Joint ownership of patents can create enforcement risks; here’s how to avoid them

When two or more research institutions, corporations or other entities collaborate on an invention, it is common for them to agree that any patents resulting from the collaboration will be jointly owned. However, a jointly owned patent can be nothing more than a piece of paper if no party has a right to use the patent to stop infringement. The collaboration agreement, patent assignment documents or both must be carefully drafted to ensure that enforcement rights are protected.

This risk was recently highlighted in STC.UNM v. Intel Corp., Fed. Cir., No. 2013-1241, 6/6/14. In the case, STC.UNM attempted to sue Intel for infringement of a patent. The patent was a continuation-in-part of an earlier patent application that was jointly owned by the University of New Mexico (UNM) and Sandia Corp. Because of procedural matters involving a terminal disclaimer, UNM and Sandia also were co-owners of the patent in suit. However, Sandia refused to join the lawsuit, and there was no agreement in place between UNM and Sandia that required Sandia to do so.

The district court dismissed the case for a lack of standing, and the Federal Circuit affirmed.  As the Federal Circuit stated:

“as a matter of substantive patent law, all co-owners must ordinarily consent to join as plaintiffs in an infringement suit”

The reasoning for this ruling was that if only one co-owner sues, it effectively deprives the other co-owner of the right to sue and collect damages for infringement.

Both courts also refused to involuntarily join Sandia to the case as a necessary party.

The case highlights risks that can occur if joint owners of a patent don’t carefully specify enforcement rights — and obligations of both parties — in the relevant agreements.  When collaboration will result in invention, it’s important that the collaboration agreement, assignment agreement, or both specify who has enforcement rights. Even more important, it’s critical that the agreement require the non-enforcing co-owners to participate in the enforcement action when and if needed.

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