Tuesday, March 15, 2011

Abraxis case: looking back to DDB, forward to Stanford/Roche?

In Abraxis v. Navinta, en banc review was not granted.
Within the dissenting opinion, there is reference to the DDB
case, and to Stanford/Roche:

Admittedly, our panel decision in DDB Technologies
established a limited exception to this longstanding
precedent for agreements assigning rights to future
inventions where the question is “whether a patent as-
signment clause creates an automatic assignment or
merely an obligation to assign.” 517 F.3d at 1290. Rea-
soning that this question is “intimately bound up with the
question of standing in patent cases,” the majority in
DDB Technologies held that federal law should displace
state contract law when this question arises. Id. Until
this case, however, our decisions following DDB Technolo-
gies have invoked this exception and applied federal law
only to resolve the narrow issue of whether a new inven-
tion covered by an earlier assignment agreement is auto-
matically assigned “by operation of law” “once the
invention comes into being,” id., or whether a further act
is required to effectuate the assignment. See, e.g., Bd. of
Trs. of the Leland Stanford Junior Univ. v. Roche Molecu-
lar Sys., 583 F.3d 832, 841 (Fed. Cir. 2009). This comes
as no surprise, as a close inspection of the decision in
DDB Technologies reveals it was never intended to create
an exception so broad as to encompass agreements assign-
ing existing patents, such as those at issue here.

On the specifics of the DDB case:

At issue in DDB Technologies was whether one of the
named inventors of the patents in suit had assigned his
interest in those patents to his employer by virtue of a
clause in his employment agreement granting the em-
ployer rights to any invention arising out of the employ-
ment relationship. If such an assignment had occurred,
Plaintiff DDB Technologies LLC (“DDB”) would have
lacked standing to maintain its suit without joining the
employer as a co-owner of the asserted patents. In sup-
port of its claim that it was the sole owner of the patents,
DDB argued that, “even if the patents in suit were within
the scope of the [inventor’s] employment agreement,” the
employer’s claim of ownership was barred by a number of
defenses. DDB Techs., 517 F.3d at 1289. DDB did not
dispute the district court’s determination that applicable
state law precluded an assignor from asserting those
defenses to rescind a valid assignment. Id. Rather, DDB
argued that, because assignment under the employment
agreement was not “automatic,” there was never a valid
assignment and the defenses therefore remained avail-
able. Id. Consequently, the panel’s initial inquiry was
whether the relevant language in the employment agree-
ment constituted a promise to assign in the future or an
assignment that became automatic upon the issuance of
the patent creating the property right.

In answering this question, the DDB Technologies
panel first acknowledged that “state law governs the
interpretation of contracts generally.” Id. at 1290.
Drawing on our analysis in Speedplay, Inc. v. Bebop, 211
F.3d 1245, 1249 (Fed. Cir. 2000) and Arachnid, Inc. v.
Merit Indus., Inc., 939 F.2d 1574 (Fed. Cir. 1991), how-
ever, the panel noted that, because “the question of
whether a patent assignment clause creates an automatic
assignment or merely an obligation to assign is intimately
bound up with the question of standing in patent cases,”
we “have accordingly treated it as a matter of federal
law.” Id. Standing in isolation, this language may appear
to encompass agreements beyond those assigning inter-
ests in future inventions. The remainder of the para-
graph, however, clarifies that the exception applies only
to agreements involving rights to future inventions:

Applying federal law, we have held that whether
an assignment of patent rights in an agreement
such as the one in this case is automatic, requir-
ing no further act on the part of the assignee, or
merely a promise to assign depends on the con-
tractual language. If the contract expressly grants
rights in future inventions, “no further act [is] re-
quired once an invention [comes] into being,” and
“the transfer of title [occurs] by operation of law.”
FilmTec Corp., 939 F.2d 1568 at 1573 (contract
provided that inventor “agrees to grant and does
hereby grant” all rights in future inventions); see
also Speedplay, 211 F.3d at 1253 (contract pro-
vided that employee's inventions within the scope
of the agreement “shall belong exclusively to [em-
ployer] and [employee] hereby conveys, transfers,
and assigns to [employer] . . . all right, title and
interest in and to Inventions”). Contracts that
merely obligate the inventor to grant rights in the
future, by contrast, “may vest the promisee with
equitable rights in those inventions once made,”
but do not by themselves “vest legal title to patents
on the inventions in the promisee.”


Post a Comment

<< Home