Federal Circuit Reminds Us: “Will Assign” isn’t an Assignment

I love this case because it has lessons for ethics, drafting, and civil procedure.

The holding is pretty simple:  an inventor who signs an employment agreement that provides (a) she “will assign” rights to inventions doesn’t then assign them; (b) that she “holds in trust” those rights doesn’t mean she assigns them; and (c) that she “quit claims” those rights doesn’t mean she assigns them.  Two judges so held (O’Malley and Reyna), and Judge Newman dissented relying on the “intent” of the contract.  The case is Advanced Video Tech. LLC v. HTC Corp. (Fed. Cir. Jan. 11, 2018), here.

So, lesson for ethics and drafting:  verbs matter and due diligence matters! (Related note: watch out for spouses of inventors — there’s an argument in community property states that spouses own inventions that I’ve blogged about somewhere and which almost worked in one CAFC case, where the accused infringer was able to get a license from an ex-spouse!)

The civil procedure issue concerns Judge O’Malley’s concurring opinion. She argues that a co-owner who refuses to join is an indispensable party under Rule 19, and that a prior panel decision holding otherwise was wrongly decided, but binding.  I very much enjoyed working with Judge O’Malley (I clerked for then-CJ Rader a couple years ago), and she’s a civ pro wiz, but I have some doubts on that interpretation of Rule 19.  The examples of when someone is an indispensable party are few, and forcing someone to be a plaintiff in a patent suit when they don’t want to be subjects them to all sorts of potential liability (285, for example) that they may not want to incur.

Moreover, even if an en banc court agrees with her, I’m not sure it will eliminate every problem of the recalcitrant co-owner. For example, in this case, suppose the court en banc decides Judge O’Malley is right and Rule 19 requires joinder, and that the co-owner can be joined (i.e., there is personal jurisdiction over her and, arguably, venue is proper (Rule 19 is very weird)). As a result, the co-owner is joined involuntarily but then pleads:  “the defendant doesn’t infringe.”  Now there is no case or controversy between that co-owner and the defendant, and so no subject matter jurisdiction.  “Claim” dismissed?

I wonder if there’s a Rule 14 way to bring in a co-owner if there is a counterclaim for, say, inequitable conduct by that co-owner/inventor?  I teach and have written a book on civil procedure and that might work, but I’m not sure Rule 19 will.  I bet we will see an effort to use it.

26 thoughts on “Federal Circuit Reminds Us: “Will Assign” isn’t an Assignment

  1. 7

    Isn’t the pleading problem you propose simply resolved? Although the “recalcitrant” inventor pleads that the defendant doesn’t infringe, the “voluntary” inventor-plaintiff did plead infringement. If his pleading met the requisite specificity for Rule 8, it follows that the court must credit them as true, and then it’s enough for the court to have a dispute to retain jurisdiction over?

    In other words, I’m not sure why the “recalcitrant” inventor pleading non-infringement would lead to a different outcome than the defendant-infringer pleading non-infringement.

  2. 6

    Related note: watch out for spouses of inventors

    For both “will – future – assign” and “hereby – now – assign” cases, right?

    Stanford v Roche was silent as to when a community-State “sharing” takes place, or whether such state law may be trumped by contract law (in which the spouse is not a signatory).

      1. 6.1.1

        I seem to recall that Case.

        If I remember correctly, the case was decided as it was because the facts were not “quite right” to attempt to insert the spousal rights as a deciding factor.

        In other words, the decision in that case did not settle the issue of spousal rights in a community state.

  3. 5

    I think their might be an issue here with foreign filing, every time somebody causes an application to be filed at the USPTO in the name of the inventor and then, one year later, files PCT which includes a declaration of the priority of the US filing.

    Why? Because under the Paris Convention, the declaration of priority is legit only if i) made by the original USPTO filer (ie the inventor) or their “successor in title” and ii) the succession to the title has to have taken place BEFORE the PCT is filed. An instrument of intent to assign, expressed in writing, and duly executed during Paris year, ain’t enough.

    Anybody here disagree?

      1. 5.1.1

        Sorry Ned, I don’t understand the question. Here:

        link to en.wikipedia.org

        is Wikipedia on the right of priority given when a country signs up to the Paris Convention. Ned, note “Applicant or successor in title”. What’s that then, in your book?

        1. 5.1.1.1

          OK, I assume who qualifies as a successor in title must be determined according to the laws of the applicant’s nationality?

