Supreme Court: Problem of Divided Ownership

by Dennis Crouch

The general rule is that all co-owners of a patent must join together as plaintiffs less the case be dismissed.  In STC.UNM v. Intel, the Federal Circuit ruled that, while co-owners are necessary parties, they may not be involuntarily joined.  That decision is in some tension with Fed. R. Civ. Pro. Rule 19 that empowers a court to order the joinder of a necessary party.  In the case, STC and Sandia National Labs co-own U.S. Patent No. 6,042,998, but Sandia refused to participate in the case.

In a new filing, STC has petitioned the Supreme Court for a writ of certiorari with the following question:

Rule 19 of the Federal Rules of Civil Procedure provides that where a necessary party to a lawsuit has not been joined, “the court must order that the person be made a party.” The Court of Appeals for the Federal Circuit ruled below that Rule 19 is “trumped” by a purported “substantive rule” that a co-owner of a patent can “impede an infringement suit brought by another co-owner.” The majority opinion below stands in stark contrast to this Court’s precedents. For over seventy years, this Court has rejected every statutory challenge to a Federal Rule that has come before it.

The petition particularly argues that the Federal Circuit decision is in conflict with Sibbach v. Wilson, 312 U.S. 1 (1941) and its progeny.

The original decision was authored by Judge Rader (joined by Dyk) with Judge Newman in dissent.  In its 6-4 en banc denial, Judge Dyk authored an opinion concurring with the denial (joined by Moore and Taranto) while both Judges Newman (joined by Lourie, O’Malley, and Wallach) and O’Malley (joined by Newman, Lourie and Wallach) dissented from the en banc denial.

I give the case a better-than-average odds for certiorari and, if granted, the court would likely reverse.

= = = = =

The ownership-tale of the case is a seeming malpractice nightmare.  Briefly, the invention stems out a joint research project between employees at UNM and Sandia.  Three of the named inventors were UNM employees while the fourth (Draper) worked at Sandia.  In 1996, Draper signed an assignment of his rights in the first patent to UNM but then a few months later assigned his rights to Sandia and the new assignment was filed as correction being “made in error” since it had erroneously identified Draper as an employee of UNM.  UNM did not challenge this new filing, but at times in the subsequent decade made several statements regarding its sole ownership of the first patent.

The patent in suit is is based upon the first patent but excludes Draper as an inventor.  (UNM later filed a certificate of correction to formalize the relationship as a continuation in part).  Because of the difference in inventor-employer rights, it would seem that UNM would have full rights to the continuation.  However, in order to overcome an obviousness-type-double-patenting rejection, UNM filed a terminal disclaimer in the second case, linking its term and ownership to that of the first patent. Of course, at the time, the two patents seemingly did not have the same ownership structure and UNM indicated to the USPTO that it was “the owner of record of a 100 percent interest” in the second patent.  In the present lawsuit, however, STC eventually admitted that the corrected Draper assignment was effective to give Sandia ownership rights in both the first patent and the second.  And that admission appears to be treated as an assignment of rights to Sandia if such is necessary.

= = = = =

Wegner recognized the case in his final top-ten:

30 thoughts on “Supreme Court: Problem of Divided Ownership

  1. 5

    How is malpractice implicated? Would not a frank discussion inoculate against such? Is not such a discussion common? Many “unsettled” issues abound in this profession – multiple inventors is just another.

    1. 5.1

      Discussions about inventorship and assignments are indeed common.

      Total screw ups are less common. That’s where the malpractice is “implicated.”

      1. 5.1.1

        Total screwups…

        Thank you Captain Obvious, as total screwups in any aspect invite malpractice concerns (and thus are quite obviously not on point).

    2. 5.2

      I agree anon. You do have to tell the client about this land mine. Seems like an odd thing not to require joinder. The other patent owner does have options. They could grant a license to the infringer, for example. Sell their share of the patent. But, I guess from a US law perspective when one views patents as property, then it seems to me that most of US law weighs in favor of utilizing whatever property is there rather than letting it go fallow.

    3. 5.3

      anon, if a joint owner can unilateral act, it is better to never have filed a patent application in the first place. The patent is worthless.

      That is why the so-called default rule is obscene.

      1. 5.3.1


        How do you square your view here with the Lemley led view** that in today’s world, it “takes a village” for most inventions?

        Are you aware that the combination leads to a anti-patent viewpoint?

        **Lemley’s view on this is captured in several of the changes introduced by the AIA regarding which entities can file an application.

      2. 5.3.2

        Be aware and beware of the “problem” and how that “problem” is being framed.

        Looking one step ahead (or several steps ahead), the “answer” that the “problem” disappears if we “only” change the traditional view that a real person must be the inventor (and first true owner). If we “only” just let the legal person known as the corporation be that very first person, then all of these “divided ownership issues” greatly reduce in their severity is the game in play here.

