Midwest Intellectual Property Symposium Current Topics Concerning Corporate Ownership and Licensing of Intellectual Pro

1. Midwest Intellectual Property SymposiumCurrent Topics Concerning Corporate Ownership and Licensing of Intellectual PropertyNovember 19, 2009

2. Recent Ownership Themes • Current Topics: • Collaborations • Security Interests • Continuations-in-Part • Outside the US (Foreign) Issues • Note: The following cases are just a small sample of recent cases related to intellectual property ownership. 

3. Collaborations

4. Stanford v. Roche (Fed. Cir. 2009) • Patented Technology • Method of quantifying HIV virus levels in human blood samples and correlating to the effectiveness of antiretroviral drugs. •  History • One of the named inventors (Holodniy) of the patents at issue signed a Copyright and Patent Agreement ("CPA") upon joining laboratory at Stanford. • Holodniy visited Cetus to learn the technology. • Holodniy signed a Visitor's Confidentiality Agreement ("VCA"). • Research for the technology at Stanford was funded by the National Institutes of Health ("NIH"). • Stanford filed the applications for the patents at issue – the '730, '705 and '041 patents.

5. Stanford v. Roche (Fed. Cir. 2009)

6. Stanford v. Roche (Fed. Cir. 2009) • Procedural History • Stanford sues Roche for patent infringement. • Roche: Stanford lacks standing - Roche owns, has a license for, and/or a shop right on the asserted patents. • District Court • Roche's ownership was barred by California's statute of limitation and the Bayh-Dole Act. • Roche's license claims fail because Stanford never consented to Roche's acquisition of Cetus. • Roche lacked shop right to the patents.

7. Stanford v. Roche (Fed. Cir. 2009) • Federal Circuit • Although Roche claiming ownership was barred by California's statute of limitation, under California law, "a defense may be raised at any time, even if the matter alleged would be barred by a statute of limitations if asserted as the basis for affirmative relief" (citation omitted).  • Similar reasoning applies to laches and equitable estoppel. • Thus, Roche can assert its ownership as a bar to Stanford's standing.

8. Stanford v. Roche (Fed. Cir. 2009) • Federal Circuit • Which law to apply?  • Normally questions of ownership are state law issues. • Exception: questions of whether a patent assignment clause creates an automatic assignment or merely an obligation to assign - Federal Circuit Law applies. 

9. Stanford v. Roche (Fed. Cir. 2009)

10. Stanford v. Roche (Fed. Cir. 2009)

11. Stanford v. Roche (Fed. Cir. 2009) • Federal Circuit • Was Holodniy's CPA with Stanford an automatic assignment? • Language: "I agree to assign and confirm in writing to Stanford..." is a mere promise to assign. • Stanford's invention rights policy supports this conclusion: "Unlike industry and many other universities, Stanford's invention rights policy allows all rights to remain with the inventor if possible." • Stanford did not immediately gain title to the inventions.

12. Stanford v. Roche (Fed. Cir. 2009)

13. Stanford v. Roche (Fed. Cir. 2009)

14. Stanford v. Roche (Fed. Cir. 2009) • Federal Circuit  • Was Holodniy's VCA with Cetus an automatic assignment? • Language: "I will assign and do hereby assign to CETUS..." is a present assignment of Holodniy's future inventions. • Cetus immediately gained equitable title to Holodniy's inventions. • Cetus's equitable title converted to legal title when the parent application was filed on May 14, 1992. • This negated Holodniy's subsequently executed assignment to Stanford (May 4, 1995) because Holodniy no longer retained any rights.

15. Stanford v. Roche (Fed. Cir. 2009)

16. Stanford v. Roche (Fed. Cir. 2009)

17. Stanford v. Roche (Fed. Cir. 2009) • Federal Circuit • Was Stanford a Bona Fide Purchaser (BFP) under 35 USC § 261? • "An assignment, grant or conveyance shall be void as against any subsequent purchaser or mortgagee for a valuable consideration, without notice, unless it is recorded in the Patent and Trademark Office within three months from its date or prior to the date of such subsequent purchase or mortgage." 35 USC § 261 • Stanford was charged with notice of its employees' assignments (the VCA). • Stanford was not a BFP.

18. Stanford v. Roche (Fed. Cir. 2009)

19. Stanford v. Roche (Fed. Cir. 2009)

20. Stanford v. Roche (Fed. Cir. 2009) • Bayh-Dole Act- 35 USC § 200+ • US Government to take title under certain conditions. • The "contractor" universities or inventors can retain ownership if US Government does not. • Stanford (and District Court): Bayh-Dole allowed Stanford a "right of second refusal" after Government refrained to exercise its rights. • Holodniy could only keep title if Stanford did not elect to retain title. • Federal Circuit  • Bayh-Dole does not void prior contractual transfers of rights. • Thus, Bayh-Dole did not automatically void the patent rights Cetus received from Holodniy. 

