By Dennis Crouch
StoneEagle Services v. Gillman and Nextpay (Fed. Cir. 2014)
This case offers an important reminder that patent ownership is largely a matter of local law – be it state or foreign-national. The result is that disputes over ownership (as opposed to inventorship) do not raise a federal cause of action. Here, the DJ plaintiff also pled inventorship (normally a federal claim under 35 U.S.C. §256), but that claim failed to keep the case in Federal Court because there was no actual dispute over inventorship. From an academic standpoint, the case is also interesting based upon the Federal Circuit’s conclusion that a claim of “authorship” is nothing like a claim of “inventorship.”
Partnership with Joint Ownership: Several years ago, David Gillman collaborated with Bobby Allen (StoneEagle’s CEO at right) on a project to convert StoneEagle’s automotive industry electronic payment system into one that would also work to process health care claims. The subsequent patent application named only Allen. U.S. Patent No. 7,792,686. According to the documents, Gillman has never claimed to be a co-inventor of the ‘686 patent. However, based upon the collaboration agreement, Gillman was a 50% owner of the patent application. Gillman did eventually assign his rights in the application to StoneEagle.
The dispute arose when Gillman later declared at a meeting that he held ownership rights and that the patent documents were on his PC. According to the complaint “Gillman suddenly and falsely claimed that it is his patent, that he wrote the patent, that it is on his computer, and that he ‘authored’ or ‘wrote’ it, or words to that effect.’ Gillman allegedly threw down his business cards and left the meeting.”
StoneEagle then sued for declaratory judgment that it was sole owner and that Allen was the sole inventor. In addition, the lawsuit alleged a variety of state law trade secret and contract claims. The district court issued a preliminary injunction against Gillman on the trade-secret and contract claims that gave Gillman the immediate right to appeal.
The declaratory judgment act provides that
In a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration . . .
28 U.S.C. §2201. The Supreme Court broadly interprets the DJ act has extending to the constitutional limits of Article III jurisdiction. Thus, “the facts alleged, under all the circumstances, [must] show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” MedImmune. Here, Gillman’s attorney basically admitted that an actual case-or-controversy exists between the parties, but that controversy is over a state-law-claim of ownership and the DJ statute requires a case-or-controversy over an issue “within [the federal court’s] jurisdiction.”
In reading StoneEagle’s complaint here, the Federal Circuit found that the pleading lacks sufficient allegations of a controversy concerning inventorship.
[J]urisdiction in this case turns on whether StoneEagle’s complaint alleges a sufficient controversy concerning inventorship. It does not. . . . As StoneEagle’s only factual allegations concerning inventorship are that Gillman authored the patent application, the complaint, viewed in its totality, has not alleged a controversy over inventorship that satisfies Article III.
On remand the case will be dismissed and perhaps re-filed in Texas state court.
= = = =
The case has some interesting discussion of the role of patent attorneys in this process. Here, Gillman (a non patent-law professional) had drafted the patent application at issue. At oral arguments, Judge Rader noted that, although only certain folks are allowed to actually file a patent application with the USPTO, “anyone can help write it.” The decision then goes into some detail on how a patent drafter should not be considered an inventor:
In this case, the most favorable inference from the record in favor of StoneEagle shows only that Gillman assisted in constructively reducing an invention to practice. See Solvay S.A. v. Honeywell Int’l, Inc., 622 F.3d 1367, 1376 (Fed. Cir. 2010). Those activities confer no more rights of inventorship than activities in furtherance of an actual reduction to practice. Otherwise, patent attorneys and patent agents would be co-inventors on nearly every patent. Of course, this proposition cannot be correct.
No inventing happens by scriveners who merely write down the invention.
= = = =
In part, this decision turns on the Federal Circuit’s knowledge that copyright law is very different from patent law, although both arise from the same Constitutional provision, “authors” get copyright and “inventors” get patent. Although the court understands this distinction quite well, most people do not. On at least a weekly basis, I talk with incredibly intelligent people who get confused over the differences and their importance. [Note here – Monday’s Supreme Court oral arguments]. It looks like the DJ plaintiff could have done a much better job of providing evidence alerting the court to this real-world fact that people are confused on this topic and that Gillman’s claim of authorship was reasonably understood by folks in the room as a claim of inventorship.
