Advanced Video Technologies v. Htc Corporation , 879 F.3d 1314 ( 2018 )

United States Court of Appeals
for the Federal Circuit
______________________
ADVANCED VIDEO TECHNOLOGIES LLC,
Plaintiff-Appellant
v.
HTC CORPORATION, HTC AMERICA, INC.,
BLACKBERRY LTD, BLACKBERRY
CORPORATION, MOTOROLA MOBILITY LLC,
Defendants-Appellees
______________________
2016-2309, 2016-2310, 2016-2311
______________________
Appeals from the United States District Court for the
Southern District of New York in Nos. 1:15-cv-04626-CM,
1:15-cv-04631-CM, 1:15-cv-04632-CM, Judge Colleen
McMahon.
______________________
Decided: January 11, 2018
______________________
ROBERT WILLIAM MORRIS, Eckert Seamans Cherin &
Mellott, LLC, White Plains, NY, argued for plaintiff-
appellant. Also represented by OJEIKU CHRISTOPHER
AISIKU, THOMAS MARTIN SMITH.
HEIDI LYN KEEFE, Cooley LLP, Palo Alto, CA, argued
for all defendants-appellees. Defendants-appellees HTC
Corporation, HTC America, Inc. also represented by KYLE
DAKAI CHEN, MARK R. WEINSTEIN.
2 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
JEFFRI A. KAMINSKI, Venable LLP, Washington, DC,
for defendants-appellees Blackberry LTD, Blackberry
Corporation. Also represented by WILLIAM DEAN COSTON;
CHRISTOPHER T. LA TESTA, Baltimore, MD.
FREDERICK LEE WHITMER, Kilpatrick Townsend &
Stockton LLP, New York, NY, for defendant-appellee
Motorola Mobility LLC. Also represented by AKARSH
BELAGODU, Washington, DC; DAVID CLAY HOLLOWAY,
Atlanta, GA; STEVEN MOORE, San Francisco, CA.
______________________
Before NEWMAN, O’MALLEY, and REYNA, Circuit Judges.
Opinion of the court filed by Circuit Judge REYNA.
Concurring opinion filed by Circuit Judge O’MALLEY.
Dissenting opinion filed by Circuit Judge NEWMAN.
REYNA, Circuit Judge.
Advanced Video Technologies LLC appeals an order
from the United States District Court for the Southern
District of New York that dismissed its complaints for
lack of standing. The district court based its decision on
the ground that a co-owner of the patent was not a party
to the actions, and the co-owner’s ownership interests in
the patent were not transferred to Advanced Video. We
affirm.
BACKGROUND
This appeal involves U.S. Patent No. 5,781,788 (“’788
patent”), entitled “Full Duplex Single Clip Video Codec.”
The technology of the patent is not at issue. The single
issue involved in this appeal is whether a co-inventor of
the patent transferred her co-ownership interests in the
patent under the terms of an employment agreement.
ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION 3
The ’788 patent lists three co-inventors: Beng-Yu
“Benny” Woo, Xiaoming Li, and Vivian Hsiun. The inven-
tion was created while the co-inventors were employed
with Infochips Systems Inc. (“Infochips”). Two of the
inventors, Mr. Woo and Ms. Li assigned their co-
ownership interests in the patent to Advanced Video. The
only co-ownership interests involved in this appeal are
those of Ms. Hsiun.
Advanced Video maintains that it obtained Ms.
Hsiun’s co-ownership interests in the invention through a
series of transfers. According to Advanced Video, the first
transfer was made before the ’788 patent application was
filed, pursuant to a January 1992 Employment Agree-
ment (“Employment Agreement”) between Ms. Hsiun and
Infochips. The second transfer occurred when Infochips’
“receivables,” which had been pledged as security in a
financing agreement between Infochips and an entity
called Lease Management Services, were seized by Lease
Management when Infochips went out of business in
1993. The third transfer occurred in 1995 when Lease
Management sold the Infochips assets to Mr. Woo, one of
the three co-inventors. A fourth transfer occurred when
Mr. Woo assigned his ownership interest in the ’788
patent to an entity called AVC Technology Inc. (“AVC”). 1
In 1995, AVC filed the parent application of the ’788
patent. 2 Two of the three inventors, Mr. Woo and Ms. Li,
executed assignments of their ownership interest in the
invention to AVC at that time. Ms. Hsiun, however,
refused to assign her interests. AVC filed a petition
before the U.S. Patent and Trademark Office (“PTO”)
1 We only address the validity of the purported
transfer under the Employment Agreement.
2 A continuation of that patent application, filed in
1997, ultimately issued as the ’788 patent in 1998.
4 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
requesting that it be permitted to prosecute the applica-
tion without an assignment from Ms. Hsiun. In support,
AVC filed a declaration attaching the Infochips Employ-
ment Agreement and financial documents between Info-
chips and Lease Management purporting to show that
Mr. Woo and AVC had acquired Ms. Hsiun’s ownership
rights. The PTO granted AVC’s petition and the ’788
patent was issued to AVC. AVC was later dissolved, but
not before purporting to transfer its assets to its succes-
sors, and ultimately, Advanced Video.
In 2011, Advanced Video filed three patent infringe-
ment lawsuits against Appellees in the United States
District Court for the Southern District of New York. The
district court found, however, that AVC had failed to
comply with Delaware statutory law governing the distri-
bution of assets for dissolved corporations, and that no
patent rights had transferred from AVC to Advanced
Video. Because Advanced Video had no ownership inter-
est in the patent, the cases were dismissed for lack of
standing. Advanced Video Techs., LLC v. HTC Corp., 103
F. Supp. 3d 409 (S.D.N.Y. 2015). 3
In 2015, the Delaware Court of Chancery appointed a
Receiver to transfer to Advanced Video any patent rights
held by AVC. Advanced Video Techs. LLC v. HTC Corp.,
No. 15 Civ. 4626 (CM), 2016 WL 3434819, at *5-6
(S.D.N.Y. June 14, 2016). After the transfer was
achieved, Advanced Video filed three new patent in-
fringement lawsuits against Appellees. In response to a
motion to dismiss, Advanced Video argued before the
3 The district court also awarded attorneys’ fees,
finding the case “exceptional” under 35 U.S.C. § 285. The
fee award was affirmed by this court. Advanced Video
Techs., LLC v. HTC Corp., 677 F. App’x 684 (Fed. Cir.
2017).
ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION 5
district court that it had acquired Ms. Hsiun’s ownership
rights via the aforementioned series of transfers begin-
ning with a transfer from Ms. Hsiun to Infochips under
the terms of the Employment Agreement. According to
Advanced Video, the transfer was effected pursuant to
three provisions of the Employment Agreement: a “will
assign” provision, a trust provision, and a quitclaim
provision. The “will assign” and trust provisions provide
as follows:
I agree that I will promptly make full written dis-
closure to the Company, will hold in trust for
the sole right and benefit of the Company, and
will assign to the Company all my right, title,
and interest in and to any and all inventions, orig-
inal works of authorship, developments, im-
provements or trade secrets which I may solely or
jointly conceive or develop or reduce to practice, or
cause to be conceived or developed or reduced to
practice, during the period of time I am in the em-
ploy of the Company.
J.A. 258 (emphasis added).
