State Law Governs Pre-Patent-Application Invention Rights: Do we Need Uniform Rules?

Suppes v. Katti and Fender (Fed. Cir. 2017) (non-precedential)

I should probably be a bit careful writing about this case because of its closeness to home.  Galen Suppes is a recently fired engineering professor from University of Missouri (my employer); Chris Fender is the director of our University Technology Transfer office, known here as the Office of Technology Management & Industry Relations and Katti is a professor of radiology and physics.

When it hired Suppes, the University (a wing of the State of Missouri) bound Suppes to an agreement that, inter alia, gave the University ownership and control over the filing of patents stemming from Suppes future inventions.

The University “shall have ownership and control of any Invention or Plant Variety developed in the course of the Employee’s service to the University.” University of Missouri Collected Rules and Regulations § 100.D.1.a.

The basis of Suppes lawsuit was that the University took control, but then failed to actually file patent applications on his inventions.

In the appeal, Suppes (acting pro se) presented some interesting arguments:

  1. That pre-patent invention ownership is a right reserved to the people under the 10th Amendment of the U.S. Constitution and that the State thus violated his constitutional rights by taking ownership and then failing to file for patent rights.
  2. The State actions stifled the progress of science and thus violated his due process rights; and
  3.  The State violated Suppes 5th Amendment rights by taking his invention-rights without just compensation.

These were all rejected by the the district court, and that decision is affirmed on appeal (nonprecedential opinion).

One way to think about Suppes argument here is to consider the employment contract as a state law that applies to anyone who works for the state (at least this branch of the state). And, the state law says that the University (rather than the inventor) owns the inventions.

In discussing inventorship rights pre-patent-application, the Federal Circuit makes an interesting set of holdings. First, the court holds that the Constitution does not directly set any limit on inventorship rights.  Rather, the Article I provision is simply an authorization to Congress to act:

The Constitution, standing alone, grants the power to Congress to “secur[e] for limited times to . . . inventors the exclusive right to their . . . discoveries.” Any rights Mr. Suppes has in his inventions are thus subject to Congress’s implementation of the Constitution by statute. 35 U.S.C. § 261 provides that “[a]pplications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing.”

Of course, Section 261 only directly applies to “applications,” “patents,” and “interest[s] therein.” A straightforward interpretation of the provision is that Section 261 says nothing about pre-application assignments.  As such, pre-application assignment of rights falls back to state law. “The allocation of interests prior to the filing of a patent application is thus a matter of state contract law and is not preempted by the Patent Act.”  Later, the court reiterates that no Federal public policy (such as preemption) would void the state contract:

The determination of whether a statute prohibiting the assignment of “inventive thoughts” would promote the Progress of Science is therefore, at least initially, allocated to Congress by the Constitution. To the extent that Mr. Suppes is arguing that the contract is void as a matter of public policy, that is once again a matter of state contract law.

In the end, Suppes easily loses this case, but it raises some interesting issues in my mind, including: (1) a tacit recognition that states could enact a set of pre-filing quasi-patent rights without those being preempted by Federal Law – perhaps as an expansion of state trade secrecy law; and (2) an implicit call for uniform law associated with ownership and transfer of pre-filing invention rights.

=====

 

Follow-up reading: Regents of University of New Mexico v. Knight, 321 F.3d 1111 (Fed. Cir. 2003).

52 thoughts on “State Law Governs Pre-Patent-Application Invention Rights: Do we Need Uniform Rules?

  1. According to the findings of the MU Campus Faculty Committee on Tenure, Suppes was found guilty of the following counts:

    Intimidation, harassment and/or bullying of students.
    Exploitation and/or coercion of students.
    Severe and habitual neglect of teaching duties.
    Insubordination regarding treatment of students.
    Intimidation, harassment, bullying and/or creation of a hostile work environment for faculty and staff.
    Intimidation and/or harassment of chairs.
    Intentional violation of the university’s intellectual property rules and regulations.
    Insubordination regarding violations of the university’s intellectual property rules and regulations.
    Other misconduct relating to research.

    Nobody could have predicted any of this.

    1. “One student testified that “there were a lot of incidences where we felt like we were belittled in one way or another where you were scolded in class or there was an incident where we were told … that his son at the time could learn faster than we could.”

