Laches Bars Claim to Change Inventorship on Issued U.S. Patent
By Joseph Herndon --
On February 16, 2016, the Federal Circuit issued an opinion in a case captioned Hedwig Lismont v. Alexander Binzel Corp. This appeal arises from an inventorship dispute between Hedwig Lismont (Mr. Lismont) and Alexander Binzel Corp. (Binzel-USA), Alexander Binzel Schweisstechnik GmbH & Co. KG (Binzel-Germany), Abicor Unternehmensverwaltungs GmbH (Abicor), IBG Industrie-Beteiligungs-GmbH & Co. KG (IBG), and Richard Sattler (Mr. Sattler) (Appellees). The U.S. District Court for the Eastern District of Virginia granted summary judgment in favor of Appellees, concluding that Mr. Lismont's inventorship claim, which he filed ten years after the patent issued, was barred by laches. The Federal Circuit agreed with the District Court's conclusion that the presumption of laches applies against Mr. Lismont's claim and that he failed to rebut that presumption.
This case serves as a reminder of the power of laches as a defense. For purposes of this case, laches as a defense does not consider any of the underlying facts surrounding whether Mr. Lismont was a proper inventor of the patent. Rather, laches simply bars Mr. Lismont from bringing his claim of inventorship any further due to delay in asserting his rights.
The case has somewhat complicated facts that are simplified here. Binzel-Germany is the owner of a German Patent (filed in 1997), which serves as the priority document for a PCT application filed in 1998. Binzel-Germany also owns the U.S. patent at the heart of this dispute, which issued in 2002 to Mr. Sattler and claims priority to the 1998 PCT application.
Mr. Lismont asserted that, in 1995, he developed the inventive method disclosed in both the German and U.S. patent in response to Binzel-Germany's request for assistance in developing a lower-cost manufacturing process. Mr. Lismont further alleged that, despite numerous representations from Binzel-Germany that he was the first to conceive of this method, Binzel-Germany filed the German patent application naming Mr. Sattler, a Binzel-Germany employee, as the inventor, rather than Mr. Lismont. As with the German patent application, Binzel-Germany did not identify Mr. Lismont as an inventor on its PCT Application, and thus, Mr. Lismont also was not named as an inventor on the corresponding U.S. patent.
Two years after the German patent issued, Mr. Lismont initiated litigation against Binzel-Germany in the German Regional Federal Court in Frankfurt, Germany (First German Litigation). In that litigation, Lismont maintained that he was the sole inventor of the subject matter disclosed in the German patent and therefore sought to change inventorship on the German patent. Mr. Lismont subsequently filed a second action in Germany (Second German Litigation) against Binzel-Germany, Abicor, and Mr. Sattler, seeking damages related to his inventorship claim. Ultimately, the German courts ruled against Mr. Lismont in both cases for essentially the same reasons: that he failed to prove that he had an inventorship interest in the German patent.
On October 31, 2012, twelve years after Mr. Lismont initiated the First German Litigation, he initiated the underlying litigation seeking, among other things, to correct inventorship of the U.S. patent under 35 U.S.C. § 256(a). The District Court granted the Appellees motion for summary judgment on the basis that Mr. Lismont's inventorship claim was barred by laches.
Laches is an equitable defense that may bar an inventorship claim, and to prevail on a defense of laches, a defendant must establish that (1) the plaintiff's delay in filing a suit was "unreasonable and inexcusable"; and (2) the defendant suffered "material prejudice attributable to the delay." Further, a rebuttable presumption of laches attaches whenever more than six years passes from the time a purportedly omitted inventor knew or should have known of the issuance of the relevant patent. This presumption of laches may be rebutted if the plaintiff offers evidence to show an excuse for the delay or that the delay was reasonable or by offering evidence sufficient to place the matters of defense prejudice and economic prejudice genuinely in issue.
Presumption of Laches
Because Mr. Lismont undisputedly knew of the application that eventually issued as the U.S. patent before the U.S. patent issued, the District Court concluded that the laches clock started to run when the U.S. patent issued on August 6, 2002. Then, more than ten years later, on October 31, 2012, Mr. Lismont initiated the present action. Given that this delay exceeded six years, the District Court found that the rebuttable presumption of laches attached.
