Last Week In The Federal Circuit (March 14-18): Federal Circuit Says Go Fish To Claims of Co-Ownership

Last week’s big news was of course the official swearing in of Judge Stark. But there were plenty of other things happening at the Court. Below we provide our usual weekly statistics and a detailed discussion of our case of the week—our highly subjective selection based on whatever case piqued our interest.

Precedential opinions: 5

Non-precedential opinions: 8

Rule 36: 3

Longest pending case from argument: Biogen Int’l GmbH v. Mylan Pharm. Inc., No. 20-1933 (463 days) (En Banc Order)

Shortest (non-Rule 36) pending case from argument: O’Keeffe’s, Inc. v. Hirshfeld, No. 21-1025 (6 days)

Case of the week: BASF Plant Science, LP v. Commonwealth Scientific and Industrial Research Organisation, Nos. 2020-1415, -1416, -1919, -1920

Panel: Judges Newman, Taranto, and Chen, with Judge Taranto writing the opinion, and a dissent in part filed by Judge Newman

You should read this case if: you are involved in a patent co-ownership dispute subject to a contractual agreement.

In this week’s case of the week, the Federal Circuit reviewed a jury verdict on patent co-ownership. The disputed patents claimed nutritional supplements for farm-raised fish designed to increase Omega-3 fatty acid content. CSIRO, the patent owner, and BASF were both developing these supplements. For a time, they agreed to collaborate and entered into a Materials Transfer and Evaluation Agreement. After the agreement ended, the companies parted ways, with each ultimately developing and marketing their own solutions.

The relationship soured and the parties eventually ended up in district court. As a defense to CSIRO’s patent infringement claims, BASF argued it co-owned CSIRO’s patents under the terms of their previous agreement. A jury agreed for one, but only one, of six asserted patents.

On appeal, the Federal Circuit reversed the finding of co-ownership for the one patent and affirmed the findings of no co-ownership for the others. The Court’s decision turned on the phrase “intellectual property subsisting in . . . Joint Results.” The Court held that this contract language required that BASF show that intellectual property defined by claims of the patents “inhere[d]” in or “form[ed] an element of” the Joint Results produced through the parties’ previous agreement.

BASF argued that requirement was met because CSIRO obtained its patents by drawing on lessons it learned from experiments using both parties’ material, material CSIRO obtained through the collaboration agreement. But that overly broad interpretation of the agreement language conflicted with legal norms, which have never treated an invention as merely inherent in the lessons learned from earlier work. Were it otherwise, virtually no invention would survive the test of obviousness. The Court also found that BASF’s interpretation made no “commercial sense,” a consideration both parties agreed was critical in interpreting their agreement. BASF’s expansive view of the contract would turn the short, limited-term collaboration agreement into “an ever-threatening cloud over independent” work by other party.

The Court then considered the evidentiary basis for the jury’s finding of co-ownership. BASF cited several pieces of evidence, including a CSIRO email that praised the value of BASF’s contributions, a CSIRO lab notebook summarizing results from the joint research, and the patent’s own description of research results. But the Court found that BASF failed to connect this evidence—or any other specific results, data, or information from the joint work—to the claims of the patent. Thus, the Court ruled there was no evidentiary basis to support the jury finding of co-ownership. And for similar reasons the jury could reasonably conclude that BASF had failed to prove it co-owned any of the other patents.

This precedential opinion by the Federal Circuit exemplifies the Court’s process of interpreting co-ownership agreements. It also serves as a reminder of the importance of establishing connections between evidence and specific patent claims.