As we have been reporting, the Federal Circuit this month scheduled three oral arguments in cases that attracted amicus briefs. In one of these cases, Omni Medsci, Inc. v. Apple Inc., the court heard argument Thursday regarding two different district courts’ holdings with respect to an alleged standing problem related to the plaintiff, Omni Medsci. This is our argument recap.
Jeffrey P. Kushan argued for Apple. He began by contending that “three aspects of Dr. Islams’s 1992 contract at the University of Michigan demonstrate that it was a present assignment of title to future inventions.” First, according to Kushan, “University Bylaw 3.10 governs the assignment of his intellectual property rights.” Second, he argued, “it states patents on his inventions shall be the property of the university if they meet the conditions in ¶ 1.” Third, he asserted, “nothing in the contract requires Dr. Islam to take any action after invention is made to assign title to the University.” Instead, according to Kushan, “when Dr. Islam makes an invention meeting the conditions in ¶ 1, title to that invention transfers automatically to the University by operation of law, and Dr. Islam has acknowledged this is precisely how his contract worked.”
Judge Linn questioned how ¶ 1 interacts with ¶ 4–5 of the same bylaw. In particular, Judge Linn contended that if the paragraphs are read together, they “place a fairly clear meaning in the phrase ‘shall be’ as not a statement of present action, but as a statement of future command or intention.” Kushan responded by arguing that “¶ 5 is not implicated by this case” and “both parties agree to that.” According to Kushan, “¶ 5 is addressing a situation where there has been a writing entered into by the parties to govern ownership and exploitation of the patents.” And, he argued, “in that instance, there is no timing requirement.”
Judge Chen interjected to ask whether the “shall be” language in the paragraphs “operates in a different way for each paragraph.” In response, Kushan contended that “it has [to operate in a different way] because the sentences are different and because they are addressing a different condition.” Judge Chen then pointed out that, with regard to the “shall be” language, “there is a facial similarity between what we have in this case and what we have seen in the past where we held there was no present assignment.” Judge Chen cited Arachnid, Inc. v. Merit Industries, Inc. as a relevant case. Kushan responded by arguing that there is a “contrast between the contract in Arachnid and the contract [we’re] looking at here.” According to Kushan, “what was critical to that decision was the contract envisioned specifically that the inventor would take an action after the invention was made to assign title to the invention.” Here, however, Kushan contended, “there is no comparable clause.”
Sarah Waidelich argued for the Regents of the University of Michigan. She began by making two points. First, she contended, “the way ¶ 5 operates is it is permitting the University and any university member to agree in advance of any deviation of bylaw 3.10.” According to Waidelich, “in advance, the parties could agree that Bylaw 3.10 here is not going to apply as it normally would.” But, she argued, “in the absence of any such advance agreement, 3.10 ¶ 1 and 3.10 ¶ 4 would be operative.” Second, she asserted, Bylaw 3.10 “does not require an additional step to effectuate the transfer.”
Judge Chen asked whether the language of ¶ 3.10 has ever been amended. Waidelich responded that it never has been.
Thomas A. Lewry then argued for Omni. He began with a disclaimer, stating “he is an avid Michigan Wolverine—I got my engineering and law degrees from U of M and I like the U of M very much—but in this case I have to disagree with them and with Apple.” According to Lewry, “there is no question that in order for Apple to prevail here they have to win on both the facts and the law.” At this point, Judge Chen quickly interjected, asking Lewry to “focus on the law.”
Focusing on the law, Lewry contended that, “after the inventive activity is done, there are three possibilities.” According to Lewry, “one is, it was all done with U of M’s resources; second, it was done all with non-U of M resources; or third, it was done with a combination of U of M resources and non-U of M resources.” As a result, Lewry asserted, “there can’t be an automatic assignment . . . because you have to decide whose resources were used and then figure out if these paragraphs apply.”
Lewry then turned to the facts, and argued that “there were no university resources used in the creation of the invention in this patent application.” According to Lewry, Omni “wins on that fact alone.”
In rebuttal, Kushan made two points on behalf of Apple. First, Kushan argued that “the district court’s decision did not rest on a finding that there was no U of M funding support.” Second, he asserted, “it is absolutely disputed that there was no funding support.” Moreover, according to Kushan, “the university conducted investigations and found that there was support.” In particular, he explained that the university identified “use of facilities” as one form of support. Moreover, he argued, the asserted use of facilities is “in ¶ 1 of the bylaw” and “is specifically identified as one way of support.”
We will keep track of this case and report on its disposition.