Federal Circuit Flash – Advanced Video v. HTC: Federal Circuit Affirms Decision that Plaintiff Lacks Standing Because Co-Owner of Patent-In-Suit Was Not Party

Digest Reports Federal Circuit Flash Digest Patent

Advanced Video Techs LLC v. HTC Corp., No. 2016-2309, 2018 WL 357609 (Fed. Cir. Jan. 11, 2018).

In Advanced Video Techs LLC v. HTC Corp., Advanced Video Techs LLC (“Advanced Video”) sued HTC America, Inc., Blackberry LTD, Blackberry Corporation, and Motorola Mobility LLC for patent infringement in the District Court for the Southern District of New York.  The district court dismissed the suit for lack of standing because a co-owner of the patent was not a party to the actions and the co-owner’s ownership interests were not properly transferred to the plaintiff.  The Federal Circuit Court of Appeals affirmed.

The patent law stipulates that only the patent owner and successors in title have standing to sue for patent infringement.  And while each co-inventor owns an equal and undivided interest in the entire patent, joint owners must act together to bring an infringement action against a third-party infringer.  See Ethicon v. U.S. Surgical Corp., 135 F.3d 1456, 1468, hosted by openjurist.org.  The majority ruled that, in this case, a co-inventor did not transfer co-ownership interests in a patent to the plaintiff by virtue of terms in an employment agreement and, therefore, the plaintiff did not have standing.  The employment agreement comprised a “will assign” provision, a trust provision, and a quitclaim provision.

Judge Reyna, writing for the majority, agreed with the district court that “[t]he ‘will assign’ language alone does not create an immediate assignment of [the co-inventor’s] rights in the invention to [the assignee].”  Further, the trust provision did not effect a transfer: the inventor-employee, absent a formal transfer, held the patent in trust for the benefit of the company.  Even assuming that the plaintiff was the beneficiary of the trust, under California trust law, the beneficiary generally is not the real party in interest and may not sue in the name of the trust.  Lastly, the quitclaim provision was found not to apply in this case.

Judge O’Malley wrote a separate concurring opinion and insisted that she agreed with the majority judgment out of respect for Federal Circuit precedents prohibiting a patent co-owner or co-inventor from being involuntarily joined pursuant to Rule 19.  See DDB Techs., L.L.C. v. MLB Advanced Media, L.P., 517 F.3d 1284, 1289 n.2 (Fed. Cir. 2008) (citing Ethicon, 135 F.3d at 1468).  In her opinion, she urged the Federal Circuit to take the case en banc and either (1) clarify why Rule 19 is inapplicable to patent infringement cases or (2) permit application of Rule 19 to patent infringement cases.

Judge Newton, writing in dissent, noted that “[the] [j]oint inventor [] never had co-ownership of the ‘788 Patent.”  Even based on the “will assign” provision, “her invention was the property of her employer.”  Judge Newton noted that the joint inventor was not the owner and she could not have acquired ownership by refusing to sign a separate “assignment” document.

Kevin Chu is a 1L student at Harvard Law School.