Employers Don’t Own Your Brain; They Merely Rent it

Apparently, New Jersey is about to join the list of states with statutes that protect the rights of inventors.  Generally, inventions made by employees belong to the employee, unless (1) that employee was specifically hired to invent, or is later assigned that task; or (2) there is an agreement between the employer and the employee.  However, in most states there is no restriction on the scope of these agreements.  Most times, an employer is content with owning inventions made using the time, material, or information of the employer, or which otherwise relate to the employers’ business.  However, some employers contract for all inventions made by the employer regarding of when or where it is made, or to what it relates.  It is this last category of employer that is targeted by the bill passed by the New Jersey legislature.

If the bill becomes law, New Jersey will join the small, but growing list of states that have statutes that affect employer’s claims to employee’s inventions:

  • California (California Labor Code § 2870)
  • Delaware (Delaware Code Annotated, Title 19, § 805)
  • Illinois (Illinois Revised Statutes, Chapter 140, §§ 301-303)
  • Kansas (Kansas Statutes Annotated §§ 44-130)
  • Minnesota (Minnesota Statutes Annotated § 181.78)
  • North Carolina (North Carolina General Statutes §§ 66-57.1, 66-57.2)
  • Utah (Utah Code Annotated §§ 34-39-2, 34-39-3), and
  • Washington (Washington Revised Code Annotated §§ 49.44.140, 49.44.150).

Employers with employees living or working in one of these states should be aware of these statutes and their requirements, or the employer may find that it does not have the rights it thought it did in its employees’ inventions.

Brexit Stage Right

KEEP_CALMThe Brexit referendum has raised a number of issues related to disentangling United Kingdom from the European Union.  Intellectual Property owners are understandably concerned about their European Intellectual property.

 

Patents

There is no need to be concerned about European Patents.  The European Patent Convention predates the 1993 establishment of the European Union.  Among the 38 contracting states to the EPC, several are not members of the EU: Albania, Iceland, Liechtenstein, Lithuania, Macedonia, San Marino, Serbia, Switzerland, and Turkey.  Upon the departure of United Kingdom from the EU, it can continue its membership in the EPC.

The United Kingdom leaving the EU will impact the proposed new Unitary Patent system and the Unified Patent Court. The United Kingdom was one of the jurisdictions required to ratify the Agreement on the Unified Patent Court, and London was one of the agreed locations for the Unified Patent Court.

Trademarks

With respect to the European Union Trade Mark system, the United Kingdom’s departure from the EU will likely affect the geographic scope of European Union Trademarks.  Some provision will be made to continue the protection of European Union Trademark registrations in the United Kingdom post-separation.  There will be at least two years before the separation occurs, and during which this transition issue will certainly be resolved.  For new applications, applicants should consider a Madrid Protocol application designating both the Community Trademark and the United Kingdom.

Designs

With respect to Community Designs, the United Kingdom’s departure from the EU will likely affect the geographic scope of Community Designs.  Some provision will be made to continue the protection of designs in the United Kingdom post-separation.  As pointed out above, it will be at least two years before the separation occurs, and during which this transition issue will certainly be resolved. For applications filed today, applicants should consider filing both United Kingdom and the European Community designs applications.  If the United Kingdom joins the Hague Convention, this double filing will become easier.

Protecting Websites

The graphics on a web page can be protected by copyright.  If they are distinctive enough, they can also be protected as a trademark, and even registered.  However, a third alternative, design patent, which can protect such things as website backgrounds and other website features.  See, for example,  U.S. Patent No. D570,362 on the background image for a portion of a display screen:

Background

 

Google obtained U.S. Patent No. D599,372 on its landing page:

Google_Page

 

 

 

 

 

 

 

Timing is Everything

In Trieme Medical, LLC v. Angioscore, Inc., [2015-1504] (February 5, 2015) the Federal Circuit reversed the dismissal of Trieme’s complaint to have its assignor, Dr. Lotan, named as an inventor of Angioscore’s patents.

