and ninety two contract with the university of michigan demonstrate that it was a present assignment of title to its future inventions st it states that by law three hundred and ten dollars governs the assignment of his intellectual property rights nd to states that patents on his inventions shall be the property of the university if they meet the conditions in paragraph one and rd nothing in his contract requires dr is law to take any action after an invention is made to assign title to the university instead of dr mit makes an invention meeting the conditions in paragraph one title to that invention transfers automatically to the university by operation of law and doctors one has acknowledged this is precisely how his contract works in two thousand and seven he agrees the university owned one of his advent despite his attempt to attempt to find that same invention to another one of his companies he also testified that he did not execute incitement that transfer title of that invention to the university after he had made it instead as he acknowledged in future intention what do you say to that paragraph five is not implicated by this case i mean both parties agree that the language in paragraph five is also addressing  situation where there is a contribution of both the actions of the inventor and the in support of the university as well as an independent source of support but that is it is used as the same and what you see in those three paragraphs are declarations of status of certain issues in paragraph one is defining the status of patents that have been supported by university funding for as defining the status of patents that are supported by no un funds in para five is addressing a situation where there has been a writing and entered into by the parties to govern ownership and exploitation of the patent in that instance there's no timing requirement there's no requirement that those agreements come actually into effect and there's no requirement to secure such a writing when you look at paragraph five it says if there is an agreement that will control ownership and that is true if there is e very relevant to my own issues in this appeal are you basically saying that the phrase shall be operates in one way for paragraph one operates in a different way for paragraph five it has to because the sentences are different the way that shall be is used in each of these three paragraphs is addressing a different condition so paragraph one is indicating that if an invention is supported by you on funding that invention shall be the property of the university in paragraph five the words shall be are not dictating or addressing whether the funding dictates ownership is saying there in that scenario in paragraph five if there is a writing governing ownership and exploitation of the patent that writing shall govern the issues of ownership and exploitation and these are declarations they're not identical sentences and that's really important to understand where the error of the just report was it is in the use of the word shall be in conjunction with the remaining passage of each clause that dictates what the effect of the language is i mean this area of law is it's difficult and it's not very fun but you know for thirty years now since  and one i think our we've had we have case law on the book that define how you construct the employment agreement to make it clear whether the intention is to make it an automatic assignment or to make it an assignment that's contingent or something that will take effect at a later time and and it's very clear tape over and over again if you say something in the present tense in the active voice i hereby assign i hereby grant everybody will understand under our savage case law what that and we said that wasn't the present the sign meant that was not an automatic assignment that was something of a agreement to assign and i see that part of that phrase part of that provision was shall be the property of which is the very phrase that we have here in dr islam or in the bylaws three point one paragraph one could you comment on that there is at least some facial similarity between what we have here in this case and what we've seen in the past and concluded there was no present  your question judge that point raises an important contrast between the contract that was at issue interact and in the contract you're looking at here is critical to that decision interacted was the contract in vision explicitly that the inventor would take an action after the invention is made to assign title to the invention so it wasn't just the words shall be in isolation it was the contract identifying a an act of the inventor after the invention is made to transfer title here there's no confortable clause it's simply a statement that says that if the condition specified in paragraph one is true for that future invention i guess you know that apparently wasn't good enough to convert that overall provision into a present assignment or a present transfer or automatic transfer by operation of law you again the question really does have to focus on the operation of the contract as a whole and that's really a critical point that you see throughout the discords jurisprudence when you look at the contract you have to divine the intention of the parties and whether there is expected to be an action of the inventor after the invention is made to transfer title or whether it's going to operate as a buy off by law when if when that condition is true in the future and in here you have you have extrinsic evidence which is in the form of this two thousand and seven agreement between dr islam and the university where he's acknowledging that the title in his case transfers without him taking that affirmative of transferring title after the invention is made but instead it's transferring by operation paragraph three dollars a lot so note that there are other cases which have employed this kind of shall be language and have been found to be present assignments in the supreme court actually two examples are addressed in the roche case where the court observed that the shall be language in those provisions unambiguous lee divested inventors title to their future inventions in th court there was a similar form of expression where the invention shall vest in the united states and in that instance it was found to be a present assignment so you have to look at the entirety of the agreement and decipher if there is an obligation of the inventor to act in the future or if that transfer is going to occur as an operation of law when the condition is true for that future invention and i will make one last point the court below the texas particular noted that the future events were the critical thing that it had focused on you know that there was a need to determine if there was funding or not every invention that is governed by these provisions is going to be something that happens in the future so the questions really focus