ALZHEIMER'S INSTITUTE OF AMERICA, INC. v. AVID RADIOPHARMACEUTICALS et al
Filing
88
MEMORANDUM. ( SIGNED BY HONORABLE TIMOTHY J. SAVAGE ON 8/31/11. ) 8/31/11 ENTERED AND COPIES E-MAILED.(gn, )
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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
ALZHEIMER'S INSTITUTE OF
AMERICA, INC.
CIVIL ACTION
v.
AVID RADIOPHARMACEUTICALS,
et al.
NO. 10-6908
MEMORANDUM OPINION
Savage, J.
August 31, 2011
The threshold issue is whether the plaintiff, the assignee of the patents in suit, has
standing to prosecute this patent infringement action. Unless the plaintiff owns the patents,
it has no standing. The defendants contend that the assignor of the patents was not the
sole inventor ofthe invention; and, even if he was, ownership ofthe invention vested in his
university-employer by operation of Florida law. If the defendants are correct, the plaintiff
lacks standing.
The question of inventorship must be answered first. If the assignor was not the
sole inventor, he could not have assigned ownership to the patent. If he was the sole
inventor, the next question is whether he owned the invention. The answer to this question
turns on whether Florida law operated to vest ownership in the inventor-assignor's
employer. If it did not or the employer waived its interest, the assignor had the ownership
rights to the invention, giving him the right to assign the patent and the assignee standing
to enforce it.
Factual and Procedural Background
Plaintiff Alzheimer's Institute of America, Inc. ("AIA") brought this action for patent
infringement against defendants Avid Radiopharmaceuticals ("Avid") and The Trustees of
the University of Pennsylvania ("Penn"). After conducting discovery, AlA and Avid have
filed cross-motions for summary judgment on the issue of whether AlA has standing to
prosecute this action. Penn has joined in Avid's motion.
The patents in suit are for technology related to Alzheimer's disease, including
nucleic acids coding for the so-called "Swedish mutation" and transgenic mice carrying the
mutation. Alzheimer's disease is the result of neuronal death believed to be caused by
aggregations in the brain of plaques formed by a peptide known as beta-amyloid, which
is released from a larger protein known as the amyloid precursor protein (!lAPP"). A
mutation in the APP gene, known as the Swedish mutation, is believed to be the cause of
the release of beta-amyloid plaques leading to Alzheimer's disease.
Dr. John A. Hardy, who Avid claims is a co-inventor of the Swedish mutation,
headed a research laboratory team at St. Mary's Hospital Medical School ("St. Mary's") in
London searching for a genetic cause of Alzheimer's disease. 1 Hardy began at St. Mary's
in 1984. 2 Among the members of the St. Mary's research team were doctoral candidates
Michael Mullan, who AlA contends is the sole inventor, and Fiona Crawford. St. Mary's
merged with Imperial College ("Imperial") in 1988. Mullan joined Imperial as a Clinical
1
AlA's Statement of Undisputed Facts rSOF"} 1f 29.
2
Declaration of Dr. John A Hardy, Apr. 29, 2011 ("Hardy Dec!.") 1f 5.
2
Research Fellow on October 1,1988 and received his Ph.D. in December 1993. 3
In a 1990 paper, co-authored with scientists from the Netherlands, Hardy described
a linkage between the APP gene and a disease called "hereditary cerebral hemorrhage
with amyloidosis of the Dutch type" ("HCHWA-D"), which is also linked to amyloid deposits.
The paper concluded that a mutation in the APP gene, known as the "Dutch mutation," was
responsible for HCHWA-D.4
After the discovery of the Dutch mutation, Hardy's team began to search for APP
mutations related to Alzheimer's by sequencing part of the APP gene known as exon 17
taken from a small British family. Exon 17 was selected because it was one of two exons
encoding the beta-amyloid peptide and was the location of the Dutch mutation. s As a
result of the team's research, it discovered a mutation, now known as the "London
mutation," at codon 717 of the APP gene. The team associated the mutation with earlyonset Alzheimer's disease. s
The St. Mary's team, then under the auspices of Imperial College, filed a United
Kingdom patent application forthe.London mutation. The application named Hardy. Mullan
and three other team members as the inventors. The team members suggested patenting
transgenic animals carrying the mutation. Imperial's technology transfer arm, Imperial
Exploitation Limited ("IMPEL"), erroneously advised them that transgenic animals could not
3 AlA's SOF 1m 24,28,30; Avid's response to AlA's SOF 4fI114. Mullan's appointment was initially
set to expire on September 30, 1990, but it was extended on several occasions and lasted at least until
December 1, 1991. Id. 1m 24-27.
4
Hardy Decl. 4fI6.
5
Hardy Decl.
6
AlA's SOF 4fI36.
