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Subsequent Employment Agreement Assigning Inventor’s Intellectual Property Rights Does not Defeat Standing for Inventions Created Prior to Employment Agreement

The plaintiff, Odyssey Wireless (“Odyssey”) filed four separate actions for patent infringement against Defendants Apple, Samsung, LG, and Motorola, alleging infringement of U.S. Patent Nos. 7,881,393; 8,199,837; 8,576,940; 8,660,169; 8,855,230; and 8,879,606. Each of the patents-in-suit lists on its face Peter D. Karabinis as the inventor and EICES Research, Inc. as the assignee of the patent. Dr. Karabinis is the Founder and Chief Technology Officer of EICES, and EICES is the predecessor of Odyssey Wireless.

In April 2001, Mobile Satellite Ventures (“MSV”) hired Dr. Karabinis to be its Vice President and Chief Technical Officer and he entered into an intellectual property and confidential information agreement with MSV, which granted MSV ownership rights in Dr. Karabinis’ work for MSV. Based on the agreement with MSV, the Defendants moved to dismiss the patent infringement action based on lack of standing.

In their motion to dismiss, the defendants argued that Odyssey lacked standing to sue in the present cases because Dr. Karabinis assigned away his rights to the patents-in-suit through his employment agreement with MSV. In response, Odyssey argued that it had satisfied its burden of proving that it has standing based on the recorded assignments for the patents-in-suit from Dr. Karabinis to Odyssey’s predecessor, EICES. Odyssey also argued that Defendants had failed to carry their burden of showing that the patents-in-suit are subject to Dr. Karabinis’s employment agreement with MSV.

In analyzing the standing issue, the district court first noted that as the party bringing the present actions, Plaintiff bears the burden of establishing that it has standing. See Sicom Sys., 427 F.3d at 976; Abbott Point, 666 F.3d at 1302. In an effort to satisfy its burden, Plaintiff relies on the recorded assignments for the patents-in-suit. Each of the patents-in-suit lists on its face Dr. Karabinis as the inventor of the patent and EICES as the assignee of the patent. In addition, Plaintiff has produced recorded assignments for the relevant applications of the patents-in-suit showing that the applications were assigned from Dr. Karabinis to EICES. EICES is Plaintiff’s predecessor. The recording of an assignment with the PTO “creates a presumption of validity as to the assignment and places the burden to rebut such a showing on one challenging the assignment.” SiRF, 601 F.3d at 1328; see also Nartron Corp. v. Schukra U.S.A. Inc., 558 F.3d 1352, 1356 (Fed. Cir. 2009) (“‘The inventors as named in an issued patent are presumed to be correct.'”).

With the burden shifted to the defendants, the defendants argued that under the “Ownership” clause in the agreement with MSV, Dr. Karabinis assigned away all of his rights to the patents-in-suit to MSV. See Abraxis, 625 F.3d at 1367 (“Abraxis’s complaint must be dismissed because Abraxis lacked standing at the time the action was filed and continues to lack standing to sue for past infringement. . . . Without ownership, AZ-UK had no authority to convey either the patents’ equitable or legal titles to Abraxis.”)

The district court agreed with the defendants that under Federal Circuit precedent, the “hereby grants” language contained in the “Ownership” clause of the agreement automatically assigns all rights to MSV to any future inventions by Dr. Karabinis that are covered under the agreement as soon as they are created. See Imation Corp. v. Koninklijke Philips Elecs. N.V., 586 F.3d 980, 986 (Fed. Cir. 2009). But the district court concluded that here the “Ownership” clause did not cover any and all inventions by Dr. Karabinis. “Rather, the clause was limited and only transfers rights in an invention/patent from Dr. Karabinis to MSV if the invention ‘refer[s] to or result[s] from [Dr. Karabinis’s] work for MSV during [his] employment by MSV” and it “relate[s] to MSV’s current, anticipated, or prospective business activities.’ Therefore, the defendants had to show that the patents-in-suit refer to or result from Dr. Karabinis’ work for MSV and that they relate to MSV’s current, anticipated, or prospective business activities.”

The district court further explained that “[a]t no time during Dr. Karabinis’s MSV employment, did MSV suggest that it had any rights to the inventions at issue. Further, MSV or its successors did not assert any rights to the patents-in-suit or the related applications until several years later, after Dr. Karabinis’s employment with the company had ended and only after Plaintiff commenced the present litigation. See DDB Techs., 517 F.3d at 1292-93 (finding relevant that for a long period after the employee left the company, the company “did nothing to indicate that it believed it had an ownership interest in the patents in suit”). And when MSV finally asserted rights to the patents-in-suit, it initially equivocated.”

As a result, the district court concluded that Odyssey had standing to assert the patents against the defendants.

Odyssey Wireless, Inc. v. Apple Inc.
, Case No. 15-cv-01735-H-RBB (S.D. Cal. June 29, 2016)

The authors of are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or