Thursday, April 16, 2009

Notable Federal Circuit Opinions from Last Week

Transcore, LP v. Elec. Transaction Consultants Corp., No. 2008-1430 (Fed. Cir. Apr. 8, 2009):

Holding: An unconditional covenant not to sue authorizes sales by the covenantee for purposes of patent exhaustion.

Comments: According to the Federal Circuit, a covenant not to sue is essentially a nonexclusive patent license.

Takeda Pharm. Co. v. Doll, No. 2008-1131 (Fed. Cir. Apr. 10, 2009):

Holding: For purposes of double patenting analysis, the relevant time frame for determining whether a product and process are “patentably distinct” should be at the filing date of the secondary application.

Schneider Agreed to Pay Chinese rival CHINT $23 million to Settle a Chinese Patent Infringement Lawsuit

A unit of France's Schneider Electric has reportedly agreed to pay Chinese rival Chint Group 157.5 million yuan ($23 million) - roughly half the court's original award in 2007 - to settle a three-year legal battle over patents for low-voltage electrical equipment.

According to Chinese media, the highest court in Zhejiang Province (to which Schneider appealed the original $48.5 million trial judgment) was pleased that the parties settled their differences, citing domestic and international pressures.

Click here to read my earlier post regarding patent litigation in China and its impacts on U.S. companies.

Wednesday, April 15, 2009

Impressions from my recent China trip

I just came back from a one-week business trip in China (Shenzhen and Shanghai) and would like to share my impressions on China's economy and IP market with our readers.

(1) Recession. What recession?

I would never have guessed that China is in recession. The stores were packed with customers and the restaurants were full of patrons, as if China's fast pace has never slowed. For the companies I visited, large or small, their oversea sales might have slowed, but China's domestic consumption keeps these companies going. I can sense that the energy is still there and these companies are still innovating (thanks to supportive Chinese government policies).

(2) Chinese IP Market

Chinese companies have stepped up their efforts to protect IP rights. It appears, however, that large Chinese companies are still not comfortable about spending reasonable (according to the US standard) attorney fees for IP matters. Because of their size and potential, these large companies still attempt to pressure US law firms to offer deep discounts in IP services. I believe that it will take at least another 5 years for the Chinese IP market to mature with respect to these large Chinese companies.

Interestingly, however, the medium or small Chinese companies are more active in defending their products against infringement allegations. Because these smaller companies rely on single or limited product lines, they are more willing to pay standard attorney fees to protect their market shares. Currently, the demand for IP services mainly comes from these smaller companies.

(3) Shanghai: A Futuristic City

I have never seen a more dynamic city than Shanghai, not NYC, not London, and certainly not Paris. Entrepreneurs from all over the world come to Shanghai to look for and seize seemly unlimited opportunities. Not only is Shanghai a financial center of Asia now, it is also becoming a center for technological innovations. Personally, after talking to several clients about their ventures, I was deeply impressed with their innovations and their energy.

Wednesday, April 1, 2009

How Unambiguous An Assignment Must Be?

In Euclid Chemical Co. v. Vector Corrosion Techs. Inc., No. 2008-1170 (Fed. Cir. Apr. 1, 2009), the Federal Circuit found that an assignment of a disputed patent to Vector was ambiguous, vacated the judgment of the district court based on an erroneous finding that the assignment was unambiguous, and remanded for further proceedings. On a second issue, the Federal Circuit found that the district court abused its discretion by dismissing Euclid’s bona fide purchaser claim.

Key Issue:
• Whether an assignment that lists an issued patent and all continuations to the issued patent, but leaves out a second issued patent that is a continuation to the first issued patent, cover the second issued patent?

• If an assignment merely lists an issued patent and all continuations to the issued patent, but leaves out a second issued patent this is a continuation to the first issued patent, without other clarifying language, does not cover the second issued patent.

The Disputed Assignment (emphasis added)

I, JACK BENNETT, whose full post office address is 10039 Hawthorne Drive, Chardon, Ohio 44024, in consideration for $25,000.00 and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged do hereby sell and assign to VECTOR CORROSION TECHNOLOGIES LTD. whose full post office address is 474 Dovercourt Drive, Winnipeg, Manitoba Canada R3Y 1G4, all my interest in the United States, Canada and in all other countries in and to my US, Canadian, and European applications for patents and issued US patent, namely:

1. Issued US Patent 6,033,553. This patent claims the specific use of LiNO3 and LiBr to enhance the performance of metallized zinc anodes;

2. US Application No. 08/839,292 filed on April 17, 1997,

3. US Application No. 08/731,248, filed on October 11, 1996 (now abandoned),

4. EPO Application No. 99122342.1, filed November 9, 1999, and

5. Canadian Application No. 2288630, filed November 8, 1999,

any and all divisional applications, continuations, and continuations in part together with the entire right, title and interest in and to said applications, any and to all divisional applications, continuations, and continuations in part thereof, the right to claim priority therefrom under the International Convention, and any and all Letters Patent which may issue or be reissued for said invention to the full end of the term for which each said Letters Patent may by granted; and hereby authorize the issuance to said assignee of any and all said Letters Patent not already issued as the assignee of entire right, title and interest in and to the same, for the sole use and benefit of said assignee, its successors, assigns or legal representatives; and hereby covenant and agree to do all such lawful acts and things and to execute without further consideration such further lawful assignments, documents, assurances, applications, and other instruments as may reasonably be required by said assignee, its successors, assigns or legal representatives, to obtain any and all Letters Patent for said invention and vest the same in said assignee, its successors, assignees or legal representatives.

SIGNED AT: Chardon, Ohio, U.S.A.

This 20th day of December, 2001

Federal Circuit’s Analysis

The patent in dispute, U.S. Patent No. U.S. Patent No. 6,217,742 (“the ‘742 patent”), had already issued by the signing date.

The district court granted Vector’s motion for partial summary judgment for ownership, finding that the assignment was unambiguous, that the ‘742 patent was a continuation-in-part of U.S. Patent 6,033,553 (“the ‘553 patent”), and that “the plain and unambiguous language of the [Assignment] assigns all rights in the 553 patent and any and all continuations-in-part thereof.” Slip op. at 4.

The Federal Circuit disagreed with the district court that the assignment unambiguously transferred ownership of the ‘742 patent to Vector. It noted that the language “refers to ‘applications’—plural—but ‘issued US patent’—singular.” Slip op. at 7.

Judge Newman, in her opinion concurring in part and dissenting in part, went one step further and argued that the assignment unambiguously does not convey the ‘742 patent because the ‘742 patent is a different invention from the ‘553 patent and thus was not for “said invention.”


It appears that Vector’s intent must have been for the assignment to cover all existing and future patents in the same patent family. Although the assignment contains broad language, it does leave slight ambiguity, as the Federal Circuit pointed out. Judge Newman’s position seems to be a little extreme, but yet still reasonable and sound, which further illustrates the danger of any ambiguity in the assignment.

From a policy (and law and economics) point of view, the Federal Circuit’s decision makes perfect sense. The burden should be on Vector to draft an unambiguous agreement, which would alleviate the needs for future disputes and the burden on other parties and the court system.

For the licensing professionals, the lesson is simple. Relying on the “any and all divisional applications, continuations, and continuations” may not be enough. Err on the side of caution, and be over-inclusive when drafting the assignment/licensing language. In this case, Vector could have included a sentence to state that the listing of specific patent(s) and patent application(s) is not intended to be exhaustive and the assignment covers any other patent(s) and patent application(s) that may exist.