When Is An Invention Conceived?
Employer Barred from Reaching into the Future for a Date of Invention
The case discussed in this blog underscores two important points:
- The importance of a date of conception of the complete invention; and
- The limits of employer rights on the work of an employee post-employment.
Bio-Rad v. 10X Genomics, No. 2020-1785 (Fed. Cir. 4/29/2021)
10X Genomics is the owner of a large series of patents covering microfluidic systems and components used for gene sequencing and related analyses. 10X sued Bio-Rad, a large biotech company, at the International Trade Commission (ITC). 10X alleged that Bio-Rad infringed the patents. The ITC and Federal Circuit on appeal sided with 10X, finding that Bio-Rad infringed the patents. The interesting aspect of this case is that Bio-Rad proffered an affirmative defense that it had an ownership interest in the patents because the inventors worked at Bio-Rad shortly before forming 10X in 2012, and allegedly conceived the invention while still at Bio-Rad. If Bio-Rad is a co-owner, it cannot be an infringer (35 U.S.C. § 262). The ITC rejected Bio-Rad’s ownership arguments. The Federal Circuit affirmed.
Serge Saxonov and Benjamin Hindson worked at a company called QuantiLife, which was bought out by Bio-Rad in 2011. Saxonov and Hindson became Bio-Rad employees, but they left Bio-Rad in April 2012 and formed 10X in July 2012. 10X began filing patent applications on an architecture called “gel bead in emulsion” (GEM). GEM architecture involves partitioning DNA or RNA nucleic acids in droplets together with gel beads used to deliver “molecular barcodes” into the droplet, where the barcodes are released from the gel beads using a stimulus. The asserted 10X patent claims all involve this architecture. The Federal Circuit agreed that Bio-Rad infringed the patents on this technology.
But one of Bio-Rad’s defenses was that Hindson and Saxonov did essential work on the 10X invention while they were still Bio-Rad employees, and if so, the date of conception of the invention, an important aspect of patents, was during the period of Bio-Rad employment of Saxonov and Hindson, and Bio-Rad therefore had an ownership interest in the 10X patents.
Regarding the inventorship issue, an invention is the “‘formation in the mind of the inventor, of a definite and permanent idea of the complete and operative invention, as it is hereafter to be applied in practice.’” FilmTec Corp. v Hydranautics, 982 F.2d 1546, 1551–52 (Fed. Cir. 1992). In Filmtec, an employer was given rights to a post-employment patent application, but the complete invention was conceived during the term of a government-supported contract. However, the court finds that here, although Hindson and Saxonov were working on similar projects at Bio-Rad to the invention at issue, essential details of the 10X inventions were not conceived until Saxonov and Hindson left Bio-Rad and started 10X. The court found that sufficient to reject Bio-Rad’s claims of co-ownership.
Bio-Rad’s rights flow from the employment agreements they presumably require from all their employees. Such agreements require that inventions made during the course of employment will be assigned to the employer. Saxonov and Hindson each signed agreements to assign inventions conceived while employed at QuantiLife and later, at Bio-Rad. However, the court finds here that the conception date of the patents-in-suit was no earlier than January 2013, well after Hindson and Saxonov left Bio-Rad. Bio-Rad asserted that Hindson and Saxonov “had ideas that contributed to the post-employment inventions at issue” during the time of their employment at Bio-Rad or QuantiLife, and they were therefore under an obligation to assign such inventions to Bio-Rad. But the court found that Bio-Rad did not demonstrate that “a person’s work, just because it might one day turn out to contribute significantly to a later patentable invention and make the person a co-inventor, is itself protectable intellectual property before the patentable invention is made.” Here, the pertinent intellectual property did not exist until at least conception of that invention. Thus, there was a significant post-employment contribution to the conception of the invention, which defeats Bio-Rad’s ownership claims.
What does this mean for others?
This case shows the importance of a date of conception of the complete invention. Bio-Rad seemed to do everything right, in the sense that they had employment agreements requiring employees to assign any inventions made with corporate resources during the period of their employment to the company. But the facts were with Saxonov and Hindson that the invention was conceived after they left Bio-Rad. One of the arguments in the Filmtec case was that the inventor continued to work on the invention after the agreement ended, but the court treated the post-agreement work in Filmtec as “mere refinements” not “not adding anything of inventive significance.” By contrast, essential aspects of the Saxonov and Hindson invention were developed after they left Bio-Rad.
This case also raises policy issues of how much an employer can limit the work of an employee post-employment. California law (applicable in this case) recognizes significant policy constraints on employer agreements that restrain former employees in the practice of their profession, including agreements that require assignment of rights in post-employment inventions. Other states may not be so liberal. Questions about the reach of an employer’s post-employment rights could be raised by an employer-employee agreement under which a particular subject matter’s coverage by an assignment provision depended on unknown contingent future work after the employment ended, to which the work during the period of employment may significantly contribute. Overreach in post-employment employer rights would deter a former employee from pursuing future work related to the subject matter and might deter a future employer from hiring that individual to work in the area — both of which are counterproductive outcomes. But, the court here did not reach the balance of rights between employers and departed employees.