Patent Lawyer Blog

In Mayo v. Prometheus, the U.S. Supreme Court held that claims directed to a diagnostic method were unpatentable, not simply because the subject matter of the claims was not novel or obvious, but rather because the subject matter covered by the claims was the mere application of the laws of nature - the discovery of facts of nature - and therefore not patentable on a more fundamental basis under Section 101 of the Patent Act.

Defendant American Master Lease LLC ("AML") appealed the decision of Judge Guilford of the Central District of California holding that all claims of U.S. Patent No. 6, 292,788 were invalid for failing to meet the subject matter eligibility requirements of Section 101 of the Patent Statute. The Federal Circuit (in a panel consisting of Circuit Judges Prost, Schall and Moore) affirmed the invalidity of the claims based on the district court's pre-In re Bilski application of the machine or transformation test.

The claims at issue relate to an investment tool to enable property owners to buy and sell property without incurring tax liability pursuant to 26 U.S.C. § 1031 ("1031 Exchange"). All claims in the '788 patent are method claims, with claim 1 being representative:

1. A method of creating a real estate investment instrument adapted for performing tax-deferred exchanges comprising:

aggregating real property to form a real estate portfolio;

encumbering the property in the real estate portfolio with a master agreement; and

creating a plurality of deedshares by dividing title in the real estate portfolio into a plurality of tenant-in-common deeds of at least one predetermined denomination, each of the plurality of deedshares subject to a provision in the master agreement for reaggregating the plurality of tenant-in-common deeds after a specified interval.

In a patent case filed in the Eastern District of Wisconsin by Illinois Tool Works ("ITW") against Elektromanufaktur Zangenstein Hanauer GmbH & Co. KGaA ("EMZ"), EMZ moved to dismiss for failure to state a claim under Rule 12(b)(6) as well as for lack of personal jurisdiction under Rule 12(b)(2). EMZ alternatively moved for a more definite statement under Rule 12(e).

EMZ's motion to dismiss for failure to state a claim rested on its assertion that ITW's failure to identify an accused product in the complaint rendered ITW's infringement claims ambiguous and conclusory. Specifically, EMZ argued that "the complaint's reference to unspecified and generically-labeled 'latching mechanisms' as the allegedly infringing product is not sufficient to provide EMZ fair or adequate notice as to what ITW's claim of infringement is and the grounds upon which it rests." In response, ITW argued that the complaint was sufficient because it alleged that the infringing products "are latching mechanisms for washing machines sold to manufacturers, such as Whirlpool, that EMZ knew were bound for the United States."

In a much anticipated decision, the United States Supreme Court confirmed that, absent a valid assignment agreement, inventors own their invention -- even if federal funding was used to support the research efforts. The decision in Leland Stanford Junior Univeristy v. Roche Molecular Systems, Inc. held that under the Patent Act an inventors owns his or her invention in the first instance and only a valid and binding assignment agreement is effective to transfer ownership from the inventor.

The decision let stand the Federal Circuit's ruling that Stanford University did not obtain the patent rights from one of its research scientists when it used an assignment agreement stating that the research scientist "agrees to assign" all of his future inventions. Rather, Roche obtained the rights in a subsequent agreement because it used the language "do hereby assign." The Federal Circuit has now held on a number of occasions that the language "agree to assign" is a mere promise to assign in the future and requires a subsequent act, while the language "do hereby assign" is effective immediately upon the creation of the future invention without any additional act on the part of the assignee.

The Supreme Court held that the Bayh-Dole act for funding did not change this result as it did not contain any language to trump the Patent Act, which makes clear that an inventor owns the invention unless there is a valid assignment to the contrary. The Supreme Court noted that the Federal Circuit's decision on the distinction between "agree to assign" and "do hereby assign" was not before it as Stanford University did not file its cert petition on that basis. Accordingly, the Supreme Court did not address this issue and let stand the Federal Circuit's decision, although it did leave open the possibility of addressing this issue in the future.

As a result, the Federal Circuit's decision on "agree to assign" stands and companies should immediately review their assignment agreements to determine if they have used the "agree to assign" language. If the "agree to assign" language was used in the past it should be changed immediately to the more favored "do hereby assign" and action should be taken immediately to remedy the problems that may have been created from the "agree to assign" language. Otherwise, the company may lose inventions that it believed it owned.

Please click on the link for a more detailed discussion of the Roche case.

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The authors of www.PatentLawyerBlog.com are patent litigation lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.

The United States Supreme Court affirmed the use of the clear and convincing evidence standard for challenges to the validity of patents last week in a closely watched and eagerly anticipated case, i4i v. Microsoft. The Supreme Court's opinion re-affirmed decades of case law that the standard to challenge the validity of a patent is clear and convincing evidence rather than the preponderance of the evidence standard urged by Microsoft.

The patent held by i4i claimed an improved method for editing computer documents. The patent was asserted against Microsoft Word and Microsoft countered that the patents were invalid and challenged the standard for determining the validity of a patent, arguing that it should be by a preponderance of the evidence rather than the existing clear and convincing standard currently used in patent cases.