Apple must face Apple Watch patent claims, Fed Circ. affirms

(Reuters) – Apple Inc lost its bid to escape patent infringement claims over its Apple Watch technology brought by a University of Michigan professor’s biomedical laser company at the U.S. Court of Appeals for the Federal Circuit on Monday.

The employment agreement between professor Mohammed Islam and the university didn’t automatically assign his patents to it, and Apple couldn’t escape the case based on a lack of standing by his company Omni MedSci Inc, U.S. Circuit Judge Richard Linn said for a divided three-judge panel.

Circuit Judge Pauline Newman dissented, arguing the majority “overturns decades of unchallenged understanding and implementation of the University’s employment agreement and policy documents.”

Omni’s attorney Tom Lewry of Brooks Kushman said in an email that the company was “pleased but not surprised” by the ruling.

Apple and its attorney Jeffrey Kushan of Sidley Austin didn’t immediately respond to a request for comment, nor did the university or its attorney Sarah Waidelich of Honigman.

Omni sued Apple in East Texas federal court in 2018, alleging the Apple Watch’s ability to measure heart rates infringed four of its patents. In the complaint, Islam said he had met with Apple representatives in his role as Omni’s principal several times about licensing the patents before it allegedly copied his technology. Islam, a professor at Michigan’s school of engineering, started Omni while on unpaid leave from the university and applied for the patents at issue during that time.

Apple moved to dismiss the case, arguing the university owned the patents under part of Islam’s employment agreement that says patents he receives “shall be the property of” the university if they were obtained based on activity it supported directly or indirectly. The university also argued in a friend-of-the-court brief that it owned the patents at issue.

U.S. District Judge Robert Schroeder in Marshall, Texas rejected Apple’s motion, finding the agreement didn’t automatically assign Islam’s future patent rights to the school but stated a future intention to assign them, at most. U.S. District Judge Yvonne Gonzalez Rogers denied Apple’s request for leave to file a motion for reconsideration of the decision after the case was moved to her Oakland, California court.

In Monday’s opinion, Linn, joined by Circuit Judge Raymond Chen, affirmed, finding the language of the provision indicates it was meant as a “promise of a potential future assignment, not as a present automatic transfer.”

Linn also noted that other parts of the university’s IP agreement using the same language couldn’t be read as automatic assignments. And the relevant part of the contract also didn’t use “present tense words of execution” – like “assigns” or “does hereby grant” – that the Federal Circuit had previously found creates an immediate transfer, Linn said.

Apple had argued that whether the agreement automatically assigned Islam’s future patents “depends on the substance of what was granted rather than formalities or magic words.”

“Our focus here is not on any magic words, but rather on the absence of an active verbal expression of present execution,” Linn said.

In her dissent, Newman said the agreement automatically assigned Islam’s future inventions to the school – noting among other things that the university’s tech transfer policy includes a provision for licensing inventors’ patents back to them – and that even under the majority’s interpretation, the agreement precluded Islam from assigning the patents to Omni because of its promise to assign them to the school in the future.

The case is Omni MedSci Inc v. Apple Inc, U.S. Court of Appeals for the Federal Circuit, No. 20-1715.

For Omni: Tom Lewry of Brooks Kushman

For Apple: Jeffrey Kushan of Sidley Austin

For the university as an amicus: Sarah Waidelich of Honigman