In Lone Star Silicon Innovations v. United Microelectronics, Nos. 2018-15 82 (Fed. Cir. May 30, 2019), the U.S. Court of Appeals for the Federal Circuit discussed how restrictive patent assignment agreements can prevent a party from suing for patent infringement. A patentee, or one who has “all rights or all substantial rights” in a patent, can assert that patent in an infringement suit. A party with rights to a patent, but lacking “all rights or all substantial rights” in it, is merely a patent licensee who cannot bring an infringement suit on its own. Instead, the patentee must join the licensee’s suit in order for it to proceed.
Patentees may and often do transfer patent rights in transactions governed by assignment agreements, which, like any contract, differ in substance and form. Some assignment agreements convey “all right, title and interest” in a patent to the purchaser, whereas others reserve certain rights for the seller or place restrictions on what the purchaser can do with the patent. A transfer of patent rights that falls short of conveying “all right, title and interest” is a license, not an assignment. But even when an agreement includes an “all rights” provision, the seller will retain his patentee status if the agreement places too many restrictions on the purchaser or reserves too many rights for the seller. That is, depending on its terms, an assignment agreement may actually constitute a license, even if contrary to the parties’ intentions. So, when patents are assigned, the question of who has “all rights or all substantial rights” in it, and, thus, who can bring suit for infringement, depends entirely on the nature of the agreement. The Federal Circuit addressed these issues in Lone Star.
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