Federal Circuit Rules An Employment Agreement May Not Be Enough to Prove Ownership of Intellectual Property
- August 20, 2021
- Posted by: Susan McBee
- Category: Blog
Contributor: Lauren A. Pogue
Does an Employment Agreement provide an automatic assignment for the transfer of intellectual property ownership from inventor to employer? According to the Federal Circuit Court it may not.
On August 2, 2021, the Federal Circuit issued an opinion in Omni MedSci, Inc. v. Apple Inc. that that an Employment Agreement executed between inventor Dr. Mohammad Islam and the University of Michigan was not an actual transfer of rights, but instead an intent to assign at a time in the future.
Dr. Islam was a professor at the University of Michigan (UM). At the beginning of his employment at UM, Dr. Islam executed an employee agreement that including the following regarding ownership of patents and intellectual property:
- “Patents and copyrights issued or acquired as a result of or in connection with administration, research, or other education activities conducted by members of the University staff and supported directly or indirectly (e.g., through the use of University resources or facilities) by funds administered by the University regardless of the source of such funds, and all royalties or other revenues derived therefrom shall be the property of the University.”
- “Patents, copyrights, and property rights in computer software resulting from activities which have received no support, direct or indirect, from the University shall be the property of the inventor, author, or creator thereof, free of any limitation which might otherwise arise by virtue of University employment.”
- “In cases which involve both University-supported activity and independent activity by a University staff member, patents, copyrights, or other property right in resulting work products shall be owned as agreed upon in writing and in advance of an exploitation thereof by the affect staff member and the Vice-Provost for Research in consultation with the committee on Patents and Copyrights and with the approval of the University’s Office of the General Counsel. It is understood that such agreements shall continue to recognize the traditional faculty and staff prerogatives and property rights concerning intellectual work products.”
In 2012, the doctor took a leave of absence, during which time Omni MedSci (Omni) and him filed six provisional applications. Upon his return to UM, he filed additional non-provisional applications which claimed priority to the previous provisional applications. The patent process continued under Omni for the next few years.
In addition to his employment as a professor, Dr. Islam has been the founder and Chief Technology Officer for several companies, including Xtera Communications, Celeste Optics, AccuPhotonics, Omni MedSci, and Cheetah Omni. He is also a Registered Patent Agent with the US Patent and Trademark Office.
In 2012, Dr. Islam took a leave of absence, during which time Omni MedSci (Omni) filed six provisional patent applications which named Dr. Islam as an inventor. Upon his return to UM, he filed additional non-provisional applications which claimed priority to the previous provisional applications also in the name of Omni. Subsequently, two of the resulting patents U.S. Patent 9,651,533 and 9,861,286 were asserted against Apple, Inc. by way of an infringement suit brought in ED Tex.
Apple filed a Motion to Dismiss, “alleging that UM, not Omni, owned the asserted patents.” Apple contended that the UM Bylaw 3.10 and the employment agreement executed between UM and Dr. Islam would override and transfer of rights to Omni and “Omni lacked standing.” The ED of Texas ultimately denied the Motion to Dismiss on the grounds that the “…paragraph 1 of bylaw 3.10 was not a present automatic assignment of title, but, at most, a statement of future intention to assign.” Apple appealed to the CAFC wherein the majority agreed with the Eastern District of Texas stating that “…paragraph 1 of bylaw 3.10 does not presently automatically assign Dr. Islam’s rights to the patent…” but it is “…most naturally read as a statement of intended disposition and a promise of a potential future assignment, not as a present automatic transfer.” Notably UM also filed an amicus brief supporting the position of Apple which was ultimately rejected by the court.
Subsequent to the 02 August 2021 decision, another related appeal involving the same parties has been filed at the CAFC on 12 August 2021 and assigned Docket no 21-2213. Appearances and Certificates of Interest are due 26 August 2021.