Opinion ID: 4533844
Heading Depth: 2
Heading Rank: 1

Heading: The Photocopy Assignment

Text: When the district court entered the judgment at issue in this appeal, it did not have the benefit of our recent precedential decision in Lone Star Silicon Innovations LLC v. Nanya Tech. Corp., 925 F.3d 1225, 1299 (Fed. Cir. 2019). Nor did the parties when they filed their appellate briefs. In Lone Star, we made clear that whether one qualifies as a patentee under 35 U.S.C. § 281 is a statutory prerequisite to the right to relief in a patent infringement action, but does not implicate the district court’s subject matter jurisdiction. There, we recognized that intervening Supreme Court precedent made clear that our earlier decisions treating the prerequisites of the Patent Act as jurisdictional were wrong. We expressly held that “[w]e therefore firmly bring ourselves into accord with Lexmark [Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014)] and our sister circuits by concluding that whether a party possesses all substantial rights in a patent does not implicate standing or subject-matter jurisdiction.” Lone Star, 925 F.3d at 1235–36. As long as a plaintiff alleges facts that support an arguable case or controversy under the Patent Act, the court has both the statutory and Case: 18-2416 Document: 60-2 Page: 10 Filed: 05/05/2020 10 SCHWENDIMANN v. ARKWRIGHT ADVANCED COATING constitutional authority to adjudicate the matter. Id. at 1235 (citing Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 128 n.4 (2014)). Because Ms. Schwendimann’s Complaint contained such allegations— that she is the owner by assignment of the ’845 patent and Appellants infringed that patent—there is no “standing” issue to be decided in this appeal. 6 6 The dissent disagrees and asserts that the Patent Act’s prerequisites must be treated as jurisdictional because the right to exclude has constitutional underpinnings. There are two problems with that contention. First, Lone Star states the opposite in a precedential decision. The dissent, like all subsequent panels, is bound by Lone Star. Second, not only has the Supreme Court made clear that virtually all statutory filing prerequisites are non-jurisdictional, see, e.g., Fort Bend Cty., Texas v. Davis, 139 S. Ct. 1843, 1846 (2019) (Title VII’s charge-filing instruction is non-jurisdictional); United States v. Kwai Fun Wong, 575 U.S. 402, 410 (2015) (“But traditional tools of statutory construction must plainly show that Congress imbued a procedural bar with jurisdictional consequences. In applying that clear statement rule, we have made plain that most time bars are nonjurisdictional.”); Union Pacific R. Co. v. Brotherhood of Locomotive Engineers and Trainmen General Comm. of Adjustment, Cent. Region, 558 U.S. 67, 82 (2009) (providing that the Clean Air Act’s instruction that, to maintain an objection in court on certain issues, one must first raise the objection “with reasonable specificity” during agency rulemaking, is non-jurisdictional), but it has held that the registration requirement in the Copyright Act is non-jurisdictional, see Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 157 (2010). The Copyright Act is no less tied to the Intellectual Property Clause in the Constitution than is the Patent Act. Case: 18-2416 Document: 60-2 Page: 11 Filed: 05/05/2020 SCHWENDIMANN v. ARKWRIGHT ADVANCED COATING 11 Thus, despite the way the parties have framed the issue in their briefing, the only questions we must decide are whether Ms. Schwendimann was a patentee at the time her action was filed and, if that status was conferred upon her by assignment, whether that assignment is reflected in a written instrument within the meaning of 35 U.S.C. § 261. We answer both questions in the affirmative. Under Title 35, only a “patentee” is permitted to pursue a patent infringement action, 35 U.S.C. § 281. A “patentee” includes “not only the patentee to whom the patent issued but also the successors in title to the patentee.” 