21. Stanford v. Roche (Fed. Cir. 2009) • Federal Circuit • Roche declaratory judgment of ownership barred by California's statutes of limitation. • Stanford lacks standing because it cannot establish ownership of Holodniy's interest.

22. Stanford v. Roche (Fed. Cir. 2009) • Take Home Points: • Review the language in your assignments to make sure that it contains a present assignment of patent rights.  • "I do hereby assign" • When collaborating, make sure that employees do not sign anything unless it is reviewed.

23. Foreclosures and Security Interests

24. Sky Technologies v. SAP (Fed. Cir. 2009) • Procedural History • Sky Technologies ("Sky") sues SAP AG and SAP America ("SAP") for patent infringement. • SAP moved to dismiss because Sky lacks standing because chain of title was broken. • District Court finds the patents in suit were transferred through foreclosure proceedings. • SAP files an interlocutory appeal to the Federal Circuit.

25. Sky Technologies v. SAP

26. Sky Technologies v. SAP

27. Sky Technologies v. SAP  • Issue: Whether XACP has legal right, title, and interest in the patents to transfer those patent rights to Sky, thereby providing Sky standing to sue. • SAP:No writing exists transferring the patents from Ozro to XACP. • 35 USC § 261requires a transfer of ownership to be in writing. • Sky:Akazawa v. Link New Technology International, Inc., 520 F.3d 1354 (Fed. Cir. 2008) permits transfer of patent ownership by operation of law without a writing.

28. Sky Technologies v. SAP  • 35 USC § 261 requires all assignments of patent interests to be in writing. • Fed. Cir.:"[T]here is nothing that limits assignments as the only means for transferring patent ownership... [O]wnership of a patent may be changed by operation of law." Akazawa, 520 F.3d at 1356. • Japanese inventor died intestate; wife (and daughters) subsequently transferred patent rights to the plaintiff. • Akazawa is controlling in this case.

29. Sky Technologies v. SAP  • SAP:Akazawa is correct, but 35 USC § 154(a)(1) limits the class to persons receiving ownership - "Every patent shall contain a short title of the invention and a grant to the patentee, his heirs or assigns, of the right to exclude ..." • Akazawa the class was heirs, but in this case, XACP is not the patentee, an heir, or an assign. • Fed Cir.:35 USC § 154 does not restrict patent ownership to these three classes and it fails to address transfers of ownership.

30. Sky Technologies v. SAP  • Fed Cir.: Policy Justifications for Transfers by Operation of Law • Large number of patent titles subject to security interests would be invalid. • If not, value of patents would diminish because patent owners would be limited in collateral sources. • Impractical to have a written assignment from a business that may no longer exist.

31. Sky Technologies v. SAP  • Which law to apply? • Federal law usually is used to determine the validity and terms of an assignment. • State law controls any transfer of patent ownership by operation of law not deemed an assignment. • In this case, Massachusetts Law applies. • XACP followed Massachusetts law in perfecting ownership of the patents through the security interest. • Massachusetts law does not require a writing--Transfer Statements are merely recognized and not mandatory to transfer patents.

32. Sky Technologies v. SAP  • Summary of Ways of Transferring Ownership • Assignment: need a writing. • Operation of law: do not need a writing if state law does not require one.

33. Assignment of Continuations in Part (CIPs)

34. Euclid Chemical Co. v. Vector Corrosion Tech., Inc., 90 USPQ2d 1220 (Fed. Cir. 2009) • Patents • '553 Patent (Parent) • '742 Patent: Continuation-in-Part (CIP) of the '553 Patent • Inventor (Bennett) consulted with both Euclid and Vector • Assignment • Inventor (Bennett) to Vector  • Executed 8 months after after the '742 Patent (CIP) issued • Assignment does not specifically identify the '742 Patent (CIP)

35. Euclid - Diagram of Assignment

36. Euclid Chemical Co. v. Vector Corrosion Tech., Inc. 90 USPQ2d 1220 • Procedural History • Euclid: DJ Action the Assignment did not transfer the ’742 patent to Vector and it was a bona fide purchaser for value of the ’742 patent. • Vector: Counterclaim it owned '742 Patent by assignment.

37. Euclid - Assignment Text I, JACK BENNETT, whose full post office address is 10039 Hawthorne Drive, Chardon, Ohio 44024, in consideration for $25,000.00 and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged do hereby sell and assign to VECTOR CORROSION TECHNOLOGIES LTD. whose full post office address is 474 Dovercourt Drive, Winnipeg, Manitoba Canada R3Y 1G4, all my interest in the United States, Canada and in all other countries in and to my US, Canadian, and European applications for patents and issued US patent, namely:

38. Euclid - Assignment Text 1. Issued US Patent 6,033,553. This patent claims the specific use of LiNO3 and LiBr to enhance the performance of metallized zinc anodes; 2. US Application No. 08/839,292 filed on April 17, 1997, 3. US Application No. 08/731,248, filed on October 11, 1996 (now abandoned), 4. EPO Application No. 99122342.1, filed November 9, 1999, and 5. Canadian Application No. 2288630, filed November 8, 1999,

