PATENTS
Penalties for misnaming a patent’s inventors
Identifying the wrong inventors can strike a fatal blow to patents, says Paul Sutton of Sutton Magidoff Barkume.
There is a misperception among many that the identification and naming of inventors are less significant than they actually are. The threshold question as to who actually conceived a patent’s underlying invention is paramount. Under US law, determining such conception is often complex and does not lend itself to mathematical-type formulation.
Invention conception is normally complete when the idea is clearly defined in the mind of the inventor(s). It is fair to say that this is the mental part of inventive activity. A properly named inventor will have participated in the earliest stages of invention conception.
This article seeks to delve into the legal ramifications of the misnaming of patent inventors. It is hoped that the following illustrative scenario will assist in this regard.
Scenario
Imagine the delight of a creative design engineer (the “Engineer”) who comes up with a novel technical invention capable of being incorporated into a toy for the mass market (the “Invention”). In addition to its potential appeal to children, the Engineer has been able to provide a technical solution to a long-existing unsolved problem. Efforts by others to solve the problem have heretofore been unsuccessful. His solution to the problem includes electrical circuitry and computer software.
The Engineer is diligent in documenting his Invention in his laboratory notebook and, during this process, he wonders aloud whether his Invention might be patentable. He discloses the Invention to his immediate superior (his “Boss”) at the toy company where he works. His Boss, who is able to strictly dominate those who report to him, takes a great interest in the beauty of the Invention as well as its sales potential which would markedly enhance the company’s competitive posture in the toy industry.
The Boss is in a position to control all dealings with the company’s patent counsel. He submits the Engineer’s Invention disclosure documentation to the company’s attorney who, after a prior art search, renders a favourable patentability opinion. Costs being justified, the patent attorney is authorised to prepare and file a US patent application covering the Invention. When asked by patent counsel, the Boss mis-identifies the inventor and himself as co-inventors and both are listed as co-inventors on the patent application. Both the Engineer and his Boss sign the required declaration for the application, as well as an assignment of all patent rights to the company. The completed application, as such, is filed with the United States Patent and Trademark Office (USPTO). All patent-related paperwork and dealings with counsel are tightly controlled by the Boss, and the Engineer dutifully follows all instructions given to him by his Boss.
In fact, the Boss made no meaningful contribution to the development of any of the essential features of the Invention. The Boss deliberately hid this fact from patent counsel in an effort to improperly claim credit. This was enabled because he has sole responsibility for dealings with counsel.
During the pendency of this patent application, the company is successful in embodying the Invention into a consumer toy product and the company’s sales take off remarkably. As icing on the cake, claims in the pending patent application are allowed after years of prosecution and a US patent is granted.
“The threshold question as to who actually conceived of a patent’s underlying invention is paramount.”
Paul Sutton
Within months of the issuance of this patent, the company discovers that an arch competitor has copied in its entirety the company’s toy product, and has begun selling the knockoff at 50% of the company’s sales price. The competitor’s toy sales soar, while the company’s sales of the higher-priced Invention rapidly drop off due to this competition.
After confirming with patent counsel that the competitor’s product literally infringes the company’s issued US patent, the company authorises patent counsel to commence a patent infringement lawsuit against the competitor. The company is hopeful that it will prevail and that it will receive a jury award of substantial monetary damages, as well as a permanent injunction against infringement.
Over the next two years, this lawsuit goes through a discovery phase during which (a) the company’s trial counsel is able to establish evidence that the competitor wilfully copied the Invention, and (b) the competitor’s trial counsel is able to establish evidence that the Boss was intentionally misnamed as a co-inventor. The lawsuit proceeds to a jury trial on the merits.
During the trial, the jury is convinced that the competitor’s product is an infringing knockoff, and that the Boss was deliberately misnamed. The jury renders a verdict to that effect. The company is shocked to witness the judge issue a judgment of patent invalidity and unenforceability, giving the competitor a total victory. The patent is legally destroyed and is no longer of any value, and the Invention can be marketed by the competitor and others, free and clear of a patent challenge. The millions of dollars invested by the company in order to obtain and enforce Invention patent rights have been for naught, and litigation involving the company, the Boss and the Engineer has wasted both personal and company resources. The Boss is fired, and the Engineer experiences bouts of depression.
