Opinion ID: 1320748
Heading Depth: 1
Heading Rank: 3

Heading: Standing to Assert the '346 Patent

Text: Appellants challenge the Commission's finding that Global Locate had standing to assert the '346 patent. The question of standing to assert a patent claim is jurisdictional, and we review that question de novo. Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1551 (Fed.Cir.1995). However, we review underlying factual determinations upon which a conclusion of standing is based for substantial evidence. See Finnigan Corp. v. Int'l Trade Comm'n, 180 F.3d 1354, 1361-62 (Fed.Cir.1999). Absent the voluntary joinder of all co-owners of a patent, a co-owner acting alone will lack standing. DDB Techs., L.L.C. v. MLB Advanced Media, L.P., 517 F.3d 1284, 1289 (Fed.Cir.2008) (citing Isr. Bio-Eng'g Project v. Amgen, Inc., 475 F.3d 1256, 1264-65 (Fed.Cir.2007)) (internal quotation marks omitted). This rule applies equally in ITC investigations. [4] The '346 patent is directed to signal correlation and the named inventors are Charles Abraham and Donald L. Fuchs. The patent names Global Locate as the assignee. At issue is whether Magellan Corporation (Magellan) is a co-owner of the '346 patent. If Magellan is a co-owner, Global Locate lacks standing to assert the '346 patent absent joinder of Magellan. The question of whether Magellan is co-owner of the patent depends on whether one of the inventors (Abraham) assigned his interest in the patent to Magellan. Abraham conceived of the subject matter of the '346 patent in October of 1999 while employed at Magellan. In 1996, Abraham had entered into an employee inventions agreement with Ashtech, Inc. (Ashtech) (a predecessor to Magellan) which assigned to Ashtech all inventions... which are related to or useful in the business of the Employer ... and which were ... conceived ... during the period of the Employee's employment, whether or not in the course of the Employee's employment. Final Determination, slip op. at 6. Apparently, Ashtech merged with Magellan in 1997. While the record is unclear, it appears likely that Abraham's agreement with Ashtech was assigned to the merged company (which retained the name Magellan). Abraham testified that at the time of conception of the invention, he was still subject to the original Ashtech agreement. Abraham separated from Magellan in February 2000 and then joined Global Locate. In May of 2001, he and his co-inventor applied for the '346 patent, which was eventually assigned to Global Locate. Initially, we conclude that the Abraham/Ashtech agreement provided for automatic assignment. The question of whether or not an agreement provides for automatic assignment is a matter of federal law. DDB Techs., 517 F.3d at 1290. If the contract expressly grants rights in future inventions, `no further act [is] required once an invention [comes] into being,' and `the transfer of title [occurs] by operation of law.' Id. (quoting FilmTec Corp. v. Allied-Signal Inc., 939 F.2d 1568, 1573 (Fed.Cir.1991)). Here, the agreement provides that [t]he Employee assigns all of his or her right, interest, or title in any Invention to the Employer to the extent allowed by law. Final Determination, slip op. at 6. By using the language Employee assigns, the employee-assignment agreement expressly grants rights with no further action needed on the part of the employee. Therefore the provision is one of automatic assignment. See DDB Techs., 517 F.3d at 1290 & n. 3 (finding automatic assignment where the agreement used the present, automatic language agrees to and does hereby grant and assign). The question remains whether the invention is related to or useful in the business of the Employer within the meaning of the agreement. That question is a matter of state lawhere, California law. See id. at 1290. Neither the agreement nor the California Labor Code specifies what it means for an invention to be related to or useful in the business of the Employer. The terms related to and useful in are inherently ambiguous. Under California law, when a contract is ambiguous, [e]xtrinsic evidence is admissible to prove a meaning to which the contract is reasonably susceptible. Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc., 109 Cal.App.4th 944, 955, 135 Cal.Rptr.2d 505 (2003). Such extrinsic evidence may include evidence of the nature of the employer's business and the nature of the employee's work for the employer, as well as evidence of the conduct of the parties, i.e., evidence probative of whether or not they regarded the invention as falling within the agreement. See DDB Techs., 517 F.3d at 1292; see also 11 Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts § 32:14 (4th ed. 1999) ([T]he parties' own practical interpretation of the contracthow they actually acted, thereby giving meaning to their contract during the course of performing itcan be an important aid to the court.). Here, as in DDB Technologies, resort to extrinsic evidence... is necessary to determine whether the [contract] provision applies. DDB Techs., 517 F.3d at 1292. The Commission, in concluding that Global Locate has standing to assert