Corporate Counsel Daily, Infringement case over improving optical signaling patent reinstated, (May 21, 2024)

By Brian Craig, J.D.

The invention agreement that included an exception for inventions that the engineer developed entirely on his own time requires further factfinding.

Concluding that an invention agreement includes ambiguous language that requires additional factfinding, the U.S. Court of Appeals for the Federal Circuit has reinstated an infringement case over a patent to improve optical signaling. In vacating the decision of the federal district court in California that granted summary judgment, the Federal Circuit held that the language in the invention agreement that included an exception for inventions that the engineer “developed entirely on [his] own time” requires further factfinding. Circuit Judge Haldane Robert Mayer wrote a dissenting opinion arguing that the engineer’s Ph.D. thesis related to his employer’s business that falls exclusively within the invention agreement (Core Optical Technologies, LLC v. Nokia Corp. , No. 23-1001 (Fed. Cir. May 21, 2024)).

Core Optical Technologies, LLC filed in the federal district court in California alleging infringement of U.S. Patent No. 6,782,211 (the ’211 patent) by three groups of defendants led by Nokia Corp., ADVA Optical Networking SE, and Cisco Systems, Inc. (collectively, Nokia). The ’211 patent is entitled “Cross Polarization Interface Canceler” that claims to optimize bandwidth efficiency. The sole inventor on the ’211 patent is Dr. Mark Core. Core developed the technology for the ’211 patent while earning a Ph.D. in electrical and computer engineering and working for TRW. The engineer’s employment at TRW began in 1990 when he signed an invention agreement. The engineer assigned to his employer all of his inventions that “relate to the business or activities of TRW” and were conceived, developed, or reduced to practice during his employment with TRW. The invention agreement included an exception for inventions that the engineer “developed entirely on [his] own time.”

Nokia filed a motion to dismiss arguing that Core Optical lacked standing to assert the ’211 patent even though the inventor had assigned the patent to Core Optical in 2011. The district court agreed and granted Nokia summary judgment. The district court determined that the time the engineer spent on his PhD research—during which he developed the claimed invention—was at least in part TRW time and not “entirely on the engineer’s own time. Core Optical appealed.

Invention ownership. The Federal Circuit vacated the decision of the district court and reinstated the case. The panel concluded that if a contract is capable of more than one reasonable interpretation, it is ambiguous, and it is the court’s task to determine the ultimate construction to be placed on the ambiguous language by applying the standard rules of interpretation in order to give effect to the mutual intention of the parties.

In this case, the Federal Circuit found that the language stating “entirely on [his] own time” is ambiguous. The majority found that the phrase entirely-own-time phrase is a somewhat colloquial phrase. The contract is ambiguous without saying how it applies to on-the-clock or off-the-clock inventions. The Federal Circuit concluded that the 1990 invention agreement is capable of more than one reasonable interpretation. Inquiry beyond the language of the contract is needed to determine the ultimate construction to be placed on the ambiguous language, applying the standard rules of interpretation in order to give effect to the mutual intention of the parties.

Here, the engineer admitted that his PhD dissertation is “essentially identical” to the provisional patent application that turned into the ’211 patent. That research and the ’211 patent concerned certain techniques for improving optical signaling. The engineer was not free to use the entirety of his off-the-clock hours any way he wished without accountability to TRW. Both Core Optical’s and Nokia’s views of how the years-long, TRW-funded research was intended to be treated under the 1990 invention agreement are plausible on the undisputed facts. The determination of mutual intention appears to call for findings of fact inappropriate for summary judgment. Therefore, the Federal Circuit vacated the decision of the district court.

Dissent. Circuit Judge Haldane Robert Mayer wrote a dissenting opinion arguing that the engineer’s Ph.D. thesis related to his employer’s business. The engineer then took the technology he developed for this thesis and patented it. The engineer acknowledged that his Ph.D. dissertation was essentially identical to the provisional patent application that turned into the ’211 patent.

The Case is No. 23-1001.

Judge: Taranto, R.

Attorneys: Lawrence Milton Hadley (Glaser Weil Fink Howard Avchen & Shapiro LLP) for Core Optical Technologies, LLC. John D. Haynes (Alston & Bird LLP) for Nokia Corp.

Companies: Core Optical Technologies, LLC; Nokia Corp.

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