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Jan  02- 2026

Employment Agreement Is Valid Proof of Right: Delhi High Court Sets Aside Patent Rejection After Inventor’s Death

NIPPON STEEL CORPORATION V. THE CONTROLLER OF PATENTS

Introduction

In a significant ruling clarifying the scope of “proof of right” under the Indian patent regime, the Delhi High Court has set aside an order of the Patent Office refusing a patent application filed by Nippon Steel Corporation. The rejection was based on the Patent Office’s insistence that an employment agreement could not serve as valid proof of right, particularly when one of the inventors had passed away.

The judgment is important for corporate patentees and assignees, as it decisively affirms that employer–employee agreements, when read with internal intellectual property policies, are sufficient to establish ownership of the right to apply for a patent under Section 7(2) of the Patents Act, 1970.

Background of the Dispute

The patent application, filed in July 2021, related to a “high-strength steel sheet and its manufacturing method.” Four inventors were named in the application, all of whom were employees of Nippon Steel Corporation at the time of the invention.

During prosecution, the Indian Patent Office raised several objections. One objection proved decisive: the Controller held that Nippon Steel had failed to establish proof of right in respect of one inventor, Kohichi Sano, who had died before the application was processed.

Nippon Steel responded by submitting Form-1 signed by the remaining inventors, along with declarations, its internal “Basic Regulations regarding Intellectual Property,” and an employer–employee agreement executed with the deceased inventor. The agreement clearly stipulated that inventions developed during the course of employment stood assigned to the company.

Despite these documents, the Patent Office refused the application, holding that an employment agreement could not be accepted as proof of right and that a formal assignment from the deceased inventor’s legal representative was mandatory.

Findings of the Delhi High Court

Allowing the appeal, Justice Tejas Karia categorically disagreed with the approach adopted by the Patent Office. The Court noted that the Controller had fundamentally misunderstood the distinction between assignment of a granted patent and proof of the right to apply for a patent.

The Court held:

“Employment Agreement entered between the Employer (assignee) and Employee (inventor), which is duly signed by the deceased inventor, is an acceptable document to comply with the requirement of ‘proof of the right’ under Section 7(2) of the Patents Act, 1970.”

The Court emphasised that Section 7(2) merely requires proof that the applicant is entitled to apply for a patent, and not a post-grant assignment in terms of Section 68 of the Patents Act, 1970. It clarified that Section 68 applies only after a patent is granted and has no relevance at the application stage.

Rejecting the Patent Office’s reasoning, the Court observed that the authority had wrongly equated assignment of a granted patent with assignment of the right to apply for a patent, an error that went to the root of the refusal.

Employment Agreements as Proof of Right

The Court held that when employer–employee agreements are read harmoniously with declarations and internal corporate intellectual property regulations, they sufficiently establish ownership of intellectual property created during the course of employment.

In clear terms, the Court stated:

“When construed harmoniously with the accompanying declarations, the EE Agreement sufficiently establishes and addresses the ownership of IPR vested thereunder.”

The Court further recorded that all inventors named in the application were employees of Nippon Steel Corporation. Importantly, it took note of the fact that similar employment agreements and declarations involving the same inventors had been accepted by the Patent Office in other patent applications filed by the company.

This selective rejection, without justification, further undermined the sustainability of the refusal order.

Procedural Law Must Serve Justice

Reinforcing the need for a pragmatic and justice-oriented approach, the Court relied on the Supreme Court’s decision in Kailash v. Nanhku, reiterating:

“Procedural laws are intended to subserve, and not to subvert, the cause of justice. Procedural laws are an instrument that facilitates rather than obstructs adjudication.”

The High Court cautioned that hyper-technical interpretations of procedural requirements should not be permitted to defeat substantive rights, especially where ownership of intellectual property is clearly established through contractual and policy documents.

Final Directions

Holding the refusal order to be legally unsustainable, the Delhi High Court set it aside and directed the Patent Office to re-examine Nippon Steel’s patent application afresh. The Court further directed that appropriate orders for grant be passed in accordance with law, without insisting on requirements not contemplated under Section 7(2) of the Patents Act, 1970.

Conclusion

This judgment is a crucial reaffirmation of the legal position that employer–employee agreements constitute valid proof of the right to apply for a patent in India. It provides much-needed clarity for multinational corporations and research-driven entities that rely on employment contracts and internal IP policies to vest invention rights in the employer.

By drawing a clear distinction between pre-grant proof of right and post-grant assignment requirements, the Delhi High Court has ensured that procedural technicalities do not obstruct genuine patent claims, particularly in cases involving deceased inventors.