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?

Holding:
• 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.”

Commentary:

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.