Tag: inventions

To Promote Innovation, Congress Should Lessen Restrictions on Injunctive Relief for Patent Owners

Under the U.S. Constitution, a patent conveys an “exclusive right” to inventors so they can prevent others from stealing their inventions. And since the enactment of the Patent Act of 1790, the law has deemed patents to be a form of personal property and specifically provided for injunctive relief, a court order stopping a proven infringer from continuing to use or sell someone else’s invention. Yet, today in the United States, despite this constitutional mandate and grounding in law, many patent holders no longer have exclusive rights to their inventions, nor the ability to obtain iinjunctions.

For much of our country’s history, permanent injunctions were the norm once patent infringement and validity were proven at trial by the patent owner. And getting an injunction depended on facts, not the patent owner’s business model – for example, whether they manufactured or licensed their invention. The practice was stable for all of that time – until recently.

In 2006, in the Supreme Court’s eBay Inc. v. MercExchange, L.L.C. decision, the Court upended this settled practice, ruling that injunctions should not be automatically issued in patent cases and clarifying that courts must apply a four-part test to determine whether an injunction should be granted. The opinion of the Court, authored by Justice Thomas, said little more than that the four factors should determine when an injunction is allowed. However, two concurring opinions expanded on the role of injunctions in patent cases – one, written by Chief Justice Roberts, defended the historic practice of allowing injunctions in most cases, while the other, by Justice Kennedy, pushed in the opposite direction, basing the injunction determination on who the patent owner was and how they used the patent.

For some years after, the pattern of injunction grants changed little. But eventually, it shifted greatly, as lower courts began to make injunction determinations based primarily on the patent owner’s identity. Those who manufacture products continued to get injunctions, while those who chose to license their patents instead, no longer did. This misapplication of the ruling by lower courts has become so widespread that it is now almost impossible for inventors who license their patents to obtain an injunction, even in the face of proven infringement.

It was almost as if the Kennedy minority concurrence became the majority opinion.  And the Roberts concurrence was mostly ignored by the lower courts – even though that opinion highlighted the settled historical practice of granting injunctions for most cases of infringement.

It may not be entirely coincidental that such an outcome was implored by a massive lobbying and public relations campaign conducted by a group of Big Tech mega corporations, mostly based in Silicon Valley. In an effort to reduce patent licensing fees for using technology created by other inventors in their products, these Big Tech companies set out to demonize the patent licensing business model and undermine the ability of inventors to defend patents against infringement. Among their asks, they specifically urged that injunctions should be largely limited to companies “practicing” their inventions by making products and denied to those following the licensing business model, so-called “non-practicing entities,” or NPEs.

Well, this campaign and its complaints about patent licensing, though lacking in evidence, apparently caught the eye of Justice Kennedy, who wrote in his concurring eBay opinion: “An industry has developed in which firms use patents not as a basis for producing and selling products but, instead, primarily for obtaining licensing fees… For these firms, an injunction, and the potentially serious sanctions from its violation, can be employed as a bargaining tool to charge exorbitant fees to companies that seek to buy licenses to practice the patent.”

This line of reasoning overlooks the fact that the patent licensing business model is not a new phenomenon in the commercialization of patented innovation, but has been around since our country’s founding and has served a key role in advancing U.S. innovation. Iconic American inventors, such as Thomas Edison, Alexander Graham Bell, the Wright Brothers, Charles Goodyear and Elias Howe Jr., all licensed their patented inventions to others, who then manufactured the final product and brought it to the masses. And today, many of our nation’s best innovators license their inventions, including universities, hospitals, startups, engineering firms and independent inventors.

What is most striking is that while the U.S. no longer provides injunctive relief to many patent holders, our competitors in Europe and Asia, including China, routinely grant injunctions in similar cases of patent infringement. This is undermining our competitiveness as innovative companies in the U.S. and around the world have an incentive to conduct R&D and patent inventions outside the U.S., where patent protections are now stronger.

Fortunately, Senator Chris Coons (D-DE) and Representative Steve Stivers (R-OH) are sponsoring bipartisan legislation, known as the STRONGER Patents Act, that would restore the traditional right of injunctions to all patent owners, including those who license their innovations. If we have learned nothing else from the Covid-19 crisis, it is the need to incentivize all the technological advances we can, especially the development of new human health technologies. That incentive system works best when all patent owners can equally and fairly use their constitutional “exclusive right” to their innovations. Let’s hope that insight will help jumpstart the legislative advance of the STRONGER Patents Act or other measures to strengthen patent rights and restore injunctive relief.

The opinions and views stated herein are the sole opinions of the author and do not reflect the views or opinions of the National Law Review or any of its affiliates.

