# United States **Court of Appeals**  **for the Federal Circuit**

______________________
ADVANCED VIDEO TECHN OLOGIES LLC, Plaintiff

- Appellant

v.

HTC CORPORATION, HTC AMERICA, INC., BLACKBERRY LTD, BLACKBERRY CORPORATION, MOTOROL A MOBILITY LLC, Defendants

- Appellees

______________________

2016

- 2309, 2016

- 2310, 2016

- 2311

______________________ Appeals from the United States District Court for the Southern District of New York in No s . 1:15

- cv

- 046 26

- CM, 1:15

- cv

- 04631

- CM, 1:15

- cv

- 04632

- CM, Judge Colleen McMahon.

______________________

Decided: January 11, 2018

______________________

R OBERT W ILLIAM M ORRIS , Eckert Seamans Cherin & Mellott, LLC, White Plains, NY, argued for plaintiff

appellant. Also represented by O JEIKU C HRISTOPHER A ISIKU , T HOMAS M ARTIN S MITH

.

H EIDI L YN K EEFE , Cooley LLP, Palo Alto, CA, argued for all defendants -appellees. Defendants -appellees HTC Corporation

, HTC Ameri ca, Inc. a lso represented by K YLE D AKAI C HEN , M ARK R. W EINSTEIN

.ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 2

J EFFRI A. K AMINSKI , Venable LLP, Washington, DC, for defendants -appellees Blackberry LTD, Blackberry Corpo ration. Also represented by W ILLIAM D EAN C OSTON ; C HRISTOPHER T. L A T ESTA , Baltimore, MD.

F REDERICK L EE W HITMER , Kilpatrick Townsend & Stockton LLP, New York, NY, for defendant

- appellee Motorola Mobility LLC. Also represented by A KARSH B ELAGODU , Washington, DC; D AVID C LAY H OLLOWAY , Atlanta, GA; S TEVEN M OORE , San Francisco, CA.

______________________

Before N EWMAN , O’M ALLEY , and R EYNA , Ci rcuit Judges

. Opinion of the court filed by Circuit Judge R EYNA

. C oncurring opinion filed by Circuit Judge O’M ALLEY

.

D issenting opinion filed by Circuit Judge N EWMAN

. R EYNA , Circuit Judge

. Advanced Video Tech n ologies LLC appeals an order from the U nited S tates District Court for the Southern District of New York that dismissed its complaint s for lack of standing

. The d istrict c ourt based its decisio n on the ground that a co

- owner of the patent was not a party to the action s , and the co

- owner’s ownership interests in the patent were not transferred to Advanced Video. We affirm

. B ACKGROUND This appeal involves U.S. Patent No. 5,781,788 (“’788 patent”), entitled “Full Duplex Single Clip Video Codec.” The technology of the patent is not at issue . The single issue involved in this appeal is whether a co

- inventor of the patent transferred her co

- ownership interests in the patent under the terms of an employment agreement.ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 3

The ’788 patent lists three co

- inventors: Beng

- Yu

“ Benny ” Woo, Xiaoming Li, and Vivian Hsiun. The inve ntion was created while the co

- inventors were employed with Infochips Systems Inc. (“Infochips”). Two of the inventors, Mr. Woo and Ms. Li assigned their co

ownership interests in the patent to Advanced Video. T he only co -owner ship interests involved in this appeal are those of Ms. Hsiun.

Advanced Video maintains that it obtained Ms. Hsiun’s co

- ownership interests in the invention through a series of transfers . According to Advanced Video, the first transfer was made before the ’788 patent application was filed, pursuant to a January 1992 E mployment A gre ement (“Employment Agreement”) between Ms. Hsiun and Infochips. The second transfer occurred when Infochip s’ “receivables, ” which had been pledged as security in a fi nancing agreement between Infochips and an entity called Lease Management Services

, were seized by L ease Management when Infochips went out of business in 1993

. The third transfer occurred in 1995 when L ease M anagement sold the Infochips assets to Mr. Woo, one of the three co

- inventors. A f ourth transfer occurred when Mr. Woo assigned his ownership interest in the ’788 patent to an entity called AVC Technology Inc

. (“AVC”). 1
In 1995, AVC filed the parent application of the ’788 patent. 2 Two of the three inventors, Mr. Woo and Ms. Li, executed assignments of their ownership interest in the invention to AVC at that time. Ms. Hsiun, however, refused to assign her interests. AVC filed a petition before the U.S. Patent and Trademark Office ( “PTO”)

1 We only address the validity of the purported transfer under the Employment Agreement

. 2 A continuation of that patent application, filed in 1997, ultimately issued as the ’788 patent in 1998.ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 4

requesting that it be permitted to prosecute the applic ation without an assignment from Ms. Hsiun. In support

, AVC filed a decl a ration attaching the Infochips E mplo yment A greement and financial document s between Infochips and Lease Management purporting to show that Mr. Woo and AVC had acquired Ms. Hsiun’s ownership rights. The PTO granted AVC’s petition and the ’788 patent was issued to AVC. AVC was later dissolved , but not before purporting to transfer its assets to its succe ssors, and ulti mately, Advanced Video

. In 2011, Advanced Video filed three patent infring ement lawsuits against Appellees in the United States District Court for the Southern District of New York. The district court found, however, that AVC had failed to comply with D elaware statutory law governing the distr ibution of assets for dissolved corporations, and that no patent rights had transferred from AVC to Advanced Video . Because Advanced Video had no ownership inte rest in the patent, the cases were dismissed for lack of standing. Advanced Video Techs., LLC v. HTC Corp. , 103 F. Supp. 3d 409 (S.D.N.Y. 2015). 3
In 2015, the Delaware Court of Chancery appointed a Receiver to transfer to Advanced Video any patent rights held by AVC

. Advanced Video Techs. LLC v. HTC Corp.

, No. 15 Civ. 4626 (CM), 2016 WL 3434819, at *5

- 6 (S.D.N.Y. June 14, 2016). After the transfer was achieved

, Advanced Video filed three new patent i nfringement law suit s again st Appellees

. In response to a motion to dismiss, Advanced Video argued before the

3 The district court also awarded attorneys’ fees, findin g the case “exceptional” under 35 U.S.C. § 285 . The fee award was affirmed by this court. Advanced Video Techs., LLC v. HTC Corp.

, 677 F. App’x 684 (Fed. Cir. 2017).ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 5

district court that it had acquired Ms. Hsiun’s ownership rights via the aforementioned series of transfers begi nning with a transfer from Ms. Hsiun to Infochips under the terms of the Employment Agreement. According to Advanced Video, the transfer wa s effected pursuant to three provisions of the Employment Agreement : a “will assign” provision, a trust provision, and a quitclaim provision. The “will assign” and trust provisions provide as follows:
I agree that I will promptly make full written di sclo sure 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, ori ginal works of authorship, developments, i mprovements 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 e mploy of the Company.
J.A. 258 (emphasis added).

The quitclaim provision provi des as follows:
I hereby waive and quitclaim to the Company any and all claims, of any nature whatsoever, which I now or may hereafter have infringement [ sic ] of any patents, copyrights, or mask work rights resulting from any such application a ssigned hereunder to the Company.

