Can you Wait 20-Years to Challenge Inventorship?: In this case, Yes

by Dennis Crouch

Pei-Herng Hor and Ruling Meng v. Ching-Wu "Paul" Chu (Fed. Cir. 2012)

Sometimes I'm surprised that there are not more inventorship disputes. But, the rise in power of HR managers in most corporate settings has helped to lock-down rights through initial employment or consulting contracts. On the other hand, the loose liberalism of the university setting continues to create problems on this front. One element that adds complexity for universities is that, in most cases, universities provide a percentage of any patent-related revenue to the inventors – in this case 50%. For the most part, major US corporations do not use that approach.

This dispute stems from the work of award winning and highly regarded University of Houston Professor Paul Chu. The superconductor innovator (Chu) is listed as the sole inventor of U.S. Patent Nos. 7,056,866 and 7,709,418, but his former assistants (Hor and Ming) argue that they should also be listed as co-inventors. The original applications were filed in 1987 and 1989 and did not issue until 2006 and 2010 respectively. The bulk of the long prosecution was occupied by an interference proceeding in the '418 case that was eventually resolved in Chu's favor. During that time, the original application was also put on hold pending the outcome. The interference was prompted by a former Chu lab assistant who had by then moved to the University of Alabama.

The patents cover a super-conducting material that does not require liquid nitrogen coolant. So far, the patents have netted $680,000 based upon a DuPont option on the patent. UH gave half of that money to Chu who, in turn, distributed about $140,000 to the lab assistants, including Hor, Meng, and the Alabama Elephant. Apparently those few thousand dollars were not enough.

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35 U.S.C. §256 implicitly provides the basis for a federal court action to correct the inventor inventorship. Hor filed his complaint in 2008 and Meng joined the action in 2010. However, the district court dismissed the case as barred by laches since those parties should have known for a long time that they were not named inventors on the patent application.

On appeal, the Federal Circuit has rejected the lower court's decision on laches – holding that the period for laches for a section 256 inventorship action cannot begin to run until the patent-in-question actually issues even if "the omitted inventors knew or should have known prior to patent issuance that their names were omitted."

The lower court also held that the action was barred by equitable estoppel. On appeal, the Federal Circuit also rejected the equitable estoppel claim because it had been raised sua sponte by the lower court and without notice to the parties. On remand, the court will need to more fully develop the law of equitable estoppel as it relates to this dispute – of interest will be whether the court applies Texas law of equitable estoppel or else some federal patent law version of the doctrine.

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The majority decision was written by Judge Prost and joined by Judge Newman. Judge Reyna wrote a concurring opinion that agrees with the statutory interpretation of Section 256 but argues that the statute is poorly drafted. Judge Reyna argues that a better approach would encourage the alleged co-inventors to take action under Section 116 to correct the inventorship during prosecution of the application. The weight of Judge Reyna's argument may well be determined based upon how the lower court rules on the equitable estoppel claim and whether that doctrine serves as a sufficient substitute for laches.

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We have had something of a shift in the culture of inventorship in the 25 years since Chu filed his original application in 1987. Back then, the vast majority of patent applicants listed only one inventor as "the inventor." Today, most new applications at least two inventors. And, in highly-scientific fields such as Dr. Chu's, the number of inventors-per-application is even higher. A key question to be discerned is whether the difference between then and now reflects differences in the process of inventing or rather does it reflect a difference in how we identify inventors. If filing his Reardon metal patent today, perhaps Hank Rearden would have included co-inventors. One element of American ethos is steeped in the idea and ideal of rugged individualism. As President Obama's recent public statements to the contrary are absorbed into our culture, I expect that our notion of inventorship will continue to shift as well.

34 thoughts on “Can you Wait 20-Years to Challenge Inventorship?: In this case, Yes

  1. anon, I am not suggesting that you and I see everything the same way, but our conversations have born fruit in that each of us understands the issues a lot better because of our discussions.

  2. You really are apologizing for your continued posting in non-substantive (badly missing) shooting of arrows while a substantive matter awaits your attention and energy?

    Here’s a suggestion: stop trying so hard to be a smart-@$$ (you are missing the smart anyway) and put your efforts into substantive reasoning. Yes, it does take more effort, but everyone will be better off for it.

    That said, I am glad that you are still working on your answer. I look forward to it.

  3. Oh, I’m sorry – I didn’t realize it was a timed exam. I’m still working on my answer.

    It’s a positively lovely essay, though.

