Archive for the ‘Patent’ Category

Who Owns Life?

Friday, March 19th, 2010

Those who are not patent attorneys may be surprised to learn that it is possible to patent the human genetic code.

In fact, approximately 20% of all human genes are patented.

The US Patent and Trademark Office (PTO) has granted patents on genes and their DNA building blocks since the early 1980s, but this practice has recently reentered public awareness due to a lawsuit (Association for Molecular Pathology v. US Patent & Trademark Office) by a breast cancer survivor against Myriad Genetics, a company that has obtained patents on two genes closely associated with increased risk for breast and ovarian cancer, BRCA1 and BRCA2. These patents make Myriad the sole provider of tests to detect those genes, at a cost of over $3,000 per test.

Patents give their owners exclusive rights to use, manufacture, or sell the patented invention for 20 years from filing of the application. In order to qualify for a patent, an invention must be new, useful, and non-obvious to an expert in the field. However, patents cannot be granted on laws of nature or theoretical phenomena, for example the Theory of Relativity. Prior to the 1980s, the PTO considered that life forms were equivalent to the laws of nature, and therefore not patentable subject matter.

However, the Supreme Court ruled in Diamond vs. Chakrabarty (1980) that a scientist could obtain a patent on a lab-created bacterium that could consume oil slicks, on the grounds that the organism did not occur in nature, and therefore was a “manufacture” or “composition of matter” under 35 USC Section 101, and not equivalent to a law of nature. (more…)

モノ作りと知恵作りとライセング, Part2

Sunday, February 28th, 2010

Making Things, Making Knowledge, and Licensing, Part 2>> English translation








「金融危機の影響がもっとも大きく出た日本。GDPはまもなく中国に抜かれ3位に転落するのは必至である。こうした中、日本はグローバル経済の中で、何を作り、何で稼いでいくべきなのか。世界最強のブランドと言われた“メイド・イン・ジャパン”が、出口を求めて必死にもがいている。いま日本の製造業が直面している世界の地殻変動、それは、猛スピードで技術が陳腐化し、製品の差別化が難しく、しかも製品の寿命が超短命に陥っていることだ。メイド・イン・ジャパ ンの代名詞だったテレビ業界では、特にその傾向は顕著で、どんなに高度で精密な薄型テレビを作り出しても瞬く間に韓国台湾などアジア勢の猛追を受ける。少しでも安いモノをと考える消費者にとって、ライバルがある程度の技術力を持てば、日本製品の優位性は一気に崩れるのだ。こうした中、いま一度日本国内工場 の存在意義を問う、「生き残りをかけた実験」が始まっている。東芝ではコストを度外視した超高機能テレビを作り技術力を極めようとする試みが佳境を迎えた。JVCケンウッドでは、自社生産にこだわらず、技術を中国メーカーに譲って製品を作らせ、そのライセンス料を企業収入にしていこうという動きも見られる。番組は、「日本は今後どうやって食べていくのか」、「日本人は何が得意なのか」と自問を繰り返す二つの電機メーカーの社運を賭けたプロジェクトに密着 し、メイド・イン・ジャパンの未来を見つめていく。」



番組によると、JVCケンウッドは、モノを作るだけでなく、魅力的なシステムをあみ出す知恵にこそ日本の活路があると思い至ったのです。堺屋氏はその考え方に賛同すると思います。 (more…)

5 Minute FAQ: When Is An Agreement a Contract?

Sunday, February 14th, 2010

A contract is an agreement that is legally binding, and can be enforced in court.

Q: So what are the magic ingredients that make an agreement a legally binding contract?

First, there must be a concrete, bona fide offer, for example, “I will sell you those shoes for $25”.  But if the seller had said instead, “I am not selling those shoes, but if I did I would probably sell them for $25,” then no contract can result.  (This is similar to the language used in a letter of intent, which is also not legally enforceable.)