35 U.S.C. § 100(d). “If the party asserting infringement is not the patent’s original patentee, the critical determination regarding a party’s ability to sue in its own name is whether an agreement transferring patent rights to that party is, in effect, an assignment or a mere license.” Lone Star, 925 F.3d at 1299 (internal quotation marks and citation omitted). “[A]n assignee is the patentee and has standing to bring suit for infringement in its own name.” Enzo APA & Son, Inc. v. Geapag A.G., 134 F.3d 1090, 1093 (Fed. Cir. 1998) (citing 35 U.S.C. § 100(d)). To confer patentee status to the assignee, an assignment must be documented in an “instrument in writing[,]” but there are no form or content requirements for the written instrument specified in the statute. 35 U.S.C. § 261; see id. (“Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing.”). In addition to the § 261 written instrument requirement of assignment, the plaintiff must have the legal title to the patent or patent application, which is determined by state law. See Enovsys LLC v. Nextel Commc’ns Inc., 614 F.3d 1333, 1342 (Fed. Cir. 2010) (“Who has legal title to a patent is a question of state law.” (citation omitted)); see also Jim Arnold Corp. v. Hydrotech Sys., Inc., 109 F.3d 1567, 1571 (Fed. Cir. 1997) (“It may seem strange at first blush that the question of whether a patent is valid and infringed ordinarily is one for federal courts, while the Case: 18-2416 Document: 60-2 Page: 12 Filed: 05/05/2020 12 SCHWENDIMANN v. ARKWRIGHT ADVANCED COATING question of who owns the patent rights . . . is a question exclusively for state courts. Yet that long has been the law.”). The assignment of a patent’s legal title is interpreted in accordance with contract statutes and common law in the state where the assignment took place, see Tri-Star Elecs. Int’l Inc. v. Preci-Dip Durtal SA, 619 F.3d 1364, 1367 (Fed. Cir. 2010), here Minnesota. Under Minnesota law, contracts are construed consistent with the parties’ intent and, where a written contract does not accurately reflect the parties’ intentions, a court may reform the contract to reflect the parties’ intentions. See Gartner v. Gartner, 74 N.W.2d 809, 812 (Minn. 1956). To reform a contract under Minnesota law, a party must provide proof that:
ties expressing their real intentions; (2) the written instrument failed to express the real intentions of the parties; and (3) this failure was due to a mutual mistake of the parties, or a unilateral mistake accompanied by fraud or inequitable conduct by the other party. Nichols v. Sherlard Nat’l Bank, 294 N.W.2d 730, 734 (Minn. 1980). B. Ms. Schwendimann Is the Owner of the ’845 Patent by Assignment The District Court concluded that, at the time she filed her Complaint, Ms. Schwendimann was a patentee entitled to sue for infringement of the ’845 patent because she is the assignee of the ’845 application and holds legal title to both that application and the subsequent ’845 patent. J.A. 36. Arkwright contends that the District Court clearly erred in reaching that conclusion because the ’845 application was assigned to ACT, not Ms. Schwendimann, at the time the infringement action was filed. Appellant’s Br. 29. We disagree and find that the District Court did not err. Case: 18-2416 Document: 60-2 Page: 13 Filed: 05/05/2020 SCHWENDIMANN v. ARKWRIGHT ADVANCED COATING 13 Arkwright does not seriously dispute the District Court’s finding that ACT intended to assign the ’845 application to Ms. Schwendimann at the time the application was filed. While Arkwright contends that the 2011 Assignment evidences that no assignment was intended in 2002 when the application was filed, all other evidence supports the District Court’s contrary conclusion. The District Court properly concluded that the assignment for the ’845 application granted legal title to Ms. Schwendimann. There was a valid agreement between Ms. Schwendimann and ACT. See Nichols, 294 N.W.2d at 734. Both ACT and Ms. Schwendimann confirmed that in 2002, ACT offered to assign the ’845 application to Ms. Schwendimann and she accepted that offer in exchange for the consideration that she agree not to file suit against ACT for her unpaid wages and sales commissions, as well as for her acceptance of ACT’s debt to SLW for the patent applications she was being assigned. J.A. 8661–62, 8664–65, 9601. Ms. Schwendimann’s conduct confirmed the contract, as she performed her portion of the agreement by not filing suit against ACT and satisfying the outstanding debts with SLW. J.A. 8688; see Holt v. Swenson, 90 N.W.2d 724, 728 (Minn. 1958) (“It is well settled that acceptance of an offer may be