J.A. 260. (emphasis added)

. The district court concluded that these provisions did
not effect a transfer of Ms. Hsiun’s ownership rights to Advanced Video . As such, because Ms. Hsiun was not a party to the suit, the district co urt dismissed the case for lack of standing

. Advanced Video appeals

.ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 6

D ISCUSSION

1. Standard of Review

This court reviews de novo a district court’s dismissal for lack of standing. Isr. Bio

- Eng’g Project v. Amgen Inc.

, 475 F.3d 1256, 1262

– 63 (Fed. Cir. 2 007); Prima Tek II, L.L.C. v. A

- Roo Co. , 222 F.3d 1372, 1376 (Fed. Cir. 2000)

. F actual findings relevant to a lack of standing determin ation are reviewed for clear error. Enovsys LLC v. Nextel Commc’ns, Inc. , 614 F.3d 1333, 1340

– 41 (Fed. Cir. 2010)

. 2

. “Will Assign ”
Advanced Video argues that Ms. Hsiun’s ownership rights transferred immediately upon execution of the Employment Agreement. In support, Advanced Video points to “will assign” language contained in the agre ement.

Section 2.b of the Infochips Employment A greement provides that Ms. Hsiun “will assign to the Company” all her right, title, and interest in any inventions. The di strict court found that “will” invoked a promise to do something in the future and did not effect a present assignment

. Advanced Video Techs. , 2016 WL 3434819, at *8

– 9. The court relied on Arachnid , Inc. v. Merit Industries, Inc.

, 939 F.2d 1574, 1576 (Fed. Cir. 1991)

, which held that “will be assigned” language in a consul ting agreement did not itself effect an assignment but was merely a promise to assign. Id

. at 1576, 15 80– 81. The district court also reasoned that the trust provision of the Employee Agreement undermined an immediate a ssig nment because Ms . Hsiun could not immediately assign the rights and at the same time hold them in trust. Advanced Video Techs ., 2016 WL 3434819 at *9

. We agree with the district court that no present assignment exists in the Employment Agreement

. T he “will assign” language

a lone does not create an immediate assignment of Ms. Hsiun’s rights in the invention to Infochips.ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 7

3. Trust Assignment

Advanced Video argues that “will hold in trust” crea ted a n immediate trust under California law in favor of Infochips

. Even were we to determine that Ms. Hsiun’s interests in the invention were immed iately placed in trust, it does not follow that those interests were automa tically , or ever, actually transferred out of trust in favor of Infochips. Absent a transfer, Ms. Hsiun would continue
to hold the invention rights as a trustee . While Advanced Video could potentially seek to enforce its alleged owne rship rights , or allege a breach of Ms. Hsiun’s duties as a trustee by her failure to transfer those rights, by bringing an action a gainst Ms. Hsiun, no party brought such an action

. See, e.g., Jim Arnold Corp. v. Hydrotech Sys ., 109 F.3d 1567, 1578 (Fed. Cir. 1997) ( stating that a party needs to file a state

- law based claim to obtain title to the patent before bringing a patent infri ngement claim). Since Advanced Video ha s not sought to enforce any obligation Ms. Hsiun might have under the trust, it ultimately has no standing to bring a patent infringement action. See Abraxis Bioscience, Inc. v. Navinta LLC , 625 F.3d 1359, 1366 (Fed. Cir. 2010 ).

U nder California trust law a trust beneficiary “gene rally is not the real party in interest,” “may not sue in the name of the trust,” and “has no legal title or ownership interest in the trust assets.” Saks v. Damon Raike & Co.

, 8 Cal. R ptr

. 2d 869
, 874

– 75 ( Cal. Ct. App. 1992) (citing Botsford v. Haskins & Sells

, 146 Cal. Rptr. 752 , 7 54 ( Cal. App. 1978 )). The dissent cites Kadota Fig Association of Producers v. Case

- Swayne Co.

, 167 P.2d 518 (1946)

, for the proposition that the real party in interest in Califo rnia trust disputes is actually the beneficiary, not the
trustee. Dissent at 6. Kadota does not apply, however, because it involves a “business trust,” which, under Cal ifornia law, is considered “a type of business organization” and not the type of trust in this case. Goldwater v. Ol tman , 29 2 P. 624

, 627 ( Cal. 1930). E ven if Advanced VideoADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 8

is correct that Ms. Hsiun’s rights are held in trust , A dvanced Video, as a trust beneficiary, cannot maintain a patent infringement suit where M s. Hsiun is not a party
, nor can she as a co

- owner of the patent be involuntarily joined as a plaintiff, except under limited circumstances which do not apply here

. 4

4

. Quitclaim Assignment
Advanced Video maintains that it has standing b ecause it eventua lly acquired Ms. Hsiun’s ownership interest in the invention when she quitclaimed her inte rest to Infochips under the terms of the Employment Agreement.

Section 2.e of the Employment Agreement provides : I hereby waive and quitclaim to the Company any and all claims, of any nature whatsoever, which I now or may hereafter have infringement [sic] of any patents, copyrights, or mask work rights r e-

4 See Fed. R. Civ. P. 19 ; STC.UN M v. Intel Corp

., 754 F.3d 940, 945

– 46 (Fed. Cir. 2014) (explaining that the right of a co

- owner “to impede an infringement suit brought by another co

- owner is a substantive right that trumps the procedural rule for involuntary joinder”). Under California trust law, a trust beneficiary may seek judicial compulsion against a trustee who refuses to enforce a valid cause of action, and “[i]n order to prevent loss of or prejudice to a claim, the beneficiary may bring an action in equity joining the third person and the tru stee. ” Saks , 8 Cal. Rptr. 2d at 875 (citing Triplett v. Wi lliams , 74 Cal. Rptr. 594, 596 ( Cal. Ct. App. 1969)). Here, Advanced Video has not attempted to join Ms. Hsiun as a trustee or otherwise bring an action against Ms. Hsiun. Accordingly, we do not address the question of whether Ms. H siun could be involuntarily joined as trustee under California trust law and Fed. R. Civ. P. 19(a)(1)(B)(i).ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 9

sulting from any such application assigned her eunder to the Com pany.
J.A. 260.

Advanced Video argues that “assigned hereunder” should essentially be read to mean all claims “assignable hereunder,” and that rights that Ms. Hsiun promised she “will assign” were immediately quitclaimed under the Employment Agreement. The Employment Agreement, however, does not provide “assignable hereunder” la nguage. Advanced Video cites no authority showing that “assigned hereunder” covers patent rights that could have been assigned under a contract
, but were never actually assigned

. The quitclaim provision waives Ms. Hsiun’s rights to interests in any patent rights that she assigned under the
agree ment. But

, as no patent rights were ever assigned to Infochips

, the quitclaim provision has no application. Accordingly, we find that the quitclaim provision in the Employment Agreement did not effect a n assignment of the ’788 patent from Ms. Hsiun to Infochips, AVC , or Advanced Video

. The dissent argues that it may be discerned from the Employment Agreement that the parties intended any ownership interest in inventions developed during Ms. Hsiun’s employment with Infochips were the property of Infochips. Dissent at 7– 10

. But, the terms of the E mployment Agreement provide otherwise. Generally, courts should not deviate from unambiguous provisions unless they lead to “absurd results.” Shaw v. Regents of Univ

. of Cal

. , 67 Cal. Rptr. 2d 850, 855 ( Cal. Ct. App. 1997); see also Coast Plaza Doctors Hosp

. v. Blue Cross of Cal

. , 99 Cal. Rptr. 2d 809, 815 ( Cal. Ct. App. 2000)

. In this i nstance , the Employment Agreement is unambiguous and, as stated, there is no reason to believe that the parties intended a present assignment. This court has previously found such agreements to assign insufficient to conferADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 10

standing. See IpVenture, Inc. v. Prostar Comput

. , Inc

., 503 F.3d 1324, 1327 (Fed. Cir. 2007).

