Docket No. 2015-1844, -1861
DYK, SCHALL, HUGHES
May 17, 2016
Brief Summary: DC dismissal of its infringement suit against Hyundai because the agreement with the original assignee of the patents (Sanyo) “did not confer patentee status on Diamond, allowing Diamond to sue Appellees without joining Sanyo” affirmed.
Summary: Diamond appealed DC dismissal of its infringement suit against Hyundai because the agreement with the original assignee of the patents (Sanyo) “did not confer patentee status on Diamond, allowing Diamond to sue Appellees without joining Sanyo.” The FC opinion explains that “‘[a]n assignment…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, FC 1996), and that an assignment “must transfer: (1) the entire exclusive patent right, (2) an undivided interest [from all co-owners], or (3) the entire exclusive right within any geographical region of the United States” at the time of suit. Assignments are treated as contracts and interpreted under the choice of law provision thereof; here it was New York law and, therefore, the FC reviewed the DC decision de novo. Diamond argued it has the required status as the recipient of “the entire exclusive patent right”. The FC panel explained that it has “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”, which is determined by reviewing “the substance of what was granted” (Vaupel, FC 1991; Waterman, US 1891; Prima Tek, FC 2000). The FC panel determined Diamon did not not have sufficient rights because Sanyo reserved “a limited right to develop and market the patented invention” (Fieldturf, FC 2004) and did “not even grant Diamond a right to practice”, limiting it to prosecution…litigation, enforcement and exploitation” (stating “Diamond ‘shall engage in no [other] business or activity”). “[E]xploitation” was not found to include making, using and selling. Sanyo was also found to “retain significant control over Diamond’s enforcement and litigation activities” (e.g., conditioned on “Sanyo’s best interests”, needs Sanyo’s prior written consent) (Azure Networks, FC 2014 (vacated on other grounds, US 2015)). After the DC decision, “Diamond and Sanyo executed nunc pro tunc agreements…‘to clarify the parties’ original intent’” but the FC panel found this did not cure the problem (Alps South, FC 2015).