      OMG!

  2. a report sent by the MU Campus Faculty Committee on Tenure to Interim Chancellor Garnett Stokes on May 15 describes a faculty member and teacher who, over a period of 16 years, harassed and intimidated colleagues and students, had a strained relationship with five successive department chairs and seemed indifferent to the Collected Rules and Regulations of the University of Missouri System.

    Shocking!

  3. Over the course of his employment, Mr. Suppes became aggrieved when the University declined to file patent applications for certain of his ideas, yet simultaneously prohibited him from filing his own patent applications
    and, in cases where he did file his own applications, required him to assign those applications to the University.1

    1. In response to Mr. Suppes’s unilateral filing of patent applications without the knowledge or consent of the University, the University filed suit against Mr. Suppes in the state courts of Missouri alleging, inter alia, breach of contract. That litigation is not at issue here.

    SUPPES v. KATTI, 2017-1142, slip at * 4 (Fed. Cir. 2017)

    1. I presume the law in Missouri follows the common law that a contract to assign a future right is equitable, and that to enforce an equitable assignment the plaintiff needs to show that the transaction was fair and that their own dealings are above reproach.

      Equitable defenses are available. I see a strong unclean hands defense.

      1. I don’t see the lack of “fairness” or the “unclean hands”.

        A university employs a someone, as an academic or researcher. The contract specifies that any patentable inventions developed during the period of employment are assigned to the university. Thus the university may have the equitable interest in the inventions (assuming the contract of employment is watertight under state law in this regard). The university could decide to file for patents, it could seek patents, and then dedicate the inventions to the public domain once patents have been obtained, if that is in line with their policy, or they could publish the inventions without seeking patents. It seems to me that any equitable interest in the subject matter of the inventions has been assigned to the university, and the employee has no reason to expect, on grounds of “fair play” or otherwise, that patents will be sought. Even if legal title is with the employee, why should the employee claim some sort of moral right to demand that “his” intellectual property should be the subject of exclusive rights? The university might surely decide that its mission is better served by dedicating the subject matter of the potential patents to the public, and why should the legal inventor have any right, equitable, or moral, or otherwise, to interfere with the university’s choice as to how to manage any potential intellectual property generated by its employees and assigned to the university by virtue of the contracts of employment.
        In many cases the invention will result from thought and laboratory results carried out as during the course of employment, on university premises, perhaps with research grants available only to university researchers etc., and fruits of research activity will be directly relevant to opportunities for tenure and promotion etc within the university. But as a quid quo pro, the university as employer expects that it has full control to decide how the intellectual property resulting from the activity of its employers is exploited to further the mission of the university.

        1. It seems to me that any equitable interest in the subject matter of the inventions has been assigned to the university, and the employee has no reason to expect, on grounds of “fair play” or otherwise, that patents will be sought.

          Right. And remember the same folks who will whine and cry about this are screeching over the other side of their mouths about “freederm this” and “freederm” that. Nobody forced this guy to sign the employment agreement. Go work somewhere else if you’re not getting enough money.

          1. Right. And remember the same folks who will whine and cry about this are screeching over the other side of their mouths about “freederm this” and “freederm” that

            Other than Ned, I hardly see anyone even close to “screeching”

            Except you.

            Go figure “Folks.”

        2. Distant, my views may be colored by some knowledge you do not have. First, most professors now share in the royalties that the U generates from patents. Thus there would seem to be an obligation of fair dealing in the contract to either file an application, or waive the U’s rights and let the professor file.

          Also, having a patent on one’s resume is important. Arbitrarily not filing on inventions and preventing the professor from filing similarly causes reputational harm. The Federal Circuit in the Seagate case has already so held.

          1. most professors now share in the royalties that the U generates from patents. Thus there would seem to be an obligation of fair dealing in the contract to either file an application, or waive the U’s rights and let the professor file.

            Whoo hooooo! Nice leaping.

        3. Developing the train of thought with hypotheticals.

          Maconchy University is angling for a substantial benefaction from a notable businessman and philanthropist, Mr Riesenschneider. There is the possibility that either Mr. Riesenschneider will fund the building of a bioinformatics institute named after his parents, or else that Mr. Riesenschneider will endow a chair whose successive holders will be called Dagmar Riesenscheider Professor of Bioinformatics (thus commemorating Mr. Riesenschneider’s mother who had embarked on a promising academic career cut short by an early death resulting from breast cancer).

