CAFC Vacates Win for Nokia on Standing Issue

“We conclude that the entirely-own-time phrase does not unambiguously express a mutual intent to designate either all the time Dr. Core spent performing his PhD research as his own time…or some of it as partly TRW’s time….” – CAFC

CAFCThe U.S. Court of Appeals for the Federal Circuit (CAFC) on Tuesday, May 21, issued a precedential decision vacating and remanding a district court’s finding that Core Optical Technologies didn’t have standing to sue Nokia due to the language of a contract between the inventor and his employer. Judge Mayer dissented.

Core Optical alleged infringement of U.S. Patent No. 6,782,211 by Nokia Corp., ADVA Optical Networking SE, and Cisco Systems, Inc. (Nokia). Nokia moved for summary judgment arguing that Core Optical lacked standing to sue because the inventor named on the patent, Dr. Mark Core, had already assigned the invention to his employer, TRW, Inc., where he worked at the time of the invention. The district court ultimately agreed with Nokia and granted summary judgment.

The case turned on the language of the invention agreement between Core and TRW, specifically paragraph 9, which defined “Non-TRW Inventions” and indicated three requirements for an invention to constitute a “non-TRW invention”:

“1) [N]o equipment, supplies, facility, or trade secret information of TRW were used in the invention process; 2) the invention was developed entirely on the employee’s own time; and 3) (a) the invention does not relate to the business of TRW or to TRW’s actual or demonstrably anticipated research or development, or (b) does not result from any work performed by the employee for TRW.”

The decisive question was whether Core could meet the second requirement, as the court found Core had presented sufficient evidence to meet the other two. The district court said that the second requirement was not met because Core was in a PhD program funded by TRW fellowship program; he received a monthly stipend, tuition and benefits from TRW; and because TRW benefited from Core’s participation in the program since the program required him “to pursue a degree sufficiently related to his job responsibilities; meet regularly with a TRW sponsor to discuss degree progress; and return to TRW for at least one year of full-time employment after completing his degree.” Therefore, the district court found the language was unambiguous in not meeting the ‘211 patent and the patent had been automatically assigned to TRW, “depriving Core Optical of standing to bring the present action.”

However, the CAFC said that the “entirely-own-time” phrase was not unambiguous and that more fact-finding was necessary by the district court. “We conclude that the entirely-own-time phrase does not unambiguously express a mutual intent to designate either all the time Dr. Core spent performing his PhD research as his own time (as Core Optical contends) or some of it as partly TRW’s time (as the district court, in agreement with Nokia, held),” wrote the court.

While Core said that the notion of “one’s own time” or “free time” should be anything outside of “on-the-clock company-assigned work for the hourly pay,” Nokia invoked a much “a broader notion of accountability through employer pay, covering payments from TRW conditioned on what Dr. Core did during the time at issue—the many hours (perhaps thousands of hours from 1993 to 1999) he spent during his PhD studies developing the ’211 patent’s invention.”

The language of the contract and the facts on record allow for either interpretation, said the CAFC, and no case law cited was helpful to the court. On remand, the district court should delve further into representations made by Core’s former project manager and immediate supervisor at TRW expressing that the ‘211 patent belonged solely to Core; extrinsic evidence of how similar employer-funded education programs have handled this issue; and the applicability of the “contra proferentem” principle, which teaches that “A]mbiguities in written agreements are to be construed against their drafters.”

Judge Mayer authored a short dissent explaining that in his view the language is unambiguous and he would have affirmed the district court’s interpretation.

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Copyright: William Perry  

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