Patent Law

Successor Company Holds Patents Assigned to Predecessor Company (Even if Assigned after Predecessor Dissolved)

By Dennis Crouch

Tri-Star Electronics Int'l. v. Preci-Dip Durtal SA (Fed. Cir. 2010)

Mr. Kerek (from Ohio) invented the claimed 'socket contact' while an employee of Tri-Star and he duly executed an assignment of his rights to to Tri-Star.  The year prior to the invention, Tri-Star (OHIO) had merged and become Tri-Star (CALIFORNIA).  However, Kerek's assignment clearly stated that the assignment of rights was to Tri-Star (OHIO) — even though that Ohio company no longer existed. Later, Tri-Star (CALIFORNIA) merged and became Tri-Star (DELAWARE).

Here, the accused infringer has challenged whether Tri-Star (DELAWARE) has standing as owner of the patent rights.  The Federal Circuit accepted this interlocutory appeal and held that Tri-Star (DELAWARE) is the owner of the patent rights.  

In making its decision, the Federal Circuit found two points of law important:

First, contract law attempts to satisfy the mutual intent of the parties, and here, it was clear that the employee had intended to transfer rights to his employer as required by the employment contract.

Second, even after a merger, a predecessor company continues to exist under Ohio law for the purposes of allowing its property to vest.

Based on these two points, the Federal Circuit held that the stated transfer to the merged Tri-Star (OHIO) equated to a transfer to its successor Tri-Star (CALIFORNIA). The later transfer to Tri-Star (DELAWARE) was not disputed.

* * * * *

I have no problem with the Federal Circuit's statements regarding Ohio law — it is correct as far as I know. However, I do have some concern with the ongoing fallacy that there is no Federal law or policy controlling the transfer of patent rights. On point, there is a Federal Law requiring that patent assignments be done 'in writing.' 35 U.S.C. 261. Based on that statute, the court should have considered how the supposed transfer from Kerek to Tri-Star (CALIFORNIA) fits within that statutory requirement. In addition, we have seen an increasing number of companies playing games with the patent recordation system by using shell corporations and by mis-recording assignment records. Here, for instance, the assignment record showed ownership by Tri-Star (CALIFORNIA) despite the documentation in the underlying assignment.  Those concerns are important — especially if we believe that the public properly has an interest in knowing the identity of patent owners.

Full post as published by Patently Obvious on September 14, 2010 (boomark / email).