Thursday, May 19, 2016


The CAFC explores the question of transfer of all substantial patent rights in the appeal by DIAMOND COATING TECHNOLOGIES, LLC.

As to the basics of transfer of patent rights, the CAFC noted

Agreements transferring patent rights occur by assignment or license. “An assignment of patent rights operates to transfer title to the patent, while a license leaves title in the patent owner” and transfers something less than full title and rights. Minco, Inc. v. Combustion Eng’g, Inc., 95 F.3d 1109, 1116 (Fed. Cir. 1996) (citation omitted). “To create an assignment, a contract must transfer: (1) the entire exclusive patent right, (2) an undivided interest[2] in the patent rights, or (3) the entire exclusive right within any geographical region of the United States.” Id. at 1117 (citation omitted). “An agreement that does not transfer one of these three interests is merely a license.” Id. (citation omitted).

We treat an agreement granting patent rights as a contract and interpret its terms consistent with the choice of law provision in the agreement in question. See Alfred E. Mann Found. for Sci. Research v. Cochlear Corp., 604 F.3d 1354, 1359 (Fed. Cir. 2010). The PATA states that New York law governs the interpretation of its terms, J.A. 219, and under that law we review the District Court’s interpretation of the PATA de novo, Dreisinger v. Teglasi, 13 N.Y.S.3d 432, 435 (App. Div. 2015). In this case, Diamond asserts “patentee” status only as the alleged recipient of “the entire exclusive patent right” (not an undivided interest or a geographically limited entire exclusive right). On its face, “the entire exclusive patent right” must include all substantial rights in the patent. We have not allowed labels to control by treating bare formalities of “title” transfer as sufficient to determine that an “assignment” of the entire exclusive right has occurred. Rather, we have explained that, “[t]o determine whether a provision in an agreement constitutes an assignment or license, one must . . . examine the substance of what was granted.” Vaupel Textilmaschinen KG v. Meccanica Euro Italia S.p.A., 944 F.2d 870, 874 (Fed. Cir. 1991); see Waterman v. Mackenzie, 138 U.S. 252, 256 (1891); Prima Tek II, L.L.C. v. A-Roo Co., 222 F.3d 1372, 1378 (Fed. Cir. 2000).

Footnote 2 observed

“When . . . multiple inventors are listed on the face of the patent, each co-owner presumptively owns a pro rata undivided interest in the entire patent, no matter what their respective contributions.” Isr. Bio-Eng’g Project v. Amgen, Inc., 475 F.3d 1256, 1263 (Fed. Cir. 2007) (internal quotation marks and citation omitted).

[Recall also 8 JMRIPL 80 (2008)]

The question in the case

We therefore must ask whether Diamond received all substantial rights in the patents-in-suit or, instead, whether Sanyo retained substantial rights. Unless Diamond received all substantial rights in the patents-in-suit at the time it filed suit in the District Court, it was not a “patentee” (allegedly without a joint owner). If Diamond was not a patentee, it could not bring this suit by itself. And since Diamond did not take the opportunity provided by the District Court to join Sanyo, the District Court properly dismissed the suit. See, e.g., Alfred E. Mann, 604 F.3d at 1360.

As to the original agreement, the CAFC agreed with the district court that the original agreements did NOT transfer all substantial rights.

A separate issue was a later agreement:

Following the District Court’s decision in Diamond, Diamond and Sanyo executed nunc pro tunc agreements,6 purportedly “to clarify the parties’ original intent; namely, to grant full ownership of the patents in question to [Diamond].” Appellant’s Br. 12. Diamond asserts these nunc pro tunc agreements effectively establish Diamond’s status as a patentee. Id. at 43. We conclude they do not.


In Alps South, LLC v. Ohio Willow Wood Co., we held that “[n]unc pro tunc assignments are not sufficient to confer retroactive [patentee status].” 787 F.3d 1379, 1384 (Fed. Cir. 2015) (citation omitted).


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