Rough waters: Inventor’s standing at issue in patent case

You might think the most appropriate party to bring an action to correct patent inventorship would be one of the named inventors. The U.S. Court of Appeals for the Federal Circuit, however, challenged this notion in Larson v. Correct Craft.

Patent overboard!

Correct Craft Inc. employed Borden Larson as a designer of boat components from 1986 to 2001. During that time, Larson designed a new “wakeboard tower” for sports boats. In 1997, he was informed that Correct Craft was planning to seek patent protection for the wakeboard tower.

Larson assisted in the patenting process and, between 1998 and 2001, executed patent assignments, transferring his interest in the invention to Correct Craft. In declarations filed with the U.S. Patent and Trademark Office, Larson attested that he was a co-inventor, along with two of the defendants.

In 2003, after he was terminated, Larson sued Correct Craft and his co-inventors in Florida state court, alleging various state law fraud claims and seeking rescission of several patent assignments and declaratory judgments concerning the parties’ respective rights to the patents.

Correct Craft removed the case to federal court because the declaratory judgment requests essentially were claims to correct inventorship under the federal Patent Act. The district court granted summary judgment for the defendants on all of the claims.

A sea leg to stand on

On appeal, the Federal Circuit weighed whether Larson had standing to pursue his action for correction of ownership. It began by examining an earlier case where the court had addressed the relationship between a suit to correct inventorship, known as a Section 256 action, and the elements of constitutional standing.

In Chou v. University of Chicago, the court declined to hold that a plaintiff in a Sec. 256 action must have an ownership interest at stake in the suit to have standing. Rather, the plaintiff’s “concrete financial interest” in the patents was sufficient to satisfy the requirements for standing (that is, injury, causation and redressability).

But the Federal Circuit distinguished Larson’s position from Chou’s. If Chou were identified as an inventor, university policy would entitle her to royalties, licensing revenue and equity in startups. Larson, on the other hand, had affirmatively transferred title to the patents to Correct Craft and stood to reap no benefit from a pre-existing licensing or royalties arrangement. His only path to financial reward would require him to first succeed on his state-law fraud claims and obtain rescission of the patent assignments.

Without first voiding the assignments, Larson had no ownership interest in the patents. Therefore, he had no noncontingent interest in the patents that would support his standing.

In an unusual move intended to prevent the Federal Circuit from vacating the judgment in their favor (as required if Larson had no standing to be heard in the district court), the defendants argued that Larson had standing based on his reputational interest in being correctly named as the sole inventor. The court declined to say that a reputational interest is sufficient to confer constitutional standing, noting that the issue wasn’t presented by the facts because Larson had emphasized that his injuries were financial, not reputational.

Back to the dock

Larson will need to obtain equitable relief that restores his ownership rights before he can bring a claim to correct inventorship. Until that time, the proper venue for his claims is the Florida state court. •