Troy & Schwartz Attorneys-At-Law

On June 6, 2022 a copyright infringement lawsuit was filed in the U.S. District Court for the Central District of California over the new blockbuster film Top Gun Maverick by the heirs of deceased Israeli author Ehud Yonay.  The lawsuit involves a relatively unknown area of copyright law – the recapture doctrine – codified in § 203 of the Copyright Act.  This law gives authors and their heirs the right to recapture ownership of valuable copyrights by “terminating” past assignments and licenses of copyrighted works starting at the end of the 35th year from the date of the grant and for five years thereafter.  The process is complex and requires a notice to the copyright holder as well as the filing of documents with the U.S. Copyright Office.   Recapture is available even if the original grant was for the entire life of the copyright.  The doctrine is attended to provide the copyright owner and heirs with the right to seek new opportunities to receive financial compensation for their copyrighted works.  Such an option is particularly desirable where the copyrighted work’s value has increased over time as is the case here.  The Top Gun Maverick plaintiffs are seeking an injunction and compensation.

Paramount, the movie’s producer and distributor, allegedly secured the exclusive motion picture rights to the author’s copyrighted story which resulted in the release of the first Top Gun film in 1986.  The plaintiffs assert that Paramount knowingly failed to re-acquire the rights to the requisite film and ancillary rights to the author’s copyrighted story prior to the completion and release of the 2022 sequel as a derivative work.  That is, Paramount knew it didn’t have the rights to the sequel but moved ahead with production and distribution anyway.

Mr. Yonay owned the original copyright in the story “Top Guns” which was published in a 1983 issue of California magazine.   The magazine piece described the high-adrenaline world of jet pilots at the US Navy’s “Top Gun” fighter training school. Yonay also later wrote a book, “NO MARGIN FOR ERROR: The Making of the Israeli Air Force.”

Paramount acquired the copyright to Yonay’s story immediately following its 1983 publication which resulted in the release of the 1986 film.  The copyright’s termination of the copyright became effective on January 24, 2020 or within the 5-year window from 2018, the 35^th year following the story’s publication.  The copyright claimant for Yonay’s story was not, however, the author himself but “California Magazine.”  The registration listed in the complaint is for a copyright in a “serial publication,” with California Magazine seemingly claiming authorship under the work-made-for-hire doctrine according to the registration.  See copyright registration no. TX0001213463.

It is unclear whether this underlying registration helps the plaintiffs.  Copyright laws are applied according to the territory in which the lawsuit is filed.  Registration of a work in the U.S. is a prerequisite for the commencement of a copyright infringement lawsuit since the U.S. Supreme’s decision in Fourth Estate Pub. Ben. Corp. v. Wall-Street.com.  Plaintiffs, who are not U.S citizens, may argue that U.S. registration of Mr. Yonay’s underlying story which resulted in the California article is not necessary for foreign nationals and the lawsuit should proceed.  Even if this assertion is found to be a valid basis for proceeding with the lawsuit without registration, the Plaintiff’s will likely need to allege as such under U.S. law.

Also, many of the complaint’s allegations appear to involve the expression of ideas that would fully be expect to be present in any story or film about combat military pilots, in this case navy pilots.  Copyright law does not protect common themes which appear across different works, e.g., romantic themes, works involving detectives, love songs, impressionism in art, etc.  Thus, even if the Plaintiffs pass the “copyright registration” threshold issue, they may have a very difficult time proving actual copyright infringement.

One of the more interesting allegations in the Complaint suggests that the famous scene in the original Top Gun movie where Maverick and Goose’s F14 plane is inverted over a Russian MiG was the author’s original expression. The 1983 California magazine article does reportedly show a photograph with one F-14 plane inverted atop another plane but the article credits a C.J. Heatley as the photographer.  The Complaint makes no mention of Heatley or the photograph and it is not clear from the story whether the “inverted plane orientation” is the author’s original expression and the photograph is a secondary expression which captures the literary expression to add “color” to the story.

