Property, intangible

a blog about ownership of intellectual property rights and its licensing

“Co-owned” Means Owned by the Same Entity

Short and sweet:

The parties agree with binding Federal Circuit precedent that holds that if the ownership of a disclaimed patent is separated from the prior patent, the disclaimed patent is not enforceable. Further, the parties do not dispute that, according to the condition set forth in the Terminal Disclaimer, the ‘176 Patent is enforceable only so long as it is commonly owned with the ‘789 Patent. Rather, Defendants argue that because the ‘789 Patent is owned by a party other than Plaintiff, Online News Link, LLC, the ‘176 Patent is not enforceable. Plaintiff counters that because Acacia owns both Plaintiff and Online News Link, the two patents are commonly owned by Acacia and Patent ‘176 is still enforceable according to the terms of the Terminal Disclaimer.

Plaintiff’s argument that both the ‘176 Patent, owned by Plaintiff Email Link, and the ‘789 Patent, owned by Online New Link, are owned by Acacia by virtue of its 100% ownership of Email Link and Online News Link goes against a “basic tenet of American corporate law.. that the corporation and its shareholders are distinct entities…. A corporate parent which owns the shares of a subsidiary does not, for that reason alone, own or have legal title to the assets of the subsidiary.” Specifically in the patent context, the Federal Circuit has applied this basic principle of American corporate law to hold that once a parent company assigned a patent to its subsidiary, the parent no longer had rights in the patent, even though it controlled the subsidiary. For this reason, Email Link, not Acacia, is the owner of the ‘176 Patent. Because the ‘176 Patent and the ‘789 are not owned by the same entity as required by the Terminal Disclaimer, we hold that the ‘176 Patent is unenforceable as a matter of law.

…  Because we hold that the ‘176 Patent is unenforceable as a matter of law, we must also deny Plaintiff’s Motion for Leave to File an Amended Complaint for reason of futility.

Internal citations omitted.

Email Link Corp. v. Treasure Island LLC, No. 2:11–cv–01433–ECR–GWF (D. Nev. Sept. 25, 2012).

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