Intellectual Ventures v. Erie Indemnity (Fed. Cir. 2017)
In yet another Intellectual Ventures loss, the the Federal Circuit has affirmed the W.D. Pennsylvania district court ruling that the asserted patents are invalid as ineligible under 35 U.S.C. § 101. This decision was issued in parallel with IV v. Capital One discussed previously. I’m going to put-off the Section 101 discussion for another post, however, and write here about the assignment debacle.
Assignment of Patent Rights: In before reaching the Section 101 eligibility issues, the district court dismissed IV’s infringement case related to the ‘581 patent for lack of standing – finding that IV didn’t actually own the patent.
The ‘581 patent (while still an application) was assigned to AllAdvantage.com. Several months later, AllAdvantage.com expressly assigned the parent patent of the ‘581 patent to Alset (along with several other patents and pending applications), but did not expressly list the ‘581 patent (still then pending as an application). Believing it owned the ‘581 patent, Alset recorded its assignment rights back in 2002 and later assigned the patent to an IV-owned-entity that later recorded the assignment with the PTO. Meanwhile, IV has defended four IPR petitions against the patent and asserted the patent in two other cases.
Based upon the assignment documents as interpreted under California law, the district court found that Alset never obtained title to the ‘581 patent, and that under the rules of derivative title, IV likewise could not own the patent. Thus, the ‘581 infringement claims were properly dismissed on appeal.
Looking through the actual assignment agreement, it does indeed appear to be very specific in terms of what patents and applications are included: assignment-of-patent. The assignment document does not include any broad statements regarding “technology grant” or “all of the assignor’s patents” or even “including family member patents and patent applications.” Further, the assignment does not express any warranties that might require the assignor to fix the problem. In those counter-factual situations, the court may well have flipped its decision and gone with the usual industry practice that patent family member ownership is kept together.
Bottom line here is (1) the assignment document was not well written and (2) the due diligence completely failed. And, the result is that the patentee holds no patent rights.
Although not raised by the parties, the case reminds me of redecoration statute issues. Section 261 of the patent act states that
[A]n assignment . . . shall be void as against any subsequent purchaser … without notice, unless [the assignment] is recorded in the Patent and Trademark Office within three months from its date or prior to the date of such subsequent purchase or mortgage.
35 U.S.C. § 261. Of course, the statute does not directly apply to this case since the fight is not between competing chains of title as we had in Stanford v. Roche, but rather is simply the question of whether the Intellectual Ventures was assigned rights rights in the first place.
The notion of adverse possession and other potential estoppel doctrines also come to mind. Here, IV at least has ‘color of title’, based upon its assignment rights, has been paying its taxes (maintenance fees), and protecting the rights against challengers. Perhaps California Law may allow a title-by-estoppel in this situation.
= = = = =
 All claims of U.S. Patent Nos. 6,510,434; 6,519,581; and 6,546,002 ineligible under 35 U.S.C. § 101 (eligibility).