This case will either be thrown out early on due to the registration issue without addressing “copying” issues or it will be drawn out.   Dates will be critical since Paramount is maintaining that the sequel was “sufficiently completed” prior to the copyright termination date of January 24, 2020.  Work on the sequel began in 2018.  The plaintiffs allege that the movie was completed in 2021 or well after the copyright’s 2020 termination date. “Big screen” release was postponed until May 27, 2022 after the movie was completed in 2021 because of the pandemic. Mr. Yonay passed away in 2021 or after termination of the copyright.

Plaintiffs contend that they originally sent Paramount a “termination of rights notice” in 2018 based on the 1983 magazine’s publication date.  However, Paramount allegedly ignored the letter apparently believing that the termination was ineffective because they had acquired the rights from the California magazine and not Mr. Yonay himself.  Instead, Paramount moved ahead with the very lucrative sequel.  It’s not clear who advised Paramount on the potential seriousness of this matter in 2018 but that this lawsuit has now been filed should have come as no big surprise.  The heirs now surprisingly are seeking to share in the financial bounty of a terrific movie which may owe its existence to a story written by their loved one almost 40 years ago under a legal doctrine that allows such redress.  Whether or not their claim of copyright infringement will pass muster remains to be seen.

The lawsuit will also likely call into question the underlying contracts between Paramount and California Magazine and California Magazine and Mr. Yonay.  It is noted that if a contract includes a waiver of termination rights by the copyright owner, such a waiver is generally unenforceable.

Stay tuned for periodic updates as the case progresses.

THANK YOU FOR YOUR INTEREST IN THIS BLOG.  AS USUAL THE CONTENT IS FOR INFORMATIONAL PURPOSES ONLY                    AND IS NOT LEGAL ADVICE.

Intellectual property law is a complex area of the law.  Contact us at 305-279-4740 for a complimentary consultation on protecting your inventions, creative works, brands, and proprietary information through patents, copyrights, trademarks and trade secrets or our litigation services involving intellectual property disputes.   We represent both individuals and business entities.  Our mission is to serve innovators and creators in protecting the fruits of their hard work and ingenuity through our Client Services Creed:  Conscientious, Rigorous, Energic, Empathetic, and Diligent legal services. 

© 2022 by Troy & Schwartz, LLC

Take Home Points

1. File at least a provisional patent application before taking steps to commercialize and sell an invention.
2. Understand the ramifications of the on-sale bar to patentability.
3. If engaging in experimentation with others prior to filing a patent application, ensure that contracts are very clear concerning the experimentation purpose.
4. Be very careful about making an offer for sale of the invention prior to filing a patent application. An offer for sale can take many forms including a contract, proposal and/or invoice.

Section 102(b) of the Patent Act involves the on-sale bar to patentability.  The America Invents Act (“AIA”) amended § 102(b).  Any patent issuing from an application filed before May 16, 2013 which is later subjected to an on-sale bar analysis in a patent infringement analysis will be analyzed under pre-AIA § 102(b). This section states that a patent claim is invalid under 35 U.S.C. § 102(b) if “the invention was  . . .  on sale in this country more than one year prior to the date of the application for patent in the United States.”

This commentator recently published a blog on the CAFC’s February 2022 opinion in Junker v. Medical Corp., Inc where the Court held that the patentee had not timely filed a patent application under § 102(b) of the Patent Act.  Also see that blog for a comparison of the pre-AIA § 102(b) and the post AIA statute.  In Junker, the patent owner’s damages for patent infringement awarded by the district court were negated.  Now we have another decision in just over two months where the patent owner has had patent claim rights adversely affected because of failure to timely file a patent application.

On April 29, 2022^, in Sunoco Partners Marketing v. U.S. Venture, Inc., the CAFC again addressed the on-sale bar to patentability.  The patent at issue involved an application filed on February 9, 2001.  Accordingly, based on 35 U.S.C. § 102(b), the critical date (the latest date on which the patentee could have made an offer for sale without violating the on-sale bar) was Feb. 9, 2000.  Here, the patentee’s offer for sale was Feb. 7, 2000.  Put another way, once the offer for sale was made, the patent applicant had exactly one year to file the patent application or until Feb. 7, 2001.

In Sunoco, the defendant asserted an on-sale bar defense to invalidate claims in two of Sunoco’s patents. To prevail, the defendant needed to demonstrate by clear and convincing evidence that the patented invention was both: (1) “the subject of a commercial offer for sale”; and (2) “ready for patenting.”  Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 57 (1998).