C ONCLUSION
Advanced Video does not have full ownership of the ’788 patent

. Ms. Hsiun is neither a party to the suit s , nor has she consented to th ese suit s

. Advanced Video , ther efore, has no s tanding to maintain its suit. Accordingly, we affirm the district court’s dismissal of the case s.
AFFIRMED

C OSTS

No costs.

# United States **Court of Appeals**  **for the Federal Circuit**

______________________
ADVANCED VIDEO TECHN OLOGIES LLC, Plaintiff

- Appellant

v.

HTC CORPORATION, HTC AMERICA, INC., BLACKBERRY LTD, BLACKBERRY CORPORATION, MOTOROL A MOBILITY LLC, Defendants

- Appellees

______________________

2016

- 2309, 2016

- 2310, 2016

- 2311

______________________ Appeals from the United States District Court for the Southern District of New York in No s . 1:15

- cv

- 046 26

- CM, 1:15

- cv

- 04631

- CM, 1:15

- cv

- 04632

- CM, Judge Colleen McMahon.

______________________

O’M ALLEY , Circuit Judge

, concurring

. I agree that we are bound to apply the law of this Ci rcuit that compels the result we reach today. I, thus, must concur in that result. I write separately, however, to explain why I continue to believe that the binding prec edent which serves as the predicate for today’s majority opinion is wrong. In particular

, I address why the concl usion that a non

- consenting co

- owner or co

- inv entor can never be involuntarily joined in an infringement action pursuant to Rule 19 of the Federal Rules of Civil Proc edure is incorrect. In the absence of that errant concl u-ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 2

sion, the various questions we address in this case would be irrelevant.

As I e xplained in my opinion dissenting from the d enial of the petition for rehearing en banc in STC.UNM v. Intel Corp. , 767 F.3d 1351 (Fed. Cir. 2014), several things are clear about Rule 19. First, Rule 19(a)(1)(A) provides that “[a] person who is subject to service of process and whose joinder will not deprive the court of subject

- matter jurisdiction must be joined as a party if [] in that person’s absence, the court cannot accord complete relief among existing parties.” Fed. R. Civ. P. 19(a)(1)(A) (emphasis added). Second, Rule 19, like all other Federal Rules of Civil Procedure, is “as binding as any federal statute. ” Stone Container Corp. v. United States , 229 F.3d 1345, 1354 (Fed. Cir. 2000) (“[T]he Federal Rules of Civil Proc edure, like the Federal Rules of Criminal procedure, are ‘as binding as any federal statute.’” (quoting Bank of Nova Scotia v. United States

, 487 U.S. 250, 255 (1988)). Third, again, like all other Rules of Civil Procedure, Rule 19 applies in patent cases just as fully as it applies in all other federal civil actions. See, e.g. , eBay Inc. v. Me rcExchange, L .L.C. , 547 U.S. 388, 393

– 94 (2006) ( rejecting this court’s attempt to develop a rule regarding the right to injunctive relief “unique to patent disputes,” holding that “the traditional four

- factor framework . . . governs the award of injunctive relief”). And, finally, it is Rule 19

— not subs tantive judge

- made laws governing joinder

— that establishes the criteria for assessing joinder. S ee Provident Tradesmens Bank & Tr

. Co. v. Patterson , 390 U.S. 102, 118 n.13 (1968) (citing with approval to a co mmentator who noted that “there is no case supp ort for the proposition that the judge

- made doctrines of compulsory joinder have created substantive rights beyond the reach of the rulemaking power” (quoting 2 Barron & Holtzoff, Federal Practice & Procedure § 512, n.21.14 (1967 Supp.) (Wright ed.)) ).ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 3

And , as Judge Newman wrote in her opinion dissen ting from the denial of rehearing en banc in STC.UNM

, “Rule 19 is not permissive” despite this court’s precedent that “Rule 19 uniquely does not apply in patent cases.” 767 F.3d at 1355 (Newman, J., dissenting) . This prec edent represents a “further removal” of patent cases from “the mainstream of the law.” Id. Indeed, the “unique exclusion of patent cases from Federal Rule 19 is as peculiar as it is unjustified,” for “[n]o justification can be found for withd rawing or excluding the co

- owner of a patent from access to legal process.” Id. at 1356

– 57.
Despite our precedent, Rule 19(a) provides for the i nvoluntary joinder of a necessary party. The rule states, in relevant part, that:
(a) Persons Required to be Joined if Feasible.
(1) Required Party . A person who is su bject to service of process and whose joinder will not deprive the court of subject

matter jurisdiction must be joined as a party if:
(A) in that person’s absence, the court cannot accord complete relief among existing parties; or
(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person’s absence

may: (i) as a practical matter impair or impede the pe rson’s ability to protect the interest; or
(ii) leave an existing party subject to a substantialADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 4

risk of incurring double, multiple, or otherwise i nconsistent obligations b ecause of the interest.
(2) Joinder by Cour t Order

. If a person has not been joined as required, the court must order that the person be made a pa rty. A person who refuses to join as a plaintiff may be made either a defendant or, in a proper case, an involuntary plai ntiff.
Fed. R. Civ. P. 19(a)(1 )– (2). By its terms, therefore, when a person satisfies the requirements of Rule 19(a), joinder of that person is required.
If joinder of a required party is not feasible, Rule 19(b) provides that “the court must determine whether, in equity and good cons cience, the action should proceed among the existing parties or should be dismissed.” Fed. R. Civ. P. 19(b). That analysis involves consideration of several factors specified in Rule 19(b), including: (1) “the extent to which a judgment rendered in the p erson’s absence might prejudice that person or the existing pa rties”; (2) “the extent to which any prejudice could be lessened or avoided”; (3) “whether a judgment rendered in the person’s absence would be adequate”; and (4) “whether the plaintiff would ha ve an adequate remedy if the action were dismissed for nonjoinder.” Fed. R. Civ. P. 19(b)(1)

– (4).
Recognizing the mandatory nature of Rule 19, one panel of this court has noted, albeit in dictum, that “all entities with an independent right to enforce the patent are indispensable or necessary parties to an infringement suit. When such an entity declines to join in the suit it may be joined involuntarily, either as a party plaintiff or party defendant [] . . . .” IpVenture, Inc. v. ProStar Co mput

. , Inc ., 5 03 F.3d 1324, 132 5– 26 (Fed. Cir. 2007) (“[W]eADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 5

need not reach the question of whether the district court had discretion, in applying Fed. R. Civ. P. 19(a), to permit the addition of parties in this case without requiring dismissal and refiling by the plaint iff.”).
For its part, the Supreme Court has indicated in a

non

- patent case that Rule 19

— not substantive law

— applies when determining who must participate in a lawsuit. S ee Provident Tradesmens , 390 U.S. 102. There, the Third Circuit declined to follow Ru le 19, and, instead, held that
the right of a person who ‘may be affected’ by the judgment to be joined is a ‘substantive’ right, u naffected by the federal rules; that a trial court ‘may not proceed’ in the absence of such a person; and that since [one par ty] could not be joined as a defendant without destroying diversity jurisdi ction the action had to be dismissed.

