

4.26. Again, it is important to note that the right of priority is part of the common law for the EPC member states concerning the grant and revocation of European patents. Since the EPC does not refer to national law in the context of the right of priority, it must be assumed that the Contracting States intended to establish common rules for the transfer of the priority right.

4.27. Common rules are also important because disputes over priority rights can occur not only in proceedings before the national courts but also in proceedings before the EPO. Unlike the right to the patent within the meaning of Article 60 of the EPC, for the right of priority, the EPC does not include a provision that in proceedings before the EPO the applicant is deemed to be entitled to assert that right (compare Article 60, third paragraph, EPC). However, the reason why this rule exists for the right to the patent, namely that the EPO should not be entrusted with the application of different national law, also applies to disputes about claims to the priority right.

4.28. In the opinion of the Court of Appeal, the EPC does not impose any formal requirements when transferring the right of priority under a special title <i.e. by assignment, as opposed to inheritance>. The text of the EPC does not mention formal requirements, nor does the rationale of the right of priority call for formal requirements. The purpose of the right of priority is to facilitate the filing of patent applications in international situations. Formal requirements may undermine that objective.

4.29. The absence of formal requirements for a transfer of the right of priority does not affect the fact that in the event of disputes, requirements can be imposed on the proof of the claim to the right of priority. In cases where the priority date is relevant for the assessment of the validity of the patent and the claim to the right of priority is under discussion, the applicant of the priority-claiming application or the proprietor of the patent granted thereon will have to proof -  depending on the burden of evidence - that the priority right was transferred to him by agreement, or must refute that he cannot invoke the priority right. 

The rules of evidence of the forum in question will then determine which means of evidence are permitted and how they should be valued. It goes without saying that a written declaration signed by both parties offers clarity in that context, but if the agreement can be proven without such a statement, there is no good reason to consider the transfer to be invalid despite the agreement having been established as proven, because of non-compliance with certain formalities.

4.30. The fact that the EPC sets formal requirements for the transfer of a European patent application in Article 72 cannot lead to a different opinion. That Article does not apply to the transfer of the right of priority. There is also no ground for analogue application. The requirement in Article 72 of the EPC for a written document signed by both parties is related to the fact that the EPO must have certainty that both parties agree to the transfer because one party loses rights and the other party assumes obligations. The latter is not the case with the transfer of priority, because the person who invokes the (transfer of) the priority right has already taken on the obligations associated with a patent application by submitting the priority-founding application.

Questions (b) (i) and (ii): interpretation of the contract, applicable law

4.31. It follows from the foregoing that the right of priority with regard to European patents and patent applications is as a matter of property law transferrable by contract without formal requirements, alternatively that formal requirements need not be met to be able to designate the receiving party to that contract as a successor in title within the meaning of Article 87 of the EPC. It is not in dispute that [name 2] has transferred the right of priority in the agreement to Biogen. The parties are disputing the answer to the question of whether the agreement made by [name 1]  in 2004 with his employer, Biogen's predecessor, Biogen Idec Inc. (see paragraph 2.6; hereinafter the Agreement) should be interpreted as agreement a contract of transfer, wherein the right of priority is assigned in advance, or as an agreement to transfer, wherein an additional agreement is needed for the <actual > transfer.    

4.32. The question of the interpretation of the Agreement is - contrary to the patent law and property law issues dealt with above - a question of contract law. As the Agreement was concluded before 17 December 2009, the law applicable to that question should be determined on the basis of the <Convention on the Law Applicable to Contractual Obligations 1980> and not on the basis of the Rome I Regulation (Articles 28 and 24 of the Rome I Regulation ). Pursuant to Articles 3 (1) and 10 (1) (a) of the Convention, the interpretation of the Agreement is governed by the law of Massachusetts because the parties to the contract explicitly have made a choice for that law as the applicable law in Article 21 of the Agreement. 

4.33. It is not in dispute that under Massachusetts law, the literal text of the agreement is leading if that text is unambiguous. If the text is not unambiguous, the agreement must be interpreted on the basis of various factors, including the intentions of the parties and the scope of the agreement. Based on these criteria, it must be considered that the Agreement is a transfer agreement, so that [name 1] has transferred the priority right under the Agreement.

4.34. The parties agree that on the basis of Article 5 of the Agreement, all rights with regard to Proprietary Information are transferred in advance, that is to say, that these rights are transferred immediately upon their creation without the need for a further agreement. Celltrion also assumes this.  

4.35. The court agrees with Biogen that it is unambiguously clear from the text of the Agreement that the right of priority belongs to the rights with regard to Proprietary Information that have been transferred pursuant to Article 5 of the Agreement.   <...>

Footnotes (part of the judgement) (untranslated)

1Verdrag van Parijs tot bescherming van de industriële eigendom van 20 maart 1883, nadien een aantal maal herzien, Trb. 2006, 157.

