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It’s Highlighted and Verified: Reversal of PTAB Non-Obviousness Decision

by | Jun 3, 2021 |

In a relatively unusual outcome, the US Court of Appeals for the Federal Circuit reversed a Patent Trial & Appeal Board (Board) decision finding non-obviousness in an inter partes review (IPR). Becton, Dickinson, and Co. v. Baxter Corp. Englewood, Case No. 20-1937 (Fed. Cir. May 28, 2021) (Dyk, J.)

Becton petitioned the Board for IPR of Baxter’s pre-America Invents Act (AIA) patent, directed to a system for preparing patient-specific doses and a method for telepharmacy. The Board decided that the patent claims were not shown to be invalid as obvious, but also found that Baxter’s secondary considerations evidence was “weak.” Becton appealed based on two contested limitations: a verification limitation and a highlighting limitation. The Federal Circuit reversed the Board, concluding that the challenged claims were obvious and explained that weak evidence of secondary considerations could not overcome the strong showing of obviousness.

First, the Federal Circuit decided that the Board erred in finding that a prior art reference that taught a remote pharmacist may verify a dose preparation did not render obvious a claimed method where a remote pharmacist must verify. The reference made clear that a non-pharmacist could not further process work without the verification step. Baxter’s own expert witness conceded that, in accordance with the teachings of the prior art, a non-pharmacist would be disciplined for continuing to process dose preparation without authorization. The Court concluded there was no significant difference between the teaching in the prior art reference and Baxter’s verification requirement.

Second, the Federal Circuit decided that the Board erred in finding that the “highlighting” limitation as it relates to a set of drug preparation steps on a computer was non-obvious. In what it characterized as a “close case,” the Board decided that a prior art reference’s teachings highlighting patient characteristics when dispensing repackaged medication did not make obvious highlighting, in a drug formulation context, prompts for additional information. Citing KSR v. Teleflex, the Court explained that the “combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results.” The reference taught highlighting in terms of various inputs and information delivered. Becton’s expert testified that one of ordinary skill would understand from the reference that other information, such as prescription order information, could be displayed on the user interface. Baxter’s expert did not contradict Becton’s expert. Because “a person of ordinary skill is also a person of ordinary creativity, not an automaton,” the Board erred in using that one reference as the only source for what one of ordinary skill would consider.

Lastly, Baxter unsuccessfully argued that under pre-AIA 35 U.S.C. § 102(e)(2), one of the patent references was ineligible as prior art. Sec. 102(e)(2) provides that a prior art reference may be a “patent granted” on another’s application filed in the United States before the invention by the applicant. Baxter argued that since the claims of the reference were cancelled after a 2018 IPR, the reference no longer qualified as a “patent granted” [...]

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PTO Rules Not Subject to the Paperwork Reduction Act

by | May 27, 2021 |

The US Court of Appeals for the Ninth Circuit concluded that certain challenged rules of the US Patent and Trademark Office (PTO) that relate to the patent application process do not violate the Paperwork Reduction Act (PRA) because each called for a response to an individualized communication; a category which is expressly exempted from the PRA. Hyatt v. Office of Management and Budget, Case No. 20-15590 (9th Cir. May 20, 2021) (Nguyen, J.).

Inventor Gilbert Hyatt and the American Association for Equitable Treatment (AAET) contended that patent applicants should not have to comply with certain PTO rules, alleging that the rules violated the PRA, which Congress passed to reduce the burden imposed on the public when responding to federal agencies’ requests for information from private individuals. The PRA requires federal agencies engaged in “collections of information” to first submit them to the Office of Management and Budget (OMB) for approval and an assignment of a control number. Collections of things other than “information” do not need to receive OMB approval, and the PRA applies only to “collections” seeking information through identical questions or requirements imposed on 10 or more people. Thus, the PRA and its regulations expressly exclude individualized communications from PRA applicability.

