Equitable Claim to Patent Title Insufficient for Standing

In a patent infringement case brought by the widow of one of two named co-inventors, the U.S. Court of Appeals for the Federal Circuit affirmed the district court’s dismissal for lack of standing after concluding that an unsigned agreement created no more than an equitable claim to title in the patent.   Gellman v. Telular Corp., et al., Case No. 11-1196 (Fed. Cir., Nov. 30, 2011) (Clevenger, J.). 

Ms. Tobi Gellman, a trustee of the Mayer Michael Lebowitz Trust (the trust), and widow of one of the co-inventors of the patent in question, M. M. Lebowitz, claimed that the trust was the sole legal owner of the   patent.  She offered an unsigned “Agreement for Consulting Services” along with other circumstantial evidence in an attempt to demonstrate that James Seivert, the second named co-inventor of the patent, was a consultant of a company Mayer Lebowitz operated called Cellular Alarm Systems. 

The relevant portion of the unsigned agreement between Seivert and Cellular Alarm stated as follows: 

[A]ny and all ideas, discoveries, inventions, [etc.] . . . developed, prepared, conceived, made, discovered or suggested by [Mr. Seivert] when performing services pursuant to this Agreement . . . shall be and remain the exclusive property of Cellular Alarm.  [Seivert] agrees to execute any and all assignments or other transfer documents which are necessary, in the sole opinion of Cellular Alarm, to vest in Cellular Alarm all right, title, and interest in such Work Products.  (emphasis added). 

According to Ms. Gellman, the terms of the unsigned agreement effectuated a full transfer of Seivert’s rights to any inventions, including any legal claims to the patent in suit.  After the district court rejected Gellman’s arguments as lacking evidentiary support and misapplying the law Gellman appealed.

At the Federal Circuit, Gellman argued that in order for the invention to “remain” the property of Cellular Alarm, it necessarily had to have been previously conveyed.   The Federal Circuit disagreed, however, stating that read in context the word “remain” “indicates that Mr. Seivert’s contributions to inventions ‘remained’ in equitable status until such a time as Mr. Seivert ‘executed[d] any and all assignments or other transfer documents which are necessary … to vest in Cellular Alarm all right, title and interest’ in such inventions.”  Reading the clause any other way would render meaningless the language “execute any and all assignments.” 

The Federal Circuit thus concluded that “[t]he most the Unsigned Agreement could do is create an obligation for Mr. Seivert to assign to Cellular Alarm.”   The Court rejected Gellman’s argument based on the “hired to invent” doctrine on the same basis.  According to the Court, to the extent the unsigned agreement created an equitable claim in the patent, it could be converted to legal title either when Seivert actually assigned ownership or by legal action. 

Because not all legal owners of the patent were properly joined in the lawsuit, the Federal Circuit affirmed the district court’s dismissal for lack of standing.  In so doing, the Court rejected the appellees’ contention that the dismissal should have been “with prejudice” and denied appellees’ motion for damages and costs. The Court declined to reach the issue of whether the Unsigned Agreement amounted to an enforceable contract that was subject to 35 U.S.C. § 261, which requires assignments of patent interests to be in writing.

Practice Note:   A present assignment of future rights must expressly undertake the actual assigning act at the time of the agreement.