Archive for June, 2011

Supreme Court Round-up – Part 3 of 3: Only if There Is an Assignment, Only Then If the Employer is a Federal Contractor Does Bayh-Dole Apply in Stanford v. Roche

Thursday, June 23rd, 2011
  • Patent title vests in the inventor
  • Title may pass to the employer but only if there is an assignment
  • Only then if the employer is a federal contractor does Bayh-Dole apply

Stanford v. Roche

In Stanford v. Roche, Cetus developed methods for quantifying blood-borne levels of human immunodeficiency virus (HIV), the virus that causes AIDS.  Cetus began to collaborate with Stanford.  Dr. Holodniy joined Stanford and signed an agreement with Stanford to assign his “right, title, and interest in” inventions resulting from his employment at Stanford.  In collaborating with Cetus, to gain access to Cetus, Dr. Holodniy signed an agreement stating that he “will assign and do(es) hereby assign” to Cetus his “right, title, and interest in . . . the ideas, inventions, and improvements” made “as a consequence of [his] access” to Cetus.  Together with Cetus, Dr. Holodniy devised a PCR-based procedure for measuring the amount of HIV in a patient’s blood which the successor company to Cetus through acquisition, Roche, commercialized.  Stanford filed for patents on the inventions and sued Roche.  Roche countered that its agreement with Dr. Holodniy gave it co-ownership of the patents, and thus Stanford had no standing to sue.  Stanford responded that Dr. Holodniy had no rights to assign because the University had superior rights under the Bayh-Dole Act.

The District Court held that the Bayh-Dole Act trumped the employer agreements.  The Federal Circuit disagreed, concluding that the Bayh-Dole Act did not divest an inventor of his rights in federally funded inventions.  Because as between Stanford and Cetus, Stanford only had an agreement to assign whereas Cetus had an actual assignment, the Federal Circuit held that Dr. Holodniy assigned his rights to Cetus and thus to Roche.

The only question before the Court in Stanford was whether the Bayh-Dole Act displaces the norm and automatically vests title to federally funded inventions in federal contractors.  The Supreme Court held that it did not.

The Court began its analysis with the fundamental tenet that under US patent law, the rights in an invention belong to the inventor.  The Court explained that while an invention may be assigned, employment alone does not give rise to assignment. Since the first Patent Act, the basic idea that inventors have the right to patent their invention has not changed.  Mere employment is insufficient to vest title to an employee’s invention in the employer.  An employee agreement is required.   Slip Op. 10.

The Bayh-Dole Act applied here because the invention flowed from federally funded research.  However, the Court held that the Bayh-Dole Act does not reorder this priority of inventors by moving the inventor from the front of the line to the back by vesting title to federally funded inventions in the inventor’s employer – the federal contractor.  Slip op. 8. There is no unambiguous language in the Bayh-Dole Act of the kind that Congress uses to divest inventors of their rights in inventions by specifying that inventions created pursuant to federal contracts becomes the property of the contractors or United States or anyone else .  Slip Op. 8.  Indeed, the Act reinforces that title vests in the inventor by providing that contractors may “elect to retain title”. Slip Op. 11.  In other words, they may keep title to whatever they may already have.  Slip Op. 11.  Here, Stanford never had the patent that it could “elect to retain” because Stanford never got an assignment of the invention from Dr. Holodniy. 

In short, only when an invention belongs to the contractor does the Act come into play.  Slip Op. 12  As the Court explained, “[t]he Act clarifies the order of priority of rights between the Federal Government and a federal contractor in a federally funded invention that already belongs to the contractor.  Nothing more.” (emphasis added) Slip op. 12

It is for this reason, the Court maintained, that universities typically enter into agreements with their employees requiring the assignment to the university of rights in inventions.  With an effective assignment, those inventions – if federally funded – become “subject inventions” under the Act, and the statute works the way Stanford says it should.  Slip op. 15.  It does so without violence to the basic principle of patent law that inventors own their inventions.  Slip Op. 15.

Here, Stanford did not have such an assignment in place and so the Bayh-Dole Act does not apply.

The Juhasz Law Firm can help you to better understand the effect of Stanford on your patents. For more information regarding Stanford and advice on how this decision may affect your patents, please contact The Juhasz Law Firm.

Your patents may be your most important asset. To help you protect your patents contact Juhasz Law, the firm committed to Positioning Your Patent Beyond The Horizon℠.

For an analysis on Prometheus v. Mayo go to Supreme Court Round-up – Part 1 of 3:  Certiorari Granted in Prometheus.

