Abbott Loses Patent Rights Due to Gap in Consultant Contract

Abbott Point of Care v. Epocal (Fed. Cir. 2012)

Abbott and Epocal both sell products used for point-of-care testing of blood samples. In 2009, Abbott sued Epocal in the Northern District of Alabama alleging infringement of its U.S. Patent Nos. 6,845,327 and 6,896,778 and asking the court to determine the legal title holder of the patents.

The patents list Dr. Lauks as the inventor and were filed in 2001 shortly after Lauks founded Epocal. The USPTO assignment database include a 2003 assignment from Lauks to Epocal and another assignment filed in 2009 shows the invention was assigned from Lauks to Abbott's predecessor company (i-STAT) vis-à-vis a 1984 employment contract. (Lauks himself did not sign another assignment). These assignments foreshadow the dispute: both Abbott and Epocal claim title to the patents.

It turns out that Lauks was an i-STAT employee in the 1980's and up through 1999 (apparently in New Jersey). He resigned in 1999 but took a position from 1999-2001 as a consultant to i-STAT. His employment agreement included a statement that he "hereby assign[s]" to i-STAT all rights to any invention that he "may make or conceive during [his] employment by … or which relate to any present or prospective activities of Integrated Ionics."

In reading this provision, the Federal Circuit first determined that the assignment clause ended in 1999 when Lauks resigned and the new consulting agreement signed by Lauks did not require that IP rights be transferred. And, in fact, the consulting contract included a provision that Lauks could also work on his own behalf. The Federal Circuit found such a clause to be in conflict with an automatic assignment. The court then concluded that – absent an agreement with i-STAT to assign his rights – Lauks was under no obligation to assign his patent rights to the company.

Because the 1999 Consultation Agreement is silent with respect to any assignment of Lauks' rights in inventions, improvements, or discoveries made or conceived during the consultation period, Lauks had no obligation to assign inventions from the consulting period to i-STAT. Thus, as the district court correctly concluded, the contract does not convey all substantial interest in the '328 or '772 patents.

These holdings were stated as being based upon New Jersey law (apparently the site of the contract). However, the court did not cite to New Jersey statute or precedent that would lead to these conclusions.

The appellate panel did look to New Jersey precedent in affirming the district court's refusal to allow Abbott additional discovery regarding the circumstances of the consulting contract. The court found the contract's plain language clear and unambiguous and that additional extrinsic evidence could not change that determination.

Chief Judge Rader penned the majority opinion, which was signed by Judge Lourie. Judge Bryson filed a dissent.

In dissent, Judge Bryson identified some ambiguity in the 1999 consulting contract as to whether the assignment provisions in the prior employment agreements were incorporated by reference. Based upon that ambiguity, Judge Bryson would have allowed Abbott additional rights of pre-judgment discovery.

The case did not address whether Abbott may have "shop rights" to practice the invention.

16 thoughts on “Abbott Loses Patent Rights Due to Gap in Consultant Contract

  1. Further,

    Even your stance of “The modification should be narrowly construed as well” fails in the present instance.

    The narrowest construction would still mean that the newly added phrase must change the meaning of the initial phrase under consideration. Else, why add it?

    The only way to arrive at the minority view is to completely ignore the newly added phrase. If one chooses to completely ignore a newly added portion of a contract, then the question of “why would the parties have added that new portion?” is begged.

    No. Here the minority view cannot logically prevail. It’s a dog of an argument.

  2. But, don’t you find it interesting that different judges reading the same contract in “context” interpret it differently?

    Not at all.

    That’s like saying every split decision automatically means the subject of the split decision has to be ambiguous.

    That ignores the fact that judges oft rule by their own agendas.

    That ignores the fact that reasonable people can reasonably see things differently without there being ambiguity.

    To so easily cry out “ambiguity” would snarl most matters in a legal SNAFU as to make justice unapproachable.

  3. Respect for The Rule of Law is the key. In today’s world of t8rr0rist acts that’s more tham ever important. Dressing the judge up so that it is the robe rather than the real individual person that sentences you to a lifelong loss of liberty strikes me as a reasonable approach. BTW, that author of The Satanic Verses, Rushdie, the one the subject of the Fatwa, is he still with us or has he been assassinated by now. And only this week a state prosecutor was shot dead by the accused, in a court near Munich.

    Anyway, in English patent cases, the judges don’t wear wigs (even if the barristers want to keep them).

  4. But, don’t you find it interesting that different judges reading the same contract in “context” interpret it differently?

    Now, just how can the same incorporation language not result in the same clauses being incorporated both times?

    The added clause can vary the terms, but only to the extent of the subject matter they actually cover. The modification should be narrowly construed as well.

    That is my view.

  5. That’s another thing Doogie Houser said never mind the Doogie how much for the Window? Now why would someone say that? Were they trying to infer I was aware of what was going on behind my back? Where is the DOJ?

  6. This is really scary. The letters I got from the Tennessee lottery. made me send them all kinds of proof. my license, My Military Card, My Social Security Card. MORE THAT ONCE THEY MADE ME SEND STUFF!!!!!!!!!!! I WAS BEING SET UP. SO SOMEONE ELSE COULD CLAIM THEY WERE ME!
    AND WHEN I CALLED THE LOTTERY A BLACK MAN SAID.. OH OH HERE IT IS RIGHT ON MY DESK. I’LL SEND IT RIGHT OFF. AND THAT SI WHEN ROBIN TORE IT OFF THE ENVELOPE AND MY SIGNATURE AND NAME WERE NOW ON BOTH SIDES. SOMEONE WENT TO THE USPTO AND PRETENDED THEY WERE ME! OR SOMEWHERE. THIS IS SICK! WHERE IS THE DOJ?

  7. Ambiguous? Why would you jump to that conclusion?

    Pay attention to what I did say. You attempted to use the logic that the same clause must have the same meaning.

    I pointed out that the contract as a whole did not have the same meaning because there was a specific section added.

    Clearly, the intent cannot be the same because of the added clause – regardless of the old clause being carried forward. The new clause must change the parties’ intent.

  8. You are suffering from farsightedness Ned.

    You cannot operate in a vacuum – even looking at the same clause, since the contract – as a whole – includes new and other directing statements. If, as you would have it, the parties intended the same meaning from the earlier contracts, then the new language would not have been added.

  9. I find myself in agreement with the dissent here. The 1984 invention assignment agreement was incorporated twice using virtually the identical incorporation language, first into a 1992 employment agreement and then into the 1999 consulting agreement. The dissent maintains that clauses incorporated from the 1984 agreement should be construed to be the same because the language used to incorporate the 1984 agreement in both was the same. Both parties agree that the 1992 agreement incorporated the invention assignment clauses. One should expect therefore that the parties intended that the same clauses be incorporated in 1999 consultancy agreement.

  10. I’ve seen many company’s use flimsy “consultant” agreements only to encounter messy problems down the line. Details matter and are too often ignored.

  11. Man I just saw a picture of modern judges from the UK.

    link to filibustercartoons.com

    LOL. How on earth people would respect people wearing that nonsense telling them to put someone in jail is a complete mystery. It says in the wiki that they just abolished the wigs in some of the courts, but some persist. Ridiculous.

    I can only imagine the millions of pounds or euros spent in time from attorneys teaching their young clients not to continually lol @ the judge in their little circus.

  12. shop rights. lol.

    Also, I note, thumbs up for this guy. Just goes to show, consulting gigs are good if you can get em.

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