Discussion
The required declaration of inventorship: Every application for US patent is accompanied by either a declaration or an oath, signed under penalty of perjury either before or shortly after its filing. Such declarations contain two important affiant statements, namely: (a) the application was made or was authorised to be made by the affiant or declarant, and (b) such individual believes himself or herself to be the original inventor or an original joint inventor of a claimed invention in the application. Issues of inventorship should be resolved prior to a patent application’s filing with the USPTO.
Proper naming of inventors on a patent is critical in another respect. It defines who owns the patent rights and their underlying invention(s). Ownership usually impacts whether a party has proper legal standing to enforce the patent.
Unless remedied, improperly-named inventorship may provide grounds for (a) requesting correction of inventorship, where there has been no deceptive intent, (b) invalidating a patent where deceptive intent is established, (c) seeking a derivation proceeding, or (d) seeking a finding of inequitable conduct where deceptive intent has been established.
The Boss’ conduct: Clearly, by affixing his signature to the declaration in the foregoing scenario, the Boss committed perjury, a crime punishable according to at least federal laws against doing so. Furthermore, as will be seen below, the ramifications of his doing so are extraordinary. Quite apart from these legalistics, the reader will appreciate that the Boss’ conduct will violate the moral and ethical beliefs of many.
The presumption of validity: US patents are presumed valid and enforceable when granted. However, this presumption is rebuttable by those who may challenge a patent. The US federal courts have sole jurisdiction over issues of patent infringement, validity and enforceability. All patent infringement lawsuits are commenced with the filing of a complaint in a US district court. District courts have the sole authority and power to issue judgments of infringement, non-infringement, validity, and invalidity. Litigants on either side are entitled by law to a jury trial, wherein a petite jury of six, plus alternates, deliberate and render a verdict.
Burdens of proof: A plaintiff suing a defendant for patent infringement must convince a jury or a court that there is infringement based upon a preponderance of the evidence presented during trial to the jury. On the other hand, a defendant seeking to invalidate a patent must convince a jury or a court that the patent in suit is invalid based upon clear and convincing evidence presented during trial to the jury. It is obvious that it is more difficult to invalidate a patent than to establish infringement.
In the foregoing scenario, the jury in invalidating the patent in suit was convinced that the addition of the Boss as a co-inventor was deceptive and intentional. Had the jury been convinced that the addition of the Boss was innocent and without deceptive intent, the court would have the power and right to order the removal of the Boss as an inventor, and the validity of the patent would have been upheld. Clearly, the outcome of the lawsuit and the entire scenario would have been different, and the company’s patent rights would be stronger than ever.
Inventorship correction: Under the US America Invents Act, signed into law by US President Obama on September 16, 2011, correction of inventorship has become easier. Correction of a patent’s inventorship is necessarily handled and implemented by the USPTO, not the courts, which have no jurisdiction to do so. Such matters are resolved in what is referred to as a “derivation proceeding”, pursuant to Title 35 of the US Code, Section 135.
Inventorship implication(s): A significant implication of the inventorship of a patent has to do with the patent’s ownership. In our country, each inventor is an owner of the entire patent. An undivided interest. Absent an agreement to the contrary, each co-owner of a US patent has the right to make, use, offer to sell and sell the patented invention, without notice or a claim of others. For this reason, it is critically important that co-inventors or co-owners of patent rights define early on their respective rights in a written agreement.
In conclusion, the naming of a patent’s inventors must be taken seriously. If in doubt, there is no substitute for consulting a seasoned patent attorney.
Paul J Sutton is a founding partner of IP boutique law firm Sutton Magidoff Barkume and is adjunct professor at NYU’s Tandon School of Engineering. He can be contacted at: paul@smb.law
Images, from top: Shutterstock / JpegPhotographer, wk1003mike
