Disputes between business partners are a regular occurrence. At Shuttleworth & Ingersoll, we advise our clients to have a direct conversation with their partners about equity, responsibilities, and decision-making authority before investing capital and labor in an idea. Once the partners come to terms on these issues, they should memorialize this understanding in an enforceable agreement. Unfortunately, failure to address these issues in the beginning or execute an enforceable agreement can lead to unfortunate consequences down the road. A recent case from the United States Court of Appeals for the Federal Circuit highlights this issue.
In In re Jeff H. VerHoef, an inventor, Jeff VerHoef, had his patent application rejected for failing to name a co-inventor. In the United States patents are awarded to inventors. This means that a patent must accurately name the correct inventors and omitting an inventor is fatal to the patent. VerHoef presented a rare situation where the incorrect inventorship was readily apparent to the patent examiner.
Mr. VerHoef’s dog Reilly developed difficulty walking after surgery. Reilly would drag his hind paw and put weight on his paw’s knuckles. Mr. VerHoef took Reilly to a veterinarian, Dr. Lamb, for rehabilitative therapy. When the therapy proved disappointing, Dr. Lamb recommended a commercially available harness that supports the hind leg. When that harness didn’t solve the problem, Mr. VerHoef constructed a homemade harness and recognized that it would work better if connected to the dog’s toes. After mentioning this to Dr. Lamb, Dr. Lamb suggested “a strap configured in a figure ‘8’ that fit around the toes.” This ended up working. VerHoef contacted a patent attorney who filed a patent application naming Mr. VerHoef and Dr. Lamb as co-inventors.
As is not uncommon, relations between Mr. VerHoef and Dr. Lamb soured. The parties did not form a legal entity to own the invention nor did they have a contract with provisions for resolving disputes. Mr. VerHoef directed his patent attorney to abandon the application and refile it identifying Mr. VerHoef as the sole inventor. Unbeknownst to Mr. VerHoef, that same day, Dr. Lamb also engaged a patent attorney and filed a patent application claiming the same invention that identified Dr. Lamb as the sole inventor.
The patent examiner of Mr. VerHoef’s patent application found Dr. Lamb’s identical patent application and immediately recognized an issue with the identity of the inventors. The examiner rejected Mr. VerHoef’s patent application under 35 U.S.C. §102(f), which requires a patent accurately name each inventor. There was no dispute that Dr. Lamb’s conception of the strap configured in a figure ‘8’ that fit around the toes was an essential feature of the invention. On appeal of the examiner’s rejection, the Court concluded that by failing to add Dr. Lamb as a joint inventor, Mr. VerHoef’s patent application was properly rejected.
VerHoef teaches us several lessons. First, it is important for joint inventors to come to terms on how they are going to commercialize their invention. Often this requires a difficult conversation about what each inventor is going to contribute to the venture in terms of capital and labor. Once the inventors come to terms, it is important to memorialize this understanding. A joint development agreement or forming a legal entity are well recognized types of arrangements that can provide certainty for the inventors down the road. Second, inventors should carefully consider who they discuss their ideas with. Mr. VerHoef may have been able to deduce the solution for the toe harness on his own and remained the sole inventor. Instead, by discussing his idea with another, Mr. VerHoef gave Dr. Lamb an opportunity to contribute to the invention and own an equal stake in it. Finally, the importance of making sure that the identity of the inventors of a patent application is correct cannot be overlooked. In this case, both Mr. VerHoef and Dr. Lamb spent thousands of dollars seeking a patent that was invalid from the start.
At Shuttleworth & Ingersoll we work with our clients to address these issues from the start. After all, nobody wants to be left out in the dog house.
More information: In re Jeff H. Verhoef