Intellectual Property Law

Chapter 19 Lecture Notes

Major points addressed in the chapter include the following:

1. Patents are items of personal property and thus may be owned, sold, licensed, or
devised by will.

2. Until September 16, 2012, applications for patents must have been filed by the actual
inventor of the article, process, design, or plant. After September 16, 2012, under the
AIA, an assignee (or one to whom there is an obligation to assign) may file the patent
application directly (thus allowing employers more easily to file and prosecute patent
applications). If there is more than one inventor, the application must be signed by all
inventors.

3. Before September 16, 2012, disputes over inventorship were determined by
interference proceedings; after that date, interferences were replaced by derivation
proceedings to determine if an invention in an earlier-filed patent application was
actually derived from the inventor of a later-filed application.

4. If one person conceives of the invention, he/she is the sole inventor. Merely giving
directions to another to solve a problem does not make one a joint inventor. It is
finding a solution to a problem rather than articulating the problem that determines
whether one is an inventor. Similarly, giving suggestions and making minor
contributions or helping one to build a model of the invention does not make one an
inventor.

5. When more than one person contributes to an invention, they are joint inventors.
Persons may be joint inventors even though they do not physically work together or at
the same time, do not make the same type or amount of contribution to the invention,
or do not contribute to the subject matter of every claim of a patent. Each, however,
must have made some contribution of inventive thought to the resulting product, and
there must be some collaboration between them.

6. Errors in naming inventors in patent applications can be easily corrected. If one joint
inventor cannot be found or won’t sign the application, others can sign on behalf of
themselves and the omitted inventor; the USPTO will grant the patent to the inventor
making the application, but the patent will be subject to the rights of the omitted
inventor.

7. Before March 16, 2013, patent rights were awarded to the first to invent. Disputes
over inventorship were usually determined in interference proceedings, in which
proceeding the USPTO determined which inventor was the first to conceive the
invention and reduce it to practice.

8. On March 16, 2013, the United States converted from a first-to-invent patent system
(in which the patent was awarded to the first to invent and which generated many
disputes over this issue of priority that needed to be resolved in complex interference
proceedings) to a first-to-file or first-inventor-to-file (with a grace period) patent
system (in which the patent is awarded to the first inventor to file the application for
the claimed invention). After March 16, 2013, and under the AIA, interference
proceedings were replaced by derivation proceedings.

9. Any dispute over inventorship after March 16, 2013, is determined by a derivation
proceeding, which determines whether a prior applicant had derived the invention in
question from a later patent applicant. The derivation proceeding is conducted by the
Patent Trial and Appeal Board (formerly named the Patent Board of Appeals and
Interferences).

10. Notebooks and records should be kept by inventors, as they will help determine if one
inventor derived the invention from another (for example, by showing that the second
applicant disclosed the invention to the first applicant at a conference or during a
telephone conversation) and will also assist in determining the contributions to an
invention when more than one inventor claims to be a joint inventor.

11. Employers often require their employees to sign agreements confirming that
inventions made by the employee are owned by the employer and agreeing to assign
the invention or any patent to the employer and to assist in the prosecution process.

12. If parties do not agree in advance as to who will own inventions conceived during the
course and scope of employment, the general rule is that the employee retains
ownership rights, subject to a shop right in favor of the employer. A shop right is a
nonexclusive royalty-free license of the employer to make and use the invention in
the employer’s business whether or not the employee remains at the business. The
employee may grant other licenses, file an application, and sue for infringement by
others. The invention must result from efforts of the employee during his/her working
hours and with material belonging to the employer for the employee to own the
invention and shop rights to exist in favor of the employer.

13. If an employee is specifically hired to solve a certain problem, however, and an
invention results from the employee’s work, the employee must assign the invention
and any patent rights to the employer, whether or not the parties have an agreement.
Courts view this situation as an implied agreement that the employer will own patent
rights. After September 16, 2012, however, and under the AIA, the employer/assignee
may file the application for patent.

14. Companies that engage independent contractors to work on projects should always
require that the contractors assign all inventions and discoveries to the company.

15. Inventions made by federal employees while working for the U.S. government are
generally owned by the government. Government agencies may own patents.
Inventions made by companies working for the federal government pursuant to
contract are usually governed by the terms of the contract.

16. A written instrument is required when a patent or application for a patent is assigned
to another. An assignment is a transfer of a party’s entire ownership interest or a
percentage of that party’s ownership interest in an invention. Although recording the
assignment with the USPTO is not required, it is recommended because it provides a
chain of title for the invention and clarifies rights of subsequent purchasers.
Additionally, for pending applications, an assignee needs to make an assignment of
record in the pending file records to allow the new owner/assignee to take action with
regard to the application.

17. In the absence of an agreement to the contrary, each of the joint owners of a patent
may make, use, license, offer to sell, or sell the patented invention without the
consent of and without accounting to the other owners. Unlike copyright law, which
requires accounting of profits, patent law does not require a joint owner to account to
the others for monies received. Thus, joint inventors should always execute written
agreements detailing their rights.

18. A license differs from an assignment in that it is not an outright grant or transfer of
ownership. A license is merely a permission to use. The license may be limited in its
scope, duration, terms, or territory. A license may be exclusive (meaning only one
party has the ability to exploit the invention) or may be nonexclusive (meaning that
more than one party may be given the rights). Licenses are generally not recorded
with the USPTO, because they are viewed as private agreements between parties.
Licensees may pay a one-time lump sum payment or may make periodic royalty
payments to make, use, or sell the invention.c

19. Security interests may also be granted in patents to secure an obligation, so that in the
event of a default, the patent may be seized by the secured party. Recordation of
security interests with the USPTO is not required though it is recommended.

20. For a small fee, the USPTO will publish a notice in the OG that a patent is available
for licensing or sale.

21. Due to the poor track record of invention promotion firms, part of the American
Inventors Protection Act of 1999 helps protect inventors against deceptive practices
of invention promotion companies. Those companies are required to make certain
disclosures to inventors. Moreover, although the USPTO does not investigate
complaints against invention promoters, it does accept complaints against invention
promoters and provides a form for such complaints. The complaint and the
respondent’s answer to it are posted on the USPTO website.