CAFC Ruling On OmniSci V Apple
CAFC Ruling On OmniSci V Apple
CAFC Ruling On OmniSci V Apple
v.
APPLE INC.,
Defendant-Appellant
______________________
2020-1715, 2020-1716
______________________
DISCUSSION
We review the district court’s determination regarding
patent ownership based on the interpretation of an employ-
ment contract de novo. DDB Techs, LLC v. MLB Adv. Me-
dia, L.P., 517 F.3d 1284, 1289 (Fed. Cir. 2008). We review
any underlying factual determinations for clear error. Id.
We apply federal law to determine whether the contract
here created an automatic assignment or created an obli-
gation to assign, because that question is “intimately
bound up with the question of standing in patent cases.”
Id. at 1290.
Omni’s standing to assert the patents at issue turns on
whether it has an exclusionary right in the asserted pa-
tents. This turns on a legal question of contract interpre-
tation: whether paragraph 1 of bylaw 3.10 automatically
and presently assigned legal title of Dr. Islam’s inventions
to UM. 3 A patent assignment clause may presently assign
a to-be-issued patent automatically—in which case no fur-
ther acts to effectuate the assignment are necessary—or
may merely promise to assign the patent in the future. Id.
at 1289. Which type of assignment is intended “depends
on the contractual language.” Id. “In most circumstances,
an inventor must expressly grant his rights in an invention
to his employer if the employer is to obtain those rights.”
Bd. Of Trustees of Leland Stanford Jr. Univ. v. Roche Mol.
Sys., Inc., 563 U.S. 776, 786 (2011) (“Roche”). Further, we
CONCLUSION
For the foregoing reasons, we conclude that para-
graph 1 of bylaw 3.10 is, at most, a statement of a future
intention to assign the patents at issue. It did not effectu-
ate a present automatic assignment of title to UM and thus
did not negate Dr. Islam’s assignment of the inventions to
Omni. Accordingly, the district court’s denial of Apple’s
motion to dismiss for lack of standing is affirmed.
AFFIRMED
Case: 20-1715 Document: 84 Page: 18 Filed: 08/02/2021
v.
APPLE INC.,
Defendant-Appellant
______________________
2020-1715, 2020-1716
______________________
that policy. Thus the district court held that Professor Is-
lam retained ownership of these inventions and that he
validly assigned the patents to Omni, a company that he
formed for the purpose of exploiting these inventions. My
colleagues affirm the district court’s denial of Apple’s mo-
tion to dismiss for lack of standing.
This ruling is not correct as a matter of contract inter-
pretation, and overturns decades of unchallenged under-
standing and implementation of the University’s
employment agreement and policy documents. Omni does
not own these patents and does not have standing to sue
for infringement.
A
Prof. Islam’s employment agreement requires
that patents based on activities supported by
the University “shall be the property of the
University”
In August, 1992, Dr. Mohammed Islam was hired by
the University of Michigan for the position of Assistant
Professor of Engineering and Computer Science, and since
November 2011 he has also held an appointment at the
Cardiovascular Center of the University’s Medical School.
His employment agreement states the University’s Bylaw
3.10, including the following text:
Regents’ Bylaws 3.10 stipulates the conditions gov-
erning the assignment of property rights to mem-
bers of the University faculty and staff. Unless
otherwise provided by action of the Regents:
1) Patents and copyrights issued or acquired as a
result of or in connection with administration, re-
search, or other educational activities conducted by
members of the University staff and supported di-
rectly or indirectly (e.g., through the use of Univer-
sity resources or facilities) by funds administered
by the University, regardless of the source of such
Case: 20-1715 Document: 84 Page: 21 Filed: 08/02/2021
B
The University’s employment agreement,
signed when employment starts, necessarily
applies to inventions made in the future
“A contract is read in accordance with its express terms
and the plain meaning thereof.” C. Sanchez & Son, Inc. v.
United States, 6 F.3d 1539, 1543 (Fed. Cir. 1993). The
plain meaning of “shall be the property of the University”
is that inventions made during employment and patents
thereon shall belong to the University.
The panel majority holds that the University’s docu-
ments fail to achieve the University’s purpose because
“shall be the property of the University” is in the future
tense and therefore does not establish ownership of future
inventions. The majority holds that the employee’s “shall
be” promise is “merely” a “promise to assign in the future,”
Maj. Op. at 6, and therefore precludes automatic vesting of
property rights when the invention is made.
On this reasoning, the majority holds that ownership
of the employee’s future inventions is not transferred by
“shall be the property of the University” and that Univer-
sity ownership does not automatically vest for inventions
made with University support during employment. This
holding defeats the purpose of the University’s Bylaw and
Technology Transfer Policy and contradicts the employ-
ment agreement.
The University and Apple cite precedent in which the
courts have considered whether an employment agreement
provides for ownership by the employer of the employee’s
future inventions. In C.R. Daniels, Inc. v. Naztec Int’l Grp.,
LLC, 2012 WL 1268623 (D. Md. Apr. 13, 2012), the employ-
ment agreement stated that the employee’s inventions
“shall become the absolute property of” the employer “with-
out further consideration,” id. at *4, and the court observed
that “conspicuously absent from the [agreements] is any
Case: 20-1715 Document: 84 Page: 24 Filed: 08/02/2021