Thinking Ahead: Join Owners of Patent Owner for 285 Liability?

You get sued and you’re thinking you’ll ultimately win big.  Exceptional case.  Fees shifted.  And you do, and you get an award of $3 million in your favor.  But, the patentee is basically a shell and so after a year of trying, you decide to go after its owners, allegedly its alter ego.

Federal courts have power to assist in executing judgments, but state law must authorize the procedures used, and not all states allow for joinder of non-parties after final judgment.  In Vehicle Interface Tech., LLC v. Jaguar Land Rover North Am., LLC (D. Del. Dec. 14, 2017), the court held that the defendant failed to show that Delaware law permitted joinder under those circumstances, and so the $3 million judgment seems, it seems, worthless.  The case is here.

So, although it seems weird, perhaps you need to join owners of patent owners….

4 thoughts on “Thinking Ahead: Join Owners of Patent Owner for 285 Liability?

  1. 2

    Let’s look as this from a different perspective:

    You are an independent inventor who holds a patent on valuable technology. MegaCorp is infringing your patent and has completely ignored your letters inviting it to engage in license negotiations. When you finally scrape up enough money to hire a lawyer who sends MegaCorp an official notice letter, MegaCorp says: “So sue me, I dare you. And if you do, I will come after you for MegaCorp’s attorney fees. By the way, we hire only the most expensive lawyers.”

    In addition to your patent, you have built up a nice nest egg to use for your kid’s college education and your retirement. You cannot risk losing that money. What to do?

    Well you create an LLC , assign the patent to the LLC, and let the LLC be the plaintiff in the lawsuit against MegaCorp. In doing this you are legitimately relying on the corporate shield laws to protect your personal assets from MegaCorp’s treats to bankrupt you with a huge attorney fee award.

    Why would anyone think it would be appropriate to pierce the corporate veil in this circumstance? I cannot think of any reason other than to further shelter the MegaCorps on the world from infringement liability.

    There is a distinction between being against patent abuse on the one hand and being against the patent system on the other. Many of us seem to have forgotten that distinction.

    1. 1.1

      I think that’s a different legal issue, but it raises to me a preemption argument: what indication is there that federal law should preempt state law protection of LLC/etc. owners?

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