The Difference Between an Assignment and a License of a Patent

The transfer of rights in a patent generally fall into two categories: an assignment and a license. The transfer is usually accomplished by an agreement.

Whether the agreement at issue is an assignment or a license matters because generally an assignee can sue for infringement alone, while a licensee of less than substantially all of the patent rights cannot sue for infringement alone without the patent owner.

A patent grants the owner certain rights, such as the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States. 35 U.S.C. § 154(a)(1) 

Usually, an assignment transfers all of the rights* of one party in a patent to the recipient (the assignee). Vaupel Textilmaschinen KG v. Meccanica Euro Italia S.P.A., 944 F.2d 870, 875 (Fed. Cir. 1991); 35 USC 261. Also, a transfer of substantially all of the patent rights can be considered an assignment for the purposes of standing to sue for infringement. A transfer of less than substantially all of the rights, is a mere license. It is the content and legal effect of the agreement that determines whether it is an assignment or license, not its title.

In the Vaupel case, the court found the agreement at issue there transferred substantially all of the rights in the patent, where the seller retained the following rights: “1) a veto right on sublicensing by Vaupel; 2) the right to obtain patents on the invention in other countries; 3) a reversionary right to the patent in the event of bankruptcy or termination of production by Vaupel; and 4) a right to receive infringement damages.” Therefore, despite the seller retaining these rights, the agreement at issue was considered an assignment.

In contrast, in Sicom Sys. v. Agilent Techs., Inc., 427 F.3d 971, 978-979 (Fed. Cir. 2005), Canada licensed the patent at issue to plaintiff Sicom. The court found the license did not transfer substantially all of the rights, where Canada reserved the right to use the patented technology itself, to veto Sicom’s reassignment of its rights, and to sue for non-commercial infringement. Canada also retained legal title to the patent.

The line between a transfer of substantially all of the rights and less than substantially all of the rights is gray. Ignoring this issue and simplifying it, an assignment usually transfers everything (including legal title) whereas a license grants less than all of the rights and reserves rights to the person or entity granting the license.

*The Supreme Court has also said that the transfer of an undivided portion or share of a patent can also be an assignment, but then assignor and assignee must act together to sue for infringement. Waterman v. Mackenzie, 138 U.S. 252 (1891).

Is the Bottom or Back of Your Design Important?

When filing a design patent application, you should consider whether the design has unimportant features or sides. Then the design patent application can be prepared to take this into account.

For example, Super-Sparkly Safety Stuff, LLC sued Skyline USA, Inc. alleging it of infringing Design Patent D731,172S (‘172 Patent).

The complaint shows the following image of Skyline’s alleged pepper spray infringing product. The product does not have rhinestones on the bottom as compared to the cylindrical side.

However the design of the ‘172 Patent has rhinestones on the bottom, as shown in figure 3.

The district court granted summary judgement of non-infringement finding that the Skyline product did not infringe the ‘172 patent.

The court said that “the accused product has no rhinestones on the canister bottom … This difference is significant, particularly given the relatively simple and limited elements of the product design, and would be obvious to an ordinary observer.”

You might think that the bottom of the product is not that important and differences in the bottom should not weight heavily when comparing an alleged infringing product to a design patent. But this case shows that even the bottom of a product might be important in a design patent case.

If the bottom or the back of your design is not important, then consider whether it should not be claimed by presenting it in broken lines.

In this case, it may be that the bottom is important because the bottom is where the key ring attaches on the pepper spray product. Therefore, the bottom could be in view to the user often in normal use.

Citation: Super-Sparkly Safety Stuff, LCC v. Skyline USA, Inc., 3:18-cv-00587-N (N.D. Tex 2020). Super-Sparkly appealed and the appeal is pending.

Hat tip to Design Law.

Inventing the Bicycle: Why Did It Take So Long?

When discovering a solution to a problem, it is not uncommon to think, “Why didn’t I think of this earlier?” The question arises with inventions in general: “Why didn’t someone invent this earlier?”

Jason Crawford attempts to answer that question for bicycles in an post titled, “Why did we wait so long for the bicycle?” He considers a number of possibilities, such as technology factors, design iteration, the quality of roads, competition from horses, and economic factors.

