Inventorship and Ownership – the Importance of Getting it Right

Anybody who works as a patent attorney for any length of time discovers that there is no shortage of people who are perfectly happy to bend the truth a little in order to achieve their objectives.  In the case of patents, such liberties with the facts tend to relate to matters of inventorship and ownership of patent rights.

A case recently decided by the Federal Court of Australia, Neobev Pty Ltd v Bacchus Distillery Pty Ltd (Administrators Appointed) (No 3) [2014] FCA 4, perfectly illustrates this point.  Here, a patent for an invention made by one person (Mr Scott) was filed and granted naming an additional inventor (Mr Hajdinjak) because he ‘wanted his name on the patent’.  Furthermore, the patent is registered in the name of one owner (Bacchus) even though, in truth, the rights are co-owned by Mr Scott’s company, in order to better satisfy the requirements for Bacchus to receive a government grant to assist in commercialisation of the invention.

The true circumstances have come to light because Bacchus got into financial difficulties and was placed in administration.  The administrators propose to sell the business, and the associated intellectual property along with it.  Neobev, which now owns all of the rights previously held by Mr Scott and his company, is disputing the administrators’ entitlement to do this – or, at least, to do it without obligating any purchaser to pay royalties to Neobev under an existing agreement with Bacchus.

The situation is something of a mess, which has cost the parties time and money to resolve in the Federal Court.  The reason for the mess is that the people involved cut corners and did as they pleased when times were good, without regard to what would happen if the circumstances were to change in the future.  The one fortunate aspect of the case is that Australia is not one of those jurisdictions in which incorrect recording of inventorship or ownership is, in itself, fatal to the validity or enforceablity of a patent.

In this case, the court has now ordered (Neobev Pty Ltd v Bacchus Distillery Pty Ltd (Administrators Appointed) (No 4) [2014] FCA 21) that the Register of Patents be rectified to show Mr Scott as sole inventor.  The court has also found that, despite Bacchus being recorded as the sole owner of the patent in question, in reality it is holding the patent in trust on behalf of itself and Neobev as joint beneficial owners.  For now, the Register will not be amended to show this joint ownership, because there is no actual error requiring correction in the trustee being recorded as legal owner, and to record joint ownership would effectively terminate the trust and distribute its property 50/50 between Bacchus and Neobev.  The court was unwilling to do this when it had not heard evidence on the nature of the trust, or considered the relevant state laws in relation to the trust and the powers of the trustee.

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Tags: Entitlement, Inventorship, Ownership

‘Raising the Bar’ Raises Its Head in Federal Court

Reckitt Benckiser Healthcare (UK) Ltd v GlaxoSmithKline Australia Pty Ltd [2013] FCA 583 (28 May 2013)

Less than two months after the majority of provisions of the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 came into effect, the revised law has been considered in a decision of the Federal Court of Australia.

Two aspects of the recent patent reforms have arisen in the dispute between Reckitt Benckiser Healthcare (‘RB’) and GlaxoSmithKline Australia Pty Ltd (‘GSK’).  The first aspect relates to new provisions which are intended to prevent patents from being declared invalid on ‘technical’ grounds arising from a faulty chain of title from an inventor to an ultimate patent-holder.  The second aspect relates to raised requirements for the standard of disclosure required in a patent specification under section 40 of the Patents Act 1990.

To make matters interesting, the decision manages to wrongly interpret the effect of the reforms relating to disclosure under section 40.  Fortunately, on this occasion the error has had no impact on the outcome.  However, the fact that such a seemingly simple error could be made is cause for concern in view of the extensive amendments made to the Australian intellectual property laws, and the long time frame over which the courts will gradually come to consider each of the changes.

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Tags: Australia, Entitlement, Raising the Bar, Validity

Entitlement Matters

Foster’s Australia Limited v Cash’s (Australia) Pty Ltd [2013] FCA 527 (29 May 2013)

What happens if a patent application is inadvertently filed in the wrong name?  By ‘wrong’ I mean that a party is named as an applicant which is not actually entitled to ownership of the rights in the claimed invention.  More importantly, what happens if the patent proceeds to be granted to the wrong proprietor?  When such mistakes occur, and are subsequently discovered, what should be done to correct them?

These questions recently arose in Federal Court of Australia, in relation to four innovation patents owned by the well-known producer of alcoholic beverages Foster’s Australia Limited (FAL) (now known as CUB Pty Ltd).  Similar questions also arose in relation to two registered designs.