A factor which may allow the patent owner to negate an on-sale bar invalidation is whether the offer for sale occurred primarily for purposes of experimentation.  The “experimentation” exception to the on-sale bar was first articulated by the U.S. Supreme Court in City of Elizabeth v. Am. Nicholson Pavement Co., 97 U.S. 126, 137 (1877):  [E]xperimental use allows inventors to delay patenting to engage in “bona fide effort[s] to bring his invention to perfection or to ascertain whether it will answer the purpose intended.”  At the same time, “[a]ny attempt to use [the invention] for a profit and not by way of experiment” before the critical date will “deprive the inventor of his right to a patent.”  Ultimately, as the City of Elizabeth court explained, the on-sale bar is related to the monopoly afforded to a patentee – to have the government-granted right to seek legal recourse for the unauthorized use of the patented invention for a statutory period of time.   The on-sale bar prevents a subsequent patentee from “acquiring an undue advantage over the public by “preserv[ing] their monopoly . . .  for a longer period than is allowed.”

Sunoco, the current owner of the patents at issue, argued the on-sale bar was not violated because the inventor’s company, MCE Blending (“MCE”) offer to sell the invention to Equilon Enterprise, LLC (“Equilon”) was primarily for experimentation purposes.  The district court agreed and held found that the defendant’s on-sale bar defense was negated by the experimental use doctrine.

The CAFC disagreed on the basis of the terms of a contract between the inventor’s company and MCE.  The opinion is instructive because it demonstrates how a contract’s terms can play a critical role in upholding or defeating patent rights.  Whether such a transaction was for primarily for experimental or commercial purposes is a “question of law to be analyzed based on the totality of the surrounding circumstances.”   The Sunoco court assessed the transaction “under contract law as generally understood, focusing on those activities that would be understood to be commercial offers for sale in the commercial community.”

The invention was for an automated butane-blending system to maximize a desirable property of combining butane and similar gasoline components.

Based on the following contractual words and terms, the transaction was deemed to be a commercial offer for sale for the following reasons:

1. The contract expressly described the transaction as a sale without any mention of any experimental purpose.
2. The contract stated that MCE already developed the relevant technology and equipment, that Equilon wanted to purchase it, and that MCE was willing to sell it, install it, and supply butane for it in return for Equilon’s agreement to purchase several hundred barrels of butane from it over a period of five years.
3. The contract stated that MCE is willing to install the blending Equipment and to supply the butane required for such blending to Equilon.
4. The contract stated that the ownership and title to the Equipment shall be conveyed to Equilon by MCE upon completion of the installation and training. MCE was to execute a bill of sale to effectuate the conveyance of ownership of the Equipment to Equilon.
5. The contract referred to Equipment Testing and not Experimental Evaluation.

The district court concluded that there had been no offer of sale of the invention because the contract “did not require Equilon to pay MCE anything in exchange for the system which incorporated the invention.  In contrast, the CAFC opined that Equilon purchased MCE’s equipment by committing to buy MCE’s butane.  In other words, it incurred a real if indirect cost.   Had the contract not intertwined the equipment’s required installation with Equilon’s obligation to buy butane, the CAFC indicated that it would not have characterized the transaction as a sale.

The CAFC further emphasized that the concept of experimental use can be difficult to establish.  For example, the contract had a section entitled “Equipment Testing” with two sets of testing:  pre-installation testing and post-installation testing.  Sunoco argued that MCE wanted “to experiment at the actual tank farm and determine whether their inventive idea was capable of performing its intended purpose in its intended environment.” MCE therefore would need access to Equilon’s facility to test under action conditions.  However, testimony revealed that the testing, which focused on determining whether that system could communicate with one of the equipment’s components was not done at Equilon, after all but by a third party.  Additionally, the testing could have been done at any time prior to entering into the offer for sale with Equilon.   This was not a situation involving, e.g., street pavement, which cannot be experimented upon satisfactorily except on a highway.  Sunoco court quoting City of Elizabeth, 97 U.S.C. 134.