The quitclaim provision provides as follows:
I hereby waive and quitclaim to the Company
any and all claims, of any nature whatsoever,
which I now or may hereafter have infringement
[sic] of any patents, copyrights, or mask work
rights resulting from any such application as-
signed hereunder to the Company.
J.A. 260. (emphasis added).
The district court concluded that these provisions did
not effect a transfer of Ms. Hsiun’s ownership rights to
Advanced Video. As such, because Ms. Hsiun was not a
party to the suit, the district court dismissed the case for
lack of standing. Advanced Video appeals.
6 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
DISCUSSION
1. Standard of Review
This court reviews de novo a district court’s dismissal
for lack of standing. Isr. Bio-Eng’g Project v. Amgen Inc.,
475 F.3d 1256, 1262–63 (Fed. Cir. 2007); Prima Tek II,
L.L.C. v. A-Roo Co., 222 F.3d 1372, 1376 (Fed. Cir. 2000).
Factual findings relevant to a lack of standing determina-
tion are reviewed for clear error. Enovsys LLC v. Nextel
Commc’ns, Inc., 614 F.3d 1333, 1340–41 (Fed. Cir. 2010).
2. “Will Assign”
Advanced Video argues that Ms. Hsiun’s ownership
rights transferred immediately upon execution of the
Employment Agreement. In support, Advanced Video
points to “will assign” language contained in the agree-
ment.
Section 2.b of the Infochips Employment Agreement
provides that Ms. Hsiun “will assign to the Company” all
her right, title, and interest in any inventions. The dis-
trict court found that “will” invoked a promise to do
something in the future and did not effect a present
assignment. Advanced Video Techs., 2016 WL 3434819,
at *8–9. The court relied on Arachnid, Inc. v. Merit
Industries, Inc., 939 F.2d 1574, 1576 (Fed. Cir. 1991),
which held that “will be assigned” language in a consult-
ing agreement did not itself effect an assignment but was
merely a promise to assign. Id. at 1576, 1580–81. The
district court also reasoned that the trust provision of the
Employee Agreement undermined an immediate assign-
ment because Ms. Hsiun could not immediately assign the
rights and at the same time hold them in trust. Advanced
Video Techs., 2016 WL 3434819 at *9. We agree with the
district court that no present assignment exists in the
Employment Agreement. The “will assign” language
alone does not create an immediate assignment of Ms.
Hsiun’s rights in the invention to Infochips.
ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION 7
3. Trust Assignment
Advanced Video argues that “will hold in trust” creat-
ed an immediate trust under California law in favor of
Infochips. Even were we to determine that Ms. Hsiun’s
interests in the invention were immediately placed in
trust, it does not follow that those interests were automat-
ically, or ever, actually transferred out of trust in favor of
Infochips. Absent a transfer, Ms. Hsiun would continue
to hold the invention rights as a trustee. While Advanced
Video could potentially seek to enforce its alleged owner-
ship rights, or allege a breach of Ms. Hsiun’s duties as a
trustee by her failure to transfer those rights, by bringing
an action against Ms. Hsiun, no party brought such an
action. See, e.g., Jim Arnold Corp. v. Hydrotech Sys., 109
F.3d 1567, 1578 (Fed. Cir. 1997) (stating that a party
needs to file a state-law based claim to obtain title to the
patent before bringing a patent infringement claim).
Since Advanced Video has not sought to enforce any
obligation Ms. Hsiun might have under the trust, it
ultimately has no standing to bring a patent infringement
action. See Abraxis Bioscience, Inc. v. Navinta LLC, 625
F.3d 1359, 1366 (Fed. Cir. 2010).
Under California trust law a trust beneficiary “gener-
ally is not the real party in interest,” “may not sue in the
name of the trust,” and “has no legal title or ownership
interest in the trust assets.” Saks v. Damon Raike & Co.,
8 Cal. Rptr. 2d 869, 874–75 (Cal. Ct. App. 1992) (citing
Botsford v. Haskins & Sells, 146 Cal. Rptr. 752, 754 (Cal.
App. 1978)). The dissent cites Kadota Fig Association of
Producers v. Case-Swayne Co., 167 P.2d 518 (1946), for
the proposition that the real party in interest in Califor-
nia trust disputes is actually the beneficiary, not the
trustee. Dissent at 6. Kadota does not apply, however,
because it involves a “business trust,” which, under Cali-
fornia law, is considered “a type of business organization”
and not the type of trust in this case. Goldwater v. Olt-
man, 292 P. 624, 627 (Cal. 1930). Even if Advanced Video
8 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
is correct that Ms. Hsiun’s rights are held in trust, Ad-
vanced Video, as a trust beneficiary, cannot maintain a
patent infringement suit where Ms. Hsiun is not a party,
nor can she as a co-owner of the patent be involuntarily
joined as a plaintiff, except under limited circumstances
which do not apply here. 4
4. Quitclaim Assignment
Advanced Video maintains that it has standing be-
cause it eventually acquired Ms. Hsiun’s ownership
interest in the invention when she quitclaimed her inter-
est to Infochips under the terms of the Employment
Agreement.
Section 2.e of the Employment Agreement provides:
I hereby waive and quitclaim to the Company any
and all claims, of any nature whatsoever, which I
now or may hereafter have infringement [sic] of
any patents, copyrights, or mask work rights re-
4 See Fed. R. Civ. P. 19; STC.UNM v. Intel Corp.,
754 F.3d 940, 945–46 (Fed. Cir. 2014) (explaining that the
right of a co-owner “to impede an infringement suit
brought by another co-owner is a substantive right that
trumps the procedural rule for involuntary joinder”).
Under California trust law, a trust beneficiary may seek
judicial compulsion against a trustee who refuses to
enforce a valid cause of action, and “[i]n order to prevent
loss of or prejudice to a claim, the beneficiary may bring
an action in equity joining the third person and the trus-
tee.” Saks, 8 Cal. Rptr. 2d at 875 (citing Triplett v. Wil-
liams, 74 Cal. Rptr. 594, 596 (Cal. Ct. App. 1969)). Here,
Advanced Video has not attempted to join Ms. Hsiun as a
trustee or otherwise bring an action against Ms. Hsiun.
Accordingly, we do not address the question of whether
Ms. Hsiun could be involuntarily joined as trustee under
California trust law and Fed. R. Civ. P. 19(a)(1)(B)(i).
ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION 9
sulting from any such application assigned here-
under to the Company.
J.A. 260.
Advanced Video argues that “assigned hereunder”
should essentially be read to mean all claims “assignable
hereunder,” and that rights that Ms. Hsiun promised she
“will assign” were immediately quitclaimed under the
Employment Agreement. The Employment Agreement,
however, does not provide “assignable hereunder” lan-
guage. Advanced Video cites no authority showing that
“assigned hereunder” covers patent rights that could have
been assigned under a contract, but were never actually
assigned.
The quitclaim provision waives Ms. Hsiun’s rights to
interests in any patent rights that she assigned under the
agreement. But, as no patent rights were ever assigned
to Infochips, the quitclaim provision has no application.
Accordingly, we find that the quitclaim provision in the
Employment Agreement did not effect an assignment of
the ’788 patent from Ms. Hsiun to Infochips, AVC, or
Advanced Video.