Second, there must be an acceptance that matches the offer on at least the main terms, such that there is a “meeting of the minds”—“I will buy those shoes for $25.”  If there isn’t a match, then the reply to the offer might be considered a counteroffer (“I will buy those shoes for $20”) which requires its own acceptance.  Note that an offer can be accepted not only with words (oral or written), but also with actions, for example handing over the $25.

Another necessary ingredient is “consideration,” not in the sense of the parties being nice to each other, but in the sense of each party bargaining for a benefit, including the ever popular “money.”  Which sounds like it would always apply, because who makes an offer for which he does not seek a benefit in return?  But for example, an offer of a gift (“I will give you $1 million because you are a lovely person”), even if promptly accepted with a hearty “yeah baby!” would not “normally” be legally binding, because there is no bargained-for benefit to the gift-giver.  “Normally,” because there are exceptions where offers that lack consideration can still become legally binding.

Finally, some kinds of agreements must be in a signed writing to qualify as a contract.

Q: In some cases? You mean oral agreements can be legally binding?

Yes, if there is a valid offer, acceptance, and consideration, then most oral agreements qualify as contracts.  Certain kinds of important agreements are required to be in a signed writing.  In fact, the laws of every state except Louisiana require five kinds of agreements to be in a signed writing: 1) agreements to pay the debt of another; 2) agreements to sell or transfer real property; 3) agreements to get married; 4) agreements that cannot be completely performed within one year; and 5) agreements for the sale of goods (not services) worth more than $500.  These laws are descended from the English Statute of Frauds enacted in 1677.

In addition, assignments (transfers of ownership) of patents, copyrights, and federal trademarks are all required by law to be in a signed writing.  This often applies to exclusive licenses of patents, copyrights and trademarks, because they are often deemed equivalent to transfers of ownership. Also, a work made for hire contract with a non-employee must be in a signed writing.

Q: So oral agreements are okay?! Doesn’t that contradict what you are always saying?

I said oral agreements could be legally binding, but they are definitely not okay.  Trust me when I say— in case of problems, there will always be a conflict over just what was agreed to.  Any agreement concerning anything of value should always be in writing.  I wholeheartedly agree with the quote variously attributed to Yogi Berra and Samuel Goldwyn: “A verbal contract isn’t worth the paper it’s written on.”

Q: Can a series of e-mails discussing deal terms be considered a contract?

Absolutely.  And under the federal Electronic Signatures in Global and National Commerce (E-SIGN) Act and the largely complementary Uniform Electronic Transactions Act enacted in 47 states and the District of Columbia, an electronic signature in a business or commercial record will be given the same legal effect as a handwritten signature if it is: 1) a sound, symbol, or process; 2) attached to or logically associated with an electronic record; and 3) made with the intent to sign the electronic record.  So an e-mail agreement could be legally binding even if it concerned one of the five “Statute of Frauds” categories of agreements.  Typically, the problem will be figuring out whether in the back and forth of e-mails there was ever truly a meeting of the minds—an offer of terms that was substantially accepted by the other side.

Q: Putting this in the context of license agreements—are so-called “clickwrap” and “shrinkwrap” software license agreements legally binding?

Yes, they can be.  If the licensor made the terms of the license clear and visible to the licensee, and gave the licensee an opportunity to manifest its acceptance, either by removing the shrinkwrap on the install disc or clicking a “Yes, I Accept These Terms” button on a website before downloading the software, then the licensee will be bound by the license terms.  On the other hand, courts have ruled that where the license terms were on a submerged screen not visible from the download screen, then the downloader is not legally bound.  Similarly, if the license terms were not clearly and completely visible to the buyer/licensee before he removed the shrinkwrap, then he would not be bound.  I will examine some of these cases in greater detail in future posts.

Research Licensing Corner: License Agreement Trumps Patent Law

Monday, January 25th, 2010

If patent law says that a joint owner of a patent does not have to pay royalties to its co-owners, but a license agreement says it does, who wins?

The license agreement, according to the federal Seventh Circuit Court of Appeals. (Original decision available here by entering case number 08-1351.) It recently affirmed a trial court’s order for Xenon Pharmaceuticals to pay $300,000 in royalties to the Wisconsin Alumni Research Foundation (“WARF”).