Hyatt asked OMB to review PTO rules 111, 115 and 116, arguing that those rules imposed “collections of information” under the PRA. Hyatt suggested that because the rules had not received OMB approval and control numbers, he was not required to maintain, provide or disclose the information these rules referenced. OMB responded that it had already determined that “these collections are not subject to the PRA because what is collected is not considered ‘information,’ pursuant to [three] exemptions in OMB’s PRA implementing regulation”:

  • Exemption 1: “[a]ffidavits, oaths, affirmations, certifications . . . provided that they entail no burden other than that necessary to identify the respondent, the date, the respondent’s address, and the nature of the instrument. . .”
  • Exemption 6: “request[s] for facts or opinions addressed to a single person”
  • Exemption 9: “[f]acts or opinions obtained or solicited through nonstandardized follow-up questions designed to clarify responses to approved collections of information.”

5 C.F.R. §§ 1320.3(h)(1), (6), (9).

AAET made similar arguments in submitting three requests to OMB on PTO rules 105, 130, 131 and 132 and MPEP § 2173.05(n). In its response to AAET, OMB only stated that “the requests under Rule 1.105 are not subject to the PRA because the responses to questions submitted under Rule 1.105 are not ‘information,’ but instead are exempt under” Exemption 9. AAET submitted three more requests to OMB on the same rules with similar arguments. OMB responded that Rules 105, 130, 131 and 132 and MPEP § 2173.05(n) were exempt under Exemptions 6 and 9; and Rules 130, 131 and 132 were additionally exempt under Exemption 1.

Hyatt and AAET sued OMB in district court, alleging that OMB’s denial of their petitions was arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law in [...]

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New Perspective on Specific Personal Jurisdiction in Patent DJ Venue

by | May 20, 2021 |

The US Court of Appeals for the Federal Circuit concluded that the minimum contacts or purposeful availment test for specific personal jurisdiction was satisfied where a patent owner sent multiple infringement notice letters and other communications to a resident of California who then filed for declaratory judgment of non-infringement in federal district court in California. Trimble Inc. v. PerDiemCo LLC, Case No. 19-2164 (Fed. Cir. May 12, 2021) (Dyk, J.)

PerDiem accused Trimble of infringing several of PerDiem’s patents. PerDiem exchanged 22 communications with Trimble in California over a period of three months, some through Trimble’s subsidiary ISE in Iowa and other communications through its chief IP counsel in Colorado. The communications started with a letter (sent to ISE in Iowa) that had attached an unfiled complaint and which PerDiem used to try to launch license negotiations. This unfiled complaint asserted nine of PerDiem’s patents. After ISE brought Trimble, its parent, into the discussion, PerDiem accused Trimble’s products of infringing 11 patents and sought to enter into binding mediation on its infringement allegations. PerDiem also threatened to sue Trimble in the Eastern District of Texas and identified the counsel it planned to use for this purpose. Trimble filed for a declaratory judgment of non-infringement in the Northern District of California. The district court dismissed the complaint, relying on the Federal Circuit’s 1998 decision in Red Wing Shoe v. Hockerson-Halberstadt, concluding that it would be unreasonable to assert personal jurisdiction over PerDiem based on its communications. Trimble appealed.

The sole issue in the appeal was whether the district court erred in holding that there was no specific personal jurisdiction over PerDiem in the Northern District of California. The Federal Circuit explained that PerDiem’s contacts with California were far more extensive than those in Red Wing, noting the manner in which PerDiem amplified its threats of infringement as the communications continued, asserted more patents, and accused more of Trimble and ISE’s products of infringement. The Court noted that PerDiem even identified the counsel it retained to sue Trimble and the venue in which it planned to file suit. Overall, the Court found that PerDiem’s 22 communications over the course of about three months fell well outside the “sufficient latitude” the Court sought to grant patentees “to inform others of [their] patent rights without subjecting [themselves] to jurisdiction in a foreign forum” on the basis of three letters sent over a similar time period in Red Wing.

