On August 11, 2017, ALJ Dee Lord issued the public version of Order No. 7 in Certain Thermoplastic-Encapsulated Electric Motors, Components Thereof, and Products and Vehicles Containing Same (Inv. No. 337-TA-1052). In the order, ALJ Lord issued an initial determination granting Respondents’ motion to terminate the investigation in its entirety due to Complainant Intellectual Ventures II LLC’s (“IV”) lack of constitutional standing to bring its complaint at the ITC. Please note that Oblon represents the Aisin Seiki Respondents in this matter.
By way of background, this investigation is based on a March 21, 2017 complaint filed by IV alleging violation of Section 337 by way of unlawful importation into the U.S., selling for importation, and/or selling within the U.S. after importation certain thermoplastic-encapsulated electric motors, components thereof, and products and vehicles containing same that infringe one or more claims of U.S. Patent Nos. 7,154,200; 7,067,944; 7,067,952; 7,683,509; and 7,928,348 (collectively, the “asserted patents”). See our March 28, 2017 and May 1, 2017 posts for more details on the complaint and Notice of Investigation, respectively.
On June 20, 2017, Respondents Aisin Seiki Co., Ltd.; Aisin Holdings of America, Inc.; Aisin Technical Center of America, Inc.; Aisin World Corp. of America; Bayerische Motoren Werke AG; BMW of North America, LLC; BMW Manufacturing Co., LLC; Denso Corporation; Denso International America, Inc.; Honda Motor Co., Ltd.; Honda North America, Inc.; American Honda Motor Co., Inc.; Honda of America Mfg. Inc.; Honda Manufacturing of Alabama, LLC; Honda R&D Americas, Inc.; Mitsuba Corporation; American Mitsuba Corporation; Nidec Corporation; Nidec Automotive Motor Americas, LLC; Toyota Motor Corporation; Toyota Motor North America, Inc.; Toyota Motor Sales, U.S.A., Inc.; Toyota Motor Engineering and Manufacturing North America, Inc.; Toyota Motor Manufacturing, Indiana, Inc.; and Toyota Motor Manufacturing, Kentucky, Inc. (collectively, “Respondents”) filed a motion to terminate the investigation in its entirety due to IV’s lack of constitutional standing.
Specifically, Respondents’ motion alleged that, based on publicly-available documents obtained from the Illinois Secretary of State, there was a gap in the chain of title for the asserted patents and, accordingly, IV did not own the asserted patents at the time that it filed its complaint at the ITC. Rather, the asserted patents were owned by Encap Holding Company, a non-party to the investigation. In particular, an entity known as Encap Technologies, Inc. —which IV had presented as owning the asserted patents prior to such entity’s assigning the patents to IV’s predecessor in 2012—had actually merged into a different entity known as Encap Holding Company in 2008 and, as a result of that merger, had ceased to exist in 2008. Also as a result of the merger, Encap Technologies, Inc. had transferred all of its property—including the asserted patents—to Encap Holding Company in 2008. Thus, Encap Technologies, Inc. did not exist and had nothing to assign when it purported to assign the asserted patents to IV’s predecessor four years later in 2012. Rather, Encap Holding Company continued to own the patents—IV never acquired the patents and did not own them at the time it filed its complaint at the ITC. Accordingly, Respondents alleged that IV lacked constitutional standing to bring its complaint and the investigation needed to be terminated.
In response, IV argued that “Encap Technologies Inc. ceased to exist only in the sense that it had no separate corporate existence from Encap Holding Company,” and that Encap Technologies, Inc. could still have conveyed the asserted patents to IV’s predecessor in 2012 under “the law of corporate merger.” IV argued that it was the intent of the parties to convey the asserted patents to IV’s predecessor. IV further argued that Encap Holding Company consistently operated under the trade name “Encap Technologies Inc.” and thus Encap Holding Company properly assigned the patents in 2012 using its trade name Encap Technologies Inc. IV also pointed to a “confirmatory assignment” that it had executed in response to Respondents’ motion to terminate.
The Commission Investigative Staff (“OUII”) filed a response in support of Respondents’ motion. OUII argued that the 2008 merger agreement had vested all ownership rights in the asserted patents in Encap Holding Company, and the 2012 assignment to IV’s predecessor therefore transferred no rights in the asserted patents. OUII cited the principle that courts applying a contract that is unambiguous must give effect to the plain meaning of the agreement.
After considering the parties’ arguments, ALJ Lord issued her initial determination granting Respondents’ motion to terminate the investigation. The ALJ first noted that there was no dispute that, if IV did not own the asserted patents at the time it filed its complaint, then IV lacked constitutional standing and the investigation needed to be terminated. The ALJ then agreed with Respondents and OUII that the 2008 merger agreement and 2012 assignment needed to be given effect as written. Since Encap Technologies, Inc. had ceased to exist as a result of the 2008 merger agreement, it could not have transferred the patents in 2012 as it purported to do. The ALJ noted that “[i]it is axiomatic that a party cannot convey rights that it does not possess.” She also rejected IV’s “trade name” argument, noting that IV had not cited any legal authority that permits conveyance of a patent under a trade name instead of in the name of the true patent owner. The ALJ further rejected IV’s “confirmatory assignment” executed in response to the motion to terminate, finding that the law was clear that such after-the-fact attempts to alter the plain language of an assignment agreement during litigation cannot establish standing.
Accordingly, ALJ Lord granted Respondents’ motion and issued an initial determination terminating the investigation in its entirety due to IV’s lack of constitutional standing.