Patent Litigation Blocked By Co-Owner's Refusal to Participate

Israel Bio-Engineering v. Amgen (Fed. Cir. 2007).

In 2002, Israel Bio-Engineering (IBEP) filed suit against Amgen, Immunex and Wyeth (collectively “Amgen”) alleging that their Enbrel drug infringed claim 1 of their patent. (Enbrel is used to treat severe rheumatoid arthritis and psoriasis.).

Yeda intervened — arguing that IBEP did not, in fact, own rights to the patent.  Although Yeda was under contractual obligation to transfer certain patent rights to IBEP, Yeda argued that some of the claims of the patent were invented only after those obligations had ended — and thus that Yeda was under no obligation to transfer rights to IBEP. The district court agreed with Yeda and dismissed IBEP’s suit for lack of standing — finding that IBEP had at most a partial interest in the whole patent.

Generally, one co-owner can block other co-owners from enforcing a patent simply by refusing to join voluntarily in the patent infringement suit.

Absent the voluntary joinder of all co-owners of a patent, a co-owner acting alone will lack standing.

Although it allowed IBEP to make a new argument on appeal, the CAFC applied Israeli contract law to hold that IBEP, at most, was a co-owner.

Notes:

• One fact that makes this case even more interesting is that IBEP was asserting claim 1, a claim that very likely fell under the terms of the assignment.  If the patent had only included claim 1, then it would have been owned by IBEP.  However, Yeda had rights in claims 2 and 3. Although those claims were likely unenforceable, their existence gave Yeda a partial interest in the entire patent.
• 2005 Appeal of The Case: Israel Bio-Engineering Project v. Amgen et al. (Fed. Cir. 2005).
• Baristas talk about another Yeda case.
• Beware that there are a few exceptions to the rule stated above.

Comments

[Kevin E, Noonan]

Dennis: I'm curious - what does the graphic represent?

[Dennis Crouch]

The morphology of murine A9 cells treated with a tumor necrosis factor inhibitory protein. http://www.google.com/search?q=patent+5981701

[Jim Uschold]

Why must all patent owners join in an action? Why don't co-owners merely owe each other an accounting? Isn't this how it works with real property (any co-owner can lease property but owes the others an accounting) and with copyrights (any joint author can license a copyright and/or bring an infringement action, but owes the others an accounting)?

If one co-owner doesn't like what another co-owner is doing, he can sue the co-owner or intervene in the lawsuit. To allow him to prevent an infringement action from being filed is to allow him to grant a de facto license to the infringer.

[Dennis]

Jim - This is a good question. In patents, any co-owner has the right to license the patent or even give-away its rights freely.

In an infringement situation, a co-owner's refusal to participate could be seen as granting an implicit license to the infringer. The way that the court's avoid the question is simply to force the patent holders to get their house in order before filing suit.

[anonymous]

Re: Mr. Uschold's analogy to other forms of property, does anyone know how the standing inquiry works when a co-owner, lessee, or licensee wants to sue for trespass or copyright infringement?

[Chris]

I think anonymous raises a good point with respect to Mr. Uschold's analogy. The difference seems to be that licensing expands rights in a third party whereas an infringement suit restricts rights. Co-owners of a patent owing each other an accounting as in real property would be analogous for patent licensing but not for infringement. It seems that the law prefers promoting the progress of science through licensing rather than restricting it through infringement suits.

[tom_bhs]

can someone list one or more exceptions under which the rule stated above can not apply?

[Abe Hershkovitz]

Lesson to be learned by those of us doing patent prosecution work. If you don't have a signed Assignment from all co-inventors before issuance of the application, ask your client if all named inventors contributed to all the claims. If the co-inventor(s) who has not signed an Assignment did not contribute to all the claims, don't pay the issue fee, and instead, carve the application by amending it to contain only claims belonging to those who have signed an Assignment, removing non-contributing individuals from the inventive entity. Then file a separate continuing application drawn to claims belonging to and naming all the joint inventors. That way, you would at least have one patent that is owned by a single party. Ahhhh, 20/20 hindsight!

[Dennis Crouch]

Tom: In certain limited instances, an exclusive licensee can bring suit. This was discussed in the CAFC's recent case involving Aspex Eyewear and Miracle Optics.

[Andrew Sutter]

Jim Uschold's question also highlights one of the hidden pitfalls in many typical joint development agreements. Parties often use the "what's mine is mine, what's yours is yours, and what's ours is ours" approach for IP allocation. That may result in joint ownership of a lot of the IP that's created during the cooperation. But the rules for different kinds of jointly-owned IP can be quite different (and not only as to who has standing to enforce, but as to right to grant licenses and right to accounting). As for patents, joint ownership makes it hard to sue an infringer who has some favorable business relationship with your other joint owner. Those relationships often weren't foreseen or even foreseeable at the time of your collaboration. A better way is to divide the IP along subject-matter lines using an all-or-nothing approach (crude e.g.: you own the process, I own the device, COM etc.). Designated owner gets assignment of other party's whole r/t/i.

In this case, sounds like the parties did the right thing, but the issue was whether the invention in question arose during the collaboration or not. Makes us contract guys feel like Sisyphus when it comes to polishing up our clauses.

[Matt Bresnahan]

Jim:
All co-owners of a patent must join in an action for the very same reason why all co-owners have the right to grant (non-exclusive) licenses. Since any co-owner can unilateral grant a license to a third party, it would be manifestly unjust to permit the other co-owner to sue that third party for infringement, let alone inconsistent with the reason we have patents in the first place: to better us all with the spread of ideas by creating incentives to invent (See Art. I, Section 8, cl. 2 of the Constitution). Someone correct me if I am wrong, but I believe Yeda (defendant in this case) was a licensee of the non-consenting co-owner, and thus it makes sense that the non-consenting co-owner would not want to sue his licensee (he probably would have to pay his licensee for the costs of licensee's defense under their tech trans agreement!)

[anonymous]

Where international considerations are involved, it's important to be aware of the provisions applying in other relevant territories.

In the UK, unless there is an agreement to the contrary, a co-owner cannot grant a licence under a patent without the consent of the other co-owner(s). Also, a co-owner can bring infringement proceedings without the concurrence of the other co-owner(s).

[tom_bhs]

Dennis: thanks for your offer, in China, an exclusive licensee can also bring a suit even without consent of a patentee having the patent in the suit.