Lotan worked as a consultant for Angioscore, and had signed a consulting agreement with a Section 9(a) that gave Angioscore a license to any preexisting inventions made by Dr. Lotan:

(a) Inventions Retained and Licensed. Consultant has attached hereto, as part of Exhibit C, a list describing all inventions, original works of authorship, developments, improvements, and trade secrets which were made by Consultant prior to the date of this Agreement (collectively referred to as “Prior Inventions”), that belong solely to Consultant or belong to Consultant jointly with another and that relate to any of the Company’s current or proposed businesses, products or research and development; or if no such list is attached, Consultant represents that there are no such Prior Inventions. If, in the course of providing the Services, Consultant incorporates into a Company product, process or machine or into any Invention (as defined below), a Prior Invention owned by Consultant or in which Consultant has an interest, the Company is hereby granted and shall have a non-exclusive license (with the right to sublicense) to make, have made, copy, modify, make derivative works of, use, sell and otherwise distribute such Prior Inventions as part of or in connection with such product, process, machine or Invention.

and a Section 9(b) that gave Angioscore ownership of any inventions made during the term of the agreement:

(b) Assignment of Inventions. Consultant agrees to promptly disclose to the Company and hereby assigns to the Company, or its designee, all right, title and interest in and to all inventions, original works of authorship, developments, concepts, know-how, improvements or trade secrets, whether or not patentable, that Consultant may solely or jointly conceive or develop or reduce to practice during the term of this Agreement that relate to the Services (collectively referred to as “Inventions”).

Angioscore’s problem was that while the agreement was executed on May 1, 2003, Dr. Lotan actually began working before May 1, 2003, and the results of such pre-agreement work was not assigned to Angioscore.

The Federal Circuit could not determine on the sparse record of the motion to dismiss, whether or not the agreement transferred all of Dr. Lotan’s rights to Angioscore, or whether he retained some ownership based upon his pre-agreement work that he could validly transfer to Angioscore.  Angioscore may still prevail, but this case highlights the importance of knowing when a consultant or other inventor began working on the invention, and making sure that all rights, including those created before the execution of the agreement, are properly addressed.

Better Protection By Design

Design patents protect the aesthetic appearance of a product (or a part of a product). They are relatively easy and inexpensive to get, but are they worthwhile?

A design patent is a patent, meaning while the application is pending (typically about 20 months) the applicant can mark the product “patent pending,” and after the patent issues “patented.”  The design patent allows its owner to sue competitors for making, using, selling, or importing a product that is substantially the same as the patented design.  Substantially the same does not mean identical, and if the patent owner can show  the resemblance is such as to deceive such an observer and sufficient to induce him to purchase one supposing it to be the other, he or she has proven infringement.

A patent owner is usually entitled to an award of its lost profits, but no less than a reasonable royalty, however there is an alternative remedy for design patent infringement: the infringer’s profits. Moreover, this is the profit on the entire product.  Thus Apple was awarded Samsung’s entire profits on the phones found to infringe Applies design patents on the iPhone shell, not just the profits attributable to the shells (which were not sold separately).

Finally, a fifteen year design patent can be a stepping stone to perpetual trade dress protection, providing a period of exclusive use of the design needed to establish that the design has acquired “secondary meaning” and has become a protectable trade dress.

If a design patent makes sense in the United States, what about foreign protection.  Interestingly, while design patents are reasonably popular in the US, with more than 35,000 applications filed last year, design patents are even more popular in Asia,.  More than half a million design patent applications were filed in China last year (sixteen times as many as filed in the US), more than 65,000 were filed in South Korea, (nearly twice as many as filed n the US),and nearly 30,000 were filed in Japan (almost tying US filings):

  1. China (564555)
  2. S. Korea (64574)
  3. United States (35378)
  4. Japan (19738)
  5. EC (25745)
  6. Turkey (10251)
  7. India (9309)
  8. Iran (8864)
  9. Germany (7392)
  10. Australia (6597)
  11. Brazil (6590)
  12. Canada (5767)
  13. Russia (5184)
  14. UK (5084)
  15. France (4782)

Perhaps of more interest to US businesses is which countries are most popular with non-residents:

  1. China
  2. US
  3. EC
  4. Canada
  5. Japan
  6. Australia
  7. S. Korea
  8. India
  9. Russia
  10. Brazil

and in particular which countries are most popular with other U.S. filers:

  1. China
  2. Canada
  3. EC
  4. Australia
  5. Japan
  6. Brazil
  7. Mexico
  8. S. Korea
  9. India
  10. Russia

Design patents help round out an IP portfolio, but domestically, and abroad.

