Opinion ID: 3052022
Heading Depth: 3
Heading Rank: 2

Heading: The Disputed Instructions Were Given In Error

Text: Because the P&C Agreement Required the Application of Patent Law. [3] L.A. Biomed argues that the district court erred by not including the co-inventorship language in the jury instructions because the dispute is over the ownership of a patent and is rooted in a contract that dictates that patent and inventorship law should control its interpretation. L.A. Biomed correctly points out that under the settled law of inventorship, each coinventor who makes a significant contribution to an invention owns an undivided interest in the corresponding patent. See, e.g., Ethicon, Inc. v. U.S. Surgical Corp., 135 F.3d 1456, 1465 (Fed. Cir. 1998); Fina Oil, 123 F.3d at 1473. L.A. Biomed thus argues that the agency instruction was given in error because the issue was not whether Dr. Yu acted as Dr. White’s agent, but whether Dr. White made a substantial contribution to the conception of an invention while using its facilities. Dr. White, on the other hand, argues that giving an instruction applying agency law was perfectly appropriate in this breach of contract case where the contract at issue pertains only to inventions Dr. White conceived and/or reduced to practice while utilizing L.A. Biomed’s facilities. 6 It is also worth noting that at the beginning of the charge conference, and prior to the alleged acquiescence, the district court stated, “any instruction that [was] requested that I don’t give [is] deemed . . . preserved, and you don’t need to reassert those. So my order is that . . . those objections and requests will be preserved just by virtue of having requested those instructions.” 5556 LOS ANGELES BIOMED. RESEARCH INST. v. WHITE [4] We first acknowledge that “issues of patent ownership are distinct from questions of inventorship.” Israel Bio-Eng’g Project v. Amgen, Inc., 475 F.3d 1256, 1263 (Fed. Cir. 2007) (hereinafter “IBEP”). Additionally, we recognize that the California Court of Appeal has held that “the trial court correctly applied contract principles in resolving [a] dispute over [a] patent agreement” nearly identical to the P&C Agreement. Shaw v. Regents of Univ. of Cal., 67 Cal. Rptr. 2d 850, 854 (Cal. Ct. App. 1997). In Shaw, a professor sued the University of California when it instituted a new patent policy that reduced the percentage of net royalties payable to him under the patent agreement he signed when he began his employment. Id. at 851. One of the central issues was whether the district court erred in applying contract law “rather than the standard of review for a mandamus action.” Id. at 854. California’s Court of Appeal found that contract law applied and looked to the language of the contract to determine “the meaning and effect of the patent agreement.” Id. at 855. Thus, we turn to the language of the P&C Agreement to determine whether the parties intended for the rules of inventorship or the rules of agency to apply. [5] First, we note that this contract employed a number of terms that reflect well settled principles of patent and inventorship law such as “conceive” and “reduce to practice.” Additionally, L.A. Biomed’s P&C Policy reflects principles of patent and inventorship law. Parties may incorporate the terms of other documents into a contract “so long as [the contract] guides the reader to the incorporated document.” Id. at 856 (internal quotation marks and alteration omitted). The P&C Agreement states that “every possibly patentable device . . . . shall be examined by L.A. Biomed to determine rights and equities therein in accordance with L.A. Biomed’s Patent and Copyright Policy.” This is sufficient to incorporate the P&C Policy into the P&C Agreement. See id. LOS ANGELES BIOMED. RESEARCH INST. v. WHITE 5557 [6] L.A. Biomed’s P&C Policy states: “In its consideration of matters relating to each particular patent . . . case or situation, [LAB’s] Patent Board shall take into consideration the principles laid down in the patent . . . laws and in the court decisions of the United States.” This strongly indicates that the parties intended for patent law to be applied when determining patent ownership rights and equities. [7] Therefore, we conclude that the pertinent language of the contract indicates convincingly that the parties intended for patent law to apply in interpreting the P&C Agreement. Consequently, we conclude that it was clear error for the district court to give the agency instruction and to exclude the co-inventorship language proposed by L.A. Biomed. Agency was a red herring. Because we find that the disputed instructions misstated the law, we presume prejudice and the burden shifts to Dr. White “to demonstrate that it is more probable than not that the jury would have reached the same verdict had it been properly instructed.” Galdamez, 415 F.3d at 1025 (internal quotation marks omitted). We conclude that Dr. White did not meet this burden and that the error was prejudicial because it allowed the jury to decide the case on a legally impermissible ground —specifically, a reasonable juror could have found that Drs. White and Yu conceived or reduced to practice the patented GAD at L.A. Biomed but still would have been compelled nonetheless to return a verdict for Dr. White if they found, as Dr. White argued, that Dr. Yu was not acting as his agent. See Heller v. EBB Auto Co., 8 F.3d 1433, 1441 (9th Cir. 1993) (reversing and remanding a jury verdict where the jury could have based its verdict on a finding inconsistent with the law due to the district court’s erroneous instruction). Dr. White now contends that Dr. Yu’s role was a side note to the centerpiece of his defense that the GAD was conceived in Australia and reduced to practice at the VA Long Beach Hospital. This assertion and the