1m 8-9; Avid's Mot. for Summ. J. (Doc.
3
No. 63) at 4.
be patented under U.K. law.7
In February 1991, after the initial patent application was filed, Athena
Neurosciences, Inc. ("Athena") of San Francisco approached Imperial, through Hardy, to
sponsor the team's research to identify new APP mutations. On August 1, 1991, a
Sponsored Research Agreement was executed.
Athena then redrafted the patent
application to include transgenic animals carrying the London mutation. The agreement
granted Athena exclusive rights to mutation-carrying transgenic animals and to any
subsequent Alzheimer's discoveries from the laboratory. Upon learning that IMPEL had
given them erroneous advice, the research team was disappointed with the deal they had
made with Athena. 8
In 1990, Kansas Citybusil1essman Ronald Sexton arrived on the scene. 9 According
to Avid, after discussions with Sexton, Hardy and Mullan contacted Imperial to attempt to
renegotiate Imperial's claim to the patent. Imperial categorically rejected their request,
citing the U. K. Patents Act 1977 for the principle that inventions made in the normal course
of employment duties belong to the employer, not to the employee.
Shortly after Imperial's rejection, Hardy and Mullan decided to conduct further
research in Florida. 10 They accepted an offer from the University of South Florida ("USF")
to set up a new laboratory dedicated to Alzheimer's research. It is undisputed that, by the
7
Hardy Dec!.
"9.
6
Hardy DecL,
W 10-13; Transcript of oral argument, Aug.
9
Deposition of Michael Mullan, Mar. 1! 2011 at 195-96; Hardy Dec!. " 14.
10, 2011 at 24.
10 The parties disagree about the motivation for relocating the research to Florida. AlA claims that
the reason was the "poor research funding environment in Britain." Avid contends it was to avoid the Athena
agreement and the effect of UK law bestowing ownership rights on Imperial.
4
end of 1991, Mullan relocated to Florida and began setting up a laboratory with Hardy as
its titular head. Mullan's appointment at USF began December 16,1991. 11
Discovery of the London mutation spurred laboratories around the world to search
their Alzheimer's patient samples for APP mutations. In January 1992, Dr. Lars Lannfelt,
part of a research team led by Dr. Bengt Winblad at the Karolinska Institute in Sweden,
began collecting DNA samples from Swedish families afflicted with Alzheimer's.
In
February 1992, Lannfelt visited Hardy's London laboratory and brought DNA samples from
two Swedish families. Hardy then instructed Henry Houlden, a medical student, to analyze
the DNA for linkage between Alzheimer'S and a genetic marker known as GT12, which was
known to reside near the APP gene on chromosome
21.12
According to Avid, Hardy
concluded that the data generated by Houlden's analysis indicated a strong likelihood of
a mutation on the APP gene in both of the Swedish families. 13
Avid contends that Hardy wanted to avoid any ownership claim by Imperial in the
anticipated mutation discovery. Consequently, he sent the DNA samples from affected
and unaffected Swedish family members to Mullan to do sequencing in Florida rather than
in Imperial's London laboratory.
Upon receiving the samples, Mullan used a computer program on Houlden's data
to generate "logarithm of the odds" ("LOD") scores. Avid contends that the resultant scores
were consistent with Hardy's conclusion that there was a strong likelihood of a mutation
on the APP gene. Without informing Hardy, Mullan instructed Crawford to conduct DNA
11
AlA's SOF mI 41,43-44,47.
12
AlA's SOF mI 50, 53-54.
13
Hardy Decl. ~ 28.
5
sequencing at an off-campus laboratory at the Tampa Bay Research Institute ("TBRI")
instead of in the USF laboratory. 14
Sequencing results for exon 16, the other exon encoding the beta-amyloid peptide,
revealed a double mutation at codons 670 and 671, now known as the Swedish mutation.
Several days later, when Mullan informed Hardy of the mutation, the two agreed that
Hardy's name would not be included on any publication related to the Swedish mutation. 15
Mullan and Hardy, along with Sexton, then sought USF's waiver of any rights it may
have in the Swedish mutation. They hired aU. K. law firm, Clyde & Co., to send a letter to
USF asking that ownership of rights to any "inventions made by them (whether before or
after the date of the letter) belong exclusively to Hardy and Mullan." The letter made no
specific mention of the recent discovery of the Swedish mutation while Mullan was
employed by USF. The letter was signed on May 4, 1992 by George R. Newkome, Vice
President for Research at USF. Newkome made one revision to the letter, changing the
language "whether before or after the date of this letter" to "before August 15, 1992."16
Avid contends that USF believed that the Swedish mutation work had been
substantially completed prior to Mullan's employment there. 17 According to Avid, only later
did USF learn that the discovery was the result of work done in Florida. The record is
14
15
mr 61; Hardy Decl. 11' 32.