For an analysis on Global-Tech Appliance v. SEB go to Supreme Court Round-up – Part 2 of 3:  “Willful Blindness” Induced Infringement as Culpable as Actual Knowledge in Global-Tech.

Supreme Court Round-up – Part 2 of 3: “Willful Blindness” Induced Infringement as Culpable as Actual Knowledge in Global-Tech

Thursday, June 23rd, 2011

Global-Tech Appliances v. SEB

In Global-Tech Appliances v. SEB, the Court affirmed the decision of the Federal Circuit finding induced infringement but on different reasoning.  The Court set aside the Federal Circuit’s “knew or should have known” standard for establishing induced infringement and articulated a new standard in its place based on “knowledge or willful blindness”.  In invoking this so called “willful blindness” doctrine to bring those who lack knowledge within the §271 prohibition, the Court turned first to deciding whether “knowledge” is indeed required for induced infringement. 

In finding that §271(b) requires “knowledge”, the Court noted that what the 1952 Patent Act treated as two separate actions – namely, §271(b) induced infringement and 271(c) contributory infringement – was, before the 1952 Patent Act was enacted, treated under the one action of contributory infringement.  Slip Op. 5.  Hence, §271(b) and §271(c) have the same origin and so the scienter element for each should be similarly interpreted.  Finding the 271(b) language short, simple, and in connection with the issue of knowledge inconclusive (Slip Op. 4), the Court looked to its 1965 decision in Aro II for guidance where a narrow majority held that a violator of §271(c) must know “that the combination for which his component was especially designed was both patented and infringing”.  Slip Op. 7-8.  The Court found that conclusion requires the same knowledge for liability under §271(b).

Turning then to the question of the knowledge scienter required to establish induced infringement, the Court observed that in criminal cases “actual knowledge” is not always capable of being established.  And yet, under criminal law precedent, defendants who are without the requisite knowledge cannot escape the reach of these statutes by deliberately shielding themselves from clear evidence of critical facts that are strongly suggested by the circumstances.  Slip Op. 10.  “Defendants who behave in this manner are just as culpable as those who have actual knowledge,” the Court observed.  Slip Op. 10.  The Court found no reason not to apply this so called “willful blindness” doctrine to effectively constructively impute a scienter almost commensurate with knowledge to civil lawsuits for induced infringement under 35 U.S.C. §271(b).  Slip op. 12.  Under this doctrine of willful blindness, the scienter required by §271(b) can be met if two basic requirements are satisfied: “(1) the defendant subjectively believes that there is a high probability that a fact exists, and (2) the defendant takes deliberate actions to avoid learning of that fact.  Slip Op. 13. 

Applying the “willful blindness” doctrine to the facts in the case, the Court found that Pentalpha (a Hong Kong manufacturer and subsidiary of Global-Tech) willfully blinded itself to the infringing nature of the sales it encouraged its customer Sunbeam to make in the U.S. since “Pentalpha subjectively believed there was a high probability that SEB’s [patentholder’s] fryer product was patented, that Pentalpha took deliberate steps to avoid knowing that fact, and that it therefore willfully blinded itself to the infringing nature of Sunbeam’s sales.”  Slip Op. 16  Particularly probative was the fact that Pentalpha designed its product based upon reverse engineering a product of the patent holder’s that was bought in Hong Kong and not in the U.S. which is without U.S. patent marking requirements and Pentalpha’s decision not to inform its patent attorney from whom Pentalpha sought a right-to-use opinion that the product to be evaluated was simply a knock-off of the patent holder’s product.  Slip Op. 15.  As stated by the Court “[o]n the facts of this case, we cannot fathom what motive [Pentalpha] could have had for withholding this information other than to manufacture a claim of plausible deniability in the event that this company was later accused of patent infringement.  Slip Op. 15.

In a lone dissent, Justice Kennedy took issue with the Majority’s invocation of willful blindness to bring those who lack knowledge within the §271(b) prohibition.  “Willfull blindness is not knowledge; and judges should not broaden a legislative proscription by analogy,” Justice posited.  Slip Op., Kennedy Dissent, at 1.

Global-Tech has ushered in a new standard for meeting the scienter required to establish induced infringement under §271(b) – namely, one based on “knowledge” or “willfull blindness” involving manufactured claims of plausible deniability where a company subjectively believes there to be a high probability of a patent, the company takes deliberate steps to avoid knowing that fact, and therefore willfully blinds itself to the infringing nature of the induced sales.  Given the familial relationship of §271(b) with §271(c) contributory infringement, the same willful blindness doctrine is likely to apply to §271(c) by extension.

