For Want of an Immediate Assignment of Patent Interests, Enforcement Rights Were Lost

By Christopher Lacenere, Ph.D.. A member of our Patent Practice Group

Employers, look over the language of your employment agreements.  It can be critical in determining who owns an employee’s inventions. “I hereby assign all inventions” may provide an employer with immediate ownership, but “I will assign all inventions” may fail the employer if the inventor does not execute a later assignment.

This fate befell the supposed patent owner in a recent case before the Federal Circuit, Advanced Video Technologies LLC v. HTC Corporation. Advanced Video Technologies’ (AVT’s) patent infringement suit was dismissed for lack of standing because a co-owner of U.S. Patent No. 5,781,788 was not a party to the suit.  To have standing in a patent infringement suit, either all of the inventors must be party to the suit or the plaintiff must be the assignee of each inventor’s rights.  Here, one of the inventor’s interests in the ’788 patent had not been assigned to AVT.

The controversy dates back to 1995 when the parent application to the ’788 patent was filed and two of the three inventors assigned their interests to AVC Technology Inc. (“AVC”), while the third, Vivian Hsiun, refused.  AVC believed it had acquired ownership of the parent application through a series of transfers that ultimately began with an invention made at company called Infochips.

In 2015, AVT acquired any patent rights held by AVC and filed three patent infringement lawsuits against HTC Corporation and others.  AVT argued that three provisions of Ms. Hsiun’s employment agreement entitled it to her interests: a “will assign” provision, a trust provision, and a quitclaim provision. These terms read as follows (emphases added):

I agree that I will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and will assign to the Company all my right, title, and interest in and to any and all inventions, original works of authorship, developments, improvements or trade secrets which I may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the period of time I am in the employ of the Company.

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