Id . at 107. 1 The Supreme Court reversed, holding that “Rule 19(b), which the Court of Appeals dismissed as an ineffective attempt to change th e substantive rights . . . is, on the contrary, a valid statement of the criteria for

1 At the outset, the Court noted that the absent

par ty fell within the category of persons who should be “joined if feasible” under Rule 19(a), but “could not be made a defendant without destroying diversity.” Prov ident Tradesmens , 390 U.S. at 108. Because Rule 19(a) provides that joinder cannot deprive the court of subject

matter jurisdiction, the Court focused its analysis on Rule 19(b), which asks whether the court should dismiss the action or proceed without the absent party. Id

. at 108

– 09. The Court’s discussion of the interplay between alleged substantive rights and Rule 19 remains relevant to co nsideration of this issue

, even though it occurred when discussing Rule 19(b) rather than Rule 19(a).ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 6

determining whether to proceed or dismiss in the forced absence of an interested person.” Id . at 125.
There is no dispute over whether co

- owners are nece ssary parties to infringement actions; the question we must address is whether a co

- owner’s mere recalcitrance can prevent enforcement of another co

- owner’s rights. Rule 19(a) is designed to address circumstances just like those at issue here. See 7 Charles Alan Wright e t al., Federal Practice and Procedure § 1606 (3d ed. 2013) (“The joinder of an absent person who should be a plaintiff as an involuntary plaintiff is authorized by the second half of the third sentence of Rule 19(a). . . . The purpose of this procedure is to mitigate some of the harshness that occasionally results when the joinder of a nonparty is found to be desirable but the nonparty refuses to join in the action.”). Involuntary joinder assumes recalcitrance by the joined party (or, as here, a preference not to parti cipate ), but authorizes joinder nonetheless. Rule 19(a) makes no exception for recalcitrant patent owners and we, to date, have not explained from where such an exception derives. See id . (noting that the “most typical application” of Rule 1 9(a) “has been to allow exclusive licensees of patents and copyrights to make the owner of the monop oly an involuntary plaintiff in infringement suits”).
The original cases on which our Rule 19 joinder pre cedent relies do not proscribe the use of involunta ry joinder of co

- owners or co

- inventors in patent cases , as our prec edent does. Neither Ethicon, Inc. v. U .S. Surgical Corp

., 135 F.3d 1456 (Fed. Cir. 1998), nor any other case on which it relies specifically holds that a patent co

- owner or

co

- inventor cannot be involuntarily joined under Rule 19(a). Examination of the pertinent case law reveals that repeated references to unsupported dicta have morphed into a hard

- and

- fast rule from which this court refuses to deviate.ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 7

In Ethicon , we quoted an earlier Federal Circuit dec ision for the proposition that “one co

- owner has the right to impede the other co

- owner’s ability to sue infringers by refusing to voluntarily join in such a suit.” 135 F.3d at 1468 (quoting Schering Corp. v. Roussel

- UCLAF SA , 104 F.3d 341, 345 (Fed. Cir. 1997)). Schering , in turn, relied solely on a Sixth Circuit decision

— Willingham v. Lawton

, 555 F.2d 1340 (6th Cir. 1977)

— not on the Patent Act or even preexisting federal common law. But Willingham did not purport to create any substa ntive patent rights. In fact, the Willingham court expressly declined to a ddress the patent co

- owner’s argument that it had a su bstantive right not to be forced to join the action under Rule 19(a). As explained below, Rule 19 was not at issue in either S chering or Ethicon , and the court in Willingham actually endorsed the application of Rule 19(a) on the facts before it. Accordingly, none of these cases su pports our current rule that displaces application of Rule 19. First, the “crux of the problem” in W illingham was “whether a co

- owner could authorize by contract another

co

- owner to file suit for patent infringement without the permission of the first co

- owner, in an action in which the unwilling co

- owner is joined as an involuntary plaintiff under Rule 19.” 555 F.2d at 1343

– 44. Although the patent co

- owner, Star, argued that “Rule 19(a) is proc edural and does not alter the substantive law requiring voluntary joinder of all co

- owners of a patent in a suit for its infringement,” the court found that it “ need not reach this issue,” because Star waived any objection by signing a contract that gave either co

- owner the right to initiate an infringement action in its sole discretion. Id . at 1343 & n.5. The court further explained that: (1) “[m]aking a patent owner an involuntary plaintiff is not new” ; (2) “[j]oining Star as an involuntary plaintiff protects the interests of both the defendants”; and (3) “Rule 19(a)ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 8

requires the continued joinder of Star as an involuntary plaintiff in the infringement suit.” Id . at 1346.

The Sixth Circuit in Willingham recognized the “ge neral rule that all co

- owners of a patent must be joined as plaintiffs before an infringement suit can be initiated. ” Id . at 1343 (citing Waterman v. Mack enzie , 138 U.S. 252, 255 (1891)). 2 It did not create or purport to create any new substantive patent law right that would trump application of Rule 19, however. Indeed, it expressly stated it was not addressing that question because it found any rights Star might have had on that score to ha ve been waived. Id . at 1343 n.5 ( comparing Provident Tradesmens , 390 U.S. at 118 n.13, 125 (recognizing that Rule 19(b) is “a valid statement of the criteria for dete rmining whether to proceed or dismiss in the forced a bsence of an interested person” and that “judge made doctrines of compulsory joinder” do not create substantive rights falling outside the reach of the rule), with Gibbs v. Emerson Elec. Mfg. Co. , 29 F. Supp. 810, 812 ( W. D. Mo. 1939) (concluding that “it appears that one joint owner or

2 In Waterman , the Suprem e Court explained that a patentee or his assignee may grant and convey to another: (1) the whole patent; (2) an undivided part or share of that exclusive right; or (3) “the exclusive right under the patent within and throughout a specified part of the Unit ed States.” 138 U.S. at 255. “A transfer of either of these three kinds of interests is an assignment, properly speaking, and vests in the assignee a title in so much of the patent itself, with a right to sue infringers; in the second case, jointly with the assignor; in the first and third cases, in the name of the assignee alone.” Id

. Importantly, the “development of the practice of joining a party as an involuntary plaintiff was a response” to Waterman . 7 Charles Alan Wright et al., Federal Practice and Procedure § 1606 (3d ed. 2013).ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 9

coown er or tenant in common of a patent right cannot compel the other coowner to join in a suit for an infring ement”) ).
Schering involved a dispute between two co

