December 08, 2015

Do the Paperwork: How Properly Executing Patent Assignments Can Win Your Case

Properly prepared patent assignments and IP assignment clauses in employment agreements can play a critical role in an IPR proceeding — for example, by preventing your own patent applications from becoming invalidating prior art under 35 U.S.C. § 103(c).

In Marvell Semiconductor, Inc. v. Intellectual Ventures I LLC, Intellectual Ventures (the patent owner) faced an obviousness challenge to one of its patents, based primarily on an earlier filed patent that was prior art under section 102(e). In response, the patent owner sought to disqualify that prior art patent under section 103(c). That section makes clear that such prior art “shall not preclude patentability” when the prior art and the patent at issue were “at the time the claimed invention was made, owned by the same person or subject to an obligation of assignment to the same person.” However, the patent owner in this case faced several significant evidentiary hurdles to disqualify that prior art, including a complicated corporate holdings structure, non-existent assignment records and conflicting evidence. Even though the patent owner was ultimately successful, this case came down to an interpretation of Florida common law to determine whether section 103(c) applied, because of the lack of clear assignment documents and employment agreements.

Thus, Marvell Semiconductor illustrates the wisdom in crafting and continuously executing an assignment strategy for patent assets, and how the right strategy will protect patent owners from being challenged with their own patents in IPR proceedings.

The Facts of Marvell Semiconductor

Marvell Semiconductor (the petitioner) filed a petition challenging the validity of U.S. Patent No. 6,754,195 (the ’195 Patent), which lists two inventors: Mark A. Webster and Michael J. Seals. The primary reference for their petition was U.S. Patent No. 7,274,652, which also lists Webster as one of the inventors (the Webster patent). The Webster patent was filed less than a month before the ’195 Patent, making it prior art under section 102(e). The petitioner asserted that the Webster patent, combined with other prior art, rendered the challenged claims of the ’195 Patent obvious under 35 U.S.C. § 103.

In response, the patent owner sought to disqualify the Webster patent as prior art pursuant to section 103(c), and the case quickly focused on one issue: whether Webster and Seals, at the time of the invention of the ’195 Patent, had assigned or were under an obligation to assign the ’195 patent to the “same person” that owned the Webster Patent. This issue became even more complicated as the “person” at issue was a complex corporation with multiple subsidiaries that changed their names around the key dates at issue in the case. In view of this complexity, the Patent Trial and Appeal Board (PTAB) granted the patent owner’s request for additional discovery to show common ownership, including depositions of Webster and Seals, and a production of documents from the corporation.

Despite the grant of additional discovery, the patent owner was unable to prove the existence of a written assignment for the ’195 patent during the critical time period and was also unable to prove the existence of an employment agreement requiring Webster and Seals to assign the ’195 patent to their employer. Thus, because of the lack of executed assignments or employment agreements, the Webster patent seemed poised to invalidate the ’195 Patent.

Fortunately for the patent owner in this case, the PTAB ultimately found that Florida state common law obligated Webster and Seals to assign the ’195 Patent to the same subsidiary that owned the Webster patent. In particular, and after wrestling with the complex corporate structure and conflicting evidence, the PTAB found that both Webster and Seals were employed by the subsidiary that owned the Webster patent at the time of the invention of the ’195 Patent. The PTAB further concluded that the nature of their employment, under Florida law, created an obligation to assign their patent to that entity. As a result, the Webster patent was disqualified as prior art to the ’195 Patent.

Undeterred, at oral argument the petitioner referred to an assignment document, executed by Webster and Seals, that purported to assign their rights in the ’195 Patent to a different subsidiary. However, the PTAB concluded that with this assignment, the inventors were simply “assigning whatever rights they held in the invention to the assignee.” As a result, this assignment “does not conflict” with the inventor’s earlier obligation to assign the ’195 Patent to their employer under Florida common law, and the PTAB was able to sidestep the issue of whether assigning patents to different subsidiaries will negate the effects of section 103(c).

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