          Mr. Riesenschneider might take particular interest in the policies of the university with regard to commercial exploitation of inventions attributable to the university. Maybe his wealth derives from a computer business that has been very active in promoting and contributing to open source projects. Or else maybe the early death of his mother has focused his attention on issues surrounding patent protection for diagnostic tests.

          In any event the university needs to satisfy Mr Riesenschneider that its values align with his. And to this end, the university might well develop a policy on management of intellectual property developed by its employees during their periods of employment. But this of course requires that the university can establish contracts of employment, under state law, that appropriately reward and remunerate its employees whilst allowing the university to adopt and adapt policies that enable it to operate effectively in areas that are central to its mission.

          1. But this of course requires that the university can establish contracts of employment, under state law, that appropriately reward and remunerate its employees whilst allowing the university to adopt and adapt policies that enable it to operate effectively in areas that are central to its mission.

            I do not see the difficulty in this.

        4. Distant, you conclude by stating that “the university as employer expects that it has full control to decide how the intellectual property resulting from the activity of its employers is exploited to further the mission of the university.”

          This is a shocking statement. And if it is correct, then it should create a seismic shift in the understanding of the relationship between faculty and universities (at least ones with onerous invention assignment rights such as this). Consider, for instance, the following questions:

          -Is a university allowed to decide whether a professor can publish an idea in an academic journal?
          -Can the university decide which journals a professor must pursue and which s/he cannot?
          -Does the university have the right to edit an academic paper before it is published?
          -Can a university prevent a professor from presenting his research at a conference?
          -Can a university prevent a professor from discussing his research entirely?

          In reality, the answer to all of these questions is currently no, and perhaps that is based more on long-standing norms of conduct rather than the legalese contained in a faculty handbook or employment agreement signed between universities and its professors. But the answer to these questions must be no for a university to claim to respect core principles of academic freedom (as they all do).

          To me, this reflects a far larger problem with the university IP function, and the problem stems from the assignment of ideas that are not yet embodied by patents or applications. After all, when we are not talking about an assignment of a patent right, but an assignment of some nebulous idea, we are talking about academic freedom.

          If Distant’s view is the legally correct one (and it seems credible to me), I fear that this institution now faces a dilemma where having won the battle, it is worse off as an institution by having pulled back the curtain to demonstrate an erosion of its respect for academic freedom. In general, I would favor a contractual arrangement in which a university claims ownership of patent documents in exchange for funding or supporting the patenting process, but where the university does not demand ownership of the underlying ideas themselves.

          1. Freedom of contract is FAR from the most insidious – and systemic – threat to actual academic freedom that infects the “please the established intelligencia” academic advancement model.

            Publish or perish – and just what (how, by whom, etc.) – far outweighs any IP contract provisions.

          2. It ought to be SOP that professors have a right to file patent applications on their inventions. It the professor names a student or U employee as a co-inventor, then the U perhaps has co-ownership, but not sole ownership. All the U should get is a shop right, just as the original cases involving employee inventions held. The big overreach by U’s is amazing to behold.

            As to application costs, that should be viewed as a joint venture with the U where the U obtains an interest in royalties in exchange, but not ownership.

            Now, if the U funds a specific project, it might ask for some ownership in inventions flowing from that project as a condition of funding.

            IIRC, a lot of Silicon Valley’s startups were based on inventions made at Stanford, where the professors and students took their inventions private, and where Stanford received some compensation based on the efforts of it departing students/professors. link to patentlyo.com The Stanford model seems to work. But it is primarily based on making its professors and students rich.

            1. Ned, It appears that you would like to turn around the current protocol. Instead, the professor will pay for patent prosecution and the University would share in royalties if they desire to contribute. It sounds good, but very few professors have 30K plus to spend to get the patent to issue. Seems like a cash flow issue. I’m not sure. Currently, if a university believes they can make money, they will invest in patent prosecution. If not, they will release to the inventor. I think the major problem is that federal funding requires publications and patent require an enbling disclosure. Thus, the timing of answering the file patent or release question is problematic.