- owners of a pharmaceutical patent: Schering and Roussel. Schering sued Zeneca for infringement, a nd two weeks later, Rou ssel granted a license to Zeneca. Schering argued that the terms of its co

- ownership agreement with Roussel

— which provided that, “if one of the co

- owners files an infring ement suit, it can call on the non

- suing co

- owner to provide

‘ reasonable assistance’ in connection with the litigation”

— meant that the non

- suing party could not grant a license to a defendant or prospective defendant. Schering , 104 F.3d at 345

– 46. Undertaking a contract analysis, we held that nothing in the agreeme nt limited the right to grant licenses under the patent, but that “the grant of a license by one co

- owner cannot deprive the other co

- owner of the right to sue for accrued damages for past infringement.” Id . at 345. Involuntary joinder was not at issue on appeal in Schering because, at the district court level, “Schering joined Roussel as an involuntary plaintiff pursuant to Rule 19(a).” Schering Corp. v. Zeneca Inc ., 958 F. Supp. 196, 197 (D. Del. 1996); see Scherin g , 104 F.3d at 346 (noting that the “co

- ownership agreement made Roussel subject to being named as an involuntary plaintiff in an infringement action brought by Schering”). Accordingly, this court in Schering did not address or analyze Rule 19; it proceed ed on the assumption that joinder under Rule 19(a) had occurred and that no objection to it had been raised on appeal. While we did cite the Sixth Circuit’s Willingham decision for the proposition that, “[o]rdinarily,

one co

- owner has the right to impede the other co

- owner’s ability to sue infringers by refusing to voluntarily join,” the “ impediment ” to which we refer red was not due to

non -joinder or a “refus[al] to voluntarily join”

— it was due to the co

- owner’s decision to license the patent to theADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 10

accuse d infringer prospectively

. Schering , 104 F.3d at 345 (citing Willingham , 555 F.2d at 1344). We explained that, “by granting a license to a prospective infringement defendant, or to a defendant that has already been sued for infringement, a patent co

- owne r can effectively deprive its fellow co

- owner of the right to sue for and collect any infringement damages that accrue after the date of the license.” Id. (emphasis added). Again, we never said a co

owner could deprive a fellow co

- owner of his or her rig hts merely by not joining in an infringement action.

In Ethicon , the co

- owner of the patent

— Dr. Choi

— granted a “retroactive license” to the accused infringer

— U.S. Surgical

— and thus could not consent to an infring ement suit against it. Ethicon , 135 F.3d at 145 8–5 9. Because the parties stipulated to Choi’s intervention as defendant

- intervenor in the case, the majority neither cited nor discussed Rule 19. Id . at 1458. Instead, the court focused on the scope of the “retroactive license.” Specifically, the court found that: (1) “a license to a third party only operates prospectively;” and (2) absent agre ement otherwise, “a co

- owner cannot grant a release of another co

- owner’s right to accrued damages.” Id . at 1467 (concluding that “Choi cannot release U.S. Surgical from its liability for past accrued damages to Ethicon, only from liability to himself”).
In the context of its retroactive licensure discussion, the court explained that, “as a matter of substantive patent law, all co

- owners must ordinarily consent to join as plaintiffs in an infringement suit.” Id . at 1468. 3 The

3 The court recognized two exceptions: (1) “when any patent owner has granted an exclusive license, he stands in a relationship of trust to his licensee and must permit the licensee to sue in his name”; and (2) “[i]f, by agreement, a co

- owner waives his right to refuse to join suit, his co

- owners may subsequently force him to join inADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 11

court did not cite any autho rity for this so

- called “su bstantive patent law,” but subsequently cited Schering for the proposition that one co

- owner can “impede” the other

co

- owner’s ability to pursue an infringement action. Id

. (quoting Schering , 104 F.3d at 345). As in Schering

, h owever, Choi’s ability to “impede” Ethicon’s infringement action was not due to non

- joinder, particularly since Choi was already a voluntary party to the case. Instead, it was because Choi had granted a license to U.S. Surgical. The court concluded that dismissal was warranted because “Choi did not consent to an infringement suit against U.S. Surgical and indeed can no longer consent due to his grant of an exclusive license,” and thus “Ethicon’s co mplaint lacks the participation of a co

- owner of the paten t.” Id . Because the court’s decision in Ethicon did not involve joinder or Rule 19, it cannot stand for the proposition that Rule 19 cannot be invoked to force joinder when no license impedes doing so.
The majority in Ethicon did not discuss joinder unde r Rule 19, did not purport to harmonize the requirements of Rule 19 with preexisting substantive patent law, and

— because the decision was focused on licensing issues

— did not create any new principles of law applicable to future cases involving the involunt ary joinder of patent co

owners. Importantly, the Ethicon majority’s silence cannot be evidence of its position with respect to Rule 19,

a suit against infringers.” Ethicon , 135 F.3d at 1468 n.9 (citing Indep. Wireless Tel. Co. v. Radio Corp. of Am ., 269 U.S. 459, 469 (1926); Willingham , 555 F.2d at 1344

– 45). As the dissent in STC.UNM points out, it makes little sense to say “that when an infringement suit is brought by an exclusive licensee, the patent owner can be joined; but when an infringement suit is brought by a co -own er, the other co

- owner cannot be involuntarily joined.” STC.UNM , 754 F.3d at 951 (Newman, J., dissenting).ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 12

even though the dissenting opinion discussed the rule. Id. at 1472 (Newman, J., dissenting) (“There is no barrier to the involuntary joinder of a joint inventor and/or co -owner under Rule 19, if such is needed to bring before the court all persons deemed necessary to the suit.”); see United Haulers Ass’n v. Oneida

- Herkimer Solid Waste Mgmt. Auth ., 261 F.3d 245, 260 (2d C ir. 2001) (“[W]e require more than the Court’s silence on this point before conclu ding that it either rejected or accepted the public/private distinction advocated by the concurring and dissenting opinions.”).
Although our Ethicon decision was not based on Rule 19, we subsequently stated that it “explicitly held that Rule 19 does not permit the involuntary joinder of a patent co

- owner in an infringement suit brought by another co

- owner.” DDB Tech s. , L.L.C. v. MLB Advanced Media , L.P. , 517 F.3d 1284, 1289 n.2 (Fed. Cir. 2008) (citing Ethicon , 135 F.3d at 1468). It is unclear, however, why the court in DDB Technologies would say that Eth icon made an explicit holding with respect to Rule 19 when it was not even mentioned in the majority opinion. In a ny event, the reference to Ethicon in DDB Technologies was dictum because the sole issue before the court in that case dealt with entitlement to jurisdictional discovery. Id . at 1286 (“[W]e hold that the district court erred in denying DDB’s request for jurisdictional discovery.”). 4

4 Other decisions from this court have perpetuated the idea that all co

- owners must ordinarily join as plai ntiffs in an infringement suit, but, ag ain, Rule 19(a) was neither raised nor addressed in those cases. See Isr. Bio

Eng’ g Project v. Amgen, Inc. , 475 F.3d 1256 , 1264 (Fed. Cir. 2007) (citing Ethicon and Schering to find that “one

co

- owner has the right to limit the other co

- owner’s ability to sue infringers by refusing to join voluntarily in the patent infringement suit ” ); Int’l Nutrition Co. v. HorphagADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 13

