In factually distinguishing years of Federal Circuit decisions that contracts assigning patent rights should be interpreted under state law, the U.S. Court of Appeals for the Ninth Circuit held that "patent law terms" in an employment contract should be interpreted according to patent law principles. Medtronic, Inc. and Los Angeles Biomedical Research Institute v. White, 526 F.3d 487 (9th Cir., May 15, 2008) (Trott, J.).
Los Angeles Biomedical Research Institute at Harbor-UCLA Medical Center is a non-profit medical research institute that allows visiting researchers to use its state-of-the-art equipment and facilities. Dr. Geoffrey White, an assistant professor of surgery at Harbor-UCLA Medical Center, signed a Patent and Copyright Agreement with L.A. Biomed in exchange for enjoying these researching privileges. The agreement read in part:
I understand and agree that every possibly patentable device, process, or product hereinafter referred to as "invention", which I conceive and/or reduce to practice while employed by the Institute, or during the course of my utilization of any Institute research facilities, shall be examined by the Institute to determine rights and equities therein in accordance with the Institute's Patent and Copyright Policy.
A dispute arose between the parties concerning whether L.A. Biomed had rights in an aorta graft attachment device invented and developed by Dr. White and his colleague Dr. Weiyun Yu. In particular, the parties disputed whether Dr. White "conceived" and "reduced to practice" the invention within the scope of his Patent and Copyright Agreement with L.A. Biomed.
As it happens, the contract terms "conceive" and "reduce to practice" are terms of art used in patent law. In particular, both of these terms encompass joint inventorship and, under certain circumstances, impute the conception or reduction to practice activities of one co-inventor to the other.
Dr. White's defense in the district court included arguments that he did not "conceive" the invention or "reduce [it] to practice" during his time at L.A. Biomed, because part of the activities that led to the "conception" and "reduction to practice" of the invention were performed by Dr. Yu. His defense relied upon a contract law interpretation of "conceive" and "reduce to practice" requiring solo inventorship. Under patent law, however, Dr. Yu's activities could be imputed to Dr. White, undermining his defense.
The district court adopted Dr. White's proposed jury instructions regarding the meanings of these terms, which did not include the co-inventorship principles of patent law. In short, the jury was instructed that "conceive" and "reduce to practice" are solo activities. The jury found that L.A. Biomed failed to prove that Dr. White had conceived or reduced to practice the invention during his time at L.A. Biomed research facilities and returned a special verdict in favor of Dr. White.
On appeal, the Ninth Circuit considered whether the jury should have been informed of the law of conception and reduction to practice as it relates to patent law. In its analysis, the Court first acknowledged that California law requires agreements regarding patent rights to be interpreted according to standard contract law rather than patent law. However, the Court distinguished the facts of this case from that general principle, finding that the patent-rich language of L.A. Biomed contract "strongly indicates that the parties intended for patent law to be applied when determining patent ownership rights and equities." For this reason, the Court concluded that the jury should have been instructed on the patent law meanings of the contract terms "conception" and "reduction to practice." "[W]e conclude that it was clear error for the district court to ... exclude the co-inventorship language proposed by L.A. Biomed."
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