Plaintiff Did Not Have Standing to Pursue Patent Infringement Action Where Inventor Assignment Was Not Automatic

In this patent infringement action, the Regents of the University of California (“the Regents”) alleged that defendant LTI Flexible Products, Inc., d/b/a Boyd Corporation (“Boyd”) improperly claimed ownership of a patent that the Regents owned and manufactured and sold technology that infringed the patent. Boyd moved to dismiss the complaint on a number of grounds, including that the Regents did not have standing to pursue the action.

The Regents contended that they owned the patent-in-suit because the inventors rights in it “were automatically assigned” to the Regents by operation of the Patent Acknowledgments. The district court explained that “[w]hether a patent assignment agreement automatically assigns or is only a promise to assign is a question of federal law. DDB Techs., L.L.C. v. MLB Advanced Media, L.P., 517 F.3d 1284, 1290 (Fed. Cir. 2008). When the agreement’s plain language is clear, that ends the inquiry. See id. Automatic assignments can occur only when the language so indicates, such as language declaring that the patent ‘shall belong to’ a party or that the assignor ‘hereby assigns’ the rights. See, e.g., Speedplay, 211 F.3d at 1253. In contrast, language that obligates an owner ‘to assign’ or says the patent ‘will be assigned’ is only an agreement to assign. See, e.g., Arachnid, Inc. v. Merit Indus., Inc., 939 F.2d 1574, 1581 (Fed. Cir. 1991).

Examining the Patent Acknowledgements, the district court determined that “[t]he agreements here are only promises to assign rights, not automatic assignments. The Patent Acknowledgment that Meinhart signed provides in relevant part that all inventions conceived or developed while employed with UC or using UC resources ‘shall be examined by the University to determine rights and equities therein.’ Then, UC can determine if it has rights. If it determines it does, the Patent Acknowledgment states, ‘I [Meinhart] shall exclude any documents and do all things necessary, at University’s expense, to assign to University all rights, title and interest therein.’ Id. The Patent Acknowledgment that Bozorgi signed is to similar effect: ‘I acknowledge my obligation to assign inventions and patents that I conceive or develop’ in the requisite circumstances. Dkt. No. 42-2 at 4. It also then includes the same ‘do all things necessary’ language. Id. These agreements’ plain language shows that they were promises to assign rights, not automatic transfers of those rights. See DDB Techs., 517 F.3d at 1290.”

The district court concluded that “[a]lthough the parties dispute who now owns Bozorgi’s rights, that dispute is beside the point at the moment; if anyone other than the plaintiffs owns those rights, the plaintiffs need that party’s consent to sue for infringement. It is sufficient today to say that the plaintiffs have produced no evidence that they own those rights.”

Accordingly, the district court granted the motion to dismiss with leave to amend, but cautioned that [“i]f the plaintiffs are going to replead the claim, they must make clear the legal basis for it and be prepared to justify it. A future dismissal will be with prejudice.”

Regents of the University of California v LTI Flexible Products, Inc., Case No. 3:20-cv-08686-WHO (N.D. Cal. May 19, 2021)

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