PROTECTING PATENTS AND TRADEMARKS –
THE U.S. MODEL
DEVELOPMENTS IN THE TRANSFER OF
PATENT RIGHTS
Paolo M. Trevisan
Patent Attorney
Office of Policy and External Affairs
United States Patent and Trademark Office
LICENSE or ASSIGNMENT?
Two mechanisms to transfer rights to a
patent:
LICENSE
(a transfer of less than all rights to the patent)
ASSIGNMENT
(a transfer of title to the patent)
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PATENT LICENSE
• Conveys limited rights to the licensee
• It is a waiver by the patent owner of its right to
exclude the licensee from making, selling, offering for
sale or importing the patented invention
• Can be limited in time and space, i.e. can limit
geographical area and/or duration
• Also can be limited by field of use, category
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PATENT LICENSE
• Parties are free to specify terms of license,
– Contractual negotiation to reflect business
priorities
– But there are pitfalls to consider
– Special case of Cross-Licensing
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PATENT LICENSE
• Some common licensing terms and issues:
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Termination: right to cure, breach, arbitration
Distribution channels: wholesale, retail, type of store
Payment terms: advance, royalties, lump sum
Royalties: on wholesale/retail price, goods sold, funds
received, profits….
– Audits: when/how often, by whom, what audited
– Non payment: interests, penalties, right to cure, once?
– Invalid/non-enforceable patent: how affects license?
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PATENT LICENSE
• EXCLUSIVE LICENSE
• Conveys more rights than nonexclusive license, but
is not a transfer of title or of all rights. Patent owner
retains ownership.
• A promise of licensor not to grant further licenses,
and in some cases not to practice invention.
• Can still be limited to a geographic area, a time
period or a field of use.
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PATENT LICENSE
Case law: Can an exclusive licensee sue alone?
• AsymmetRx, Inc. v. Biocare Medical, LLC (CAFC 2009)
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AsymmetRx received from Harvard an exclusive license under the ’256 and
’227 patents and a license to use the p63 antibodies.
Harvard retained the right to make and use the p63 antibodies for academic
research and to grant non-exclusive licenses to other nonprofit or government
entities for research purposes.
Harvard could render the AsymmetRx License non-exclusive if AsymmetRx
failed to meet certain commercial, regulatory or public availability benchmarks.
Harvard could also suggest possible sublicensees and a portion of any
sublicensing income would be paid to Harvard.
AsymmetRx had the right to prosecute infringement suits at its expense.
Before doing so, however, AsymmetRx was to “give careful consideration to the
views of Harvard and to potential effects on the public interest in making its
decision whether or not to sue.”
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PATENT LICENSE
Case law: Can an exclusive licensee sue alone?
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AsymmetRx, Inc. v. Biocare Medical, LLC (CAFC 2009)
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The Federal Circuit decided that AsymmetRx had no standing to sue
without joining Harvard
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Although the license was a broad conveyance of rights to AsymmetRx,
the court considered it a licensee, not an assignee, since the grantor
retained substantial interests in the patents being enforced
•
Specifically, under the license Harvard retained rights to
– use the patented invention for academic research purposes
– grant non-exclusive licenses
– exercise control over sublicenses and other aspects of the licensed
product via benchmarks
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PATENT LICENSE
Case Law: Standing to Challenge Patent Validity
• MedImmune, Inc. v. Genentech, Inc.,
549
U.S. 118 (2007)
– Can a licensee, after entering in a royaltybearing license agreement, challenge the
validity of the underlying patent(s)?
– The Federal Circuit found there was no
“case or controversy”, thus declaratory
relief was not proper
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PATENT LICENSE
Case Law: Standing to Challenge Patent Validity
•
Previous Case Law:
– Lear, Inc. v. Adkins, 395 U.S. 653 (1969)
Patent license provision is unenforceable when it prohibits the
licensee from challenging the validity of the patent.
– Studiengesellschaft Kohle m.b.H. v. Shell Oil Co. 112 F.3d 1561
(Fed. Cir. 1997)
Repudiation requires a licensee to stop paying royalties under the
license agreement.
– Gen-Probe Inc. v. Vysis, Inc. 359 F.3d 1376 (Fed. Cir. 2004)
Failure to repudiate the license deprives the licensee of any basis
for a declaratory judgment action, because the license agreement
removes any reasonable apprehension of being sued.
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PATENT LICENSE
Case Law: Standing to Challenge Patent Validity
• After MedImmune, Inc. v. Genentech, Inc., Licensee
can challenge the validity of the underlying patent:
– A licensee can refuse to pay royalties and
challenge the validity of the licensed patent.
– A licensee can continue to pay royalties "under
protest" and challenge the validity of the licensed
patent, if there is a sufficient threat of litigation by
the licensor if the licensee does not pay royalties.
