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An Assignment Transferring “Any and All” CIPs of a Patent Is Ambiguous and May Exclude a CIP of the Patent That Issued Before the Assignment Was Executed

April 01, 2009

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Last Month at the Federal Circuit - May 2009

Judges: Newman (concurring-in-part and dissenting-in-part), Lourie, Linn (author)

[Appealed from: N.D. Ohio, Judge Boyko]

In Euclid Chemical Co. v. Vector Corrosion Technologies, Inc., No. 08-1170 (Fed. Cir. Apr. 1, 2009), the Federal Circuit vacated the district court’s grant of partial SJ that U.S. Patent No. 6,217,742 (“the ’742 patent”) was assigned to Vector Corrosion Technologies, Inc. (“Vector”). The Court also vacated the district court’s holding that Euclid Chemical Company (“Euclid”) abandoned its claim that it was a bona fide purchaser of the ’742 patent. Euclid brought a DJ action concerning patents purportedly owned by Vector. Euclid sought DJ that a December 20, 2001, agreement (“the Assignment”) did not transfer the ’742 patent to Vector and that Euclid was a bona fide purchaser for value of the ’742 patent. Vector moved for partial SJ that it owned by assignment the ’742 patent.

The Assignment states that Vector was assigned the inventor’s “US, Canadian, and European applications for patents and issued US patent, namely,” U.S. Patent No. 6,033,553 (“the ’553 patent”) and “any and all . . . continuations in part together with the entire right, title and interest in and to said applications, any and to all divisional applications, continuations, and continuations in part thereof, . . . and any and all Letters Patent which may issue or be reissued for said invention . . . .” Slip op. at 3-4. At the time of the Assignment, the ’742 patent had already issued from a CIP of the ’553 patent.

The district court granted Vector’s motion for partial SJ, holding that the plain and unambiguous language of the Assignment transferred all rights in the ’553 patent and any and all CIPs thereof (including the ’742 patent) to Vector. Furthermore, because the district court held that the Assignment was unambiguous, it concluded that, under Ohio law, it could not consider extrinsic evidence to interpret the Assignment.

On appeal, the Federal Circuit began by noting that there were at least two reasonable interpretations of the language of the Assignment. Under one interpretation, the Assignment included the ’742 patent because it issued from a CIP of the ’553 patent. However, the Federal Circuit also explained that the Assignment included language that excluded the ’742 patent because it was already an issued patent, not an application, at the time of the Assignment. In particular, the Court noted that the Assignment referred to “applications” (plural) but to “issued U.S. patent” (singular).

The Court stated that “[h]ad the assignee intended, through the assignment of ‘continuations in part’ to assign other issued U.S. patents, it would be expected that the Assignment would have said that the inventor was assigning his ‘issued US patents’—plural—and even recited the patent number of the issued ’742 patent.” Id. at 7.

Based on the Federal Circuit’s finding that the Assignment was susceptible to at least two reasonable interpretations, the Court held that the Assignment was ambiguous under Ohio law; thus, the district court should have considered extrinsic evidence to ascertain the parties’ intent. Accordingly, the Court reversed the district court’s grant of SJ and remanded for a determination of whether the Assignment, interpreted in light of relevant extrinsic evidence, transferred ownership of the ’742 patent to Vector.

With respect to the district court’s holding that Euclid abandoned its bona fide purchaser claim, the Federal Circuit explained that the facts upon which the district court relied in its decision did not support this holding. In particular, the Court found that Euclid’s failure to move for SJ on the bona fide purchaser claim did not indicate an intent to abandon that claim. Furthermore, the Court noted that Euclid was under no obligation to address its bona fide purchaser argument in detail in its opposition to Vector’s motion for SJ. Accordingly, the Court also vacated the district court’s holding that Euclid abandoned its bona fide purchaser claim and remanded for further proceedings.

In a separate opinion, Judge Newman concurred-in-part and dissented-in-part. Judge Newman agreed that the district court erred in its grant of SJ, but dissented from the majority’s decision that the issue of contractual intent requires trial. In Judge Newman’s opinion, it is clear that the only reasonable construction of the assignment agreements is that they assigned the specifically listed ’553 patent and did not assign the previously issued yet unlisted ’742 patent for a different invention. Accordingly, Judge Newman would hold that the ’742 patent was not assigned.