Ninth Circuit: Patent law terms in employment agreement should be given patent law definitionsJune 19, 2008

In a recent decision, the Ninth Circuit held a district court's jury instructions regarding construction of the patent ownership provisions of an employment agreement erred in applying contract law rather than patent law. The court determined that jury instructions defining the terms "conceive," "reduce to practice," and "Work of Dr. Yu" (a possible coinventor) required application of patent law to determine whether co-inventorship existed for both conception and reduction to practice of an invention, and whether conception and/or reduction to practice took place while using the employer's facilities. The Ninth Circuit held the district court erred in applying agency law to determine whether a second researcher's actions triggered the patent ownership provisions of the "employed" researcher. The court remanded the case and ordered a new trial with proper jury instructions.More detail of Los Angeles Biomedical Res. Inst. v. White after the jump.The dispute between LA Biomedical Research Institute ("LA Biomed") and Dr. Geoffrey White arose from litigation involving technology for repairing aortic aneurisms, specifically a graft attachment device or "GAD." Drs. White and Yu filed two patent applications in 1998, both resulting in issued patents, relating to GAD technology. Ownership of the patents was contested originally between Medtronic and Dr. White. The case evolved further when LA Biomed intervened, asserting rights to the patents, based on a Patent and Copyright Agreement ("P&C Agreement") signed by Dr. White. LA Biomed claimed that under the P&C Agreement, Dr. White was required to assign the two patents to LA Biomed. The P&C Agreement required in part that "every possibly patentable device, process, product . . . which [Dr. White] conceive[s] and/or reduce[s] to practice while employed by the institute, or during the course of my utilization of any institute research facilities, shall be examined by the institute to determine rights and equities therein in accordance with the institutes patent and copyright policy." The P&C Agreement further required Dr. White to assign all of Dr. White's right, title and interest in such inventions to LA Biomed if LA Biomed decided to pursue patent protection on the invention. The relevant timeline of events is as follows:

• 1985: Dr. White signs LA Biomed's P&C Agreement
• 1989 – October 1992: Dr. White goes to Australia; Drs. White & Yu perform development work on GAD technology; unsuccessful implantation into patient
• December 1992 – January 1993: Drs. White & Yu work at LA Biomed's facilities, performing bench tests and building miniature GAD devices for use with dogs; Dr. Yu never signs a P&C Agreement
• September – October 1993: First successful human trials in Australia
• 1998: Patent applications filed
• 2000: Declaration filed during prosecution of the patents describing development work done
• 2003: Patents issued

At issue were the dates and location of conception and reduction to practice of the GADs by Drs. White and Yu. LA Biomed argued the P&C Agreement continually applied to Dr. White and he conceived and/or reduced the invention to practice during the two-month span in December 1992 – January 1993 he worked at LA Biomed's facility, thereby entitling LA Biomed to ownership of Dr. White's interest in the patents. In instructing the jury, the district court used jury instructions that did not explain the meaning of the terms "conceive" and "reduce to practice" in the context of patent law, and failed to explain the concept of joint inventorship. The jury returned a verdict in favor of Dr. White, finding that Dr. White did not conceive or reduce to practice the GADs while utilizing LA Biomed research facilities, and that Dr. Yu was not acting on behalf of Dr. White. On appeal, LA Biomed challenged the jury instructions relating to "work of Dr. Yu," "conceive," and "reduce to practice."The Ninth Circuit reversed and remanded. The court first reviewed the P&C Agreement to determine whether contract law or patent law should be applied to the terms at issue. The court concluded patent law principles should have been applied and included in the jury instructions, as the real issue was whether Dr. White made a substantial contribution to the conception of the invention while using the LA Biomed facilities, not whether Dr. Yu was acting as Dr. White's agent (and therefore fell under the P&C Agreement Dr. White signed in 1985). As a result, the jury instructions focusing on agency law were improper, as the patent law co-inventorship language, as originally proposed by LA Biomed, should have been included in the jury instructions. Because the jury instructions misstated the applicable law, prejudice was presumed and the burden the shifted to Dr. White to demonstrate that the error in jury instruction were likely to be harmless. Dr. White was unable to show the error was harmless and the court reversed and remanded for a new trial.To read the full decision in Los Angeles Biomedical Res. Inst. v. White, click here.