The dissent argues that it may be discerned from the
Employment Agreement that the parties intended any
ownership interest in inventions developed during Ms.
Hsiun’s employment with Infochips were the property of
Infochips. Dissent at 7–10. But, the terms of the Em-
ployment Agreement provide otherwise. Generally, courts
should not deviate from unambiguous provisions unless
they lead to “absurd results.” Shaw v. Regents of Univ. of
Cal., 67 Cal. Rptr. 2d 850, 855 (Cal. Ct. App. 1997); see
also Coast Plaza Doctors Hosp. v. Blue Cross of Cal., 99
Cal. Rptr. 2d 809, 815 (Cal. Ct. App. 2000). In this in-
stance, the Employment Agreement is unambiguous and,
as stated, there is no reason to believe that the parties
intended a present assignment. This court has previously
found such agreements to assign insufficient to confer
10 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
standing. See IpVenture, Inc. v. Prostar Comput., Inc.,
503 F.3d 1324, 1327 (Fed. Cir. 2007).
CONCLUSION
Advanced Video does not have full ownership of the
’788 patent. Ms. Hsiun is neither a party to the suits, nor
has she consented to these suits. Advanced Video, there-
fore, has no standing to maintain its suit. Accordingly, we
affirm the district court’s dismissal of the cases.
AFFIRMED
COSTS
No costs.
United States Court of Appeals
for the Federal Circuit
______________________
ADVANCED VIDEO TECHNOLOGIES LLC,
Plaintiff-Appellant
v.
HTC CORPORATION, HTC AMERICA, INC.,
BLACKBERRY LTD, BLACKBERRY
CORPORATION, MOTOROLA MOBILITY LLC,
Defendants-Appellees
______________________
2016-2309, 2016-2310, 2016-2311
______________________
Appeals from the United States District Court for the
Southern District of New York in Nos. 1:15-cv-04626-CM,
1:15-cv-04631-CM, 1:15-cv-04632-CM, Judge Colleen
McMahon.
______________________
O’MALLEY, Circuit Judge, concurring.
I agree that we are bound to apply the law of this Cir-
cuit that compels the result we reach today. I, thus, must
concur in that result. I write separately, however, to
explain why I continue to believe that the binding prece-
dent which serves as the predicate for today’s majority
opinion is wrong. In particular, I address why the conclu-
sion that a non-consenting co-owner or co-inventor can
never be involuntarily joined in an infringement action
pursuant to Rule 19 of the Federal Rules of Civil Proce-
dure is incorrect. In the absence of that errant conclu-
2 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
sion, the various questions we address in this case would
be irrelevant.
As I explained in my opinion dissenting from the de-
nial of the petition for rehearing en banc in STC.UNM v.
Intel Corp., 767 F.3d 1351 (Fed. Cir. 2014), several things
are clear about Rule 19. First, Rule 19(a)(1)(A) provides
that “[a] person who is subject to service of process and
whose joinder will not deprive the court of subject-matter
jurisdiction must be joined as a party if[] in that person’s
absence, the court cannot accord complete relief among
existing parties.” Fed. R. Civ. P. 19(a)(1)(A) (emphasis
added). Second, Rule 19, like all other Federal Rules of
Civil Procedure, is “as binding as any federal statute.”
Stone Container Corp. v. United States, 229 F.3d 1345,
1354 (Fed. Cir. 2000) (“[T]he Federal Rules of Civil Proce-
dure, like the Federal Rules of Criminal procedure, are ‘as
binding as any federal statute.’” (quoting Bank of Nova
Scotia v. United States, 487 U.S. 250, 255 (1988)). Third,
again, like all other Rules of Civil Procedure, Rule 19
applies in patent cases just as fully as it applies in all
other federal civil actions. See, e.g., eBay Inc. v. Mer-
cExchange, L.L.C., 547 U.S. 388, 393–94 (2006) (rejecting
this court’s attempt to develop a rule regarding the right
to injunctive relief “unique to patent disputes,” holding
that “the traditional four-factor framework . . . governs
the award of injunctive relief”). And, finally, it is Rule
19—not substantive judge-made laws governing joinder—
that establishes the criteria for assessing joinder. See
Provident Tradesmens Bank & Tr. Co. v. Patterson, 390
U.S. 102, 118 n.13 (1968) (citing with approval to a com-
mentator who noted that “there is no case support for the
proposition that the judge-made doctrines of compulsory
joinder have created substantive rights beyond the reach
of the rulemaking power” (quoting 2 Barron & Holtzoff,
Federal Practice & Procedure § 512, n.21.14 (1967 Supp.)
(Wright ed.))).
ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION 3
And, as Judge Newman wrote in her opinion dissent-
ing from the denial of rehearing en banc in STC.UNM,
“Rule 19 is not permissive” despite this court’s precedent
that “Rule 19 uniquely does not apply in patent cases.”
767 F.3d at 1355 (Newman, J., dissenting). This prece-
dent represents a “further removal” of patent cases from
“the mainstream of the law.” Id. Indeed, the “unique
exclusion of patent cases from Federal Rule 19 is as
peculiar as it is unjustified,” for “[n]o justification can be
found for withdrawing or excluding the co-owner of a
patent from access to legal process.” Id. at 1356–57.
Despite our precedent, Rule 19(a) provides for the in-
voluntary joinder of a necessary party. The rule states, in
relevant part, that:
(a) Persons Required to be Joined if Feasible.
(1) Required Party. A person who is sub-
ject to service of process and whose joinder
will not deprive the court of subject-
matter jurisdiction must be joined as a
party if:
(A) in that person’s absence, the
court cannot accord complete relief
among existing parties; or
(B) that person claims an interest
relating to the subject of the action
and is so situated that disposing of
the action in the person’s absence
may:
(i) as a practical matter
impair or impede the per-
son’s ability to protect the
interest; or
(ii) leave an existing party
subject to a substantial
4 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
risk of incurring double,
multiple, or otherwise in-
consistent obligations be-
cause of the interest.
(2) Joinder by Court Order. If a person
has not been joined as required, the court
must order that the person be made a par-
ty. A person who refuses to join as a
plaintiff may be made either a defendant
or, in a proper case, an involuntary plain-
tiff.
Fed. R. Civ. P. 19(a)(1)–(2). By its terms, therefore, when
a person satisfies the requirements of Rule 19(a), joinder
of that person is required.
If joinder of a required party is not feasible, Rule 19(b)
provides that “the court must determine whether, in
equity and good conscience, the action should proceed
among the existing parties or should be dismissed.” Fed.
R. Civ. P. 19(b). That analysis involves consideration of
several factors specified in Rule 19(b), including: (1) “the
extent to which a judgment rendered in the person’s
absence might prejudice that person or the existing par-
ties”; (2) “the extent to which any prejudice could be
lessened or avoided”; (3) “whether a judgment rendered in
the person’s absence would be adequate”; and
(4) “whether the plaintiff would have an adequate remedy
if the action were dismissed for nonjoinder.” Fed. R. Civ.
