Ownership of Patent Rights

Ownership of Patent Rights Statutory and Common Law

Ownership of Patents • The Romantic notion of inventorship • Co-ownership of inventions • Employee/Employer relationships • Corporate/Public financing of inventive activities

The Romantic Individual • In the early period of the development of patent law, inventors were individuals who worked on ideas without depending a lot on external funding. • Patent law construed patent rights on inventions as purely personal incidents. • However, as some benefactors of the early scientists and inventors began to realize that enormous fortunes could be made from the commercialization of inventions, the legal regime on ownership of patent rights began to face philosophical and legal pressures for a change in the jurisprudence on ownership of patents.

The Romantic Era • Another factor which influenced the development of the law on ownership of patent rights over inventions was the emergence of scientific and research schools where researchers worked together and often contributed in various ways to develop inventions. • Hence, from being a solitary process and a framework for rewarding individual inventiveness, the creative process and ultimately the patent system evolved into a system capable of protecting gregarious and corporate stakeholders. • These changes in the social character of inventiveness influenced the law on ownership of patented inventions.

Individualism and Inventoship • Despite the changes in the social character of inventiveness, patent law still retains the fiction that an inventor is that person who performed the creative act of invention. • Who is an inventor? In Apotex v. Wellcome, the Supreme Court reiterated that an inventor must meet two requirements, namely, • (a) s/he must conceive of a new idea and; • (b) reduce the conception into practical shape.

Ideas vs. Embodiment • Sometimes a person may conceive of an idea but would lack the equipment or resources to reduce that idea to a practical reality. If in such circumstances, the person solicits for help and such financial or infrastructural help is given but the others contributed NO CREATIVE intellectual act of invention, the patent rights will remain solely with the initiator of the idea.

Joint-Inventorship • Further, if the concept or idea is from one person but other colleagues make “suggestions of practical value which assist in working out the main idea and making it operative, or contribute an independent part of the entire invention which helps create the whole, s/he is a joint inventor even though his contribution is of minor importance.” See Gerald Wire Tying Machines Co. v. Cary Manufacturing Co., Ltd.

Apotex v. Wellcome • In Apotex v. Wellcome, the Supreme Court clarified the dictum in Gerald Wire Tying, to the effect that, “to the extent this suggests that an individual who contributes to the inventive concept may be a co-inventor without being the prime originator, I agree with it. To the extent, however, that it can be read to include as inventors those who help with the invention to completion, but whose ingenuity is directed to VERIFICATION rather than the original inventive concept, I respectfully disagree.”

Apotex v. Wellcome • Glaxo-Wellcome conceived of the idea that AZT, an old compound, would work in humans against the HIV retrovirus. Glaxo-Wellcome was not equipped to undertake the required testing and thus turned it to other laboratories including the National Institutes of Health (NIH). • NIH scientists performed the requisite tests and in February 1985 confirmed that AZT inhibited the replication of HIV in vitro. They advised Glaxo-Wellcome accordingly. • In March 1985, Glaxo-Wellcome filed in the UK the patent application from which the Canadian patent claims priority.

Apotex v. Wellcome • In a suit for infringement of the Canadian patent, Apotex countered, inter alia, that the Canadian patent was invalid for the misleading nature of the disclosure in that the disclosure did not name NIH as a co-inventor. • The question on this point was whether NIH (Drs. Broder & Mitsuya) was a co-inventor? • The Supreme Court held that in the steps leading from conception to inventorship, the inventor may utilize the services of others, who may be highly skilled, but those others will not be co-inventors unless they participated in the inventive concept as opposed to its verification.

Joint Inventors & Co-Inventors • On the other hand, there are cases where two or more persons contribute ideas and work together to reduce the idea into a working invention. • In such cases, the contributors are treated as co-inventors or joint inventors for purposes of obtaining a patent on the invention. • Patent law permits the granting of a patent to two or more persons in respect of one invention.

s. 31 of the Patent Act • Under s. 31 (1) of the Patent Act, where an invention is made “by two or more inventors and one of them refuses to make application for a patent or his whereabouts cannot be ascertained, the other inventors or their legal representatives may make application, and a patent may be granted in the name of the inventors who make the application on satisfying the Commissioner that the joint inventor has refused to make application of that his whereabouts cannot be ascertained after diligent inquiry.” • See also subsections 3,4, and 5 of s. 31.

