Property, intangible

a blog about ownership of intellectual property rights and its licensing

Automatic Assignment or Agreement to Assign?

Patent numbers 5,138,459, 6,094,219, 6,233,010 and 6,323,899 had three named inventors, Marc Roberts, Matthew Chikosky and Jerry Speasl. They invented the subject matter of the patents while working for Mirage Systems, Inc., then formed their own company, Personal Computer Cameras, Inc. St. Clair Intellectual Properties invested in the company, and when Personal Computer Cameras was about to go under St. Clair took an assignment of the patents. It did its due diligence before taking the patents, asking about employment agreements and shop rights, confirming the men had invented on their own time using their own resources, and ensuring that the inventors had disclosed the patents to Mirage.

St. Clair then proceeded to enforce the patents, suing Canon. Canon raised an ownership defense, claiming that there was an automatic assignment provision in the men’s employment agreement so that Mirage was the true owner of the patents. Later at trial, Canon disclosed that it was in cahoots with Mirage on the defense. Canon was sanctioned and the ownership defense dismissed.

St. Clair then sued more defendants, including Samsung, in November, 2004. Mirage also sued St. Clair and the inventors in state court over ownership of the patents. Kodak, one of the defendants in the Samsung case, bought Mirage’s rights to the patents and was substituted as plaintiff in the state court action. St. Clair then next brought the instant suit.

Kodak, Mirage and St. Clair entered into a Memorandum of Understanding which stated that St. Clair had owned the patents all along, ending the state court suit. The Samsung case settled.

The defendants in this case, not surprisingly, also raised an ownership defense, claiming that St. Clair didn’t have standing to sue at the time suit was filed. If Mirage was the owner by an automatic assignment, St. Clair didn’t own the patents at the time it brought the suit and thus didn’t have standing. The defendants argued that the MOU between Kodak, St. Clair and Mirage was a private agreement that didn’t affect the reality of ownership at the time this suit was filed.

So the court looked at the assignment language to determine whether there had been an automatic assignment. The assignment language was:

5. I will promptly disclose in confidence to MIRAGE or any persons designated by it all inventions . . . .

6. [A]ll such Inventions which MIRAGE in its sole discretion determines to be related to or useful in the business or research or development of MIRAGE, or which result from work performed by me for MIRAGE, shall be the sole and exclusive property of MIRAGE and its assigns and MIRAGE shall have the right to use and/or to apply for patents, copyrights or other statutory or common law protections for such inventions in any or all countries. I further agree to assist MIRAGE in every proper way (but at MIRAGE’S expense) to obtain, and from time to time to enforce, patents, copyrights and other statutory or common law protections therefore [sic], and in enforcing the same, as MIRAGE may desire, together with any assignments thereof to MIRAGE or to persons designated by MIRAGE.

The court held that the language “shall be the sole and exclusive property” was not language of present conveyance. Further, the two paragraphs contemplated additional steps before Mirage would own the patents, i.e., the inventor had to disclose the invention to Mirage, Mirage had to determine that it was useful or related to its business, and the employee had to assist with obtaining any assignment. Therefore the patents were not automatically assigned to Mirage, the inventors properly assigned them to St. Clair, and St. Clair had standing to bring suit.

St. Clair Intellectual Property Consultants, Inc. v. Palm, Inc., Civ. No. 0-404-JJF-LPS (D. Del. May 4, 2009)

© 2009 Pamela Chestek

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