PROTECTING PATENTS AND TRADEMARKS THE U.S. MODEL DEVELOPMENTS IN THE TRANSFER OF PATENT RIGHTS Paolo M. Trevisan Patent Attorney Office of Policy and External Affairs United States Patent and Trademark Office
LICENSE or ASSIGNMENT? Two mechanisms to transfer rights to a patent: LICENSE (a transfer of less than all rights to the patent) ASSIGNMENT (a transfer of title to the patent) 4/6/2012 2
PATENT LICENSE Conveys limited rights to the licensee It is a waiver by the patent owner of its right to exclude the licensee from making, selling, offering for sale or importing the patented invention Can be limited in time and space, i.e. can limit geographical area and/or duration Also can be limited by field of use, category 4/6/2012 3
PATENT LICENSE Parties are free to specify terms of license, Contractual negotiation to reflect business priorities But there are pitfalls to consider Special case of Cross-Licensing 4/6/2012 4
PATENT LICENSE Some common licensing terms and issues: Termination: right to cure, breach, arbitration Distribution channels: wholesale, retail, type of store Payment terms: advance, royalties, lump sum Royalties: on wholesale/retail price, goods sold, funds received, profits. Audits: when/how often, by whom, what audited Non payment: interests, penalties, right to cure, once? Invalid/non-enforceable patent: how affects license? 4/6/2012 5
PATENT LICENSE EXCLUSIVE LICENSE Conveys more rights than nonexclusive license, but is not a transfer of title or of all rights. Patent owner retains ownership. A promise of licensor not to grant further licenses, and in some cases not to practice invention. Can still be limited to a geographic area, a time period or a field of use. 4/6/2012 6
PATENT LICENSE Case law: Can an exclusive licensee sue alone? AsymmetRx, Inc. v. Biocare Medical, LLC (CAFC 2009) AsymmetRx received from Harvard an exclusive license under the 256 and 227 patents and a license to use the p63 antibodies. Harvard retained the right to make and use the p63 antibodies for academic research and to grant non-exclusive licenses to other nonprofit or government entities for research purposes. Harvard could render the AsymmetRx License non-exclusive if AsymmetRx failed to meet certain commercial, regulatory or public availability benchmarks. Harvard could also suggest possible sublicensees and a portion of any sublicensing income would be paid to Harvard. AsymmetRx had the right to prosecute infringement suits at its expense. Before doing so, however, AsymmetRx was to give careful consideration to the views of Harvard and to potential effects on the public interest in making its decision whether or not to sue. 4/6/2012 7
PATENT LICENSE Case law: Can an exclusive licensee sue alone? AsymmetRx, Inc. v. Biocare Medical, LLC (CAFC 2009) The Federal Circuit decided that AsymmetRx had no standing to sue without joining Harvard Although the license was a broad conveyance of rights to AsymmetRx, the court considered it a licensee, not an assignee, since the grantor retained substantial interests in the patents being enforced Specifically, under the license Harvard retained rights to use the patented invention for academic research purposes grant non-exclusive licenses exercise control over sublicenses and other aspects of the licensed product via benchmarks 4/6/2012 8
PATENT LICENSE Case Law: Standing to Challenge Patent Validity MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007) Can a licensee, after entering in a royaltybearing license agreement, challenge the validity of the underlying patent(s)? The Federal Circuit found there was no case or controversy, thus declaratory relief was not proper 4/6/2012 9
PATENT LICENSE Case Law: Standing to Challenge Patent Validity Previous Case Law: Lear, Inc. v. Adkins, 395 U.S. 653 (1969) Patent license provision is unenforceable when it prohibits the licensee from challenging the validity of the patent. Studiengesellschaft Kohle m.b.h. v. Shell Oil Co. 112 F.3d 1561 (Fed. Cir. 1997) Repudiation requires a licensee to stop paying royalties under the license agreement. Gen-Probe Inc. v. Vysis, Inc. 359 F.3d 1376 (Fed. Cir. 2004) Failure to repudiate the license deprives the licensee of any basis for a declaratory judgment action, because the license agreement removes any reasonable apprehension of being sued. 4/6/2012 10
PATENT LICENSE Case Law: Standing to Challenge Patent Validity After MedImmune, Inc. v. Genentech, Inc., Licensee can challenge the validity of the underlying patent: A licensee can refuse to pay royalties and challenge the validity of the licensed patent. A licensee can continue to pay royalties "under protest" and challenge the validity of the licensed patent, if there is a sufficient threat of litigation by the licensor if the licensee does not pay royalties. 4/6/2012 11
PATENT LICENSE Case Law: Exhaustion Doctrine Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008) LG licensed Intel to make and sell computer chips that would otherwise infringe LG's patents LG did not want third parties, who acquired chips made under license by Intel, to assemble them and other components into computers Therefore the License prohibited Intel from further licensing third parties to use the chips and other components in assembling computers 4/6/2012 12