  4. And the Professor didn’t even thank you.

    Not so sure Leopold, the good Professor may not have seen or contemplated the gift, so I am not jumping to that conclusion (his being rude).

    On the other hand, I notice your quiver is empty and you have no arrows yourself for this essay. To me, that is a bit rude, as you are usually so quick to shoot comments at my posts. I have to wonder, why your silence on something of substantive merit? Is being disagreeable the only time you feel compelled to post?

  5. Ned,

    If by “Our discussions on this,” you mean my<>/b> posts with content, I would say that my content has been rock steady.

    If by “have born fruit,” you mean that my content has been grasped and understood by the usual pundits that visit these threads, well, that remains to be seen.

    I think you and I can easily see some of the glaring problems that my essay exam gift to the Professor puts a spotlight on. But if you noticed, there were no real takers to any of the issues in that essay question. None (a usual glib and meaningless comment from MM counts for the usual nothing).

    My question is rich with many of the key problems that we will be facing, and sets a fact pattern that those issues can be (as clearly as possible) discussed. Yet all I have for the class of intelligentsia are grades of Incomplete.

  6. Re: Texas law of equitable estoppel does not seem to fit:

    [T]he doctrine of equitable estoppel requires:
    (1) a false representation or concealment of material facts;
    (2) made with knowledge, actual or constructive, of those facts;
    (3) with the intention that it should be acted on;
    (4) to a party without knowledge or means of obtaining knowledge of the facts;
    (5) who detrimentally relies on the representations.”)
    Trammell Crow Co. No. 60 v. Harkinson, 944 S.W.2d 631, 636 (Tex. 1997)

  7. The AIA imposes a 1 year time limit on derivation proceedings, but no time limit on 256 actions. The latter is completely independent of whether there is a patent or not.

    I can see grounds for both derivation and for a 256 action in the future regarding the same issued patent in the same omitted inventor. I think it would be odd that the derivation proceeding might be barred, while the 256 action is not.

  8. Indeed. But that’s one area where I can sympathize with him, at least when I’m feeling more curmudgeonly than normal.

  9. Does Dr. Loudmouth have a Dallas Cowboys Cheerleaders calendar on his wall? I think I might have worked in the same building with him back in grad school.

  10. Yeah, but don’t use this ill begotten word in front of Justice Scalia – he has publicly humiliated at least two lawyers for using it. It does show up in legal literature, but it’s an improper backformation from “inchoate.” The “in” in “inchoate” is not actually a negative prefix, as it is in words like “indistinguishable” or “incomplete.” See Bryan Garner, “A Dictionary of Modern Legal Usage.”

  11. If you own a business, you didn’t build it.

    If you’re on a patent, you didn’t invent it.

    [Sarcasm].

  12. btw:

    Definition for choate:
    “Choate”, as used in American law, means “completed or perfected in and of itself,” or “perfected, complete, or…

    en.wikipedia.org/wiki/Choate_(law)

  13. UH gave half of that money to Chu who, in turn, distributed about $140,000 to the lab assistants, including Hor, Meng, and the Alabama Elephant. Apparently those few thousand dollars were not enough.

    So Chu received $340,000 before taxes, probably about $210,000 after taxes, and voluntarily distributed $140,000 to his assistants? Wow. What would Ayn Rand say?

  14. In honor of Prof. Crouch, let’s explore a hypothetical.

    Client A approaches you and asks for your advice. They detest the patent system and feel that it is an abomination, but they are also realists and want some protection for their intellectual property. They have decided to go the Trade Secret route, and have put what any court would consider to be adequate controls in place. They employ a person Dr. F who invents Process X to make Product N. Assignment and work product protections are in place so that Client A does in fact own the invention.

    Client A makes a “qualifying public use” of both Process X and Product N (innovative product made by Process X and for which patent protection is not sought) on date D. They still maintain Trade Secret on the process (in the instant case, Process X cannot be reverse engineered by any currently known method). Knowing that they wish to keep this a trade secret, and mindful of the power of Prior User rights under the AIA, Client A documents all these things very well.

