State University Patent Inventorship Dispute Does Not Invoke Supreme Court Jurisdiction

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By Tony Dutra  


A state university that was assigned a patent has “no core sovereign interest in inventorship,” the U.S. Court of Appeals for the Federal Circuit ruled Aug. 19 (Univ. of Utah v. Max-Planck-Gesellschaft zur Forderung der Wissenschaften e.V., Fed. Cir., No. 2012-1540, 8/19/13).

The 2-1 decision affirmed a district court's judgment that it had jurisdiction over a case featuring two state universities' claims only its employees can claim to have invented a development in the field of RNA interference (RNAi).

Under the dissent's view, the dispute would have been between the states, which can only be resolved by the U.S. Supreme Court, per Article II, §2, cl. 2 of the Constitution, as codified at 28 U.S.C. §1251(a).

The decision's reach is particularly relevant to the biotechnology industry, where patents are often assigned to state universities or their technology transfer departments.

Competing Claims to Inventorship

Two patents (U.S. Patent Nos. 7,056,704 and 7,078,196) with essentially the same specification were granted to Thomas Tuschl, a researcher employed by the University of Massachusetts.

The patents were assigned to UMass and to Max-Planck-Gesellschaft zur Foerderung der Wissenschaften e.V., Munich, Germany, and they are exclusively licensed to Alnylam Pharmaceuticals Inc., Cambridge, Mass. Alnylam has had previous patent disputes with Tekmira Pharmaceuticals Corp. RXi Pharmaceuticals Corp., OPKO Health Inc., Silence Therapeutics PLC, and Mirna Therapeutics Inc. have also been involved in recent corporate transactions related to RNAi intellectual property.

Brenda Bass, a professor of biochemistry at the University of Utah, contended that the patents disclosed and claimed her conception. After UUtah could not convince UMass to add her name to the list of inventors, UUtah filed the instant lawsuit in the U.S. District Court for the District of Massachusetts. It seeks to have Bass listed as sole inventor or, in the alternative, as co-inventor with Tuschl.

UMass moved to dismiss, arguing that disputes between parties that are instruments of each state fall within the exclusive jurisdiction of the Supreme Court. UUtah consequently amended its complaint to identify four UMass officials as defendants and drop UMass as a party.

Judge Patti B. Saris refused the request to join UMass as an indispensable party and denied the motion to dismiss. UMass appealed that decision.

State's Core Sovereign Interests Not at Issue

In the majority opinion, Judge Jimmie V. Reyna said that the question was whether UMass was the “real, substantial party in interest” in the case, per Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89 (1984).

The majority then relied primarily on a similar decision by the Second Circuit that was also split 2-1, Connecticut v. Cahill, 217 F.3d 93 (2d Cir. 2000). The court agreed with Cahill that the lawsuit must implicate Massachusetts's “core sovereign interests,” and it concluded that patent inventorship did not qualify.

First, the court noted that only individuals can be inventors. It thus distinguished UMass's prospective ownership rights from questions about inventorship.

Second, the court characterized the dissent in Cahill as a concern for restraining the state in question from “acting” or, conversely, compelling the state to act. The instant case does not even touch on that concern, the court said. “A judgment ordering the Director of the USPTO to correct inventorship will not require or restrain UMass from acting.”

“While certain of UMass' interests may be 'more or less affected by the decision,' the [district] court's decree will not deplete the state treasury, compel UMass to act, or instruct UMass how to conform to state law,” the court said.

UMass Not Indispensable Party

The court acknowledged that UMass could certainly be joined under Fed. R. Civ. P. 19(a), and that precedents “strongly support the conclusion that patent owners are required to be joined if feasible.” However, it concluded that there was no per se rule for joinder and that the university was not an indispensable party such that it must be joined under Rule 19(b).

The court agreed with the lower court's reliance on Dainippon Screen Mfg. Co. v. CFMT, Inc., 142 F.3d 1266, 46 U.S.P.Q.2d 1616 (Fed. Cir. 1998), in which the Federal Circuit affirmed a decision not to join the holding company of one of the named parties. The instant case is even stronger, the majority said, because “UMass's s interests were adequately represented by Defendants--including all of the Tuschl Patent owners except UMass--each of whom stands to lose if inventorship changes.” In particular, the court characterized an agreement between UMass and Alnylam as handing sole and exclusive control over the lawsuit to Alnylam.

One of the Rule 19(b) factors concerned whether relief was available to UUtah should the case be dismissed, and the court refused to predict whether the Supreme Court would even take the case. “Accordingly, the availability of another forum in this case is not particularly strong,” the court said. “Certainly, it is less compelling than in Dainippon, where this court presumed that the absent party could be joined in the district of Delaware.”

A conflict of interest may arise in Alnylam's control over the suit, and UMass can renew its motion at that time, the court said. But for the time being, UMass is not an indispensable party, the court said, as it affirmed the lower court's ruling that it had jurisdiction.

Judge Evan J. Wallach joined the opinion.

Dissent Focuses on Ownership, Not Inventorship

In dissent, Judge Kimberly A. Moore rejected the majority's reliance on requiring “a core sovereign interest.” She said, “The concept of a 'core sovereign interest' has roots in opinions that address whether the Supreme Court will decide to exercise its jurisdiction over a dispute, not whether the Court's exclusive original jurisdiction over the controversy exists.”

“The majority baldly asserts that issues of patent ownership and inventorship are not sufficiently grand for the Supreme Court to resolve in the first instance,” she said in a footnote. “That is not our decision to make.”

In general, Moore's analysis began with a different focus. “This is a dispute about ownership, plain and simple,” she said, in contrast to the majority's emphasis on inventorship. “UUtah cannot recast the nature of this dispute by suing the UMass Officials as stand-ins for UMass.”

And with that emphasis on ownership, she was particularly critical of the majority's conclusion that a judgment favoring UUtah would not restrain UMass's ability to act. “The effect of this judgment will be to prevent UMass from exploiting the Tuschl II patents or the technologies they cover,” Moore said. “This certainly 'restrain[s] the Government from acting.' ” That would be true even if Bass were declared a co-inventor, she noted, as UUtah could then license the patent without UMass's consent.

Finally, Moore used the word “nonsensical” in reference to the court's decision that UMass was not an indispensable party. The court's precedents have held that a patentee is an indispensible party in a declaratory judgment action related to a patent, she said, so how could it be that the patentee “need not be joined in a suit over patent ownership.”

Mark S. Carlson of Hagens Berman Sobol Shapiro, Seattle, represented the UUtah. David I. Gindler of Irell & Manella, Los Angeles, represented UMass.

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