Tracing the origin of our so

- called rule of substantive patent law makes clear that, prior to our decision in STC.UNM v. Intel Corp. , 754 F.3d 940 (Fed. Cir. 2014)

, we had never explicitly held that one patent co -owner cannot involuntarily join the other

. Neither Schering nor Ethicon made any pronouncements on involuntary joinder that were necessary to the resolution of those cases. T here is no preexisting federal common law supporting the court’s declaration in STC.UNM of a substantive patent right that wholly trump s application of Rule 19.
Moreover, it is well established that, absent any agreement to the contrary, “each of the joint owners of a patent may make, use, offer to sell, or sell the patented invention within the United States, or import the paten ted invention into the United States, without the consent of and without accounting to the other owners.” 35 U.S.C. § 262. Given these rights, the Ethicon court declared that “the congressional policy expressed by s ection 262 is that patent co

- owners are ‘at the mercy of each other.’” Eth icon , 135 F.3d at 1468 (quoting Willingham , 555 F.2d at 1344). Nothing in § 262 suggests that one co

- owner can deprive the others of their rights to enforce the patent. Indeed, we have recognized that “[a] patentee’s right to exclude is a fundamental tenet of patent law.” Edwards Lifescis. AG v. CoreValve, Inc ., 699 F.3d 1305, 1314 (Fed. Cir. 2012) (citations omitted). And § 262 specifically provides that each co

- owner has an ind ependent right to

Research Ltd ., 257 F.3d 1324, 1331 (Fed. Cir. 2001) (citing E thicon for the proposition that United States patent law “requires that all co

- owners normally must join as plai ntiffs in an infringement suit”). Mere repetition of dicta

— without any accompanying analysis and without consi deration of Rule 19

— cannot give r ise to a substantive patent right sufficient to overcome application of that rule.ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 14

practice the patent. It therefore seems inconsistent to say that each co

- owner has an independent right to practice the patent

, but that they may prevent one another from enforcing the fundamental right of exclusion solely b ecause they “ prefer[] to take a neutral position.” See STC.UNM , 754 F.3d at 943.
Finally, the Patent Act provides that “[a] patentee shall have remedy by civil action for infringement of his patent.” 35 U.S.C. § 281 (emphasis added). In other words, each co

- owner ha s a right to file a civil action to enforce the patent. But the effect of our current precedent is that, if a patent co

- owner refuses to join the infring ement suit voluntarily as a plaintiff, it can prevent the other owner from obtaining judicial relief f or accrued damages. If that were the case, then § 281’s statutorily

mandated right to a civil action would have little mea ning. Accordingly, while there may be some other support for our precedent’s so

- called overriding “substantive right” against involuntary joinder in patent infringement cases, our decisions ha ve provided no statutory basis for this rule, which actually appears inconsistent with several provisions of the Patent Act

. Rather than once again exempt ing pate nt law from the rules that govern all federal litigation, we should either: (1) clarify the basis for our so

- called substantive right against involuntary joinder in patent infringement cases and explain why it can overcome the dictates of Rule 19; or (2) h old that Rule 19, including the provisions for involuntary joinder set forth therein, applies to cases such as this one . For these reasons, I respectfully suggest that our Rule 19 precedent should be reconsidered en banc by this court

. Because I must abi de by that prec edent in deciding this case, however, I concur in the jud gment.

# United States **Court of Appeals**  **for the Federal Circuit**

______________________
ADVANCED VIDEO TECHN OLOGIES LLC, Plaintiff

- Appellant

v.

HTC CORPORATION, HTC AMERICA, INC., BLACKBERRY LTD, BLACKBERRY CORPORATION, MOTOROL A MOBILITY LLC, Defendants

- Appellees

______________________

2016

- 2309, 2016

- 2310, 2016

- 2311

______________________ Appeals from the United States District Court for the Southern District of New York in No s . 1:15

- cv

- 046 26

- CM, 1:15

- cv

- 04631

- CM, 1:15

- cv

- 04632

- CM, Judge Colleen McMahon.

______________________ N EWMAN , Circuit Judge, dissenting

. I respectfully dissent. Joint inventor Vivian Hsiun never had co

- ownership of the ’788 Patent, contrary to the majority opinion. B y her Employment Agreement, her invention was the property of her employer; she was not the owner, and she could not acquire ownership simply by refusing to sign a separate “assignment” document.
Vivian Hsiun was employed on the basis of a detailed and tho rough Employment Agreement , whereby all of her inventions and other product of her employment a re owned by the employer

. After the ’788 Patent applicationADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 2

was filed, of which she is listed as one of three joint inve ntors, Ms. Hsiun declined to sign the PTO’s form of a ssignment document . This lapse was discovered by the defendants during this litigation , and the defend ants

mo ved to dismiss for lack of standing to enforce the p atent

. The district court granted the mo tion and the panel majority agrees

, fi nding sua sponte that Ms. Hsiun own s

one

- third of the ’ 788 Patent.
However, the Employment Agreement place d owne rship of the employee’s invention s with the employer . In view of the Employment Agreement, a s eparate as sig nment document is not necessary to confirm that the employee has no ownership of the ’788 Patent

. Nor has the employee asserted any such ownership.

D ISCUSSION The Employment Agreement contains several prov isions concerning ownership of inventions made by Ms. Hsiun durin g her employment , as fol lows:

1.

Section 2.b provides that a ll i nventions made during employment will be disclosed and held in trust and a ssigned to the Company
Agreement Section 2.b obligate s M s. Hsiun to disclose and to assign all her right, title, and interest in all inve ntions that she makes while employed by the Company :
2.b. Inventions and Original Works Assigned to the Company

. I agree that I will promptly make full written disclosure to the Company, will hold in trust for the sole right and benef it of the Co mpany, and will assign to the Company all my right, title, and interest in and to any and all i nventions , original works of authorship, develo pments, improvements or trade secrets whic h I may solely or jointly conceive or develop or reduceADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 3

to p ractice, or cause to be conceived or developed or reduced to practice, during the period of time I am in the employ of the Company

. . . . Empl. Agmt.

, J.A. 258

. On Ms. Hsiun’s refusal to sign the PTO’s standard assignment form , t he PTO accepted the Employment Agreement as s h owing ownership by the employer. Ms. Hsiun di d not object to the procedures in the PTO, and the face of the patent lists AVC Technology, Inc. as “Assignee. ” Ms. Hsiun did not object, and has

never assert ed any ownership interest in the ’ 788 P atent

. 2.

Section 2. c states that i nvention r ecords a re the p roperty of the C ompany In conformity with the other provisions on ownership of inventions made by Ms. Hsiun during her employment, the Employment Agreement provides that all invention records are the property of the employer:

2.c

. Maintenance of Records. I agree t o keep and maintain adequate and current written records of all inventi o ns and origina l works of authorship made by me ( solely or jointly with others) during the term of m y employment with the Company. The records wi l l be in the form of notes, sketches, dr a wings, and any other format that may be spec ified by the Company. The records wi l l be avail able to and remain the sole property of the Company at a l l times

. Empl. Agmt.

