Originally Published MX November/December 2004
GOVERNMENTAL & LEGAL AFFAIRS
Sorting Out Inventors and Patent RightsA profit-maximizing strategy for establishing patent ownership cuts out unnecessary royalty payments.
Gregory J. Carlin
In most high-technology industries, employees of manufacturing companies develop inventions for their employers. But in the medical device industry, independent physicians—the product end-users—often develop devices in collaboration with company staff. Physicians bring the advantage of a direct understanding of the problems that might be encountered during surgery or treatment. Involvement of these collaborators in the development of a medical device generally occurs according to one of two scenarios.
The physician, or a group of physicians, may develop the invention originally, file for a patent, and then shop it around to various medical device companies. A suitably impressed company may negotiate an exclusive license of the patent rights in exchange for royalties amounting to a percentage of the net sales of products incorporating the invention. The exclusivity of the license is important to the medical device company; it will ensure that no competitors will gain a right to commercialize the invention.
In the medtech industry, physicians often are hired as consultants to collaborate in developing or testing a new medical device. This is the second scenario, in which the medical device may already have been conceived and developed by employees of the medical device company and requires only clinical testing conducted by the physician. Alternatively, a physician licensing a patent to the medical device company may be obligated to further test and refine the invention under the licensing agreement.
Because ownership of a patent flows from claims to the invention, a clear understanding of the qualifications for claiming inventor status on the part of the manufacturing company can help ward off ownership problems that might arise when consulting physicians are involved in the development of a medical device.
Identifying the Inventor
Careful identification of all of the true inventors of a medical device is a prudent step that can benefit the device manufacturer in either of the scenarios outlined. As will be explained in more detail, accurately determining a technology's inventors before production begins can ensure the appropriate payment of royalties and can also inform licensing negotiations.
To be a device's inventor, a person must have contributed to the conception of the invention as it is described in the claims of the patent.
The claims typically appear at the end of the patent document and establish boundaries to the rights of the patent owner to exclude others from making, using, or selling similar devices. Technically, ownership of a patent does not entitle one to practice an invention as claimed, only to exclude others from making, using, or selling the claimed invention. Certain cases exist in which the patent owner cannot realize and market the patented invention because it falls within the claims of another, broader patent owned by someone else.1
To use a simplified example, the claim in an issued patent might describe "a catheter, comprising a tubular body defining an opening, and a plurality of spherical baffles positioned within the opening." Anyone making, using, or selling a catheter with a tubular body having two or more spherically shaped baffles positioned inside an opening defined in the tubular body would be infringing that claim.
The notion of conception of an invention involves essentially formation of the idea of the improvement that makes the invention patentable. For example, if tubular-bodied catheters with baffles were commonly known prior to filing of the patent containing the claim just cited, then the person or persons who formed the idea of including specifically spherical baffles would be inventors. A new combination of known ideas might also be an invention, so long as the combination is not obvious in view of the existing prior art.
On the other hand, someone who has the idea of creating a new tubular catheter with baffles that are not specified as spherical would not be an inventor. That person would merely have conceived of a catheter whose idea was already known in the art.
Further, someone taking direction from an inventor, or showing particular skill at bringing the invention to practice once it has been conceived (such as by machining the spherical baffles in the catheter with exquisite accuracy), also is not an inventor—no matter how difficult or onerous the task.
Determination of the inventors properly named on a patent or patent application typically involves, therefore, the following steps:
- Individual study of each claim in the patent or patent application.
- Definition of the improvement over prior art that is described by each of the claims.
- Identification of the person or persons who conceived of the improvement described in each claim.
Taking these steps will not necessarily enable the inventors of a patentable device or process to be precisely determined; the complexity of sorting through the facts of each situation may be too great. However, knowing and following the steps makes it more likely that situations where an experienced patent attorney should be sought out for advice and clarification will be apparent.
A Late-Identified Inventor
When there are two or more joint inventors, each inventor, prior to any formal assignment of his or her rights, is an independent owner of an equal right to make, use, or sell an invention without accounting to the other inventors or obtaining their consent.2 A patent application that fails to identify the inventors correctly and, at least initially, to afford each of them ownership rights can result in patent invalidation.
An unidentified inventor who has a verifiable connection to the conception and claims of a patent is known as a rogue inventor. This so-called rogue could be sought out during future litigation by a competitor seeking to avoid a finding of infringement of the patent by having the patent declared invalid.
An inventor is more likely to be left out of a patent application when the medical device company holding a license is not involved in the patent application process than when it is. This can occur when the initial patent application is filed by the physician inventor. Or, a physician acting as a consultant may not be under an obligation to assign rights to the invention owing to the lack of an invention ownership agreement. It is advisable, therefore, that the device manufacturer confirm that the correct inventors are listed on a patent before entering into an exclusive licensing agreement. The manufacturing company should also correctly identify, and obtain assignments from, physician consultants who are inventors of the patent.
If an inventor comes to light who has not been included on the patent or patent application being prosecuted by a medical device company, the company should take steps to add the newly identified inventor to the document and to obtain an assignment or license from that person. Perhaps the company is negotiating a license with an independent physician who is a named inventor. In that case, it should avoid entering into the agreement until the newly identified inventor is added to the application or patent and then made a party to the licensing negotiations.
