Delhi High Court Clarifies “Proof of Right” Requirements Under the Patents Act

In a significant intellectual property law development, the Delhi High Court delivered a detailed ruling in Nippon Steel Corporation v. Controller of Patents, addressing the statutory requirement of “proof of right” in patent applications. The Court clarified the evidentiary threshold and circumstances under which an employment agreement and associated internal IP policy can constitute valid entitlement to file a patent application on behalf of a corporate applicant.

The dispute arose after the Indian Patent Office refused a patent application on the ground that the applicant had failed to demonstrate adequate proof of right to apply under Section 7(2) of the Patents Act, 1970. The Controller had concluded that the documentation submitted comprising an employment contract and internal policy purporting to assign employee inventions to the employer did not, in form or substance, sufficiently convey the “right to apply” for patent protection. In particular, the Office found deficiencies in language relating to assignment scope and absence of corroborative evidence that the invention fell within the ambit of contractual entitlement.

At first instance, the applicant argued that a well drafted employment clause granting all invention rights automatically to the employer, combined with an internal IP policy reflecting corporate practice, was sufficient “proof of right.” The Controller maintained that formal assignment deeds or project specific agreements were necessary in each instance.

The High Court, after examining the statutory text and legislative purpose, upheld the importance of ensuring entitlement but rejected an overly formalistic approach. The Court held that where a patent applicant credibly demonstrates entitlement through clear contractual language in an employment agreement particularly language that unambiguously vests rights in future inventions and where corporate policy supports that intention, the “proof of right” requirement is satisfied. The Court emphasised a substance over form standard, focusing on actual legal rights rather than mere technical formalities.

Legal Analysis

The concept of “proof of right” in Indian patent law is rooted in Section 7(2) of the Patents Act, 1970. Section 7(2) requires that an applicant furnishing a patent application include evidence establishing that the applicant is the true and first inventor or assignee, or the successor in title of such person. This provision safeguards the public interest by ensuring that patents are not granted to parties without legitimate entitlement.

Historically, Section 7(2) refusals have hinged on narrow technical objections where the Controller demands express assignment instruments or deed transfers dated contemporaneously with invention disclosure. The Nippon Steel ruling departs from a rigid formalism by emphasising that entitlement may be proven through a combination of contractual and corporate documentation when it collectively evidences unambiguous ownership of inventive rights.

In its reasoning, the Court reaffirmed that the statutory purpose of Section 7(2) is to verify legal entitlement, not to enforce a particular documentary format. The judgment highlighted that an employment agreement containing a sufficiently broad invention assignment clause one that conveys rights in future inventions to the employer may, by itself, satisfy the statutory requirement if it clearly vests rights in the applicant. Corporate policies that formalise IP ownership and align with contractual terms further reinforce the evidentiary foundation.

The Court also underscored the principle that entitlement cannot be inferred where contractual language is ambiguous or restricted to certain categories of inventions. Thus, clarity of wording remains critical even under a substance oriented standard. Ambiguous clauses that leave ownership unresolved will not suffice.

From a procedural standpoint, the ruling touches upon the interplay between patent prosecution and employment law. Employment contracts and internal IP policies should be drafted with precision, avoiding reliance on generic catchall phrases. Clear clauses vesting rights in future inventions, specific references to patented subject matter, and corroborating corporate practice evidence significantly strengthen entitlement arguments.

For multinational corporations and research intensive entities, this decision reduces the risk that legitimate inventions will be denied protection due to preventable formal defects in proof of right documentation. It also provides a roadmap for drafting and pre filing assessment to minimize statutory refusals.

However, practitioners should note that the ruling does not eliminate the requirement of proof of right; it refines the standard. Applicants remain responsible for demonstrating entitlement at the time of filing. Where employment or contractual terms are silent, conflicting, or incomplete, Section 7(2) objections will still arise.

Overall, Nippon Steel Corporation v. Controller of Patents represents a pragmatic and modernised judicial approach to entitlement in Indian patent practice. By prioritising legal clarity and substance over rigid formality, the Court has enhanced predictability for corporate patent filers while preserving the statutory safeguards essential to the integrity of the Indian patent system.