AlA's SOF mr 72, 78. Avid alleges that Hardy's name was excluded to avoid the Imperial-Athena
AlA's SOF
agreement. AlA contends that it was excluded because Hardy's contributions were not significant enough to
constitute inventorship.
16 See Ex. 5 to Avid's Mot. for Summ. J. (Doc. No. 63). Newkome's initials appear in the margin
where the change was made.
17 See Ex. 6 to Avid's Mot. for Summ. J. (Doc. No. 63). If the research had been substantially done
before Mullan did the sequencing, Hardy's contention that he was a co-inventor gains traction.
6
unclear about what USF knew about the work on the Swedish mutation at the time the
purported waiver letter was presented.
On May 5, 1992, the day after Newkome countersigned the Clyde & Co. letter,
Sexton incorporated AlA as a Florida for-profit corporation for the purpose of holding and
exploiting the rights to the Swedish mutation. AlA's first annual report, issued in 1993,
listed Sexton as president, and Mullan as vice president and treasurer. 18
The patent application for the Swedish mutation was filed one month later, on June
4, 1992. It named Mullan as the sole inventor. On July 15, 1992, Mullan executed an
assignment to AlA of his rights in the invention, including any patents or continuations. The
assignment was recorded in the U.S. Patent and Trademark Office ("PTO") on July 31,
1992.19
Mullan and Crawford were awarded doctorate degrees from Imperial in 1993 and
1994, respectively, according to Avid, in large part due to their work on the Swedish
mutation. At the time of discovery ofthe Swedish mutation, an Imperial College regulation
imposed upon Imperial students an obligation to disclose and assign their inventions to
Imperial. There is no evidence that they did so. Mullan claims that he was not an Imperial
student in 1992 while working on his dissertation.
On October 3, 1995, the first of the patents in suit issued from the June 4, 1992
application as U.S. Patent No. 5,455,169 ("the '169 patent") for a nucleic acid encoding an
APP protein carrying the Swedish mutation, along with vectors comprising the nucleic acid
and cell lines containing the nucleic acid. On March 8, 2007, Mullan filed a continuation
18 AlA's SOF ~ 1. Hardy's interest in AlA is unclear from the parties' briefs. At oral argument, AlA's
counsel represented he had none.
19
AlA's SOF 1m 2, 4, 6.
7
application, again naming himself as the sole inventor. On May 26, 2009, the continuation
application issued as U.S. Patent No. 7,538,258 ("the '258 patent") for transgenic mice
carrying the nucleic acid and for screening methods for an agent for treating Alzheimer's
using such mice.
The '258 patent was assigned to AlA pursuant to the original
assignment. 20
On November 24, 2010, AlA brought this action alleging patent infringement by
defendants Avid and Penn. After conducting a Rule 16 conference, we ordered the parties
to conduct discovery limited to the issue of whether AlA has standing to bring this action.
Pursuant to the scheduling order, Avid conducted discovery and filed a motion seeking
summary judgment that AlA lacks standing, contending that Mullan was not the sole
inventor; and if he was, the rights to the Swedish mutation inventions vested in USF as a
condition of Mullan's employment pursuant to Florida law. According to Avid, the purported
waiver on the part of USF was ineffective because it did not comply with the regulations
and was not knowingly made. In the alternative, Avid argues that Imperial owned the rights
to the inventions because Mullan was a student and employee of Imperial when the
inventions were conceived. Avid asserts that in either case Mullan owned no rights to the
inventions and, thus, had no rights to assign to AlA. Therefore, so Avid argues, AlA has
no standing to bring a patent infringement action for the patents in suit.
AlA filed a cross-motion for summary judgment on the standing issue, arguing that
the patents listing it as owner are entitled to a presumption of validity. According to AlA,
Mullan is the sole inventor; and, although involved in research resulting in the inventions,
none of the other individuals made a contribution sufficient to rise to the level of
20
AlA's SOF1MT 4,7-8,10.
8
inventorship. AlA further contends that USF has no rights in the patents because Mullan
was not bound by the Florida regulation; he did not agree to be bound by the regulation's
terms; and even ifthe regulation vested rights in USF, USF waived them in favor of Mullan.
Similarly, according to AlA, Imperial has no rights in the patents because Mullan was not
acting as an employee or as a student of Imperial when the inventions were conceived.
There are disputed material facts precluding summary judgment on the inventorship
issue. On the ownership issue, we conclude that Mullan was subject to a Florida regulation
vesting ownership in USF of the inventions he made during the course of his employment
there. Consequently, unless USF waived its right to the inventions, he had no rights to
assign to AlA. Thus, absent a valid waiver, AlA lacks standing to bring this action.