          3. Nothing is new in the paradigm. If a professor doesn’t want to make any money on a discovery, the professor is free to dedicate ideas to the public in any manner of timing that suits them. The university will not get involved in preventing a disclosure. However, if the idea of collecting some cash from a patent is desireable, then taking advantage of a secret for as long as possible is usually the best course of action. The whole idea is that you have better information than everybody else, therefore you have an advantage over everyone else. Take advantage of it for as long as possible. On the flip side, the professor will need to eventually publish in order to get more federal funding.

          4. I believe that I should respond, and try to set out the more nuanced bigger picture.

            And I plan to proceed by reference to the university most familiar to me. It is a university that has been in existence for centuries. And it has policies. Lots of policies! In particular it has both an Intellectual Property Policy and a policy concerning Academic Freedom. With regard to the latter, the University also has Statutes that “constitute the basic law” of the University. And these statutes include a two-page schedule specifically on Principles of Academic Freedom. (The University also has a Dignity and Respect Policy concerned with the mutual interactions of members of the University community.) Obviously the various ‘policies’ must be construed consistently with one another – and in particular, the Intellectual Property Policy should not be interpreted so as to overrule basic principles of “academic freedom”, as those principles are understood within the University.

            I now move on to specifics of the Intellectual Property Policy, observing in passing before I do so that Title 35 is not governing law in the jurisdiction where the University is located.

            ===

            “Subject to the exemptions set out in this document, [the University] claims ownership of all IP arising from the work of:

            “(a) [University] Staff in the course of their employment and/or in the fields of expertise in which they are employed to work; and […]”

            […]

            “Exemptions to [University] ownership of IP

            [The University] does not claim ownership of:

            “(i) copyright IP encompassed in scholarly publications of [University] Staff that are of literary, historical, social, philosophical, scientific, or critical nature, books and textbooks whether creative works or works of analysis, art works and newspaper articles, or occasional films provided that none of the above were commissioned by [the University] or by any party with whom [the University] contracted to produce such work, and provided that […] ”

            […]

            “Upon becoming aware of newly-created [University] IP which may have commercial potential, all [University] Staff must promptly disclose such IP to [the Office] (or any other such office as may be designated), in a format prescribed by [the Office]. […]”

            […]

            “The inventors/creators/authors of IP are required to assign their rights to [the University] in return for a share of any Financial Benefits received by [the University] as a result of the commercial exploitation of such IP.”

            […]

            [The Office], in consultation with the inventors and with the licensee (if any), shall be responsible for all decisions regarding the continued prosecution or maintenance of [University] patent applications and granted patents. In making such decisions, [the Office] shall take into account such factors as the commercial potential of the IP, [the University’s] contractual obligations to third parties, the maturity of the technology covered by the IP, the availability of further research or third party funding to add value to the IP and the views and support of the inventors.”

            […]

            “No commercial negotiations regarding [University] IP shall be made by [University] Staff other than through [the Office], unless [the Office] has given its written permission, in which case the conditions laid down by [the Office] shall be observed. [The University] will only embark on a course of patenting and/or commercial exploitation if the potential of the technology warrants it and if the researchers in question engage fully in the process.”

            [The document continues by setting out conditions under which IP “may” be assigned to the inventor/author in return for a share of any profits generate in situations where the Office has “deemed” that the IP “does not warrant commercial exploitation”. There is a whole lot more in the document including procedures for dispute resolution.]

            The above concerns a university distinct from the University of Missouri, but I presume that similar policies apply at all well-established universities.

            1. By way of postscript to 5.1.1.4.4., I would add that, within the jurisdiction within which ‘the University’ of 4.1.1.4.4, the acts of the parliament of that jurisdiction include the following provision relating to academic freedom:

              ===

              (1) A university, in performing its functions shall—

              (a) have the right and responsibility to preserve and promote the traditional principles of academic freedom in the conduct of its internal and external affairs, and

              (b) be entitled to regulate its affairs in accordance with its independent ethos and traditions and the traditional principles of academic freedom, and in doing so it shall have regard to—

              (i) the promotion and preservation of equality of opportunity and access,

              (ii) the effective and efficient use of resources, and

              (iii) its obligations as to public accountability,

              and if, in the interpretation of this Act, there is a doubt regarding the meaning of any provision, a construction that would promote that ethos and those traditions and principles shall be preferred to a construction that would not so promote.

