Patent Infringement Complaint Dismissed for Lack of Standing Where Co-Inventor Had Not Assigned Rights to Plaintiff

September 22, 2014

Plaintiffs Alpha One Transporter, Inc. and American Heavy Moving and Rigging, Inc. (collectively "Alpha One") filed a complaint against Defendant and Third-Party Plaintiff Perkins Motor Transport, Inc. ("Perkins"). Perkins subsequently filed a motion to dismiss Alpha One's complaint for lack of standing on one of the patents-in-suit (the '897 Patent) because a co-inventor of the patent had not assigned his rights to Alpha One.

In its opposition, Alpha One did not dispute that the co-inventor status but argued that the co-inventor's (Mr. McGhie's) prior assignment of rights in a 2002 provisional patent application ("2002 Assignment") provided Alpha One ownership of the '897 Patent. Because the parties disputed these jurisdictional facts, the district court determined that Alpha One bore the burden of proof to show it had standing to sue on the '897 patent.

The district court then noted that the parties did not dispute that Mr. McGhie was a co-inventor but rather whether Mr. McGhie had assigned his rights to the patent-in-suit to Alpha One.

As explained by the district court, Alpha One claimed that "McGhie assigned his rights to the 2002 Provisional in writing in May 2002 via an Assignment Accompanying Application. (Exhibit 6 to Perkins' motion to dismiss, Doc. No. 57-4.) That assignment, the 2002 Assignment, provides Alpha One with, in pertinent part: "the full and exclusive right, title, and interest in and to said invention, in and to said application, and in and to any Letters Patent to be granted and issued thereon . . . ." (Id.) Alpha One does not allege that McGhie assigned to Alpha One his rights in the '897 Patent, issued in April 2013. Instead, Alpha One argues that the 2002 Assignment covers the '897 Patent."

The district court disagreed with Alpha One's argument. "But the '897 Patent is only a continuation-in-part of the earlier inventions. (See Doc. 57-1 at 2-3 and Doc. 59 at 2.) And a continuation-in-part application includes "new matter." PowerOasis v. T-Mobile USA, Inc., 522 F.3d 1299, 1304 n.3 (Fed. Cir. 2008); Transco Prods. Inc. v. Performance Contracting, Inc., 38 F.3d 551, 555 (Fed. Cir. 1994) (citing the Manual of Patent Examining Procedure ["MPEP"] ยง 201.08 and noting that a continuation-in-part application includes "added matter not present in that earlier application"). Accordingly, the '897 Patent is not the same "invention" that was assigned in the 2002 Assignment."

The district court also disagreed that the co-inventor was contractually obligated to assign his rights. "Alpha One's argument that McGhie is "contractually obligated . . . to assign to AHM his rights in the invention" is also unavailing and does not establish standing. (Doc. No. 59 at 7.) McGhie, at best, has only an obligation to assign Alpha One his rights. (See id.) An obligation to assign rights does not create a present right in the potential assignee and does not establish standing. See DDB Tech., 517 F.3d at 1290."

Accordingly, the district court concluded that Alpha One had not met its burden to show the necessary ownership rights to support standing to sue on the '897 Patent and granted Perkins' motion to dismiss Alpha One's complaint for infringement of the '897 Patent. The district did, however, grant Alpha One 30 days leave to amend.

Alpha One Transporter, Inc. v. Perkins Motor Transport, Inc., Case No. 13-cv-2662-H-DHB (S.D. Cal. Sept. 11, 2014)

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.