The Juhasz Law Firm can help you to better understand the effect of Global-Tech on your patents. For more information regarding Global-Tech and advice on how this decision may affect your patents, please contact The Juhasz Law Firm.

Your patents may be your most important asset.  To help you protect your patents contact Juhasz Law, the firm committed to Positioning Your Patent Beyond The Horizon℠.

For an analysis on Prometheus v. Mayo go to Supreme Court Round-up – Part 1 of 3:  Certiorari Granted in Prometheus.

For an analysis on Stanford v. Roche go to Supreme Court Round-up – Part 3 of 3:  Only If There is an Assignment, Only Then If the Employer is a Federal Contractor Does Bayh-Dole Apply in Stanford v. Roche.

Supreme Court Round-up – Part 1 of 3: Certiorari Granted in Prometheus

Thursday, June 23rd, 2011
  • Diagnostic Methods Under Attack: S. Ct. to revisit diagnostic method patents

Prometheus v. Mayo

For the second time, on June 20, 2011, the Supreme Court granted certiorari in Prometheus v. Mayo.  The previous certiorari was granted last June in which the Court remanded the case to the Federal Circuit for a rehearing consistent with the Court’s Bilski decision.  On rehearing last December, the Federal Circuit affirmed its pre-Bilski decision (based on the machine-or-transformation test) but this time using the reasoning articulated by the Court in Bilski.  Nonetheless, included in that reasoning was the particular persuasiveness of the transformative nature of the claims under the machine-or-transformation test, a test the Bilski Court held to be “a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under Section 101” albeit not the sole test for making that determination.

The granted writ of certiorari poses the following question:

  • Whether 35 U.S.C. § 101 is satisfied by a patent claim that covers observed correlations between patient test results and patient health, so that the claim effectively preempts all uses of these naturally occurring correlations.

As framed, Mayo may have stacked the deck in its favor by incorporating into the question the very highly charged term “observed correlations” language that has been before the Court once before in 2006 in Laboratory Corp, a certiorari that the Court dismissed as improvidently granted but not without Justice Breyer first weighing in on the issue, by way of a strongly worded dissent of the dismissal, in which he effectively viewed diagnostic “observed correlations” to be unpatentable subject matter.  Lab Corp. of Am. Holdings (LabCorp) v. Metabolite Labs, Inc., 126 S. Ct. 2921, 2922–2923 (2006) (Breyer, J., dissenting). 

In Prometheus, the claims involve more than simply the “observed correlations” that arbuably form a part of the “wherein” recitations.  Claim 1, for example,  recites “administering a drug providing 6-thioguanine . . . “ and “determining the level of 6-thioguanine in said subject . . . .”  Hence, lumping all of the claims under the “observed correlations” language propounded by Mayo may be inapropos for Prometheus if, as the Federal Circuit stated in its post-Bilski decision, for example, “[d]etermining the levels of 6-TG or 6-MMP in a subject necessarily involves a transformation, for those levels cannot be determined by mere inspection. Some form of manipulation, such as the high pressure liquid chromatography method specified in several of the asserted dependent claims or other modification of the substances to be measured, is necessary to extract the metabolites from a bodily sample and determine their concentration.”  Prometheus v. Mayo, 2008-1403, at 18 (Fed. Cir. 2010) 

Nonetheless, the question as posed by Mayo is the question upon which the certiorari was granted and which will define the debate.

It remains to be seen whether this time around, these arguments lead to a sea change in the patenting of diagnostic method patents or become yet another example of good lawyering, this time done on the part of Mayo, which like Microsoft lawyers in the i4i case, presented facially convincing arguments that fall apart after the Court does its own analysis.  The hearing on Prometheus is expected to be scheduled for this Fall 2011 Term of the Court with a decision likely next year.  What the Court does with this case will echo through the medical diagnostic industry.

The Juhasz Law Firm can help you to better understand the effect of Prometheus on your patents. For more information regarding Prometheus and advice on how this decision may affect your patents, please contact The Juhasz Law Firm.

Your patents may be your most important asset.  To help you protect your patents contact Juhasz Law, the firm committed to Positioning Your Patent Beyond The Horizon℠.

For an analysis on Global-Tech Appliances v. SEB  go to Supreme Court Round-up – Part 2 of 3:  “Willful Blindness” Induced Infringement as Culpable as Actual Knowledge in Global-Tech.

For an analysis on Stanford v. Roche go to Supreme Court Round-up – Part 3 of 3:  Only if There is an Assignment, Only Then If the Employer is a Federal Contractor Does Bayh-Dole Apply in Stanford v. Roche.

« Older Entries