You might think that simple errors in filing details might be easy to fix.  You might also think that once they had been fixed, that might be the end of the story.  But the judgment of the Federal Court in this case demonstrates that you would be wrong on both counts!  Even after reassigning the patents and design registrations to the correct owner, the alleged infringer in this case – Cash’s Australia Pty Ltd (Cash’s) – challenged the validity of Foster’s rights based upon an initial error in the identification of the applicant.

Resolving this challenge was not a mere formality.  It involved numerous submissions to the court, a day of hearings, and resulted in a 139 paragraph judgment.

The moral of the story is that entitlement matters!  It is important that everybody involved in the process of applying for registration of IP rights takes the appropriate steps to ensure that all of the filing details are correct – especially the identity of the rights-owner.

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Tags: Designs, Entitlement

Patents, Invention, Employment and Slavery

Do you know who ‘owns’ your inventions?

I read a fascinating story last week, entitled ‘How the Patent Office Helped to End Slavery’.  It has all the elements a good story needs – celebrity (Jefferson Davis, the future Confederate president), adversity (the denial of the rights of a slave, Benjamin Montgomery), conflict (the Union versus the Confederate patent offices), and the triumph of good over evil (emancipation, and victory of the Union patent laws).

In a nutshell, the question arose as to who ‘owned’ inventions made by slaves, and was thus entitled to ownership of any resulting patent.  It will come as no surprise to learn that slave-owners, such as Jefferson Davis’ brother Joseph, considered that they were entitled to the fruits of the ingenuity of their human chattels. 

However, the US Commissioner of Patents, Joseph Holt, disagreed.  In 1857 he ruled, essentially, that since slaves had no legal rights, they could not possess rights as inventors, and therefore they had no recognisable intellectual property that could be transferred to their owners.  Since neither Jefferson nor Joseph Davis was the first and true inventor of the improved riverboat propeller invented by Joseph’s slave Benjamin Montgomery, and nor could they be the legitimate assignees of any purported ‘rights’ to the invention (since no such rights ever existed), the USPTO simply refused to grant patents to either one of the brothers, or indeed to any other slaveholders who sought to claim ownership of inventions devised by their slaves.

Although the Confederate enacted its own patent law which secured ownership by slaveholders of inventions developed by their slaves, it appears that no such patents were ever granted (and if they had been granted, they would not have been in force for very long).

While ownership of inventions by slave owners is no longer an issue in developed nations, the right of one party to claim ownership of an invention made by another, remains very much a live issue.  We are fortunate that, nowadays, all free women and men are entitled, the the first instance, to ownership of the products of their own ingenuity, should they choose to capitalise on that right.  However, it remains the case that many inventions for which patent rights are sought are made by employees in the course of employment, and are claimed as the property of their employers.

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Tags: Australia, Entitlement, History, Inventorship, US

Patent Office Told: Factual Matters Preclude Summary Dismissal

Preference Manufacturing (Aust) Pty Ltd and Commissioner of Patents and Breezway Australia (Holdings) Pty Ltd (Joined Party) [2012] AATA 393 (27 June 2012)

Practice and procedure – opposition to the allowance of an amendment of notice of entitlement summarily dismissed – whether matter capable of being determined summarily

In the latest development in a dispute which could turn out to be a great expenditure of time, money and public resources for little substantive effect, the Administrative Appeals Tribunal (AAT) has ruled that a delegate of the Australian Commissioner of Patents was wrong to summarily dismiss an opposition to a request to correct a document which was filed in the course of prosecution of a patent application.

According to the AAT’s decision (at [22]), there were ‘factual matters that warranted investigation and proper consideration’, and it was therefore inappropriate for the opposition to be dismissed without submission of evidence or argument, and without (if requested) conducting a hearing.

The erroneous document in question is a ‘Notice of Entitlement’.  For readers unfamiliar with Australian patent procedures, this is a statement which must be filed by, or on behalf of, a patent applicant before the Patent Office can issue a patent.  The statement explains the basis upon which the ‘nominated person’ (i.e. the applicant for the patent) gains the rights required for it to be the legitimate owner of the patent.  Usually this is by some chain of assignment, or other contractual provision (such as employment) leading back to the original inventor(s).

