The biotechnology industry has a long history of successfully licensing and litigating university technology.1 That trend looks to be continuing, even as other industries have taken aim at limiting patent enforcement. Ten U.S. universities obtained (collectively) over 2000 biotech patents last year.2 Given this level of investment, we can expect to see enforcement actions down the road. With that in mind, it is essential that academic institutions take a critical look at their patent agreements at the outset to ensure that they have perfected their rights. Problems with patent licenses and assignments otherwise may not come to light until many years after a technology has been invented and patented, often in the midst of litigation. And, at that point, taking measures to perfect patent rights may be too little, too late.
In the U.S., patent rights originally vest in the inventors themselves.3 A university may obtain these rights by assignment,4 but should be cognizant that language in an assignment agreement may—or may not—actually convey patent rights. Obtaining ownership rights in a patent is important because a patent can only be enforced in an infringement action in federal district court by the patent owner, or by its exclusive licensee.5 As a result, transferring patent rights back and forth between individuals or entities can be fraught with pitfalls.
For instance, the Federal Circuit has held that contractual language that an inventor “agrees to assign” an invention may be merely a promise to execute a future assignment, and generally does not immediately transfer the current rights to a patent that are needed to establish standing to bring a lawsuit.6 In contrast, language that an inventor “does hereby assign” an invention generally may act as a present assignment of future rights to an invention, which are automatically assigned by operation of law.7 Nonetheless, depending on the language and the context of the agreement, “hereby assigns” may not be enough. Two inventors recently discovered that they had not successfully transferred rights to sue for past infringement in IPXPharma, LLC v. Millennium Pharmaceuticals, Inc.8
The inventors had patented a way to prevent the emergence of multidrug resistance in tumor cells during chemotherapy, and had filed their first patent application in 1992. Three years later, they assigned their “entire right, title, and interest in the invention or improvements” to the University of Illinois.9 The assignment agreement was recorded at the Patent Office, and the patent-in-suit reflected the same. The parties agreed that—under the 1995 assignment—all rights in the patent belonged to the University.
In 2014, however, the inventors entered into another agreement with the University, even though the patents had expired two years earlier in 2012. Their motivation? Despite the patent expiration, an owner or exclusive licensee of a patent may still seek up to six years of past damages,10 which, in this case, would have corresponded to damages accrued between 2008 and 2012. The University had determined that it was in the best interests for it “to assign all right, title, and interest” in the patents back to the inventors, and signed an agreement, which stated that it “hereby assigns” its rights to the inventors. The inventors promptly assigned their newly re-acquired interests to a company they co-owned, IPXPharma, LLC, which then sued Millenium Pharmaceuticals, Inc. for patent infringement.
Millenium immediately filed a motion to dismiss based on IPXPharma’s lack of standing, which the district court granted. While the University had transferred “all right, title, and interest” to the patents back to the inventors, this was insufficient in this case to convey the right to sue for past infringement of the now-expired patent. An assignment of the right to sue for past infringement was not explicitly granted in the 2014 agreement, and was not inferred from the assignment of the patent itself.11 Because the inventors had never re-acquired the right to bring suit, they therefore could not have assigned that right to IPXPharma.
As a fallback position, the inventors argued that the University had agreed to assign the invention back to them in 1999, via a letter to the prosecuting attorney, which was later formalized as the 2014 assignment. The court easily disposed of this argument because the letter did not comply with the University’s own guidelines. It had been sent by an administrator, and had not been signed by the comptroller and Board secretary, or even endorsed by the University’s attorneys. The 1999 letter lacked the detail and formality of the 2014 assignment, and had never been recorded at the Patent Office. Moreover, the 2014 assignment had not incorporated the 1999 letter. Consequently, the 1999 letter was not an assignment.
As of 2014, the right to sue for patent infringement was possessed by the University. The entity that had brought the suit had no standing to enforce the patent, warranting the dismissal of the case.
In IPXPharma, the absence of language transferring the right to sue for past infringement scuttled the inventors’ attempt to enforce their patent. Whether you are seeking to enforce a patent, or desire to assign your rights to another entity, draft carefully. In this instance, in the context of the existing agreements, the omission of just a few words had a big impact on enforcement efforts.
1 See e.g., Rauber, C., $200M patent runs out (Nov. 23, 1997) (http://www.bizjournals.com/sanfrancisco/stories/1997/11/24/story2.html?page=all); Fallon, D., The Neulasta Question (Sept. 12, 2013) (http://www.fool.com/investing/general/2013/09/12/the-neulasta-question.aspx).
2 See, e.g., B. Huggett and K. Paisner, University biotech patenting, 2013, Nature Biotechnology 32 (512) June 9, 2014.
3 Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc. et al. 563 U.S ---, 131 S. Ct. 2188, 2195 (2011).
4 35 U.S.C. §§ 100(d), 281.
5 Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245, 1249-50 (Fed. Cir. 2000).
6 Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., et al., 583 F.3d 832, 841-42 (Fed. Cir. 2010) (aff’d 563 U.S. ---, 131 S. Ct. 2188 (2011)).
7 Id. at 842.
8 IPXPharma, LLC v. Millennium Pharmaceuticals, Inc., Case No. 3:14-cv-01545, Dkt. No. 57 (M.D. Tenn. Dec. 9, 2014).
9 U.S. Patent Number 6,171,786; IPXPharma, LLC v. Millennium Pharmaceuticals, Inc., Case No. 3:14-cv-01545, Dkt. No. 57 (M.D. Tenn. Dec. 9, 2014).
10 35 U.S.C. § 286.
11 IPXPharma, 3:14-cv-01545, Dkt. No. 57 at 11 (citing Arachnid v. Merit Indus., Inc., 939 F.2d 1574, 79 (Fed. Cir. 1991); Moore v. Marsh, 74 U.S. 515, 522 (1868); Minco v. Combuston Eng’g, 95 F.3d 1109, 1117 (Fed. Cir. 1996)).
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