Employer-Owned Inventions • The rules detailed above apply only in relations devoid of the legal incidents of employee-employer relationship. • The law on ownership of inventions in cases where there are no compulsory assignment of patent rights has developed into two categories. • The first is the category where the inventor is specifically hired to invent. • The second is where the employee is generally inventive but has no specific invention tasks assigned to him/her.

Hired to Invent • In cases where the employee is specifically hired to invent, whatever invention that comes from such employee belongs to the employer. Devoe-Holbein Inc v. Yam (1984) 2 CIPR 229. • As long as the invention was made during the duration and in furtherance of the contractual engagement, ownership rights will vest in the employer. See the case of Seanix Technology Inc v. Vladislav Ircha, [1998] 10 W.W.R. 688. • The law suggests that there is an implied contract to assign employee inventions to the employer but every case will depend on its facts.

Hired to Invent • The employee is often deemed to be the trustee of any invention made by him/her in the course of his/her employment. • The employer may thus act as the legal representative of the employee. • This implied term of contractual relationships may, however, be displaced by a contrary legal agreement. Seanix Technology Inc., v. Ircha (1998) 78 CPR (3d) 29.

Hired to Invent • Where, in spite of a contract of employment the employee develops an invention OUTSIDE of the work assigned to him/her, and in his/her spare time, ownership rights on the invention may, in the absence of an agreement to the contrary, vest in the employee. • The question whether an implied agreement to assign exists between the employer and the employee is one of fact.

Inventive Employee; But not Hired to Invent • The second category covers those cases where an employee is hired for a general purpose without expectations that s/he would invent things but because s/he is inventive, some inventions are developed in the course of employment. • The law suggests that where such employee uses the tools or resources of the employer or makes the invention in the course of work, there may be a deemed assignment of the invention and rights thereto to the employer.

Shop Right • In cases where there is considerable doubt as to whether the employee used the resources of the employer, the courts may come to the equitable remedy of creating a “shop right” for the employer. • This right authorizes the employer to make use of the invention and shields him/her from any action in infringement. • The employee gets the legal title but the employer enjoys some equitable benefits such as non-infringing use.

Spiroll v. Putti • Plaintiff employed defendant to operate a machine for manufacturing pre-cast, pre-stressed, hollow-core concrete slabs used for flooring. • The defendant was hired as a mechanic and by remarkable talent became the mechanical superintendent in charge of all machines at the plant operated by the plaintiff. • The defendant greatly improved on the performance of the machine in issue. • He applied for and obtained patents on the improvements.

Spiroll v. Putti • In deciding whether the patents on the improved machine belonged to the employer, the court considered the following factors: • Did plaintiff deal with confidential information? • Was there evidence of fraud? • Was plaintiff hired to invent? • The court concluded that upon case law, there is no principle of law that supports the notion that mere employment, ipso facto obligates the employer to deliver up his invention to his/her employer.

Spiroll v. Putti • “ I take this to mean that a court must first find what the employee is engaged to do and, if he invents something while performing that function, it belongs to the employer. If he is employed to design then it would be a "normal incident" of his contract of employment that he should do so and that the result of his ingenuity should belong to his employer.”

Public Servants • Inventions made by persons employed by the federal public service must be disclosed to the appropriate Minister and the patent rights thereto belong to Her Majesty in Right of Canada IF: • The person made the invention while acting within the scope of his/her duties, • Used government facilities. • The public servant affected by the law in issue may be given an award. See s. 10. of the Patent Act.

Inventions of War Munitions • S. 20 of the Patent Act prescribes that any public officer or employee, acting within the scope of his/her duties who invents munitions of war, MUST, if required by the Minister of Defence, assign the same to the Minister of Defence. • Compensation would however be paid.

Government Use of Patents • The Patent Act is binding on the Crown. • Therefore, save in cases of national emergency, or extreme urgency, a patentee and the Crown are expected to negotiate the commercial use of patented inventions.

Right of Priority • Given the need to regulate the (mis)use of atomic energy, where in the opinion of the Commissioner for Patents, any patent application relates to the production, application or use of atomic energy, such application shall before it is laid open for public inspection, be communicated to the Atomic Energy Control Board. • The Minister of Defence may relieve the inventor of such invention, subject to the payment of compensation.

Summary • Ownership of patents is therefore governed by regulations extending beyond the Patent Act. • The regime incorporates prescriptions from contract, equity, common law, and extra-patent legislation. • The facts of each case will invariably determine the applicable legal rules.

Ownership of Patent Rights