The commentator adds that large, expensive equipment is often set up and qualify assurance tests conducted by the seller’s employees.  However, these are not “experimental purpose” activities because the buyer is expecting the equipment to work.  A good example is medical diagnostics equipment.

The inventor’s subjective intent concerning experimentation is of minimal importance.  The courts have generally looked to objective evidence to show that a precritical date sale was primarily for experimentation.   The opinion includes a useful list of objective indicia relied on by the courts in footnote 5.  In this case: 1) the terms of the sale agreement itself constituted objective evidence; and 2) the nature of the experimentation was such that it could have been done prior to the sales offer.

In conclusion, the CAFC held that the Equilon agreement was an offer for sale to commercially exploit the invention rather than primarily for experimentation purposes. Equipment which incorporated the invention was ready for use at the time the contract was entered into and ready for patenting based on objective evidence.   The district court’s experimental-use determination was reversed and its infringement determination with respect to the pertinent claims was vacated.   The decision involved some other issues which are separate from the 102(b) discussion of this blog for those interested.

If you have any questions about when you should file a patent application to preserve your rights, contact Susan at 305-279-4740.

WE THANK YOU READING THIS BLOG AND HOPE YOU FOUND IT INFORMATIVE.  HOWEVER, THE CONTENT IS PROVIDED FOR INFORMATION ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE.  IF YOU ARE CONTEMPLATING ANY ACTION THAT MAY HAVE LEGAL CONSEQUENCES, CONSULT WITH AN ATTORNEY.

©2022

Troy & Schwartz, LLC

Where Legal Meets Entrepreneurship™

(305) 279-4740

Opinion Background & Discussion – In re Dare Foods, Inc.

Trademark blogs often focus on detailing decisions by the Trademark Trial & Appeal Board (“TTAB”) and the courts over whether a mark should be approved for registration or not based on the likelihood confusion with an existing registered mark.  However, trademark law provides a mechanism through which two registered marks having different owners can co-exist.  How is this possible? Because the mechanism involves a co-existence or consent agreement between a registered mark owner and an applicant.  As the Federal Circuit Court of Appeal’s predecessor court stated in the 1973 seminal Dupont case,

[W]hen those most familiar with use in the marketplace and most interested in precluding confusion enter agreements designed to avoid it, the scales of [likelihood of confusion] evidence are clearly tilted.  It is at least difficult to maintain a subjective view that confusion will occur when those directly concerned say it won’t.  A mere assumption confusion is likely will rarely prevail against uncontroverted evidence from those on the firing line that it is not.

The cited wording pertains to Dupont factor #10 in a likelihood of analysis determination which was referred by the Dupont court as the “market interface” factor.

On March 29, 2022, the TTAB recently reversed the examining attorney’s refusal to register the mark RAINCOAST DIP for “snack food dips” in view of the registered mark RAINCOAST TRADING for seafood products on likelihood of confusion grounds.  Note that the USPTO routinely finds likelihood of confusion problems with a registered mark and an applied-for mark where both marks have the same word as the first word (the aspect of the mark consumers are most apt to focus on) when the same or related goods/services are involved.  For example, the TTAB itself found that the involved goods were related because “it is not uncommon for snack food dips as well as seafood and seafood snacks to emanate from the same source.”    It was thus not surprising that the examining attorney found likelihood of confusion because the marks are more similar than dissimilar in appearance, and sounds, and “particularly connotation and commercial impression.”  The TTAB agreed.

However, the TTAB found that the examining attorney had failed to give proper credence to a 2013 agreement between the parties’ predecessors.  That agreement was detailed and covered the typical factors the TTAB will look at in determining whether the agreement meets at least the following requirements:

1. Shows agreement between both parties;
2. Whether the agreement includes a clear indication that the goods or services travel in separate trade channels;
3. Whether the parties agree to restrict their fields of use;
4. Whether the parties will make efforts to prevent confusion and cooperate and take steps to avoid any confusion that may arise in the future;
5. And whether the marks have been used for a period of time without evidence of actual confusion.

Simple agreements, which some sarcastically refer to as “naked agreements”, will not qualify as suitable co-existence/consent agreements.  Here, the TTAB concluded that the parties had entered into a detailed agreement with sufficient parameters for allowing the existence of the two registered marks.

