Complete Ownership Is Required to Sue for Infringement
By Baltazar Gomez --
On June 18, 2007, the U.S. Supreme Court denied a petition from Israel Bio-Engineering Project (IBEP) for a writ of certiorari, and let stand an Federal Circuit ruling that IBEP cannot sue for infringement because it failed to show full patent ownership. The Supreme Court's denial marked yet another set back for IBEP since the Federal Circuit February denial of IBEP's request that the CAFC rehear the case en banc. In January, the Federal Circuit affirmed a District Court decision that IBEP lacked standing to sue.
The IBEP case deals with the principles underlying patent ownership and
joint inventorship, and their effects on standing to sue for
infringement. In the appellate level, the Federal Circuit analyzed a series of agreements to determine whether IBEP had complete ownership of U.S. Patent No. 5,981,701 to support standing to sue for infringement. IBEP signed three research agreements with Inter-Yeda in December 1982 which were set to expire in December 1987. Under the agreement, IBEP would fund a number of research programs and in return IBEP would have all ownership rights, title, and interest in patents and patent applications resulting from the agreements. At the same time, Inter-Yeda also signed an agreement with Yeda in which any results that did not belong to IBEP would belong to Yeda.
On January 1988, after the expiration of the IBEP agreements, Dr. Menachem Rubinstein began working on the same research program of the IBEP agreements. Co-inventor Rubinstein helped to purify and sequence the protein of claims 2 and 3 of the '701 patent and assigned the rights to Yeda. The '701 patent issued with Yeda as the assignee.
In 2002, IBEP brought a case before the U.S. District Court for the Central District of California alleging that Amgen Inc., Immunex Corp., Wyeth, and Wyeth Pharmaceuticals, Inc. infringed claim 1 of the '701 patent. Shortly thereafter, Yeda intervened, and in 2003, moved for summary judgment against IBEP arguing that IBEP could not claim full title to the '701 patent because the inventors were not Inter-Yeda employees who assigned their rights to IBEP. The District Court granted summary judgment to Yeda and IBEP appealed. On appeal, the CAFC reversed, holding that there were genuine issues of material fact on whether the inventors were Inter-Yeda employees. On remand, Yeda was granted summary judgment arguing that IBEP did not have standing to sue for infringement because the IBEP agreements had expired before claims 2 and 3 of the '701 patent were co-invented by Dr. Rubinstein. As such, complete ownership of the entire '701 patent could not have been passed to IBEP who could only claim a pro rata undivided share of the entire '701 patent. IBEP appealed once more.
The Federal Circuit started by stating that the bedrock tenet of patent law presumes that an invention belongs to its creator. Each co-inventor presumptively owns a pro rata undivided interest in the entire patent regardless of the co-inventor's contribution. Accordingly, IBEP did not have sole ownership of the '701 patent because Dr. Rubinstein co-invented claims 2 and 3 of the '701 patent after the termination of the IBEP agreement. The court further reasoned that IBEP could only sue with voluntary joinder of co-owner Yeda, but because Yeda has refused to join in the lawsuit, IBEP lacked standing to sue for infringement.
The Federal Circuit also considered IBEP's argument that it had standing to sue because it owned the whole of the '701 patent by way of assignment resulting from the agreements with Inter-Yeda. The CAFC stated that ownership depends on the substance of what was granted through assignment, so that IBEP had to establish that co-inventor Rubibstein was contractually required to assign all of his rights to IBEP. After evaluating the language of the IBEP agreements, the Federal Circuit concluded that the agreements granted IBEP ownership of all rights, titles, and interest to patents and patent applications formed during the agreements. Since the inventive contribution of Dr. Rubinstein was made after the expiration of the agreements, IBEP was not entitled to further assignments of any other newly developed inventions, even when those inventions were built primarily on proprietary information developed during the agreements.
Interestingly, IBEP was asserting only claim 1. Claim 1 clearly fell under the terms of the agreements, and had the '701 patent only included claim 1, IBEP would have been the sole owner of the '701 patent. But Yeda had the rights to claims 2 and 3 so that Yeda had partial ownership of the entire '701 patent. The only way IBEP could sue for infringement is if Yeda joined the lawsuit. Thus, one important lesson from this case is to ensure that research agreements include complete assignment of all rights, especially the rights of new individuals joining a research program. Research agreements should also state how ownership rights of inventions discovered after expiration of an agreement would be assigned.
Israel Bio-Engineering Project v. Amgen Inc. (Fed. Cir. 2007)
Panel: Circuit Judges Bryson and Prost and District Judge Saris
Opinion by District Judge SarisAdditional information regarding this case can be found at Patently-O.
Baltazar Gomez, Ph.D., is a biochemist and regular Patent Docs contributor. Dr. Gomez, who will be attending Chicago-Kent College of Law in the fall, currently serves as a technical advisor at MBHB.
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