P. 19(b)(1)–(4).
Recognizing the mandatory nature of Rule 19, one
panel of this court has noted, albeit in dictum, that “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[] . . . .” IpVenture, Inc. v. ProStar Com-
put., Inc., 503 F.3d 1324, 1325–26 (Fed. Cir. 2007) (“[W]e
ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION 5
need not reach the question of whether the district court
had discretion, in applying Fed. R. Civ. P. 19(a), to permit
the addition of parties in this case without requiring
dismissal and refiling by the plaintiff.”).
For its part, the Supreme Court has indicated in a
non-patent case that Rule 19—not substantive law—
applies when determining who must participate in a
lawsuit. See Provident Tradesmens, 390 U.S. 102. There,
the Third Circuit declined to follow Rule 19, and, instead,
held that
the right of a person who ‘may be affected’ by the
judgment to be joined is a ‘substantive’ right, un-
affected by the federal rules; that a trial court
‘may not proceed’ in the absence of such a person;
and that since [one party] could not be joined as a
defendant without destroying diversity jurisdic-
tion the action had to be dismissed.
Id. at 107. 1 The Supreme Court reversed, holding that
“Rule 19(b), which the Court of Appeals dismissed as an
ineffective attempt to change the substantive rights . . . is,
on the contrary, a valid statement of the criteria for
1 At the outset, the Court noted that the absent
party fell within the category of persons who should be
“joined if feasible” under Rule 19(a), but “could not be
made a defendant without destroying diversity.” Provi-
dent Tradesmens, 390 U.S. at 108. Because Rule 19(a)
provides that joinder cannot deprive the court of subject-
matter jurisdiction, the Court focused its analysis on Rule
19(b), which asks whether the court should dismiss the
action or proceed without the absent party. Id. at 108–09.
The Court’s discussion of the interplay between alleged
substantive rights and Rule 19 remains relevant to con-
sideration of this issue, even though it occurred when
discussing Rule 19(b) rather than Rule 19(a).
6 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
determining whether to proceed or dismiss in the forced
absence of an interested person.” Id. at 125.
There is no dispute over whether co-owners are neces-
sary parties to infringement actions; the question we
must address is whether a co-owner’s mere recalcitrance
can prevent enforcement of another co-owner’s rights.
Rule 19(a) is designed to address circumstances just like
those at issue here. See 7 Charles Alan Wright et al.,
Federal Practice and Procedure § 1606 (3d ed. 2013) (“The
joinder of an absent person who should be a plaintiff as an
involuntary plaintiff is authorized by the second half of
the third sentence of Rule 19(a). . . . The purpose of this
procedure is to mitigate some of the harshness that
occasionally results when the joinder of a nonparty is
found to be desirable but the nonparty refuses to join in
the action.”). Involuntary joinder assumes recalcitrance
by the joined party (or, as here, a preference not to partic-
ipate), but authorizes joinder nonetheless. Rule 19(a)
makes no exception for recalcitrant patent owners and we,
to date, have not explained from where such an exception
derives. See id. (noting that the “most typical application”
of Rule 19(a) “has been to allow exclusive licensees of
patents and copyrights to make the owner of the monopo-
ly an involuntary plaintiff in infringement suits”).
The original cases on which our Rule 19 joinder prec-
edent relies do not proscribe the use of involuntary joinder
of co-owners or co-inventors in patent cases, as our prece-
dent does. Neither Ethicon, Inc. v. U.S. Surgical Corp.,
135 F.3d 1456 (Fed. Cir. 1998), nor any other case on
which it relies specifically holds that a patent co-owner or
co-inventor cannot be involuntarily joined under Rule
19(a). Examination of the pertinent case law reveals that
repeated references to unsupported dicta have morphed
into a hard-and-fast rule from which this court refuses to
deviate.
ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION 7
In Ethicon, we quoted an earlier Federal Circuit deci-
sion for the proposition that “one co-owner has the right to
impede the other co-owner’s ability to sue infringers by
refusing to voluntarily join in such a suit.” 135 F.3d at
1468 (quoting Schering Corp. v. Roussel-UCLAF SA, 104
F.3d 341, 345 (Fed. Cir. 1997)). Schering, in turn, relied
solely on a Sixth Circuit decision—Willingham v. Lawton,
555 F.2d 1340 (6th Cir. 1977)—not on the Patent Act or
even preexisting federal common law. But Willingham
did not purport to create any substantive patent rights.
In fact, the Willingham court expressly declined to ad-
dress the patent co-owner’s argument that it had a sub-
stantive right not to be forced to join the action under
Rule 19(a). As explained below, Rule 19 was not at issue
in either Schering or Ethicon, and the court in Willing-
ham actually endorsed the application of Rule 19(a) on
the facts before it. Accordingly, none of these cases sup-
ports our current rule that displaces application of Rule
19.
First, the “crux of the problem” in Willingham was
“whether a co-owner could authorize by contract another
co-owner to file suit for patent infringement without the
permission of the first co-owner, in an action in which the
unwilling co-owner is joined as an involuntary plaintiff
under Rule 19.” 555 F.2d at 1343–44. Although the
patent co-owner, Star, argued that “Rule 19(a) is proce-
dural and does not alter the substantive law requiring
voluntary joinder of all co-owners of a patent in a suit for
its infringement,” the court found that it “need not reach
this issue,” because Star waived any objection by signing
a contract that gave either co-owner the right to initiate
an infringement action in its sole discretion. Id. at 1343
& n.5. The court further explained that: (1) “[m]aking a
patent owner an involuntary plaintiff is not new”;
(2) “[j]oining Star as an involuntary plaintiff protects the
interests of both the defendants”; and (3) “Rule 19(a)
8 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
requires the continued joinder of Star as an involuntary
plaintiff in the infringement suit.” Id. at 1346.
The Sixth Circuit in Willingham recognized the “gen-
eral rule that all co-owners of a patent must be joined as
plaintiffs before an infringement suit can be initiated.”
Id. at 1343 (citing Waterman v. Mackenzie, 138 U.S. 252,
255 (1891)). 2 It did not create or purport to create any
new substantive patent law right that would trump
application of Rule 19, however. Indeed, it expressly
stated it was not addressing that question because it
found any rights Star might have had on that score to
have been waived. Id. at 1343 n.5 (comparing Provident
Tradesmens, 390 U.S. at 118 n.13, 125 (recognizing that
Rule 19(b) is “a valid statement of the criteria for deter-
mining whether to proceed or dismiss in the forced ab-
sence of an interested person” and that “judge made
doctrines of compulsory joinder” do not create substantive
rights falling outside the reach of the rule), with Gibbs v.
Emerson Elec. Mfg. Co., 29 F. Supp. 810, 812 (W.D. Mo.
1939) (concluding that “it appears that one joint owner or
2 In Waterman, the Supreme Court explained that a
patentee or his assignee may grant and convey to another:
(1) the whole patent; (2) an undivided part or share of
that exclusive right; or (3) “the exclusive right under the
patent within and throughout a specified part of the
United States.” 138 U.S. at 255. “A transfer of either of
these three kinds of interests is an assignment, properly
speaking, and vests in the assignee a title in so much of
the patent itself, with a right to sue infringers; in the
second case, jointly with the assignor; in the first and
third cases, in the name of the assignee alone.” Id.
Importantly, the “development of the practice of joining a
party as an involuntary plaintiff was a response” to
Waterman. 7 Charles Alan Wright et al., Federal Practice
and Procedure § 1606 (3d ed. 2013).
ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION 9
coowner or tenant in common of a patent right cannot
compel the other coowner to join in a suit for an infringe-
ment”)).
Schering involved a dispute between two co-owners of
a pharmaceutical patent: Schering and Roussel. Schering
sued Zeneca for infringement, and two weeks later, Rous-
sel granted a license to Zeneca. Schering argued that the
terms of its co-ownership agreement with Roussel—which
provided that, “if one of the co-owners files an infringe-
ment suit, it can call on the non-suing co-owner to provide
‘reasonable assistance’ in connection with the litigation”—
meant that the non-suing party could not grant a license
to a defendant or prospective defendant. Schering, 104
F.3d at 345–46. Undertaking a contract analysis, we held
that nothing in the agreement limited the right to grant
licenses under the patent, but that “the grant of a license
by one co-owner cannot deprive the other co-owner of the
right to sue for accrued damages for past infringement.”
Id. at 345.
Involuntary joinder was not at issue on appeal in
Schering because, at the district court level, “Schering
joined Roussel as an involuntary plaintiff pursuant to
Rule 19(a).” Schering Corp. v. Zeneca Inc., 958 F. Supp.
196, 197 (D. Del. 1996); see Schering, 104 F.3d at 346
(noting that the “co-ownership agreement made Roussel
subject to being named as an involuntary plaintiff in an
infringement action brought by Schering”). Accordingly,
this court in Schering did not address or analyze Rule 19;
it proceeded on the assumption that joinder under Rule
19(a) had occurred and that no objection to it had been
raised on appeal. While we did cite the Sixth Circuit’s
Willingham decision for the proposition that, “[o]rdinarily,
one co-owner has the right to impede the other co-owner’s
ability to sue infringers by refusing to voluntarily join,”
the “impediment” to which we referred was not due to
non-joinder or a “refus[al] to voluntarily join”—it was due
to the co-owner’s decision to license the patent to the
10 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
accused infringer prospectively. Schering, 104 F.3d at
345 (citing Willingham, 555 F.2d at 1344). We explained
that, “by granting a license to a prospective infringement
defendant, or to a defendant that has already been sued
for infringement, a patent co-owner can effectively deprive
its fellow co-owner of the right to sue for and collect any
infringement damages that accrue after the date of the
license.” Id. (emphasis added). Again, we never said a co-
owner could deprive a fellow co-owner of his or her rights
merely by not joining in an infringement action.
In Ethicon, the co-owner of the patent—Dr. Choi—
granted a “retroactive license” to the accused infringer—
U.S. Surgical—and thus could not consent to an infringe-
ment suit against it. Ethicon, 135 F.3d at 1458–59.
Because the parties stipulated to Choi’s intervention as
defendant-intervenor in the case, the majority neither
cited nor discussed Rule 19. Id. at 1458. Instead, the
court focused on the scope of the “retroactive license.”
Specifically, the court found that: (1) “a license to a third
party only operates prospectively;” and (2) absent agree-
ment otherwise, “a co-owner cannot grant a release of
another co-owner’s right to accrued damages.” Id. at 1467
(concluding that “Choi cannot release U.S. Surgical from
its liability for past accrued damages to Ethicon, only
from liability to himself”).
In the context of its retroactive licensure discussion,
the court explained that, “as a matter of substantive
patent law, all co-owners must ordinarily consent to join
as plaintiffs in an infringement suit.” Id. at 1468. 3 The
3 The court recognized two exceptions: (1) “when
any patent owner has granted an exclusive license, he
stands in a relationship of trust to his licensee and must
permit the licensee to sue in his name”; and (2) “[i]f, by
agreement, a co-owner waives his right to refuse to join
suit, his co-owners may subsequently force him to join in
ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION 11
court did not cite any authority for this so-called “sub-
stantive patent law,” but subsequently cited Schering for
the proposition that one co-owner can “impede” the other
co-owner’s ability to pursue an infringement action. Id.
(quoting Schering, 104 F.3d at 345). As in Schering,
however, Choi’s ability to “impede” Ethicon’s infringement
action was not due to non-joinder, particularly since Choi
was already a voluntary party to the case. Instead, it was
because Choi had granted a license to U.S. Surgical. The
court concluded that dismissal was warranted because
“Choi did not consent to an infringement suit against U.S.
Surgical and indeed can no longer consent due to his
grant of an exclusive license,” and thus “Ethicon’s com-
plaint lacks the participation of a co-owner of the patent.”
Id. Because the court’s decision in Ethicon did not involve
joinder or Rule 19, it cannot stand for the proposition that
Rule 19 cannot be invoked to force joinder when no license
impedes doing so.
The majority in Ethicon did not discuss joinder under
Rule 19, did not purport to harmonize the requirements of
Rule 19 with preexisting substantive patent law, and—
because the decision was focused on licensing issues—did
not create any new principles of law applicable to future
cases involving the involuntary joinder of patent co-
owners. Importantly, the Ethicon majority’s silence
cannot be evidence of its position with respect to Rule 19,
a suit against infringers.” Ethicon, 135 F.3d at 1468 n.9
(citing Indep. Wireless Tel. Co. v. Radio Corp. of Am., 269
U.S. 459, 469 (1926); Willingham, 555 F.2d at 1344–45).
As the dissent in STC.UNM points out, it makes little
sense to say “that when an infringement suit is brought
by an exclusive licensee, the patent owner can be joined;
but when an infringement suit is brought by a co-owner,
the other co-owner cannot be involuntarily joined.”
STC.UNM, 754 F.3d at 951 (Newman, J., dissenting).
12 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
even though the dissenting opinion discussed the rule. Id.
at 1472 (Newman, J., dissenting) (“There is no barrier to
the involuntary joinder of a joint inventor and/or co-owner
under Rule 19, if such is needed to bring before the court
all persons deemed necessary to the suit.”); see United
Haulers Ass’n v. Oneida-Herkimer Solid Waste Mgmt.
Auth., 261 F.3d 245, 260 (2d Cir. 2001) (“[W]e require
more than the Court’s silence on this point before conclud-
ing that it either rejected or accepted the public/private
distinction advocated by the concurring and dissenting
opinions.”).
Although our Ethicon decision was not based on Rule
19, we subsequently stated that it “explicitly held that
Rule 19 does not permit the involuntary joinder of a
patent co-owner in an infringement suit brought by
another co-owner.” DDB Techs., L.L.C. v. MLB Advanced
Media, L.P., 517 F.3d 1284, 1289 n.2 (Fed. Cir. 2008)
(citing Ethicon, 135 F.3d at 1468). It is unclear, however,
why the court in DDB Technologies would say that Ethi-
con made an explicit holding with respect to Rule 19 when
it was not even mentioned in the majority opinion. In any
event, the reference to Ethicon in DDB Technologies was
dictum because the sole issue before the court in that case
dealt with entitlement to jurisdictional discovery. Id. at
1286 (“[W]e hold that the district court erred in denying
DDB’s request for jurisdictional discovery.”). 4
4 Other decisions from this court have perpetuated
the idea that all co-owners must ordinarily join as plain-
tiffs in an infringement suit, but, again, Rule 19(a) was
neither raised nor addressed in those cases. See Isr. Bio-
Eng’g Project v. Amgen, Inc., 475 F.3d 1256, 1264 (Fed.