This commentator has drafted detailed co-existence/consent agreements resulting in registration of an applied-for mark.  One fact that can be helpful is when the goods/services are provided in a different geographical market.  For example, this type of agreement was entered into between a Florida eatery (the commentator’s client) and an Oregon eatery. Obviously, the registered mark owner must be willing to enter into such an agreement.  Had the Oregon eatery instead been a Georgia-based company owned by a franchisor who planned to open franchise restaurants in Florida and across the Southeast, the possibility of obtaining a “USPTO-acceptable” co-existence/consent agreement would likely have been more difficult because of the stronger possibility of overlapping trade channels.

Take Home Point

A properly-drafted, accurate co-existence/consent agreement with appropriate provisions may allow an applied-for mark to be registered by the USPTO even where the applied-for mark would not otherwise be registered on the basis of its likelihood of confusion with the registered mark.

In Need of Legal Counsel on Trademark Matters?

Contact Susan at 305-279-4740 if you have any questions about co-existence/consent agreements or any other matter related to trademark law.

               THANK YOU FOR YOUR INTEREST IN THIS BLOG.

AS USUAL THE CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT LEGAL ADVICE.

© 2022 by Troy & Schwartz, LLC

This September 2021 decision addresses complex aspects of Copyright Law involving both copyright ownership issues and termination rights wherein the Creator of a work can reclaim rights in an originally assigned copyright 35-40 years after the work’s assignment.  The commentator has previously posted blogs discussing the importance of properly categorizing the work’s Creator as a work-for-hire under the Copyright Act.   Failure to do so may result in a situation wherein the plaintiff in a copyright infringement case may actually not be the owner of the registered copyright. Under such circumstances, a copyright infringement case may be dismissed because the plaintiff, as a non-owner, may not have standing to sue for copyright infringement.

The public policy underlying the Copyright Act’s termination right under 17 U.S.C. § 203 is to give Creators a second chance when the work they licensed or sold (assigned) becomes more valuable than anticipated. Improper classification of the Creator also impacts a Creator’s termination rights because the Creator of a work-for-hire cannot invoke a termination right. Disputes over termination rights often turn on an analysis of the nature of the Creator’s relationship to the work.

The defendant in Horror (Victor Miller) was the screenplay writer of the 1980 horror movie “Friday the 13th”.   The screenplay was created for Manny, Inc. which later transferred its copyright in Miller’s screenplay to Georgetown Productions, Inc.  It was Georgetown Productions that registered the screenplay as a work-for-hire.  The rights were later acquired by Horror, Inc.  In 2016, Miller notified both the “first” company which had retained his screenplay writing services decades before and Horror, Inc. that he planned to exercise his termination rights.

Horror filed an action in the U.S. District Court of Connecticut, seeking a declaration that the screenplay was a work-for-hire by an employee and not subject to termination. The district court disagreed with Horror’s position, finding that Miller had instead been an independent contractor and the screenplay did not qualify as a work-for-hire.  Horror appealed. The Second Circuit affirmed the lower court’s decision.

Employment Status Analysis

In arriving at its “independent contractor” conclusion, the Second Circuit discounted the plaintiffs’ position that Miller had been an employee at the time he wrote the screenplay.  The plaintiffs’ argument focused on Miller’s membership in the Writers Guild of America (WGA) at the time he was hired to create the screenplay as grounds for his designation as an employee and the registered work’s classification as a work-for-hire.   Miller’s original agreement with Manny was conducted under a collective bargaining agreement governing WHA’s writers and signatory employers like Manny.

The Second Circuit concluded that Horror wrongly relied on labor law’s framework defining “employee.” Instead, Copyright law controls the analysis; its concept of employment is grounded in the “common law of agency” and serves different purposes from labor law.

The Second Circuit relied on the Supreme Court’s 1989 seminal case of Community for Creative Non-Violence v. Reid where the High Court laid out the scope of employment framework for establishing copyright ownership under 17 U.S.C. § 102.   In discussing CCNV, the Second Circuit noted that “the Copyright Act uses a more restrictive definition of employment” in order to protect authors whereas labor law construes employment broadly “to serve workers and their collective bargaining interests and establishing rights” including safety and pay rights.  Thus, Miller’s membership in the WGA and Manny’s status as a signatory employer to their collective bargaining agreement did not create an employment relationship that converted the screenplay into a work-for-hire.