PATENT LICENSE Case Law: Exhaustion Doctrine Quanta continued Quanta bought the licensed chips from Intel, and assembled the chips and other components into computers LG sued Quanta for patent infringement. LG asserted that those computers infringed its patents directed to methods and systems for combining components into an operational computer system 4/6/2012 13
PATENT LICENSE Case Law: Exhaustion Doctrine Quanta Supreme Court Holding: Patent Exhaustion is Triggered by the Authorized Sale of Products that Embody the Essential Features of the Patented Invention and Whose Only Reasonable and Intended Use is to Practice the Patent Exhaustion was triggered by Intel's sale to Quanta If a licensee is authorized to make a sale, that sale can exhaust the licensor's patent rights. The license agreement cannot control the use of the product by the licensee's customers 4/6/2012 14
PATENT ASSIGNMENT An assignment is the transfer of the whole right to make, use and sell the invention Gives assignee right to sue infringers without grantor s (original patent owner) participation (In general, a licensee cannot sue an infringer without joining the licensor) 4/6/2012 15
PATENT ASSIGNMENT RECORDATION Not mandatory to record an assignment in USPTO USPTO does not evaluate validity of assignments, grants, and similar instruments, only looks at accompanying form However, must record to be effective against third parties not having actual knowledge of assignment If not recorded within 3 months, void against a subsequent purchaser for a valuable consideration without notice, unless recorded prior to the purchase 4/6/2012 16
Questions arising from PATENT ASSIGNMENTS EMPLOYMENT SITUATIONS US patents are issued to the inventor Employment Contract is used when contemplating the transfer of title to a patent or patent application from inventor to employer 4/6/2012 17
Questions arising from PATENT ASSIGNMENTS Special case of a future invention: The inventor is hired by employer, want to ensure patents to future inventions are owned by the employer Distinction between contractual obligation of employee to assign invention rights in the future as opposed to an actual transfer of ownership in the patent. Board of Trustees of the Leland Stanford Junior University, et al., v. Roche Molecular Systems, et al., 583 F.3d 832 (Fed. Cir. 2009) 4/6/2012 18
PATENT ASSIGNMENTS Stanford v. Roche The Stanford employment agreement and assignment clause stated: I agree to assign... to Stanford... that right, title and interest in... such inventions... A researcher signed upon being hired in 1988, and began working on methods for quantifying HIV in the blood. Work resulted in 3 patents, which Stanford applied for in 1992. Researcher signed assignment of rights in the patent application to Stanford in 1995 4/6/2012 19
PATENT ASSIGNMENTS Stanford v. Roche BUT.while employed by Stanford (1980 s), researcher also worked with Cetus, and signed a Visitor s Confidentiality agreement stating: [Researcher] will assign and does hereby assign to Cetus his right, title and interest... In 1991 Roche purchases Cetus relevant business In 2005 Stanford sues Roche for infringement of the three patents. Roche claimed to own those patents 4/6/2012 20
PATENT ASSIGNMENTS Stanford v. Roche CAFC Held: Stanford did not own the patents-in-suit Stanford did not acquire title to the inventions upon execution of employment agreement, nor when inventions were created The employment agreement was not an immediate transfer of the patent rights from inventor to assignee, but only indicated an intent to assign patent rights at a later, unspecified time However, Cetus immediately gained an equitable title to the inventions upon execution of the agreement, which became legal title on the filing of the patent application. 4/6/2012 21
PATENT ASSIGNMENTS Stanford v. Roche Some conclusions: Use precise language in assignment clauses Ensure that employment agreement conveys an immediate transfer of inventor s right in the invention and patent(s) Promptly record assignments with USPTO as patent applications are filed 4/6/2012 22
PATENT ASSIGNMENTS Stanford v. Roche: Supreme Court review Whether a federal contractor university s statutory right under the Bayh-Dole Act in inventions arising from federally funded research can be terminated unilaterally by an individual inventor through a separate agreement purporting to assign the inventor s rights to a third party The Supreme Court affirmed the Federal Circuit: Patent ownership rights do not automatically vest under the Bayh-Dole Act 4/6/2012 23
PATENT ASSIGNMENTS Legislative Developments America Invents Act (AIA) A person to whom the inventor has assigned or is under an obligation to assign the invention may make an application for patent. A person who otherwise shows sufficient proprietary interest in the matter may make an application for patent on behalf of and as agent for the inventor on proof of the pertinent facts and a showing that such action is appropriate to preserve the rights of the parties. 4/6/2012 24
PATENT ASSIGNMENTS Administrative Developments USPTO proposed rules on recordation Must record assignment with the USPTO when: 1 at the time of filing 2 if change before publication 3 before paying issue fee 4 when causes to gain or lose small entity status 4/6/2012 25
DEVELOPMENTS IN THE TRANSFER OF PATENT RIGHTS Any Questions? For more information: Paolo.Trevisan@uspto.gov 011 571 272 7110 4/6/2012 26