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For Correction of Inventorship Under 35 U.S.C. § 256, the Laches Period Begins When the Patent Issues

November 14, 2012

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Last Month at the Federal Circuit - December 2012

Judges: Newman, Prost (author), Reyna (concurring)

[Appealed from: S.D. Tex., Judge Ellison]

In Hor v. Chu, No. 11-1540 (Fed. Cir. Nov. 14, 2012), the Federal Circuit reversed the district court’s SJ that the plaintiffs’ claims to correct inventorship under 35 U.S.C. § 256 were barred by laches, affirmed the district court’s SJ in favor of the defendant on the plaintiffs’ unclean hands defense, and vacated the district court’s sua sponte SJ that the plaintiffs’ claims were barred by equitable estoppel.

U.S. Patent Nos. 7,056,866 (“the ’866 patent”) and 7,709,418 (“the ’418 patent”) are directed to superconducting compositions and list Ching-Wu Chu as the sole inventor. The ’866 and ’418 patents issued in 2006 and 2010 from applications that were filed in 1987 and 1989, respectively. Pei-Herng Hor and Ruling Meng, who worked in Chu’s research lab at the University of Houston, filed suit in the District Court for the Southern District of Texas to correct the inventorship of the ’866 and ’418 patents under § 256.

The district court granted Chu’s motion for SJ that the claims were barred by laches, reasoning that the inventorship claims arose before the patents issued, and that Hor and Meng knew or should have known of their claims by at least the early 1990s. The district court found that a presumption of laches, which attaches after six years, applied because Hor did not sue until 2008 and Meng did not intervene until 2010, and that neither plaintiff rebutted this presumption. The district court also entered judgment in favor of Chu on the plaintiffs’ unclean hands defense and sua sponte determined that the inventorship claims were barred by equitable estoppel.

On appeal, the Federal Circuit relied on the language of the statute and held that a claim for correction of inventorship under § 256 does not begin to accrue until the patent issues. The Court disagreed with the district court’s reliance on potential correction procedures before the PTO, holding that an omitted inventor’s failure to seek correction under 35 U.S.C. § 116 or § 135 does not prevent the inventor from challenging inventorship under § 256.

The Court explained that its holding was supported by the plain language of the statute, the accompanying regulations, and “[its] instruction that § 256 be ‘interpreted . . . broadly’ to protect the ‘public interest of assuring correct inventorship designations on patents.’” Slip op. at 8 (quoting Chou v. Univ. of Chi., 254 F.3d 1347, 1358 (Fed. Cir. 2001)). The Court also noted that its holding was supported by the specific procedural rules governing §§ 116 and 135, namely, that § 116 requires consent of all parties and that § 135 allows for interferences to be provoked after a patent issues. Finally, the Court explained that requiring an omitted inventor to initiate an inventorship dispute before issuance may be inefficient, because claims are routinely narrowed or cancelled such that an inventor may not know whether there is an inventorship claim until the patent issues.

The Court held that because Hor and Meng filed their claims within six years of the issuance of the ’866 and ’418 patents, the district court erred in finding that a presumption of laches attached to those claims. The Court thus reversed the district court’s SJ in favor of Chu on the affirmative defense of laches.

Regarding unclean hands, Meng alleged that Chu’s laches defense was barred because Chu’s attorney failed to inform Meng that her former coworker had placed Meng’s inventorship of the ’866 patent at issue during an interference, and that the attoney’s actions caused her to delay in bringing her inventorship claims. The Federal Circuit disagreed and affirmed the district court’s SJ in favor of Chu. The Court explained that “[u]nclean hands is an equitable defense within the sound discretion of the district court,” and that it “[saw] no reason to disturb the district court’s decision.” Id. at 12. The Court noted that Meng did not provide any authority that the alleged actions of Chu’s attorney could be imputed to Chu, or cite to any evidence that she relied on the attorney’s alleged actions in not asserting her inventorship rights sooner.

Finally, the Federal Circuit vacated the district court’s sua sponte determination that the § 256 claims were barred by equitable estoppel. The Court held that the district court erred, because equitable estoppel is an affirmative defense that must be pleaded, and Chu did not assert it in his answer or his SJ motion. The Court thus reversed the SJ in favor of Chu on laches, affirmed the SJ in favor of Chu on unclean hands, vacated the sua sponte SJ in favor of Chu on equitable estoppel, and remanded the case to the district court.

In a concurring opinion, Judge Reyna agreed with the majority that the laches period for an inventorship claim under § 256 begins to run when the patent issues. Judge Reyna then stated that he diverged from the majority’s reasoning that it may be inefficient to require inventorship disputes to be initiated while a patent application is pending. According to Judge Reyna, “the differences between § 116 and § 256 create a potential incentive to not challenge inventorship until the patent issues.” Reyna Concurrence at 5. “Without a threat of laches that would bar a § 256 claim to correct inventorship within a specific time period beginning with the date the omitted inventor is shown to have known of the omission, the omitted inventor is encouraged to remain silent as the applicant bears the costs of prosecution and garners potentially lucrative licenses,” and “[t]hen, once the patent issues, the omitted inventor can claim entitlement to the fruit of [the] applicant’s labors.” Id.

Summary authored by Jolie D. Lechner, law clerk at Finnegan.