Abbott Lacks Standing to Sue in Case Over Point-of-Care Blood Testing Systems
January 13, 2012
Abbott lacks standing to bring a suit alleging infringement of two patents covering point-of-care blood testing systems because it failed to prove that it was transferred ownership of the patents under agreements with its predecessors, the U.S. Court of Appeals for the Federal Circuit ruled Jan. 13 (Abbott Point of Care Inc. v. Epocal Inc., Fed. Cir., No. 2011-1024, 1/13/12).
While a majority of the judges found that the agreements were unambiguous and did not transfer ownership to Abbott, Judge William C. Bryson dissented, arguing that the agreements were indeed ambiguous and that further discovery should be conducted as to their meaning.
District Court Dismisses Abbott’s Suit.In this case, Abbott Point of Care filed suit against Epocal Inc., claiming infringement of two patents (6,845,327 and 6,896,778) related to point-of-care systems that allow medical professionals to quickly test blood without sending a sample off to a lab. Epocal is Canadian company founded by Dr. Imants Lauks, the named inventor on both patents. Though Abbott and Epocal both assert ownership of the ‘327 and ‘778 patents, only Epocal is the named assignee on both patents.
The patents in dispute trace back to applications filed by Lauks on June 4 and 8 of 2001. In December of 2003, he assigned the patents to Epocal. Abbott’s ownership claims stem from two employment agreements and one consulting agreement that Lauks had with Abbott’s predecessors, Integrated Ionics Inc. and iSTAT Corp.
The U.S. District Court for the Northern District of Alabama ruled that Abbott lacked standing to sue because a 1999 consulting agreement did not extend a 1984 agreement’s disclosure and assignment covenant. Accordingly, it dismissed Abbott’s suit for lack of subject matter jurisdiction.
CAFC Majority: Agreements Clearly Did Not Assign the Lauks Patents.
The Federal Circuit affirmed the district court’s ruling, agreeing that Abbott failed to meet its burden of showing the necessary ownership rights to support standing to sue. “Only a patent may bring an action for patent infringement,” Chief Judge Randall R. Rader observed, citing 35 U.S.C. § 281. Abbott’s status here turned on the Patent Act’s assignment provision at 35 U.S.C. § 261, which provides:
Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing. The applicant, patentee, or his assigns or legal representatives may in like manner grant and convey an exclusive right under his application for patent, or patents, to the whole or any specified part of the United States.
Interpreting the agreements under New Jersey law, the Federal Circuit found that Abbott was not transferred the patents under Lauks’ agreements with Integrated Ionics Inc. and iSTAT. Rader explained:
While the 1984 Agreement contained a Disclosure and Assignment Covenant, the 1999 Consulting Agreement does not contain any obligation that Lauks must assign rights in inventions, improvements, or discoveries made or conceived during the consultation period. Rather, the 1999 Consulting Agreement recognized and allowed Lauks to pursue other, non-conflicting interests. It also explicitly excluded work on new products, regardless of the subject matter, including point-of-care blood analysis applications. Abbott’s proposed interpretation of the Agreements as containing a continued assignment obligation finds no support in the documents themselves. An automatic assignment of “inventions, improvements or discoveries” conceived while pursuing other interests directly conflicts with the agreement’s allowance that Lauks may work on his own behalf. Moreover, the plain language of the 1999 Consulting Agreement is unambiguous and does not continue the 1984 Agreement’s Disclosure and Assignment Covenant. … Because the 1999 Consultation Agreement is silent with respect to any assignment of Lauks’ rights in inventions, improvements, or discoveries made or conceived during the consultation period, Lauks had no obligation to assign inventions from the consulting period to i-STAT. Thus, as the district court correctly concluded, the contract does not convey all substantial interest in the ’328 or ’772 patents.
Judge Alan D. Lourie joined Rader’s opinion.
Bryson in Dissent: Ambiguity in Agreements Must Be Resolved.
Despite the certainty expressed by the majority opinion, Judge William C. Bryson argued in his dissenting opinion that there was some ambiguity in the agreements. He wrote:
I believe that the 1999 Consulting Agreement is at least ambiguous as to whether it incorporated the assignment covenant of the 1984 agreement. I would therefore vacate the judgment of the district court and remand this case for discovery and consideration of extrinsic evidence regarding whether, and to what extent, the 1999 Consulting Agreement incorporated the assignment-of-invention clause that was first found in the 1984 agreement.
Abbott was represented by Gregory A. Castanias of Jones Day, of Washington, D.C.
Epocal was represented by J. Anthony Downs of Goodwin Procter, Boston.
Read the Federal Circuit’s decision in Abbott Point of Care Inc. v. Epocal Inc.