2Verdrag tot samenwerking inzake octrooien, Trb. 1973, 20.

3Verdrag inzake de verlening van Europese octrooien (Europees Octrooiverdrag), Trb. 1975, 108, zoals laatstelijk gewijzigd bij Trb. 2002, 9.

4Hof Den Haag 24 juli 2012, ECLI:NL:GHSGR:2012:BX1515, IER 2012/57 (Spirits/FKP), rov. 8.2.

5Vgl. de lex rei sitae voor onroerende zaken; ook een intellectuele-eigendomsrecht is territoriaal gekoppeld aan een bepaald grondgebied.

6Overeenkomst inzake de handelsaspecten van intellectuele eigendom, Bijlage 1C bij het Verdrag tot oprichting van de Wereldhandelsorganisatie (WTO), Marrakesh 15 april 1994, Trb. 1994, 235 (TRIPs-Overeenkomst).

7Trb. 1980, 156.

8Verordening (EG) nr. 593/2008 van het Europees Parlement en de Raad van 17 juni 2008 inzake het recht dat van toepassing is op verbintenissen uit overeenkomst (Rome I), PbEU 2008, L 177/6.

9Trb. 1972, 51 en 1985, 79.

10Zie onder meer TKB 14 november 2006, T 0062/05; TKB 18 juni 2015, T 0205/14; en TKB 14 april 2016, T 0577/11.

11Bundesgerichtshof 16 april 2013, X ZR 49/12, Fahrzeugscheibe.

12G. Benkard, Europäisches Patentübereinkommen, C.H. Beck 2019, Art. 87, Rn. 3; J.M. Boelens, ‘Parijse Perikelen, over de overdracht van voorrangsrechten’, IER 2018/33; Gruber e.a., Europäisches und Internationales Patentrecht, C.H. Beck 2012, §2.3.a; J.L.R.A. Huydecoper e.a., Industriële eigendom deel 1 – Bescherming van de innovatie, Deventer: Wolters Kluwer 2016, 3.7.4.12; P. Mes, Patentgesetz, C.H. Beck 2015, §40, Rn. 4; R. Schulte, Patentgesetz mit Europäischem Patentübereinkommen, Carl Heymanns Verlag 2008, §41, Rn. 27S; M. Singer & D. Stauder, European Patent Convention, Köln: Carl Heymanns Verlag 2016, Art. 87, Rn. 59; D. Visser, The Annotated European Patent Convention, Haarlem: H. Tel Publisher 2018, Art. 87, punt 4; anders Th.C.J.A van Engelen, IE-Goederenrecht 2018, Boek9 2018, p. 186; de Franse wet kent een afwijkende regeling voor de – in dit geval zich niet voordoende – situatie dat in het kader van de Europese aanvrage een beroep wordt gedaan op het recht van voorrang op basis van een Franse prioriteitsaanvrage (art. 614-14 Code de la Proriété Intellectuelle).

13BPatG 28 oktober 2010. 11 W (pat) 14/09; Cour de cassation, 18 juni 1996, 94-18909.

14J. Azéma & J-C. Galloux, Droit de la proriété industrielle, Parijs: Dalloz 2017, p. 414-15; G.H.C. Bodenhausen, Guide to the Application of the Paris Convention for the Protection of Industrial Property As Revised at Stockholm in 1967, United International Bureaux for the Protection of Intellectual Property: 1969, p. 38; T. Cottier & P. Véron, Concise International and European IP Law, Art. 4 PC; W.H. Drucker, Handboek voor de studie van het Nederlandsche Octrooirecht, ’s-Gravenhage: Martinus Nijhoff 1924, p. 236-237; R. Kraßer & C. Ann, Patentrecht, C.H. Beck 2016, §24, Rn. 124; P. de Lange, ‘Overdracht en overdraagbaarheid van prioriteitsrechten in de ROW’, BIE 2018, p. 116-120; O. Ruhl, Unionspriorität, Köln: Carl Heymanns Verlag 2000, p. 98; M. Vivant, Code de la propriété intellectuelle, Parijs: LexisNexis 2019, p. 507; R. Wieczorek, Die Unionspriorität im Patentrecht, Köln: Carl Heymanns Verlag 1975, p. 136.

15In Britse uitspraken over het recht van voorrang wordt aangenomen dat ‘rechtsopvolger’ in de zin van artikel 87 EOV betekent ‘successor in title to the invention’, zie o.m. High Court, Arnold J, 23 juni 2010 [2010] EWHC 1487 (Pat), KCI Licensing Inc & Ors/Smith & Nephew Plc & Ors.