Patent Docs: The importance of accounting for inventor assignments

An ounce of prevention was certainly worth the pound of its eventual cure when it comes to assigning inventions

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Patent Docs: The importance of accounting for inventor assignments

The Federal Circuit recently considered the significance, regarding ownership of an invention, of legal arrangements involving consulting agreements. More specifically, the Court considered the consequences that can ensue when a consulting agreement lacks an express provision obligating the consultant to assign to his employer his inventorship rights for inventions made during the course of his consultancy.

The case, Ferring B.V. v. Allergan, Inc., involved claims to patent ownership by a former consultant, Seymour Fein, from Ferring Pharmaceuticals. During Mr. Fein’s employment he was involved in a project involving desmopressin, used to treat sleep disruption caused by nocturia. Unfortunately, this compound had low bioavailability and a large range of absorption, and it was thought that increasing desmopressin doses (to reduce these negative aspects of use of the drug) could pose a safety issue. In addition, the drug was also accompanied by hyponatremia (low blood sodium ion concentration), which can be life-threatening, and Mr. Fein was asked to consult on this problem as part of his consulting duties.

According to the opinion Mr. Fein suggested using low doses of desmopressin formulated "in a waterless orodispersible form (a 'melt') [and administered] sublingually through the mucosal membranes of the mouth" as a solution to the problem. When tested, such a formulation showed double the bioavailability of previously marketed forms of the drug. Clinical trials and a patent application filing by Ferring followed. Thereafter, Mr. Fein was not further involved with development of these formulations of the drug. Instead, he was tasked with overseeing a study testing intravenous desmopressin administration, where he suggested improvements that permitted a greater weight range of participants. When Ferring filed an application claiming priority to the initial application, Mr. Fein was named as an inventor but his contract with Ferring was terminated shortly thereafter.

Mr. Fein communicated with Ferring through his attorney for the next two years regarding his inventive contribution to embodiments of the invention encompassing sublingual desmopressin administration. In his extensive correspondence, Mr. Fein reminded Ferring that his consulting agreement contained no obligation that he assigned any inventions to Ferring and his inventive contribution to the invention claimed in Ferring's PCT application (as acknowledged by Ferring naming him as an inventor).

In response, Ferring informed Mr. Fein that it had "dropped" the sublingual administration feature of the claimed invention and hence Mr. Fein was no longer properly an inventor. Mr. Fein acquiesced to Ferring's decision but informed the company that he was also an inventor of "the associated low dosage possibilities enabled by the sublingual administration route" which had not been specifically claimed in the pending application.

Somewhat aggressively, Mr. Fein notified Ferring that he intended to pursue patent protection on the sublingual administration route invention as well as "the associated low dosage possibilities" which he assumed Ferring would relinquish any claims thereto. Ferring's response included its reasoning that it was not pursuing these aspects of the invention because they were in the public domain and hence not patentable. Nevertheless, Ferring refused to provide a blanket disclaimer of ownership or inventorship by Ferring employees without reviewing any patent application Mr. Fein might thereafter file.

Mr. Fein filed an application naming himself as sole inventor and claiming priority to the earlier-filed Ferring application. The claims were directed to low dose desmopressin formulations not limited to a sublingual route of administration. In response (the next day, according to the opinion), Ferring filed its own new application, claiming priority to its earlier applications, that did not contain claims directed to desmopressin formulations for sublingual administration nor name Mr. Fein as an inventor.

According to the opinion, these various Ferring applications resulted in eventual patent grants, and Mr. Fein likewise obtained a patent based on his own clinical trials; this patent claimed "pharmaceutical compositions comprising varying low doses of desmopressin administered by various routes of delivery" (not limited to sublingual delivery routes).

This prompted Ferring to write to inform Mr. Fein that it believed his patent applications contained proprietary and confidential information and that Mr. Fein was not entitled to the invention claimed in his patent.

Continued correspondence between the parties failed to resolve these issues. In the meantime, Mr. Fein took steps to commercialize the invention encompassed by his patent claims and pursued further patent protection, resulting in two additional patent grants. Ferring filed suit to correct inventorship (and for state law claims). In that suit, co-defendant Allergan (joined by all co-defendants) moved for summary judgment that Ferring's claims were barred by the doctrine of equitable estoppel; the Court granted that motion. The basis for the District Court’s decision was that "Ferring's inaction for over seven years" after Mr. Fein's correspondence (through his attorney) amounted to "misleading conduct, and that the evidence further showed that Ferring's response to Mr. Fein's assertion that he had invented low-dose desmopressin formulations "was not that the low dosage invention was Ferring's intellectual property, but that it was not patentable at all, and that Ferring would no longer be pursuing claims directed toward it."

The Court denied Ferring’s motion to have their inventors named as inventors on Mr. Fein’s patents.

The Federal Circuit vacated and remanded the decisions of the District Court, rejecting Ferring's challenges to the Court’s estoppel decision. However, the Court stated that differences on the scope of the invention claimed in Ferring’s patents and Mr. Fein’s patents raise significant factual issues that needed adjudication in the District Court. Specifically, the Court could not decide whether Ferring was barred by estoppel because “any inference that a patentee [Ferring] made a misleading communication by omission or acquiescence 'must be the only possible inference from the evidence,'" and the Court did not believe that to be the case.

Thus, the Court opined that the District Court erred in concluding as a matter of law that Ferring's attempt to correct inventorship contradicted its earlier position as reflected in correspondence with Mr. Fein's attorney. The error was the District Court's view that the scope of the claims discussed in that correspondence was commensurate with the scope of Mr. Fein's granted claims.
Specifically, the panel understood (and believed the parties understood) that Ferring had "disavowed any ownership claim to the sublingual, transmucosal route of delivery of desmopressin and its associated low-dosage possibilities that Fein identified as his invention." But “Fein pursued claims untethered to sublingual administration of desmopressin," according to the opinion and none of those claims are limited to sublingual administration.

Under these circumstances, the Court believed that "a reasonable factfinder could conclude that it would have been unreasonable for Fein to infer from Ferring's pre-2004 communications that Ferring intended to relinquish inventorship rights in the issued claims of the Fein patents."

The lesson to be learned from this litigation is that the parties are now in the position, after pursuing their claims below and having appealed to the Federal Circuit, to return to the Court to litigate these issues fully. This uncertainty and expense could have been avoided simply by obligating Mr. Fein to assign any inventions he made while employed by Ferring to Ferring as his employer. This ounce of prevention was certainly worth the pound of its eventual cure, and the best lessons being learned by the mistakes of other people is the object lesson to be garnered from this case.

Kevin Noonan is a partner with the law firm McDonnell Boehnen Hulbert & Berghoff LLP and represents biotechnology and pharmaceutical companies on a myriad of issues. A former molecular biologist, he is also the founding author of the Patent Docs weblog,

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