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Assignment of “Inventions and Discoveries” Disclosed in an Application Also Assigned Unrelated Application Covered by the Disclosure

10-1287
August 10, 2011
Rodkey, Kevin D.

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Last Month at the Federal Circuit - September 2011

Judges: Rader, Gajarsa (author), Prost

[Appealed from: E.D. Tex., Judge Ward]

In MHL Tek, LLC v. Nissan Motor Co., Nos. 10-1287, -1317, -1318 (Fed. Cir. Aug. 10, 2011), the Federal Circuit affirmed the district court’s decision that MHL Tek, LLC (“MHL”) lacked standing to assert two patents-in-suit, reversed the district court’s decision that MHL had standing to assert the third patent-in-suit, and vacated the district court’s decision granting SJ of noninfringement relating to the third patent-in-suit.

MHL sued Nissan Motor Co. (“Nissan”) and several other defendant automobile manufacturers (collectively the “defendants”), alleging infringement of U.S. Patent Nos. 5,663,496 (“the ’496 patent”); 5,741,966 (“the ’966 patent”); and 5,731,516 (“the ’516 patent”) (collectively “the patents-in-suit”). The patents-in-suit relate to tire pressure monitoring systems (“TPMS”) and have the same inventors. A TPMS monitors a tire’s pressure and transmits pressure information to the vehicle’s operator. Both the ’496 and ’966 patents are divisionals of U.S. Patent Application No. 08/101,379 (“the Parent Application”). The later-filed ’516 patent is not related to either of the two other patents-in-suit or the Parent Application.

The ’496 patent generally claims a sensor inside of the tire that generates a signal related to the tire’s pressure and transmits the signal along a communications link to a receiver. The communications link allows the pressure signal to travel along the conductive components of the car. The preferred embodiment includes a piezo-resistive power source allowing for reduced energy expenditures when the tires are stationary. The ’966 patent has similar claims to the ’496 patent with the addition of a “processor control command” that allows remote-controlled command entry. The ’516 patent claims a TPMS in which all of the components are contained within a “cylindraceous housing” and together measure tire pressure and allow the signal to be transmitted.

Shortly after the Parent Application was filed, the inventors executed an assignment to Animatronics Inc. (“Animatronics”) assigning “the entire right, title and interest, domestic and foreign, in and to the inventions and discoveries in [the Parent Application]” to Animatronics. Slip op. at 10 (alteration in original) (citation omitted). Animatronics subsequently assigned “the entire right, title and interest, domestic and foreign, in and to the inventions and discoveries set forth in the [Parent] Application” to McLaughlin Electronics (“ME”). Id. (alteration in original) (citation omitted). The assignment from Animatronics to ME contained a carve out provision that the assignment “shall not cover any rights to the [Parent] Application that concern the Animatronics Proprietary Inventions.” Id. (alteration in original) (citation omitted). Instead, pursuant to a development agreement between ME and Animatronics, Animatronics had an exclusive, irrevocable, royalty-free license to use the Animatronics Proprietary Inventions to make, use, and sell the TPMS, which did not prevent Animatronics from using the Animatronics Proprietary Inventions to make, use, and sell other non-TPMS products. The Animatronics Proprietary Inventions included “(1) the Communications Link; (2) a radio frequency transceiver and algorithm used in the Service Unit and Sensor Unit; and (3) a peizo [sic] resistive rubber pressure sensor for use in the Sensor Unit.” Id. at 11 (alteration in original) (citation omitted). Eventually, Animatronics and ME disputed ownership of the ’496 and ’966 patents under the development agreement, but the dispute was never resolved.

Fourteen years later, the inventors of the patents-in-suit purported to assign the patents-in-suit to MHL. MHL then brought a first suit against the defendants alleging patent infringement. Shortly thereafter, Animatronics purportedly assigned the patents-in-suit to MHL and MHL filed a second suit against the defendants in March 2008. The district court eventually dismissed MHL’s claims relating to the ’496 and ’966 patents for lack of standing, holding that the ’496 and ’966 patents were not subject to the carve out provision of the license and therefore were assigned from Animatronics to ME. The district court then determined that the defendants did not infringe the asserted claims of the ’516 patent. Both parties appealed.

On appeal, the Court first reviewed the scope of the assignment from Animatronics to ME and rejected ME’s argument that the ’496 and ’966 patents were subject to the carve out provision, which concerned the Animatronics Proprietary Inventions. The Court determined that the Communications Link in the assignment was a “system,” whereas the ’496 patent defined the communications link as an electromagnetic path. The Court stated that MHL’s argument confused the patent specification with the patent assignment, which controls the scope of the assignment. The Court noted that MHL did not argue that the ’496 patent claims covered the Communications Link of the patent assignment, even though one claim did include some components of the Communications Link. Rather, the Court agreed with the district court that the ’496 patent claimed a TPMS. The Court held that MHL had not met its burden of showing that the claims of the ’496 patent cover the Communications Link and, therefore, MHL lacked standing to assert the ’496 patent.

Turning next to the ’966 patent, the Court rejected MHL’s argument that the claims of the ’966 patent cover the “Service Unit and its RF Link,” and are therefore subject to the carve out provision. The Court noted that the carve out provision covers only a “radio frequency transceiver and algorithm used in the Service Unit and Sensor Unit,” and that the communications link claimed in the ’966 patent was not used in the Sensor Unit. The Court observed that the communications link was at most used with the Service Unit and not used in it, and was therefore not subject to the carve out provision.

Next, the Court addressed MHL’s argument that the ’966 patent claims the piezo-electric elements of the Animatronics Proprietary Inventions and is therefore subject to the carve out provision. The Court rejected this argument, noting that the carve out provision does not use the phrase “piezo electric.” Rather, the Court observed that Animatronics reserved the rights to a “peizo [sic] resistive rubber pressure sensor for use in the Sensor Unit.” Id. at 17 (alteration in original) (citation omitted). The Court determined that the piezo-resistive element of the carve out provision is a pressure sensor, whereas the claimed piezo-electric element supplies power. Furthermore, the Court noted that the ’966 patent does not describe a rubber piezo-resistive element. Therefore, the Court held that MHL lacked standing to assert the ’496 and ’966 patents.

Finally, the Court addressed MHL’s standing to sue under the ’516 patent. The Court noted that the inventors assigned the entire right, title, and interest “in and to the inventions and discoveries” in the Parent Application, and that similar language was used in assignment from Animatronics to ME. The Court rejected MHL’s argument that the ’516 patent is not subject to the assignment because it is not related to the Parent Application. The Court determined that the language of the assignment was not so narrow because it assigns “inventions and discoveries” disclosed in the Parent Application without requiring them to be in patents or applications related to the Parent Application. The Court further noted that the file history of a divisional application related to the ’516 patent stated that the inventors had assigned the application to Animatronics, expressing the view that the assignment covered more than applications related to the Parent Application. The Court then compared the claims of the ’516 patent to the specification of the Parent Application and stated that if the Parent Application reasonably conveyed to those skilled in the art the invention of the ’516 patent, then the ’516 patent had been assigned to Animatronics, then to ME. Findings that all of the elements of the claims of the ’516 patent were disclosed in the Parent Application, the Court determined that the ’516 patent had been assigned to Animatronics and was not subject to the carve out provision. The Court held that because the ’516 patent was assigned from the inventors to Animatronics, then to ME, MHL lacked standing to assert the ’516 patent.

Because MHL lacked standing to assert any of the patents-in-suit, the Court vacated the grant of SJ for noninfringement regarding the ’516 patent.

Summary authored by Kevin D. Rodkey, Esq.