Omitted Inventors May Have Standing To Seek Patent Correction Based On “Reputational” Injury

Thursday, October 08, 2015

The U.S. Court of Appeals for the Federal Circuit recently ruled that a plaintiff not named as a joint inventor on several patents and pending patent applications has standing to maintain an action to correct inventorship under 35 U.S.C. § 256, despite the fact that he previously assigned all rights in the patented inventions to his former employer. Shukh v. Seagate Technology, LLC, Case No. 2014-1406 (Fed. Cir. Oct. 2, 2015). The decision recognizes for the first time that an omitted co-inventor may have an enforceable interest in correcting inventorship based on evidence that the correction would enhance the inventor’s reputation.

Practice Points:

  • The Federal Circuit rules that “reputational injury” may be sufficient to establish standing to seek correct nonjoinder of inventorship under 35 U.S.C. § 256.
  • Under the facts presented, a putative inventor presented evidence, which created a triable issue that nonjoinder had caused a specific and particular injury, based on evidence that status as a named co-inventor would enhance the plaintiff’s reputation as a scientist and improve future employment prospects.
  • A claim for correction of inventorship exists even though the plaintiff assigned all rights in the patents and applications to the defendant, and therefore lacked any ownership or financial interest in the patents.

Background:

The plaintiff in Shukh was a solid state physics research scientist at defendant Seagate Technology, LLC. At the outset of his employment, he signed Seagate’s standard “inventions agreement,” which prohibited him from filing a patent application without permission from Seagate, and included a present assignment to Seagate of all future inventions made during his term of employment. Subsequently, Shukh contended that Seagate failed to name him as a co-inventor on six patents and four pending patent applications covering subject matter that he had allegedly contributed. Seagate terminated him in 2009, in part due to his confrontational manner and reputation for claiming credit for discoveries made by other Seagate researchers. He then filed suit seeking to correct inventorship of the patents under § 256 and asserting several state-law tort and breach of contract claims.

At the motion to dismiss stage, the U.S. District Court for the District of Minnesota ruled that Shukh lacked any ownership or financial interest in the patents and applications based on his assignment of all rights to Seagate. The district court also granted summary judgment on the § 256 claim on the ground that the plaintiff lacked standing.

On appeal, the Federal Circuit vacated and remanded on the § 256 claim, and affirmed the district court’s other rulings. The appeals court declined to revisit the effect of the Seagate inventions agreement, stating that the district court’s ruling that Shukh lacked any ownership or financial interest in the patents was supported by binding precedent. Filmtec Corp. v. Allied-Signal, Inc., 939 F.2d 1568 (Fed. Cir. 1991).

Court Recognizes Standing Based on “Reputational Injury”

Although the Federal Circuit vacated and remanded the district court’s grant of summary judgment, it did rule that Shukh demonstrated standing to pursue its claim to correct inventorship. The court announced that in some situations, an inventor may have a reputational interest in being properly designated as the co-inventor on a patent:

Today, we hold that concrete and particularized reputational injury can give rise to Article III standing. As we noted in [Chou v. Univ. of Chi., 254 F.3d 1347, 1357 (Fed. Cir. 2001)], “being considered an inventor of important subject matter is a mark of success in one’s field, comparable to being an author of an important scientific paper.” 254 F.3d at 1359. We reasoned that “[p]ecuniary consequences may well flow from being designated as an inventor.” Id. This is particularly true when the claimed inventor is employed or seeks to be employed in the field of his or her claimed invention. For example, if the claimed inventor can show that being named as an inventor on a patent would affect his employment, the alleged reputational injury likely has an economic component sufficient to demonstrate Article III standing.

Slip op. at 7.

In addition, the court found that Shukh presented enough evidence of a specific reputational injury to create a triable issue on his claim to correct inventorship. First, evidence and expert testimony established that being a named inventor on patents was a significant factor in the professional reputation and stature of scientists in Shukh’s field. In particular, Seagate itself recognized issued patents as an indicator of good performance. Although the district court observed that the plaintiff already had an excellent reputation as an inventor, the Federal Circuit noted that the evidence suggested that his reputation would be enhanced had he been named on multiple additional patents and applications. The court also noted that being named on the additional patents could have rehabilitated Shukh’s bad reputation for claiming credit for Seagate innovations, since it would tend to validate his role as a co-inventor. Finally, Shukh presented evidence that his bad reputation was a factor in his inability to find employment after termination from Seagate. The Federal Circuit found that a jury could infer that his status as a co-inventor on additional Seagate patents would rehabilitate his reputation, which would improve his employment prospects and have a direct financial impact.

Practical Significance:

The Shukh decision suggests that in some situations, a plaintiff may seek to correct the inventorship of an issued patent even if he or she has assigned all rights to an employer or other third party. The decision in this case is based on two unusual facts. First, the plaintiff admitted that he suffered from a poor reputation, based in part on the perception that he claimed credit for inventions developed by others in the Seagate semiconductor research department. Second, he provided evidence that his reputation prevented other companies from hiring him after his termination from Seagate. The Federal Circuit ruled that correction of inventorship would rehabilitate Shukh’s reputation, and lead to improved prospects for employment. The court did not suggest that standing would apply in all cases in which a putative inventor cited increased fame as a result of being added to a patent. In at least some situations, however, plaintiffs may be able to establish standing by linking correction of inventorship to a specific and particular reputational injury.

The case also suggests that care should be taken in designating inventors on parent applications, despite the fact that employees who are potential inventors have executed blanket assignments to the employer or other company. Standing to correct inventorship through a federal court action may exist even if the putative inventor lacks any ownership or direct financial interest in a patent.