Transfer of Ownership Requires a Written Assignment

Addressing the issue of patent ownership based on contractual assignments, the United States Court of Appeals for the Federal Circuit affirmed the district court’s decision dismissing patent ownership claims where a consulting agreement contained no express assignment language requiring defendant to assign the patents-in-suit to plaintiffs.Abbott Point of Care, Inc. v. Epocal, Inc., Case No. 11-1024 (Fed. Cir., Jan. 12, 2012) (Rader, C.J.)

Defendant-appellee Epocal was founded by Dr. Imants Lauks (Lauks), who was previously an employee of a predecessor company of plaintiff-appellant Abbott, with whom he signed three contracts (two employment agreements and one consulting agreement).Both Epocal and Abbott claim to own the patents-in-suit, which cover systems for testing blood samples.Epocal is the assignee of both patents.Lauks’ 1984 employment agreement contained language assigning all inventions to Abbott’s predecessor company (Integrated Ionics), but his 1999 consulting agreement, although it stated that the 1984 agreement remained in effect for work done while Lauks was an employee, was “silent” as to assignments of any inventions.Lauks filed applications for these two patents in 2001, after which Abbott sued Epocal and claimed ownership of the patents pursuant to the 1984 agreement.Epocal claimed ownership pursuant to the 1999 consulting agreement.After the district court granted Epocal’s motion to dismiss, Abbott appealed.

After noting that the Court reviews decisions on standing and contracts without deference, the Federal Circuit noted that Abbott had the burden of showing ownership and concluded that under New Jersey law, where the contract was apparently signed, the 1984 employment agreement ceased upon the execution of 1999 consulting agreement.The 1999 consulting agreement expressly stated that Lauks resigned from his position and the 1999 consulting agreement then refers to Lauks as a “Senior Consultant,” i.e., no longer an employee.The Court found that the 1999 consultant agreement did not specify that the entire 1984 employment agreement remained in effect, but only the confidentiality provisions.The 1999 consulting agreement was silent as to any assignment of inventions, but “recognized and allowed Lauks to pursue other, non-conflicting interests.”The Court thus found that there was an express recognition that Lauks’ agreement in the 1984 employment agreement to assign his inventions had ceased. The Court rejected the contention that Lauks had a duty to continue to assign his inventions to Abbott, finding that proposed interpretation to be in conflict with the express language of the 1999 consulting agreement.The Court thus held that Epocal was the owner of the patents-in-suit and affirmed the district court’s dismissal of Abbott’s infringement claim.

Practice Note: Companies should carefully examine patent assignment obligations of their employees or consultants and, in connection with corporate changes, examine whether prior assignment agreements will impose continuing assignment obligations after the employee or consultant has ceased employment with the company.