, J.A. 259. It is not disputed that the ’ 788 invention was made during Ms. Hsiun’ s employment. She has asserted no ownership or any other rights to her invention records.

3.

Section 2.e states the employee’ s obligation t o assist in o btain ing p atentsADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 4

This clause of the Employment Agreement refers to patents on inventions “ assigned hereunder” to the e mployer:

2.e. Obtaining Letters Patent, Copyrights, and Mask Work Rights

. I agree that my obligation to assist the Company to obtain United States or foreign letters patent, copyrights, or mask work rights covering inventions, works of authorship, and mask works, respectively, assigned hereunder to the Company shall continue bey ond the term ination of my employment, but the Company shall compensate me at a reasonable rate for time act ually spent by me at the Company’ s request on such assistance.

. . . Empl. Agmt.

, J.A. 259. The words “ assigned hereun der” and the continuing obliga tion s after termination of e mployment conform to the mutual intent and understan ding, of employer and employee, with respect to the Company’s ownership of inven tio ns made during her employment.
Ms. Hsiun did not object to the Company’s filing of this patent applications naming her as a joint inventor; such filing was authorized by the agreed right of owne rship of her inventions.

4.

Section 2 .e provides for action by the employer i n absence of the employ ee’ s signature on patent documents

Ms. Hsiun agreed that if her signature is unobtain able for “ inventions or other rights assigned to the Comp any ,” the Company may act in her stead:

2. e. [ continued].

. . . If the C ompany is unable because of my mental or physical incapacity or for any other reason to secure my signature to applyADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 5

for or to pursue any application for any United States or foreign letter s patent, copyrights, or mask work rights covering inventions or other rights assigned to the C ompany as above

, then I hereby irrevocably designate and appoint the Company and it s duly authorized officers and agents as my agent and attorney in fact, to act for and in my behalf and stead to execute and file any such application s and to do all other lawfully permitte d acts to further the prosecution and i ssuance of letters patent, copyrights, and mask work rights with the same legal force and effect as if executed by me.

. . . Empl. Agmt.

, J.A. 259

– 60 . Th is provisio n was a basis of the Company’s prosecution of the ’ 7 88 application , and issuance of the ’788 Patent naming Ms. Hsiun as a joint inventor and AVC Technology as assignee

. 5.

Section 2.b requires the employee to hold all inven t ions in trust for the Company

2.b. I agree that I

. . . will hold in trust for the sole right and benefit of the Company, and will assign to the Company all my right, title, and i nterest in and to any and all inventions, . . . during the period of time I am in the employ of the Co mpany. Empl. Agmt.

, J.A. 258

. My colleagues on this pane l concede that the tru st provision of the Employment Agreement may apply

, Maj. Op. at 7, but nonetheless hold that the trust provision is ineffective to establish that Ms. Hsiun held her inventions in trust “for the sole right and benefit of the Company. ” My colleagues state that it is necessary for the beneficiary to sue the trustee in order to obtain the benefit of the trust. No supporting authority is cited, or relates to these facts.ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 6

The parties’ briefs discuss a California case in which the court held that a trust was n ot created on a dying man’s oral instruction to pay his hospital bill and dispose of his funds , the court stating in Monell v. College of Physicians & Surgeons of San Francisco, 198 Cal. App. 2d 38, 48

– 49 (1961), that “it is essentia l to the creation of a valid express trust that some estate or interest should be conveyed to the trustee and, when the instrument cr ea ting the trust is other than a will, th at such estate or interest must pass immediately, although the enjoyment of the cestui may commence in the future .” The Monell court held that the oral instruction did not create a trust when the attempted disposition was testamentary in
nature
, id . at 51 , and that the disposition had to comply with the formalities of wills. Id . To the extent that the Monell case is relevant to th e trust provision of the E mployment Agreement , it supports the immediate conve yance of inventions to the trust, for the benefit of the Company , in accordance with the signed Employment Agreement.
The panel m ajority also states that under California law the beneficiary of the trust is not the real party in interest. However, California law accords with the ge neral law of trusts, as represented by Kadota Fig Ass ’ n of Producers v. Case

- Swayne Co

. , 7 3 Cal. App. 2d 796, 801 (1946) ( “The real parties in interest are the beneficiaries under the business agreement, and not the trustees or directors. ”)

. Ms. Hsiun is the trustee of her inventions

, which vest in trust immediately on creation of the inve ntion. T he employer is the beneficiary of her invention s as established by the Employment Agreement . T he beneficiary is not denied its beneficial rights if the trustee is absent or inactive

. S ee id. (“The reason for requiring an action to be prosecuted in the name of the real parties in interest (C ode C iv. P roc ., § 367) is to save the defendants from a multiplicity of suits

. . . . ”).ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 7

At a minimum, t h e trust provision further demo nstrat es the mutual intent and understanding that Ms. Hsiun ’s inventions made during her employment are for the sole benefit of the employer.

6.

Section 2.e provides a “ waiver and qui tclaim ” of infringement claims of patents “a ssigned hereunder”
The Employment Agreement contains the following waiver and quitclaim provision:

2.e. [c ontinued]

. . . I hereby waive and quitclaim to the Company any and all claims, of any nature whatsoever, which I now or may hereafter have infringement of any patents , copyrights, or mask work rights resulting from any such application assigned hereunder to the Company.
Empl. Agmt.

, J. A

. 260

. The waiver and quitclaim provisions comport with the mutual intent and understanding that M s. Hsiun retained no ownership of patents on her inventions “a ssigned hereunder to the Company

. ” The quitclaim assures that any rights the grantor had

, are transferred to the grantee of the property. California precedent is clear

. E .g., City of Manhatt a n Beach v. Superior Court

, 914 P.2d 160, 164 (1996) ( “A quitclaim deed transfers whatever present right or interest the grantor has in the property .”); s ee generally

, “ Quitclaim, ” Black’s Law Di ct ionary (4th ed. 1968) ( a quitclaim is “intended to pass any title, interest, or claim which the grantor may have in the premises”).

The panel major ity states that since the ’788 P atent

was not assigned to the Company, “ the quitclaim prov ision has no application .” Maj. Op. at 9. To the contrary: if indeed the patent was not individually assigned in aADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 8

special document , the “quitclaim to the Company” assures transfer of the property to the Company

. A quitclaim does not require that the property was a lready assigned, for in such ca se no quitclaim would be needed. However, the quitclaim does require that “any and all claims” that may “ now or hereafter” exist, a re “assigned hereunder to the Company.”
This provisio n further renders impossible that Ms. Hsiun now owns one

- third of the ’788 Patent , for any such ownership was quitclaimed to the employer

. 7.

