August 28, 2020

Inventorship, Unlike a Claim, is a “Nose of Wax”

In Egenera, Inc. v. Cisco Systems, Inc., [2019-2015, 2019-2387] (August 28, 2020), the Federal Circuit affirmed the district court’s claim construction but vacated the invalidity judgment of U.S. Patent No. 7,231,430, based on judicial estoppel, and remanded for further proceedings.

Prior to claim construction, during an Inter Partes Review proceeding, Egenera separately petitioned the USPTO to remove one of the eleven listed inventors from the ’430 patent (the presence of the inventor prevented Egenera from antedating the cited prior art). Following the district court’s claim construction and a trial on inventorship, Egenera asked the district court to add the removed inventor back to the patent (because the removed inventor was found to have conceived one of the claim limitations). The district court determined that judicial estoppel prevented Egenera from relisting the inventor and held the ’430 patent invalid for failing to name all inventors.

The Patent Act allows a listing of inventors to be corrected either upon petition to the Director (35 U.S.C.§ 256(a)) or upon court order (see §256(b)). Further, a patent cannot be invalidated if inventorship can be corrected instead.

The Federal Circuit noted that its precedent provides that “error” in §256 includes “all varieties of mistakes — honest and dishonest” rather than only unintentional inaccuracy. §256 is a savings provision, functioning to prevent invalidation when correction is available; it is the inequitable-conduct rules that provide a safety valve in the event of deceit.

The Federal Circuit held that §256 does not exclude “considered acts,” or even “deceptive intention,” from the meaning of “error.” “Error” is simply the incorrect listing of inventors.

The district court here concluded that Egenera was judicially estopped from adding Mr. Schulter’s name back to the patent after it held a trial establishing him to be an inventor — thereby invalidating the patent for improper inventorship.

Judicial estoppel is an equitable doctrine that prevents a litigant from taking a litigation position inconsistent with one successfully asserted in an earlier court proceeding. The purpose of the doctrine is to protect the integrity of the judicial process. A court examines the following:

  1. Whether a party’s earlier and later positions are “clearly inconsistent,” i.e., “mutually exclusive”
  2. Whether the party “succeeded in persuading a court to accept” the earlier position
  3. Whether the party would “derive an unfair advantage or impose an unfair detriment” on the other side if not estopped

Because inventorship is a complex legal conclusion that depends on claim construction, once claim construction was performed, the Federal Circuit found that it was not inconsistent to correct inventorship after the claims were construed. Thus, the district court erred in determining that the first factor of clearly inconsistent positions was met.

The Federal Circuit also found that Egenera did not meet the second factor, persuading the court to accept its earlier position. The Federal Circuit observed that no persuasion was involved in getting the USPTO to remove the inventor. Finally, the Federal Circuit found no unfair advantage to Egenera.

Concluding that the district court legally erred as to each factor, the Federal Circuit held that the district court abused its discretion by applying judicial estoppel, vacating the district court’s invalidity judgment and the accompanying cost award, and remanding for further proceedings.