A rogue inventor may refuse to negotiate or assign rights to the invention. In such an event, other options are available for the medtech company to pursue. If an assignment of rights cannot be obtained from the newly identified inventor, then the value of the patent or patent application should be discounted accordingly in licensing negotiations.
Removing an Inventor from the Patent
Inventor status on a patent is determined on the basis of conception of the invention as claimed. Therefore, if the claims in a pending patent application are able to be amended so as to remove from the application claimed aspects of the invention that were conceived by the rogue inventor, that inventor can be removed from the patent.
The example of the catheter with spherical baffles may be expanded to describe a case in which this approach would be effective. That patent application might also include a second claim dependent on the first, which cites the catheter described in the first claim, "wherein said spherical baffles include a biological-agent coating." That claim 2 would be infringed by any competing catheter that includes the elements of claim 1—a tubular body having two or more spherically shaped baffles positioned inside an opening defined in the tubular body—and the additional element of claim 2—a biological agent coating the spherical baffles.
If the idea of spherical baffles was conceived solely by a first inventor and the idea of coating them with a biological agent was conceived by a second inventor alone, then both the first and second inventors should be listed on the patent application if it includes the dependent claim. But if the second inventor in this example refuses to sign a rights assignment or a licensing agreement, that inventor can be removed from the patent application by canceling the second claim and proceeding only with the first.
The drawback of removing the second inventor is, of course, that specific coverage of the biological-agent coating on the spherical baffles will be lost. That is not of great concern in this sample case, however, because the improvement contributed by the biological coating is only an addition to the broad, core patent concept of spherical baffles. Someone manufacturing, using, or selling a catheter infringing claim 2 would still be infringing claim 1, which would remain in the patent application in any case.
Removing a troublesome inventor might not be possible. The second inventor in the example, who conceived of the coating, might also have contributed to the conception of a core inventive idea, such as the spherical baffles, described in the basic claim. Removal of claim 2 from the hypothetical catheter patent would also remove a fallback opportunity if claim 1 were found to be invalid during later litigation.
Patenting Later Improvements
Excluding or removing a licensing inventor from a patent application can also be advantageous to the licensee company in instances where it has improved upon a device without the assistance of the licensor.
Licensing agreements often contain provisions requiring payment of royalties not only on the invention described in the patent or pending patent application, but also on all future patents and applications on which the licensor is a named inventor and which relate generally to the same subject matter. Where enhancing additions to the invention are developed solely by employees of the licensee company and at the expense of the licensee, these improvements typically are owned by the company and should not require the payment of royalties. Removing the original inventor from the later application, therefore, can provide clarity for the purpose of calculating royalties.
The catheter example can be usefully further modified. Suppose the first inventor is a physician licensing the invention as described in the first claim to the medical device company, while the second inventor is an employee of the device company with an obligation to assign inventions to the company. The company might cancel the dependent second claim in the first patent application and file a second application with a single claim combining elements of the earlier claims 1 and 2. This new application would list only the second, sole inventor of the biological-agent coating. Under the terms of the licensing agreement, and with this revision, royalties for the revenue attributable to the distinctive coating would clearly not be due the first inventor, the independent physician.
The strategy of filing a separate application claiming only the subsequent improvement has pitfalls, however. The lack of a common inventor on the second patent application will preclude a claim of priority relating to the original patent or patent application. This can result in the original patent or patent application, which must be disclosed during prosecution of the second patent application, being cited as prior art in order to reject the second patent application. For instance, if catheters with baffles—though not spherical ones—coated with a biological agent are known in the art, then this art could be used in combination with the original patent or patent application describing spherical baffles to reject the claims to spherical baffles with biological-agent coatings.
In some instances, the original application can be removed from consideration as prior art even when the second application identifies a different inventor. This requires that the first application or patent be assigned to the medical device company at the time of conception of the subject matter of the claims in the second application.3
Help also may be on the way for inventions resulting from a collaboration between two different owning entities. The Cooperative Research and Technology Enhancement Act (CREATE Act) has been passed in 2004 in House and Senate versions that await reconciliation.4,5 If a written agreement among the collaborators exists at the time the inventions are made, and if the inventions are within the scope of the written agreement, then, under the CREATE Act, the joint inventions would be treated as though having a single owner for the purpose of removing prior art.
Another drawback to filing separate applications is that an original physician inventor may become disgruntled at the appearance of gamesmanship. It is therefore advisable that the medical device company clearly state in the licensing agreement that future patentable improvements developed solely by the company will not entitle the licensor to additional royalty payments.
Conclusion
Each inventor of a technology holds rights to the invention independently. Ownership of a patent or patent application, therefore, flows from its inventors. Recognition that the inventors of a patent under application must have conceived of the invention as claimed facilitates detection of inventors who may have been left off the patent or application.
Medtech companies can take steps to secure an assignment from the inventor or to remove a late-identified inventor from a patent by removing the aspects of the invention conceived by the inventor from the patent claims. If a device company correctly identifies those aspects not invented by the licensor and files separate patent applications covering those aspects, it can avoid unnecessary royalty payments on inventions rightfully owned by the company.
References
Gregory J. Carlin is an attorney in the Charlotte, NC, office of the law firm of Alston & Bird LLP (Atlanta).
Illustration by COMSTOCK IMAGES
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