The Federal Circuit has ruled that a company lacked standing to sue for patent infringement because one of the employees who created the patented invention didn’t assign ownership to the company.
The patent, for a “Full Duplex Single Clip Video Codec,” lists three inventors who were employed by the company. Two of the inventors assigned their co-ownership interests to the company.
At issue in the case was the ownership interest of the third inventor, Vivian Hsuin.
In 1996, two of the inventors signed assignments of their ownership interests to the company. Hsuin refused to sign.
The company filed a petition with the US Patent and Trademark Office (USPTO) asking to be allowed to prosecute the application. The USPTO agreed, based on the terms of Hsuin’s employment agreement.
The relevant clauses of the employment agreement said:
I agree that I will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and will assign to the Company all my right, title, and interest in and to any and all inventions, original works of authorship, developments, improvements or trade secrets which I may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the period of time I am in the employ of the Company.
[AND]
I hereby waive and quitclaim to the Company any and all claims, of any nature whatsoever, which I now or may hereafter have infringement [sic] of any patents, copyrights, or mask work rights resulting from any such application assigned hereunder to the Company.
(Emphasis added.)
A successor company filed three patent infringement lawsuits against HTC and other defendants. The district court dismissed the case because it found that the employment contract didn’t transfer Hsuin’s rights in the patent.
The court noted that
Advanced Video argues that Ms. Hsiun’s ownership rights transferred immediately upon execution of the Employment Agreement. In support, Advanced Video points to “will assign” language contained in the agreement.
However,
The district court found that “will” invoked a promise to do something in the future and did not effect a present assignment.
The case is Advanced Video Techs. LLC v. HTC Corp.
Takeaways
To avoid this kind of result, it’s better to avoid future-oriented terms like “will assign” or “agrees to assign” in employment agreements, contractor agreements, and employee or contractor IP assignments.
It’s better to use terms like “hereby assigns,” or “will and hereby does assign.”
It’s also a good idea to get an assignment signed right before a specific patent application is being filed, with reference to that specific patent. A bonus paid to the inventors may provide an incentive.
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