Discussion
Standing is a threshold issue on which the plaintiff bears the same burden of proof
and evidentiary standard as at trial. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61
(1992). To have standing to assert patent infringement under 35 U.S.C. § 271, AlA must
demonstrate that it held enforceable title to the patent at the inception of the lawsuit.
Paradise Creations, Inc. v. UV Sales, Inc., 315 F.3d 1304, 1309 (Fed. Cir. 2003).
Inventorship
On the inventorship issue, AlA argues that Hardy and others did not make any
significant contributions to the inventions. According to AlA, Hardy's participation was
limited to developing a research plan and giving instructions to Houlden and Crawford, who
make no claim to co-inventorship and merely carried out routine chores as directed by
Mullan.
Not surprisingly, Avid contends Hardy played a much more significant role in the
9
conception of the inventions. It claims Hardy and Mullan were collaborating all along in the
research that led to the discovery of the Swedish mutation.
Despite Hardy's early
disclaimers, he now insists that he was a co-inventor. At the time Mullan joined USF and
later Hardy, the research that ultimately led to the conception of the invention was a work
in progress. What each did and the extent of this contribution to the end result is disputed
and presents a jury issue.
The inventor named on a patent is presumed to be the only inventor. Acromed
Corp. v. Sofamor Danek Group, Inc., 253 F.3d 1371, 1379 (Fed. Gir. 2001) (citations
omitted). To rebut that presumption, the challenger must prove by clear and convincing
evidence that someone else was the actual inventor or a joint inventor. Id (citations
omitted). Additionally, a co-inventor need not contribute to every claim of a patent.
Ethicon, Inc.
v. United States Surgical Corp., 135 F. 3d 1456, 1460 (Fed. Gir. 1998). A
contribution to a single claim is sufficient. Id.
Because proving non-joinder of an actual inventor invalidates a patent, the self
serving testimony of the alleged joint inventor alone is insufficient to meet the clear and
convincing evidence standard. Symantec Corp. v. Computer Assocs. Int'l, Inc., 522 F. 3d
1279, 1295 (Fed. Gir. 2008) (citing Ethicon, Inc., 135 F.3d at 1461). There must be
corroborating evidence. Id. Depending on the facts of the case, corroborating evidence
can be found in documentary or physical evidence made contemporaneously with the
inventive process, which is considered the most reliable; circumstantial evidence of an
independent nature; or oral testimony from someone other than the alleged inventor or an
interested party. Checkpoint Sys., Inc. v. All-Tag Security s.A., 412 F.3d 1331,1339 (Fed.
Gir. 2005).
10
The proffered corroborating evidence is evaluated using a "rule of reason" analysis.
Lazare Kaplan Inn, Inc. v. Photoscribe Technologies, Inc., 628 F.3d 1359, 1374 (Fed. Cir.
2010) (internal quotations and citations omitted). All pertinent evidence is examined to
determine the alleged inventor's credibility. Id.
AlA contends that it is the assignee of the patent pursuant to an assignment from
the sole inventor. It argues that the patent is not invalid. As the moving party, AlA must
demonstrate that Avid failed to produce clear and convincing evidence that Mullan, AlA's
assignor, was not the sole inventor. Eli Lilly and Co. v. Ba" Laboratories, Inc., 251 F.3d
955,962 (Fed. Cir. 2001). Conversely, as the party moving to invalidate the patent, Avid
must produce clear and convincing evidence that Mullan was not the sole inventor. Id.
Neither party has met its burden at this stage. Indeed, Avid concedes that there are
disputed material facts that preclude summary judgment on the inventorship issue. AlA
disagrees, arguing that Avid has not presented undisputed facts showing, by clear and
convincing evidence, that Mullan was not the sole inventor. With respect to AlA's motion,
we must view the evidence in the light most favorable to Avid and resolve all doubts in its
favor.
AlA argues thatthe only evidence Avid presented, Hardy's testimony, was unreliable
and uncorroborated. There is no question that Hardy has in the past denied that he was
a co-inventor of the Swedish mutation. AlA contends that his current position to the
contrary is not corroborated.
There is circumstantial evidence from which a reasonable jury could conclude that
Mullan was not the sole inventor and that Hardy was a co-inventor. Hardy and Mullan both
worked on the research to identify APP mutations. They started and continued down the
11
research path leading to the discovery of the Swedish mutation. Hardy sent the DNA
samples to Mullan in Florida for the sequencing that identified the Swedish mutation.
Hardy and Mullan were both employed at the USF laboratory at the relevant time. They
both met with Sexton to finance the research.
The April 29, 1992 letter seeking a waiver authored by the solicitors representing
Hardy and Mullan itself may be corroborating documentary evidence. Written to USF in
anticipation of Hardy and Mullan working there, it references the work the two had done
while at St. Mary's "in important developments in Alzheimer's disease."
