American Cyanamid Co. ("Cyanamid") owns United States Patent No. 4,431,634 (the '634 patent) for prenatal iron supplements ("Materna"), a reformulation of an earlier supplement that provides improved iron absorption. Plaintiffs University of Colorado and two researchers ("the Doctors") allege that they in fact invented the reformulation, communicated the formula to Cyanamid, that Cyanamid intentionally concealed the patent application from the Doctors, and omitted them as co-inventors in the patent application. The Doctors sought relief under 35 U.S.C. § 256, which allows the names of accidentally omitted but legitimate inventors to be substituted on a reissued patent certificate without invalidation of the patent, and for restitution damages and equitable title to the '634 patent. They also sought damages for fraudulent nondisclosure, patent infringement, and copyright infringement.
The district court granted summary judgment to Cyanamid on the § 256 claim, refusing to substitute the Doctors as the named inventors, and denied the Doctor's claims of patent infringement and ownership of equitable title to the '634 patent. In a bench trial, the district court applied state common law rather than federal patent law to determine inventorship and found that the Doctors indeed invented Materna. Based on this finding, the court held Cyanamid liable for fraudulent nondisclosure and unjust enrichment. The Court assessed significant damages to Cyanamid, who appeals the liability judgment. The Doctors appeal the denial of correction of inventorship and equitable patent title claims.
The Court found that the district court properly applied state law to the issues of fraudulent disclosure and unjust enrichment, as these claims did not arise from an attempt to enforce intellectual property rights, but from an alleged duty between the parties. The Court held that federal patent law does preempt states from dictating standards for inventorship, as to hold otherwise would allow states to develop different requirements for inventorship, grant greater or fewer property rights to inventors, and would give rise to different remedies than federal patent law. Because the district court used an incorrect standard for determining inventorship, the Federal Circuit vacated all judgments resulting from the determination, including the damage awards, and remanded for redetermination under the correct standard.
The Court noted that the district court should, in its recalculation of damages, consider the usual and customary arrangements at the time of the filing of the patent application, the relative nonexistence of university licensing at the time, and that the Doctors did not undertake to file a patent of their own or adequately meet their burden of proof of loss of prestige. Thus, the Court indicated that the district court should award only the amount Cyanamid would have paid the Doctors to secure cooperation in filing for a patent or for an assignment of interest in the patent and/or an exclusive license thereunder.
In reviewing the district court's denial of relief under § 256, which would have granted the Doctors equitable title to the '634 patent, the Court noted that the district court refused relief because Cyanamid's omission of the Doctors as inventors was intentional, not unintentional as the statute requires. The Federal Circuit points to its recent decision in Stark v. Advanced Magnetics, 119 F.3d 1551 (Fed. Cir. 1997) in which it held that § 256 allows correction in all misjoinder cases whether the error occurred by deception or by innocent mistake; thus, relief under the statute is not precluded in this case. Therefore, the Court remanded for reconsideration of the merits of this claim.
In sum, the Federal Circuit vacated the district court's decisions on inventorship, fraudulent nondisclosure, and unjust enrichment as well as the summary judgment in favor of Cyanamid on the correction of inventorship and equitable patent title claims, remanding for reconsideration of these issues.
Prepared by the liibulletin-patent Editorial Board.