 

A Challenge to Inventorship Reveals Possible Issues Regarding Transfers of Ownership

In Shukh v. Seagate Technology, LLC, [2014-1406] (Fed. Cir. 2015), the Federal Circuit reversed summary judgment against Shukh claim to be named as a co-inventor for defendants, holding that Shukh’s reputational interest in being named an inventor gave him standing to challenge inventorship under 35 USC 256.

Shukh’s first argument was that Filmtec Corp. v, Allied-Signal, Inc., should be reversed.  Under Filmtec, Dr. Shukh’s assignment in the Employment Agreement of his ownership
and financial interests in his inventions conveyed legal in his inventions to Seagate, depriving him of standing to contest inventorship of the patent.  The Federal Circuit observed that  as a panel, it could not overrule that holding without en banc action — hardly a ringing endorsement of the immediate assignment doctrine of Filmtec.

While Filmtec has inspired us all to use the language “agree to assign, and hereby do assign.”  Perhaps we should do more.  An express statement that rights in any inventions vest immediately upon creation with the employer might provide some rights to the employer.  The employer might also incorporate assignment language in its invention disclosure statement:

I agree that all rights in the inventions disclosed herein belonged to the EMPLOYER from the moment they were created, and agree to assign, and hereby do assign any rights I may have in them to EMPLOYER,and authorize EMPLOYER to file a patent application thereon.  I further grant the the Chief Technology Officer of EMPLOYER a durable, irrevocable power of attorney to declarations, oaths, and other patent application papers, including assignments to EMPLOYER, if I am unable or unwilling to do so.

However, the Federal Circuit concluded that “concrete and particularized reputational
injury can give rise to Article III standing” to challenge inventorship of a patent, noting that “being considered an inventor of important subject matter is a mark of success in one’s field, comparable to being an author of an important scientific paper.”

 

When Help from A Vendor is Not So Helpful

The district court’s September 30 Order in Ethox Chemical, LLC vs. The Coca-Cola Company, 6:12-1682-KFM (D.S,C.2015) is an important reminder to pay close attention to the contributions made by vendors and consultants, and in particular to plan in advance for the possibility of such contributions.

Coca-Cola’s packaging group pioneered the use of polyethylene terephthalate (“PET”)
beverage containers.  One disadvantage of PET was that it is porous to gas, so the carbonation in beverages would gradually escape from the bottle.  Coca-Cola scientists identified an additive, BPO-1, that functioned as a gas barrier, and sought the assistance of several vendors including Ethox to make BPO-1 on a commercial scale.  Ethox determined that it it was not commercially feasible to use BPO-1, but one if its employees, Dr, Tanner, proposed PEM as an alternative.

Coca-Cola proceeded with a patent application on PET containers, and included PEM, which eventually resulted in the issuance of U.S. Patent No. 8,110,265.  However Coca-Cola did not include Dr. Tanner as a co-inventor.  Ethox and Dr. Tanner sued to have Dr. Tanner named as a co-inventor, and in the Order issued on September 30, the court agreed.  While adding Dr. Tanner as a co-inventor would not affect Coca-Cola’s access to the technology under 35 U.S.C. 262, it would affect Coca-Cola’s ability to block competitor from using the technology.  While the dispute is not yet over, and Coca-Cola may yet prevail, the dispute could have been avoided entirely with some advance planning.

Whenever a business deals with a third party who could potentially solve a technical problem it is facing, that business should address  the possibility upfront taking steps to secure access to the solution, and if desired secure exclusivity over the solution.  In addition, when preparing a patent application, the potential contributions of anyone who might have contributed to the invention should be vetted..

 

 

State Statute Restricting Assertion of Patent Infringement Not At Issue, So Remand to State Court Appropriate

Many of the states have passed legislation purporting to restrict a patent owner’s right to make accusations of infringement.  Some of these statutes seem to be of questionable validity, but we will have to wait for a determination.  In State of Vermont v, MPHJ Technology Investments, LLC, [2015-1310] (September 28, 2015), the Federal Circuit affirmed the district court’s remand back to state Court, finding that the Vermont Bad Faith Assertions of Patent Infringement Act (“BFAPIA”) had not (yet) been raised by the state.