              (2) A member of the academic staff of a university shall have the freedom, within the law, in his or her teaching, research and any other activities either in or outside the university, to question and test received wisdom, to put forward new ideas and to state controversial or unpopular opinions and shall not be disadvantaged, or subject to less favourable treatment by the university, for the exercise of that freedom.

            2. To round out the story, how the ‘University’ of 5.1.1.4.4 sets out its principles of “academic freedom”. I suggest that they can be construed as endorsing an IP Policy in which academic staff are encouraged to pursue their research in relevant areas through sharing in returns from commercial exploitation. But these principles seem to fall short of validating any purported right for an inventor to either to seek, or require the university to seek, patent protection for inventions.

              First, freedom of expression: “No policy should be adopted that would, inadvertently or otherwise, curtail freedom of expression among either staff or students.”

              Next, under teaching and learning: “Staff are not required to present as valid what they consider to be inaccurate or untrue, and students will be enabled to question that for which inadequate evidence is given.”

              Under Research; “Recognising that the search for new knowledge, experience, and practice is an essential part of [the University’s] reason for being, [the University] will ensure that an environment is maintained that facilitates the pursuit of knowledge wherever it may lead.”

              […]

              “On the positive side, [University] policy is to support, by various means available to it, individuals and groups in pursuit of their diverse research aspirations. This support includes the role of [the University] in incentivising or rewarding particular areas of research in an open manner.”

              1. Thanks for the interesting context. If Missouri is like your University and has a policy that says that “[n]o policy should be adopted that would, inadvertently or otherwise, curtail freedom of expression among either staff or students,” then this decision may have come out incorrectly. Article 19 of the Universal Declaration of Human Rights states that “[e]veryone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.” Through any media. A patent application is a medium of expression; indeed, its status as such is baked into the quid-pro-quo of the patent system. Coming full circle, a University with an overriding freedom of expression (or speech) policy like this undermines its own claim to ownership and control of its professors’ ideas qua ideas. I wonder where Missouri falls on the spectrum of freedom of expression protections.

                (and to the inevitable argument contesting my definition of freedom of expression, I doubt you’ll find a definition of the freedom of expression that does not protect patent application filing)

                1. A patent application is a medium of expression

                  First and foremost, it is a legal document.

                  its status as such is baked into the quid-pro-quo of the patent system

                  I do not understand what you are trying to say here; and think that you are misunderstanding just what the Quid Pro Quo of the patent system is actually about.

                  (and to the inevitable argument contesting my definition of freedom of expression, I doubt you’ll find a definition of the freedom of expression that does not protect patent application filing)

                  Perhaps if you can explain the “protection” you think needs to be present with a patent application filing, we can see if your definition of freedom of expression even intersects. As it is, a patent application filing DOES intersect with the freedom to contract. No academic is forced into a contract (they are not indentured servants). One is free to contract away their own rights (to a certain extent).

                  As to the reference to Article 19 of the Universal Declaration of Human Rights, I must have missed class that day, but how is this tied to any controlling US law?

                  From wiki, all I get is:

                  Some legal scholars have argued that because States have constantly invoked the Declaration over more than 50 years, it has become binding as a part of customary international law.[1] [2] However, in the United States, the Supreme Court in Sosa v. Alvarez-Machain (2004), concluded that the Declaration “does not of its own force impose obligations as a matter of international law.”[3] Courts of other countries have also concluded that the Declaration is not in itself part of domestic law.

    2. I also think the good professor should continue to file applications the university did not, and to contest any purported assignments of patent applications he did assign to the university. The U’s actions, on the surface here seem reprehensible.

      1. I also think the good professor should continue to file applications the university did not,

        You think he’s a good professor? What makes you say that? Did you attend any of his classes?

        Have you seen the patent applications?

        The facts here all suggest that the odds are excellent that he’s a cr @ppy professor with an usually bloated engineer’s ego. Happy to be proven wrong about that. Good luck.

