Inventor's agreements : CAFC Alert

Inventors’ Agreements will not protect a former employer from the inventors’ future related work

| May 27, 2021

Bio-Rad Laboratories, Inc. v. International Trade Commission, 10X Genomics Inc.

Decided on April 29, 2021

Before Taranto, Chen and Stoll.  Opinion by Taranto.


Bio-Rad attempted to assert that language in inventors’ agreements which were signed by two of the named inventors in the patents asserted against Bio-Rad made the patents their intellectual property by being subject to assignment.  The CAFC disagreed noting that the agreements were too general is scope as asserted and 10X had failed to assert an earlier conception date.


  1. Background

10X Genomics Inc. filed a complaint against Bio-Rad Laboratories, Inc. with the International Trade Commission, alleging that Bio-Rad’s importation and sale of microfluidic systems and components used for gene sequencing or related analyses violated section 337 of the Tariff Act of 1930, 19 U.S.C. § 1337.

The ITC found that Bio-Rad infringed the patent claims at issue and also that 10X practiced the claims, the latter fact satisfying the requirement of a domestic industry relating to the articles protected by the patent.  Bio-Rad argued on appeal that the Commission erred in finding that Bio-Rad infringes the asserted claims of the patents, in finding that 10X’s domestic products practice the asserted claims of the ’530 patent, and in rejecting Bio-Rad’s indefiniteness challenge to the asserted claims of the ’530 patent. The CAFC disagreed and affirmed the Commission.  These aspects of the appeal are not the subject of this paper.

In addition, the ITC rejected Bio-Rad’s defense that it could not be liable for infringement because it co-owned the asserted 10X patents under assignment provisions that two of the named inventors signed when they were employees of Bio-Rad (and its predecessor), even though the inventions claimed were not made until after the employment.

Regarding the timeline of invents of the work of the two inventors, around mid-2010, the two named inventors of the 10X patents—Dr. Hindson and Dr. Saxonov—were working for a company called QuantaLife, Inc., which Dr. Hindson had co-founded. Each of them signed an agreement (Dr. Hindson in 2009, Dr. Saxonov in 2010) that provided, as relevant here:

(a) Employee agrees to disclose promptly to the Company the full details of any and all ideas, processes, recipes, trademarks and service marks, works, inventions, discoveries, marketing and business ideas, and improvements or enhancements to any of the foregoing (“IP”), that Employee conceives, develops or creates alone or with the aid of others during the term of Employee’s employment with the Company . . . .

(b) Employee shall assign to the Company, with-out further consideration, Employee’s entire right to any IP described in the preceding subsection, which shall be the sole and exclusive property of the Company whether or not patentable.

In 2011, Bio-Rad acquired QuantaLife, and Drs. Hindson and Saxonov became Bio-Rad employees. In October of that year, they each signed an agreement that provided, as relevant here:

All inventions (including new contributions, improvements, designs, developments, ideas, discoveries, copyrightable material, or trade secrets) which I may solely or jointly conceive, develop or reduce to practice during the period of my employment by Bio-Rad shall be assigned to Bio-Rad.

Drs. Hindson and Saxonov left Bio-Rad in April 2012, and together they formed 10X in July 2012. By August 2012, 10X filed the first of several provisional patent applications that focused on using microcapsules in capsule partitions or droplet partition.  By January 2013, the 10X inventors had conceived of a different architecture: “gel bead in emulsion” (GEM). The GEM architecture involves “part-tioning nucleic acids, DNA or RNA, in droplets together with gel beads that are used to deliver the 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 CAFC found that the common core of the inventions in the asserted 10X patents is the use of gel beads with releasably attached oligonucleotide barcode molecules as a system for delivery of barcodes to nucleic acid segments.

After 10X began selling its products, including the GemCode and Chromium products, Bio-Rad released its own ddSEQ™ system, whose ordinary use, 10X alleges, practices its patents. The ddSEQ system uses oligonucleotide molecules that are attached to a gel bead and can be released from the bead via a stimulus.

  • Opinion

On appeal, Bio-Rad renewed its argument, made as a defense to infringement, that it co-owns the three assert-ed patents based on the assignment provisions in the employment contracts signed by Drs. Hindson and Sax-onov.  The CAFC noted that it is undisputed that, if Bio-Rad is a co-owner, it cannot be an infringer, per 35 U.S.C. § 262 (“[E]ach of the joint owners of a patent may make, use, offer to sell, or sell the patented invention . . . without the consent of and without accounting to the other owners.”).   However, co-ownership itself was disputed.

The CAFC first noted that Bio-Rad did not present an alternative conception date (earlier than January 2013), and it lost the opportunity to argue conception of certain claim elements while Drs. Hindson and Saxonov were at QuantaLife.

The Court reasoned that Bio-Rad has furnished no persuasive basis for disturbing the Commission’s conclusion that the assignment provisions do not apply to a signatory’s ideas developed during the employment (with Bio-Rad or QuantaLife) solely because the ideas ended up contributing to a post-employment patentable invention in a way that supports co-inventorship of that eventual invention.

Examining the employee agreements, the CAFC found that the assignment provisions are limited temporally. The assignment provision of the QuantaLife agreement reaches only a “right to any IP described in the preceding section,” and the preceding (disclosure-duty) section is limited to IP “that Employee conceives, develops or creates alone or with the aid of others during the term of Employee’s employment with the Company,” before adding a limitation, stating: “All inventions . . . which I may solely or jointly conceive, develop, or reduce to practice during the period of my employment by Bio-Rad shall be assigned to Bio-Rad.”.  Based thereon, the Court concluded that the most straightforward interpretation is that the assignment duty is limited to subject matter that itself could be protected as intellectual property before the termination of employment.

