ADVANCED VIDEO TECHS. LLC v. HTC CORP., Case Nos. 2016-2309, -2310, -2311, January 11, 2018. Before Newman, O’Malley, and Reyna.

Takeaway:

  • An employment agreement stating that the employee “will assign” all interest in any inventions is merely a promise to assign and does not in itself effect an assignment.
  • A patent trust beneficiary cannot maintain a patent infringement suit where the trustee is not a party.
  • Newman in dissent argues that the employment agreement as a whole unambiguously established ownership by the employer of all patent rights.

Procedural Posture:

Plaintiff-Appellant Advanced Video appealed the Southern District of New York’s dismissal for lack of standing based on a finding that a co-owner of the patent-in-suit was not joined as a party. CAFC affirmed.

Synopsis:

  • Patent Assignment: The CAFC ruled on three issues relating to contract interpretation in the patent assignment clauses of an employment agreement. First, the CAFC held that the phrase “will assign” in the agreement “did not itself effect an assignment but was rather a promise to assign.” Second, the CAFC held that the phrase “will hold in trust” in the agreement created a trust wherein the employee would hold the invention rights as a trustee for the plaintiff’s benefit. Finally, the CAFC held that a “quitclaim assignment” provision for patent rights “assigned hereunder” did not cover patent rights that could have, but never were, actually assigned under a contract.
  • Standing: The CAFC ruled that Advanced Video cannot maintain a patent infringement suit where a trustee or co-owner of the patent rights is not joined as a party. The only issue on appeal was whether the co-inventor’s ownership interest was transferred to the plaintiff under the terms of her employment agreement. In dicta, the CAFC noted that it did not need to address the question of whether the patent co-owner could be involuntarily joined under R. Civ. P. 19(a)(1)(B)(i) because Advanced Video had not attempted to join her.
  • Other Opinions: In a concurring opinion, Justice O’Malley agreed with the judgment under current CAFC precedent but explained why Rule 19 should not be applied differently in patent cases to prevent involuntarily joinder in an infringement action of a non-consenting co-owner or co-inventor. In a dissenting opinion, Judge Newman stated her disagreement with the circuit law precedent regarding the same and also found that the employment agreement as a whole unambiguously established ownership by the employer of all patent rights.