Patent Assignments

Patentees can profit from the patents they hold by licensing their technology.  Alternatively, patentees can sell their technology to others through an assignment of the patent.  In either case, it is important to carefully lay out the terms and conditions of the license or assignment to make clear the intent of the parties.

In The Euclid Chemical Company v. Vector Corrosion Technologies, Inc. (Fed. Cir. 2009), the patentee (Euclid) assigned its patent applications and patent to Vector.  Unfortunately, there was a dispute as to whether one of two patents owned by the patentee was assigned to Vector or retained by the patentee.  In particular, the assignment document stated that the patentee assigned the patentee’s patent (singular) and patent applications.  The assignment document listed only one patent and four pending patent applications.  At the time the assignment document was executed, the patentee had two patents, one of which was listed on the assignment document and the other of which was not.  The unlisted patent was related to the listed patent by a claim of priority.

The patentee contends that the unlisted patent is retained by the patentee.  Whereas, Vector (assignee) contends that the unlisted patent was assigned by virtue of the assignment document.  In support of the assignee’s position, the assignee points to the language of the assignment document that stated that the assignment included all other related patent applications. As such, the assignment document is ambiguous (i.e., open to two or more different interpretations).

As a result of the ambiguity, the parties had to litigate the issue, spend money on litigation, divert their attention from their business, etc.  Ultimately, the District Court held that the unlisted patent was assigned to Vector.  The patentee appealed the Court’s decision.  The Federal Circuit reversed the District Court’s decision for failure to fully consider evidence outside of the patent assignment document to determine the intent of the parties.  The expense of litigation and the diversion of litigation may have been avoided by drafting a clearer assignment.

If parties intend the assignment to include all related patent applications or patents, then the assignment document should so state their intentions.  It could also then list all of the patent applications and patents “by way of example and not limitation.”  The bottom line is that parties to an agreement should take the time to make clear their intent since failing to make clear their intentions in writing may lead to unwanted litigation.

Other articles that may be of interest is “Benefits of Patent Protection” which briefly discusses licensing in a different geographic or commercial market.