Court Holds that IP Assignment Must Include “Magic Words”

The United States Court of Appeals for the Federal Circuit has affirmed a District Court’s decision to refuse a motion by Apple to dismiss a patent infringement lawsuit against it by Omni MedSci (“Omni”).

The inventor of the patents at issue was Dr. Mohammad Islam, the founder of Omni. Apple argued that Omni lacked standing to claim infringement because Dr. Islam had previously assigned the patents to the University of Michigan (“UM”), where he was employed.

When Dr. Islam joined the UM faculty, he signed an employment agreement that included an agreement to follow the University’s bylaws.

These bylaws include the following terms:

1) Patents and copyrights issued or 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 employment.

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.

[The emphasis was added by the court.]

In 2012, Dr. Islam took a leave from the university and founded Omni, a biomedical laser company. He filed several provisional patent applications for his inventions for his new company, and then filed non-provisional applications when he returned to the university. He assigned the resulting patents to Omni.

In 2018, Omni sued Apple for infringing the patents. Apple argued that Dr. Islam had assigned the patents to UM by agreeing to the bylaws, and thus that Omni had no standing to allege infringement.

The Federal Circuit found that

Omni’s standing to assert the patents at issue turns on whether it has an exclusionary right in the asserted patents. This turns on a legal question of contract interpretation: whether paragraph 1 of bylaw 3.10 automatically and presently assigned legal title of Dr. Islam’s inventions to UM. A patent assignment clause may presently assign a to-be-issued patent automatically—in which case no further acts to effectuate the assignment are necessary—or may merely promise to assign the patent in the future.

The court thus concluded that

paragraph 1 of bylaw 3.10 does not unambiguously constitute either a present automatic assignment or a promise to assign in the future. … It does not say, for example, that the inventor “will assign” the patent rights—language that this court has previously held to constitute an agreement to assign rather than a present assignment.

The lesson here is that in drafting a patent assignment it’s important to phrase it carefully. Phrases like “shall be the property of” may not be interpreted by courts to mean what the drafter intended.

The case is Omni Medsci, Inc. v. Apple Inc.