Complaint Established Sufficient Facts to Support Claim for Inventorship

In Coda Development S.R.O. v. Goodyear Tire & Rubber Company, [2018-1028](February 22, 2019), the Federal Circuit vacated the dismissal of Coda’s complaint, seeking correction of inventorship of patents on self-inflating tires and alleging misappropriation of its trade secrets.

The district court dismissed the complaint under 12(b)(6) for failing to state a claim, and denying Coda the opportunity to amend its complaint. However the Federal Circuit, accepting the complaint’s well-pleaded factual allegations as true and drawing all reasonable inferences in Plaintiffs’ favor, concluded that Plaintiffs’ claims for correction of inventorship are plausible. The Federal Circuit noted that the complaint described Goodyear’s prior failures with inflation technology; and that it described two meetings with Goodyear representatives—both arranged at Goodyear’s initiative and attended by Goodyear’s point-person on SIT technology. The Federal Circuit further noted that Goodyear sought technical information from Coda at both meetings, and Goodyear’s point person requested that he and his team be allowed to spend some time alone with Coda’s functional prototype, during which he photographed it without permission. The Federal Circuit noted that a month, Goodyear applied for the first in a series of patents covering assemblies and methods concerning self-inflating tires, with claims covering the allegedly novel, proprietary, and confidential information Coda disclosed to Goodyear.

The Federal Circuit said that construing the complaint in the light most favorable to Plaintiffs and taking these and other highly specific facts together—including, but not limited to, Goodyear’s prior failure, its eagerness to meet with Coda, its unauthorized photography of Coda’s functional prototype, the timing of its distancing itself from Coda and its filing for the ’586 patent, and a pointed accusation from one of its former employees—we conclude that Plaintiffs’ correction-of-inventorship claims are plausible.

The Federal Circuit also found that the district court also erred in dismissing Plaintiffs’ trade-secret-misappropriation claim as time-barred. The statute-of-limitations inquiry was when Plaintiffs discovered or by the exercise of reasonable diligence should have discovered their claim. The Federal Circuit rejected Goodyear’s argument that based upon the facts alleged in the complaint, plaintiff should have begun investing earlier, observing that plaintiff might have simply assumed Goodyear lost interest, or that Goodyear would honor is nondisclosure agreement. Considering only the complaint, and drawing all reasonable inferences in Plaintiffs’ favor, the Federal Circuit concluded that the district court erred in dismissing Plaintiffs’ trade-secret misappropriation claim as time-barred.

Neither Express Agreement, nor Implied Agreement, Clearly Deprived a Putative Inventor of Standing to Challenge Inventorship of a Patent Under 35 USC 256

In James v. J2 Cloud Services LLC, [2017-1506] (April 20, 2018), the Federal Circuit reversed the dismissal of James’ claim for correction of inventorship for lack of jurisdiction.

James alleged that he is the sole inventor of the subject matter claimed in U.S. Patent
6,208,638, on systems and methods for accepting an incoming message
over a circuit switched network and transmitting it over a packet switched network, which names Rieley and Muller as the inventors.  On defendant’s motion the district court dismissed the complaint for lack of Article III standing, concluding that James failed to allege facts sufficient to show that he has an ownership or financial interest in the patent.

To have Article III standing, a plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.  The Federal Circuit said that if Mr. James were to prevail on his allegations he would stand to gain concretely, whether through securing an entitlement to seek damages for past acts of infringement or otherwise.
Such a gain would be directly related to the merits of the claim and would redress the asserted injury of being deprived of allegedly rightful ownership.  The Federal Circuit said that in the absence of other facts, that is enough to give James Article III standing.

However, the district court found that James assigned away, or entered into an enforceable agreement to assign away, any ownership rights he may have had in
the patent.  However, the Federal Circuit concluded that he did not.  The Federal Circuit could not conclude that the Software Development Agreement precludes James from
retaining ownership rights in patents on his inventions, finding it “amenable to the construction that it does not assign, or promise to assign, patent rights that would
otherwise accrue to Mr. James as an inventor.”  The Federal Circuit reviewed the sections addressed by the district court or argued by the parties, and when considered in the light favorable to James, as they must be on a motion to dismiss, do not deprive James of constitution standing.

