Successor Company Holds Patents Assigned to Predecessor Company (Even if Assigned after Predecessor Dissolved)

Tri-Star Electronics Int'l. v. Preci-Dip Durtal SA (Fed. Cir. 2010)

Mr. Kerek (from Ohio) invented the claimed “socket contact” while an employee of Tri-Star and he duly executed an assignment of his rights to to Tri-Star.  The year prior to the invention, Tri-Star (OHIO) had merged and become Tri-Star (CALIFORNIA).  However, Kerek's assignment clearly stated that the assignment of rights was to Tri-Star (OHIO) — even though that Ohio company no longer existed. Later, Tri-Star (CALIFORNIA) merged and became Tri-Star (DELAWARE).

Here, the accused infringer has challenged whether Tri-Star (DELAWARE) has standing as owner of the patent rights.  The Federal Circuit accepted this interlocutory appeal and held that Tri-Star (DELAWARE) is the owner of the patent rights.  

In making its decision, the Federal Circuit found two points of law important:

First, contract law attempts to satisfy the mutual intent of the parties, and here, it was clear that the employee had intended to transfer rights to his employer as required by the employment contract.

Second, even after a merger, a predecessor company continues to exist under Ohio law for the purposes of allowing its property to vest.

Based on these two points, the Federal Circuit held that the stated transfer to the merged Tri-Star (OHIO) equated to a transfer to its successor Tri-Star (CALIFORNIA). The later transfer to Tri-Star (DELAWARE) was not disputed.

* * * * *

I have no problem with the Federal Circuit's statements regarding Ohio law — it is correct as far as I know. However, I do have some concern with the ongoing fallacy that there is no Federal law or policy controlling the transfer of patent rights. On point, there is a Federal Law requiring that patent assignments be done “in writing.” 35 U.S.C. 261. Based on that statute, the court should have considered how the supposed transfer from Kerek to Tri-Star (CALIFORNIA) fits within that statutory requirement. In addition, we have seen an increasing number of companies playing games with the patent recordation system by using shell corporations and by mis-recording assignment records. Here, for instance, the assignment record showed ownership by Tri-Star (CALIFORNIA) despite the documentation in the underlying assignment.  Those concerns are important — especially if we believe that the public properly has an interest in knowing the identity of patent owners.

15 thoughts on “Successor Company Holds Patents Assigned to Predecessor Company (Even if Assigned after Predecessor Dissolved)

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  3. Those concerns are important — especially if we believe that the public properly has an interest in knowing the identity of patent owners.

    Of course they be important – ya gotta know who ya goin after with the false marking suits, doncha?

  4. TINLA,

    The post before yours esplains the issue: a patent as a piec of property can be bought and sold, traded and attached to all kinds of contract terms. There be no way of the Office tracking that, and I sure as anythin don’t want the Office legislatin my bizness deals. This here aint the United Socialists O’ America.

  5. what’s in a name, I would agree that the merger document or documents is the written agreement and it should be recorded.

  6. Years ago the PTO clearly announced that it would stop reviewing the actual assignment against the accompanying cover sheet information which it records. So that fault is not the PTO’s.

    If a patent attorney clearly announces that he or she will no longer review prior art references against Office actions rejecting claims, will it not be his or her fault if the claims are needlessly amended? It’s good to be the Office, I guess.

  7. Completely agree with Dennis’s comments. But assignments are only the tip of the iceberg. If you want a real mess, consider the fact that licenses can be both oral and binding upon successors.

  8. Is the concern here that the transfer of rights from Kerek to Tri-Star (CA) was not done in writing? I think the written document here would be the merger document. I don’t see the problem here.

    Also, I don’t see this as a mis-recordation of the assignment documents. Tri-Star (CA) considered itself the patent owner and the public would have seen that in the assignment database.

  9. Re: “..if we believe that the public properly has an interest in knowing the identity of patent owners.”
    In that case, are not the non-performing-entities hiding behind a whole series of shell corporations to sue real performing entities on patents that may not even have previously recorded re-assignments, an even more serious problem? With shell corporations that can be a mere empty desk address in some law firm office in East Texas?
    ————-
    Re: “the assignment record showed ownership by Tri-Star (CALIFORNIA) despite the documentation in the underlying assignment.” Years ago the PTO clearly announced that it would stop reviewing the actual assignment against the accompanying cover sheet information which it records. So that fault is not the PTO’s.

  10. Dennis, The Federal Circuit has declared that whether an assignment is a “present assignment” of future inventions, or an “obligation to assign,” is a question of “federal law.” They apparently justified this in order to resolve issues of standing on a consistent basis. However, I personally don’t think this “issue” is simply procedural, so I don’t fully understand how federal law and not state law applies.

    Circling back to the present case, the issues involved here are are primarily related to corporate law and only loosely related to the effectiveness of assignments. I think that’s why the Federal Circuit was very comfortable here in applying state law.

  11. Case 6 (IDS 7&8)

    One IDS with 21 references, 15 of them cumulative with respect to the claims, and the whole case. All of them decent as a primary reference if I have certain other features from other refrences (which I happened to find, in 102 references).

    The other IDS submitted after restriction it has 6 references. All relevant to the case in some way or other and at least tangentally related to the claims. One reference may be a 102 for many claims. I found a 102 for those claims during classification search as well.

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