There is no assignment from Gillman of record in the PTO.
link to assignments.uspto.gov
I am still puzzled as to just how Gillman and Allen could have thought that Gillman owned 50% of the 2006 application such that it required Gillman to assign his “interest” in the patent application to StoneEagle. By statute, Allen was the sole owner on filing. On filing, he assigned to StoneEagle. Gillman never had an interest in the application unless that interest was assigned to him by StoneEagle. The facts do not allege such.
I am thinking here that the Federal Circuit is once again equating equitable assignments and legal assignments. That is what makes their jurisprudence in this area of the law so plainly horrific, as noted by the Supreme Court in Stanford v. Roche.
This is not to say that attorneys making arguments to the court are not equally at fault for not keeping the two doctrines distinct.
Of course, Ned, you are aware that the assignments in the USPTO are voluntarily submitted…
So, you presuppose an assignment from StoneEagle to Gillman?
No Ned, I simply presumed that the statement in the case itself was accurate:
“On July 15, 2010, Gillman appears to have assigned his interest to StoneEagle. Id. at 74.” See page 3.
What was that you were jabberwockying about the other day? Poor legal support for positions?
Did you read the case?
anon, but the problem is, he had no interest except an equitable interest. He, in point of fact, OWNED nothing.
The fact that the Federal Circuit continues to get the basic law wrong is what so aggravates.
The problem is Ned that you are ignorant of all the facts and are simply making things up as you go along.
We do not have the contract between the two gentlemen in front of us. That contract can very well have spelled out the 50% ownership assignment from the inventor to the attorney.
anon, you might be right. But what appears to have happened is that the contract were entered into before the JV began. In such a case, Gillman had no interest other than an equitable interest. He owned nothing.
Again, Ned you have no clue.
The facts to determine the complete picture simply are not here and speculation is simply too meaningless to engage in.
And, anon, do not forget that it was Rader who brought us BMC resources in the first place. He was so far off base in that case as to be on a different planet from the law. He Never cited any authority for his holding, other that that article written by none other than Lemley.
Not understanding the basics of the law is a pattern that surrounds cases decided by the one and only. We get crazy, unfounded opinions that cause havoc. Just think of that recent opinion of his regarding “inherent anticipation by a reference” where the testimony of an expert about what one of ordinary skill in the art would know what the reference teaches without reference to timeframe is absurd. Utterly absurd, and Lourie said so in dissenting against a denial of rehearing en banc.
We know Rader got slammed in Prometheus. He is going to get reamed once again in Alice. His opinion in Akamai is remarkably bad. And the beat goes on.
Rich was competent, but he had an agenda. The One and Only is just plain incompetent.
You are going off into the weeds Ned. You may find it helpful to concentrate on one case at a time.
After the immediate one here, may I recommend that you revisit Nazomi?
How did Rader do in In re Bilski?
And do remember (if you can) that he used what the Supreme Court gave him to use. Let’s not have you go off into the weeds again and not remember to hold the correct Court responsible for the 101 morass.
Rader on Bilski?
Well, he got Kennedy and crew to adopt his view that the business method claimed was notoriously old. His opinion and that of Rader’s sounded in prior art.
But he gave no reasons why the Bilski claim abstract, and the Supreme Court did not either. Rader’s incompetence on display. His opinion lead to one of the worst Supreme Court opinion in history.
Nazomi, Nazomi.
Where art thou, Nazomi?
“ that the business method claimed was notoriously old”
LOL – there you go into the weeds again…
How was that medical method In Prometheus? You firing up your Crusade to eliminate all medical methods as well?
“His opinion lead to one of the worst Supreme Court opinion in history.”
Let’s take a little closer look at two of the other critically panned Supreme Court patent opinions of Benson and Flook (both limited by the succeeding decision of Diehr as confirmed in Bilski.
Benson: “We do not so hold”
Flook“: “Neither the dearth of precedent nor this decision should therefore be interpreted as reflecting a judgment that patent protection of certain novel and useful computer programs will not promote the progress of science and the useful arts, or that such protection is undesirable as a matter of policy.”
It appears that like Benson, Ned has been less than candid in his portrayal of Flook.
We see that Ned does not have the law, so he cannot pound the law.
We see that Ned does not have the facts, so he cannot pound the facts.
And upon closer inspection, we see that Ned does not even have policy to pound.
