I Thought I Had ItSometimes it’s hard to know what you’ve got. In these cases, the patent owners thought they had IP rights, but the Federal Circuit told them otherwise.

Well, What Do You Know?

Teva Pharmaceutical Industries, Inc. v. AstraZeneca Pharmaceuticals LP, No. 2011-1091 (Fed. Cir. Dec. 1, 2011) (Chief Judge Rader, Judges Linn and Dyk)

This is the type of case that the America Invents Act’s first-inventor-to-file system is designed to prevent. It’s the classic question of who invented what when. Teva and AstraZeneca (AZ) were in a race, and they didn’t even know it.

Here’s the “what”: The technology at issue is stabilized formulations of statins, which are used to treat high cholesterol. Teva’s patent covers a statin that is stabilized by an amido-group containing polymeric compounds called “AGCP compound.” AZ manufactures and sells CRESTOR®, a stabilized statin also used to treat high cholesterol. AZ uses tribasic calcium phosphate, which is not an ACGP compound, to stabilize its drug. But AZ’s drug also happens to contain crospovidone, which is an ACGP compound. When AZ developed CRESTOR®, it didn’t realize that crospovidone could be a stabilizer.

Here’s the “when”: The earliest date that Teva says it conceived of and reduced to practice its invention is December 1, 1999. AZ showed that, by mid-1999, it had made a 10,000-unit batch of its drug, and it had made additional batches by the fall of 1999. AZ disclosed the ingredients and amounts used in its formulation by late summer 1999. So, AZ came up with its formulation and made it public before Teva conceived of or reduced to practice the subject matter of its patent.

Based on these facts, the district court granted summary judgment of invalidity to AZ under 35 U.S.C. § 102(g)(2), which is part of the patent statute that says a person can’t get a patent for an invention if someone else invented it first.

The crux of the fight is what AZ knew about crospovidone when it invented its drug. Teva argues that AZ had to prove that it (AZ) appreciated that crosprovidone could be a stabilizer. AZ argues that, under § 102(g)(2), it only had “to understand the fact of what it made”—a stabilized formulation of a statin.

The Federal Circuit agreed with AZ. The court said that § 102(g) doesn’t require an earlier inventor to understand every detail about why or how her invention works. And she doesn’t have to describe the invention in the same words that the later patentee would. There’s some wiggle room for happy accidents. The court explained:

AstraZeneca had to appreciate that the compound it asserted as its invention was stable and what the components of this formulation were. There is no question that AstraZeneca had this appreciation. However, AstraZeneca did not need to appreciate which component was responsible for stabilization.

The court concluded that AZ knew enough when it invented its drug to be the first inventor of the patented technology, so it upheld the district court’s judgment that Teva’s patent is invalid.

A note about my first point on the America Invents Act: This opinion doesn’t mention whether AZ has a patent covering CRESTOR®, and, if it does, when that patent was filed. Without more information, it’s hard to tell how this case might have progressed under a first-inventor-to-file system.

You can read the full Teva opinion, if you like.

Tension Among Tenses

Gellman v. Telular Corp., No. 2011-1196 (Fed. Cir. Nov. 30, 2011) (Judges Bryson, Clevenger, and Prost) (nonprecedential)

This case is a great example of why lawyers need to pay attention to all the words in a contract. What seems like standard or boiler plate language can cause a lot of heartache later down the road.

Ms. Gellman sued Telular, Napco, and Visonic for infringing a patent that listed two co-inventors: her late husband, Mayer Michael Lebowitz, and James Seivert, also deceased. This co-inventorship situation brought up two important patent law rules: (1) co-inventors (and their heirs or assignees) are presumed joint legal owners of a patent, and (2) all legal owners of a patent must participate in a case for infringement of that patent. Since no one from Mr. Seivert’s camp was involved in the suit, the district court dismissed the case without prejudice.

Ms. Gellman said the Mayer Michael Lebowitz Trust, of which she is trustee, is the only legal owner of the patent. According to Ms. Gellman, Mr. Seivert was Mr. Lebowitz’s employee. As part of Mr. Seivert’s employment, she argued, his patent rights automatically transferred to Mr. Lebowitz.

The trouble is that Ms. Gellman didn’t have any proof to back up her claim. Ms. Gellman only provided an unsigned consulting agreement that included this language:

[A]ny and all ideas, discoveries, inventions, [etc.] … developed, prepared, conceived, made, discovered, or suggested by [Mr. Seivert] when performing services pursuant to this Agreement … shall be and remain the exclusive property of Cellular Alarm [Mr. Lebowitz’s company for which Mr. Seivert worked]. [Mr. Seivert] agrees to execute any and all assignments or other transfer documents which are necessary, in the sole opinion of Cellular Alarm, to vest in Cellular Alarm all right, title, and interest in such Work Products.

(See page 5, emphasis added). The first problem with this agreement is that it’s not signed, because the Patent Act requires all assignments of patent interests to be in writing. But that aside, the Federal Circuit actually focused on the language of the agreement to conclude that Mr. Seivert’s patent rights weren’t legally assigned to Mr. Lebowitz.

The court said that this agreement didn’t assign patent rights automatically. (This gets hyper-legalistic, so bear with me.) According to the court, the way the agreement is written sets up a two-step process for transferring rights: (1) it creates an obligation for Mr. Seivert to assign his rights (the “shall be and remain” language), and (2) Mr. Seivert would take some other action to complete that assignment (“agrees to execute any and all assignments”).

Looking at its past cases, the court said the assignment language in the agreement should be in present tense, e.g., “I do hereby assign” for the assignment to hand over legal title automatically. The language of Mr. Seivert’s agreement, however, is in the future tense. Because Ms. Gellman had no evidence that Mr. Seivert formally completed an assignment (i.e., completed step 2 of the 2-step process), he (or his heirs) still had legal title to the patent and needed to be involved in the litigation.

The Federal Circuit upheld the district court’s dismissal, but noted that because the case was dismissed without prejudice, she can try again if she resolves this patent title issue.

Here’s the Gellman opinion, if you’d like to read it yourself.