It sought
recognition of their "ownership in work carried out by them and inventions made by them
before August 13,1992." Drawing inferences in favor of Avid, one could conclude from the
letter that Hardy and Mullan jointly engaged in the research project that was a work in
progress that resulted in the invention that was conceived before August 13, 1992. Thus,
this letter is circumstantial documentary evidence that tends to corroborate Hardy's
contention that he was a co-inventor.
Avid has proffered Houlden's declaration that supports its position that Hardy was
a co-inventor. Houlden declares that he made contemporaneous notes regarding the work
the members of Hardy's team did in the development of the Swedish mutation. He also
explained that both Hardy and Mullan wanted the sequencing done in Florida to avoid any
claim of ownership of the invention by St. Mary's.
Hardy's testimony together with the documentary and circumstantial evidence
tending to corroborate it raises a jury question as to the who invented the Swedish
mutation. Therefore, we cannot, in the face of the disputed facts, grant AlA's motion for
summary judgment.
12
Ownership
The dispositive question is not who made the inventions but who owns them.
Whether Mullan was the sole inventor or a co-inventor may be a disputed issue. But, there
is no dispute that the inventions were conceived at the time that he was employed at USF;
and Hardy, who claims to be a co-inventor, was employed by both Imperial and USF. The
answer to the question of ownership lies in the efficacy of the Florida law governing
ownership of inventions made by employees of USF during their employment. If the law
applies, ownership of the inventions and, consequently, the patents vested in USF. In that
case, Mullan would have had no interest to assign to AlA.
Under Florida law, inventions developed or discovered by an employee in the course
of employment with USF are the property of USF.
Fla. Admin. Code Ann. r. 6C4
10.012(3)(c), implementing Fla. Stat. § 240.229 (superseded by § 1004.23) (authorizing
state universities to secure patents and enforce patent rights). 21 USF employees are under
The Florida regulation provides, in pertinent part:
(3) Inventions.
(a) Disclosure/University Review.
1. An employee shall fully and completely disclose to the President or Vice President
for Research all inventions which the employee may develop or discover while an
employee of the State University System together with an outline of the project and
the conditions under which it was done....
(c) University-Supported Efforts. An invention which is made in the field or discipline in which
the employee is employed by the University or by using University support is the property of
the University and the employee shall share in the proceeds therefrom ....
(e) Release of Rights....
2. At any stage of making the patent applications, or in the commercial application
of an invention, if it has not otherwise assigned to a third party the right to pursue its
interests, the President or Vice President for Research may elect to withdraw from
further involvement in the protection or commercial application of the invention. At
the request of the employee in such case, the University shall transfer the invention
rights to the employee, in which case the invention shall be the employee's property
21
3. All aSSignments or releases of inventions, including patent rights, by the President
or Vice President for Research to the employee shall contain the provision that such
invention, if patented by the employee, shall be available royalty-free for
governmental purposes of the State of Florida, unless otherwise agreed in writing by
the University.
13
a duty to disclose to the University any inventions made during the course of their
employmentthere. R. 6C4-10.012(3)(a)(1). The University reserves the right to relinquish
its ownership interest. The regulation provides that an employee may seek the University's
waiver of invention rights, provided that any assignment or release of rights contains a
provision making the invention available royalty-free for governmental purposes to the
State of Florida. R. 6C4-10.012(3)(e)(2)-(3).
Because Mullan was employed by USF when the inventions were conceived,
ownership of the inventions vested in USF by operation of Florida law. "An invention which
is made in the field or discipline in which the employee is employed by the University or by
using University support is the property of the University and the employee shall share in
the proceeds therefrom." R. 6C4-10.012(3)(c). Florida regulations promulgated pursuant
to statutory authority have the force of law. Menna v. Sun Country Homeowners Ass'n,
Inc., 604 So. 2d 897, 899 n.1 (Fla. Dist. Ct. App. 1992) {citing Fla. Livestock Bd. v.
Gladden, 76 So. 2d 291,293 (Fla. 1954»; accord Griffin v. Harris, 571 F.2d 767,772 (3d
Cir. 1978) ("Validly promulgated regulations have the force and effect of law."). Therefore,
under Florida law, although the inventor-employee has a right to share in the monetary
benefits of the invention, ownership remains with the University-employer.
When an inventor's rights to an invention are deemed the property of his employer
by operation of law, the inventor has no property rights to assign, and any purported
assignee lacks standing to sue for patent infringement.
See, e.g., FilmTec Corp. v.
(4) Execution of Documents. The University and the employee shall sign an agreement individually
recognizing the terms of this rule.
(5) Responsibility. The authority and responsibility for administration and implementation of this rule
is delegated to the Vice President for Research.
