Problems with Assignment Agreement Leads to Lack of Standing

Author: Hojung Cho Ph.D.
Editor: Lauren J. Dreyer

In Diamond Coating Technologies v. Hyundai Motor America, Nos. 2015-1844, -1861 (Fed. Cir. May 17, 2016), the Federal Circuit affirmed the district court’s decision that Diamond lacked standing to pursue an infringement action without joining the original assignee of the patents-in-suit, Sanyo Electric Co., Ltd. The Court found that the original agreement between Diamond and Sanyo did not convey all of the substantial rights in the patents-in-suit to Diamond. The Federal Circuit focused on two problems with the assignment agreement: (1) the agreement did not grant Diamond a right to practice the patents-in-suit and instead vested that right in Sanyo; and (2) the agreement allowed Sanyo to retain significant control over Diamond’s enforcement and litigation services because, among other things, Diamond’s actions were conditioned on taking into consideration the “best interests” of both Diamond and Sanyo.

The Federal Circuit also rejected a nunc pro tunc agreement executed by Diamond and Sanyo after the district court’s decision, relying on its precedent in Alps South, LLC v. The Ohio Willow Wood Co., Nos. 2013-1452, -1488, 2014-1147, -1426 (Fed. Cir. June 5, 2015) that held that nunc pro tunc agreements do not confer retroactive patentee status.

 

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