Practice Note: It remains to be seen how useful this case may be in the context of obtaining specific personal jurisdiction over non-practicing entities (or other patent owners) based on sending demand letters into a potential declaratory judgment venue viewed as less hospitable to patent owners.



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Arthrex Argument May Be Available in Round Two

by | May 20, 2021 |

The US Court of Appeals for the Federal Circuit found that a party did not waive the Patent Trial & Appeal Board’s (Board) constitutionality argument by raising it for the first time in its opening brief because the Court’s decision in Arthrex, Inc. v. Smith & Nephew, Inc. was issued after the party sought rehearing. New Vision Gaming v. SG Gaming, Inc., Case Nos. 20-1399, -1400 (Fed. Cir. May 13, 2021) (Moore, J.) (Newman, J. concurring in part, dissenting in part)

New Vision appealed two covered-business method (CBM) review final written decisions in which the Board found that all claims of the patents, as well as its proposed substitute claims, were directed to patent ineligible subject matter under 35 U.S.C. § 101. In its opening brief before the Federal Circuit, New Vision requested the Court vacate and remand the Board’s decisions in light of Arthrex. SG Gaming argued New Vision had waived its right to a challenge under Arthrex since it raised it for the first time on an appeal. The Court disagreed, finding that New Vision had not waived its ability to challenge the Board’s decision under Arthrex since Arthrex was issued after the Board’s final written decisions and after New Vision sought Board rehearing. The Court vacated the Board’s final written decisions in the CBMs and remanded for further proceedings consistent with Arthrex without reaching the merits or any other issues.

In her partial dissent, Judge Pauline Newman agreed that Arthrex applied and vacating the Board’s final written decisions was appropriate. She also argued that another threshold issue (venue) should have been resolved, rendering the remand under Arthrex unnecessary and unwarranted. Additionally, Judge Newman agreed with New Vision that since the parties agreed to a different forum for dispute resolution in their license agreement, compliance with the parties’ patent license agreement would be appropriate. Under that agreement, if “any dispute” arose, jurisdiction would be “exclusive” in the appropriate federal or state court in the state of Nevada. New Vision filed suit in the federal district court in Nevada before SG filed CBM petitions before the Board. The Board stated it “[does] not discern, nor has Patent Owner pointed to, any portions of chapter 32 or § 18 of the AIA, or authority otherwise, that explicitly provide for a contractual estoppel defense,” in its decision and proceeded to a final decision despite the forum selection agreement.

Both parties briefed the forum selection question, with New Vision citing the Federal Circuit 2019 decision in Dodocase VR v. MerchSource in which a case was removed from the Board based on an agreed choice of forum. SG countered that the Board’s rejection of choice of forum is an unreviewable “institution” decision under Thryv vs. Click-to-Call. Andrei Iancu, the Director of the US Patent and Trademark Office (USPTO), intervened in the appeal, arguing that the Board’s decision is “final and nonappealable” under 35 U.S.C. § 324(e). As to the Board’s “conduct” in declining to [...]

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Prosecution History Prevents Patent Owner from “Intercepting” Win on Appeal

by | May 20, 2021 |

In reviewing whether the Patent Trial & Appeal Board (Board) correctly interpreted the meaning of “intercepting” in the context of Voice over Internet Protocol (VoIP) technology, the US Court of Appeals for the Federal Circuit found that the claim language and prosecution history supported the Board’s decision. The Court thus affirmed the Board’s construction and subsequent finding of obviousness. Uniloc 2017 LLC v. Apple Inc., Case Nos. 20-1403, -1404 (Fed. Cir. May 12, 2021) (Prost, C.J.)

