Memorylink Corp. v. Motorola Solutions, Inc.

Addressing whether a patent was properly assigned and whether claims of inventorship fraud were properly barred by the statute of limitations, the U.S. Court of Appeals for the Federal Circuit affirmed a lower court’s summary judgment finding that the patent infringement claims were properly dismissed based on a proper assignment and that the claims of fraud were properly barred because the plaintiff waited too long to challenge inventorship.  Memorylink Corp. v. Motorola Solutions, Inc., Case No. 14-1186 (Fed. Cir., Dec. 5, 2014) (Lourie, J.).

Two inventors of the asserted patent, who later would form Memorylink, approached Motorola to jointly develop handheld cameras that could wirelessly transmit videos. After successfully developing the technology, the two inventors sent a letter to Motorola agreeing any patents would be jointly owned by Motorola and Memorylink. Motorola, handling the patent prosecution, included two Motorola employees as co-inventors.  All four inventors signed an assignment agreement transferring rights to Motorola and Memorylink for one dollar and “other good and valuable consideration.”  Ten years later, Memorylink filed a suit against Motorola alleging patent infringement and fraud related to inventorship.  The Court affirmed that Motorola could not infringe a patent that it had ownership in and that the statute of limitations barred any claims of fraud.  Memorylink appealed.

On appeal, Memorylink argued the assignment was invalid because the agreement did not have proper consideration.  Applying Illinois contract law, the Federal Circuit found that Memorylink’s assignment was proper because consideration was explicitly stated on the face of the agreement. The Court agreed that Memorylink received consideration in the two Motorola inventors assigning their rights jointly to Memorylink and Motorola. Further, Memorylink had received substantial consideration in the form of patent prosecution representation, technical and engineering support, and business opportunities.

Memorylink further argued that the consideration was invalid because the Motorola employees were not proper co-inventors and therefore could not assign ownership. The Federal Circuit found that even if the two employees were erroneously included as co-inventors, this did not create an issue of material fact concerning the validity of the consideration. The Court made the analogy to the assignment of patent rights before a patent application is filed or during prosecution of a patent. In either case, there is no guarantee that a valid patent will issue, yet in either case, this assignment is valid consideration. Therefore, because Memorylink’s assignment was valid, the Court affirmed the grant summary judgment of non-infringement because Motorola could not infringe a patent that it jointly owns.

Concerning the claims of fraud, the Federal Circuit affirmed that Memorylink knew of the underlying facts to assert its claims of fraud more than five year prior to bringing its suit. Illinois bars fraud based claims five years after the fraud was known or should have been known. Memorylink argued that the clock should not have started until after it had completed its external investigation into the inventorship issue and concluded that fraud had occurred. Prior to this date, Memorylink argued it had no reason to question inventorship based on its reliance on Motorola’s attorney. The Court found that regardless of any faulty legal advice, Memorylink knew all facts related to whether the two Motorola employees contributed to the conception of invention. The Court subsequently affirmed the dismissal of all the fraud claims as untimely.