the '346 patent, found that there was no evidence that the invention of the '346 patent was `related to or useful in' its business. Final Determination, slip op. at 8-9. In reaching this conclusion, the Commission pointed out that none of the evidence to which [appellants] have cited relates the specific invention of the '346 patent to any particular aspects of Magellan's business. Id. at 7. The Commission also relied on the fact that [i]n light of Magellan's awareness of the invention of the '346 patent and its failure to assert ownership of the invention at any time, ... Magellan itself did not consider the invention of the '346 patent `related to or useful in' its business within the meaning of ... the employee inventions agreement. Id. at 8. All parties agree that Global Locate had the burden to establish standing. Global Locate attempted to satisfy this burden by showing that Abraham and Fuchs, the inventors, had assigned the patent to Global Locate, and that Global Locate is shown as the assignee of the patent as issued. [5] The question is whether Global Locate also had the burden of establishing that an interest in the patent had not been previously assigned by Abraham to Magellan. We think that that the Commission properly found that that burden rests with the appellants. [6] The recording of an assignment with the PTO is not a determination as to the validity of the assignment. See 37 C.F.R. § 3.54. However, we think that it creates a presumption of validity as to the assignment and places the burden to rebut such a showing on one challenging the assignment. Such an understanding is consistent with and supported by the provisions of 35 U.S.C. § 261. That section provides that the recordation of an assignment with the PTO can be the basis for a bona fide purchaser defense (An assignment, grant or conveyance shall be void as against any subsequent purchaser or mortgagee for a valuable consideration, without notice, unless it is recorded in the Patent and Trademark Office within three months from its date or prior to the date of such subsequent purchase or mortgage.). Given that the burden of proof on this issue rested with appellants, we think that the Commission's determination that appellants have not sustained their burden is supported by substantial evidence. Because the phrase related to or useful in is inherently ambiguous, the Commission was correct in looking to the parties' own interpretation of this language as being determinative. Here, there is evidence that the parties indeed interpreted the agreement in a way that is fatal to appellants' interpretation. In June of 2000, Magellan sued Global Locate as well as Abraham personally (one of the named inventors of the '346 patent) for trade secret misappropriation. At the time of the litigation, Abraham had already commenced working for Global Locate, and apparently had assigned his rights to the '346 invention to Global Locate. The litigation was concluded by settlement in March of 2001. At the time of settlement, the application for the '346 patent had not been filed, and the rights to the patent were not directly involved in the trade secret action. Abraham's agreement with Magellan or Ashtech covered not only patented inventions, but also inventions that were not patented (including inventions represented by trade secrets) that were related to or useful in the business of the Employer. See Final Determination, slip op. at 6. During the litigation, Magellan was provided with documents prepared by Abraham while at Magellan relating to the conception of the subject matter of the '346 patent. As part of the settlement agreement, although there was no compensation flowing from Magellan to Global Locate, Magellan and Abraham appeared to recognize that Global Locate was the owner of the invention in question, stating that nothing in this Agreement shall preclude Global Locate from using any of the following technical concepts: ... (vi) Shortening the signal shift register (with the number of bits being divisible into 1023). Initial Determination, slip op. at 39. The parties agree that this is the technology involved in the asserted claims of the '346 patent. Id. If Magellan and Abraham recognized that Global Locate was the owner of the trade secret rights to the invention, it logically follows that Magellan and Abraham did not think that Magellan was the owner of similar rights that eventually became the subject of the '346 patent. Further, following the settlement, Magellan informed one of its customers that after a diligent examination of information produced during discovery, there was no evidence of trade secret misappropriation by Global Locate and Abraham. J.A. 13,516. If Magellan had owned the invention, the disclosure of its trade secrets by Abraham to Global Locate would have been misappropriation. It is therefore reasonable to conclude that during the trade secret litigation, Magellan determined that it was not the owner of the invention. In sum, we find that there is substantial evidence to support the Commission's finding that Global Locate had standing to assert the '346 patent.