In determining that Miller was an independent contractor who had the right to terminate Horror’s copyright, the Second Circuit considered CCNV’s enumerated factors for establishing whether the Creator of the work was indeed an employee:

• Miller’s previous screenwriting employment and graduate degree in theater established his expertise and skill in screenwriting requiring little oversight/direction;
• Manny, Inc. never provided Miller with typical employment benefits such as health insurance of paid vacation time;
• Manny, Inc. never withheld or deducted any taxes or social security payments from the two lump sums he received for his screen-writing services.
• Nothing in Miller’s employment agreement with Manny, Inc. could be construed as granting Manny the right to assign additional projects.
• Miller was the only person credited as the screenplay writer.

Certain types of commissioned works may also qualify as a work-for-hire under the Copyright Act when the Creator is an independent contractor and not an employee but only if the Creator and the commissioning party have both signed an agreement stating that the work is a work-for-hire. Additionally, the work must fall into one of the Copyright Act’s nine enumerated classifications for this type of work-for-hire.  Screenplays are not one of the enumerated classifications. Here, the agreement between Manny and Miller never specified that the screenplay would be a work-for-hire.  Even if the screenplay would have qualified as one of the enumerated classifications, the absence of the required agreement eliminated any chance of establishing the screenplay as a work-for-hire under the “independent contractor” scenario.

As a result of the Second Circuit’s decision, Miller now has the right to terminate his copyright.  He will presumably try to negotiate a licensing agreement seeking royalties commensurate with the movie franchise’s success.

Comments

Copyrights enjoy a long lifetime but  nobody has a crystal ball.  Parties who are contemplating obtaining the rights to a copyrighted work(s) should consider the money-making potential with the knowledge that the work’s Creator (including his/her estate) could seek to terminate the copyright 35-40 years into the future. Parties who are acquiring the rights as a successor-in-interest should consider the possibility of termination and determine if the work was a bona fide work-for-hire: 1) by an employee; or 2) via a “work for hire” agreement signed by both the Creator/independent contractor and the hiring party for certain classifications of works.   Why?  Because a “true” work-for-hire is not eligible for termination.  On the other hand, independent contractors may not wish to have their work designated as a work-for-hire and instead assign the rights in return for monetary compensation to preserve their termination rights.

As the Horror decision shows, a registration which specifies a work as a work-for-hire does not necessarily make it so. Had this been a copyright infringement lawsuit brought by Horror against another party, chances are that an astute copyright infringement attorney would have challenged Horror’s ownership and standing as the owner of the registered copyright.  Why?  Because the Creator was never an employee.  Nor would the work  have likely qualified as a work-for-hire under the “independent contractor” alternative provided for under the Copyright Act.

Copyright law is complex even though at first blush it appears relatively simple due to the ease of completing a copyright registration application.  However, numerous pitfalls abound for the unwary and even the issuance of a registration does not mean that the registration is absolutely immune from problems as the Horror decision demonstrates.

Copyrights can be extremely valuable intellectual property assets.  Make sure you understand the pitfalls to avoid problems down the road where your ownership may be questioned or the Creator may have the right to exercise termination rights.   Contact us for a complimentary consultation on your copyright matters.

WE THANK YOU READING THIS BLOG AND HOPE YOU FOUND IT INFORMATIVE.  HOWEVER, THE CONTENT IS PROVIDED FOR INFORMATION ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE OR AN ATTORNEY-CLIENT RELATIONSHIP.  

©2021

Troy & Schwartz, LLC

Where Legal Meets Entrepreneurship™

(305) 279-4740

On April 5th, a federal judge in the U.S. District Court of Virginia heard summary judgment arguments on this very issue in Thaler v. Iancu.  Thaler brought this action to challenge the current legal definition of inventorship of patent applications after the United States Patent & Trademark Office had rejected two of his patent applications for failing to identify a person as inventor in non-compliance with the Patent Statute’s statutory requirements.  Instead, he had named an artificial intelligence (AI)-based system, DABUS, as the inventor and disavowed any notion of being named a sole or at least a joint inventor.  Thaler may well have brought as a test case given AI’s increasing role in R&D in industries ranging from the life sciences to chemistry to engineering.

