Working With Inventors Post-AIA: Managing Inventor Challenges And Preventing Common Mistakes

1. Introduction

   The America Invents Act (AIA) was signed into law on September 16, 2011, and changed many provisions of the Patent Act that affect how lawyers and agents should work with their inventors. Many of these changes can present traps for prosecutors and surprises to inventors. This paper alerts practitioners to issues raised by the AIA that impact inventors and what inventors need to understand going forward, so that missteps can be avoided. For example, inventor disclosures and first-to-file practices greatly impact how inventors should conduct themselves relative to disclosures, competitors and research collaborators. This paper also gives recommendations for prosecutors regarding how to handle the day-to-day issues associated with inventor documents, such as oaths, declarations and assignments post-AIA.

2. Inventors Are Not the Only "Inventors" (i.e., Applicants) Under the AIA

   A big change brought by the AIA, with respect to inventors, is who can apply for a patent. The AIA provides that someone other than the actual inventor or inventors may apply for a patent.1 An applicant may be any person or "juristic entity," e.g., a corporation or other legally created organization, (1) to whom the inventor has assigned; (2) to whom the inventor is under an obligation to assign; or (3) who otherwise shows sufficient proprietary interest in the matter.2 The 35 U.S.C. § 118 states "A person to whom the inventor has assigned or is under an obligation to assign the invention may make an application for patent." Of course, an application can still be filed in the name of an inventor or in the name of a group of joint inventors.

   Thus, post-AIA, the inventor and the applicant are distinguished from one another. As to the difference between an inventor and an applicant, an inventor is a person who must execute the oath or declaration.3 An applicant may take various other actions in the application and can include any of the three categories listed above. Even where the applicant is the assignee, the inventor(s) must still satisfy the requirements for an oath/declaration.

   If the application is assigned to an assignee or the inventor is under an obligation to assign it to an assignee, the assignee should be identified as the applicant. Applications filed under the AIA should be submitted with an application data sheet (ADS). While there is no currently issued Code of Federal Regulations (CFR) provision requiring the use of an ADS, the U.S. Patent and Trademark Office (USPTO) has set forth proposed rules requiring the use of an ADS for various purposes, such as identifying an applicant other than an inventor.4 Using ADSs routinely in filings is a best practice.

   Best practices dictate that an ADS should be used routinely in all filings to identify the inventors, applicant and the assignee. The newly revised ADS form explicitly separates the applicant from the assignee, and includes a notation that failure to identify the assignee on the ADS will result in no assignee being printed with the publication of the application.

   For Patent Cooperation Treaty (PCT) § 371 National Stage applications coming into the United States, the entity or person listed on the request form in the international application is considered the applicant for the corresponding U.S. application. If this information will differ at the national-phase stage, then a Request for Recording of a Change (PCT Rule 92bis) must be filed in the international application or as a new ADS, in the corresponding U.S. case.

3. The Role of "Juristic Entities" as Applicant

   Juristic entities are corporations and other non-human entities created by law and given certain legal rights that seek to prosecute an application. Post-AIA, juristic entities may be applicants in patent applications.

   The rules regarding juristic entities became effective September 16, 2012, and apply to any paper filed on behalf of a juristic entity on or after September 16, 2012, regardless of the filing date of the application or proceeding.5

   For prosecution purposes, however, juristic entities can only act through a registered patent practitioner, even if the juristic entity is the applicant.6 Thus, most papers submitted on behalf of a juristic entity must be signed by a patent practitioner, unless otherwise specified, in accordance with 37 CFR 1.33(b)(3). However, it is important to keep in mind that only a limited number of documents may be signed by a juristic entity. These include: a terminal disclaimer, statement under 37 CFR 3.73(c), power of attorney and a substitute statement.

4. Proper Assignments from Inventors Are Essential

   Proper assignment to an employer or assignee of patent ownership rights is critical to ensure that the rights transfer and can be subsequently transferred or used by the assignee. A patent assignment is a transfer or sale of the entire interest in a patent. In other words, all rights that were originally granted to the inventor(s) will transfer to the assignee. Generally, patent assignments can be made during the application process or after a patent issues. As a best practice, however, we recommend that patent applications be immediately assigned from the inventor(s) to the company so that the company can control the prosecution of the application and can add the patent (when issued) to its portfolio. Although recording an assignment with the USPTO is not required, recordation can protect against confusion as to the true owner of the patent, which may be especially important with any future sales or transactions involving the assignee and the patent(s).

   Several issues can impact a company's ownership of patent rights and assignments, but one of the most common is incorrectly drafted employment contracts. Generally, employment contracts bind an employee to assign all inventions and discoveries within the scope of employment to the company. Although, some employment contracts fail to even include such a provision. Some agreements include an erroneous provision that, essentially, has no effect. For instance, a common mistake is to include a provision to a "promise to assign" to a future rather than a present assignment,7 which is not an effective assignment without further action by the employee. In the case where there is simply no employee contract and no agreement with each inventor addressing the assignment of an invention, each co-inventor or prior assignee may retain the right to practice, and perhaps assign, the invention without compensating or even notifying the other co-inventors or assignees.

   Assignments can be complicated when the inventors have obligations to former employers.8 If this is the case, the prior employment contracts of the founders and inventors of patents and applications should be examined for provisions that allow a former employer to assert rights in the company's intellectual property (IP) or provisions that limit the former employee's ability to compete in its technology and market areas. University rights may also affect proper assignments, and agreements between universities and inventors of the technology should be studied to ensure that a university cannot assert rights in the company's IP. If the invention/research was funded by the government, the government might retain rights in a patented invention resulting from the government support.9

   As a practice note, evidence of ownership (e.g., an assignment, employment agreement, etc.) should be recorded at the USPTO no later than the date the issue fee is paid. Such recordation of assignments, if made using the USPTO electronic system, is free as of January 1, 2014. Also, where the applicant is an assignee or obligated assignee and the real party in interest at the time of allowance has changed, the USPTO should be notified of the change so that the patent can issue to the real party in interest.10 Any changes in the ownership status of a patent should similarly be updated and recorded at the USPTO to avoid confusion.

5. Strategies to Address Potential Issues with Assignments from Inventors

   Strategies for handling potential assignment issues with inventors can be as easy as including practical provisions in documents. For instance, an assignment may be included in the company's internal invention disclosure form. Thus, the inventor would essentially execute the assignment when filling out the form. However, it should be noted that if the invention disclosure form is then the assignment of record, it may lose any attorney-client privilege protection and become part of the record when filed at the USPTO. Another practical way to address this is to clarify the inventor's obligation to assign in all initial communications with the inventor. Be sure to use clean/self-serving communications, if later needed to evidence obligation. It is good practice to recommend that your client's employment agreements include a provision that the employee is under an obligation to assign and/or hereby assigns rights to any and all IP developed under his/her employ.

   An issue to recognize is that state law will govern whether an assignment is valid, not federal law or the USPTO regulations. Satisfying the USPTO requirements for the oath/declaration may not be sufficient to effect an assignment under state law. Recognize also that some states have a common law obligation to assign, while others do not.

6. Powers of Attorney and Assignments After the AIA and the Ethical Paradigm

   For patent applications filed on or after September 16, 2012, only the applicant may grant a power of attorney. Thus, where the inventors are named as the applicant, an assignee would need to become the applicant by filing a request under 37 CFR 1.46(c) and include a corrected ADS per 37 CFR 1.76(c) and a statement under 37 CFR 3.73(c).

   For...