by conduct[.]”). Moreover, the Hand-Altered copy of the ’983 application shows that the parties informed counsel that an assignment was to be made, even if counsel did not accurately reflect the parties’ precise intentions. Finally, the Patents-in-Suit all listed Ms. Schwendimann as the assignee, without challenge by ACT for almost a decade before this litigation took place. J.A. 33. In light of all of this testimony, the District Court did not clearly err in concluding that the 2011 Assignment, taken in context with the testimony of Ms. Schwendimann and Mr. Nasser, merely reaffirmed the 2002 agreement. J.A. 8614–17. Perhaps recognizing the difficulty of debating the District Court’s findings with respect to what the parties intended in 2002, Arkwright primarily focuses on the writing Case: 18-2416 Document: 60-2 Page: 14 Filed: 05/05/2020 14 SCHWENDIMANN v. ARKWRIGHT ADVANCED COATING requirement of § 261. See generally Appellant’s Br., CrossAppellant’s Br. It argues that the District Court lacked the authority to reform the writing after the fact to reflect the parties’ understanding as of 2002 and that, if it did have that authority, the assignment would not be effective until the reformation actually occurred and the writing requirement was satisfied. We disagree on both points. We see nothing in § 261 or our case law interpreting the statute that specifies the type of writing that is necessary to convey an assignment of patent rights, nor do we see any reason why state law contract principles, including those pertaining to reformation, would not apply with equal force to such writings. Here, the District Court concluded that the written instrument that SLW provided to the PTO in connection with the ’845 application failed to express the real intention of the parties as of that date. The District Court found that the reason it failed to express the parties’ intentions was due to a mutual mistake of fact. J.A. 35; see J.A. 32–35. Accordingly, because all reformation requirements were met, see Nichols, 294 N.W.2d at 734 (requiring, for contract reformation: a “valid agreement between the parties expressing their real intentions”; a “written instrument [that] failed to express” those real intentions; and “this failure was due to a mutual mistake of the parties”), the District Court properly reformed the Hand-Altered Copy as an assignment for the ’845 application and determined that Ms. Schwendimann was the “patentee” as of the date that the handwritten instrument was submitted to the USPTO. J.A. 35; see Tri-Star, 619 F.3d at 1367 (explaining that a good-faith mistake does not deprive the assignment of its force and the standing it conveys); Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245, 1250– 51 (Fed. Cir. 2000) (holding that a licensing agreement conferred standing even though the license agreement included the wrong patent number because “substantial patent rights were transferred”). Case: 18-2416 Document: 60-2 Page: 15 Filed: 05/05/2020 SCHWENDIMANN v. ARKWRIGHT ADVANCED COATING 15 When a court reforms a contract, it simply assures that the written instrument properly reflects the parties’ agreement. The agreement was effective when made, not as of the date of the reformation. The written instrument requirement in § 261 does not define when the agreement occurs, it merely requires that some writing confirm the fact of assignment. By virtue of the reformation, the written instrument was corrected nunc pro tunc, to the point of the assignment. It is for these same reasons that the dissent’s reliance on our prior holdings in Paradise Creations, Inc. and Gaia Technologies is unpersuasive. See Dissent Op. at 4 (citing Paradise Creations, Inc. v. UV Sales, 315 F.3d 1304 (Fed. Cir. 2003); Gaia Techs., Inc. v. Reconversion Techs., Inc., 93 F.3d 774 (Fed. Cir. 1996)). Even putting aside the fact that both cases significantly predate Lone Star and the Supreme Court case law on which it relies, neither case involves a district court’s reformation of a contract, to properly reflect a valid, pre-existing transfer agreement. See Paradise Creations, 315 F.3d at 1309 (holding that a state corporate revival statute cannot retroactively confer Article III standing); Gaia Techs., 93 F.3d at 779 (holding that an assignment, executed on October 24, 1994, but which claimed to be effective “prior to Gaia’s filing of the instant suit,” was not sufficient to confer standing on Gaia). 