You are on page 1of 2




Allocating Inventorship and Ownership in IP Disputes

BY LYNDA L. CALDERONE Corp. Harris continued to develop and file LYNDA L . CALDERONE,
Special to the Legal further patents that were issued to a shareholder and chair-
Shearwater. In 2003, he then sold Shearwater woman of the Intellectual

any lawsuits and other proceed- to Inhale Therapeutic Systems Inc., later Property Practice Group
ings grow out of inventorship known as Nektar Therapeutics, for $197 mil- at Flaster Greenberg, con-
disputes. In the United States, lion. centrates her practice in
since inventorship is the starting place for In the subsequent dispute, UAH alleged the preparation and pros-
determining ownership of patented technolo- that the later-filed patents were related tech- ecution of U.S. patent
gy, correct naming of inventors and alloca- nologies to the original technology devel- applications, intellectual
tions of ownership among the relevant par- oped at the university and were similar to property litigation, as
ties at the outset are keystones for strong the original patent. UAH sued under its roy- well as with re-examination of U.S. patents, inter-
relationships and dispute avoidance. alty agreement with Harris seeking dam- ference practice, prosecution of foreign patent appli-
When significant financial resources are at ages, including damages for unjust enrich- cations, appeals before the Board of Patent Appeals
stake, most individuals are careful to plan ment based on the Shearwater sale. A press and Interferences, and European opposition practice.
estates, seek prenuptial agreements or obtain released issued on July 7 acknowledges that
careful review of contracts for sale of real the parties had settled and that Harris and • Fully understand the import and implica-
estate or businesses. However, it is not Nektar will pay the university a total of $25 tions of the language in the final contract
always true that individual inventors and million in exchange for a mutual release of leading to breach or abuse of the terms.
organizations invest sufficient time and claims. The starting place for dispute avoidance is
effort after a new invention is made in deter- The issue raised by cases like that of UAH clear understanding of the law of inventor-
mining inventorship and allocating owner- and Nektar is how best to avoid such dis- ship, including the law underlying resolution
ship. putes. The answers are many and varied of such disputes. Inventorship derives from
A recent example of a failure to clearly depending on the circumstances, but the conception, according to the case Burroughs
establish ownership allocation can be found majority of such disputes arise either Wellcome Co. v. Barr Laboratories Inc.
in the dispute between the University of because no agreement was put into place ini- Inventorship is evaluated upon challenge in
Alabama in Huntsville, (UAH), and inventor tially, or because there is a failure to: litigation as a question of law having under-
(and former professor at UAH from 1973 to • Properly evaluate inventorship upon fil- lying questions of fact, according to
2000), Milton Harris. Harris, an expert in ing patent applications; Gemstar-TV Guide International Inc., et al.
polyethylene glycol (PEG), developed a • Establish internal procedures that care- v. International Trade Commission.
process referred to as “PEGylation” which fully evaluate activities and developments of Naming and identifying inventors at the
allows PEG polymers to bond with certain employees regarding new inventions and time of preparing an invention disclosure
therapeutic drugs, thereby facilitating their properly identify the correct inventive entity; document within an organization, or when
solubility and other properties in the blood- • Have intellectual property counsel contacting attorneys to initiate a patent appli-
stream and enhancing performance of such review standard employment and/or business cation, is a good start, but it is not the end of
drugs. allocation and royalty agreements to ensure the evaluation. It is more like guessing an
Harris’ first patent in this area was inclusion of proper intellectual property pro- answer before a question has been thorough-
obtained while at UAH by the university. visions; ly framed.
However, according to allegations in the • Establish clear, understandable terms in Inventorship is determined in a claim-by-
lawsuit, Harris left UAH to start Shearwater “form” agreements; and claim analysis, referring to the patent claims.