Cir. 2007) (citing Ethicon and Schering to find that “one
co-owner has the right to limit the other co-owner’s ability
to sue infringers by refusing to join voluntarily in the
patent infringement suit”); Int’l Nutrition Co. v. Horphag
ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION 13
Tracing the origin of our so-called rule of substantive
patent law makes clear that, prior to our decision in
STC.UNM v. Intel Corp., 754 F.3d 940 (Fed. Cir. 2014),
we had never explicitly held that one patent co-owner
cannot involuntarily join the other. Neither Schering nor
Ethicon made any pronouncements on involuntary joinder
that were necessary to the resolution of those cases.
There is no preexisting federal common law supporting
the court’s declaration in STC.UNM of a substantive
patent right that wholly trumps application of Rule 19.
Moreover, it is well established that, absent any
agreement to the contrary, “each of the joint owners of a
patent may make, use, offer to sell, or sell the patented
invention within the United States, or import the patent-
ed invention into the United States, without the consent
of and without accounting to the other owners.” 35 U.S.C.
§ 262. Given these rights, the Ethicon court declared that
“the congressional policy expressed by section 262 is that
patent co-owners are ‘at the mercy of each other.’” Ethi-
con, 135 F.3d at 1468 (quoting Willingham, 555 F.2d at
1344). Nothing in § 262 suggests that one co-owner can
deprive the others of their rights to enforce the patent.
Indeed, we have recognized that “[a] patentee’s right to
exclude is a fundamental tenet of patent law.” Edwards
Lifescis. AG v. CoreValve, Inc., 699 F.3d 1305, 1314 (Fed.
Cir. 2012) (citations omitted). And § 262 specifically
provides that each co-owner has an independent right to
Research Ltd., 257 F.3d 1324, 1331 (Fed. Cir. 2001) (citing
Ethicon for the proposition that United States patent law
“requires that all co-owners normally must join as plain-
tiffs in an infringement suit”). Mere repetition of dicta—
without any accompanying analysis and without consid-
eration of Rule 19—cannot give rise to a substantive
patent right sufficient to overcome application of that
rule.
14 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
practice the patent. It therefore seems inconsistent to say
that each co-owner has an independent right to practice
the patent, but that they may prevent one another from
enforcing the fundamental right of exclusion solely be-
cause they “prefer[] to take a neutral position.” See
STC.UNM, 754 F.3d at 943.
Finally, the Patent Act provides that “[a] patentee
shall have remedy by civil action for infringement of his
patent.” 35 U.S.C. § 281 (emphasis added). In other
words, each co-owner has a right to file a civil action to
enforce the patent. But the effect of our current precedent
is that, if a patent co-owner refuses to join the infringe-
ment suit voluntarily as a plaintiff, it can prevent the
other owner from obtaining judicial relief for accrued
damages. If that were the case, then § 281’s statutorily-
mandated right to a civil action would have little mean-
ing. Accordingly, while there may be some other support
for our precedent’s so-called overriding “substantive right”
against involuntary joinder in patent infringement cases,
our decisions have provided no statutory basis for this
rule, which actually appears inconsistent with several
provisions of the Patent Act.
Rather than once again exempting patent law from
the rules that govern all federal litigation, we should
either: (1) clarify the basis for our so-called substantive
right against involuntary joinder in patent infringement
cases and explain why it can overcome the dictates of
Rule 19; or (2) hold that Rule 19, including the provisions
for involuntary joinder set forth therein, applies to cases
such as this one. For these reasons, I respectfully suggest
that our Rule 19 precedent should be reconsidered en
banc by this court. Because I must abide by that prece-
dent in deciding this case, however, I concur in the judg-
ment.
United States Court of Appeals
for the Federal Circuit
______________________
ADVANCED VIDEO TECHNOLOGIES LLC,
Plaintiff-Appellant
v.
HTC CORPORATION, HTC AMERICA, INC.,
BLACKBERRY LTD, BLACKBERRY
CORPORATION, MOTOROLA MOBILITY LLC,
Defendants-Appellees
______________________
2016-2309, 2016-2310, 2016-2311
______________________
Appeals from the United States District Court for the
Southern District of New York in Nos. 1:15-cv-04626-CM,
1:15-cv-04631-CM, 1:15-cv-04632-CM, Judge Colleen
McMahon.
______________________
NEWMAN, Circuit Judge, dissenting.
I respectfully dissent. Joint inventor Vivian Hsiun
never had co-ownership of the ’788 Patent, contrary to the
majority opinion. By her Employment Agreement, her
invention was the property of her employer; she was not
the owner, and she could not acquire ownership simply by
refusing to sign a separate “assignment” document.
Vivian Hsiun was employed on the basis of a detailed
and thorough Employment Agreement, whereby all of her
inventions and other product of her employment are
owned by the employer. After the ’788 Patent application
2 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
was filed, of which she is listed as one of three joint inven-
tors, Ms. Hsiun declined to sign the PTO’s form of as-
signment document. This lapse was discovered by the
defendants during this litigation, and the defendants
moved to dismiss for lack of standing to enforce the pa-
tent. The district court granted the motion and the panel
majority agrees, finding sua sponte that Ms. Hsiun owns
one-third of the ’788 Patent.
However, the Employment Agreement placed owner-
ship of the employee’s inventions with the employer. In
view of the Employment Agreement, a separate assign-
ment document is not necessary to confirm that the
employee has no ownership of the ’788 Patent. Nor has
the employee asserted any such ownership.
DISCUSSION
The Employment Agreement contains several provi-
sions concerning ownership of inventions made by Ms.
Hsiun during her employment, as follows:
1.
Section 2.b provides that all inventions made
during employment will be disclosed and
held in trust and assigned to the Company
Agreement Section 2.b obligates Ms. Hsiun to disclose
and to assign all her right, title, and interest in all inven-
tions that she makes while employed by the Company:
2.b. Inventions and Original Works Assigned to
the Company. I agree that I will promptly make
full written disclosure to the Company, will hold
in trust for the sole right and benefit of the Com-
pany, and will assign to the Company all my
right, title, and interest in and to any and all in-
ventions, original works of authorship, develop-
ments, improvements or trade secrets which I
may solely or jointly conceive or develop or reduce
ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION 3
to practice, or cause to be conceived or developed
or reduced to practice, during the period of time I
am in the employ of the Company. . . .
Empl. Agmt., J.A. 258. On Ms. Hsiun’s refusal to sign the
PTO’s standard assignment form, the PTO accepted the
Employment Agreement as showing ownership by the
employer. Ms. Hsiun did not object to the procedures in
the PTO, and the face of the patent lists AVC Technology,
Inc. as “Assignee.” Ms. Hsiun did not object, and has
never asserted any ownership interest in the ’788 Patent.
2.
Section 2.c states that invention records are
the property of the Company
In conformity with the other provisions on ownership
of inventions made by Ms. Hsiun during her employment,
the Employment Agreement provides that all invention
records are the property of the employer:
2.c. Maintenance of Records. I agree to keep and
maintain adequate and current written records of
all inventions and original works of authorship
made by me (solely or jointly with others) during
the term of my employment with the Company.