7 The Hand-Altered copy is not a later license that the parties declare transferred rights as of some earlier effective date. The District Court’s reformation of the writing simply confirmed the earlier written transfer of the license—both the transfer and the writing predated the filing of the lawsuit. 7 Abraxis Bioscience, Inc. v. Navinta LLC, 672 F.3d 1239 (Fed. Cir. 2011) (denial of reh’g en banc) is distinguishable for the same reasons. Case: 18-2416 Document: 60-2 Page: 16 Filed: 05/05/2020 16 SCHWENDIMANN v. ARKWRIGHT ADVANCED COATING To understand this principle, it is helpful to consider an analogous context: reformation of written instruments that are subject to the statute of frauds. Restatement (Second) of Contracts discusses reformation for statute of frauds contracts—certain types of contracts that, under common law, must be executed in writing—and states: “If reformation of a writing is otherwise appropriate, it is not precluded by the fact that the contract is within the Statute of Frauds.” Restatement (Second) of Contracts § 156 (1981). The Restatement explains that the premise underlying this rule is that a writing evidencing an agreement may be reformed before it is subjected to the requirements of the Statute of Frauds because the Statute does not bar reformation in such a case. Moreover, Minnesota courts have applied reformation to deeds and contracts that require a written agreement. See, e.g., Olson v. Erickson, 44 N.W. 317, 318 (Minn. 1980); Olson v. Olson, No. C9-971978, 1998 WL 170111, at  (Minn. Ct. App. Apr. 14, 1998) (“Where a written contract fails, through mistake or fraud, to express the actual oral agreement, it may be reformed even though it comes within the statute of frauds.”). Following the Restatement’s logic, the assignment with the Hand-Altered Copy may be reformed before it is subjected to the requirements of § 261 because the statute does not bar reformation. Here, Ms. Schwendimann was the patentee by virtue of an assignment that occurred before the suit was filed. While the writing needed to satisfy § 261 had to be reformed, it suffices that reformation occurred before judgment was entered in the infringement action. Finally, despite the dissent’s arguments otherwise, our precedent does not suggest that in the context of agreements assigning existing patents, federal law governs the interpretation of these contracts. We recognize that, in the context of employment agreements assigning rights to future inventions, our decision in DDB Technologies v. MLB Advanced Media, 517 F.3d 1284 (Fed. Cir. 2008) established an exception to the general rule that state law Case: 18-2416 Document: 60-2 Page: 17 Filed: 05/05/2020 SCHWENDIMANN v. ARKWRIGHT ADVANCED COATING 17 governs the interpretation of assignment employment agreements. We have not held that such an exception should be extended to agreements assigning existing patents, especially where those assignments occur outside of the employment context. See, e.g., Enovsys, 614 F.3d at 1342; Larson v. Correct Craft, Inc., 569 F.3d 1319, 1327 (Fed. Cir. 2009) (holding that “questions of patent ownership are determined by state law”); Euclid Chem. Co. v. Vector Corrosion Techs., Inc., 561 F.3d 1340, 1343 (Fed. Cir. 2009) (“Construction of patent assignment agreements is a matter of state contract law.” (quoting Mars, Inc. v. Coin Acceptors, Inc., 527 F.3d 1359, 1370 (Fed. Cir. 2008))); MyMail, Ltd. v. Am. Online, Inc., 476 F.3d 1372, 1376 (Fed. Cir. 2007) (“[T]he only question is one of ownership. State law, not federal law, addresses such property ownership disputes.”). Accordingly, we find that the District Court did not err in concluding that (1) Ms. Schwendimann was a patentee at the time of her Complaint; and (2) as of that same time there was a valid agreement between ACT and Ms. Schwendimann in 2002 to assign the ’845 application to Ms. Schwendimann and make her the patentee within the meaning of 35 U.S.C. § 281. For all of these reasons, we reject Arkwright’s claim that the lower court judgment must be set aside because Ms. Schwendimann was not a patentee entitled to pursue infringement claims relating to the ’845 patent at the time this action was filed.