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

The Delhi High Court has set aside a Patent Office order that refused a patent application filed by Nippon Steel Corporation for a “high-strength steel sheet and its manufacturing method.” The court held that the Patent Office wrongly rejected the application on the ground that Nippon Steel had failed to establish “proof of right.” It also found fault with the Patent Office's view that an employment agreement could not serve as valid proof of such a right.Proof of right refers to documents showing that the applicant legally owns the right to apply for a patent. This can be established through an assignment or an employment agreement with the inventor.In a judgment dated December 24, 2025, Justice Tejas Karia allowed Nippon Steel's appeal against a 2024 order of the Indian Patent Office. The court observed, “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 Act.”The patent application was filed in July 2021 and relates to a high-strength steel sheet and its manufacturing process. Four inventors were named in the application, all of whom were employees of Nippon Steel. During prosecution, the Patent Office raised multiple objections. One of them was that proof of right had not been established in respect of one inventor, Kohichi Sano, who had passed away. Nippon Steel told the court that it had filed Form-1 signed by the remaining inventors. It also submitted declarations and its internal “Basic Regulations regarding Intellectual Property,” which provide that intellectual property created by employees vests in the company. In addition, it relied on an employer-employee agreement executed with the deceased inventor. This agreement showed that rights in inventions developed during employment stood assigned to the company. The Patent Office nevertheless refused the application. It held that an employment agreement could not be treated as valid proof of right, especially where the inventor had died. It further held that an assignment from the inventor's legal representative was required. The Patent Office relied on provisions dealing with assignment of granted patents.Disagreeing with this approach, the court held that the Patent Office had wrongly equated assignment of a granted patent with assignment of the right to apply for a patent. It clarified that Section 68 of the Patents Act applies only after a patent is granted and had no relevance at the application stage.The court observed that Section 7(2) merely requires “proof of the right” to apply for a patent. It held that an employer-employee agreement read with corporate policies governing intellectual property can constitute acceptable proof of right for an assignee.“When construed harmoniously with the accompanying declarations, the EE Agreement sufficiently establishes and addresses the ownership of IPR vested thereunder,” the Court said. The court also noted that all the inventors were employees of Nippon Steel. It recorded that similar declarations and employment agreements had been accepted by the Patent Office in several other patent applications filed by the company involving the same inventors.In this background, the refusal order was found to be unsustainable. Referring to the Supreme Court's ruling in Kailash v. Nanhku & Ors., the court reiterated that “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.”Accordingly, the court set aside the refusal order and directed the Patent Office to examine Nippon Steel's patent application afresh. It also directed the authority to pass appropriate orders for grant in accordance with law.Case Title: Nippon Steel Corporation v. The Controller Of PatentsCitation: 2026 LiveLaw (Del) 2Citation: 2026 LLBiz HC (DEL) 1Case Number: C.A.(COMM.IPD-PAT) 10/2025For Appellant: Advocates Debashish Banerjee, Vaishali Joshi & Tanveer MalhotraFor Respondent: CGSC Nidhi Raman with Advocates Om Ram & Mayank Sansanwal Click Here To Read/Download Order

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

Ayushi Shukla

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