Indent C. ROUND THREE * Sears appealed the district court's decision again to the federal court Court of Appeals agreed with Spears and in a masterfully worded opinion replete with NEWSPEAK decided: In our prior opinion, we repeatedly referred to the "return of plainiff's patent" and when we used the word "rescission," we used it in the context of returning the plaintiff's patent. We did not say that the plaintiff could under any theory upon remand be entitled to restitution or additional damages or profits. In fact, we expressly, said that the plaintiff did elect his remedy as to past damages or profits up to the time of the jury verdict and that return of his patent might be the most effective way of insuring that the plaintiff receive the future benefits of the patent. We remanded the case for the purpose of determining whether as an equitable matter the plaintiff should recover his patent. In retrospect, we would have been better advised to use some other word such as cancellation, termination or forfeiture of the June 15, 1965 agreement, or reconveyance or reassignment of plaintiff's patent. event, we believed that the language of our opinion made it clear that the plaintiff had elected his remedy as to past damages or profits and, because that remedy continued only up to the date of the judgment, it might be equitable to return the patent to the plaintiff as of that same time to insure that he would realize any future benefits which might accrue through his ownership of the patent as of the time immediately following the entry of the judgment. We did not say nor intend that the June 15, 1965 agreement be subject to being declared void as of any time prior to the date of the entry of the judgment if the district court upon remand found such cancellation to be equitable. In any Indent In addition to what we said and intended, the law does not permit the remedy the district court attempted to award upon remand. In the earlier opinion, we accepted Illinois law as to election of remedies for past damages or profits, as had the district court immediately after the jury verdict. We parted with Illinois law only to give the plaintiff an opportunity to protect himself against future damages. The district court would now entirely ignore Illinois law as to election of remedies but would seem to apply the Illinois law of ab initio rescission plus complete past restitution.17 To justify its logic, the court, in a footnote, stated that rescission ordinarily means abrogation from the beginning, but the law of Illinois recognizes the concept of partial rescission. Also, the word "Rescission" is often used when a patent or copyright license is terminated after partial collection of royalties.18 The court vacated the decree of the district court, and remanded it for further proceedings consistent with its opinion. The results were that Roberts was able to retain the $1,000,000 judgment that had been satified earlier, and that he was to be considered the patent owner from January 20, 1977 on. Swygert In a dissenting opinion, Judge Sest agreed with the majority that an accounting for the period from the date of the contract to the date of judgment was prohibited by the earlier appeals court decision, but he felt that an accounting for the period from January 1, 1977 to the date of the accounting was The dissent stated: proper We held that the jury award for past profits did not bar an equitable remedy for future benefits. Roberts v. Sears, Roebuck & Co., supra. The majority concedes, that the damages remedy continued only up to the date of the judgment, after time the equitable remedy of rescission attached. Indent which Indent By denying the plaintiff an accounting for the period after which his damages were assesed but before he was in a position to benefit from the return of his patents, the majority has, with no justification, left a substantial gap in the plaintiff's rightful recovery. According to the majority, the contract was rescinded or cancelled as of January 1, 1977. It is not disputed that the remedy of rescission generally carries with it an accounting for profits unjustly earned. Yet, the majority holds that in order for the plaintiff to recover the defendant's profits, he must start a new action at law for patent infringement. Apparently the majority is concerned lest the plaintiff have a second chance to recover in equity what he has already received at law. But the jury award for damages continued only up to the date of the judgment. Here we are concerned exclusively with profits made after that date. Because we have held that the contract was void after January 1, 1977, profits earned by the defendant after that date must be disgorged to prevent unjust enrichment. Because the jury was never asked to award damages for this period, there is no possible double recovery or factual inconsistency in this result. I would give the plaintiff the full equitable relief to which he is entitled upon the finding that rescission is appropriate. heightened "Big" business ethics have of late come under beghtened scrutiny and criticism. That scrutiny and criticism may appear to be justified if Sears' monumental fraud visited on the plaintiff is any measurement. Evidence before the jury indicated that Sears' incremental profits on the patented wrench had been $44,032,082 from the date it fraudulently acquired the patents up to December 31, 1976. The jury awarded the plaintiff one million dollars damages for that period. Beyond December 31, 1976, according to the directions of the court in the present appeal, the plaintiff will have back his patents with the opportunity to sue Sears for infringement, subject, however, to Sears' defense of invalidity. lost Peter M. Roberts, his fight for "Truth, Justice, and the American Way"20 After more than eleven years spent in the courts, and eighteen years after his invention was conceived, Roberts must be one frustrated individual. During the litigation, it Kseemed that the issue of common law employee patent rights was never in contention, as the parties likely assumed that the original ownership rights belonged to Roberts. Had Sears originally contracted in good faith, it would have saved both parties hundreds of thousands of dollars in legal fees, and would have prevented years of disappointment. Although the ownership rights were not covered by a statute the author would Like to point out that had proposed federal legislation been adopted, Roberts would have been required to offer Sears a right of first refusal subject to compensation for 21 the invention. If the issues remained in dispute, they could have been easily disposed of through an arbitration hearing. And so, Peter M. Roberts, may "The Force" be with you. 16Roberts v. Sears, Roebuck and Co., 617 F.20 460 (1980). 