Co-inventorship of only a single claim in a will lie with the employer if the employer has the agreement should clearly provide for any
patent yields co-ownership of the entire an express contract allocating ownership of specific exemptions.
patent, since co-owners are each entitled to an employee inventions to the employer. Improvements made after the term of the
undivided share in the entire scope of the Alternatively, employees may be obligated to agreement by one party based on prior joint,
patent rights. assign inventions if they were specifically shared development are also not addressed by
To have a patent “claim,” a patent applica- hired to use their inventive talents. Finally, such vague language. Failure to designate
tion must be written, so initial guesses at employees may acquire limited “shop rights” ownership of improvements may allow one
inventorship can change as the patent claims to use the employee’s patented inventions if party to piggyback on another’s efforts and
are finalized. To determine what to claim and an employee who is not hired to invent, and still claim ownership of the improvement,
what not to claim in a patent application has no express contact, nonetheless uses com- causing inconvenience to, or worse — giving
involves strategic planning that should begin pany resources and time to conceive of and rise to a blocking patent that impacts — the
even before writing the application. Further, work on an invention.
business of the former collaborating party.
since “claims,” in the event of a dispute, must While courts have found implied contracts to
The language also does not explain what it
be construed by a court as a matter of law to assign patent rights in certain cases, this is typi-
means to “share” ownership. It does not say
determine their scope, careless or inadequate cally a disfavored outcome, since it can be seen
whose obligation it is to pay prosecution
patent specification drafting can lead to inter- as discouraging innovation, including when
expenses, maintenance fees, litigation fees
pretations of the claims at issue which may implied rights to assign are based on employee
and other costs. By merely reciting “owner-
not have been initially intended. handbooks.
ship sharing,” the language does not explain
In such cases, claim scope may be con- To avoid later disputes, standard employ-
strued by a court to be broader or narrower ment contracts should clearly set forth what is whether the co-owner is obliged to cooperate
than intended, which may include or elimi- expected of the employee in terms of patent in any lawsuits.
nate inventors. Thus, patent attorneys must be rights and ownership. For most employees an Other improper provisions may even go so
cautious to ensure that the inventors review obligation to assign patent rights for all inven- far as to allocate the right to sue on a patent in
the application, including the claims, and that tions made during the course of employment a party having no ability to establish standing
the client confirms the initial inventorship should be expressly in the employment con- to sue on the patents (such as non-exclusive
naming. Care also must be taken in the draft- tract. People who are hired to invent or to use licensees). Such drafting arises out of a failure
ing of the specification consistent with the their “inventive faculties” to enhance a partic- to understand the underlying law and/or to
claim scope and supportive of the intended ular business should have clear contract terms grasp the implications of the agreement lan-
claim meaning. The inventorship analysis to that effect, especially at senior management guage, lack of clear terms and failure to seek
must also be revisited at the time of levels, reflecting the need for that person’s review by intellectual property counsel.
allowance of the patent application, in the skills and the obligation to assign inventions to Regarding standard agreements, while
event substantive amendments were made the employer. Attorneys preparing such agree- good practice in the context of patent licens-
during examination to confirm or update ments should have the agreements reviewed by ing, employment, and transfers of property, it
inventorship. Inventorship can be corrected in intellectual property counsel if at all possible is important to realize that not all situations
the face of errors either during examination, to ensure that all the ownership terms are clear, fit neatly into such agreements. Further, such
or even after issuance of the patent. unambiguous and legally correct. agreements, which may be used many times,
With this in mind, organizations must be In addition to new employee and third- should be carefully reviewed by all relevant
careful to put procedures in place and work party inventor contexts, disputes also arise in counsel before implementation. They should
with patent counsel to develop claim strate- allocation of ownership and designation of also be reviewed periodically to ensure con-
gies and to ensure correct inventorship, limited patent rights (both exclusive and non-
tinued compliance with current patent law.
including insisting on full disclosure to patent exclusive rights) in licensing, sale of patent
All such agreements should be reviewed at
counsel of any involvement of a potential properties and joint development, joint ven-
some point by counsel to avoid applying them
inventor, including a third-party inventor. ture and other collaborative agreements. For
in the wrong context. Prior to signing collab-
Organizations must put aside internal custom example, agreements exist which merely state
orative agreements with third parties, each
and personal desire (such as senior level that the parties will “share ownership of all
party and respective counsel should confer
researchers and executives insisting on their patent properties” without more.
and go through the contract, particularly
name on a patent when there is no conception Such language does not adequately deal
of invention) in favor of working with patent with many potential dispute situations. It does patent ownership provisions, to confirm clear
counsel to make sure inventorship is accurate not explain what properties are within the understanding of the terms before embarking
and determined without bias or undue influ- scope of the agreement. Intellectual property, on the relationship. Differences in interpreta-
ence. Failure to do so renders resulting including patent rights, should be clearly tion can then be avoided before execution.
patents vulnerable in the face of error, which defined (including lists of specific properties Thus, while such ownership allocation dis-
can lead to contractual disputes and breach of where applicable). Such language does not putes will always arise on occasion, much can be
warranty under later patent licenses and other say if there are properties that are left out of done to put in place procedures and strategies for
collaborative patent agreements. the agreement. Exempt properties or patents dispute avoidance, incurring legal costs that are
All inventors are owners, regardless of in the relevant area that were developed and typically far less significant for careful planning
whether they are employees. Employers must owned before the agreement may not be than they are for litigation that results from a fail-
acquire rights from the employee. Ownership intended as part of ownership “sharing,” and ure to act preemptively. •