According to StoneEagle’s appellate brief, it seems that Allen has not admitted that Gillman was ever a co-owner. The assignment discussed in the case is characterized by SotneEagle as follows: “By agreement dated July 15, 2010, Defendants waived all right, title, and interest in StoneEagle’s subsequently-issued patent. (JA 832-34.)”
Dennis, thanks for the clarification. This makes sense. What Rader said about the facts in the case then was nigh on completely misleading. I wonder, though, given his general level of competence, whether he even knew why what he said was inaccurate.
“What Rader said about the facts in the case then was nigh on completely misleading.”
Ned – your bias is leading you again. It appears that only you were so ‘misled.’ For all of your smoke-puffing about “only reasonable” I immediately showed you that other far more reasonable circumstances could easily be at play.
You suffer only to lessen your credibility with such exhibits of bias.
I thought inventorship was determined by a person’s contribution to the claimed invention.
Did Gillman point to any claims covering what he invented?
Did anyone talk about the claims?
No one, I think the problem here was that Gillman was claiming not to be an inventor on appeal in order to get out of the district court case. Just based on the facts, had he really contended he was inventor, he may have prevailed and may even have been adjudged the sole inventor.
The reason I say this is that the inventor is the one who puts meat on the bare bones of an idea. Gillman probably is the one who did that in this case because it is he who drafted the patent application and it is he who probably came up with the flow charts and/or other descriptions of the “software.” Whether or not the real software preceded the application or whether it followed would be another factor.
“he may have prevailed and may even have been adjudged the sole inventor”
Ned’s incredible X-ray vision (or what ever you call the vision that lets you see into the mythical Ned-IMHO alternate reality).
Dennis, you really should post on this case
BRAIN LIFE, LLC v. ELEKTA INC.
link to cafc.uscourts.gov
I guarantee you that 99% of patent attorneys have never even heard of Kessler v. Eldred, 206 U.S. 285 (1907).
link to patlit.blogspot.de
As you see, Ned, the PatLit blog is already on to it.
That’s a good blog.
Thanks for the link MaxDrei.
I will bet you that 99% of patent attorneys HAVE heard of the Nazomi case.
How many of that 99% still want to hide behind a wall of ignorance?
anon, re: Nazomi, I have admitted that I do not understand the facts. To me, what the hardware in the sold devices was, how the SDK toolkit related to it, etc., was not well enough described by the opinion for me to understand where hardware ended and software began.
I, of course, stand willing to discuss Nazomi with you and have repeatedly stated my willingness to do so. Just give us the facts, the issue and the holding first.
Ned,
Yes you keep on admitting ignorance.
You are missing the point.
I want you to take the time to get over your ignorance. Go. Understand the case. THEN come back and we can discuss it.
Of what use would it be to discuss the case when you profess that you do not even understand it? Since you don’t understand it, what chance is there that you can move forward at all?
Ask yourself is the item that you are stuck on – where hardware ends and where software begins the crux of your problem? I even volunteered a fact you could use as a crutch, a fact that you never want to admit, but is a fact nevertheless: software is equivalent to firmware and is equivalent to hardware.
You are only willing to maintain your ignorance of the Nazomi case because admitting the facts of the case – and your understanding of those facts would be like Malcolm admitting that he knows and understands the controlling law of the exceptions to the judicial doctrine of the written matter doctrine.
Be honest Ned.
And it is extremely humorous to note that the faux-concern of 6 and his projections of ‘control’ are actually the opposite of what I seek. I seek an intellectually honest discussion of the facts and law – truth, as it were.
And the Truth will set you free.
You might need a different book to understand that 6. I welcome you to expand your mind and embrace the truth.
Software is authored……
Blueprints are “authored”
Blueprints are not patentable
Software is patentable.
Math is not copyrightable.
The talking bird is an article of manufacture, of course. Every time you train it anew, you make a new bird.
Do you have that ‘functional’ tie that the exceptions to the printed matter doctrine provides with your talking bird Ned?
Are you really trying to say that ‘oldbox’ somehow magically and in apparent violation of Morse somehow contains all future inventions?
When you want to approach this topic in a serious and honest manner, let me know.
We also say the person who figures out how to take an idea and reduce it to practice is THE inventor. Conception is of the invention, not of the idea.
Ned,
Tell me about constructive reduction to practice…
Ned,
Tell me about the requirement for a working model to be filed with an application… (that’s right there is not one, and has not been one for, um, how many years, Ned?)
