The ’086 patent was owned by Astra L and the ’524 and ’489 patents were owned AZAB. On, and effective on, June 28, 2006 and pursuant to an earlier-executed Asset Purchase Agreement, a third company, AstraZeneca-UK (“AZ-UK”), purported to assign the three patents to plaintiff Abraxis. Does Abraxis have standing? It’s not as clear-cut as you might think.
Here’s the language of the APA:
|[AZ-UK] shall, or shall cause one or more of its Affiliates to, Transfer to the Purchaser, and the Purchaser shall purchase and accept from the Seller or its Affiliates, as applicable, all of the right, title and interests of the Seller and its Affiliates in and to … all Transferred Patent Rights.|
The separate Intellectual Property Assignment Agreement, executed as part of the transactional documents, stated:
|[The] provisions of this instrument are subject to the terms and conditions of the [Asset] Purchase Agreement. . . . [Seller] hereby sells, assigns, conveys and transfers to Buyer … all of Seller’s right, title and interest [in the three patents in suit, and others].
. . . .
Further Assurances. [AZ-UK will] do, execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered, any and all further acts, conveyances, transfers, assignments, and assurances as necessary to grant, sell, convey, assign, transfer, set over to or vest in Buyer any of the Transferred Intellectual Property.
Most likely in contemplation of filing the patent infringement lawsuit, AZ-UK realized that Astra L and AZAB were the record owners of the patents. Documents were executed on March 15, 2007 (the same day the lawsuit was filed) to assign the patents to AZ-UK, using the following language:
|[T]his instrument is being executed by the parties to enable the Transferee [AZ-UK] to further convey to Buyer [Abraxis] that portion of the Transferred Assets . . . pursuant to which Transferee agreed to sell to Buyer and Buyer agreed to purchase from Transferee the Transferred Assets, all as more particularly set out in the [Asset] Purchase Agreement [with] consummation of the transactions . . . deemed to occur at the Effective Time.|
On November 12, 2007, eight months later, AZ-UK executed an additional document between it and Abraxis, stating that it was:
|confirming the sale, assignment and transfer to Abraxis, for Abraxis’ sole and exclusive use and enjoyment, of all of AZ-UK’s right, title and interest in and to [the ’086, ’524, and ’489 Patents] and the patent applications therefor pursuant to the Asset Purchase Agreement and further sells, assigns, conveys and transfers to Abraxis . . . all of AZ-UK’s right, title and interest, if any, in and to [the ’086, ’524, and ’489 Patents] and the patent applications therefor pursuant to the Asset Purchase Agreement.|
So does Abraxis have standing? The answer apparently depends on whether you apply the law of the State of New York (as the district court did) or the law of the Federal Circuit (as of course the Federal Circuit did). In the former case, the assignment is valid as of the 2006 effective date. As explained in Judge Newman’s dissent:
|The district court, applying New York law of contracts and property transfers, held that the March 15, 2007 assignment documents were “delivered in accordance with” the terms of the Asset Purchase Agreement and were effective as of June 28, 2006, as stated therein. The district court determined that the June 28, 2006 Closing Date applied to all of the listed patents. The court stated: “Given this retroactive effect, the [Intellectual Property Assignment Agreement] would then operate to transfer title from [AstraZeneca UK] to Abraxis as of that date as well,” and held that the transfer was effective as of June 28, 2006.|
In Judge Newman’s opinion, the March, 2007 transaction was undertaken pursuant to the “Further Assurances” clause of the APA and therefore effective on February June 28, 2006. But the Court of Appeals for the Federal Circuit took a more literal approach to the chain of title. It held that the documents did not effect a present assignment of the patents, but instead there was only a promise to assign in the future. Thus, Abraxis did not acquire the patents in suit until the final document was executed on November 12, 2007, well after suit was filed. Therefore Abraxis did not have standing.
I have to agree with Judge Newman on this one. (Well, I usually do agree with Judge Newman.) As she notes, “It is not unusual to transfer a complex set of related assets through a master agreement and additional contracts and assurances. . . .” It’s clear that the parties to this transaction fully intended to, and by their language thought they had, transferred the ownership of the patents. The patents were listed by number in the original transactional documents and the documents contemplated the possibility that there might be a series of transactions to effect the transfer, which, no matter when executed, were to be effective on June 28, 2006. Indeed, as stated by Judge Newman, the Federal Circuit “engraft[ed] a meaning that no party could reasonably or possibly have intended.” It’s a lousy decision.
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