Two recent decisions of the Federal Court of Australia have confirmed that patent entitlement remains an important issue under Australian patent law. Patentees should be aware that a patent can be revoked, and a patent application can be refused, if the patentee or applicant lacks title to the invention, even if the patent is otherwise valid.
Under s 15 of the Patents Act 1990 (Cth) (the Act),
a patent for an invention may only be granted to a person who: a) is the inventor; or
b) would on the grant of a patent for the invention be entitled to have the patent assigned to him or her; or
c) derives title to the invention from the inventor or person mentioned in b); or
d) is the legal representative of a deceased person referenced in a), b) or c).
This requirement is known as ‘patent entitlement’. Patent applicants have typically been required to file a notice or statement of entitlement, asserting their entitlement to the patent. An applicant will be taken by the Commissioner of Patents to be entitled to the grant of a patent, unless there is evidence to the contrary. Under s 59(a) of the Act, the Minister (for Industry, Innovation and Science) or another person may oppose an application on the grounds that a nominated person is not entitled to the grant of a patent, or is only entitled to grant in conjunction with another person.
Section 22A of the Act holds that a patent is not invalid merely because it was granted to a person who was not entitled to it, or because it was not granted to a person who was entitled to it. If it is determined following grant of a patent that a patentee is not entitled to the patent, then pursuant to s 138(3) of the Act, a Court may, by order, revoke that patent, either wholly or in part. However, s 138(4) states that such an order must not be made unless the Court is satisfied that, in all the circumstances, it is just and equitable to do so.
Given the potentially severe consequences that can flow from a lack of entitlement to a patent, both before and after the grant of the patent, it is important for patent applicants that are assignees to ensure that they derive title to the invention from all persons who are entitled to the invention. Further, as was recently illustrated in the Merial v Intervet decisions of the Federal Court of Australia (discussed below), where one party engages another party to perform work in relation to a product, it is important that the parties are clear as to whether the party undertaking the work will be incorporating its own technology into the product, or whether it will also be assigning its rights in any such technology to the party that engaged it to undertake the work. If it is intended that the party undertaking the work will assign all rights to the technology to the party that engaged it, any agreement between the parties should include an express assignment of any rights in inventions resulting from the work undertaken.
Merial v Intervet
In 2009, the veterinary medicine company Intervet International B.V. (Intervet) filed a patent application in Australia for a soft chew formulation for administering an antiparasite pharmaceutical to certain animals. The three inventors listed on the application were Mr Pieloch, Mr Huron, and Ms Cady. In 2011, Merial, Inc. (Merial) opposed the grant of the patent in the Australian Patent Office (APO), claiming a lack of novelty, inventive step and patentable subject matter. This opposition failed on all three grounds. Consequently, in 2015, the Delegate of the Commissioner of Patents directed that the patent application proceed to grant.
In 2016, Merial appealed the APO decision to grant the patent in the Federal Court of Australia, submitting that the alleged invention the subject of the patent did not involve an inventive step, and that Intervet was not entitled to the grant of the patent because it did not derive title to the alleged invention from Mr Pieloch. Justice Moshinsky, in the decision of Merial, Inc. v Intervet International B.V. (No 3)  FCA 21, concluded that Intervet lacked entitlement to the invention because it did not derive title from any of the listed inventors.
His Honour firstly determined that on the evidence before the Court, neither Mr Huron nor Ms Cady (both employees of Intervet Inc, a related company of Intervet) played any, or any substantial, role in developing the alleged invention. In light of this finding, title could only be derived from Mr Pieloch, an employee of the pet supplement and flavour manufacturing business Pharma Chemie Inc (Pharma Chemie), which at all relevant times was owned and controlled by Mr Pieloch.
In 2002, Intervet Inc had engaged Pharma Chemie to develop ‘soft chew’ formulations for two animal veterinary products, one for horses and the other for dogs. The parties also entered into a Manufacturing and Supply Agreement in relation to these two formulations.
In 2003, Mr Pieloch refused Intervet Inc’s request that he sign an ‘inventor’s declaration’ attaching to Intervet’s Inc’s patent application. Shortly thereafter, Pharma Chemie contended that it was in fact the owner of the soft chew technology described in the patent application, having invented the technology prior to its engagement by Intervet Inc.
After reviewing the evidence before the Court, Moshinsky J determined that Pharma Chemie had already developed the soft chew technology described in the relevant patent applications before it was engaged by Intervet Inc, and that Pharma Chemie was engaged to incorporate Intervet Inc’s active ingredients into a formulation using this technology – not to develop a soft chew dosage form.
Ultimately, Moshinsky J found that there was no express assignment from Pharma Chemie to Intervet Inc of rights in the alleged invention, or rights in any inventions resulting from the above formulation projects. Nor, in light of the factual circumstances, was his Honour willing to imply such an assignment.
Merial v Intervet – amendment?
In the subsequent decision of Merial, Inc. v Intervet International B.V. (No 4)  FCA 223, Moshinsky J considered Intervet’s request that it be allowed to make an amendment application to the Commissioner of Patents in order to cure its lack of entitlement. According to Intervet, this might involve Mr Pieloch becoming a co-applicant, or Intervet obtaining an express assignment of the invention from Mr Pieloch.
Moshinsky J refused this request on the basis that such an amendment would be a fundamentally different proposition to the categories of patent-related amendment that have typically been accepted by the Court. Moreover, his Honour doubted whether it would even be open to an applicant to seek amendment of a notice of entitlement under ss 104 or 105 of the Act, given the apparent incongruity of such an application with the structure of the statutory scheme. Finally, his Honour held that the issue of Intervet’s entitlement had been fully determined generally – not merely on the basis of the facts as they stood at the time of the hearing.
In light of this refusal, Moshinsky J ordered that Intervet’s patent application not proceed to grant.