© The National Law Forum. LLC
ARTICLE BY Chief Judge Paul Michel (ret.) US Court of Appeals for the Federal Circuit
For more on patenting inventions, see the National Law Review Intellectual Property law section.

Intellectual Property and You: University Edition

Intellectual Property at UniversityIt may be July, but school is still in session. Today, I’ll discuss another common but mysterious topic: intellectual property ownership, specifically in the university setting. Universities sponsor research, encourage experimentation, and foster collaboration. The hallowed halls of universities are treasure troves of intellectual property. However, the process can hit a snag when it comes time to start a company and (hopefully) make money. Intellectual property is the cornerstone of many companies and at the center of many disputes. Here, I will address a few items: 1) joint inventorship; 2) university policies and grant terms; and 3) employment agreements.

Joint Inventorship

As it is synonymous with intellectual property, let’s first tackle patents and the concept of “joint inventorship.” 35 USC §116(a) provides that when an invention is made by two or more persons jointly, they shall apply for a patent “jointly.” Further, inventors may apply for a patent jointly even though (1) they did not physically work together or at the same time, 2) each did not make the same type or amount of contribution, or 3) each did not make a contribution to the subject matter of every claim of the patent.

Case law maintains no minimum threshold for contribution. In Burroughs Wellcome Co. v. Barr Labs, Inc. (1994), the court posited that “conception is the touchstone of inventorship.” There, the patent application was prepared before the defendant’s scientists (Barr Labs) contributed to the research on the use of a pharmaceutical to treat HIV. The court held that inventors are those who thought of the idea, not those who only realized the idea. As such, discovery that an idea actually works and reduction of that idea to practice are irrelevant for inventorship. The idea must be “definite” and “permanent” in a sense that it involves a “specific approach to the particular problem at hand.” The typical contributions of a supervisor do not necessarily qualify.

Burroughs Wellcome teaches an important lesson for startup teams: everyone should have a clear understanding of their roles and duties. Over an idea’s lifecycle, many hands may touch the idea. Confusion among these matters can create disputes and unnecessary hurdles. Teams must secure the intellectual property rights of all inventors, otherwise, the intellectual property will have multiple owners. For example, three students are working on a project for a new light tracking technology. Each student contributed, but only two students were listed on the patent, which was assigned to the company IP, Inc. The third student has inventorship rights, and as such, she can have herself added to the application and more importantly, she has rights to the patent which she may assign and license at her pleasure. Put simply, your company may have a joint owner.

University Policies and Grant Terms

Second, always–and I do mean always–look at your university’s intellectual property and technology transfer policies and any funding terms that you receive. These terms will ultimately govern your relationship with the university and dictate your responsibilities and rights. Many of your questions may be answered right in the policy.

For my fellow Wolverines, let’s focus on the University of Michigan’s Tech Transfer Policy.

1. Ownership. Generally, the University claims ownership over intellectual property made by “any person, regardless of employment status, with the direct or indirect support of funds administered by the University (regardless of the source of such funds).” These funds include University resources, and funds for employee compensation, materials, or facilities.

2. Student Intellectual Property. The University generally does not claim ownership of intellectual property created by students. The policy defines “student” as a person enrolled in University courses for credit, except when that person is an employee. However, UM will claim ownership of intellectual property created by students in their capacity as employees (i.e., persons who receive a salary or other consideration from the University for performance of services, part-time, or full time). Interestingly, a student will be considered an employee, for the purposes of this policy, if they are compensated. UM gives the following examples as compensation: stipends and tuition.

The University of Michigan is relatively generous towards its students. However, employees (professors, graduate student instructors, research assistants, post-docs) are another matter.

Employment Relationships

Lastly, as hinted above, founders should pay close attention to the terms of their engagement with the university, which will include employment agreements or other related agreements. Typically, professors, graduate student instructors, research assistants, and the like will have these agreements in place and they are bound by their provisions. Each of these agreements is likely to have an intellectual property assignment clause, which will give ownership of created intellectual property to their respective university employer.

Conclusion

Although the university setting is a boon to intellectual property creation, it does come with strings attached. IP ownership can also become very messy due to concepts like joint inventorship and a lack of proper assignment documents. An unwary student group can end up with the university, or another party, as a co-owner in his/her intellectual property.

Here are a few suggestions:

  • Communicate. As stated above, it is important that everyone understand their role in your project/venture. Informed persons are less likely to assert unwarranted ownership claims.

  • Read your university, classroom, and grant policy. While some places can be student friendly (GO BLUE!), others may not.

  • Maintain clear documentation. Properly document your inventive processes. Also ensure that when you have a startup involved, have proper intellectual property assignments between participants and the startup.

  • Always read your employment agreements. These agreements can contain various obligations in regards to intellectual property. They may also contain intellectual property assignment clauses.