Crawford dates early references to human powered four wheel vehicles to the 1400s. He says it wasn’t until 1817 that that a two wheel ancestor to the modern bicycle was invented by Karl von Drais, which he called Laufmaschine, or “running machine. ” It had a wood frame, no peddles, and was powered by pushing off the grounds with one’s feet. Drais was an aristocrat with free time to tinker.

But the key advance over the Laufmaschine was the addition of peddles, which didn’t arrive for decades (maybe between 1839 and 1860).

U.S. Patent 59,915 for a “Velocipede” issued in 1866.

And chains and gearing reportedly didn’t arrive until still later in the 1880s.

Crawford, considers whether the technology had not yet advanced sufficiently to allow the modern bicycle to become an adjacent possible. In other words, maybe “advanced metalworking was needed to make small, lightweight chains and gears of high and consistent quality, at an acceptable price—and that no other design, such as a belt or lever, would have worked instead.” Further, maybe inflatable (pneumatic) tires, which arrived around 1888, were important.

However, Crawford discounts the technology cause, at least somewhat, after considering other inventions, such as the cotton gin, and the flying shuttle, that took a long time to arrive and their prior invention didn’t appear to be limited by the state of technology.

Crawford concludes the need for economic surplus was one of the main contributors to the delay in the arrival of the bicycle. Nassim Talab has also noted this when he said, “Knowledge formation, even when theoretical, takes time, some boredom, and the freedom that comes from having another occupation.” Talab notes that many inventions originated from the English clergy, whom had extra time on their hands.

Crawford says, “it seems that there needs to be a certain level of surplus to support the culture-wide research and development effort that creates inventions.” He also notes that “Maybe GDP per capita just has to hit a certain point before people even have time, attention and energy to think about new inventions that aren’t literally putting food on the table, a roof over your head, or a shirt on your back.”

This fits with Nicola Tesla’s explanation of the importance of having time to both develop ideas and let them incubate, when he said, “After experiencing a desire to invent a particular thing, I may go on for months or years with the idea in the back of my head.”

Inventing is probably facilitated by (1) sufficient technology advancement to support the invention and adoption of the invention (i.e. the invention and its adoption is within the adjacent possible) and (2) sufficient economic surplus so that persons have time for thinking and tinkering.


Design Patent on Open Ended Wrench, Functional or Ornamental?

The USPTO recently issued US Design Patent D859,108 covering a wrench, which is shown below.

Every part of this wrench is shown in broken lines except the U-shaped mouth working portion that is for engaging with another part, such as a nut, bold head, or the like. Therefore, the U-shaped part, shown in solid lines, is the only claimed part of the wrench.

I wonder whether the curvy design of the U-shaped part is functional. Design patents are to be directed to ornamental designs. So, if a design patent is directed to a design that is primarily functional, the patent can be invalid.

However, the standard for invalidating a design patent as directed to primarily functional matter is stringent. See Ethicon Endo-Surgery, Inc. v. Covidien, Inc., 796 F.3d 1312, 1328 (Fed. Cir. 2015). The Federal Circuit Court of Appeals has said that “[w]hen there are several ways to achieve the function of an article of manufacture, the design of the article is more likely to serve a primarily ornamental purpose.” It also said, “[I]f other designs could produce the same or similar functional capabilities, the design of the article in question is likely ornamental, not functional.”

Here, I don’t know whether the curvy design of the U-shaped part imparts a functional benefit, or, if so, whether other designs could also achieve that function. However, it is interesting that the only claimed portion of this wrench is the working mouth portion that is for engaging with another part, such as a nut, bolt head, or the like.

How Limiting is a Specific Date and Time in a User Interface claimed in a Design Patent?

Apple recently was granted US Design Patent D861,014 for an electronic device with graphical user interface. The patent is directed to the user interface for a smart watch. Below is figure 1.

Apple kept the time and date in solid lines claiming them rather than making the time and date in broken lines. Providing the date and time in broken lines would have made those elements unclaimed and would not have limited the claimed design.

However, including the date and time might not be much of a limitation in terms of the actual date and time displayed. First, any competitor device with the same vertical stripe pattern and time in the upper right location would show 10:09 twice a day. The old adage applies that a broken clock is correct twice a day. Further, it is likely that Wednesday will fall on the 23rd of the month every now and then.

