Community Property Rights of Ex-Wife Impact Standing of Plaintiff to Maintain Patent Infringement Action

May 6, 2013

James R. Taylor ("Taylor") filed a patent infringement action against Taylor Made Inc. ("Taylor Made"). Taylor Made filed a motion to dismiss the action on the ground that Taylor did not have standing to maintain the patent infringement action because Taylor's ex-wife had not been made a party to the lawsuit and she had an ownership interest in the asserted patent.

As explained by the district court, "[t]he Plaintiff and Ms. Taylor were married on February 14, 1987. Dkt. 24-1. The Plaintiff subsequently obtained the Patent on September 15, 1998 for a storm drainage conduit plug and sealing band. Dkt. 1. The Plaintiff and Ms. Taylor obtained a Final Judgment of Dissolution of Marriage (A "Divorce Settlement") from a Florida state court on March 7, 2011. Dkt. 24-1; see also In re the Marriage of James R. Taylor and Mary Louisa Taylor, Case No. 2006-Dr-10057-NC. The Divorce settlement subjects the Taylors' marital assets to equitable distribution, in so doing notes that the primary assets of the marriage are three United States patents, specifically: (1) '5,224,514/July 6, 1993;" (2) "5,316,045/May 31, 1994;" and (3)[5], 806566/September 15, 1998."

The complaint was filed on April 9, 2012. After the complaint was filed, "Ms. Taylor did not joint the Plaintiff's infringement suit, but instead filed a Motion for Contempt and Motion for Injunctive Relief in Florida state court alleging that the Plaintiff had violated the Divorce Settlement by filing the Complaint with the Court Dkt."

After that filing, Taylor Made file a motion to dismiss "[a]rguing that the Plaintiff did not have standing because Ms. Taylor, a co-owner of the patent, had not been made a party to the infringement suit. Dkt. 23. The plaintiff filed a response on October 29, 2012; arguing that the Divorce Settlement did not grant Ms. Taylor an ownership interest in the Patent, and that even if Ms. Taylor did have an ownership interest in the Patent she had otherwise failed to comply with the terms of the Divorce Settlement."

Noting that standing is a threshold jurisdictional issue, the district court then analyzed Florida law regarding the ownership of patents. "Under Florida law, properties acquired during a marriage are presumably marital assets. Fla. Stat § 61.075(6)(1)(1)(2012). Further, under Florida law "a patent is personal property that may be the subject of equitable distribution when the inventor and his or her spouse dissolve their marriage." Gulbrandsen v. Gulbrandsen, 22 So.3d 640, 644 (Fla. Dist. Ct. App. 2009). Additionally, the Florida Supreme Court has definitively held that "a final judgment of dissolution settles all such matters as between the spouses...and acts as a bar to any action thereafter to determine such rights and obligations." Davis v. Dieujuste, 496 So.2d 806, 809-10 (Fla. 1986). Accordingly, since the Patent was issued to the Plaintiff while he was married to Ms. Taylor, Dkt. 1, the Patent was presumably a marital asset, under Florida law, prior to the issuance of the Divorce Settlement. The Divorce Settlement merely reinforced that presumption by subjecting the Patent to equitable distribution and awarding Ms. Taylor a 60% interest in any proceeds from the Patent. Dkt 24-1."

The district court also concluded that dismissal was "[a]lso proper based on the analytical framework provided by the Federal Circuit in Enovsys LLC v. Nextel Communications, Inc., which examines "the effect of a state-court divorce decree on patent owner's standing to sue" for infringement . 614 F.3d at 1335-36. In that case, the Federal Circuit deferred to stat law to determine whether a former spouse had legal title to a patent invented by her ex-husband. Id. at 1342. In so doing, the Federal Circuit examined the couple's divorce settlement, which unambiguously stated that the couple had "no community assets or liabilities." Id. The Federal Circuit noted that notwithstanding the presumption that property acquired during the marriage was community property, the divorce settlement was entitled to res judicata effect under California law, as well as full faith and credit in federal court regarding the divorced couple's respective ownership interests in the patent. Id. at 1342-43. Since the divorce settlement expressly disclaimed the ex-wife's ownership interest in the underlying patent, the Federal Circuit refused to dismiss the plaintiff's infringement action for lack of standing because she was not a co-owner of the underlying patent. Id. at 1343-44."

Using this framework, the district court found that dismissal was also appropriate. "In the matter at hand, the Court adopts the analytical framework used by the Federal Circuit in Enovsys. Accordingly, the Court first looks to Florida law to determine whether Ms. Taylor ahs an ownership interest in the Patent, and notes that under Florida law any property acquired during a marriage is presumably a marital asset. Fla. Stat. § 61.075(6)(1)(a). further, the Court notes that under Florida law a final judgment of dissolution of marriage can subject a patent to equitable distribution among spouses. See e.g., Gulbrandsen, 22 So. 3d at 644. Here, the Patent was obtained while the Plaintiff and Ms. Taylor were married, and the Divorce Settlement confirms Ms. Taylor's ownership interest in the Patent. Dkt. 24-1. Since Ms. Taylor has legal title to the Patent under Florida law, and has not been made a party to the action at hand, the Plaintiff lacks standing to sue for infringement. See, e.g., Enovsys, 614 F.3d at 1343-44; Ethicon 135 F3d at 1467."

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This case once again highlights the important of making sure that spousal rights are addressed when acquiring or instituting litigation over a patent. Failure to do so can mean that ownership rights are split and result in a lack of standing and, therefore, an inability to enforce the acquired patent.

James R. Taylor v. Taylor Made Plastics, Inc., Case No. 8:12-CV-746-T-EAK-AEP (M.D. Fla. April 29, 2013)

The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.