Post-Suit Reformation of a Flawed Assignment Can Support Federal Standing

In Schwendimann v. Arkwright Advanced Coating, Inc., Nos. 2018-2416, 2019-1012 (Fed. Cir. May 13, 2020), a divided Federal Circuit held that a district court’s post-suit reformation of a flawed assignment could grant the plaintiff standing to sue.

Schwendimann filed a complaint against Arkwright, alleging infringement of several patents that Schwendimann believed Arkwright had assigned to her as part of a debt settlement agreement.  Arkwright moved to dismiss, arguing that Schwendimann lacked standing because one assignment, by error, referenced a different patent number.  Schwendimann moved for summary judgment, arguing that there was no genuine dispute that the patent had been assigned. The district court granted Schwendimann’s motion, finding the patent had been assigned to Schwendimann notwithstanding the fact that the assignment referred to the wrong patent.  Arkwright appealed after a jury found that Arkwright had willfully infringed the patent. 

On appeal, the Federal Circuit held that whether a party possesses rights in a patent implicates neither standing nor subject matter jurisdiction—referencing Lone Star Silicon Innovations LLC v. Nanya Tech. Corp., 925 F.3d 1225 (Fed. Cir. 2019).  The Court thus had only to decide whether Schwendimann was a patentee when she filed her complaint and, if her patentee status was conferred upon her by assignment, whether that assignment was part of a “written instrument” under 35 U.S.C. § 261.  To answer the first question, the Court looked to Minnesota contract law.  Under that law, a court may reform a contract to accurately reflect the parties’ intentions.  Because Arkwright and Schwendimann had entered into an agreement contemplating that the patents would be assigned, the Federal Circuit held that the district court properly concluded that the agreement granted legal title to Schwendimann.  In answering the second question, the Court explained that the reformation did not impact the analysis as the reformed contract is considered effective as of the date it was originally made, not the date of the reformation.  The reformation merely revises the contract to reflect the parties’ intent.  The Court further noted that 35 U.S.C. § 261 does not have a requirement for when the agreement occurs.  Thus, the Federal Circuit held that the district court did not err in finding that the reformed agreement satisfied the “written instrument” requirement of 35 U.S.C. § 261.

Judge Reyna dissented.  In his view, Schwendimann did not have Article III standing at the time of filing her claim.  Judge Reyna wrote that a district court’s post-suit reformation of a flawed assignment, pursuant to state law, cannot cure a plaintiff’s lack of Article III standing.