Intervet chew on ownership of an invention in Australian patent opposition proceedings

Thursday 18th May 2017

This case concerns whether or not the rights to an invention of an Australian patent application had been successfully transferred from the inventors to a company, Intervet. After an unsuccessful opposition by Merial, Intervet’s Australian patent application was allowed to proceed to grant.  Merial appealed the decision to the Federal Court of Australia.  Merial’s appeal was successful (following discovery) on the ground that Intervet was not entitled to grant of the patent because ownership of the invention  had not been validly transferred from the inventors to Intervet.

Intervet had sought to amend their patent application by adding an inventor as a co-applicant but were refused.  The case highlights the importance of ensuring that there is a documented, clear chain of title between inventors and whoever is named as patent owner.

Agreements for work

Intervet entered into a Manufacturing and Supply Agreement with Pharma Chemie to develop soft chews for horses and dogs.    

Pharma Chemie was owned by Mr Pieloch.  Mr Pieloch and two employees of Intervet were listed as the inventors of the soft chew technology.  A patent application was prepared under Intervet’s instructions in relation to the soft chews.  Intervet’s patent attorney sent the patent application to Mr Pieloch at Pharma Chemie with a request to sign an inventor’s declaration.  Mr Pieloch refused to sign on the basis that he and Pharma Chemie developed and owned the soft chew.  Pharma Chemie asserted that the work developing the soft chew technology was completed in the years prior to entering into any agreement with Intervet.  In contrast, Intervet argued that there was a written agreement providing for assignment of rights to the soft chew technology, relying on the Manufacturing and Supply Agreement.  Perhaps crucially, a copy of the agreement could not be produced.

Findings of the Court

The Court found that there was no express assignment of the rights to the invention from Pharma Chemie to Intervet.  Nor was there any other agreement that contained an express assignment from Mr Pieloch and Pharma Chemie to Intervet.  Instead, Pharma Chemie asserted that the Manufacture and Supply agreement between Pharma Chemie and Intervet provided only for assignment of veterinarian products that incorporated a flavour base and which Intervet were going to market and sell worldwide.

In making its decision to refuse grant of the patent, the Court considered whether Pharma Chemie was “hired to invent” (by Intervet).  Critical to the fact was whether there was a contract that specifically required the invention to be made by Pharma Chemie.  The Court did not think that Pharma Chemie was contracted to develop or invent the soft chew.  Instead, the Court considered that Pharma Chemie were contracted to incorporate Intervet’s active ingredients into a soft chew formulation using Pharma Chemie’s existing technology.  Consequently, the Court decided that Intervet were not entitled to own the patent because they did not develop the chew technology.

To try to evade this decision, Intervet sought to amend the patent application by adding Mr Pieloch as co-applicant.  The request was rejected, the Court stating that “…lack of entitlement goes to the heart of the application…cannot be overcome without a ‘wholesale change to the basis of entitlement’”.                                                             
Get it right at the start

It is essential to ensure that whoever is named as owner of a patent application is entitled to the rights in the invention, before the patent application is filed.   The chain of ownership from the inventors to the party named as owner should be carefully documented.  In most if not all cases, it will be very difficult to correct this later on.    Filing in the names of inventors initially and recording an assignment (i.e. transferring the rights from the inventors) later can often be an option, especially when inventions are developed or worked on under contract by third parties.

Merial, Inc. v Intervet International B.V. (No 3) [2017] FCA 21 (25 January 2017)
Merial, Inc. v Intervet International B.V. (No 4) [2017] FCA 223 (9 March 2017)

This article is intended to summarise potentially complicated legal issues, and is not intended to be a substitute for individual legal advice. If you would like further information, please contact a Baldwins representative.

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