The Federal Circuit the addressed the the “hired to invent” doctrine of United States v. Dubilier Condenser Corp., 289 U.S. 178, 187 (1933), and Standard Parts Co. v. Peck, 264 U.S. 52, 59–60 (1924), under which an employer may “claim an employee’s inventive work where the employer specifically hires or directs the employee to exercise inventive faculties.”  The “hired-to-invent” rule is “firmly grounded in the principles of contract law,” and “[t]o apply this contract principle, a court must examine the employment relationship at the time of the inventive work to determine if the parties entered an implied-in-fact contract to assign patent rights.”  Whether the doctrine is viewed as a matter of federal law or a matter of the state law of implied-in-fact contracts, its applicability in a given case depends on the terms of the contractual relationship of the parties.  The Federal Circuit noted what it found an important distinction: the agreement was not with James personally, but with GSP.  Thus James was not himself an “employee” of, or personally hired by, defendant’s predecessor in interest.  Moreover, because the Software Development Agreement largely or even wholly defines the terms of the alleged “hiring” of James (actually of GSP),there is at least a factual dispute about any implied assignment or promise to assign.  Accordingly, the Federal Circuit found that it was improper to dismiss the case under Rule 12(b)(1) for lack of standing based on the hired-to-invent principle.

An Omitted Inventor Can’t Correct Inventorship of a Patent Owned by a Government Agency

In a non-precedential opinion in Ali v. Carnegie Institution of Washington, [2016-2320] (April 12, 2017), the Federal Circuit affirmed the dismissal, on grounds of soverign immunity,  of Ali’s lawsuit to be added as a co-inventor on several of defendants’ patents. The district of Oregon court dismissed UMass on the ground that it is entitled to sovereign immunity under the Eleventh Amendment of the U.S. Constitution and transferred the case to the U.S. District Court for the
District of Columbia, where the court dismissed the case for want of an indispensible party.

Ali argued that the Oregon court erred in refusing to conclude that UMass waived sovereign immunity when, in return for federal funding under the Bayh-Dole Act.  The Federal Circuit noted that the question of Eleventh Amendment waiver is a matter of Federal Circuit law, and that a district court’s decision on sovereign immunity is subject to de novo review.  The Federal Circuit said that UMass waives sovereign immunity under only two circumstances: first, if the state on its own initiative invokes the jurisdiction of the federal courts; and second, upon a clear declaration by the state of its intent to submit to federal jurisdiction.  The Federal Circuit said that UMass’s alleged agreement to be subject to suit by the federal government under a contract controlled by and consistent with the Bayh-Dole Act did not operate as a “clear declaration” that it waived its sovereign immunity
as to Mr. Ali’s suit against it for damages arising from his alleged omission as a co-inventor of the patents-in-suit.

The net result is that it is impossible for an omitted inventor to correct inventorship of a patent that is at least partially owned by a government entity.

 

 

 

District Court Correctly Added Inventors Who Contributed to at least one Claim Element

In Vapor Point LLC. v. Moorhead, [2015-1801, 2015-2003] (August 10, 2016), the Federal Circuit affirmed the district court’s correction of inventorship, dismissal of the infringement action, and denial of a attorneys’ fees.

A person who alleges that he is a co-inventor of the invention claimed in an issued patent who was not listed as an inventor on the patent may bring a cause of action to correct inventorship in a district court under 35 U.S.C. § 256.  Inventorship is a question of law entitled to de novo review by this court.  All inventors, even those who contribute to only one claim or one aspect of one claim of a patent, must be listed on that patent.

The Federal Circuit agreed that the district court’s findings were sufficient to support its inventorship judgment. Co-inventors need not physically work together or at the same time, make the same type or amount of contribution, or make a contribution to the subject matter of every claim of the patent.  Inventorship is determined on a claim-by-claim basis.

The Federal Circuit said that inventorship and ownership are separate
issues.  The patent owner waived the Federal Circuit’s review of whether the added inventors had an obligation to assign the invention by affirmatively representing to the district court that resolution of the inventorship issue would dispose of the infringement issue.