Presenting the date and time in solid lines does limit the claimed design here. But maybe not greatly in terms of the actual time of 10:09 or the date of Wednesday the 23rd. Instead, the limitation probably is more in terms of the location and presentation of the date and time.

The original application that resulted in the above patent contained drawings showing the date and time in broken lines as well as solid lines. But, Apple amended the application to focus on the non-broken line version. There is a continuation patent application filed where Apple might be pursing the broken line version, which is shown below. If Apple obtains a patent on the broken line version below, it will have hedged its risk that the solid line version is too limiting.

Will They Steal My Invention?

“[He] requested that he and his team be allowed to spend some time alone with the prototype, during which he photographed it without permission.”

Inventors and businesses are often concerned that their invention or technology will be stolen or copied in the marketplace. However, keeping an invention secret is not always an option. If bringing the invention to market requires disclosing the invention to the public, then secrecy is not an option. But neither, in such case, is keeping it locked up in the lab or under the mattress–if commercial exploitation of the invention is desired.

There are at least two ways to protect yourself when interacting with another about the invention: (1) file a patent application on the invention beforehand, (2) enter into a favorable and strong nondisclosure agreement, or (3) both.

However, there are rarely guarantees. Even with a nondisclosure agreement agreement in place things can still go sideways, as allegedly happened to Mr. Hrabal when he interacted with Goodyear.

Mr. Hrabal’s complaint alleges the following in the case of Coda Development v. Goodyear Tire & Rubber Company, 2018-1028 (Fed. Cir. 2019). In 2008, Mr. Hrabal invented a self-inflating tire (SIT) technology. General Motors expressed an interest and wanted to involve Goodyear. Goodyear reached out to Coda Development, Mr. Hrabal’s company, requesting a meeting. Before the meeting the parties executed a nondisclosure agreement restricting use of information regarding the SIT Technology.

Then Coda and Goodyear met in 2009 for the first time and requested that Coda share information on the SIT technology. At a second meeting in 2009, Coda allowed Goodyear to examiner a functional prototype of the SIT technology. Also at this second meeting, Mr. Benedict of Goodyear, “requested that he and his team be allowed to spend some time alone with the prototype, during which he photographed it without permission.”

Following the second meeting in 2009, months passed without any communication from Goodyear. Mr. Benedict later in 2009 declined an invitation from Coda to restart communications over a dinner saying that a meeting “would be premature at this point.”

In December 2009, Goodyear applied, without Coda’s knowledge, for a patent titled “Self-Inflating Tire Assembly” naming Mr. Benedict as an inventor, which became U.S. Patent 8,042,586.

Coda assumed that Goodyear lost interest. But in 2012, Coda received an unsolicited email from a then ex-Goodyear employee that said “I am retired now from Goodyear and see in the news today that they have copied the SIT. Unfortunate. I though China companies were bad.”

Between 2012 and 2015 eleven other patents issued to Goodyear covering assemblies and methods for assembly of pumps and other devices used in self-inflating tires, which Coda claims cover confidential information Coda disclosed to Goodyear.

Goodyear denied Coda’s claims and denied that the Coda’s SIT technology was new. This case is only at the initial stage so the court has not made a final determination on these allegations.

What’s the take away here? Does one forego opportunities with other companies even while taking precautions and having a good nondisclosure in place? Probably no.

One should take reasonable steps to protect their interests. But, these allegations illiterate that things could still go badly. 

Could someone try to steal your invention? It’s possible. But that possibility probably should not stop you from trying to commercialize the invention after taking reasonable steps to protect yourself, particularly if the alternative of indefinite secrecy means that your invention might never get off the ground commercially.

Is There a Market for the Invention?

“[T]he lesson Edison drew from the experience was that invention should not be pursued as an exercise in technical cleverness, but should be shaped by commercial needs.”

Thomas Edison is an inventor famous for his long running electric light invention among many others. Edison accumulated over 1000 patents in his life time. His life and work is covered in Randall Stross’ book The Wizard of Menlo Park: How Tomas Alva Edison Invented the Modern World.

Early in his career, while working as a telegraph operator, Edition invented on the side. According to Stross, “Edison filed patent applications as fast as the ideas arrived.” The first patent application that Edison filed was for a legislative chamber vote recorder (U.S. Patent No. 90,646). The vote recorder could shorten the time it took to tabulate votes by hours.

