Opinion ID: 1190344
Heading Depth: 1
Heading Rank: 5

Heading: The Disputed Instructions Were Given In Error Because the P & C Agreement Required the Application of Patent Law.

Text: 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 co-inventor 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. 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., 58 Cal.App.4th 44, 67 Cal.Rptr.2d 850, 854 (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. 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. 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. 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 insufficient 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.