Source: http://www.chisum.com/cplrg-guides/0070
Timestamp: 2019-04-22 22:38:34+00:00

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So decreed Chief Justice Roberts for the Supreme Court in the course of rejecting an argument that the Bayh-Dole Act, a federal statute on inventions made in projects funded by the federal government by federal contractors, such as universities, automatically vested title to all federally funded employee inventions in federal contractors. The Court reasoned that Congress, in enacting Bayh-Dole Act, did not intend to displace the prevailing rule that title to an invention vests initially in the inventor, even when the inventor makes the invention during the course of employment.
In Board of Trustees of The Leland Stanford Junior University v. Roche Molecular Systems, Inc., 583 F.3d at 832, CPLRG 0003 (Fed. Cir. 2009) (LINN, Prost & Moore), aff’d, 131 S. Ct. 2188 (2011), the Federal Circuit had held that Stanford lacked standing because a named inventor on the patent, Holodniy, a research fellow at a Stanford, had, after signing an agreement to assign rights to inventions resulting from his employment at the University but prior to signing an actual assignment of the invention to Stanford, executed an assignment of future inventions as part of a consulting arrangement with Roche’s predecessor, Cetus. The Federal Circuit held that the assignment agreement with Cetus resulted in an automatic transfer of ownership when the invention was made and prevailed over the prior Stanford agreement, which was merely an agreement to assign, not an assignment of future inventions.
In Stanford University, the district court had taken a different tact: it had upheld Stanford’s standing but found the patents invalid for obviousness based on the prior art effect of Holodniy’s work at Cetus. Cetus had elected not to seek a patent on Holodniy’s work but allowed it to be published. See Board of Trustees of the Leland Stanford Junior Univ. v. Roche Molecular Sys., 487 F. Supp. 2d 1099 (N.D. Calif. 2007); Board of Trustees of the Leland Stanford Junior Univ. v. Roche Molecular Sys., 563 F. Supp. 2d 1016, (N.D. Calif. 2008).
Ironically, lower court decisions before Stanford University treated the general rule on employee invention ownership as a matter of state law on ownership and contractual relations, not as matter of federal statutory patent law.
As the Court describes in Stanford University, the patent statutes do require that an application be filed by and in the name of the inventor or inventors, but court decisions prior to Stanford University have construed those statutes as speaking to inventorship and not to the distinct question of ownership.
Construction of Patent Assignment Agreements; Uncertainty Created by Federal Circuit Law on Standing. In Stanford, the Court noted but did not pass upon the Federal Circuit’s rulings on important issues concerning the construction of patent assignment agreements and their effect on the standing of a putative patent owner to sue for infringement.
As noted by Justice Breyer, in interpreting patent assignment agreements for the purpose of determining standing to sue for infringement, the Federal Circuit has, (1) applied its own law rather than regional circuit law or state law, DDB Techs., L.L.C. v. MLB Advanced Media, L.P , 517 F.3d 1284 (Fed. Cir. 2008), and (2) distinguished between (a) a present assignment of patent rights and (b) an agreement to assign rights in the future. FilmTec Corp. v. Allied-Signal, Inc., 939 F.2d 1568 (Fed. Cir. 1991). With the former but not the latter, an ownership transfer from the inventor to the assignee is deemed to occur automatically and as a matter of law on the date an invention is made.
The Federal Circuit applied the distinction in Stanford University to deprive Stanford of standing to sue Roche for infringement. The oddity of this result can be appreciated by considering a simplified, hypothetical time line based on the facts of Stanford University.
1. January 1, 2000. Employee A signs an employment agreement with employer B. A agrees to assign any invention pertaining to the employer B’s business to B.
2. February 1, 2000. As employer B’s direction, employee A spends time consulting with another company, C. Unbeknown to Employer B, Employee A signs a confidential disclosure agreement, which states that A “hereby assigns all future inventions” to company C.
3. March 1, 2000. Employee A makes an invention X.
4. April 1, 2000. As she had agreed, employee A executes an assignment of invention A to her employer B.
5. Thereafter, employer B takes the necessary steps to obtain a patent on the invention and to record the assignment in the PTO. The patent issues in 2003.
6. In 2006, employer B files suit for infringement against both company C and another, unrelated company D.
Current Federal Circuit law, as applied in Stanford University, is that employer B lacks standing to sue company C (or. presumably, the unrelated company D).
Strangely, the Federal Circuit applied its standing rule even though it held separately that the accused infringer (Roche or, in the hypothetical, C) was barred from affirmatively obtaining ownership of the patent by a statute of limitations, which applied because of C’s long delay in asserting any ownership rights.
Evaluation. The Stanford University case was complex and the Supreme Court’s ruling dealt with one issue. One conclusion is inescapable: the current law on patent ownership is unacceptably complex and creates excessive uncertainty. Such uncertainty endangers the reliance interests of patent owners, which the Supreme Court emphasized in another 2011 decision. Microsoft Corp. v. i4i Limited Partnership, 31 S. Ct. 2238 (2011). See CPLRG 69.
Justice Breyer’s comments in Stanford University criticized the Court’s holding (and, implicitly, Federal Circuit law on the interpretation of assignment agreements) as making “the commercialization and marketing” of inventions “more difficult” are applicable to patents rights on all inventions, not just those arising from federally-funded research.
Furthermore, regardless of the wording of private assignment agreements, ownership rights, which are not reflected in the written chain of title recorded in the Patent and Trademark Office, such as those of Roche in Stanford University, should always be categorized as “equitable” and subject to equitable rules, including a priority to a first-arising equitable interest.
In SiRF Technology, Inc. v. U.S. Int’l Trade Comm’n, 601 F.3d 1319 (Fed. Cir. 2010), the Federal Circuit moved in that direction. In SiRf, unfortunately, the Federal Circuit acknowledged DDB, but it recognized a presumption in favor of title ownership, placing the burden of proof on a challenger asserting that an invention was the subject of a prior “automatic” employee assignment.
An analogous problem area is that of inventorship disputes. In a questionable interpretation of the statute providing for inventorship correction, 35 U.S.C. Section 256, the Federal Circuit allows persons claiming to be inventors of subject matter claimed by a patent to bring independent suits, which, if established, alter ownership, even though such persons could have but did not timely file their own applications for a patent on the subject matter. However, with inventorship correction, the Federal Circuit does apply equitable principles, such as laches (undue delay in asserting inventorship) and treats uncorrected inventorship as a potential invalidity ground, not a jurisdictional defect. See Chisum on Patents § 2.03[e], § 2.04[d].

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