Resolving Inventorship Royalty Distribution Disputes Before they become
Resolving Inventorship & Royalty Distribution Disputes - Before they become disputes Presentation for MATTO Fangli Chen, Ph. D. Melissa Hunter-Ensor, Ph. D. John Cosmopoulos October 11, 2017
Brief Outline of Presentation • Introduction to Inventorship Determination Under U. S. Patent Law • Inventorship dispute Case Study #1 • Inventorship dispute Case Study #2 • Inventorship dispute/issues Case Study #3 –European situation • Royalty Sharing Disputes • Q&A 2 Inventorship Determination Under U. S. Patent Law September 29, 2016
Inventorship Determination Under U. S. Patent Law
Who should be named as an inventor? • Under U. S. patent law, “invention” has two aspects: Conception is the formation of a definite and permanent idea of the complete and operative invention in the mind of the inventor. Reduction to practice is the process of showing that the claimed invention works for its purpose. • An inventor must contribute to the conception of the invention. MPEP 2137. 01(II) states: “The threshold question in determining inventorship is who conceived the invention. Unless a person contributes to the conception of the invention, he is not an inventor. ” • An inventor need not contribute to reduction to practice. 4 Inventorship Determination Under U. S. Patent Law
Who should be named as an inventor? • Inventors do not need to contribute to every patent claim. In fact, a contribution to only one claim suffices. See Smith. Kline Diagnostics, Inc. v. Helena Lab. Corp. , 859 F. 2 d 878, 888 (Fed. Cir. 1988). • Inventorship is tied to the subject matter of the claims at issue. Ethicon, Inc. v. United States Surgical Corp. , 135 F. 3 d 1456, 1460 (Fed. Cir. 1998). As a result, the inventorship determination can change during prosecution, as claims are amended, abandoned, or deferred for prosecution in child applications. 5 Inventorship Determination Under U. S. Patent Law
What does conception require? • Conception needs to be so clear in the inventor’s mind that “only ordinary skill would be necessary to reduce the invention to practice, without extensive research or experimentation. ” Burroughs Wellcome Co. v. Barr Laboratories, Inc. , 40 F. 3 d 1223, 1228 (Fed. Cir. 1994). • Courts want to see a “specific, settled idea” rather than a “general goal or research plan to pursue. ” Id. • Conception “must encompass all limitations of the claimed invention. ” Singh v. Brake, 317 F. 3 d 1334, 1340 (Fed. Cir. 2003). 6 Inventorship Determination Under U. S. Patent Law
Inventorship vs. Authorship • A common issue in a university setting is whether all of the authors of a journal article should be named as inventors of a corresponding patent application. • Inventorship on a patent application and authorship on a research publication are distinct. For example, a coauthor on a journal article may be a thesis adviser, a department or laboratory head, a graduate student, or a technician or research collaborator who carried out instructions. These individuals may not be co-inventors. • Authorship of an article by itself does not raise a presumption of inventorship with respect to the subject matter disclosed in the article. In re Katz, 687 F. 2 d 450, 455 (C. C. P. A. 1982). 7 Inventorship Determination Under U. S. Patent Law
Joint Inventors: Special Considerations • When an invention is made by two or more persons, 35 U. S. C. § 116(a) requires that they apply for the patent jointly. • Generally speaking, joint inventorship requires communication in some form between the inventors: “[F]or persons to be joint inventors under § 116, there must be some element of joint behavior, such as collaboration or working under common direction, one inventor seeing a relevant report and building upon it or hearing another’s suggestion at a meeting. ” Kimberly-Clark Corp. v. Procter & Gamble Distributing Co. , 973 F. 2 d 911, 917 (Fed. Cir. 1992). 8 Inventorship Determination Under U. S. Patent Law
Joint Inventors: Special Considerations • Each joint inventor must make a material, “not insignificant” contribution to the overall conception of the invention. Pannu v. Iolab Corp. , 155 F. 3 d. 1344, 1351 (Fed. Cir. 1998). • However, for joint inventors, it is not necessary that: the inventors physically work together; the ideas occurred to both inventors at the same time; each inventor conceived the same part of the ultimate invention or made the same type of contribution; or the inventive contributions are of equal importance. 9 Inventorship Determination Under U. S. Patent Law
Correction of Inventorship • Procedures exist to correct errors made in inventorship, as long as no deceptive intent existed. Patent application: See 37 C. F. R. 1. 48 Issued patent: See 37 C. F. R. 1. 324 International patent application: PCT Rule 92 bis • In the U. S. , if deceptive intent is found, the patent can be invalidated. • Corrections to inventorship in the U. S. can be sought in court by inventors alleging to be impermissibly omitted using 35 U. S. C. § 256. 10 Inventorship Determination Under U. S. Patent Law