          Thus, what does it take to have a legal assignment of a right of priority in Germany?

          1. 5.1.1.1.2

            OK, Ned, anon, let me spell it out in baby steps.

            The USA is a member of the Paris Convention, in which Art 4 provides for a right of priority. But the only good ol’ boys who can benefit under Paris Art 4 are i) the party named as Applicant on the priority filing or ii) the “successor in title” to that party. In a FtF world, hanging on to Paris priority can be decisive to the issue, whether or not you have rights that you can enforce.

            Now, as I understand it, it is (still) common to file a pro in the name of the inventorship entity (human) then, one year later, file PCT in the name of a corporation. All fine and good if the corporation acquires ownership (under the laws of the USA) BEFORE filing PCT.

            Now, on these pages I am told not to worry because that is ALWAYS the case. I though, suspect that what actually happened, over the last 20 years you understand, is that much of the time all there was, prior to filing the PCT, was an “agreement to assign”.

            Currently, in Europe, there is a rash of cases in Europe where priority is denied, because the PCT filer was not, on the PCT filing date, the……..wait for it…….successor in title.

            Hence my interest in this particular Fed Ct case.

            1. 5.1.1.1.2.1

              I already “get” how the right of priority is in play, MaxDrei. I was wondering why dear ‘ol Ned was attempting to kick up dust by dragging it into the conversation.

              Ned’s angle is the same one that he attempts whenever “title” comes out to play: legal title and equitable title.

              Now, on these pages I am told not to worry because that is ALWAYS the case.

              I have never seen you being told that on these pages.

              That being said, your point here is a valid one – and one worth repeating for a variety of reasons (including the PCT rule, as well as the fact that most US attorneys in such situations represent the corporation and NOT the individual inventor – and we have conflict of interest ethical rules to live by – Dave Hricik can chime in on that angle).

            2. 5.1.1.1.2.2

              Thanks Max.

              And I would think that in negotiating with the Europeans the U. S. government cannot say that the U. S. law is that an agreement to assign a future invention is different in the law from a agreement to presently assign a future invention given the scathing reception the Federal Circuit rule met at the Supreme Court in Stanford v. Roche.

              If simply is about time for the Federal Circuit to take en banc, sua sponte perhaps, the issue so that an appropriate petition to the Supreme Court can be taken.

              1. 5.1.1.1.2.2.1

                cannot say that the U. S. law is that an agreement to assign a future invention is different in the law from a agreement to presently assign a future invention given… Supreme Court…

                Your take away from the Stanford v. Roche case remains most odd, Ned.

                The case decided to the very opposite effect that you are now (still) seeking.

                THAT is bit one of the lessons I provided to you.

              2. 5.1.1.1.2.2.2

                link to bailii.org

                Ned, the Link above will take you to a November 2017 English patent decision centered on a distinction between legal and equitable rights. The judge finessed out of a difficult dilemma, to arrive at a “common sense” outcome.

  4. 3

    I think O’Malley is correct. Even though the recalcitrant owner as a right to license for the future, they have no right to prevent a co-owner from collecting past damages even if those damages must be shared with the recalcitrant owner.

  5. 2

    btw, I do not think that “not wanting” aspects that necessarily come with being a (or even a partial) patent owner is enough to dismiss those liabilities.

  6. 1

    Reminds me of the lessons I (attempted to) impart to one Ned Heller following the Stanford v. Roche Supreme Court case – another case where “verbs matter” and “due diligence matters.”

    1. 1.1

      Anon, as always, I fail to recall you saying anything of substance on Stanford v. Roche. Exactly what did you say?

      1. 1.1.1

        Your “failure to recall” does NOT necessitate my going back and pulling the comments forward.

        You have every ability to visit the archives yourself. I suggest that not only that you do so, but that you also pay better attention in real teime as I dole out the lessons to you.

        1. 1.1.1.1

          anon, the problem is that folks trying to understand you have no idea what you are talking about. They are in worse shape in this regard than yours truly.

          1. 1.1.1.1.1

            That “problem” would not happen Ned if you actually committed to conversations in a full and inte11ectually honest manner, instead of playing the “Internet shout down” game that you play.

            OUR conversations this span a huge number of individual posts because of your actions.

            I would it for the situation to be different, but that would depend on you.

              1. 1.1.1.1.1.1.1

                LOL – as if, Ned.

                You DO read them (even if you pretend otherwise).

                Being able to answer them (at least in an inte11ectually honest manner – well, that’s quite a different story)

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