With technological advancements in data communication, networking, and file management systems making it easier than ever to work with anyone around the world at any time of day, joint ventures between companies and other cooperative partnerships have continued to increase in number and importance over the past decade. However, when multiple companies work together to develop technological innovations, issues may arise regarding the ownership of any intellectual property that arises from the joint work. As a starting point, it always behooves a partner in any joint venture to explicitly contract with the other collaborators as to ownership of any jointly developed intellectual property using a joint development agreement (JDA) or some other legal contract. However, as with any contract, questions may arise as to the scope of the JDA and what type of work is covered. For instance, one of the parties may claim that the contract does not apply to certain acts that it contends were independent of the jointly performed work.
In terms of patent protection, ownership of patents in the United States is determined based solely on the identities of the named inventors. The identity of the inventors is determined based on who actually conceived of the claimed invention. Although the inventors may have an obligation to assign their rights in the invention to their employers based on their employment agreement, the fact that a certain company financed the research that led to a patentable invention does not give that company any inherent rights in the intellectual property. This can have tremendous consequences when the inventors are distributed amongst multiple independent parties or if the joint venture sours and the parties become more adversarial towards each other. The issue may become even more complicated when the parties disagree over the identities of the actual inventors. For example, one of the companies may take the position that the conception of an invention was performed solely by its employees performing work outside the scope of the JDA.
In such a situation, if the other joint venture partners believe that one or more of their employees also contributed to the conception of the invention (either alone or jointly with inventors from other companies), the most important thing that the company can do is to timely file a patent application naming its employee(s) as an inventor. Provided the company has a good faith belief that that it is naming the correct inventive entity (i.e., the inventors named in the application are correct), filing a patent application preserves the company’s rights to claim ownership of the innovation.
Failure to file a patent application may lead to problems down the road, especially if a recalcitrant former partner files its own application naming only its own employees. Such a scenario may allow this recalcitrant former partner to prevent the other collaborators from practicing an invention that they may have contributed resources to develop. By filing an application of their own, the other collaborators may preserve the right to claim an invention that was jointly conceived.
However, there may be recourse for a company even if the excluded collaborators fail to file their own application, although these options are considerably less desirable than what is available to an applicant that files its own application. For example, suppose that a Company A filed a patent application naming Inventors 1, 2, and 3 (all of whom are employees of Company A). Company B believes that the invention claimed in A’s application was actually invented by Inventors 1, 2, 3, and 4 during a joint development project, where Inventor 4 was an employee of Company B. If a patentability bar such as a public disclosure, sale, or the publication of Company A’s application has past – thus preventing Company B from pursuing its own application – the options for Company B become limited. Company B will be effectively prevented from affecting the prosecution of Company A’s application because in the view of the U.S. Patent Office, Company B has no rights in the application.
One potential option for Company B may be to file a continuation application naming Inventors 1, 2, 3, and 4 and claiming priority to Company A’s application while it is still pending. Although Company B would have to provide the inventors who work for Company A an opportunity to sign an oath or declaration, assuming they refuse, Company B could proceed and attempt to trigger an interference between the two applications. In this situation, the Patent Office would decide who actually invented the claimed subject matter. However, depending on the date and scope of the published claims of Company A’s application, an interference over the “same or substantially the same subject matter” of the published claims may be barred under 35 U.S.C. § 135(b) if the later application was filed more than one year after the claims published.
Another option for Company B would be to wait for Company A’s application to issue as a patent and then file an action under 35 U.S.C. § 256 to change the inventorship. However, such an option is not without risks, and Company B would need to prove that one of their employees should have been named as an inventor under the “clear and convincing” evidentiary standard. Testimonial evidence by the omitted inventor that is not corroborated by physical evidence is typically insufficient to meet such a standard, adding to the importance of keeping detailed engineering notes during the design process. Moreover, Company B would need to prove that Inventor 4 was not joined in Company A’s application without any deceptive intent on the part of Inventor 4.
Even if Company B is successful under section 256, the Federal Circuit in Stark v. Advanced Magnetics, Inc. (119 F.3d 1551 (Fed. Cir. 1997)) implied in dicta that the patent may still be unenforceable due to inequitable conduct. For example, if Company A did not name company B’s inventors with deceptive intent (for example to prevent company B from owning an interest in the application), the patent may be unenforceable due to inequitable conduct even with respect to enforcement by Inventor 4 and Company B despite the fact that they did not engage in any deceptive conduct. Arguments could also be made that Company B’s failure to inform the Patent Office that there was an inventorship dispute may rise to the level of inequitable conduct because the Office could have raised the prospect of a rejection under 35 U.S.C. § 102(f) if it had been aware of such a dispute.
In short, the best way to preserve your rights in any invention is to timely file your own application naming what you believe to be the proper inventive entity. Although limited recourse may be available to a company that fails to do so, these options are not desirable and leave open the possibility that a Company may be enjoined from practicing an invention that its employees helped conceive.