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Ownership of a Patent May Be Changed by Operation of Law Such as State Probate Law or Japanese Law

March 31, 2008

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Last Month at the Federal Circuit - April 2008

Judges: Newman, Archer (author), Linn

[Appealed from: C.D. Cal., Judge Selna]

In Akazawa v. Link New Technology International, Inc., No. 07-1184 (Fed. Cir. Mar. 31, 2008), the Federal Circuit vacated the district court’s grant of SJ to Link New Technology International, Inc. (“Link”) based on lack of standing and remanded. The Court found that issues of Japanese intestacy law had to be resolved by the district court to determine whether Akira Akazawa (“Akira”) owned U.S. Patent No. 5,615,716 (“the ’716 patent”) and, therefore, possessed standing to bring the lawsuit.

Yasumasa Akazawa (“Yasumasa”), a Japanese citizen, is the only named inventor of the ’716 patent. Yasumasa was the sole owner of the patent until his death. He did not have an executed will when he died. Thus, under Japanese law, Hitomi Akazawa (“Hitomi”), Yuki Akazawa (“Yuki”), and Fumi Akazawa (“Fumi”), his wife and daughters respectively, are Yasumasa’s only heirs. In an “Inheritance Agreement,” the daughters assigned their interest in the ’716 patent to their mother, Hitomi, who executed an assignment transferring all rights in the patent to Akira.

In 2003, Akira and Palm Crest, Inc. (“Palm”) brought suit against Link for infringement of the ’716 patent. Link moved for SJ on the basis that Akira did not have standing to file the suit. The district court noted that Japanese law may determine to whom the ’716 patent could be transferred upon Yasumasa’s death, but that the Patent Act determined the manner by which the assignment must be made. It found that when Yasumasa died, title to the ’716 patent was held by his estate until properly assigned in writing by the legal representative of the estate and that it was Akira’s burden to prove that such a writing existed or that some other chain of title gave Akira ownership of the ’716 patent. The district court held that Akira had not met his burden and granted SJ to Link. In so holding, the district court relied on 35 U.S.C. § 261, which states that “[a]pplications for patent, patents, or any interests therein, shall be assignable in law by an instrument in writing.” Akira and Palm appealed.

On appeal, the Federal Circuit noted that the district court’s focus on section 261 was erroneous. The Court observed that 35 U.S.C. § 154(a)(1) states that “[e]very patent shall contain a short title of the invention and a grant to the patentee, his heirs or assigns, . . . .” The Court reasoned that while section 261 requires assignments to be in writing, “there is nothing that limits assignment as the only means for transferring patent ownership.” Slip op. at 4. It explained that “ownership of a patent may be changed by operation of law.” Id. It noted that patent title may be transferred according to state probate law and that state law, not federal law, typically governs patent ownership. The Court determined that applying this principle to the present case would require looking to foreign law, as opposed to state law, because Yasumasa was a resident of Japan at the time of his death. Thus, the Court noted that “interpreting Japanese intestacy law, not United States patent law, [was] the first step in determining whether Akira possessed standing to bring the present suit.” Id. at 7.

The Court determined that the translation of Japanese intestacy law suggested that at the time of Yasumasa’s death, Hitomi, Yuki, and Fumi became owners of the ’716 patent. However, noted the Court, whether an administrator was required under Japanese law, the role of such an administrator, and whether the existence of an administrator would affect the transfer of the ’716 patent to Yasumasa’s heirs was less clear. Rather than decide these issues in the first instance on appeal, the Court vacated the district court’s grant of SJ and remanded.