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.