The records will be in the form of notes, sketches,
drawings, and any other format that may be speci-
fied by the Company. The records will be availa-
ble to and remain the sole property of the
Company at all times.
Empl. Agmt., J.A. 259. It is not disputed that the ’788
invention was made during Ms. Hsiun’s employment. She
has asserted no ownership or any other rights to her
invention records.
3.
Section 2.e states the employee’s obligation to
assist in obtaining patents
4 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
This clause of the Employment Agreement refers to
patents on inventions “assigned hereunder” to the em-
ployer:
2.e. Obtaining Letters Patent, Copyrights, and
Mask Work Rights. I agree that my obligation to
assist the Company to obtain United States or
foreign letters patent, copyrights, or mask work
rights covering inventions, works of authorship,
and mask works, respectively, assigned hereunder
to the Company shall continue beyond the termi-
nation of my employment, but the Company shall
compensate me at a reasonable rate for time actu-
ally spent by me at the Company’s request on
such assistance. . . .
Empl. Agmt., J.A. 259. The words “assigned hereunder”
and the continuing obligations after termination of em-
ployment conform to the mutual intent and understand-
ing, of employer and employee, with respect to the
Company’s ownership of inventions made during her
employment.
Ms. Hsiun did not object to the Company’s filing of
this patent applications naming her as a joint inventor;
such filing was authorized by the agreed right of owner-
ship of her inventions.
4.
Section 2.e provides for action by the employ-
er in absence of the employee’s signature on
patent documents
Ms. Hsiun agreed that if her signature is unobtaina-
ble for “inventions or other rights assigned to the Compa-
ny,” the Company may act in her stead:
2.e. [continued]. . . . If the Company is unable be-
cause of my mental or physical incapacity or for
any other reason to secure my signature to apply
ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION 5
for or to pursue any application for any United
States or foreign letters patent, copyrights, or
mask work rights covering inventions or other
rights assigned to the Company as above, then I
hereby irrevocably designate and appoint the
Company and its duly authorized officers and
agents as my agent and attorney in fact, to act for
and in my behalf and stead to execute and file any
such applications and to do all other lawfully
permitted acts to further the prosecution and is-
suance of letters patent, copyrights, and mask
work rights with the same legal force and effect as
if executed by me. . . .
Empl. Agmt., J.A. 259–60. This provision was a basis of
the Company’s prosecution of the ’788 application, and
issuance of the ’788 Patent naming Ms. Hsiun as a joint
inventor and AVC Technology as assignee.
5.
Section 2.b requires the employee to hold all
inventions in trust for the Company
2.b. I agree that I . . . will hold in trust for the
sole right and benefit of the Company, and will
assign to the Company all my right, title, and in-
terest in and to any and all inventions, . . . during
the period of time I am in the employ of the Com-
pany.
Empl. Agmt., J.A. 258. My colleagues on this panel
concede that the trust provision of the Employment
Agreement may apply, Maj. Op. at 7, but nonetheless hold
that the trust provision is ineffective to establish that Ms.
Hsiun held her inventions in trust “for the sole right and
benefit of the Company.” My colleagues state that it is
necessary for the beneficiary to sue the trustee in order to
obtain the benefit of the trust. No supporting authority is
cited, or relates to these facts.
6 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
The parties’ briefs discuss a California case in which
the court held that a trust was not created on a dying
man’s oral instruction to pay his hospital bill and dispose
of his funds, the court stating in Monell v. College of
Physicians & Surgeons of San Francisco, 198 Cal. App. 2d
38, 48–49 (1961), that “it is essential to the creation of a
valid express trust that some estate or interest should be
conveyed to the trustee and, when the instrument creat-
ing the trust is other than a will, that such estate or
interest must pass immediately, although the enjoyment
of the cestui may commence in the future.” The Monell
court held that the oral instruction did not create a trust
when the attempted disposition was testamentary in
nature, id. at 51, and that the disposition had to comply
with the formalities of wills. Id. To the extent that the
Monell case is relevant to the trust provision of the Em-
ployment Agreement, it supports the immediate convey-
ance of inventions to the trust, for the benefit of the
Company, in accordance with the signed Employment
Agreement.
The panel majority also states that under California
law the beneficiary of the trust is not the real party in
interest. However, California law accords with the gen-
eral law of trusts, as represented by Kadota Fig Ass’n of
Producers v. Case-Swayne Co., 73 Cal. App. 2d 796, 801
(1946) (“The real parties in interest are the beneficiaries
under the business agreement, and not the trustees or
directors.”). Ms. Hsiun is the trustee of her inventions,
which vest in trust immediately on creation of the inven-
tion. The employer is the beneficiary of her inventions as
established by the Employment Agreement. The benefi-
ciary is not denied its beneficial rights if the trustee is
absent or inactive. See id. (“The reason for requiring an
action to be prosecuted in the name of the real parties in
interest (Code Civ. Proc., § 367) is to save the defendants
from a multiplicity of suits . . . .”).
ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION 7
At a minimum, the trust provision further demon-
strates the mutual intent and understanding that Ms.
Hsiun’s inventions made during her employment are for
the sole benefit of the employer.
6.
Section 2.e provides a “waiver and quit-
claim” of infringement claims of patents “as-
signed hereunder”
The Employment Agreement contains the following
waiver and quitclaim provision:
2.e. [continued] . . . I hereby waive and quitclaim
to the Company any and all claims, of any nature
whatsoever, which I now or may hereafter have
infringement of any patents, copyrights, or mask
work rights resulting from any such application
assigned hereunder to the Company.
Empl. Agmt., J.A. 260.
The waiver and quitclaim provisions comport with the
mutual intent and understanding that Ms. Hsiun re-
tained no ownership of patents on her inventions “as-
signed hereunder to the Company.” The quitclaim
assures that any rights the grantor had, are transferred
to the grantee of the property. California precedent is
clear. E.g., City of Manhattan Beach v. Superior Court,
914 P.2d 160, 164 (1996) (“A quitclaim deed transfers
whatever present right or interest the grantor has in the
property.”); see generally, “Quitclaim,” Black’s Law Dic-
tionary (4th ed. 1968) (a quitclaim is “intended to pass
any title, interest, or claim which the grantor may have in
the premises”).
The panel majority states that since the ’788 Patent
was not assigned to the Company, “the quitclaim provi-
sion has no application.” Maj. Op. at 9. To the contrary:
if indeed the patent was not individually assigned in a
8 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
special document, the “quitclaim to the Company” assures
transfer of the property to the Company.
A quitclaim does not require that the property was al-
ready assigned, for in such case no quitclaim would be
needed. However, the quitclaim does require that “any
and all claims” that may “now or hereafter” exist, are
“assigned hereunder to the Company.”
This provision further renders impossible that Ms.
Hsiun now owns one-third of the ’788 Patent, for any such
ownership was quitclaimed to the employer.
7.
Section 5 requires the employee to execute all
documents needed to carry out the Agreement
The record before us does not explain why Ms. Hsiun
refused to sign the provided PTO assignment form, for the
Employment Agreement is explicit as to the employee’s
obligations to execute any required documents:
5. Representations. I agree to execute any proper
oath or verify any proper document required to
carry out the terms of this Agreement. I repre-
sent that my performance of all the terms of this
Agreement will not breach any agreement to keep
in confidence proprietary information acquired by
me in confidence or in trust prior to my employ-
ment by the Company. I have not entered into,
and I agree I will not enter into, any oral or writ-
ten agreement in conflict herewith.