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Tags: Amendments, Appeal, Entitlement

‘Shades of Gray’ Moves Up to the Federal Court

Last November we wrote about a dispute between Robert Alexander and the Royal Children’s Hospital (RCH) over ownership of an invention – and corresponding patent application – relating to improvements in a medium used to inoculate and grow viruses (see Shades of Gray as Dispute Over Invention Ownership Goes Viral).

At the relevant times, Dr Alexander was Head of Virology at RCH where his primary role was to maintain the Virology/Tissue Culture and Molecular Diagnostics service, which conducts viral diagnostic work on upwards of 10,000 clinical samples at the hospital each year.  The dispute played out before the Australian Patent Office, where a Hearing Officer found that it was one of Dr Alexander’s duties to improve the viral diagnostic techniques used at the hospital, so as to enable RCH to better diagnose viral diseases.  She also found that the ‘growth medium’ invention was made in the course of those duties, and thus belonged to his employer, RCH.

We wrote at the time that:

The decision is subject to appeal to the Federal Court. While this is an expensive option, if the RCH’s example of over 10,000 clinical samples per year is typical, there is potential for the invention of the ‘051 application to be quite valuable, and so an appeal by Dr Alexander may not be out of the question.

We can now confirm that Dr Alexander has indeed appealed to the Federal Court of Australia.

The appeal was filed in the Melbourne Registry on 1 December 2011, and was initially listed before Justice Jessup on 21 December 2011.  A directions hearing is currently set down for 10 February 2012.  The case is file no. VID1352/2011.

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Tags: Appeal, Australia, Entitlement, Inventorship

Shades of Gray as Dispute Over Invention Ownership Goes Viral

The Royal Children’s Hospital v Robert Alexander [2011] APO 94 (10 November 2011)

Entitlement – employer/employee relationship – whether employee had a ‘duty to invent’ – whether inventions made ‘in the course of employment’ – whether patent applications should proceed in the name of the employer or employee

In a tale of two pending patent applications filed by the sole named inventor Dr Robert Alexander, one has been found rightfully to belong to his employer, The Royal Children’s Hospital (RCH), while he will be allowed to keep the other for himself, according to a Hearing Officer (Delegate Karen Ayres) in the Australian Patent Office.

As in the leading decision of the Full Federal Court in University of Western Australia v Gray [2009] FCAFC 116, ownership was resolved by considering whether Dr Alexander had a ‘duty to invent’ the subject matter of each application under any express or implied terms of his employment contract with RCH.

At the relevant times, Dr Alexander was Head of Virology at RCH where his primary role was to maintain the Virology/Tissue Culture and Molecular Diagnostics service, which conducts viral diagnostic work on upwards of 10,000 clinical samples at the hospital each year.  The Delegate found that in this role it was one of his duties to improve the viral diagnostic techniques used at the hospital, so as to enable the hospital to better diagnose viral diseases.  However, he was not required, or expected, to conduct extensive (and, perhaps, expensive) research into possible modifications to equipment used in diagnosis, particularly where there had been no substantial issues identified with the effectiveness of the existing equipment.

As a result, the Delegate has directed that Dr Alexander’s patent application for an invention related to improvements in diagnostic techniques should proceed in the name of RCH, while a second application covering modifications to a microtitre assembly tray used in the testing process should remain in Dr Alexander’s name.

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Tags: Australia, Entitlement, Inventorship

‘Stolen’ Invention Restored to Rightful Owner

Laurence Clifford Scott v Icon Plastics Pty Ltd [2011] APO 84 (3 November 2011)

Opposition – entitlement – whether the named inventor actually invented the subject matter of the application – whether the named applicant is an entitled person – filing of new application by entitled party

A Hearing Officer (Delegate Ranganath Subbarayan) in the Australian Patent Office has invoked a rarely-used provision of the Patents Act 1990, which allows a true inventor to recover the right to apply for a patent on an invention that has been appropriated by another party.

It sometimes happens that someone – through a misunderstanding, ignorance or a lack of scruples – files an application for a patent in their own name, when in fact they are not entitled to do so because the invention was actually made by someone else.  Disputes over inventorship and ownership are not uncommon, and there are mechanisms to resolve issues of this type when they arise in relation to patent applications.

The simplest cases can be dealt with under Section 32, which allows the Commissioner simply to direct that an existing application proceed in the name of the rightful applicant.