The Court went on to note that Bio-Rad did not argue or 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 protectible intellectual property before the patentable invention is made.   Specifically, the CAFC stated:

Such work is merely one component of “possible intellectual property.” Bio-Rad Reply Br. at 3. In the case of a patent, it may be a step toward the potential ultimate existence of the only pertinent intellectual property, namely, a completed “invention,” but the pertinent intellectual property does not exist until at least conception of that invention. See, e.g., REG Synthetic Fuels, LLC v. Neste Oil Oyj, 841 F.3d 954, 958 (Fed. Cir. 2016); Dawson v. Dawson, 710 F.3d 1347, 1353 (Fed. Cir. 2013); Burroughs Wellcome Co. v. Barr Labs., Inc., 40 F.3d 1223, 1227–28 (Fed. Cir. 1994).

The panel reviewed the current fact pattern in light of previous decisions on the issue of inventor’s employment agreements.  Of note, regarding the FilmTec case (FilmTec Corp. v Hydranautics, 982 F.2d 1546, 1548 (Fed. Cir. 1992)) cited by Bio-Rad involved language of an agreement, and language of the statutory command embodied in the agreement, that expressly assigned ownership to the United States of certain inventions as long as they were “conceived” during performance of government-supported work under a contract.   The panel noted that in the Filmtec case the Court had examined the claimed invention, namely, a composition conceived during the term of the agreement, where conception meant 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.’” Id. at 1551–52 (quoting Hybritech Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1376 (Fed. Cir. 1986)).

We noted that the inventor, continuing to work on the invention after the agreement ended, added certain “narrow performance limitations in the claims.” See id. at 1553. But we treated the performance limitations as not adding anything of inventive significance because they were mere “refine[ments]” to the invention already conceived during the term of the agreement. See id. at 1552–53. We held the claimed inventions to have been conceived during the agreement—something that Bio-Rad accepts is not true here. We did not deem a mere joint inventor’s contribution to a post-agreement conception sufficient. (Emphasis added).

The CAFC additionally reviewed the Stanford case (Bd. of Trustees of the Leland Stanford Junior Univ. v. Roche Molecular Sys., Inc., 583 F.3d 832, 837 (Fed. Cir. 2009), aff’d on different grounds, 563 U.S. 776 (2011)), also relied on by Bio-Rad, involved quite different contract language from the language at issue. The case involved a Stanford employee who was spending time at Cetus in order to learn important new research techniques; as part of the arrangement, the Stanford employee signed an agreement with Cetus committing to assign to Cetus his “right, title, and interest” in the ideas, inventions, and improvements he conceived or made “as a consequence of” his work at Cetus. The CAFC noted that the Stanford case was not a former-employee case and the language at issue in Stanford did not contain the temporal limitation set forth in the agreements at issue.   The Court concluded by noting that the agreement at issue here did not contain the broad “as a consequence of” language at issue in Stanford.

 The Court also examined the relevant aspects of the governing law of California which provides a confirmatory reason not to read the assignment provision at issue here more broadly. California law 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.  The Court noted that substantial questions about compliance with that policy would be raised by an employer-employee agreement under which particular subject matter’s coverage by an assignment provision could not be determined at the time of employment, but depended on an unknown range of contingent future work, after the employment ended, to which the subject matter might sufficiently contribute.   The reasons behind the policy being that such an agreement might 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.   The CAFC concluded that the contract language at issue does not demand a reading that would test the California-law constraints and they would not “test those constraints here by adopting a broader reading of the contract language than the straightforward reading we have identified.”

Finally, Bio-Rad had argued that Drs. Hindson and Saxonov conceived of key aspects of the claimed inventions, if not the entirety of the claims, at QuantaLife/Bio-Rad. The Commission had determined that many of these “ideas” are at a level of generality that cannot support joint inventorship or (sometimes and) involve nothing more than elements in the already-published prior art.  Specifically, Bio-Rad contended that at least three ideas developed at QuantaLife were not publicly known in the prior art at the time Drs. Hindson and Saxonov were working on them: tagging droplets to track a sample-reagent reaction complex, using double-junction microfluidics to combine sample and reagent, and using oligonucleotides as bar-codes to tag single cells within droplets. After analysis of these concepts, the Court found that these contentions, by their terms, look to a time long before the January 2013 conception date for the inventions at issue and Bio-Rad did not deny that these ideas were in the published prior art by the time of the conception of the inventions at issue or that they were, by then, readily available to the co-inventors on the patents involved. Hence, the Court concluded that the contentions are insufficient to establish co-inventorship.

Specifically, the Court found that to accept Bio-Rad’s contention after giving the required deference to the Commission’s factual (and, in one instance, procedural) rulings would require that they find joint inventorship simply because Drs. Hindson and Saxonov, while at Bio-Rad (or QuantaLife), were working on the overall, known problem—how to tag small DNA segments in microfluidics using droplets—that was the subject of widespread work in the art.

  • Decision

The CAFC concluded that Bio-Rad had not demonstrated proper ownership of “ideas” as comported to be assigned to them by the two inventors employment agreements.  The general concepts relied upon by Bio-Rad were insufficient as Bio-Rad had failed to assert an earlier conception date.  As such, the Court affirmed the Commission’s ruling.

Take away

  • Broad language in an employment agreement assigning rights to inventions will not suffice to protect an entity from future work performed by the employees at a different entity.
  • Employee agreements assigning rights to inventions conceived while employed need to be structured such that they are clear as to what is conceived is considered the property of the entity.  The entity should take steps to clarify “conception” during employment to provide evidence thereof.

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