        As my pal Einstein once said (paraphrasing), things should be as simple as possible – but no simpler.


          anon, you ought to read the Madstad petition to the SC regarding first to invent. A good read. It does seem the Feds are once again fighting the Supreme Court, this time on standing.


          Oh, and the author does make the point that there is a difference from being “the” inventor and being named as an inventor.

          Many can discover the new world, but there is only one true discoverer, the first.


            Your point is simply not valid, as even before the AIA, the notion that many are invited to the race necessarily implies the reality that invention can have multiple (and equally valid) different inventors.

  2. 4

    Divided Ownership is a big problem to everyone. To take a relief from this problem it need a proper consultation and advice. To resolve it get help from top law firms and attorneys.

  3. 3

    I just noticed

    “No. 13–1044. Cisco Systems, Inc., Petitioner v. Commil USA, LLC.
    Petition for writ of certiorari to the United States Court of Appeals
    for the Federal Circuit denied. Justice Breyer took no part in the consideration
    or decision of this petition. ”

    In this case, the Feds found this: “Additionally, we find that Cisco’s evidence of a good-faith belief of invalidity may negate the requisite intent for induced infringement.”

    I thought this issue was taken by the Supreme Court? Is that a different case?

  4. 2

    The original rule that all patent owners had to join a lawsuit was from a Supreme Court case, Waterman v. Mackenzie, 138 U.S. 252, 255 (1891), that cited the Paper Bag Cases for the proposition that all joint owners had to join together to sue. The Paper Bag Cases had required all the joint owners to agree to license the patent.

    While recognizing the rule of the Supreme Court case about joinder to sue, the Federal Circuit seems to be under the impression that each joint owner may separately licensed the patent without the consent of his brethren. That does not seem consistent with the very Supreme Court case on point. Instead, the Federal Circuit realizes that on a series of circuit court and district court cases for its rule of law regarding the power to license without the consent of his brethren, none of which cited to the Supreme Court cases on point.

    Hopefully, this case can indirectly raise the issue of the correctness of the underlying “substantive” patent law upon which the Federal Circuit now relies. The seeming ability of one joint owner to license the patent without the consent of his brethren has long vexed patent law.

    1. 2.1

      > The seeming ability of one joint owner to license the patent without the consent of his brethren has long vexed patent law.

      I wonder why you think this is an issue. As a default rule, this seems to be a good thing and defensive of the minority contributor to a patented invention.

      And, if you wanted a different arrangement, you are free to contract around it.

      1. 2.1.1

        And, if you wanted a different arrangement, you are free to contract around it.

        Short of an assignment, I don’t see how you can contract around it in any meaningful way. Even if a co-owner agreed not to license the patent without the consent of the other owners, if he did so anyway that license would still be good (assuming the Federal Circuit law is correct on this issue). The other owners would have a remedy against the breaching co-owner, of course, but that could be too little, too late.


          This is the usual rule in copyright, and no one seems to mind it. That is, if a co-owner licenses a third party without consent/knowledge of the other owner, the other owner has an action against the first co-owner for an accounting, but that’s it. No action against the licensee.

          The rule makes sense if we consider patent rights to be indivisible, in that each owner holds the rights in a “joint tenancy”. Indeed, this rule makes sense if we view what the patent rights are at base: a right to exclude. Why does one owner get to control over another whether or not they wish to “exclude” someone else?

          In the end, though, we’re fighting about the default rule. Nothing prevents people from contracting around this. You could easily contract around in the manner suggested above, and you would have a remedy against the third party if they took a license with knowledge that they were not contracting with someone with authority. Otherwise, we would penalize the third party who acted innocently (and in fact more than that in this case, since they believed themselves to be licensed, and who could not avoid infringing). The least-cost avoiders are the patent owners who are in a position to determine who will have rights, and the law provides them with a remedy of an accounting if they don’t do so.


            Jane, it is not “easy to contract around this.” People are surprised all the time by the so-called default rule as it is contrary to common sense. One does not, for example, obtain an enforceable mortgage when only one joint owner signs. Everyone KNOWS that one has to obtain the signatures of all joint owners.

            The default patent law as created by the Federal Circuit is out of sync with the default law concerning joint tenants — and it is out of sync once again with Supreme Court case law.


              Are you not assuming that full ‘joint tenancy’ applies…?

              And is the ‘default’ patent law not in sync with 35 USC 262? …or have you not yet read Paul F Morgan’s post as I directed you to?


                262 is the default law regarding use of an estate by a joint owner.

                It says nothing about a joint owner encumbering an estate by his lonesome.

                1. The analogy with real property must break down when one views encumbrances since the nature of a patent is that of a negative right.

                  Realizing the limit of usefulness of any analogy is a part of critical thinking.

