Property, intangible

a blog about ownership of intellectual property rights and its licensing

Beneficial Owners Don’t Have Standing

The Eastern District of Virginia recently held that a beneficial owner of a patent has standing to bring an infringement claim. It appears the Federal Circuit disagrees.

 The ‘451 patent was invented by Mayer Michael Lebowitz and James Seivert, both deceased. The Lebowitz Trust now owns Mr. Lebowitz’s ownership interest in the patent. The Trust sued Telular Corporation, which filed a motion to dismiss for lack of standing because not all patent owners were plaintiffs. The Trust valiantly, but unsuccessfully, tried to show it owned the Seivert interest in the patent.

First up was an argument that Seivert was Lebowitz’s employee and had transferred his rights to Lebowitz. However, the only document was an unsigned “Agreement for Consulting Services,” which had this assignment clause:

[A]ny and all ideas, discoveries, inventions, [etc.] … developed, prepared, conceived, made, discovered or suggested by [Mr. Seivert] when performing services pursuant to this Agreement … shall be and remain the exclusive property of Cellular Alarm. [Mr. Seivert] agrees to execute any and all assignments or other transfer documents which are necessary, in the sole opinion of Cellular Alarm, to vest in Cellular Alarm all right, title, and interest in such Work Products.
(Brackets in original.) The court punted on whether an unsigned agreement satisfied the writing requirement for assignment of an invention, on the basis that there are other means for transferring patents besides assignment. (Seivert is deceased, so the patent ownership must have been conveyed to someone in his estate.)

The court punted because there was a bigger problem, which was the assignment language. The court held that the language “shall be and remain” was a future duty to assign, not a present assignment. The legal transfer of title would occur when Seivert actually executed the necessary documents, which didn’t happen. Therefore the Trust had, at best, only an equitable interest in the patent and an equitable interest isn’t good enough for standing.

The Trust’s second argument, that Seivert was “hired to invent,” failed for the same reason – “this doctrine is expressly equitable, and creates only an obligation for the employee to assign to his employer.” Thus the Trust did not have standing and the district court decision was affirmed.

The Trust seems to be in a bit of a morass at this point. Now it has to figure out who owns Seivert’s interest and how to get that party or parties to satisfy Seivert’s duty to assign.

Practice tip:  “I agree to assign” and “I shall assign” are a no-go on assignment.  “I do hereby assign,” “I hereby convey, transfer and assign,” and “does hereby grant” are a go.

Teva Pharmaceutical appealed the opinion in the Eastern District of Virginia case mentioned above. It should do pretty well in the appeal.

Patently-O’s coverage of the case.

Gellman v. Telular Corp., No. 2011-1196 (Fed. Cir. Nov. 30, 2011).

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