Uniloc owns a patent directed to a system and method for using various VoIP features, such as caller-ID, call waiting, multi-line service, and different levels of service quality known as the “codec specification.” The patent explains that in order to generate revenue for these features, service providers must maintain control over which subscribers have paid for these additional features. To achieve that control, the system employs an enforcement mechanism that sits between the sender of the communication and the intended recipient. The enforcement mechanism ensures that both parties are authorized to use the particular features by intercepting the signaling message, determining whether the client is authorized, and filtering the signaling message based on the authorization. The majority of the claims require authorization related to only one service type. However, one of the claims (claim 18) requires authorization related to at least two service types.

Apple filed a petition for inter partes review (IPR), alleging that all claims of the patent were invalid as obvious over a prior art patent referred to as Kalmanek. Kalmanek discloses signaling messages that are routed through at least one “gate controller,” which can authenticate the identity of the calling party and authorize the services sought. The services include at least caller-ID and enhanced levels of call quality. Kalmanek’s process is accomplished by sending a SETUP message, which the calling party sends to the gate controllers and then to the intended recipient. After receipt, the called party sends a SETUPACK message along a return path to the gate controllers and then to the caller.

During the IPR, Apple asserted that the term “intercepting” a signaling message associated with the call, as recited in all independent claims, should be interpreted to mean “the signaling [message] is received by a network entity located between the endpoints of the call.” Uniloc disagreed and argued that the term should be interpreted as excluding the receipt of a signaling message by the intended recipient of the message. The Board agreed with Apple’s construction and subsequently found that all terms were invalid as obvious with the exception of claim 18. With respect to claim 18, the Board concluded that Apple failed to meet its burden to show that Kalmanek disclosed authorization related to a codec service. Furthermore, the Board opined that even assuming Apple had properly advanced such an argument, it would have lost on the merits.

On appeal, Uniloc challenged the Board’s construction of the “intercepting” term, and Apple cross-appealed the Board’s finding with respect to the non-obviousness of claim 18. The Federal Circuit affirmed [...]

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Full Scope of Claimed Invention Must Be Enabled

by | May 20, 2021 |

In a case relating to nucleic acid sequencing, the US Court of Appeals for the Federal Circuit upheld a jury verdict of non-enablement because a skilled artisan would have only known how to successfully practice a narrow range of the full scope of the nucleic acids covered by the asserted claim at the time of the invention. Pacific Biosciences of California, Inc. v. Oxford Nanopore Technologies, Case No. 21-2155, -2156 (Fed. Cir. May 11, 2021) (Taranto, J.)

PacBio sued Oxford for infringement of two patents related to methods for sequencing nucleic acids (such as DNA) using nanopore technology. The methods involve drawing nucleic acids through a nanometer-sized hole formed in a substrate. A voltage is applied to the substrate, and as the nucleic acids pass through the hole, the identity of each nucleic acid is identified based on changes in electric current passing through the substrate.

At trial, Oxford’s lawyer made opening remarks that included references to the potential applications of Oxford’s accused products to the then-emerging global COVID-19 crisis. PacBio immediately objected, and the district court gave exactly the curative instruction that PacBio requested. The district court also required that going forward, the parties give advance notice if they intended to make any reference to COVID-19. Ultimately, the jury found all asserted claims infringed, but also determined that the claims were invalid for lack of enablement under 35 USC § 112. In post-trial motions, the district court denied PacBio’s request that the court grant a new trial because of Oxford’s remark during opening statements regarding the accused products’ potential application to the then-emerging COVID-19 crisis. PacBio appealed.