record, however, are insuffi5558 LOS ANGELES BIOMED. RESEARCH INST. v. WHITE cient to carry Dr. White’s burden. For example, at closing Dr. White’s counsel argued to the jury that Dr. Yu’s efforts were independent of Dr. White’s. He argued, “What did Dr. Yu tell you when he sat in the stand? These were his designs. His designs. He builds the grafts. He designed the wireforms.” He went on to argue that Dr. Yu “clearly was working on his own. He clearly designed these devices.” This is enough to show that the instructional error was not harmless. See Gizoni v. Sw. Marine Inc., 56 F.3d 1138, 1141-42 (9th Cir. 1995) (finding error in jury instruction prejudicial “in light of [appellee’s] closing arguments”). Because the agency instruction combined with the absence of a recitation of settled co-inventorship law was error, and because Dr. White has failed to demonstrate that the error was more probably than not harmless, we reverse the district court’s judgment and remand this case to the district court for a new trial consistent with this opinion. C. The “Corroboration Instruction” was Prejudicial Error. L.A. Biomed alleges that the final paragraph of the “Reduce To Practice” instruction (“the corroboration instruction”) erroneously misstated the law because it failed to inform the jury that any admission against interest by Dr. White need not be corroborated by independent evidence. L.A. Biomed is correct. The first sentence of the corroboration instruction summarizes an accepted principle of patent and inventorship law: “To prove reduction to practice by testimony from a person who claims to have reduced to practice a device, that testimony must be corroborated by independent evidence.” See, e.g., Cooper, 154 F.3d at 1330. The instruction goes on to explain what is sufficient corroborating evidence. L.A. Biomed argues not that the corroboration instruction itself misstates the law, but that the district court misstated the law by failing to acknowledge that an inventor’s admissionsagainst-interest need not be corroborated. LOS ANGELES BIOMED. RESEARCH INST. v. WHITE 5559 [8] We conclude that the corroboration instruction was given in error. The Federal Circuit’s predecessor court has held that in a dispute over the date of conception of an invention, “all that is necessary to constitute an admission is a previous statement by an adversary party which is inconsistent with the position he is taking in litigation.” Technitrol, Inc. v. United States, 440 F.2d 1362, 1370 (Ct. Cl. 1971). In other words, although corroborating evidence is required of an inventor pursuing a patent to prove the date of conception or reduction to practice of an invention, such corroborating evidence is not required when offered by an adversary party against an inventor as an admission-against interest. [9] Thus, we conclude that the corroboration instruction, without a corresponding admission against interest instruction, was given in error because it misstated the law by requiring corroborating evidence.7 Furthermore, we conclude that this instruction was prejudicial. In the PTO declaration, Dr. White stated that he performed bench testing at L.A. Biomed on a version of the GAD that “had the features of a wireform supported prosthesis which could be overlapped with another similar prosthesis”—one of the features L.A. Biomed argued was central to the invention of the “Z-ring GAD device.” He stated further in the PTO declaration that “the bench tests indicated that one graft could be supported within another.” [10] Dr. White argues that this was not an admission against interest and thus could not be prejudicial because the PTO declaration was consistent with his position at trial. We disagree, however, and conclude that a reasonable juror could have found that this statement from the PTO declaration constituted at least some convincing evidence that Dr. White conceived and/or reduced to practice the patented GAD at L.A. 7 We have considered Dr. White’s other arguments on this issue and determined that they are without merit. 5560 LOS ANGELES BIOMED. RESEARCH INST. v. WHITE Biomed. Yet, the corroboration instruction inappropriately prohibited the jury from making such a finding unless there was also sufficient independent corroborating evidence supporting it. Thus, because a reasonable juror could have based a verdict in favor of L.A. Biomed on Dr. White’s declaration in the absence of the corroboration instruction, we conclude that it was prejudicial and a new trial is necessary for this reason as well. See Heller, 8 F.3d at 1441. D. The Identification of the Invention. L.A. Biomed complains that the district court improperly blurred an important distinction between Dr. White’s “O-ring GAD design” and the successful “Z-ring GAD device” when the court held that L.A. Biomed’s contract claim would be limited to whether Dr. White invented an “overlapping GADgraft device” at L.A. Biomed. Given the exact terms of the agreement Dr. White signed, which required him to disclose “every possible patentable device,” this contention has merit. It is clear that more precise jury instructions on this central point of contention needed to have been given. We leave the rectification of this issue to the district court on remand. However, given the parties’ manifest willingness endlessly to dispute on appeal who argued what and when, and who presented what in the multiple conferences on instructions, we would advise both the district court and the parties—now that they will have a fresh start—to take great care to respect Rule 51 and to leave nothing either to inference or to the imagination. We recognize the convoluted history of this case in the trial court, but it turns out that allowing the parties to “deem preserved” previous objections created an unnecessary Rule 51 battlefield on appeal. III