on is the condition true as specified in the contract that will trigger the operation of the provision causing a transfer of title or is there something else being done or has to do in the future after the invention is made so here we believe the language is clear there's no additional requirement from doctor is one to assign to invention a sign title to his inventions after he makes them and the language is very much as a whole or look to the documents as a whole to determine what the intention was but if you if you look at the circumstances and the situations that were referenced by the supreme court in the roche case where shall be was used those documents taken as a whole make it pretty clear that the rights that's the media they either use that expression for otherwise indicate that rights vest immediately and we don't have that here is not a problem for you well i think i might disagree with your suggestion that the language  character i believe that language is straightforward and declarative as if the condition is true of you in funding that invention is the property of the university michigan but there's no other there's no other language it doesn't say and shall best or and show here by a sign or words to that effect there is no additional language like that in and that is actually a signal that it's operating the way we believe it is  and this is also something which the university of michigan believes is how their provision works just a question before you go there's also the question of this invention report form that  professors like dr islam have to sign and i guess in that form it makes it very clear it actually has the here by a sign language that active voice present tense language and i'm now wondering why shouldn't we look at the invention report form along with the by laws and some kind of two step process where the st step is the bylaws which say perhaps the way to understand the bylaws is this is what we intend and i agree that i am ultimately obligated to assign these rights over and then comes at a later date the actual invention report form which undoubtedly unquestionably represents an actual present automatic assignment because it's now saying here by  the convention to the university so is there something there that we should be looking at these two pieces as a two step process overall so the form is not part of the agreement that dr islam signed but the university ninety two is actually not even part of the transfer policy that has been implemented by the university is something one step below that what you see in that contract which they're sorry that form is as i said not part of the contract so it can't override the contractual obligations dr islam has more directly a specific assignment after inventions are made and you found that to be in consequential because the primary agreement dictated the transfer of title was clear and we believe that's the situation we have here that form is different than you can yes yes your honor and that helps the court reached the conclusion it was a present assignment but again you can reach that conclusion as well my last point before and i would like to reserve some time for rebuttal that form is i want to make sure that you know the university's position an understanding of that is in the record for the court the way paragraph five operates is it's permitting the university and you know any university member to make is that by law three dollars as mr christian mentioned it does not require an additional step be taken to affect the transfer and i think that that is a key line of reasoning that  has followed from this court cases on this issue since one thousand nine hundred and one and many of the cases the court has considered will be assigned language shall be assigned clear language that's indicating some additional st needs to be taken to effectuate the transfer we simply do not have that here the district court made that finding at appendix six it specifically said that by last three dollars is silent as to how the transfer is to  occur and we think especially in light of the language that the supreme court found unambiguous in the stanford b roche decision we think that's very clear evidence that by law three point one is a predicate presents an automatic the parties agree in advance in advance of any research activity or any work is that is that what you're saying right with the way it would work is if there is no agreement in writing in advance that modifies the default provisions of paragraph three dollars paragraph one or paragraph four those provisions apply so what would happen what would happen if there was an invention made and at the time the invention was completed there was a dispute as to who contributed what i was that resolved so that would be resolved by the tech transfer office would do an investigation a detailed investigation similar to what they did here and they would determine you know to contact the stakeholders contact the fact witnesses do the investigation and determine if university resources were used pursuant to paragraph one if they were then the university owns that if there had been an agreement in advance that by law three point one is not going to apply as it normally does there could be a deviation from that the university could agree that a faculty member could use the university  resources and the university would not own it but that would need to be agreed to in advance as paragraph five permits i'm still confused because it sounds to me like either way whether it's in advance or whether it's after the fact the agreement needs to happen in advance of the work or the exploitation of the invention and the nd point is that many are where where does the language say that why does it have to be done just curious in advance of the work undertaken that leads to a patent as opposed to after the work has been conducted and then a determination is how does the ownership split paragraph one and paragraph four are the governing provisions so in the absence of something changing those those are the governing provisions this paragraph i'd say that i mean i guess i'm just asking i i don't know the answer saying that the writing the agreement on ownership co ownership has to be done before the invention is commercialized exploitation isn't that what that means it doesn't mean  in advance of the activity research undertaken that leads to the resulting claim convention and i mean when we think it would also apply  to please could you we also think we think it would also apply to the exploitation but we think that what this is and pending to do is provide that there is an opportunity to change the default rules of paragraph  e paragraph for every just like to touch on one thing if i may the point from judge will and many of this court cases finding automatic assignments of future inventions you know have a condition subsequent that that needs to be determined in the future you saw that in the d d b tex