Inventorship and Ownership • Ownership is an important aspect of patent law Ownership determines who may enforce, license, etc. • Ownership follows inventorship In the US, an assignee may file applications as the applicant, but ownership still initially vests in the inventors. Outside the US, assignment from inventors is typically required to prove entitlement in the assignee to prosecute an application. • In some EP states, identity of applicant (assignee) between provisional and PCT is necessary for a valid priority claim. • Robust assignment provisions in agreements with employees, consultants and development partners are critical. 11 Inventorship Determination Under U. S. Patent Law
Recent Case Study: Meng v. Chu • Meng v. Chu, 643 Fed. Appx. 990 (Fed. Cir. 2016) involves two superconductivity patents allegedly owned by the University of Houston based upon assignment from the listed inventor, Prof. Ching-Wu Chu. • Meng & Hor worked with Chu during the research, but were not listed as inventors. Hor and Meng sought correction of inventorship of the patents under 35 U. S. C. § 256. 12 Inventorship Determination Under U. S. Patent Law
Case Study: Meng v. Chu (Fed. Cir. 2016) • The district court found that (1) that Meng had failed to show that her contribution exceeded the ordinary skill in the art; and (2) that Hor had not provided sufficient corroborating evidence so as to overcome the clear-and-convincing standard required for correcting inventorship. • On appeal, the Federal Circuit affirmed: In order to prevail on a § 256 claim, an alleged co-inventor must show that he contributed to the conception of the claimed invention and that his contribution was “not insignificant in quality, when that contribution is measured against the dimension of the full invention. ” … An alleged co-inventor’s testimony regarding his contribution must be corroborated, which courts assess under a “rule of reason” analysis. 13 Inventorship Determination Under U. S. Patent Law
Key Takeaways • Always discuss inventorship early in the drafting process with patent counsel. • Ask inventors to describe their contributions to conception, rather than reduction to practice or academic authorship. • Periodically re-assess inventorship as prosecution advances and claims are withdrawn or amended. • Keep patent counsel apprised of any needed changes in inventorship, either by mistake or otherwise. • Ensure that agreements with both internal and external personnel address ownership of inventions. 14 Inventorship Determination Under U. S. Patent Law September 29, 2016
Inventorship Disputes: First Case Study
Case Study #1: Background • Tufts investigators in the Department of Chemistry conceive of novel bioactive polypeptides. • Tufts chemists initiate a collaboration with a pharmacologist from another university to collaborate on the testing of the novel bioactive polypeptides in other models and obtain pharmacology data in support of the invention. • Both groups have a productive collaboration over several years, collaboration includes joint laboratory meetings, joint grant applications, and numerous formal and informal discussions. 16 MATTO Seminar October 11, 2017
Case Study #1: Inventorship • Tufts licensing officer organizes meeting to discuss planned U. S. provisional patent application, meeting includes a large of team members. • Then everything falls apart! • Tufts chemists assert that they are the only inventors, pharmacologists from the second institution played a supporting role only. • Pharmacologists strongly disagree, believe that they are coinventors. 17 MATTO Seminar October 11, 2017
Case Study #1: Inventorship (cont’d) • The contributions of Tufts chemists to the invention are documented in the invention disclosure form which lists no other inventors. • Tufts chemists asserted that the invention was fully conceived before the collaboration started and that the invention was documented in laboratory notebooks, computer files, correspondence, and other materials. • However, the claims were not drafted at the time, hard to confirm that the full scope of the invention was conceived before the start of the collaboration without some contribution by the pharmacology team. 18 MATTO Seminar October 11, 2017
Case Study #1: Inventorship (cont’d) • Hard to document the contribution of the pharmacology team to the chemistry invention because it happened over several years. • Emails were provided as supporting evidence, but some summarized conclusions from joint meetings -inconclusive. • Some collaborators conflated co-authorship and collaboration with co-inventorship. • Tufts case manager changed 3 times. • One senior pharmacology PI decided she was not a coinventor at the provisional stage and then reversed her position at the PCT stage. 19 MATTO Seminar October 11, 2017
Case Study #1: Solutions/Conclusions • Tufts patent counsel interviewed all potential co-inventors, reviewed documentation. • Senior managers from the technology transfer office at both universities held combined meeting with the two senior investigators in an effort to mediate. • Patent counsel concluded that: Chemists had made inventive contributions to all the claims. Two members of the pharmacology team were deemed to have made focused inventive contributions to specific claims. Other members of the pharmacology team were deemed not to have made an inventive contribution. Other Tufts chemists were co-inventors on particular claims. 20 MATTO Seminar October 11, 2017
