IpVenture V. Prostar Computer and Midern Computer (CAFC 2006-1012, -1081)

Douglass Thomas had been a patent attorney with Hewlett-Packard for a few years (1992-1995). The standing issue arose because Douglass had an employment contract that obliged Douglass to assign his patent to HP, though the assignment was not automatic, as many such employment agreements are. '235 was kept by the Thomases.

The district court blanched.

The district court stated that California law does not distinguish between an assignment itself and an agreement to assign, and ruled that the employment agreement "constituted an assignment of all Proprietary Developments to HP."

HP even begged off the patent, though that statement was signed after the infringement suit was filed.

However, the district court declined to consider the content and effect of this agreement, because it was executed after this suit was filed. The court ruled that this agreement could not cure a "standing" defect, even if viewed as a retroactive assignment...

The post-facto HP statement should have been considered. The district court, failing to apply judiciousness, "erred in ruling that dismissal was obligatory." If there was an agreement to assign, but the assignment didn't happen, and the supposed assignee was okay with that, what's the fuss?!

[T]he Hewlett-Packard agreement says "agree to assign." This difference is reinforced by the Hewlett-Packard 2005 statement that it "never has had any legal or equitable rights" to the '235 patent. The district court should have considered this statement, although it was written after this suit was filed, for it serves to remove any uncertainty arising from the language of the employment agreement. While that agreement is an agreement to assign, such interest in the '235 patent must be implemented by written assignment. See Helvering v. San Joaquin Fruit & Investment Co., 297 U.S. 496, 499 (1936) (an option in a property right may be an equitable interest in the property but "it would not follow that . . . he acquires property at the date of the option rather than at the date of the conveyance").

Hewlett-Packard, by stating that it never had an interest in the '235 patent, confirmed the situation as to that patent and removed the need to construe the employment agreement. Hewlett-Packard also confirmed that there is no possibility of a separate infringement suit by Hewlett-Packard, thus serving the policy purposes explained in Independent Wireless, 269 U.S. at 468. The Hewlett-Packard statement that it "never has had any legal or equitable rights" is effective in accordance with its terms. We know of no public policy that is violated by giving this statement the meaning that is stated on its face, at least when no intervening right or other equitable consideration is asserted.

On with the suit back at district court.

Here's the case law brief on standing -

Only the entity or entities that own or control all substantial rights in a patent can enforce rights controlled by that patent, lest an accused infringer be subjected to multiple suits and duplicate liability. See Independent Wireless Tel. Co. v. Radio Corp. of Am., 269 U.S. 459, 468 (1926); Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1551 (Fed. Cir. 1995) (en banc); see generally Intellectual Property Development, Inc. v. TCI Cablevision of California, Inc., 248 F.3d 1333 (Fed. Cir. 2001). Thus all entities with an independent right to enforce the patent are indispensable or necessary parties to an infringement suit. When such an entity declines to join in the suit it may be joined involuntarily, either as a party plaintiff or party defendant; the purpose is to assure that all interested parties are before the court and that their interests are considered, as the Court explained in Shields v. Barrow, 58 U.S. (17 How.) 130, 141 (1854):

[A]s is observed by this court in Mallow v. Hinde, 12 Wheat. 198, when speaking of a case where an indispensable party was not before the court, "we do not put this case upon the ground of jurisdiction, but upon a much broader ground, which must equally apply to courts of equity, whatever may be their structure as to jurisdiction; we put it on the ground that no court can adjudicate directly upon a person's right, without the party being either actually or constructively before the court."

Employment contracts fall under state law, while standing in Federal courts is a federal issue.

Dennis Crouch over at Patently-O opined: "There is some California state law supporting the idea that the assignment had 'vested' even though it was only an agreement to assign."