On appeal, PacBio argued that the jury’s finding of lack of enablement was unsupported by the evidence, citing to testimony from its expert that a person skilled in the art at the priority date would have been able to successfully perform the methods of the asserted claims. The Federal Circuit disagreed, noting that the expert only demonstrated successful practice of the asserted claims for a narrow subset of nucleic acids covered by the claims—namely DNA hairpin molecules. The Court cited evidence where PacBio admitted through a stipulation that it had never performed the nanopore sequencing methods of the asserted claims, meaning its reduction to practice was purely constructive. The Court also noted that Oxford produced evidence that it was not until 2011 (two years after the priority date) that anyone in the field was able to use nanopore sequencing to sequence biological DNA—a different type of nucleic acid within the scope of the asserted claims. Thus, the Court found that PacBio had only demonstrated that a person of skill in the art would have been able to successfully practice a narrow range of the full scope of the nucleic acids covered by the asserted claim. The Court explained that it is not enough for enablement that the relevant artisans knew how to perform some nanopore sequencing before the priority date. Instead, what matters is the scope of the asserted claims, which relate [...]

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Targeted Advertising Still Patent Ineligible Subject Matter

by | May 20, 2021 |

The US Court of Appeals for the Federal Circuit found that targeted advertising is still an abstract idea and that a system providing targeted advertising must utilize something more than generic features and routine functions to be eligible for patent protection. Free Stream Media Corp. v. Alphonso Inc., Case No. 19-1506 (Fed. Cir. May 11, 2021) (Reyna, J.)

Free Stream Media, d.b.a. Samba, owns a patent directed to “a system providing a mobile phone user with targeted information (i.e., advertisements) that is deemed relevant to the user based on data gathered from the user’s television.” The system has three main components: (1) a networked device (e.g., a smart TV) that collects primary data, including program information, location, weather information or identification information; (2) a client device (e.g., a mobile device) on which applications run and advertisements may be shown; and (3) a relevancy-matching server that uses the primary data to select advertisement or other targeted data based on a relevancy factor associated with the user. Specifically, the relevancy-matching server “may also be configured to render the targeted data to the user through the networked device and/or the sandboxed application of the client device.”

Samba asserted infringement of the patent against Alphonso. In response, Alphonso filed a motion to dismiss on grounds that the asserted claims of the patent were directed to patent ineligible subject matter under 35 USC § 101. Alphonso subsequently filed a motion for summary judgment of non-infringement. The district court denied the § 101 motion but granted the summary judgment motion. Samba appealed the non-infringement finding, and Alphonso cross-appealed the § 101 finding.

The Federal Circuit started with the § 101 finding by first addressing Alice step 1 (abstract idea). The Court rejected the district court’s finding that the asserted claims were directed to “systems and methods for addressing barriers to certain types of information exchange between various technological devices . . . being used in the same place at the same time,” i.e., to bypass the security sandbox, and not an abstract idea of tailored advertising. To the contrary, the Court found that the asserted claims were directed precisely to the abstract idea of tailored advertising—specifically, gathering information about television users’ viewing habits, matching the information with other content and sending that content to a second device. Reiterating its prior holdings with respect to Alice step 1, the Court explained that the asserted claims only provided for the result of overcoming a security sandbox, and did not at all describe how that result is achieved. The Court also explained that even if the claims did recite a method for bypassing a security sandbox, Samba failed to demonstrate that this was anything more than a mere use of a computer as a tool, or that it somehow “improves the operability of these devices beyond providing a user with targeted content using generic processes and machinery.”

Turning to Alice step 2 (inventive concept), the Federal Circuit explained that the claimed abstract idea of providing targeted advertisements was not [...]

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Tax Court Allows Partial Deduction, Requires Partial Capitalization of Generic Drug Approval Legal Expenses

by | May 13, 2021 |

The US Tax Court determined that a pharmaceutical manufacturer’s legal expenses incurred to defend against a patent infringement suit were eligible for an immediate deduction as ordinary and necessary business expenses, while legal expenses incurred as part of an abbreviated new drug application (ANDA) were not eligible for an immediate deduction and thus had to be capitalized and then amortized over 15 years. Mylan, Inc. & Subsidiaries v. Commissioner, 156 T.C. No. 10 (Apr. 27, 2021) (Urda, J.)