case where there was needed to be a determination of whether the conduct fell into the provisions set forth in the employment contract  idea that we have to make a determination in the future of whether the factual predicates are present does that's very common in all of these agreements and we don't believe that it suggests that there's only a promise to a sign in the future one final question before you go by law three point one has been amended in recent years to replace or amend the shall be the property of the language that right past five years amended something to further clarify what the university wants there have been you know you mentioned it came up earlier the discussion about some of the changes to the forms i believe that that that may be what you're referring to there have also been amendments to the tech transfer policy over the years particularly to to make changes to revenue sharing and different different things like that on the transfer policy has been amended  and there are the confirmatory assignments with the the invention disclosure forms but that does have some additional here by a sign language about the ownership of intellectual property section of undertaken and invention was produced and there was some dispute and as a result of that dispute it was determined that paragraph four should be the operative paragraph that there was no support by the university under those circumstances with the inventor have to execute an assignment to the university no no if paragraph four is affable and it's  shown that the inventor did not use any university resources the title is no but if there's no agreement in advance and the inventor undertake some work then wouldn't paragraph one  if you're argument is that these are devolve power grabs and paragraph one would default ownership to the investor and then there's a dispute my hypothetical if there's a dispute later on and it's determined after the fact that well know the university the inventor received no support and therefore ownership should be for the university with where they have to be an assignment for another words if your argument is that these paragraphs one dollar and four dollars are default paragraphs and that title vests automatically at paragraph five only kicks in in advance and my hypothetical is there is no understanding in advance so one of these two paragraphs one dollar and four dollars operate as a default and then if that's the case it would seem to me that there would have to be an assignment later on if there was some sort of a dispute and and a different resolution other than the default is that is that correct or not i don't believe that that is correct and i think the circumstance that we haven't in this record the extrinsic evidence of the two thousand and seven reassignment is a is a good example of that you know dr islam believes that he had not used any university resources in two thousand and three and he attempted to assign the rights to the patent to his company cheated me you know he later acknowledged that the university he had used university resources and that title had vested you know automatically with the university he was not required then to assign to the university he simply acknowledged in the two thousand and seven reassignment agreement that the university did on it automatically by really thank you your honor good morning let me start by giving a disclaimer i am a avid michigan wolverines i got my engineering and law degrees from u of m and i like the u of m very much but in this case i have to disagree with them and with apple there's no question that in order for apple to prevail here they have to win on both the facts and the law we've been talking a lot about the law the last few minutes here but but the facts here make it clear that even if only paragraphs one dollar and four dollars applied and they don't got you to focus on that i'm happy to do that thank you so let's talk about paragraphs five years in advance concept that you have them was arguing it says in advance of an exploitation the be owned as agreed upon in writing in advance of an exploitation thereof of the patents by the affected staff member this isn't talking about making an agreement before any work is done you have to know what the invention is before you can decide who owns what and what work relates to what you couldn't possibly do this in advance of any work and so i disagree with you of m's analysis of paragraph five this is about doing things in advance of exploitation of the patents and and so it does fit within the same structure as paragraphs one dollar and four dollars that after the inventive activity is done there are three possibilities one is it was all done with u of m resources nd it was done all with non u of them resources or rd it was done with a combination of u of m resources and non human resources those are three possibilities covered by the bylaws and and there can't be an automatic assignment under that scenario because you have to decide whose resources were used and then figure out which of these paragraphs apply  the other thing that i think is critical here is the no added step concept that you have em and apple have promoted the university the bylaws are high level concepts right and the university implements those concepts in the tech transfer policy that's exactly what the tech transfer policy says and that was contemplated from the beginning that there would be some way to implement these the tech transfers policy requires inventors employees to disclose their inventions to the office of tech transfer and the way that is implemented by the university is with the invention report form that invention report form is a required additional staff that must be done under the university rules and and apple argued isn't wasn't required to follow that but he was he has his agreement says he will abide by the bylaws of the university and their regulations and rules and this is one of the rules on page eight of the blue brief apple says the policy requires university inventors to report inventions immediately to the office office of technology transfer price pills the use of m thirty six witness was deposed he said explicitly that if the invention falls under you them policies then they're required to report those to the university that's appendix page five hundred and twenty five dollars he also said the same thing appendix page five hundred and seventy one dollars so there's no doubt that if the dividing line is doing an additional stop and i don't think that's right dividing line by the way but if that's the dividing line there's clearly an additional step required under the university policies and regulations but i think the better approach in the in the right approach the cases have followed is does the language of the agreement call for some future act or is it a present to act and and that part of it there ought to be a clear message from this court about how to apply these kinds of