Xenon and WARF had jointly filed for a patent on a cholesterol-lowering enzyme called Stearoyl CoA Desaturase (“SCD”). WARF made Xenon an exclusive licensee of WARF’s patent rights, and in exchange, Xenon promised to commercially develop SCD and pay WARF a percentage of any product sales, royalties, or sublicenses under the WARF license.

Xenon then entered a sublicense with Novartis, but tried to get clever on WARF by saying that under the rule of concurrent ownership in Section 262 of Title 35 of the US Code, it did not have to pay any royalties to WARF, because Section 262 said, “each of the joint owners of a patent may make, use, offer to sell, or sell the patented invention… without the consent of and without accounting to the other owners.”

WARF then sued Xenon, and replied that Section 262 was prefaced by the phrase, “In the absence of any agreement to the contrary…” which the license agreement obviously was.

The trial and appellate courts both agreed that Xenon’s argument was too clever by half, and ordered Xenon to pay WARF $300,000 in royalties on Xenon’s revenues from the Novartis sublicense.

An interesting sidelight in this case: Xenon also claimed sole ownership of a set of therapeutic compounds arising from SCD, claiming that the WARF researcher who worked on the project had assigned his rights to Xenon via an invention assignment agreement. However, unlike Stanford’s invention assignment agreement, WARF’s assignment agreement had beaten Xenon to the punch, successfully transferring its researcher’s patent rights to WARF, so there was nothing left for him to assign to Xenon.

Takeaway: in a collaborative research arrangement that may result in a patentable invention, it is critical for the parties to draft a license or other agreement addressing development rights and revenue sharing, or else Section 262 will allow every party to strike its own separate deal.

Why IP Assignment Agreements Matter, Part 1

Tuesday, January 5th, 2010

Clients often ask their attorneys why they spend so much time arguing about seemingly trivial differences in contract wording.  Isn’t it just interchangeable generic boilerplate gobbledygook?

And attorneys often reply that slightly different wording in even basic legal agreements can yield radically different real world results.

Stanford University found that out the hard way when the Federal Circuit Court of Appeals in Stanford v. Roche dismissed its $200 million patent infringement lawsuit against Roche Molecular Systems because of sloppy wording in a Stanford researcher’s invention assignment agreement.

Patent rights initially belong to the inventor, which is why all companies engaged in research and development should require employees and independent contractors to sign written agreements assigning all intellectual property rights in their work product immediately upon invention.

Stanford’s agreement stated, “I agree to assign or confirm in writing to Stanford and/or Sponsors that right, title and interest in … such inventions as required by Contracts or Grants.”  Which looks okay at first glance, but if you read it again, you realize that the employee has only agreed to assign ownership of the invention at some time in the future.

Mark Holodniy, one of the researchers on a Stanford project to use polymerase chain reactions (PCR) to measure HIV concentration in blood plasma, signed that agreement.  Holodniy worked with researchers at biotech company Cetus to learn more about PCR, but Cetus required him to sign a non-disclosure agreement that said he, “will assign and do[es] hereby assign to CETUS, [his] right, title and interest in each of the ideas, inventions, and improvements” that he developed, “as a consequence of” his work at Cetus.

Since Holodniy had not yet actually assigned his rights to Stanford via the invention assignment agreement, he wound up assigning them to Cetus via the non-disclosure agreement, which was worded in the present tense.

The PCR hit the fan when Stanford sued Roche (which had acquired Cetus’ PCR business) for infringement of its PCR patents.  The court ruled that Roche could not infringe what it already owned, and threw out the lawsuit.

Takeaway: A lot of folks DIY basic contracts like employment agreements by cutting and pasting poorly drafted templates from the Internet.  A lot of other folks sign non-disclosure and similar basic agreements without a glance at the actual contents.  This case shows why neither is a good idea.

Update, 11/9/10: The Supreme Court has decided to grant certiorari and hear Stanford’s appeal of the decision. We will continue to follow this case of great importance to the university research community.