Check Each Link in the Chain of Title; The Time to Find Out Your Assignor Does Not Exist is Before you Sue

In In re Certain Thermoplastic-Encapsulated Electric Motors, 337-TA-1052, (August 11, 2017), Administrative Judge Dee Lord dismissed Intellectual Ventures II LLC complaint asserting infringement of U.S. Patent Nos. 7,154,200, 7,067,944, 7,683,509 and 7,928,348 for lack of standing.  Intellectual Ventures predecessor in interest received an assignment from Encap Technologies in 2012.  Unfortunately for Intellectual Ventures Encap Technologies did not exist in 2012, having merged with Encap Holding back in 2008.

Intellectual Ventures made a number of technical arguments about how the documents could be construed to transfer title, including arguing that the intention to transfer was clear, and that Encap Technologies was simply acting for Encap Holding.  Regardless of what the intention of the parties may have been, the documents simply did not reflect this intent.

Intellectual Ventures also deployed the panacea for chain of title defects — the confirmatory assignment.  However,  as the ALJ noted, “such after-the-fact attempts to alter the plain language of an assignment agreement during litigation cannot establish standing.”  Federal law requires that a complainant establish standing at the time the complaint is filed.

The ALJ noted that Intellectual Ventures best argument was for reformation of the contracts conveying title so as to effectuate the obvious intent of the parties and permit the plaintiffs to claim rights as patent owners. Case law supports such reformation in a number of instances, but unfortunately for Intellectual Ventures, while a court has the power to reform a contract, the ITC is not a court, and lacks the authority to reform the agreements which on their face showed that Intellectual Ventures lacked ownership and therefore standing.

While Intellectual Ventures might have obtained a better result in a district court than before the ITC, the case is reminder of the importance of minding the chain of title, each link of which must be tested to ensure that assignor and assignee in fact existed at the time.


You Need Standing to Appeal and IPR Decision, But Not to Participate in the Appeal

In Personal Audio, LLC v. Electronic Frontier Foundation, [2016-1123] (August 7, 2017), the Federal Circuit affirmed the PTAB’s determination in an IPR that claims 31-35 of U.S. Patent No. 8,112,504, related to a system and apparatus for storing and distributing episodic media files, were unpatentable.

The Federal Circuit first addressed whether the Electronic Frontier Foundation had standing to participate in the appeal after  Consumer Watchdog v. Wisconsin Alumni Research Foundation, 753 F.3d 1258 (Fed. Cir. 2014), where the Federal Circuit held that a challenger who was not a competitor did not have Article III standing to appeal a PTAB determination of patentability.

However the Federal Circuit concluded that because Personal Audio had standing to appeal the invalidation of its patent claims, the Electronic Frontier Foundation did not need Article III standing to merely participate in the proceeding in which the appellant had standing.

On the merits, the Federal Circuit rejected Personal Audio’s objections to the Board’s claim construction, and affirmed the Board’s decision that the claims were anticipated or obvious.

It’s a Good Idea to Actually Own the Patents you Sue on

In National Oilwell Varco, L.P. v. Omron Oilfield and Marine, Inc., [2015-1406] (January 25, 2017), in a non-precedential opinion, the Federal Circuit affirmed the dismissal of claim for infringement of U.S. Patent No. 5,474,142 because of problems with the chain of title which deprived NOV of standing.

Bobbie Bowden, the named inventor on the ’142 Patent assigned the patent to Wildcat Services, L.P., on October 9, 2001.  Wildcat Services, L.P. assigned the ’142 Patent to MD/Totco, a Division of Varco, L.P.,1 on June
30, 2004.  NOV claimed it purchased the ’142 Patent from Varco, L.P., pursuant to an Asset Contribution Agreement dated January 1, 2006.

NOV initially refused to produce the ACA, instead producing only a “Assistant Secretary’s Certificate,” which assigned only “physical assets.” After being forced to produce the ACA, Omron renewed its motion to dismiss for lack of standing.  The district court agreed that that the NOV could not prove ownership of the ’142 Patent as of the filing date of this case, and dismissed the case, with prejudice, for lack of standing.

The Federal Circuit agreed with the district court, noting that the ACA contains no reference to patents except within Exhibit A, which had a column labeled “Patents – Patents.”  The Federal Circuit said that the district court correctly interpreted the ACA to find that its plain meaning did not include transferring the ’142 Patent from Varco, L.P. to NOV because the Exhibit A spreadsheet shows a “0” where the patents row intersects with the MD/Totco column.  The Federal Circuit concluded that a plain
reading of the ACA reveals that it did not transfer the ’142 Patent from MD/Totco to NOV.