However, some disputes are more complex.  In this case, a patent application in the name of Laurence Clifford Scott (‘Scott’) had been accepted, and was subsequently opposed by Icon Plastics Pty Ltd (‘Icon’).  One of the grounds of opposition was that Scott was not entitled to the patent, because he was neither the inventor nor a legitimate assignee of the inventor.  According to Icon, the invention disclosed and claimed in the application was actually devised by Icon General Manager Royston Douglas Bull (‘Bull’), had been misappropriated by Scott, and wrongfully made the subject of the application in Scott’s name.

The difficulty with succeeding in an opposition in these circumstances is that the result of a successful opposition is invalidation and rejection of the opposed application, leaving the party genuinely entitled to the patent with nothing!  The solution to this problem is provided by Section 33, which permits a new patent application to be filed by the opponent in these circumstances, and for the claims of that application to be given the benefit of the relevant earlier filing date of the original, unentitled, applicant.

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Tags: Australia, Entitlement, Inventorship

Inventor’s Disclosure Bars Market Research Patent Rights

Robert Dommett v Zebra Research Pty Ltd [2011] APO 53 (12 July 2011)

Inventorship – request under section 32 of the Patents Act 1990 – entitlement – request under section 36 of the Patents Act 1990 – identification of ‘inventive concept’ – whether inventor’s prior disclosure of inventive concept precludes claiming inventorship and/or entitlement in a subsequent patent application

This Australian Patent Office decision, by Hearing Officer Owen Haggar, concerns issues of inventorship and entitlement.  In particular, Robert Dommett, who through his business RDA Research provides market research services, contended that he was in inventor, and was entitled to be a ‘nominated person’ (i.e. applicant), in respect of Australian patent application no. 2010201111, filed in the name of Zebra Research Pty Ltd (‘Zebra’), and naming Katie Harris as an inventor.

Two provisions of  the Australian Patents Act were relied upon by Dommett.  Section 32 provides for the Commissioner to make decisions regarding disputes between parties over patent applications.  In this case, Dommett requested that he be declared as the inventor on the application, and not Katie Harris.  Section 36 provides for the Commissioner to make determinations regarding the correct ‘eligible persons’ on a patent application, i.e. the persons (natural or corporate) entitled by invention, assignment or other transfer of title, to be the owner of any patent ultimately granted.  Dommett requested such a determination, with the intention of showing that he (or perhaps his company) is the correct eligible person.

To cut a long story short, the Hearing Officer determined that Dommett was indeed the originator of the broad ‘inventive concept’ underlying the patent application.  However, since he had made non-confidential disclosures and commercial use of the concept prior to the priority date of the patent application, this subject matter was not novel or inventive, and could not be the basis for the grant of a valid patent.  Therefore Dommett could not be an inventor, and could not be eligible for the grant of a patent on the application.

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Tags: Australia, Entitlement, Inventorship, Novelty

Ultrasonic Cleaning II: The High-Pitched Shriek-quel

David Leigh Wake v Soniclean Pty Ltd [2010] APO 12 (30 July 2010)

Opposition – whether innovation patent should be revoked due to lack of entitlement of patentee - Inventorship – whether requestor is the sole inventor – whether requestor is an inventor jointly with named inventors

ABSTRACT

This Patent Office decision is the sequel to David Leigh Wake v Cavitus Pty Ltd [2010] APO 11 ("the Cavitus dispute"), on which we reported earlier in the week.

Again the decision illustrates the challenges and pitfalls that can be associated with determining inventorship and entitlement if these are not settled at the earliest possible opportunity.

Furthermore, the assessment of inventorship may be a complex undertaking.  In any given case, it may be necessary to consider not only the disclosure in the specification and claims, but also the state of the prior art, and also the specific circumstances in which the invention arose. There is no universally-applicable formula or "test" for inventorship, and ultimately each case will be decided on its specific facts.

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Tags: Australia, Entitlement, Inventorship, Opposition

Court Pours (Stored) Water on Employer's Claim to Ownership of Employee Designs

Courier Pete Pty Ltd v Metroll Queensland Pty Ltd [2010] FCA 735 (15 July 2010)

This is a case relating to a registered design, rather than a patent. However, Patentology claims interest on this occasion because it addresses an issue in common with patent rights, namely the circumstances in which an employer will (or, in this case, will not) have a claim to ownership of employee inventions.

The take-home message from this case, as in similar cases in the past, is that an employer is not entitled to assume ownership of the products of their employees’ efforts, including patentable inventions and registrable designs, unless they have actually been produced pursuant to the employees’ paid duties.

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Tags: Australia, Employee inventions, Entitlement, Ownership