In a recent judgement, Nippon Steel Corporation v. Controller of Patents (C.A.(COMM.IPD-PAT) 10/2025), the Hon’ble Delhi High Court iterated and clarified the interpretation and scope of proof of right under the Patents Act, 1970 by setting aside the Indian Patent Office’s refusal of a patent application on hyper technical grounds and reaffirmed that procedural law should be an instrument of justice and not its obstacle. The judgment demonstrates that properly structured employment contracts together with internal intellectual property regulations function as legitimate evidence of patent rights during the application process.
Understanding the Dispute
A patent application was filed by Nippon Steel Corporation in July 2021 in India, titled “High-Strength Steel Sheet and Its Manufacturing Method.” The patent application had four inventors, all of whom were employees of the company at the time of invention.
During prosecution, the Indian Patent Office (IPO) raised multiple objections, including one relating to the proof of right in respect of one of the inventors, Mr. Kohichi Sano, who had passed away during the pendency of the application.
According to the Indian Patent Act, 1970 (hereinafter, “the Act”), if the applicant is not the inventor but has applied for the patent through assignment or as an employee, the applicant must prove his or her right to apply for the patent. To comply with this requirement, Nippon Steel provided the following documents:
- A valid agreement between the employer and employee signed by the deceased inventor
- The company’s internal regulations regarding inventions by employees
- Statements on record regarding ownership
- Form-1 signed by the other inventors
These documents proved that any invention made by an employee as part of his or her job was owned by the employer or had to be assigned to the employer. However, IPO argued that an agreement of employment could not be valid proof of right after the death of the inventor, and that a particular assignment deed from the legal representative of the deceased inventor was required. This was determined based on the provision for post-grant assignment of patents.
The Issues
What is a valid “proof of right” under Section 7(2) of the Act at the filing stage? More specifically:
- Is an employer entitled to rely on an employment agreement and internal IP policies?
- Does the death of an inventor extinguish rights vested in the employer under contract?
- Is the Indian Patent Office entitled to insist on post-grant assignment at the prosecution stage?
Section 7(2) vs. Section 68
The Delhi High Court held that the Patent Office has “fundamentally misunderstood the statutory provisions by equating Section 7(2) with Section 68 of the Patents Act.”
Section 7(2): Proof of Right to Apply
Section 7(2) states, “if the applicant is an assignee, he must, unless it appears that the invention was made by him, file proof of right to make the application.” The purpose of this provision is to protect the interests of the inventor and prevent unauthorised patenting
It is pertinent to note that in the present case, the Court held that proof of right under Section 7(2) is prima facie and contextual. It is not a conclusive determination of title.
Section 68: Assignment of a Granted Patent
Section 68 deals with the assignment, licensing, or transfer of a granted patent. Section 68 states that any assignment, licensing, or transfer of a granted patent must (i) be in writing, (ii) contain all material terms and (iii) be duly executed.
The Court held that it is not valid to import the requirements of Section 68 into the assessment of Section 7(2). Section 68 is applicable at a different stage of the patenting process and cannot be used to invalidate an application at the time of filing or prosecution.
Employment Agreements as Valid Proof of Right
One of the most significant aspects of this judgement is that it recognizes the importance of employment contracts in patent law. The Court stated that:
- A relationship of employer and employee is contractual in nature
- Merely being an employee does not result in ownership of an invention
- Ownership is determined by what the contract actually says regarding ownership of inventions
In this particular case, the employment contract itself, when read in conjunction with the Basic Regulations of the company, clearly stated that any invention made during the course of employment belonged to the employer or had to be assigned to the employer. This was sufficient to establish prima facie rights under Section 7(2).
The Court overruled the Patent Office’s requirement that there must be a separate assignment deed or that the assignment must refer to the particular invention. Such a requirement, according to the Court, is undue formalism and rigid approach.
Death of the Inventor Does Not Defeat Employer’s Rights
Another important aspect of this judgment is the Court’s handling the issue i.e. the death of the inventor. The Patent Office had taken the stand that after the death of the inventor, the employer cannot rely on the contract of employment and must seek an assignment from the legal heirs.
The Court categorically rejected this rigid position. The death of the inventor cannot affect the rights which have already vested in the employer under the contract of employment during the lifetime of the inventor.
No Hyper-Formalism in Patent Prosecution
The Court held that procedural law is the “handmaid of justice.” This principle has been held time and again by the Indian Courts. Procedural laws should not come in the way of justice, but should help in the administration of justice.
Another relevant factor in this case was that the Indian Patent Office had already allowed six prior patents to Nippon Steel on the same documents of proof of right but refused to accept the same documents in the present case. This was not acceptable to the Court. The administrative authorities must act in a predictable and fair manner.
The Court therefore set aside the refusal order and directed the Patent Office to proceed with the examination of the application on merits.
Why the Nippon Steel Judgment is a Strategic Milestone
The Delhi High Court’s ruling in Nippon Steel Corporation v. Controller of Patents marks a pivotal shift toward practicality in Indian IP law. By validating that a properly executed employment contract constitutes “Proof of Right” under Section 7(2) of the Patents Act, 1970, the court has removed significant procedural hurdles for innovators.
1. Legal Clarity and Reduced Friction
The judgment establishes a critical distinction between a prima facie right (required at filing) and conclusive title (required at grant). This distinction:
- Lowers Risk: Reduces patent rejections based on rigid formal requirements.
- Speeds up Prosecution: Minimizes delays caused by the Patent Office’s previous insistence on specific assignment forms over existing contracts.
2. Contracts as Strategic IP Tools
Employment agreements are no longer just HR formalities; they are now primary legal shields. For startups and established R&D firms alike, robust IP provisions are now a strategic imperative. To be effective as “Proof of Right,” these contracts must explicitly cover:
- Clear invention ownership and assignment obligations.
- Required support for filing and prosecution.
- Confidentiality and rights post-termination.
3. Empowerment Through Innovation, Not Paperwork
Ultimately, this decision shifts the focus from “technical formalities” to “legal entitlement.” It recognizes the reality of modern corporate R&D, where the employer-employee relationship is the engine of innovation.
The Bottom Line
If you have a signed agreement stating you own the invention, that is your “Proof of Right.” This judgment strikes down procedural formalism in favor of commercial reality, allowing businesses to focus on creating rather than chasing signatures.