Section 5 requires the employee to execute all documents need ed to carry out the Agreement

The record before us does not explain why Ms. Hsiun

re fused to sign the provided PTO assignment form , for t he Employment Agreement is explicit as t o the employee’s obligations to execute any required documents :

5. Representations . I agree to execute any proper oath or verify any proper document required to

carr y out the terms of this Agreement . I repr esent that my performance of all the terms of this Agreement will not br e ach any agreement to keep in confidence pr oprieta ry information acquired by me in confidence or in trust prior to m y emplo yment by the Company. I have not entered into, and I agree I will not enter into, any oral or wri tten agreement in conflict herewith.
Emp l . Agmt., J.A. 260

– 61

. Throughout this litigation, there is no assertion by Ms. Hsiun of any ownership interest in the ’788 Patent , orADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 9

any negation of her obligations set forth in the Emplo yment Agreement. 1

8. Other provisions of the Employment Agre ement comport with the mutual understan ding of employer ownership of employee inventions

Several o ther provisions of the Employment Agre ement relate to inventions , and further implement the understanding of employer ownership of the employee’s work product :
Section 3 p rohibits conflicting future employment.

Section 4 provides for ownership by the Company of all d ocuments and p ropert y created by the employee

. Section 6.b state s that this is the enti re agree ment and cannot be changed except “ in writing signed by the party to be charged.”

Section 6.c provides for severability.

Section 6.d binds the employee’ s heirs and executors for the benefit of the Company , its successors, and its assigns

. Section 6.e provides that the Agreement survives the termination of employment

, and benefits the C ompany ’ s

succes s ors and assigns

.

1 The panel majority states that “the terms of the Employment Agreement provide otherwise

, ” the “othe rwise” being “unambiguous provisions” in the Employment Agreement purportedly negating assignment to the employer. Maj. Op. at 9. No citation is offered, and I have searched in vain for any such unambiguous prov ision.ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 10

Section 7 require s the employee to identify all pr eemployment inventions

— there were none.
It is inconceivable that the parties intended that u nless a separate assignment document was signed as to each and every aspect of the employee’s work product , the provisions of the Employment Agreement would not apply

. 9.

Section 6.a of the Agreement state s that Califo rnia law applies

California contract law provides:
Cal. Civ. Code § 1643: A contract must receive such an interpretation as will make it lawful, o perative, definite, reasonable, and capable of being carried into effect, if it can be done without viola ting the intention of the parties.

The record contains no challenge to the mutual intent

a nd understanding of the parties to the Employment Agreement. The provisions of the Employment Agre ement demonstrate, over and over, the intent and unde rstanding that Ms. Hsiun’s inventions made as an employee are the property of the employer. There are n o contrary provisions, and no contrary evi dence was pr esented in this action

. Every contract provision, and the entirety of the E mployment contract, show this mutuality of intent. The intention of the parties must be respected and “ intent is to be inferre d, if possible, solely from the written prov isions of the contract.” People ex. r el. Lockyer v. R.J. Reynolds Tobacco Co., 107 Cal. App. 4th 516, 525 (2003)

. California law provides no contrary authority, and none was asserted in this case.

It is not reasonable now to hold that the Employment Agreement fails in its intended purpose , for every prov i-ADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 11

sion of the Agreement accords with and implements the intent that the employee’s inventions are the property of the employer

. 10. The Delaware Chancery Court quitclaimed and assigned t he ’788 Patent to the plaintiff

The record further demonstrates that ownership of the ’788 Patent

, by Ms. Hsiun’s employer and its succe ssors , was recognized in corporate proceedings in Del aware. After a challenge to the transfer of the ’788 P atent, a Receiver was appointed by the Chancery Court, who held as follows:
I, Joseph Cicero, . . . have quitclaimed, a ssigned, transferred, set over and conveyed and do hereby quitclaim, assign, transfer, set over and convey unto Advanced Vi deo Technologies LLC, a New York limited liability company (“Assignee”)

, its successors, and assigns, any and all right, title, and interest to United States Patent No. 5,781,788 (the “Patent”) held and enjoyed by A ssignor, for the entire term of the Paten t, including any reissues, reexaminations, and extensions thereof, including the right to sue for and recover damages in respect of past acts of infringement. This assignment includes, but is not limited to, all Assignor’s right to all income, royalties, damages and payments now or hereafter due and payable, and in and to all causes of action, either in law or in equity, and the right to sue and counterclaim for and collect past and continuing damages for infringement. The right, title and interest co nvey ed in this Assignment is to be held and enjoyed by Assignee and Assignee’s successors and assigns as fully and exclusively as it would have been heldADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 12

and enjoyed by Assignor had this assignment not been made.
[signed] Joseph B. Cicero, Esq., Date: 6/5/15 Receiver for AVC Technology, Inc.
J.A. 130. The record does not show any appeal by any person or other entity from the Delaware Court’s dete rmination , or any challenge to or dispute with this esta blishment of ownership of the ’788 Patent by Advanced Video Technologies

. 11.

Federal Circuit p recedent does not contr avene the Employment Agreement

Ethicon Inc. v. U.S. Surgical Co rp ., 135 F.3d 1456 (Fed. Cir. 1998 ) does not support the position that Ms. Hsiun owns one

- third of the ’788 Patent. T he situations and rulings are widely d ifferent. In Ethicon

, a consultant who had not agreed to assign his inventions made a contribution to a claim, and the court held that the co nsultant owned an undivided interest in the patent

. Id . at 1464. Here, in contrast, ownership of Ms. Hsiun’s inve ntions is established by the Employment Agreement

. Unlike Ms. Hsiun’s contractual agreement , in Ethicon there was no employment agreement, no agreement as to ownership of inventions, no holding in trust for the e mplo yer, no waiver and quitclaim to the employer

. The ruling in Ethicon does not govern ownership of Ms. Hsiun’s invention s. Nor does the ruling in Arachnid, Inc. v. Merit Indu stries, Inc ., 939 F.2d 1574 (Fed. Cir. 1991) apply to this case. In Arachnid a con sultant had agreed by contract that his inventions “will be assigned” to the company, but he did not execute an assignment. The court held that although equitable title may have been acquired by the company, legal title was needed before damages could be obtained. Id. at 1579. The gaps that the court perceivedADVANCED VIDEO TECHN OLOGIES v. HTC CORPORATION 13

in the consulting agreement in Arachnid are filled in the Employment Agreement signed by Ms. Hsiun. Her Agreement not only provides for ownership by the e mployer of all inventions made by the employee, but impo ses a trust and implements a quitclaim in favor of the employer. S ee Akazawa v. Link New Tech

. Int’ l, Inc., 520 F.3 d 1354, 1356 (Fed. Cir. 200 8 ) (“ [T]here is nothing that limits assignment as the only means for transferring patent o wnership. . . . [O]wnership of a patent can be

c hanged by operation of law.”).
Ms. Hsiun’s Employment Agreemen t is directly co ntrolled by contract law. The Employment Agreement that she signed established ownership by the employer of the ’788 Patent by w ay of clear contract provisions impl ementing the intent and understanding and agreement of employer and employee, as a condition of the employment

. There is no ambiguity, and Ms. Hsiun asserts no owne rship in the ’788 Patent.

C ONCLUSION

The E mployment Agr eement established the te rms and conditions of Ms. Hsiun’ s employment. These terms and conditions include ownership by the employer of all inventions made by the employee during her employment. My colleagues ’ award to Ms. Hsiun of one

- third of the ’ 788 Patent ca nnot be supported

, under any view of any law

. I respectfully dissent.