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IP Alert
IP Alert: Reputational Harm Can Establish Standing to Sue for Correction of Inventorship

October 5, 2015

“Standing” is the capacity of a party to bring suit in court. To establish standing to sue, a plaintiff must demonstrate that it suffered a concrete injury that resulted from the complained-of conduct. In patent law, a plaintiff that has assigned away its interest in a patent generally lacks standing to bring an action relating to the enforcement of that patent. But on October 2, 2015, in Shukh v. Seagate Technology Inc., the Federal Circuit identified a general exception to that general rule, holding that a plaintiff seeking to correct inventorship under 35 U.S.C. § 256 of a patent he did not own could establish standing by alleging that the omission of the plaintiff’s name from the patent caused him reputational harm.

Plaintiff Dr. Alexander Shukh is a scientist in the field of semiconductor physics. From 1997 through 2009, Dr. Shukh worked for the defendant, Seagate Technology, during which time he was named as an inventor on 17 Seagate patents and received numerous accolades. The court reported that Dr. Shukh received unfavorable performance reviews indicating, in part, that he was confrontational and sometimes accused others of taking credit for his work. Seagate fired Dr. Shukh in 2009. Although he has applied for many new positions, Dr. Shukh has not been able to secure subsequent employment.

Dr. Shukh sued Seagate, asserting several claims, including a claim pursuant to 35 U.S.C. § 256 that Seagate wrongfully omitted him as an inventor on six U.S. patents and four pending U.S. patent applications. Seagate moved to dismiss the section 256 claim for lack of standing, alleging that Dr. Shukh held no interest in the disputed patents due to the language of his employment agreement. The agreement included a statement that Dr. Shukh does “hereby assign” all his future invention rights to Seagate. In response, Dr. Shukh alleged three distinct interests in the disputed patents: (1) an ownership interest, (2) a financial interest, and (3) a reputational interest. 

The district court agreed that Dr. Shukh had no ownership or financial interest in the patents, relying on the 1991 Federal Circuit case of Filmtec Corp. v. Allied-Signal, Inc. The court did not recognize any of Dr. Shukh’s other alleged interests in the patent, and dismissed the case. Dr. Shukh appealed.

On appeal, Dr. Shukh first argued that the Federal Circuit should overrule the holding in the Filmtec decision. The court declined, however, noting that Filmtec was an en banc decision that the court panel could not itself overrule. 

Second, Dr. Shukh also argued that the district court erred in granting summary judgment because a trier of fact could have concluded that his reputation was damaged for not being recognized as the inventor of the patents. On this second point, the court agreed with Dr. Shukh and vacated and remanded the district court’s grant of summary judgment. The court stated that that concrete and particularized reputational injury can give rise to Article III standing, and found that there was a question of material fact as to whether Dr. Shukh’s omission as a named inventor on the disputed patents could have caused him reputational injury. 

The court noted that the omission could have caused Dr. Shukh reputational harm in at least two ways. First, the omission could have harmed his reputation in the field of semiconductor physics. Dr. Shukh presented evidence supporting the claim that a scientist’s professional reputation is influenced by the number of patents on which that scientist is named. Indeed, Seagate itself gave financial rewards and other incentives to its employees based on the number of patents the employees were named on. 

Second, the court noted that the omission could have affected Dr. Shukh’s personal reputation, in particular, his reputation for seeking credit for his inventions. Dr. Shukh presented evidence that he had developed a negative reputation at Seagate based on his insistence on getting credit for his work. The court thus held Dr. Shukh’s allegations sufficient to contend that if Dr. Shukh had been named an inventor on the disputed patents, it might have helped rehabilitate his reputation as a scientist. 

Finally, the court found that Dr. Shukh had presented evidence that his alleged reputational harm had an economic component, specifically affecting the possibility of future employment after his termination from Seagate. The court did not decide any of these issues on the merits, but instead remanded them for consideration by the district court.

The Shukh decision is of interest to both employers and employees as creating a previously seldom-recognized cause of action in patent law. 

Fitch Even expresses no opinion on the merits of Dr. Shukh’s or Seagate’s allegations.

For more information, please contact Fitch Even partner Michael J. Krautner, the author of this alert.

 

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