The judge is expected to rule in favor of the USPTO on the basis of the patent statute’s definition of inventor which states:  “The term “inventor” means the individual or, if a joint invention, the individuals collectively who invented or discovered the subject matter of the invention.”  Any change in the definition of inventor to include AI will require intervention by Congress.

The issue is not, however, as simple as expanding the definition to include the AI.  For example, an Inventor must contribute to the conception of the invention.  As the Manual for the Procedure for Examining Patents (MPEP) states, “[t]he threshold question in determining inventorship is who conceived the invention.  Unless a person contributes to the conception of the invention, he is not an inventor.”  MPEP § 2019.

In understanding the legal definition of inventorship, it is important to understand that the inventor is not required to reduce the invention to practice.  “Difficulties arise in separating members of a team effort, where each member of the team has contributed something, into those members that actually contributed to the conception of the invention, such as the physical structure or operative steps, from those members that merely acted under the direction and supervision of the conceivers.”  MPEP § 2019 citing a 1991 case from the Board of Patent Appeals and Interferences.

Can AI spontaneously conceive of an invention without any human input or is it actually being directed to reduce a human-inputted concept to practice?  Under this scenario, AI cannot be an inventor even if the definition for inventor is expanded to include AI.

Additionally, assignment of patent rights is a common practice.  Generally, any scientist or engineer employed by a company is required to execute and assignment of any patent rights resulting from his or her endeavors to the company-employer.  The company generally files the patent application as the assignee wherein the inventors must always be named.  Another common patent assignment scenario is one where the inventor, as the patent owner, assigns another person, often a business entity, to commercialize the patent.   Patent licensing is another common business transaction surrounding issued patents.   These routine contractual business transactions will clearly become complicated if AI is allowed to be named as an inventor.  Why? Because the party to an agreement must have the requisite intent to enter into the agreement.   Can AI have that requisite invent to assign its patent rights or enter into a licensing agreement?

Other considerations include:  1) An AI machine’s ability to have standing to sue or be able to testify as the inventor in a patent infringement lawsuit; 2) Ownership rights in any resulting patentable invention if the AI machine was designed by an independent person and purchased by the inventor.  Here, any purchase contracts should unequivocally state that any resulting patentable technology resulting from the usage of the AI machine belongs to the purchaser of that machine.  But what if the AI machine is named as the inventor?  The point is that any such contracts involving AI must be carefully tailored to anticipate possible scenarios.

This commentator is not in favor of having AI named as an inventor perhaps because of a bias in favor of the human brain as the ultimate source of creativity and ingenuity.  Instead, Congress should first address the upheaval in intellectual property law caused by simply bad court decisions in U.S. patent law concerning patent eligibility under § 101 and just this month, the questionable application of the fair use doctrine in a copyright law case.  Click here for a link to the blog on the copyright case.  There is also no question that human ingenuity is what created AI in the first place and that AI is here to stay.

As an alternative to complicating the patent law business transactions that are so essential to acquiring investment funding and commercially exploiting patented inventions, a separate statute for thoughtfully addressing the unique aspects of AI-involved inventions is suggested.  This suggestion of a separate patent classification has precedent through plant patents and design patents – types of patents that are separate and distinct from utility patent applications, the very type of patent application at issue in the Thayer case.

THANK YOU FOR YOUR INTEREST IN THIS BLOG.  AS USUAL THE CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT LEGAL ADVICE.

Intellectual property law is a complex area of the law.  Contact us at 305-279-4740 for a complimentary consultation on protecting your inventions, creative works, brands, and proprietary information through patents, copyrights, trademarks and trade secrets or our litigation services involving intellectual property disputes.   We represent both individuals and business entities.  Our mission is to serve innovators and creators in protecting the fruits of their hard work and ingenuity through our Client Services Creed:  Conscientious, Rigorous, Energic, Empathetic, and Diligent legal services. 

© 2021 by Troy & Schwartz, LLC