39. Euclid - Assignment Text any and all divisional applications, continuations, and continuations in part together with the entire right, title and interest in and to said applications, any and to all divisional applications, continuations, and continuations in part thereof, the right to claim priority therefrom under the International Convention, and any and all Letters Patent which may issue or be reissued for said invention to the full end of the term for which each said Letters Patent may by granted; and hereby authorize the issuance to said assignee of any and all said Letters Patent not already issued as the assignee of entire right, title and interest in and to the same, for the sole use and benefit of said assignee, its successors, assigns or legal representatives; 

40. Euclid - Assignment Text and hereby covenant and agree to do all such lawful acts and things and to execute without further consideration such further lawful assignments, documents, assurances, applications, and other instruments as may reasonably be required by said assignee, its successors, assigns or legal representatives, to obtain any and all Letters Patent for said invention and vest the same in said assignee, its successors, assignees or legal representatives. SIGNED AT: Chardon, Ohio, USA. This 20th day of December, 2001

41. Euclid - District Court • Ohio Law applies. •  Assignment was unambiguous for CIP ('742 Patent) • Consequently, no extrinsic evidence. • District Court relied on the following language to conclude that the '742 CIP patent was assigned: • “any and all . . . continuations in part together with the entire right, title and interest in and to said applications, any and to all divisional applications, continuations, and continuations in part thereof . . . and any and all Letters Patent which may issue or be reissued for said invention . . . ."

42. Euclid - Federal Circuit (Majority) • Ohio Law applies •  Assignment was ambiguous for CIP ('742 Patent). • District Court was correct that the language of the Assignment purports to convey “US Patent 6,033,553” and “any and all divisional applications, continuations, and continuations in part.” and the '742 Patent was a CIP of the '553 Patent. • BUT- the Assignment specifically assigns all interest in and to the inventor’s “US, Canadian, and European applications for patents and issued US patent.” (emphasis added) • “applications”—plural but “issued US patent”—singular.

43. Euclid - Federal Circuit (Majority) •  Assignment was ambiguous for CIP ('742 Patent). • Had the assignee intended through the assignment of “continuations in part” to assign other issued US patents, it would be expected that the Assignment would have said that the inventor was assigning his “issued US patents”—plural—and even recited the patent number of the issued ’742 patent. • '742 Patent already issued as a patent when the assignment was executed. • Although Euclid provided extrinsic evidence to show '742 patent (CIP) not assigned, remand to give Vector the opportunity to submit extrinsic evidence.

44. Euclid - Federal Circuit (Newman) •  Newman: Concurs in part and dissents in part • Concurs: District Court erred in granting summary judgment of ownership to Vector • Dissents: Contractual intent requires a new trial • Arguments • Need specificity of identification of transferred patents • Bennett- 3 (consultant) agreements with Vector all related to the '553 patent and its distibuted anode technology • None of the agreements explicitly mention the '742 patent (CIP) or embedded anode technology • Vector recorded assignment for '553 patent but not for the '742 patent (CIP) • Vector never paid maintenance fees for the '742 patent (Bennett paid)

45. Continuations-in-Part (CIPs) • Take Home Points: • If the patent application was already filed and/or issued, identify it in the assignment. • Do not rely on boilerplate language. • Watch out for singular and plural forms of intellectual property in your assignments. • Consider language in assignments preventing the inventor filing CONs/DIVs/CIPs without approval. • Consider instead filing CIPs as straight utility applications. • Watch out for consultants and conflicts of interest.

46. Mergers and Acquisitions - CIPs and Security Interests

47. Gerber Scientific Int'l v. Satisloh AG, No. 3:07-CV-1382, (D. Conn., September 25, 2009, order) • Parties • Plaintiff- Gerber Scientific International, Inc. ("Gerber"). • Defendants- Satisloh AG and Satisloh North America, Inc. ("Satisloh"). • Procedure • Gerber sues Satisloh for infringement of US Patent No. 5,485,771 ("'771 Patent"). • Satisloh moves to dismiss because Gerber does not own the '771 patent due to a break in assignment chain and thus lacks standing. • District Court denies motion.

48. Gerber- Assignments Diagram

49. Gerber- Assignments Diagram

50. Gerber Scientific- Key Assignment Language • Inventors Assign '394 Application to Pilkington • December 2, 1991, the inventors assigned the ‘394 application “and all divisions, continuations, and continuations-in-part of said application, and reissues and extensions of said Letters Patent or Patents” to Pilkington Visioncare, Inc. (emphasis added). • Coburn Acquires Pilkington • On March 9, 1992, Pilkington assigned the ‘394 application, along with 27 issued patents and 12 other pending applications to Coburn.  • The assignment transferred “all its right, title and interest in, to and under said Letters Patent and patent applications and the inventions covered thereby and any divisions, reissues, continuations and extensions thereof.”