Fla. Admin. Code Ann. rr. 6C4-10.012(3)(a)(1), (c), (e)(2)-(3), (4), (5).
14
Hydranautics, 982 F.2d 1546, 1553-54 (Fed. Cir. 1992); Cadence Design Sys., Inc. v.
Bhandari, No. 07-0823, 2007 WL 3343085, at *6 (N. D. Cal. Nov. 8,2007) Cf. Arachnid, Inc.
v. Merit Indus., Inc., 939 F.2d 1574 (Fed. Cir. 1991) (holding a provision that rights "will be
assigned" is an agreement to assign rather than a present transfer of rights, thus not
nullifying plaintiffs standing).
For ownership of the inventions to vest in USF, the evidence must demonstrate that
Mullan was an employee of USF when the inventions related to the patents in suit were
conceived and that the inventions were within the field or discipline of his employment. It
is not necessary to prove that he used USF support. The invention need only have been
in his field or discipline. The parties disagree when the inventions were conceived and
reduced to practice. Avid contends this occurred in late March or early April of 1992. AlA
claims that conception and reduction to practice were not complete until the original patent
application was filed on June 4, 1992, the effective filing date for each patent. 22 This is not
a material dispute because whether the inventions were conceived and reduced to practice
as early as March or as late as June of 1992, Mullan was an employee of USF.23 As to the
second element, it is undisputed that the inventions are within the field or discipline in
which Mullan was employed by USF. Therefore, because Mullan was employed by USF
when the inventions related to the patents in suit were conceived and the inventions were
within the field in which Mullan was employed by USF, rights to the patents in suit vested
22
Avid's SOF 4[( 2.
23
Avid's SOF 4[( 3; see also Avid's ex. 21 at USF000050; AlA's ex. 19 at USF000050.
15
immediately in USF by operation of the Florida regulation. 24
As a USF employee, although Mullan is entitled to share in the proceeds of the
revenue from the inventions, he does not have ownership rights to them. He can assign
his right to share in the proceeds. He cannot assign any right to ownership because he
has none.
AlA argues that there was no transfer of rights to USF because there was no written
assignment as required by 35 U.S. C. § 261. This argument fails for two reasons. First, the
premise that there was a transfer is wrong. Mullan had no property to transfer. The
ownership of the inventions vested immediately in USF.
Second, even if it were
considered a transfer of ownership from the inventor to the employer, assignment is not
the only legal method of transfer. An ownership interest in a patent may pass from the
inventor to another by operation of law.
Section 261 provides that an assignment of a patent is valid only if it is executed in
writing and recorded with the PTO. AlA contends USF has no ownership interest in the
inventions because there is no written aSSignment from Mullan. AlA relies on University
Patents, Inc. v. Kligman for the assertion that § 261 is the only method for transfer of
patent ownership interests. See 762 F. Supp. 1212,1219 (E.D. Pa. 1991) ("Since a patent
is a creature of federal statutory law, it may be transferred only in the manner provided by
such law.").
AlA misreads Kligman.
Kligman instructs that ownership rights in the
inventions are generally governed by state, not federal, law. Id. at 1219 n.B.
AlA's argument ignores that a § 261 assignment applies to patent rights, not to
24 The Florida regulation's provision that employees' inventions are property of the University is a
provision for an immediate, present transfer, in contrast to the proviSion in Arachnid, vesting the rights to the
patents immediately in USF.
16
ownership rights, a distinction noted in Kligman. See Kligman, 762 F. Supp. at 1218-19
(acknowledging that patents and patent applications are assignable under § 261, but
cautioning that inventorship is merely a starting point for determining patent ownership and
that the inventor may be subject to an effective transfer of patent rights). Section 261
presumes that the patent holder is the owner. In other words, if the patent holder is not the
owner, there can be no assignment; and any document, even though it may have satisfied
the requirements of § 261, can not assign the ownership rights. Otherwise, an assignment
of a patent by a non-owner could divest the owner of ownership.
Again, we emphasize the critical distinction between vesting of and transferring
ownership rights.
Vesting by law occurs at conception.
conception, after ownership has vested.
Transfer takes place after
The Florida regulation does not require an
employee to transfer his ownership of an invention.
It effectively declares that the
employee does not own the invention in the first instance.
AlA also argues that the recording of an assignment with the PTa creates a
presumption of validity as to the assignment pursuant to 35 U.S.C. § 282. See SiRF Tech.,
Inc. v. Int'! Trade Comm'n, 601 F.3d 1319,1327-28 (Fed. Cir. 2010) ("[W]e think that [the
recording of an assignment with the PTa] creates a presumption of validity as to the
assignment and places the burden to rebut such a showing on the one challenging the
assignment.").
However, the SiRF Tech court cautions that U[t]he recording of an
assignment with the PTa is not a determination as to the validity of the assignment." Id.