Keep in mind, there is a value to working with university intellectual property. The university may already have ownership, or in some cases, a venture (or students) may assign their intellectual property to tech transfer offices for help in commercialization efforts. The university is a valuable environment.

ARTICLE BY Fermin M. Mendez of Varnum LLP

© 2016 Varnum LLP

Patent Practitioners: Inventions and the Ecosystem of Ideas

Womble Carlyle Law firm

There are some striking parallels between inventions and living organisms, and between technology in a consumer marketplace and an ecosystem.  Insights gained through the comparisons may be beneficial to inventors, companies, consumers and the patent community.  What are the connections?  To review, living organisms exist in an ecosystem, and flourish or perish according to the laws of nature, with survival of the fittest.  Variations among the organisms occur from generation to generation, and are positively or negatively selected over the passage of time and generations, as organisms evolve.  This begets new species, which occupy environmental niches in the ecosystem, and also begets extinction in which species die off.  Ideas, invention and technology exist in a sort of man-made ecosystem, with the consumer marketplace performing a selection process, the whole experiencing a type of guided evolution.

Human beings have ideas.  We brainstorm them, communicate them to each other, and come up with more ideas.  Humans invent, bringing some of these ideas to fruition.  In turn, humans bring some of these ideas to actual products, which are then put up for sale and use in the consumer marketplace.  This is a sort of test in the ecosystem, as to which products will survive.  Consumers then make choices, purchasing the products they like, for various reasons.  Products that are not purchased and used influence manufacturers to stop making those products.  Products that are purchased and used influence manufacturers to continue making those products, and to develop next-generation variations of those products.  New features are added to next-generation products, and some of these new features are popular, and some are not.  The process of selection as to popularity, and sales volume, of products, is made by the consumers.

Next-generation variations of products are rather like offspring with mutations, in the comparison to living organisms in an ecosystem.  A brand-new, never before seen product is rather like a new species that has suddenly emerged.  Entire product types that become obsolete are rather like the dinosaurs that went extinct long ago.  Even the term “dinosaur”, in colloquial usage, is synonymous with outdated technology (and is also sometimes applied to people who still prefer to use such outdated technology).

Ideas, invention, products and technology thus emerge, develop, thrive or perish, beget variations, and evolve over time in the consumer marketplace.  The ever-present interest by, and purchasing power of, consumers drives the selection process that guides the evolution of products and technology.  The ever-present ingenuity of inventors, and desire for companies to succeed in the marketplace, drives the production and mutation (variation) processes that guide the evolution of products and technology.  The history of technology thus parallels the history of living organisms. 

We patent practitioners are privileged to be chroniclers of inventions.  A study through the body of published patent applications and issued patents illuminates the more recent history of invention and key aspects of technology.  A study of the United States Patent Classification System, as developed and used by the United States Patent and Trademark Office, is rather like studying the taxonomy of living organisms.

How might we apply these insights?  Consider a new product without a marketplace.  Is such a product likely to survive?  Perhaps a new marketplace will emerge for the new product, which could then dominate.  How will other products compete with this new product?  How will consumers decide whether to select and use, or deselect the new product?  Consider competition against a product that is well-established in a marketplace.  What new feature or new product could compel consumers to favor it?  If some branch of technology is headed for obsolescence, why is this?  If some new branch of technology is emerging, how might it fare, and why?  And, for the patent practitioners in the audience, how might we best capture the innovative aspects and the inventions in our drawings, descriptions and claims on behalf of the inventors?  This is all part of the art of patenting.

ARTICLE BY

Christopher M. Hall
 
OF 
Womble Carlyle Sandridge & Rice, PLLC

Supreme Court to Consider Case on Patent Eligibility of Computer-Implemented Inventions

Michael Best Logo

On December 6, 2013, the Supreme Court agreed to consider Alice Corp. v. CLS Bank International, a case concerning the patent eligibility of computer-implemented inventions. The Court will review a split decision issued by the en banc Federal Circuit in May 2013. In that decision, seven of 10 judges concluded Alice Corporation’s claims to computer-based methods for minimizing settlement risk in financial transactions, as well as claims to computer-readable media containing program code for performing such methods, constituted patent-ineligible subject matter under § 101. The judges split evenly, however, regarding the patent eligibility of Alice’s remaining claims to computerized systems for performing such transactions. Given the stark differences of opinion expressed by members of the Federal Circuit, it was widely predicted that the Supreme Court would step in to settle the dispute. The Court’s decision could have significant implications for the computer hardware and software industries, as well as for patent eligibility standards in general.

The Supreme Court is expected to hear arguments in early 2014, and a decision is expected by the end of the term in June 2014. The case number is 13-298.

Article by:

Of:

Michael Best & Friedrich LLP