The ANDA process allows for faster approval of a generic drug if the manufacturer can show that the generic drug is sufficiently similar to an approved brand name drug. As part of the ANDA process, the generic manufacturer must file statements certifying that the generic drug does not infringe any brand drug patents, or that such patents are invalid. The generic manufacturer also must send a notification to the holder of any patents covered by the certification statements.

Mylan filed several ANDAs for generic versions of brand name drugs, including Celebrex, Lunesta and Nexium, during the tax years at issue in the case. Considerable legal expenses were incurred as part of filing the ANDAs and making the required certifications and notifications. As a result of those certifications and notifications, patent holders brought approximately 120 patent infringement suits against Mylan. Mylan defended itself against the infringement suits, incurring litigation expenses.

In general, taxpayers may take an immediate deduction for ordinary and necessary business expenses. However, taxpayers must capitalize expenditures that create or enhance a distinct asset or otherwise generate benefits for taxpayers beyond a single tax year. Special rules apply to determine whether expenses related to an intangible asset should be capitalized. The income tax regulations provide that a “taxpayer must capitalize amounts paid to a governmental agency to obtain, renew, renegotiate, or upgrade its rights under a trademark, trade name, copyright, license, permit, franchise, or other similar right granted by that governmental agency.” Taxpayers must also capitalize an amount paid to facilitate an acquisition or creation of an intangible.

Litigation expenses for patent suits may be deducted or must be capitalized depending on the nature of the litigation. Defense of title claims are treated as the acquisition or disposition of a capital asset and must be capitalized. In contrast, patent infringement claims arise in tort and can be deducted in the year the expense is incurred.

Applying these rules to Mylan’s legal expenses, the Tax Court held that expenses related to the preparation of the ANDA, including the certifications and notices, were capital expenses to acquire or create an intangible asset and had to be recovered incrementally over 15 years. However, the Tax Court held that the costs of defending against patent infringement suits is an ordinary and necessary business expense for a generic drug manufacturer and permitted Mylan to deduct its litigation expenses in the year the expense was incurred.



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Federal Circuit Puts Patent Infringement Award/Injunction Back in the Box

by | May 13, 2021 |

The US Court of Appeals for the Federal Circuit, exploring the use of Federal Rule of Civil Procedure 60(b)(3) under Ninth Circuit law, affirmed a district court’s ruling setting aside a monetary damages judgment and an injunction for fraudulent misrepresentations by a corporate patent owner’s president concerning prior art. Cap Export, LLC, et al. v. Zinus, Inc., et al., Case No. 20-2087 (Fed. Cir. May 5, 2021) (Dyk, J.)

In 2016, Cap Export sued Zinus seeking a declaratory judgment that claims of a patent owned by Zinus were invalid and not infringed. Zinus countersued, alleging that Cap Export infringed its patent covering a bed frame that can be packed into the headboard for compact shipping (known as a “bed in a box”). Zinus filed a motion for partial summary judgment of no invalidity of certain claims, and the court allowed Cap Export to depose Zinus’s then-president and “testifying technical expert,” Colin Lawrie. During the deposition, Lawrie denied knowledge of the existence of prior art. The district court concluded that the claims were not invalid and entered a judgment and permanent injunction against Cap Export.

Shortly thereafter, Zinus sued another company for patent infringement, and Cap Export discovered an exhibit on the docket describing a sale to Zinus of a bed that had all of the components of the bed (except the headboard) packed inside a zippered compartment in the headboard. Cap Export contacted the third party that sold the prior art beds to Zinus and obtained an invoice bearing the signature of Lawrie, the same witness who denied knowledge of such beds during his deposition. Cap Export moved to vacate the judgment and injunction on the grounds of fraud and misrepresentation under Rule 60(b)(3). After the district court granted the motion, Zinus appealed.