The State of Vermont initiated an action under the Vermont Consumer Protection Act, 9 V.S.A. § 2453(a) for unfair trade practices and deceptive trade practices arising from MPHJ’s conduct in sending patent infringement warnings in the State of Vermont.  The district court found that Vermont was not seeking an injunction that requires MPHJ’s compliance with the Vermont Bad Faith Assertions of Patent Infringement Act (“BFAPIA”), 9 V.S.A. §§ 4195–99.. Given this conclusion, the Federal Circuit agreed that if the State
prevails on the merits in state court, it may not seek an injunction requiring MPHJ to comply with the BFAPIA.  The Federal Circuit found that because MPHJ relies
on the BFAPIA as its basis for removal under § 1442(a)(2), the necessary consequence of our decision is that we find no grounds for removal to federal court.

 

 

“I agree to assign and hereby do assign”

Personalized User Model, LLP v. Google Inc., [2014-1841, 2015-1022] (August 18, 2015), reminds us that an employee agreement will preferably include a immediate assignment of the employee’s inventions. Personalized User Model sued Google for patent infringement.  In the course of discovery, Google learned that the patented inventions were conceived while one of the co-inventors was employed by SRI.  In a move worthy of Harvey Specter and Mike Ross in Suits, Google attempted to acquire SRI’s rights in the invention.  Unfortunately for Google, the Federal Circuit agreed with the district court that the statute or limitations prevented Google from asserting a breach of contract action against the co-inventor.  The result likely would have be very different, if, instead of simply agreeing to assign inventions conceived during employment:

I agree to execute such documents, disclose and deliver all information and data, and to do all things which may be necessary or in the opinion of SRI reasonably desirable, in order to effect transfer of ownership in or to impart a full understanding of such discoveries, improvements and inventions to SRI.

the agreement provided that the inventions automatically belonged to SRI.  While one can forgive this lapse in an agreement drafted more than thirty years ago, today it is generally advisable to have an automatic assignment.  Several years ago in Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., 583 F.3d 832, 842 (Fed. Cir. 2009) the Federal Circuit explained that the language “agree to assign” is merely an agreement to assign in the future requiring a subsequent written instrument.  In contrast, the words “do hereby assign” have been construed as a current  assignment of future inventions.  See FilmTec Corp. v. Allied-Signal, Inc., 939 F.2d 1568, 1572-73 (Fed. Cir. 1991).  If SRI’s agreement had included a current assignment of future inventions, SRI would have had ownership rights to sell to Google, irrespective of any breach by the employee.

Personalized User Model is a great reason to review existing employee agreements, and to make sure that they include a current assignment of future inventions.  Of course, if your agreement does provide include a current assignment, you have to make sure that the rest of your paperwork is consistent.  Thus, rather than having the inventor subsequently execute an assignment of a particular invention, one should have the inventor execute a confirmation of the prior assignment of that invention.  Furthermore, if because of some business arrangement, a company want to assign rights to some third party, the company must do so itself (because of the automatic assignment), and an assignment from the employee would be ineffective to do so, because the rights had already been assigned to the company.  Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., 583 F.3d 832, 842 (Fed. Cir. 2009).

 

No Good Deed Goes Unpunished — Follow Company Policy Regarding Unsolicited Submissions

The Delaware Court of Chancery recently dismissed Joseph Alfred’s Complaint against the Walt Disney Company for its breach of implied contract resulting from Disney’s refusal to negotiate with Mr. Alfred for a license to Disney’s T-65 X-wing fighter plane and thereby stalling the next evolution of human transportation.  The crux of Mr. Alfred’s complaint, if there is one, is that Disney varied from its standard policy not to accept unsolicited proposals, and in so doing created an expectation in Mr. Alfred that his proposal would be accepted.

Alfred v. Disney P25

While such policies are often cited as being short sighted and stifling, they do in fact protect businesses from litigation, and a variance from such a policy invites trouble, as Mr. Alfred has proven.  Disney was able to get the suit dismissed in its early stages, but its doubtful that the Disney employees who participated in July 22, 2014, call had factored in the cost in both money and time, of taking the initiative with an unsolicited disclosure.