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Inventorship Rulings Show Fed. Cir.’s Sympathy for a Good Story

June 18, 2021, 9:53 AM

A series of recent inventor-friendly patent decisions from the Federal Circuit shows that a good story can win over the court.

The U.S. Court of Appeals for the Federal Circuit issued six opinions involving issues of who is listed as an inventor or owns a patent. Although this area of the law is very fact-dependent, the rulings generally have been favorable to inventors.

That’s likely because telling a story about the person who came up with an invention humanizes an area of the law that can be very technical, attorneys said. The court’s rulings on other patent issues, such as eligibility, aren’t always as favorable to inventors.

Practitioners should focus on how to tell compelling story to judges and juries, Lauren Degnan of Fish & Richardson PC in Washington said.

“You have to have the facts, and you need to have the law, but in these areas where it turns so much on what your facts are, it’s important to find a narrative—that’s true—that also puts you in the morally right camp,” Degnan said.

Inventor-Friendly

In Schwendimann v. Arkwright Advanced Coating, Inc., the Federal Circuit affirmed a $4.5 million infringement award over the alleged infringer’s arguments that the plaintiff didn’t own the patents when she sued. The court found that the original patent owner’s transfer to the plaintiff was valid despite an error in filing the assignment of ownership at the patent office because the parties intended to make the deal.

In Whitewater W. Indus. v. Alleshouse, the court found that an employment agreement requiring that a former employee assign his patent rights for water-park attraction inventions created after he left the company is invalid under California law.

In both cases, counsel for the inventors were able to tell their story and make their positions relatable.

An ownership issue can “suddenly transform what seems to be a patent case into what seems to be an employment or family drama,” Lowenstein & Weatherwax LLP attorney Kenneth Weatherwax in Los Angeles said. That can draw the judges in because, after all, “judges are humans, too,” he said.

Inventorship often makes for a better story than more technical patent issues like claim construction. “It’s hard to find a morality play in the construction of communication network,” for example, Degnan said.

Potential Tension

Two of the Federal Circuit’s decisions addressed whether contributors should be added to a patent as co-inventors.

In Dana-Farber Cancer Institute v. Ono Pharm. Co., the Federal Circuit held that partial contributions over time by two researchers that eventually led to the conception of a cancer treatment are enough to support joint inventorship. The court declined to adopt a rule that once a contribution is made public it no longer qualifies as a significant contribution to the conception of an invention.

Eight months later in Bio-Rad Labs., Inc. v. ITC, it held that a contract that assigns all inventions made during employment with a company doesn’t reach inventions conceived after the term of the agreement, even if those inventions were based on work done while the employee was there. The court declined to award the company co-ownership of gene-sequencing patents because the alleged contributions were in the published prior art at the time of conception of the invention.

Weatherwax sees a “very significant tension” between these two cases and how they treat the significance of prior publication of alleged contributions to an invention.

“I have trouble reconciling those two holdings, to be perfectly frank,” he said. “Bio-Rad notes Dana-Farber but doesn’t seem to grapple with what it said about prior publication of alleged contributions.”

Fact-Intensive

But Finnegan, Henderson, Farabow, Garrett & Dunner LLP’s Cora R. Holt in Washington finds the cases distinguishable.

“In Dana-Farber, the court was really rejecting what was proposed to be a bright-line rule about public disclosure,” she said. “And in Bio-Rad, the question was a little bit different, about an individual’s use information that was already in the public domain.”

Attorneys can use the cases strategically in opposition to each other, she said. “But whether the court sees it that way, or instead finds them to be reconcilable and to easily coexist with one another, we’ll see in future decisions.”

Any tension between the two cases boils down to the fact that these cases are so fact-intensive, Degnan said.

That is also illustrated by Egenera, Inc. v. Cisco Sys., Inc., where the determination of who should be listed as an inventor on an enterprise server system patent changed as the understanding of the patent’s scope changed.

“This is why sometimes the common law is so great—you get to see different facts scenarios and where they fall in the spectrum,” Degnan said. “That guides you as to where your case likely falls and allows you to make arguments that this scenario is closer to ours than that scenario.”

More to Come

Inventorship issues are likely to come up more as workers are increasingly mobile and the pandemic blurs the lines between employer time and personal time.

The court’s decision in Hologic, Inc. v. Minerva Surgical, Inc. highlights issues with worker mobility. The Federal Circuit found it was bound to apply assignor estoppel, the doctrine that an inventor who assigns patent rights to someone else can’t later claim the patent was wrongly issued.

The case is now before the U.S. Supreme Court, where at oral arguments in April the justices were interested in narrowing the doctrine to ensure there is no logical inconsistency between an inventor’s prior representations and that inventor’s current challenge to a patent’s validity.

When companies look to hire engineers, they have to worry about the impact their past inventions could have, Degnan said.

If the Supreme Court cabins the doctrine, that would make it more favorable to employee movement, she said.

“Obligations to assign can really circumscribe what people are able to do in the future,” Holt said. “The interest in whether to limit or abolish assignor estoppel is a direct result of the fact that it does come up a lot more given the way that that people move around and start their own companies.”

Many assignment provisions specify that what you invent on company time belongs to the company.

That can raise tricky issues that are magnified by the pandemic and the move to more remote work, Degnan said, pointing to the blurring between when an employee is on her own time or on the employer’s time.

“If there’s no clear demarcation of when you’re working and when you’re on your own time, you might find additional disputes arising to try to figure out who’s going to own what,” she said.

She recommended companies regularly audit their employment agreements to “kick the tires” and make sure they are in line with changes in the law and the realities of modern work.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bloomberglaw.com

To contact the editors responsible for this story: Renee Schoof at rschoof@bloombergindustry.com; Kibkabe Araya at karaya@bloombergindustry.com

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