The Federal Circuit analyzed the issue under Ninth Circuit law, which requires evidence that the verdict was obtained through fraud, misrepresentation or other misconduct, and that the conduct prevented the losing party from fully and fairly presenting its defense. Ninth Circuit law further requires that the fraud was not discoverable by due diligence before or during the proceedings. Zinus argued that Cap Export’s counsel should have discovered the emails if they had exercised due diligence and propounded standard document requests for a patent case. Cap Export did not dispute that its written discovery served on Zinus did not specifically seek prior art and that it did not depose the inventor of the patent. Cap Export also did not dispute that although Lawrie’s deposition was taken, it was not taken under Federal Rule of Civil Procedure 30(b)(6).

The Federal Circuit explained that the issue was not whether Cap Export’s conduct fell below the standard of care for attorneys practicing patent litigation, but rather whether a reasonable company in Cap Export’s position should have had reason to suspect the fraud—i.e., that Lawrie had testified falsely—and, if so, whether it took reasonable steps to investigate. The Court found no showing that there was reason to suspect that Lawrie’s statements were [...]

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Employment Agreement Assignment Provisions Don’t Reach Post-Employment Inventions

by | May 6, 2021 |

The US Court of Appeals for the Federal Circuit rejected a biotechnology company’s argument that assignment provisions in its employment agreements granted ownership rights in post-employment inventions. Bio-Rad Laboratories, Inc. v. Int’l Trade Comm’n, Case No. 20-1785 (Fed. Cir. Apr. 29, 2021) (Taranto, J.)

10X filed an International Trade Commission (ITC) complaint against Bio-Rad, alleging that Bio-Rad’s microfluidic systems infringed 10X’s gene sequencing patents. Bio-Rad raised an affirmative defense alleging that it co-owned the asserted patents because two of the named inventors, formerly employed by Bio-Rad and its predecessor QuantaLife before forming 10X, conceived the ideas embodied in the patents while they were still employed by Bio-Rad. The two inventors had executed employment agreements, including provisions requiring disclosure and assignment of intellectual property created during their employment with Bio-Rad. The two inventors left Bio-Rad and formed 10X several months before the earliest conception date of the asserted patents.

The ITC administrative law judge rejected Bio-Rad’s co-ownership defense, concluding that Bio-Rad had not shown the inventive concept of the asserted patents was conceived before the inventors left Bio-Rad. The administrative law judge also found that Bio-Rad infringed 10X’s patents and that 10X satisfied the technical domestic industry requirement by practicing the asserted patents. The ITC affirmed the administrative law judge’s determinations and also found that the asserted claims were not invalid for indefiniteness. Bio-Rad appealed.

Bio-Rad argued, among other things, that the ITC erred in not finding co-ownership of the asserted patents based on the assignment provisions. Bio-Rad also contended that during their employment at Bio-Rad, the two inventors had conceived the ideas that contributed to the inventions reflected in the 10X patents, and the invention assignment provisions of their employment agreement required assignment of their interest to Bio-Rad.

The Federal Circuit affirmed the ITC. On the co-inventorship issue, the Court adopted the ITC’s conclusion and found that Bio-Rad had no ownership interest in the asserted patents, explaining that the assignment provisions did not apply to ideas developed during employment solely because the ideas ended up contributing to a post-employment patentable invention. The Court found that the language was limited to a grant of actual intellectual property, i.e., subject matter protectable as a patent created during the term of employment with Bio-Rad. The Court reasoned that a person’s work that contributes, even significantly, to a later patentable invention does not create protectable intellectual property until a patentable invention is made, and that therefore, the assignment provisions did not reach the ideas that Bio-Rad alleged were conceived during the inventors’ Bio-Rad employment.

The Court also noted policy reasons for limiting the reach of the assignment provisions, including the difficult compliance issues raised by requiring assignment of rights in post-employment inventions. The Court explained that such provisions might deter a former employee from pursuing work related to their prior work, or deter a potential future employer from hiring that individual to work in an area similar to that in which they had prior experience. The Court also agreed with the ITC’s conclusion that [...]

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