Yes, Martin, but that does not deny the patent effect. Did not your attorney explain this to you?
I don’t know how my Atty. feels about software patents in general. I know how she feels about one in particular…
What kind of counsel do you have that has not explained the law to you – regardless of how you feel about this one in particular? How can she have informed consent from you as to how to proceed when you are so uninformed about the law?
Your admissions here should cause here to have some serious ethical dilemmas of her own.
I wonder if Prof. Hricik has a take on any possible ethical issues due to the contract agreement between Bobby Allen and attorney David Gillman.
The background facts seem a little sparse (I do not know the extent of Gillman’s role). There seems to be the role of marketer for Gillman. A different law firm is shown in the prosecution file wrapper, so Gillman’s “help with responses” is a bit nebulous. Was there a client-attorney relationship? or was this strictly an example of a business deal falling apart that just happened to have one of the business partners be an attorney?
I don’t think Gillman is a lawyer. He isn’t registered anyway. But of course, registration is of small import since it doesn’t take much to be a “scrivener” who does nothing more than “write down” the invention.
“It looks like the DJ plaintiff could have done a much better job of providing evidence alerting the court to this real-world fact that people are confused on this topic and that Gillman’s claim of authorship was reasonably understood by folks in the room as a claim of inventorship.”
I do not think that the CAFC would have or should have been swayed by such better evidence. That in effect is saying that the Constitutional requirement for an actual case or controversy can be met when there is no actual case or controversy but only purported legal ignorance, and I don’t think such an argument would get very far.
Dennis, “It looks like the DJ plaintiff could have done a much better job of providing evidence alerting the court to this real-world fact that people are confused on this topic and that Gillman’s claim of authorship was reasonably understood by folks in the room as a claim of inventorship.”
Indeed. There seems no other reasonable explanation for Gillman’s initial 50% ownership of the patent application. He thought he was an inventor.
This might get interesting if in state court it comes out that he IS claiming to be an inventor. Back to the district court. But, is the issue then res judicata?
Ned,
If the issue is not recognized by the court, how would you then hope to have res judicata on something that is only later recognized as an issue?
Ned, The explanation for the initial 50% stake was contractual stemming from the joint development project.
Dennis, just to remind you, a patent application is by law owned by the applicant. In order for anyone else to have title or an interest in title, the owner must assign that title to the assignee. In this case, the named inventor is Allen. He had 100% of the title by law. He did in fact assign his title to StoneEagle. There is no evidence of any assignment from Allen to Gillman or from StoneEagle to Gillman.
So just where did Gillman get his undivided 50% interest in the title?
Now, if Allen or StoneEagle had an obligation to assign 50% to Gillman by a contract, not doing so would be a breach of contract. But until and unless StoneEagle o Allen actually assigned Gillman anything he would not have “ownership” of the patent application.
This again seems one more example of the Federal Circuits misunderstanding of basic law.
Circling back, if Gillman claimed to be a 50% owner, it could not be because of the agreements, it could only be because, as you rightly observed, he was in fact a co-inventor.
Ned,
To remind you, any purported owner who lacks actual good title is not an owner.
You seem to want a legal discussion, except when your views are in the crosshairs. Is that why you never showed me where Standing was listed in the patent law of 35 USC 282?
“Circling back, if Gillman claimed to be a 50% owner, it could not be because of the agreements”
You are again assuming a conclusion that you cannot assume.
The actual agreement is not before us. That agreement may very well spell out that Gillman’s 50% ownership came from the inventor.
Your legal reasoning Ned is extremely slipshod.
There seems no other reasonable explanation for Gillman’s initial 50% ownership of the patent application.
It’s just an agreement between two people who have an idea for a company.
“I’ll take care of this, that and the other thing. You invent the other thing we need. I’ll help draft the patent after you do the inventing part, and I’ll retain 50% ownership of any patent that results. As part of the agreement, you’ll get this and that.”
MM, the case itself makes the point that “all technology” is owned by StoneEagle. I don’t understand how Gillman could have a claim of 50% ownership of the patent application except by believing he was a coinventor.
He may not had any knowledge that the application was being filed without naming him. I have had numerous occasions in my career where one inventor files but does not even tell the patent attorney about co-inventors or that he is not really the inventor. The patent attorney simply represents his client and assume he is being told the truth. Inside a company, the where filings are made known to engineering management, such “misrepresentations” quickly are made known and actions taken, otherwise there might be blood on the floor.
