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  • David Vance

What does 1% get you? 100% right to license!

You've tirelessly worked to perfect and patent your invention and get it approved for sale. Manufacturing and sales are going well, but suddenly there is a problem. A former employee is suing to be named inventor. The former employee works for your competitor who is rumored to be ready to launch a knock-off (ahem, a competitive product). Could it be worse? Yes! Assume the above, except that your former employee is already a named inventor of your patents. Why worse? You can't find an executed assignment and the former employee has licensed their rights to your competitor. Is this a problem? Very much so. An inventor listed on a patent, until an assignment of rights is executed, is an owner of an undividable interest in that patent. That inventor/owner can do whatever they want with their interest including licensing the right to practice your invention to a competitor. Also, all of the owners of a patent must be joined in a lawsuit. If one refuses, you have a subject matter jurisdiction problem.

Years ago, Stanford University, the Cardinal (one of those rare singular mascots), sued Roche over infringement of an HIV PCR (polymerase chain reaction) patent. The Federal Circuit (in 2009) dismissed Stanford's patent infringement suit against Roche for failure to own the subject patent. The Federal Circuit held that the inventor's agreement with Stanford (~I agree to assign my rights to future inventions) was inferior to the inventor's contract with Roche (~I will and do hereby assign my rights to future inventions). In essence, this was a promise to assign future rights (Stanford) versus an assignment of future rights (Roche). While Stanford did have a retrospective assignment executed by the inventor, Roche's prospective assignment meant that the inventor couldn't assign to Stanford.

So, does the Roche-style prospective assignment still work? Yes! For example, in 2012 Marathon Oil won its ownership dispute because of a similarly worded employment agreement.

Are inventorship disputes still happening? Yes! Inventorship determination can be quite difficult as it is based on conception, not effort. When an invention is fully conceived can sometimes be so difficult as to require a court of law to decide. For example, this summer the Dana-Farber Institute successfully had two scientists added as inventors to a family of PD-1 cancer treatment patents owned by Ono Pharmaceutical. It is a complicated fact pattern, but the gist is that the two scientists collaborated with one of the co-inventors of the Ono patents. The Federal Circuit held that the collaboration was sufficient to qualify as an inventive contribution. Those newly added scientists are not obligated to and have not assigned their rights to Ono. That might end up being a very costly mistake.

Today's takeaways are:

  1. Inventorship is important and thought should be given prior to filing a patent application as to who was involved in the process of invention. In particular, all parties involved should at least be considered for inventorship.

  2. Listen to your potential inventors and clear up any potential issues before there is substantial money involved. The Ono PD-1 patent family could be worth billions in royalties.

  3. Your company needs a clear assignment from every listed inventor. This can be a prospective assignment via an employment agreement and/or consulting agreement. This can also be from a retrospective assignment (after the application is drafted, filed, or even issues as a patent). Having both prospective and retrospective assignments is a good policy.

  4. Be careful of collaborations, joint research projects, or whenever you have a non-employee assisting with research and/or product development. Get prospective assignments into your collaboration documents or make some type of agreement as to how inventive rights will be assigned.

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