    Unbeknownst to Client A, Dr. F maintains a home office and has critical information there “so that he can continue to work on projects on the weekends.” Dr. F’s brother-in-law, Mr. G, often visits and sometimes snoops into Dr. F’s office. Mr. G. sees critical information related to Process X and decides to file a patent application naming himself as the inventor. Prior to writing the application, he approaches Client A’s competitor, Mega Corp C, and for a hefty bounty assigns the to-be-written application to the competitor. One week prior to the year anniversary of date D, Mega Corp C publishes a story on its website of “its” greatest invention, Process Xx, a trivially obvious variation of Process X. The obviousness is two-way, that is, knowing Xx, coming up with X is trivial. Mega Corp C does not file until two months later. Two days later, independent inventor Dr. Hermit, who does not own a computer, independently invents Process X and files a patent application the same day. In that application, a claim is also made to Process Xy, wherein the “y,” a critical element, was invented by Dr. Hermit’s single friend, Dr. Loudmouth working with Dr. Hermit. On the day of the filing, Dr. Loudmouth publishes the entire application in the New York Times. Dr. Loudmouth is not named as an inventor on Dr. Hermit’s application.

    Alarmed by what he reads in the Times, Dr. F and Client A discuss and ask you if they should file their own patent application on Process X on the day before the anniversary date D, but they want to leave out the best mode of the Process X in order to maintain some semblance of Trade Secret.

    Discuss all pertinent issues and indicate how the passage of the America Invents Act impacts the situation. What happens if all of the activities of Mr. G, Mega Corp C and Drs. Hermit and Loudmouth all happen one month later?

  15. Dennis, if you’re going to invoke the cult of Ayn Rand, you probably ought to spell “Rearden” correctly.

    I just read that book again, by the way. A very strange mixture of “compelling” and “sucky,” in my view, but they probably won’t be asking me to provide a blurb for the 60th anniversary edition.

  16. The patents cover a super-conducting material that does not require liquid nitrogen coolant.

    I think you mean a superconductor that can be used with liquid nitrogen coolant. Previous superconductors had to be much colder, and required liquid hydrogen or helium coolant, which are more expensive and harder to work with. Plus, we’re running out of helium.

  17. The increasing number of inventors being listed may be a better reflection of the reality of invention and scientific discovery. These efforts are far more likely the result of a collaboration and NOT the result of any particular individual. There are some recent articles on this very topic in Scientific American magazine exploring this topic. The fact that we are far more able to collaborate on scientific advances than in the past contributes to not only are ability to provide more innovation, but also necessarily leads to more people contributing to any particular invention. The Noble prize folks have a similar problem with their arcane approach that only recognizes one or two people for any particular contribution, when in fact, these discoveries are the result of teams of people.

  18. The 11/8/84? amendment of 35 USC 116 allowed patent applications and valid patents in which a named joint inventor did not have to have contributes to all claims. E.g., even if a named inventor only contibuted to a dependent claim. Hence, more such applications listing more joint inventors subsequently as patent attorneys began relying on that change.

    Also, publicity for lawsuits over the years of college professors or engineering managers risking patent invalidity for the patent owner [not just royalty sharing disputes] by leaving off grad students or employees as proper joint inventors may have gotten more attention to correct inventorship?

    The AIA has made correcting inventorship somewhat safer by eliminating one more issue. [But it does not cure the noted problems of universities with sloppy or inadequate employment agreements and/or excessive financial incentives for alleged joint inventors to litigate inventorship disputes.]

  19. I also see an equitable argument (for the unnamed inventors) who may not be represented by the counsel prosecuting the application. If they speak up too soon (and do not have means to pursue an invention on their own), they run the risk of being edited out of the application and might be left holding nothing but an inchoate idea.

    Since such inventors had no input in writing the law that allows them to wait and see if something actionable is first obtained (the inchoate right turning into a choate right), I would posit that equity cannot force them to act prematurely and risk losing the very thing that is being sought. I do not think the fact pattern here – with the long wait due to an exceptional event like an interference – should change the law as Congress has decided to right it. The propensity of bad facts making bad law is only heightened with an activist court stepping into a legislative mode. My earlier lamentations against the AIA and its (over-hyped) dependence on derivation proceedings notwithstanding, the larger picture should be kept in mind (for an example of a hypothetical situation which might prove the point, let’s say Dr. Chu (or the University of Houston, as applicable) had decided to proceed with an application under a non-publication request. It might be very likely that the non-signed co-inventors would be entirely unaware of their possible rights until after a patent has been obtained and made public.

  20. This article made some excellent points on the culture of inventorship. It wasn’t previously an issue I had considered much but this article gave lots of food for thought. Thanks for posting!

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