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PATENT LICENSE
Case Law: Exhaustion Doctrine
• Quanta Computer, Inc. v. LG Electronics, Inc.,
553 U.S. 617 (2008)
– LG licensed Intel to make and sell computer chips
that would otherwise infringe LG's patents
– LG did not want third parties, who acquired chips
made under license by Intel, to assemble them
and other components into computers
– Therefore the License prohibited Intel from further
licensing third parties to use the chips and other
components in assembling computers
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PATENT LICENSE
Case Law: Exhaustion Doctrine
• Quanta continued
– Quanta bought the licensed chips from Intel, and
assembled the chips and other components into
computers
– LG sued Quanta for patent infringement. LG
asserted that those computers infringed its patents
directed to methods and systems for combining
components into an operational computer system
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PATENT LICENSE
Case Law: Exhaustion Doctrine
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Quanta Supreme Court Holding:
– Patent Exhaustion is Triggered by the Authorized Sale
of Products that Embody the Essential Features of the
Patented Invention and Whose Only Reasonable and
Intended Use is to Practice the Patent
– Exhaustion was triggered by Intel's sale to Quanta
– If a licensee is authorized to make a sale, that sale
can exhaust the licensor's patent rights.
The license agreement cannot control the use of the
product by the licensee's customers
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PATENT ASSIGNMENT
• An assignment is the transfer of the whole
right to make, use and sell the invention
• Gives assignee right to sue infringers without
grantor’s (original patent owner) participation
(In general, a licensee cannot sue an infringer
without joining the licensor)
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PATENT ASSIGNMENT
RECORDATION
• Not mandatory to record an assignment in USPTO
• USPTO does not evaluate validity of assignments, grants,
and similar instruments, only looks at accompanying form
• However, must record to be effective against third parties
not having actual knowledge of assignment
• If not recorded within 3 months, void against a
subsequent purchaser for a valuable consideration
without notice, unless recorded prior to the purchase
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Questions arising from
PATENT ASSIGNMENTS
• EMPLOYMENT SITUATIONS
US patents are issued to the inventor
Employment Contract is used when
contemplating the transfer of title to a patent
or patent application from inventor to
employer
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Questions arising from
PATENT ASSIGNMENTS
• Special case of a future invention:
The inventor is hired by employer, want to ensure
patents to future inventions are owned by the
employer
• Distinction between contractual obligation of
employee to assign invention rights in the future as
opposed to an actual transfer of ownership in the
patent.
•
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Board of Trustees of the Leland Stanford Junior University, et al., v. Roche
Molecular Systems, et al., 583 F.3d 832 (Fed. Cir. 2009)
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PATENT ASSIGNMENTS
Stanford v. Roche
• The Stanford employment agreement and assignment
clause stated:
• “I agree to assign . . . to Stanford . . . that right, title and
interest in . . . such inventions . . .”
• A “researcher” signed upon being hired in 1988, and began
working on methods for quantifying HIV in the blood.
• Work resulted in 3 patents, which Stanford applied for in
1992.
• “Researcher” signed assignment of rights in the patent
application to Stanford in 1995
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PATENT ASSIGNMENTS
Stanford v. Roche
• BUT….while employed by Stanford (1980’s), “researcher”
also worked with Cetus, and signed a Visitor’s Confidentiality
agreement stating:
• “[Researcher] will assign and does hereby assign to Cetus
his right, title and interest . . .”
• In 1991 Roche purchases Cetus’ relevant business
• In 2005 Stanford sues Roche for infringement of the three
patents. Roche claimed to own those patents
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PATENT ASSIGNMENTS
Stanford v. Roche
• CAFC Held: Stanford did not own the patents-in-suit
• Stanford did not acquire title to the inventions upon
execution of employment agreement, nor when
inventions were created
• The employment agreement was not an immediate
transfer of the patent rights from inventor to assignee,
but only indicated an intent to assign patent rights at a
later, unspecified time
• However, Cetus immediately gained an equitable title to
the inventions upon execution of the agreement, which
became legal title on the filing of the patent application.
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PATENT ASSIGNMENTS
Stanford v. Roche
• Some conclusions:
• Use precise language in assignment clauses
• Ensure that employment agreement conveys an
immediate transfer of inventor’s right in the invention
and patent(s)
• Promptly record assignments with USPTO as patent
applications are filed
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PATENT ASSIGNMENTS
Stanford v. Roche: Supreme Court review
• Whether a federal contractor university’s statutory
right under the Bayh-Dole Act in inventions arising
from federally funded research can be terminated
unilaterally by an individual inventor through a
separate agreement purporting to assign the
inventor’s rights to a third party
• The Supreme Court affirmed the Federal Circuit:
Patent ownership rights do not automatically vest
under the Bayh-Dole Act
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PATENT ASSIGNMENTS
Legislative Developments
• America Invents Act (AIA)
• “A person to whom the inventor has assigned or is
under an obligation to assign the invention may make
an application for patent.”
• “A person who otherwise shows sufficient proprietary
interest in the matter may make an application for
patent on behalf of and as agent for the inventor on
proof of the pertinent facts and a showing that such
action is appropriate to preserve the rights of the
parties.”
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PATENT ASSIGNMENTS
Administrative Developments
• USPTO proposed rules on recordation
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Must record assignment with the USPTO when:
1 at the time of filing
2 if change before publication
3 before paying issue fee
4 when causes to gain or lose small entity status
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DEVELOPMENTS IN THE TRANSFER
OF PATENT RIGHTS
Any Questions?
For more information:
Paolo.Trevisan@uspto.gov
011 571 272 7110
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