This is consistent with Federal Circuit precedent holding that the presumption of validity is
merely a procedural device assigning the burden of proof. See, e.g., Chore-Time Equip.,
Inc. v. Cumberland Corp., 713 F .2d 774, 780 (Fed. Cir. 1983) ("The presumption is, like all
17
presumptions in law, a starting place and a procedural device assigning the burden of
proof. To treat the presumption as irrebuttable would be to oust the courts of their
jurisdiction to consider a challenge to the validity of patents before them.").
In any event, we do not reach the validity of the assignment unless the assignor's
ownership of the patent is established. If Mullan did not own a valid patent, he had nothing
to assign. Only if he legitimately owned a valid patent does § 261 come into play. Holding
a properly recorded assignment meeting the § 261 requirements does not a fortiori
establish ownership of the patent.
AlA relies on a recent Supreme Court case for the principle that where the
ownership of an invention is transferred from the inventor by operation of law, the
inventor's rights are not automatically voided unless there is unambiguous language
effectuating an automatic transfer of rights. See Bd. of Trustees ofthe Leland Stanford Jr.
Univ. v. Roche MolecularSys., Inc., No. 09-1159, _
U.S. _,2011 Wl2175210, at *4
(June 6,2011), aff'g 583 F.3d 832 (Fed. Cir. 2009). There, the Court found that the 8ayh
Dole Act of 1980. 35 U.S.C. §§ 201 (c), (e), 202(a), which allocates rights in federally
funded inventions between federal contractors and the government, did not contain
unambiguous vesting language. Id. at *7. Rather, the Act merely gives contractors an
option to retain rights to their work. Id.
The Roche Court held that the 8ayh-Dole Act did not "automatically vest" title to
federally funded inventions in federal contractors. It concluded that the Act does not
disturb the centuries old prinCiple that the rights to an invention belong to the inventor. Id.
at *4.
Here, the Florida regulation. unlike the 8ayh-Dole Act, unambiguously vests
18
ownership of its employees' inventions in the University. It states: "An invention which is
made in the field or discipline in which the employee is employed by the University or by
using University support is the property of the University and the employee shall share in
the proceeds therefrom." R. 6C4-10.012(3)(c) (emphasis added). This unequivocal
language is similar to the statutory language that the Supreme Court noted was necessary
to divest inventors of their inventions conceived during work on specified federal contracts.
Roche, 2011 WL 2175210, at *7. It was the absence of such clear language in the 8ayh
Dole Act that made the difference in the case.
Roche does not hold that ownership rights in an employee's invention cannot vest
in an employer by operation of law. On the contrary, it acknowledges that it can. However,
if a law is intended to vest ownership rights of inventions automatically in the employer, the
vesting language must be clearly expressed and unambiguous.
Id.
Thus, Roche
undermines, rather than supports, AlA's argument.
AlA argues that Mullan was not bound by the Florida regulation because he did not
agree to accept its terms. It points out that Mullan did not sign an agreement to be bound
by the regulation. Notwithstanding this undisputed fact, Mullan's agreement was not
required.
It does not matter that the regulation itself provides that both the University and the
employee "shall sign an agreement individually recognizing the terms ofthis rule." R. 6C4
10.012(4). Nothing in the regulation makes such a written acknowledgment a prerequisite
to its enforceability. Said differently, the regulation does not condition its applicability upon
execution of such an agreement. In fact, the version of the regulation in force at the
relevant time made the regulation applicable by virtue of employment at USF. R. 6C4
19
10.001 (Rev. 1/92) (stating that Chapter 6C4 has "university-wide application").25 When
a term in a regulation amounts to a mere formality, the term is not a condition of
applicability. See Film Tee, 982 F.2d at 1553. Because the requirement of a written
document does not affect ·the applicability of the regulation, the failure to expressly
acknowledge the law does not permit an employee to confiscate the employer's property.
AlA also claims that the regulation was not implemented before the inventions were
conceived. It argues that the regulation was not self-executing. Subsection 5 of the
regulation states, "The authority and responsibility for administration and implementation
of the rule is delegated to the Vice President for Research." R. 6C4-10.012(5). As Avid
correctly contends, the purpose of the provision is simply to identify the official responsible
for administering and implementing the regulation. The vesting of property rights in USF
took effect when the regulation became effective. It was not postponed until further action
was taken. In fact, USF Policy 0-300, which requires completion of a specific disclosure
form, tends to contradict AlA's assertion that the regulation was not implemented. See USF
Policy 0-300(IV)(B) (,The disclosure is made by completing and submitting the Disclosure
of Invention Form.") 26 Thus, Mullan was bound by the terms of the regulation.