Empl. Agmt., J.A. 260–61.
Throughout this litigation, there is no assertion by
Ms. Hsiun of any ownership interest in the ’788 Patent, or
ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION 9
any negation of her obligations set forth in the Employ-
ment Agreement. 1
8.
Other provisions of the Employment Agree-
ment comport with the mutual understand-
ing of employer ownership of employee
inventions
Several other provisions of the Employment Agree-
ment relate to inventions, and further implement the
understanding of employer ownership of the employee’s
work product:
Section 3 prohibits conflicting future employment.
Section 4 provides for ownership by the Company of
all documents and property created by the employee.
Section 6.b states that this is the entire agreement
and cannot be changed except “in writing signed by the
party to be charged.”
Section 6.c provides for severability.
Section 6.d binds the employee’s heirs and executors
for the benefit of the Company, its successors, and its
assigns.
Section 6.e provides that the Agreement survives the
termination of employment, and benefits the Company’s
successors and assigns.
1 The panel majority states that “the terms of the
Employment Agreement provide otherwise,” the “other-
wise” being “unambiguous provisions” in the Employment
Agreement purportedly negating assignment to the
employer. Maj. Op. at 9. No citation is offered, and I
have searched in vain for any such unambiguous provi-
sion.
10 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
Section 7 requires the employee to identify all pre-
employment inventions—there were none.
It is inconceivable that the parties intended that un-
less a separate assignment document was signed as to
each and every aspect of the employee’s work product, the
provisions of the Employment Agreement would not
apply.
9.
Section 6.a of the Agreement states that Califor-
nia law applies
California contract law provides:
Cal. Civ. Code § 1643: A contract must receive
such an interpretation as will make it lawful, op-
erative, definite, reasonable, and capable of being
carried into effect, if it can be done without violat-
ing the intention of the parties.
The record contains no challenge to the mutual intent
and understanding of the parties to the Employment
Agreement. The provisions of the Employment Agree-
ment demonstrate, over and over, the intent and under-
standing that Ms. Hsiun’s inventions made as an
employee are the property of the employer. There are no
contrary provisions, and no contrary evidence was pre-
sented in this action.
Every contract provision, and the entirety of the Em-
ployment contract, show this mutuality of intent. The
intention of the parties must be respected and “intent is
to be inferred, if possible, solely from the written provi-
sions of the contract.” People ex. rel. Lockyer v. R.J.
Reynolds Tobacco Co., 107 Cal. App. 4th 516, 525 (2003).
California law provides no contrary authority, and none
was asserted in this case.
It is not reasonable now to hold that the Employment
Agreement fails in its intended purpose, for every provi-
ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION 11
sion of the Agreement accords with and implements the
intent that the employee’s inventions are the property of
the employer.
10.
The Delaware Chancery Court quitclaimed
and assigned the ’788 Patent to the plaintiff
The record further demonstrates that ownership of
the ’788 Patent, by Ms. Hsiun’s employer and its succes-
sors, was recognized in corporate proceedings in Dela-
ware.
After a challenge to the transfer of the ’788 Patent, a
Receiver was appointed by the Chancery Court, who held
as follows:
I, Joseph Cicero, . . . have quitclaimed, as-
signed, transferred, set over and conveyed and do
hereby quitclaim, assign, transfer, set over and
convey unto Advanced Video Technologies LLC, a
New York limited liability company (“Assignee”),
its successors, and assigns, any and all right, title,
and interest to United States Patent No.
5,781,788 (the “Patent”) held and enjoyed by As-
signor, for the entire term of the Patent, including
any reissues, reexaminations, and extensions
thereof, including the right to sue for and recover
damages in respect of past acts of infringement.
This assignment includes, but is not limited to, all
Assignor’s right to all income, royalties, damages
and payments now or hereafter due and payable,
and in and to all causes of action, either in law or
in equity, and the right to sue and counterclaim
for and collect past and continuing damages for
infringement. The right, title and interest con-
veyed in this Assignment is to be held and enjoyed
by Assignee and Assignee’s successors and assigns
as fully and exclusively as it would have been held
12 ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION
and enjoyed by Assignor had this assignment not
been made.
[signed] Joseph B. Cicero, Esq., Date: 6/5/15
Receiver for AVC Technology, Inc.
J.A. 130. The record does not show any appeal by any
person or other entity from the Delaware Court’s deter-
mination, or any challenge to or dispute with this estab-
lishment of ownership of the ’788 Patent by Advanced
Video Technologies.
11.
Federal Circuit precedent does not contra-
vene the Employment Agreement
Ethicon Inc. v. U.S. Surgical Corp., 135 F.3d 1456
(Fed. Cir. 1998) does not support the position that Ms.
Hsiun owns one-third of the ’788 Patent. The situations
and rulings are widely different. In Ethicon, a consultant
who had not agreed to assign his inventions made a
contribution to a claim, and the court held that the con-
sultant owned an undivided interest in the patent. Id. at
1464. Here, in contrast, ownership of Ms. Hsiun’s inven-
tions is established by the Employment Agreement.
Unlike Ms. Hsiun’s contractual agreement, in Ethicon
there was no employment agreement, no agreement as to
ownership of inventions, no holding in trust for the em-
ployer, no waiver and quitclaim to the employer. The
ruling in Ethicon does not govern ownership of Ms.
Hsiun’s inventions.
Nor does the ruling in Arachnid, Inc. v. Merit Indus-
tries, Inc., 939 F.2d 1574 (Fed. Cir. 1991) apply to this
case. In Arachnid a consultant had agreed by contract
that his inventions “will be assigned” to the company, but
he did not execute an assignment. The court held that
although equitable title may have been acquired by the
company, legal title was needed before damages could be
obtained. Id. at 1579. The gaps that the court perceived
ADVANCED VIDEO TECHNOLOGIES v. HTC CORPORATION 13
in the consulting agreement in Arachnid are filled in the
Employment Agreement signed by Ms. Hsiun. Her
Agreement not only provides for ownership by the em-
ployer of all inventions made by the employee, but impos-
es a trust and implements a quitclaim in favor of the
employer. See Akazawa v. Link New Tech. Int’l, Inc., 520
F.3d 1354, 1356 (Fed. Cir. 2008) (“[T]here is nothing that
limits assignment as the only means for transferring
patent ownership. . . . [O]wnership of a patent can be
changed by operation of law.”).
Ms. Hsiun’s Employment Agreement is directly con-
trolled by contract law. The Employment Agreement that
she signed established ownership by the employer of the
’788 Patent by way of clear contract provisions imple-
menting the intent and understanding and agreement of
employer and employee, as a condition of the employment.
There is no ambiguity, and Ms. Hsiun asserts no owner-
ship in the ’788 Patent.
CONCLUSION
The Employment Agreement established the terms
and conditions of Ms. Hsiun’s employment. These terms
and conditions include ownership by the employer of all
inventions made by the employee during her employment.
My colleagues’ award to Ms. Hsiun of one-third of the ’788
Patent cannot be supported, under any view of any law. I
respectfully dissent.