Federal Circuit Finds Assigned “Inventions and Discoveries” Extends to Continuation Applications

In MHL Tek, LLC v. Nissan Motor Co.,
99 USPQ2d 1681 (Fed. Cir. 2011), MHL Tek, LLC (“MHL”), the controversy
surrounds the ownership of U.S. Patent Nos. 5,663,496 (“the ?496
patent”), 5,741,966 (“the ?966 patent”), and U.S. Patent No. 5,731,516
(“the ?516 patent”), all of which relate to a tire pressure monitoring
system (“TPMS”) and have the same inventors.  Two of the patents, the
‘496 and ‘966 patents, are divisionals of the same parent application
(the “Parent Application), while the third patent, the ‘516 patent, has a
separate specification from the ‘496 or ‘966 patents or to the Parent
Application.

The Parent Application was filed on August 3, 1993, while the ‘496
and ‘966 patents were both filed on June 6, 1995, and the ‘516 patent
was filed on May 2, 1996.  On August 5, 1993, two days after the Parent
Application was filed, the inventors executed an assignment to
Animatronics, Inc. (“Animatronics”), assigning all rights to “the
inventions and discoveries” in the Parent Application.

Two months later, Animatronics executed an assignment (the “1993
Assignment”) to McLaughlin Electronics (“ME”), stating that Animatronics
assigned all rights to “the inventions and discoveries set forth” in
the Parent Application.  However, this 1993 Assignment contained a
carve-out provision, stating that the Assignment did not cover any
rights to the Parent Application concerning Animatronics’ “Proprietary
Inventions.”  The Proprietary Inventions were define in a separate
Development Agreement as “(1) the Communications Link; (2) a radio
frequency transceiver and algorithm used in the Service Unit and Sensor
Unit; and (3) a piezo resistive rubber pressure sensor for use in the
Sensor Unit.”  However, Animatronics and ME began to have disputes as to
ME’s progress under the Development Agreement, and Animatronics began
to dispute the ownership over the ?496 & ?966 patents, which were
divisionals of the Parent Application in the 1993 Assignment.  The
dispute was not resolved.

On June 7 and July 6, 2007, the inventors signed documents assigning
the ?496, ?966, and ?516 patents to MHL, who then sued the Defendants on
July 13, 2007, claiming that Defendants’ TPMS infringed on all three
patents.  Animatronics then assigned any of its rights to the
patents-in-issue to MHL on November 6, 2007.

The Defendants moved to dismiss for lack of standing.  The district
court granted this motion with respect to the ‘496 and ‘966 patents,
agreeing that these patents had already been assigned to Animatronics
due to the 1993 Assignment and thus were not assigned to MHL until
November 6, 2007, after MHL had filed suit.  However, the district court
denied the motion with respect to the ‘516 patent, holding that the
inventors never assigned this patent to Animatronics, and therefore the
June and July 2007 assignments conferred standing upon MHL in regard to
this patent.

MHL filed an amended complaint to cure the timing defect with respect
to the ‘496 and ‘966 patents.  The Defendants again moved to dismiss
these claims for lack of standing, asserting that Animatronics had
assigned its rights in these patents to ME and therefore could not
assign them to MHL.  The district court agreed, holding that these two
patents did not concern Animatronics’ Proprietary Inventions and were
not subject to the carve-out provision of the Assignment.

The Defendants moved again to dismiss the ‘516 infringement claim for
lack of standing, asserting that the ‘516 patent was assigned to
Animatronics and then to ME because it was within the scope of the
“inventions and discoveries” in the Parent Application.  Here, the
district court disagreed, holding that the ‘516 patent was not related
to the Parent Application and therefore was not included within the
scope of either assignment.  Litigation commenced regarding infringement
of the ‘516 patent, and the district court eventually granted the
Defendants’ motion for summary judgment of non-infringement of the ‘516
patent.

On appeal, MHL did not dispute that the ‘496 and ‘966 patents were
“inventions and discoveries” within the Parent Application as defined in
the 1993 Assignment, but instead argued that the ‘496 and ‘966 patents
included additional features which were part of the carve-out. 
Specifically, the ’496 patent claims include limitations to a
communications link, and the ?966 patent covers a Service Unit and its
RF Link, both of which were Proprietary Inventions in the carve-out. 
The Federal Circuit, however, noted that there was no evidence that
these technologies included in the specification of the Parent
Application were the same ones included in the 1993 Assignment
carve-out.  Therefore, the Federal Circuit held that the ‘496 and ‘966
patents were not subject to the carve-out provision of the 1993
Assignment because the patent claims did not cover any of the
Proprietary Inventions – thus, they were assigned to ME and could not be
then assigned to MHL by Animatronics.  As such, the Federal Circuit
affirmed the district court’s decision that MHL lacked standing to
assert those two patents.

In regards to the ’516 patent, the Federal Circuit noted that the
1993 Assignment was not limited solely to patents claiming priority to
the Parent Application since it was limited only to “inventions and
discoveries” of the Parent Application.  As such, it was possible for
the 1993 Assignment to also cover the ’516 patent.  To determine the
scope of the 1993 Assignment, the Federal Circuit noted that the
invention is both determined by the existing claims of the ’516 patent
as defined in Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed.
Cir. 2005) (en banc), as compared to whether the written description in
the Parent Application would describe the invention for purposes of 35
U.S.C. § 112 “reasonably conveys to those skilled in the art,” Ariad Pharms., Inc. v. Eli Lilly & Co., 589 F.3d 1336, 1351 (Fed. Cir. 2010) (en banc).

Under this test, the Federal Circuit first noted that the
specification of the Parent Application did support the claims of the
’516 patent, and therefore did include the invention of the ’516
patent.  As such, the ’516 patent was also subject to the 1993
Assignment.  Therefore, the Federal Circuit held that MHL also lacked
standing to assert the ‘516 patent, reversing the district court’s
decision, and vacated the district court’s grant of summary judgment of
non-infringement of the ‘516 patent.

For information on how this decision affects Patent Owners, please see Federal Circuit Finds Assigned “Inventions and Discoveries” Extends to Continuation Applications.

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