Here, whether Mullan was the sole inventor or a co-inventor, the undisputed facts
establish that ownership of the inventions vested in USF by operation of law. There is no
dispute that Mullan was employed by USF at the time the inventions were conceived and
that the inventions were in the field or discipline of his employment. Thus, because the
25 The provision for university-wide application was in force when the inventions were conceived, but
it was repealed in 2003.
26
USF
Policy
0-300,
"Inventions
and
Works·
(2009),
available at
http://generalcounseLusf.edu/policies-and-procedures/pdfsIpolicy-0-300.pdf (last visited August 31, 2011).
20
Florida regulation vested ownership of the patents in suit in USF, Mullan had no rights to
assign to AlA, unless USF had waived its ownership rights.
To summarize, a plaintiff in a patent infringement action must have enforceable title
to an invention in order to sue for patent infringement.
Under Florida regulations,
inventions made by University employees in the course of employment are property of the
University. The regulation is binding on employees as a condition of employment, and no
written agreement to be bound is required. When an inventor's rights to an invention are
transferred by operation of law, the inventor has no rights to assign, and any assignee
lacks standing to sue for patent infringement.
Having concluded that the undisputed facts establish that USF had ownership of the
invention by operation of law, we must consider AlA's alternative argument that USF
waived its interest in the invention. If the waiver was effective and Mullan was the sole
inventor, his assignment to AlA was valid. Conversely, if he was the sole inventor but the
waiver was ineffective, Mullan had no rights to assign.
Avid argues that when Mullan sought USF's waiver of rights in the Swedish mutation
inventions, he did not make the disclosure required by the regulation. As a result, the
purported waiver was not made knowingly. So Avid argues, without an effective waiver,
Mullan had no rights in the invention to assign to AlA.
Under the Florida regulation, USF employees are under a duty to disclose to USF
any inventions made during the course of their employment. R. 6C4-10.012(3)(a). The
regulation also contains a waiver provision, which provides that the University may elect
to transfer its rights to employees' inventions at the request of the employee. To be
effective, any assignment or release of rights must contain a provision that the invention
21
remains available royalty-free to the State of Florida for governmental purposes. R. 6C4
10.012(3)(e)(2)-(3). This provision assures that Florida retains an interest in the invention.
The purported waiver letter relied upon by AlA sought a waiver of rights of inventions
of Mullan and Hardy.27 It makes no mention of the Swedish mutation invention. While
denying that Mullan was under such an obligation, AlA apparently does not dispute that
Mullan never specifically disclosed the Swedish mutation invention to USF prior to the
waiver letter. 28 This omission, Avid argues, constitutes a failure to disclose the invention
as required by the regulation. Furthermore, USF Policy 0-300 requires completion of a
speCific disclosure form. See USF Policy 0-300(IV)(B) ('The disclosure is made by
completing and submitting the Disclosure of Invention Form."). There is no evidence that
Mullan ever completed such a form. He did not fulfill his disclosure obligation. Without
Mullan's disclosure of the Swedish mutation invention, a question arises whether USF's
purported waiver could have been knowing.
What Mullan, Hardy and USF understood and intended by the letter countersigned
by Newkome, USF's Vice-President for Research, is not clear. The letter is susceptible to
more than one meaning. A fact finder could reasonably infer that the letter was an
agreement to agree at a later time how the rights to any inventions would be treated. It
reads, " ... to avoid any further arguments about ownership or rights to exploit which might
impede exploitation, until formal arrangements for exploitation, in which our Clients [Hardy
and Mullan] would like USF to be involved, have been settled." In the next paragraph, the
27 The fact that Mullan and Hardy jointly sought a waiver tends to show that they were co-inventors.
Because there are disputed material facts on the inventorship issue, we cannot decide whether the Swedish
mutation was jointly created by Mullan and Hardy or by Mullan alone.
28 At oral argument, AlA's counsel suggested that USF had to have known about the Swedish
mutation discovery because it appeared in scientific literature.
22
attorneys wrote that the clients wanted confirmation that they had ownership rights in any
inventions "until specific formal arrangements for exploitation and ownership have been
agreed." It could be, as AlA argues, a relinquishment of USF's rights to any and all
inventions. Or, it could be an acknowledgment of USF's rights and a recognition that any
benefits from those rights were to be negotiated later. These inferences are for the jury
to draw.
Conclusion
There are disputed material facts regarding whether Mullan was the sole inventor
of the Swedish mutation. If he was the sole inventor, as a matter of law, ownership rights
to the invention vested in USF by operation of law. There are contested material facts
relating to whether USF waived its ownership rights. Therefore, the cross-motions for
summary judgment will be denied.
This case will proceed to trial to determine whether AlA, as Mullan's purported
assignee, has standing. A jury must determine whether Mullan was the sole inventor; and,
then if it decides he was, whether USF waived its legal ownership rights in the invention.
23
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