Although a patentee often tends to ensure that it is vested with the rights to derivative technology in a technological collaboration by entering into a collaboration agreement with relevant provisions, in practice, disputes still arise over the vesting issue. This was exemplified by a recent Intellectual Property and Commercial Court case.(1)
Plaintiff A claimed that he was the patentee of patent A and that he had entered a collaboration agreement with company C, which was represented by defendant B. Both parties agreed that plaintiff A would provide the technology covered by patent A to company C to assist in its mass production of the contracted products. Company C would then be exclusively responsible for the sales by paying a certain amount of royalties to plaintiff A as profits based on the sales volume.
Plaintiff A discontinued the agreement, having found that company C had failed to perform its obligations thereunder. Nevertheless, plaintiff A later observed that defendant B had already applied for other patents (patents one and two in dispute) under the names of others by imitating the technical features of patent A. Plaintiff A filed for litigation, claiming the agreement as a cause of action, and requested:
- a declaratory judgment confirming that the patent rights were vested with plaintiff A; and
- an assignment of the patent rights to plaintiff A.
After confirming the content of the agreement, the IPCC held that plaintiff A could not claim that it was vested with the rights to patents one and two in dispute. Article 1 of the agreement held as follows:
Definition: Product's Patent Number: As listed in Attachment (A) (where patent A is recorded), any patents extended from improvements or revisions of the patent in Attachment (A) shall still be covered by the claims of the patent referred to herein in the agreement. The preceding rule shall also apply to any utility model patents extended from specific products.
The agreement simply defined the patent claims, without expressly providing that derivative patent rights would be vested with plaintiff A. Furthermore, the IPCC pointed out that the other provisions of the agreement did not explicitly provide for derivative patent rights to be vested with plaintiff A. Moreover, as the parties to the agreement were plaintiff A and company C, not defendant B, the IPCC considered it doubtful whether plaintiff A could claim the agreement as a cause of action.
Plaintiff A, though evidencing that the product manufactured according to the patent in dispute fell within several claims of patent A after undergoing a patent infringement assessment, claimed that the patent in dispute was a derivative patent of patent A. However, the IPCC held that the litigation filed by plaintiff A was to request a declaratory judgment confirming the vesting of a patent right, not litigation relating to patent infringement. Deeming that the preceding ground held by plaintiff A had nothing to with the vesting of the patent in dispute, the IPCC finally rejected plaintiff A's request. Such judgment was upheld by the second-instance court.
Consequently, with regard to with whom the rights to derivative technology vests during a technological collaboration, the collaboration agreement must clearly define the parties involved. Furthermore, the agreement shall also specify the vesting of the derivative technology in order to avoid ambiguity and disputes arising from different interpretations.
For further information on this topic please contact Shih-I Wu at Lee and Li Attorneys at Law by telephone (+886 2 2763 8000) or email ([email protected]). The Lee and Li Attorneys at Law website can be accessed at www.leeandli.com.
(1) 2021 Min-Zhuan-Shang No. 2 Civil Judgment, 23 December 2021.