    2. 2.2

      A co-owned patent cannot be enforced by any individual owner, since all co-owners must join in bringing any suit for infringement. Waterman v. MacKenzie, 138 US 252 (1891) and other subsequent cases cited in Sec. 21.03[3][d] of “Chisum on Patents”. But note that this is not statutory. So I do not understand the reason for last sentance of the cert petition allegation quoted above about statutes not overuling Federal Rules?

      BUT, this other issue IS statutory: 35 USC 262 plainly states verbatim: “In the absence of any agreement to the contrary, each of the joint owners of a patent may make, use, offer to sell, or sell the patented invention within the United States, or import the patented invention into the United States, without the consent of and without accounting to the other owners.”
      Thus, any co-owner can do whatever it wants independently to license, or even give away, the entire patent right, refuse to cooperate, etc.. With no accounting to the other party. [In the U.S., but note not in many other counties.] Thus, “joint ownership” of an invention or its patents can destroy the licensing value of a patent. Anyone can get a license from any of the joint owners, playing them off against each other for the best price. [Attempting to prevent this by an agreement between joint owners that neither will license without the consent of the other is not a desirable fix and might even raise an antitrust issue.]
      Joint ownership can be created accidentally by adding an inventor to an aapplication, even if only for a single dependent claim therein, where that added inventor has a different effective invention assignment or employment agreement with a different entity than the other inventors.

      1. 2.2.1

        Paul, the statute says nothing about the right to license third parties to use the patent. All it says the patent owner himself has the right to use the patent – akin to a license. As with all licenses, there is a default rule that the licensee has no right to sublicense. This the case with a joint owner – the joint owner only has a right to do is use the patented invention. He has no right to sublicense.

        What the statute actually does is state the basic law of joint tenancy. Each joint tenant under joint tenancy law has the unfettered right to use the estate. But, joint tenants have no right to encumber the estate without the consent of all their brethren.

        This doctrine about joint tenants was well understood at the time of the McKenzie decision. The Supreme Court cited the Paper Bag Cases as supporting its rule. There, the Supreme Court dealt with a license to a machine granted by one of the joint owners. The Supreme Court stated that the particular joint owner was acting as a representative of the other joint owners and there was no question of consent.

        Clearly the validity of the license depended upon their being unanimous agreement among the joint owners to the license. This is inconsistent with the so-called default rule developed by a district court in particular cases that treated the ownership of the patent as if the owners were tenants in common and can deal with their interests independent of the other owners.

        Patents share aspects of tenancy in common in that each joint owner does not need to own a proportional share of the entire estate. The ownership can be divided into smaller units like tenants in common. But beyond that, the Supreme Court has ruled that all the joint must act together to enforce and to license.

        The lower court rule adopted by the Federal Circuit that a particular joint owner can encumber the estate without the consent of his brethren is in conflict with controlling Supreme Court authority.

    3. 2.3


      You have a voracious appetite for over-reading patent law cases and expounding on”holdings” simply far too broad based on a cases narrow (narrow due to their complexity) fact patterns.

      The Paper Bag Cases do NOT stand for the notion that all joint owners had to agree (were required by the Court) to license the patent.

      Clearly this reach by you is plainly wrong (Paul F. Morgan’s post below at 2.2 for details).


          You may have ‘quoted’ your version of the case, Ned, but repeatedly messing up a case does not change a misquote into an accurate quote.

          For example, on another thread today you make your same old mistake about Bilski and business methods – we discussed this forever and a day and at one point it dawned on you that the Court there did NOT rule that business methods are outside of the Useful Arts, admitting that what Bilski held was that that case was about something “abstract.” And the oft pointed out distinction between something being “of a category” contrasts with something else being “categorically” treated.

          Sadly, that wisdom you grasped was fleeting.


            Anon, a consistent problem with your posts is that you simply say that a poster is wrong about something without actually saying why, without offering to discuss the particular case in more detail. In particular, I have never, ever, have gotten you to discuss the facts of a case. But the facts are clearly important to understanding what the issues were. One cannot understand what a case held unless one knows the facts and the issues. But the facts and issues are something you seem to ignore.

            Take Bilski for example. Everyone agrees that the claims at issue in that case were business method claims. They were held to be ineligible. So it cannot be true that Bilski held that business method claims are eligible as a category. But that is something you say constantly. And it cannot be true.


              You engage in two (typical) fallacies here:

              1) the accusation that my posts are merely conclusory.

              They are not.

              No one – and I mean absolutely no one -has engaged you in more detail than I.

              2) you are (again) attempting the (il)logic of over-reading and over applying a single instance to cover a universal group (your same error of mistaking “as a category” and “categorically.”

              As a well repeated example, Prometheus featured a medical method – but surely not all medical methods as a category were eliminated with that decision.

              This has been carefully – and in great detail – explained to you many times now.

  5. 1

    Typo Dennis? Near the end, should “….effective to give STC ownership rights…..” be instead “…effective to give Sandia …..”

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