But in smaller firms, the controlling manager can and often does get away with “murder.’
What is important here is that Gillman “admitted” on appeal that he was not an inventor just to get rid of the case and the injunction. Now that was “convenient” was it not?
Per Malcolm’s added details, (yes 6, I do understand that such is a hypothetical), the ethics implication may come from the fact that one of the two is an attorney and ‘mere scrivening’ is related to a legal document. Even if the attorney is not registered, he may have created an attorney-client relationship (quite possibly inadvertently) with his business agreement. This is not to say that such cannot be done – but this is an ethical minefield. That the attorney appears to be incompetent for the task may be hinted at as knowing that he lacked a registration number with the USPTO. This was not a naive bloke volunteering to help with a pro-se legal document.
Ned – the stipulation is present so as to remove your view that Gillman considered himself a co-inventor. If his business arrangement included the drafting of a legal document as an attorney – registered or not – and he was not competent in that legal role, then there is an ethical issue afoot.
Is seems in-credulous that he would not know of the filing if he was doing the drafting, and the situation does not seem to fit the hypo of an unaware co-inventor. Further, the fact pattern does include him providing an assignment in giving up his ownership rights. In any such assignment, would not a drafting attorney be aware (and ethically, should be aware) of what is involved?
“No inventing happens by scriveners who merely write down the invention.”
Thank you for implying that patent attorneys are mere scribes. Did you get that from Breyer? It certainly sounds like something that someone with no experience in developing a product or the patenting process (like a judge who went straight from majoring in English to laws school) would say, and it’s disappointing to hear it from someone who was in private practice long enough that he knows or should know better.
Those of us who still work in the profession, including many of the partners at the firm that sponsors this blog, know that a good patent attorney, among other things, helps his client identify what the invention is, define it over the prior art with good claims, and obtain the experimental data necessary to support the claims in a patent application. Often, it’s that work that means the difference between getting a patent and the investment necessary to grow a company versus having potentially great but unprotected – and therefore forever undeveloped – technology. Such contributions usually don’t result in the patent attorney qualifying as an inventor, but it’s far from mere scribe work either. In view of the large number of poorly drafted applications that are published every week, it would appear that it’s also not work that is easily done well, even by those who are licensed to practice.
Great comment.
You’re right. No mere scribe would take the time to make the invention incomprehensible while writing it down.
Plurality of dopey comments, can’t you try to make substantive comments? All I see from you is cheap shots.
Oh, I try all the time. They tend to get washed out in all the noise that normally plagues these threads. Besides, that joke was mostly for examiner consumption – I have no idea how well your specs are written, but believe me, we see it all.
“washed out”
LOL – it doesn’t take much for that to happen, given how lame the comment was.
The little (very little) humor seems misplaced as there is no attorney David Gillman listed on the USPTO register.
There is a bio out there in the www (not sure if it is the same David Gillman) that includes references to BS and MS degrees, and background of the person as a scientist, but that bio does not list IP among the many different areas of legal coverage offered.
Gillman threw down his business cards and left the meeting in anger? That sounds like a moment of high drama. You’d think he’d at least have ripped them up into little pieces or something.
LOL. I thought the same thing. Another classic bit of theatre is defecating on the table but for some reason people usually only pull that stunt on airplanes after they’ve been told they won’t be served more alcohol.
A slew of major companies including General Electric Co. on Thursday urged the Federal Circuit to find that the U.S. Patent and Trademark Office exceeded its rulemaking authority in promulgating a broad claim construction standard for new review proceedings under the America Invents Act.
That is the big news, of course. This case is pretty important. Broadest reasonable interpretation in AIA proceeding coupled with impossible claim amendments equals death squads.
Jonas: if you don’t care, why did you write all that blathering nonsense? I have no interest in trying to please you.
Link? This is big news.
The case is Versata Development Group Inc. v. SAP America Inc., case number 2014-1194, in the U.S. Court of Appeals for the Federal Circuit.
You do realize that your navel is not the only object in the known universe, don’t you?
Yeah I don’t know if this is “big news” or not, but it’s mildly interesting in a sort of blase sort of way. I’m sure I will derive many lols from the oral arguments though.