Case Study #1: Solutions/Conclusions (cont’d) • Tufts filed two PCT patent applications on the same day! • One PCT had broad claims around the platform and carved out the specific subfield that was of interest to pharmacology team. The second PCT had focused claims on the specific subfield that was of interest to the pharmacology team. • Tufts and the other university executed two IIAs making each party responsible for licensing one PCT and granting the other university FTO for the specific subfield that was of interest to the pharmacology. • Needless to say…. $$$ cost was high for all of the above and required a significant investment of time from TTO! 21 MATTO Seminar October 11, 2017
Key Takeaways • Avoid creating the assumption in people’s minds that s/he might be a co-inventor. Limit the “potential” co-inventors invited to the first meeting to the key 1 -2 people max. • Make it clear in the invention disclosure form that inventorship is a legal standard and will be determined at the time the claims are drafted. • If the IDF lists too many people, don’t believe that everyone is a co-inventor under U. S. patent law. • Similarly, ask questions if an obvious candidate for coinventorship is not listed as on the IDF (e. g. lead co-author). 22 MATTO Seminar October 11, 2017
Key Takeways (cont’d) • If there is an inventorship analysis: Create an open and transparent dialogue with your counterpart at the other university on the process and conclusions that are drawn along the way. Don’t wait to convey final conclusions only! Document the process and any conclusions thoroughly. Remember we all have to manage strong personalities. 23 MATTO Seminar October 11, 2017
Inventorship Disputes: Second Case Study
Case Study #2 Background • PI at Research Institute hypothesizes that a therapeutic combination will be useful for treating cancer. • PI reaches out to New. Co, among others, to obtain a therapeutic agent under MTA, which includes favorable terms with regard to Research Institute. • PI administers therapeutic combination to mice and observes a reduction in tumor size. • Without involving Tech Transfer Office, PI begins a correspondence with New. Co, sharing data and requesting input on mechanism of action of therapeutic agent. 25 MATTO Seminar October 11, 2017
Case Study #2 • CEO at New. Co makes an introduction to a Professor at another institution who is an expert with regard to therapeutic agent. • PI and Professor begin a correspondence. PI does not realize that Professor is a paid consultant for company and under an obligation to assign inventions to company. • PI wishes to file a patent application. CEO at New. Co alleges he and professor should be inventors. 26 MATTO Seminar October 11, 2017
Case study #2 Takeaway • When appropriate, undertake patent filings prior to involving outside collaborators. • Maintain open communication with PIs regarding ongoing collaborations, particularly where commercial entities are involved. • Avoid unpleasant surprises! Clarify who the collaborators are and whether they are acting in an academic capacity or as paid consultants. 27 MATTO Seminar October 11, 2017
Inventorship Disputes: Third Case Study
Case Study #3 Inventorship in Europe • Inventorship impacts ownership • The right to claim priority: Only the owner(s) can claim priority, which means the identical ownership between the provisional and PCT is necessary for a valid priority claim. Robust assignment provisions in agreements with employees, consultants and development partners are critical • Co-owner must consent to commercialization Agreements should include co-owner consent language 29 MATTO Seminar October 11, 2017
Royalty Distribution Disputes
Royalty Distribution Disputes: Issues • How should we respond to a request from a PI that s/he receive a larger share of future royalties resulting from commercialization of inventions disclosed? • How can the TTO ensure that the co-inventors that are in a position of weakness provide real consent to receiving a lesser share of future revenues (i. e. graduate students, post-docs)? • Harvard University was sued in 2013 by a former graduate student/co-inventor on patents licensed to Tetra. Phase. Case was later settled out of court on “mutually agreeable terms. ” 31 MATTO Seminar October 11, 2017
Royalty Distribution Disputes: Solutions • Offer co-inventors receiving a lesser share of future revenues an opportunity to discuss in person and express any concerns privately. • Involve other university administrators/faculty that are normally part of the process if a graduate student or post-doc has internal conflicts and grievances. • TTO should never, never take a position on proposed asymmetrical sharing of future revenues! • Encourage co-inventors receiving a lesser share of future revenues to seek independent legal advice. 32 MATTO Seminar October 11, 2017
Royalty Distribution Disputes: Solutions (cont’d) • Ensure that everyone is aware of how future royalties and non-royalty license fees are allocated. • If a license involves multiple, related patents, ensure that the licensee is obligated to report in detail royalty payments on a patent-by-patent and product-by-product basis. That will ensure that the TTO distributes the right amount of monies to the right inventors. It’s advisable to confirm licensee’s determination. 33 MATTO Seminar October 11, 2017
Questions? ? 34 Inventorship Determination Under U. S. Patent Law
Resolving Inventorship & Royalty Distribution Disputes - Before they become disputes Presentation for MATTO Fangli Chen, Ph. D. Melissa Hunter-Ensor, Ph. D. John Cosmopoulos October 11, 2017
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