Standing to sue for patent infringement requires that the plaintiff have valid legal title in the asserted patents at the time of filing suit. In a consolidated case involving twenty-six patent infringement actions, the plaintiff claimed title to the asserted patents through a series of transactions, including an assignment by a parent corporation that never obtained a valid written assignment of the patents that were actually held by its subsidiary. The Maryland court ruled that a retroactive assignment from the subsidiary to the parent made after the parent's transfer was ineffective to bring into force earlier ineffective assignments or cure the defect in chain of title. Therefore, the plaintiff never acquired title to the asserted patents and did not have standing to sue.
CTP Innovations filed over seventy-five lawsuits, alleging infringement of two patents pertaining to systems and methods related to the printing industry. In a consolidated action involving twenty-six of those suits, a Maryland court ruled that CTP had no standing to sue due to a defect in the chain of title to the asserted patents.
Background
CTP based its claim of ownership in the asserted patents on a series of transactions:
- The inventors assigned their rights to Banta Corporation.
- Banta became a subsidiary of R.R. Donnelley.
- R.R. Donnelly purported to assign its rights in the patents to Media Innovations.
- Media purported to transfer its rights in the patents to CTP.
- Banta executed a nunc pro tunc written assignment to R.R. Donnelley, seeking to retroactively assign the patents as of an effective date before R.R. Donnelley's purported assignment to Media.
- CTP sued for patent infringement.
The CTP Innovations Decision
Constitutional standing to sue for patent infringement requires that the plaintiff have valid legal title to the patents being asserted as of the filing date of the action. In CTP Innovations, the court found that CTP did not have title to the asserted patents when it sued for infringement.
The court examined the series of transfers of the asserted patents and observed that a corporate parent does not automatically have title to the subsidiary's assets. Therefore, an assignment of patent rights owned by a subsidiary needs to be made by the subsidiary, rather than the corporate parent, because an attempted assignment by a corporate parent to transfer patents owned by its subsidiary does not result in an assignment of those rights.
In this case, when R.R. Donnelley acquired Banta, R.R. Donnelley did not become an owner of Banta's patents. Rather, Banta retained ownership of the patents. R.R. Donnelley's failure to acquire rights in the patents owned by Banta prevented R.R. Donnelley from being able to transfer any rights in the patents. Therefore, R.R. Donnelley's attempted assignment to Media, and Media's subsequent attempted assignment to CTP, failed to effectively transfer ownership in the patents to CTP.
The court also found that a nunc pro tunc assignment does not necessarily have a retroactive effect on bringing into force earlier assignments that were ineffective.
In this case, Banta attempted to cure the defect in R.R. Donnelley's attempted transfer of patent rights by executing a nunc pro tunc assignment of its patent rights to R.R. Donnelley to be retroactively effective at an effective date prior to the assignments by R.R. Donnelley to Media, and Media to CTP.
However, rather than curing CTP's standing deficiency, the retroactive assignment demonstrated a recognition that R.R. Donnelley did not have legal title to the patents when it purportedly assigned them to Media. And the retroactive assignment did not bring into force the earlier assignments from R.R. Donnelley to Media, and Media to CTP, that were ineffective because R.R. Donnelley had no rights to transfer.
The court discussed several ways CTP could have acquired good title to the patents prior to filing a patent infringement litigation. For example, CTP could have received a direct assignment from Banta. Or if R.R. Donnelley's original assignment to Media assigned future or expectant interests in the patents, the nunc pro tunc assignment could have effectively transferred those rights from R.R. Donnelley to Media. However, the language of the original assignment from R.R. Donnelley to Media only used present-tense language, transferring only rights it had at the time of the assignment, rather than rights it would have later acquired from the nunc pro tunc assignment.
Because the retroactive assignment did not cure the defect in CTP's ownership in the patents, CTP did not have constitutional standing to sue for infringement of the patents.
Strategy and Conclusion
This case demonstrates the importance of confirming valid title to asserted patents before filing suit and illustrates issues that can arise when related companies may be involved in the chain of title. Where defects are discovered in a multiparty transfer, it can be useful to consider whether they can be best addressed through direct assignment from the party actually holding title rather than merely attempting to redo the defective portion of the transfer.
Further Information
The CTP Innovations decision is available here.
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