Mr. Lismont argued that he did not delay in initiating the underlying action because he had been diligently seeking to vindicate his inventorship rights in German and European courts. The Federal Circuit disagreed, and noted that the relevant inquiry for the laches presumption is whether more than six years passed between the time when the inventor knew or should have known of the subject patent and the time the inventor initiated litigation. Accordingly, to avoid the imposition of the rebuttable laches presumption, Mr. Lismont should have filed his United States inventorship litigation within six years of August 6, 2002, the date on which the patent issued.
Rebutting the Presumption
Although Mr. Lismont's litigation abroad may not be used to avoid a presumption of laches, it may help to rebut that presumption. The Federal Circuit has recognized that a patent owner may avoid the consequences of what would otherwise be an unreasonable delay in filing suit by establishing that he or she was engaged in "other litigation".
For other litigation to excuse a plaintiff's delay, however, the defendant must have adequate notice of the other proceedings as well as plaintiff's intention to pursue its patent rights upon completion of the other proceedings. What is important is whether the defendant had reason to believe it was likely to be sued. Although the "other litigation" excuse is typically invoked when a plaintiff is serially asserting its patents against different defendants, in circumstances like those presented in this case, the defendant in the foreign litigation must likewise receive adequate notice that the plaintiff intends to later pursue its rights under United States patents after termination of the proceedings in the foreign jurisdiction.
The Federal Circuit found, however, that the mere initiation of patent litigation in a foreign jurisdiction and the existence of United States patents are not sufficient to notify a defendant that the plaintiff will eventually seek to assert its patent rights in the United States.
Mr. Lismont pointed to three possible sources of the requisite notice, each of which was rejected by the Federal Circuit.
1. A document filed in the First German Litigation in which he stated that "the witness Sattler has applied for the patent that is in dispute here in the Unite[d] States in his own name as inventor" and then stated that an "extension of claim according to § 263 ZPO is therefore expressly reserved." (i.e., notifying Binzel-Germany that he was reserving his right to assert correction of inventorship on the '406 patent). But, here, the Federal found that "ZPO" refers to the German Code of Civil Procedure and section 263 of the German Code of Civil Procedure permits amendments to pleadings pending in a German civil action. Thus, Mr. Lismont's reference to "§ 263 ZPO" reserved only his right to "extend" his German claim in front of the German court.
2. A letter to Mr. Sattler that (i) noted the filing of a U.S. patent application naming Mr. Sattler as the inventor; (ii) advised that Mr. Lismont would "carefully examine and prosecute your conduct and actions in all legal respects"; and (iii) notified Mr. Sattler that failure to pay damages would result in the initiation of "appropriate legal action with no further notification." Again, the Federal Circuit found that this communication lacked any indication that Mr. Lismont intended to commence legal proceedings to correct inventorship in the United States.
3. Lismont's request in Germany for "worldwide damages" also does not satisfy requisite notice. There are no assertions in the complaint filed in the Second German Litigation indicating that Mr. Lismont was pursuing the issue of inventorship as to the '406 patent. More importantly, there are no assertions in the complaint that could serve to notify Binzel-Germany that this issue would eventually be litigated in the United States if left unresolved upon conclusion of the litigation abroad.
Thus, because the plaintiff did not provide any explicit notice to the defendants in a foreign patent dispute that it would pursue litigation in the courts of the United States against the same defendants upon termination of the foreign litigation, it was not an abuse of discretion to find that laches bars the later claim. Thus, the Federal Circuit found that the presumption of laches applies and that Mr. Lismont had not presented any genuine issues sufficient to rebut the presumption. Therefore, Mr. Lismont's claims were barred by laches.
Thus, in instances in which a party believes a patent has issued with improper inventorship, and the interested party is looking to be correctly added as a named inventor, 35 U.S.C. § 256 allows for a court to order correction of the patent on notice and hearing of all parties concerned and the USPTO Director shall issue a certificate of correction with the proper inventorship. But, with all claims, the doctrine of laches is a possible defense, and plaintiffs must act diligently to avoid unreasonable delay to bring forth possible claims. For correction of inventorship, within 6 years of learning of the error, the interested party must come forward to challenge/correct the inventorship to avoid the presumption of laches.
Lismont v. Alexander Binzel Corp. (Fed. Cir. 2016)
Panel: Circuit Judges Lourie, Reyna, and Chen
Opinion by Circuit Judge Chen