          1. ‘Collectively, engineers really are a piece of work. They drink so much of kool-aid they really do seem to believe that the sign of the work term in the first law of thermodynamics should be negative… ‘

          2. Oh, there’s a wee difference between your typical engineer and this character. I meant to say “unusually bloated.”

            But among the engineers who think they are gob’s gift to innovation and who whine about their “constitutional rights” to a patent, that amount of bloat is typical.

            I think we should do a lot more research into this guy. Because he likes the attention, plainly.

        1. Now we know why MM hates patents. He hate the people (usually engineers) who invent things.

          I will guess that MM’s father (whom he lives with in a small apartment in Novosibirsk) is an engineer.

      2. There may be a number of reasons why a university would not want to file a patent and not want to reassign back to the inventor. For example, if the technology is a good idea but not reduced to practice and/or not enabled. That is, it would be better to have more evidence of operability prior to filing, but the inventor files a patent application too early thinking they know best.

        1. Keep in mind that there is an inherent conflict of interest between a professor and the university. Every professor would prefer that the university file a patent in every country in the world on every idea. Paying attorneys for internation prosecution on every idea for every professor would bankrupt the university. The patent budget would be larger than the research budget. The university needs a somewhat disinterested person to make decisions that can rationalize the pros and cons in an unpredictable endevor. Sometimes their bets will be wrong.

    3. If, by contract, it is the University’s IP, then they get to do with it what they want, including not filing patents if they choose not too. If, under contract, he recorded a song for them and then they decided to destroy every copy and prevent him from creating another, that would be their right.

  4. Clearly, the U of M contract was better written than Stanford’s.

    But to say that a State government contract is “like a state law” seems to be a very bad idea.

    1. “Clearly, the U of M contract was better written than Stanford’s.”

      Either that, or Mr. Suppes didn’t have Roche’s legal talent to call on.

      1. I am not sure that Roche’s legal talent was either all that expensive or that any such expense was in any way attributable to the result obtained.

  5. [T]he court holds that the Constitution does not directly set any limit on inventorship rights. Rather, the Article I provision is simply an authorization to Congress to act

    Read it and weep, maximalists.

      1. I have been saying this for years.

        Nobody cares what you say or think about anything, “anon.”

        You’re a bl o g t r 0 ll. Try to remember that.

      1. if the Feds did not act? Would state patents be preempted?

        Who cares? Congress did act. They created a limited conditional right to sue, specifically a right that is revokable by the agency upon a showing of error and the usual due process considerations.

        1. MM, but the SC has said repeatedly that only the courts have a right to revoke a patent for being mistaking issued. What you are saying here is supported only by the Federal Circuit and/or by your insistence that you are, like the Pope, always right.

  6. I hope Suppes’ “innovations” were more inspiring than his dull, idling “Kernstertershnernal” arguments.

    Collectively, the maximalists really are a piece of work. They drink so much of kool-aid they really do seem to believe that a right to a patent is somehow “fundamental”.

    And then at the same time nearly all of these maximalist types are whining out of the other side of their mouth that “big government” is the worst thing ever because …. “freederm” or something like that.

    All they really care about is themselves and their own power and stuffing cash into their pockets. Sc rew everyone else. It’s just Repu k k k hypocricy on steroids. And it’s always been this way. Their just sh tty human beings. Get their favorite junk (logic and info patents) out of the system and minimize their opportunities to meddle with the system and the system will be better, instantly.

    1. Collectively, the maximalists really are a piece of work.

      You are doing that ‘one-bucketing’ thing again….

      1. You are doing that ‘one-bucketing’ thing again….

        You are an incredible hypocrite Mr. “Ivory Towerism” and also and a quintessential example of human s c u m.

        1. My comments on Ivory Towerism are made with direct references to such (and occasionally exempt those that are not captured by the lack of meritocracy that the academic world presents.

          There simply is NO hypocrisy – as mush as you may want to whine otherwise.

  7. IMHO, the prof, had a better chance under a theory of breach or fraud in the inducement – arguing that the university invention assignment provision – contains an implied covenant of good faith – Then he would have to show bad faith, and of course, the very difficult ‘but-for’ test on damages.

    To be sure, a State can create a stronger trade secret right, I believe California did just that a couple of years ago.

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