contracts we shouldn't be in these debates and these shouldn't be in the future either there should be if the language is future tense language if it says shall be which is future tense than that is not a present assignment if the language is present tense language like the university of florida uses is the property of and that comes out of the all timers institute case in the eastern district and sylvania then that is present blank times language that's an that's an automatic a sign but you have property which doesn't made you can't and you can't assign an invention you have made the dissent in the roche supreme court case sort of makes this point that that film tech may not be the right and i'm not asking  court to overturn film tech but the dissent in this in the roche case says film film fact is probably not the right solution to this they point out that before film tech the way the law worked was any simon regardless of how it was worded for future rights and invention gave only applicable title and there had to be some further act to give legal title about film tech change that i understand that but there needs to be some bright line now that phone tech is the law unless we're going to override overrule from talk so the bright line that's clear from the cases is if the assignment language is present tense then it's an automatic assignment if simon language like here is future tense then it's not an automatic assignment and it requires some further action to sign a legal title how do you have no alternative after the invention is made it is an automatic assignment and isn't that how all of these cases that have come up have been resolved well yes but it's an automatic assignment based on the language of the of the contracts both by if they wanted to changing the bylaws but they could also do it the way they have done it by changing their forms so i was a visiting scholar two thousand and fourteen at the university of michigan and taught the patent law class there and my form said what the bylaw language says which is you know any inventions i make shall be the property of the university on two thousand and sixteen they changed that language and said instead it's shall be the property university and hereby  the university has a way to do exactly what you're saying they can use the language of present tense assignment and they have done that in all their forms now everyone they would have said they were trying to adjust to the evolution  arise but i didn't see anywhere that it was they were changing the foundation of the of the relationship of the to be sent to faculty are employed  only equitable title would transfer no legal title would transfer without some further act so until nine hundred and ninety one before after this bylaw was adopted there was no question that this only transferred equitable title this bylaw made and i believe it's no longer just species that university resources to use is that correct it's absolutely disappeared in fact there's no evidence that any resources were used i thought that was behind that  these inventions we were made well dr islam was on the payroll actually he took a leave of absence he was not paid he received no salary he was not paid and the only people the only people with any knowledge of the work he saw let me step back he was doing research on paid at the cardiovascular center with us and the several doctors doesn't the record shows that other other in his deposition that they're the the three doctors who worked with dr islam at the c b c looked at the patent applications and said they did this turns on the question of fact as to whether how do you diversity resources who are involved rather than a question of law as to what would happen if and a university resources were involved university resources that's that's the footnote one in the district court opinion which is which is not contested and there's been no shown no clearer in the that fact finding there were no university resources used to make these inventions and so we win on that fact alone you don't have to be human but we also went on the law in our view as well decision does not rest on the finding a factual determination so that is not a correct for trail of what the basis of just a course decision was nd thing i'd like to point out is that it is absolutely disputed that the  position is disputed there was no funding support what the university did in two thousand and thirteen through two thousand a thing is conduct two different investigations into the question of whether there was funding support and if found both times that there was in one of the things that's really important to note is that the university found a variety of types of funding support use of facilities was one of them and that is if you look in the language of paragraph one of the bylaws it's explicitly six in the appendix so there's plenty of evidence supporting the university's finding that it made and communicated to dr islam that there was funding support so important to recognize dr islam in the university are not parties to this case the dispute between them about whether there is funding support or not as is between those two has been resolved university made a determination there was in the end dr islam never invoked the appeal procedure in the tech transfer policy that he had to use to change that determination and he never sought to get transferred a title to those inventions either now on the central question which is what's the effect of this language i was because i didn't have the university to doctors f university has found that they own the patents and it's up to them to decide how to deal with the breach of the contract they've concluded they don't need to intervene up until this point they hadn't but the bottom line is that if you look at the situation of the question of funding you have a determination by the university that has not been contested by the part of this adversely affected by it which is dr islam and that again is not the basis of the district court's decision so the last point i'd like to flag is the language that was discussed about the phrase shall be the property of or shall best and keep in mind that the bylaws not the only operative element of this contract the contract is actually the one thousand nine hundred and ninety two contract which starts with the observation that assignment of property rights of dr islam are governed by the various provisions of by a last three point one and that's equivalent to the i here by a sign perhaps but it's definitely a clear signal that the assignment is going to be implemented according to the rules of the bylaw the language that you mentioned and i think dr or mr laurie had talked about about the shall be the property of actually that type of language one of one instance of it was addressed by the court in the majority opinion of the supreme court in roche that's the national language and it is very similar to the to the language that's in