by Dennis Crouch
The Federal Circuit has decided an important employment agreement case. Omni MedSci v. Apple (Fed. Cir. 2021).
Dr. Islam is a professor at Michigan (UM). Back in 2012 though he took an unpaid leave-of-absence to start a LASER company. During that time he filed a number of patent applications that came from his time on-leave and that he assigned to Omni. However, UM argued that it owned the patents based upon his employment agreement; that it had expended some ongoing funds; and that Islam had bounced ideas off of some of the faculty members. This argument between Islam and UM was internal. UM did not file any paperwork with the PTO attempting to claim ownership and UM is not a party to the present litigation.
Omni later sued Apple for infringement, but the iPhone giant argued that Omni lacked standing since UM was the real patent owner. The district court sided with Omni — finding that Omni had received rights from the inventor, and that Islam had not assigned his rights to UM. On appeal, the Federal Circuit has affirmed.
The basic question is whether the Islam’s employment agreement with UM caused his inventorship rights to be automatically transferred in this situation.
Lets look at the contract. Here are the relevant clauses:
1) Patents … acquired as a result of or in connection with administration, research, or other educational activities conducted by members of the University staff and supported directly or indirectly (e.g., through the use of University resources or facilities) by funds administered by the University regardless of the source of such funds, and all royalties or other revenues derived therefrom shall be the property of the University.
* * *
4) Patents, copyrights, and property rights in computer software resulting from activities which have received no support, direct or indirect, from the University shall be the property of the inventor, author, or creator thereof, free of any limitation which might otherwise arise by virtue of University
5) In cases which involve both University-supported activity and independent activity by a University staff member, patents, copyrights, or other property right in resulting work products shall be owned as agreed upon in writing and in advance of an exploitation thereof by the affected staff member and the Vice-Provost for Research in consultation with the Committee on Patents and Copyrights and with the approval of the University’s Office of the General Counsel. It is understood that such agreements shall continue to recognize the traditional faculty and staff prerogatives and property rights concerning intellectual work products.
Both the district court and appellate court agreed that the agreement was not a present assignment of future inventions. “It does not purport to effectuate the present transfer of a present or future right.” Rather, at most, the language “reflects a future agreement to assign.”
Judge Newman wrote in dissent and argued that “these patents are the property of the University.”
Although both the majority and dissent conclude that the issue is a matter of contract law, neither cite to the governing law of contracts for this case–the law of Michigan.