Intellectual Property

An Idea In Place

This dispute should remind companies and their independent contractors of the rules regarding co-inventorship.

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business meeting ideaThere is a long history of companies working with independent designers and engineers to help boost their innovation efforts. Most of the time, everything works out. The independent contractor gets paid for their effort, and the company gets to release and market a better product than originally planned. Sometimes, however, things don’t go as smoothly. Whether it is a dispute over which party gets credit for what — or more likely a dispute over distribution of monies related to the effort — the business relationship can always go sideways. And when that scenario unfolds and leads to litigation involving interesting questions of inventorship, the case then becomes worthy of our attention.

One such case is unfolding — a Central District of California case involving cervical collars made by an Icelandic medical device company, Össur. The plaintiff, a California-based design and product development consultant named Wayne Calco, was contacted by Össur after his success in patenting cervical collar designs for two of his competitors. Össur and Calco entered into an agreement whereby Calco would be paid “consultancy fees and royalties based on Össur’s sales of products incorporating technology from the patents on which Plaintiff was named as an inventor or co-inventor before entering into the Agreement.” Included were two advance payments, with the one due at signing — the only one that Össur ended up paying. Litigation ensued, with Össur filing a motion to dismiss that was recently denied by the CDCA’s Hon. Cormac J. Carney.

In his decision, Carney notes that Össur’s “Miami JS” cervical collar “uses features based on Plaintiff’s Sternum Adjustment and Repeatable Fit Tabs concepts.” The court also noted that Össur had filed a series of patent applications related to various cervical collar features, at least one of which named Calco as a co-inventor. Yet, at the time that the agreement between Calco and Össur terminated, “the adjustable cervical collar that Plaintiff was working on that ultimately became the Miami JS was still in the design and development phase, the production cost and design review of the collar had not been completed, and the collar was not ready for production.” By 2019, the Miami JS was for sale, but Calco was never paid the second milestone payment of $20,000 allegedly due him, which was supposed to get triggered once a particular development milestone had been reached. Calco then met with an Össur executive to complain that the Miami JS incorporated his “Sternum Adjustment concept,” but was rebuffed in his attempt to get payment.

Instead of paying Calco, Össur made some adjustments to its pending patent applications with respect to claims directed at the Sternum Adjustment embodiments disclosed in their respective specifications. Calco eventually sued for breach of contract, in part based on the idea that he was owed royalties from sales of the Miami JS collar “based on the issuance of the ’374 Patent, which covers the Sternum Adjustment feature.” Össur moved to dismiss the complaint in its entirety, but Carney made quick work of its arguments for dismissal in his decision denying the motion.

While most of Össur’s arguments for dismissal were swatted away without much elaboration by Carney, the court’s decision on Calco’s claim for correction of inventorship on one of Össur’s issued patents has more meat for us to chew on. In relevant part, Calco alleged “​​that he conceived or contributed to the conception of what Claim 5 of the ’633 Patent calls ‘the grip,’ which is ‘a solid tab-like structure that is an obvious touch point built into and protruding from the center of the front portion of the intermediate support,’ on which ‘[t]he user of the Miami JS or their clinician places a finger and/or thumb’ and moves it ‘to smoothly and neatly adjust the height of the chin support instead of grabbing the chin support assembly to adjust its height.’” Calco further alleged “that on September 28, 2016, he met with Össur employee Chris Webster, who is named as a co-inventor on the ’633 Patent, and explained to Webster the concept and need for the grip and drew by hand sketches of the grip.” After the meeting, he “took a picture of the sketches of the grip that he made for Webster in their meeting and emailed the pictures to Webster during the meeting.” Össur argued that these allegations were insufficient to make a plausible claim that inventorship should be corrected.  In particular, Össur argued that Calco had failed to establish that his grip concept “was qualitatively significant.” But the court disagreed, citing the Federal Circuit’s 1997 Fina decision’s holding that there is “no explicit lower limit on the quantum or quality of inventive contribution required for a person to qualify as a joint inventor. Rather, a joint invention is simply the product of a collaboration between two or more persons working together to solve the problem addressed.” Put otherwise, the bar for qualifying as a co-inventor is figuratively low enough to challenge even the most flexible limbo contestant.

Ultimately, the dispute between Calco and Össur is a reminder to not only the companies but also the independent contractors they hire of the rules regarding co-inventorship, as well as the importance of having contractual agreements that are clear on what obligations and responsibilities each side has with respect to the collaboration. At the same time, the case also reminds us of the relatively low bar set by the Federal Circuit in terms of the level of contribution a co-inventor needs to make in order to earn legal entitlement to that status. At a minimum, the Calco case shows that the process of determining inventorship credit for a jointly conceived invention may be subject to differing opinions. To avoid litigation, therefore, it behooves both the companies and the consultants that they hire to make sure they lock every idea in its proper place.

Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

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Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.

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