The invention provided buttons at each member’s desk and the chamber’s speaker could see running totals for “aye” and “nay” on twin dials.

However, there was no interest in the Capital for the invention. Stross describes a Capital insider’s reaction to the invention as “undisguised horror.” Stross continues: “The minority faction would not embrace an expedited voting process because it eliminated the opportunity to lobby for votes, nor would the majority want a change, either.”

Stross concludes, “The vote recorder was a bust, and the lesson Edison drew from the experience was that invention should not be pursued as an exercise in technical cleverness, but should be shaped by commercial needs.”

Explaining Technical Details of an Invention in an Understandable Manner

In a patent dispute, one challenge can be explaining technical features of an invention or product in an easily understandable manner. Analogies are helpful on this score.

In the patent infringement case of Sprint v. Time Warner Cable, Time Warner tried to distinguish its IP-based technology from ATM technology described in the patents at issue. Time Warner’s expert described the two technologies this way:  ATM is “like being on a train track where you have to follow the tracks,” but IP is like “driving a car from Point A to [Point] B, where you’re free to take different roads.”

Assuming this is an accurate analogy, the reference to railways and roads allows the reader to readily understand the emphasized difference between the technologies.

Case Citation: Sprint Communications Company LP v. Time Warner Cable, Inc., No. 2017-2247 (Fed. Cir. Nov. 30, 2018).

Describing Features of the Invention Both Broadly and in Detail

Drafting a patent application often involves  describing the invention both broadly and in detail. But how can something be described both broadly and specifically?A decision in a case between Sprint and Time Warner Cable illustrates one way.

In that case, Time Warner argued that the patents asserted by Sprint did not comply with the written description requirement. It argued that the claims were broader than what was described in the patent description. Time Warner argued that the patent description was limited to ATM networks. The appeals court disagreed.

The patent description at issue in the case included reference to “[b]roadband systems, such as Asynchronous Transfer Mode (ATM).” The court said that this wording “strongly suggests that the patents are not limited to ATM technology.”

In the Sprint case, Time Warner accused technology did not use ATM technology but instead used IP technology. If the patents did not describe broadly “broadband systems” it is less likely that the claims would have been useful to cover Time Warner’s IP-based system.

The form of the phrasing is “[broad or general descriptor], such as [detailed or specific descriptors].” This form can allow claims to the broad element while also specifying specific details in the patent application. Multiple detailed elements can be listed. For example, “a wireless protocol, such as WiFi, CDMA, 3G, 4G, LTE…” or another example, “a fastener, such as a screw, bolt, nail, rivet, hook and loop fastener….”

By describing an invention feature broadly first and then providing detailed examples of the broad element in an exemplary way, the invention feature is described both broadly and in detail. Describing the invention feature broadly provides the opportunity for broad patent coverage. Providing detailed examples supports the broad description and provides a fall-back position if some portion of the broad subject matter is already in the prior art.

Case Citation: Sprint Communications Company LP v. Time Warner Cable, Inc., No. 2017-2247 (Fed. Cir. Nov. 30, 2018).

Card Games Using a Standard Deck Face a Tough Road at the Patent Office

Ray and Amanda Smith applied for a patent on a method of playing a wagering card game. The title of their patent application was “Blackjack Variation.” The court of appeals noted that the Smiths’ claim were directed to rules for playing a wagering game using conventional shuffling and dealing of a standard deck of cards. As such, the court of appeals found the Smiths’ claims were not patent eligible in In Re Smith, No. 2015-1664 (Fed. Cir. 2016).

The court found that the Smiths’ claim were similar to other fundamental economic practices previously found abstract. The court agreed with the reasoning of the patent office that “[a] wagering game is, effectively, a method of exchanging and resolving financial obligations based on the probabilities created during the distribution of cards.”

The court also found that the claims did not contain an inventive concept sufficient to transform the abstract idea into a patent-eligible subject matter. The shuffling and dealing of physical playing cards from a standard card deck were purely conventional activities, according to the court.

However, the court noted that some inventions in the gaming arts could be patent-eligible. The court said “claims directed to conducting a game using a new or original deck of cards potentially” could be patent eligible.