19 Its unknown to this author whether the parties have subsequently litigated the 20 The author expresses his humble apologies to Superman, Clark Kent, Lois Lane, 21See Phillips, op. cit., at pg. 167 17 617 F. 2d 460, 464 (1980). 18 617 F.2d 460, 464, Fn. 3 (1980). Patent Bill Returns Bright Idea to Inventor When your innovative idea fets tied up by piles of paperwork, and months of delay as Washington dawdles over whether to let you market the thing or not, nasty thoughts about U.S. patent policy are never far off. Just ask Sydney E. Salmon, a biomedical researcher at the University of Arizona. In 1977, Salmon and another scientist found that by growing human tumor cells in a Petri dish and adding anticancer drugs, they could predict what drug or combination of drugs would best shrink a patient's tumor. The method could also be used to screen the effectiveness of new anticancer drugs. Salmon wanted to patent the technique. But since the salary of one researcher in the lab was paid by the Department of Health, Education, and Welfare (HEW), all rights reverted to the agency. To make sure the method did not just sit on a government shell, Salmon on 5 July 1977 asked HEW for the patent rights, and on 29 July published his results in Science. An editorial in the New England Journal of Medicine soon took note of the technique, and even Time ran a story on it. Not long afterwards, drug companies showed up at Salmon's door, wanting to market the method. HEW, however, had not yet ruled on the patent rights, and the companies soon lost interest. It took until March of this year in all some 20 months before HFW finally decided to band over the rights. The drug com panies are only now starting again to ask about licensing the patent rights. "This mvention will spate cancer pa tients from receiving toxic drugs which we can predict would be of no benclit,” Salmon recently told a Senate heating. "Yet this slow process of gaining HEW approval delved its availability to the public by at least 1 year.” It is am oft told tale on Capitol Hill these days. A steady stream of inventors has been show my up at beatings to com plun about the bineau, catic knots that tie up the transfer of patents derived from federally funded research. Then goal is to boost new. legislation, and 20 seems to be working. Support has been buildme for a Senate but that wenki aut matically pive patent rights to universi thes and small businesses The Hill, the University and Small Basmesses Patent SCIENCE Vent And in the process it would help federally funded inventors and their institutions to pick up a little cash Procedures Act (S.414), is coauthored by Birch Bayh (1) Ind.), chairman of the Senate Judiciary Committee's subcommittee on the Constitution, and Robert Dole (R-Kan.). The bill would let any federally funded university or small business make some money off their bright ideas. Say, for instance, that a researcher on a Department of Energy (DOE) grant came up with a cost-efficient way of converting coal into gasoline. Under the bill, the inventing organization could apply for a patent-without waiting for permission from DOE-and then license the idea to a company for up to 8 years. A portion of the money made during commer cialization would be returned to the inventing organization with the stipulation that the funds, over and above administrative expenses and a fee to the inventor, be used to support further scientific research. Not only university researchers are backing the bill. A study by the Department of Commerce has recommended the exclusive licensing of patents derived from federally funded research. The General Accounting Office (GAO) has come out in favor of the Bayh Dole legis businessmen. Of the 30,000 inventions now in the government's patent portfolio, an estimated 4 percent have been licensed, and even fewer make it to market. One reason is that the government insists on issuing “nonexennsive" f; censes--which means that any number of companies can jump in along the road to development and marketing though few take the chance). Another reason. say many researchers, is that the govern ment doesn't know how to market an invention. The further one goes from the source of the idea, the inventor, the less one knows about how to put it to work. The government is not all thumbs, however. To help cut through this web. federal agencies over the years have worked out agreements with certain universities that show a knack for peddling their inventions to companies that will produce them. Called Institutional Patent Agreements (IPA), they allow a university to become the owner of a patented invenion resulting from federally funded research and to give an exclusive license to a company for up to 5 years. IPA's are few and far between, however. They are in place at only 72 HEW grantee institutions and, out of 1200 institu Critics of such legislation, who in the lation. And the critics of such legislation, who in the past have railed about the "giveaway of public funds,” have grown unusually quiet. The reason scems clear. Industrial innovation has become a buzz word in bureaucratic circles. The White House, for mistance, is about to release a study on how to cure the alleged decline in the innovative spirit within US an dustry. The patent transfer people have latched onto this issue. It is about inne. they say, to cut the red tape that saps the incentive to be inventive. The way things currently stand, the in centrve is indeed small Years cm ship by before a funding aren, y decides, whether of not to retina patent relats to JAJU PINAN tor's organization, and, as often as not. the are notes decide to hold on me the agencies merevvel, Ponve to be post phate but "es" and "IMA tions that receive National Science Foundation funds, they are in place at about 20. And not many more are expected, since the agencies are con servative in identifying institutions that have what it takes to promote technology transfer. The Bach Dole bill goes beyond the IPA concept in that it makes no distmction between institutions that have a kna. 3. for marketing their mventions and thoa that do not. It says any university or smi di business can manage its own invention better than the rovernment can. The IPV, moreover, is limited to uven trous discovered on government grants, not conitats Not so with Bash Dele. Most everyone on any kind of funding iS covered, with the exception of by: bust ness, and that is mostly foi tactical res ་ས་་་་ 421 |