By Dennis Crouch
James Taylor v Taylor Made Plastics (Fed. Cir. 2014)
I should note here that this case is neither about the musician or the golf club company. Rather, it is about the now fractured Taylor family and their patented pipe plugs. I discussed the district court decision earlier here.
Several years ago James T. invented storm drain equipment and obtained a patent in his name only. U.S. Patent No. 5,806,566. When he and his wife Mary T. later divorced, the divorce court ordered “equitable distribution of marital property” with Mary T. receiving 60% of proceeds from the patent and James T. receiving 40%. The divorce court seemingly only dealt with equitable title in the form of rights-to-proceeds and not with legal title to the patent itself. And, in particular, the divorce court did not identify who held the exclusive rights associated with the patent.
Following the divorce, James T. seems to have lost control of the Taylor Made Plastics company that sells the devices he invented and the company also stopped paying on the patent. Mary T., however, is on much better terms with the company that continues to be family run. So, when James T. filed his infringement lawsuit against Taylor Made Plastics, Mary T. sided with the company and the district court dismissed the case – finding that title to the patent was divided between the two former spouses and, as a consequence, any infringement lawsuit must be filed by both co-owners acting in concert.
On appeal, the Federal Circuit has affirmed – finding that Mary T. was properly considered a co-owner and therefor a necessary party for any infringement lawsuit to consider.
The appellate panel began by highlighting the rule that equitable title is not the type of ownership we are talking about. Thus, the fact that Mary T. is owed 60% of the distribution is irrelevant. Rather the correct question is whether Mary T. has at least partial power to wield the rights-of-exclusivity inherent to the patent.
The long-established rule is that a suit for patent infringement must join all co-owners of the patent as plaintiffs. Waterman v. Mackenzie, 138 U.S. 252 (1891). If any co-owner should refuse to join as a co-plaintiff, the suit must be dismissed for lack of standing. But a party is not co-owner of a patent for standing purposes merely because he or she holds an equitable interest in the patent. Arachnid, Inc. v. Merit Indus., Inc., 939 F.2d 1574 (Fed. Cir. 1991). Rather, a co-owner must hold legal title to the patent. Id. (citing Crown Die & Tool Co. v. Nye Tool & Mach. Works, 261 U.S. 24 (1923)). Legal title vests initially in the inventor, and passes to others only through assignment or other effective legal transfer.
As in most states, assets acquired by either spouse during a Florida marriage are presumed to be marital assets subject to equitable distribution on divorce. It is through that process that Mary T. became a co-owner. In the appeal, James T. represented himself pro se and seemingly did a poor job by offering number of arguments “only in a cursory fashion without any supporting facts.” At the Federal Circuit, James T. argued (but failed to provide any evidence) that Mary T. had signed a contractual agreement to enforce the patent against Taylor Made. If that contract exists and is enforceable then James T. should be able to re-file the lawsuit and force her to participate in the next go-round.
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Professor Hricik provides his thoughts here: http://patentlyo.com/hricik/2014/05/spouses-inventors-owners.html