Patent Assignment Must be in Writing; But Some Transfers are not Assignments

Akira Akazawa v. Link New Tech (Fed. Cir. 2008).

Yasumasa Akazawa was the inventor and owner of a patent covering a new way to change engine coolant. When he died intestate in 2001, his wife and daughters inhereted his entire estate. The daughters then transferred their interest to the mother, and the mother assigned the patent to Akira Akazawa. Akira Akazawa then sued New Link for infringement.

The question on appeal is whether Akira Akazawa properly holds title (because of the non-written intestate transfer).

35 USC §261 has been interpreted to require that patent assignments be in writing. “Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing.”  Thus, New Link questions whether the intestate transfer of rights satisfies the writing requirements of Section 261.

The CAFC rejected this argument — holding that although ASSIGNMENTS must be in writing, there are other means of transfering patent ownership that need not be in writing. In particular, transfer through “operation of law” need not be in writing under the statute.

On remand, the district court must determine whether, under Japanese intestate law, the title to the patent properly transferred as an operation of law – or whether an assignment was necessary.

If the district court concludes that the ‘716 patent was transferred to [the heirs] upon Yasumasa’s death, then the subsequent transfers between [the heirs] and Akira conveyed ownership of the ‘716 patent to Akira. If, however, the district court concludes that under Japanese law the ‘716 patent was transferred to the estate of Yasumasa which then fell under the control of an administrator or executor, a written assignment in accordance with § 261 may then be necessary to convey the patent from the estate to Yasumasa’s heirs.

Vacated and remanded.

 

Comments

[StoopidQs]

Couldn't the court merely have decided that the statute that governs intestate transfer is "an instrument in writing?" (i.e., does the instrument have to be specific to the patent rather than a general dispensation of property?)

[CaveMan]

Better yet, Stoopid, the probate body's decree transferring the intestate's estate to the heirs could operate as a writing. However, its really not that complicated.

As for the case itself, the word "duh" comes to mind, however I understand counsel's imperative to raise the issue out of a desire to zealously represent. At least I hope that's the reason.

As any first year law student knows, Statute of Frauds general requires a transfer to be "by writing, or by act and operation of law" Title clearly passed by operation of law in Japan. Heck, there might even be some kind of paper in Japan that acts to officially transfer the right in lieu of an inter vivos transfer by written assignment.

Also 261 only says that a patent "shall be *assignable* at law by an instrument in writing." 261 does not preclude other means of transfer of ownership. 261 clearly does not say that "the only way an interest in a patent can be transferred is by an assignment in writing"

The CAFC clearly believes, rightly, that title can pass by operation of law as is a customary attribute of personal property (also codified in 261 "Patents shall have the attributes of personal property"). However it would be very prudent for any transfer including an intestate transfer to be properly recorded.

[CaveMan]

transfer of the estate to an administrator does not sever the beneficial interest that flows to the heirs, therefore the property can be considered constructively transferred subject to any ministerial actions necessary by the executor such as an accounting, valuation or the like.

I retract my "duh" and suddenly find this to be a fascinating issue...

[me]

Wha? The guy is dead so all his patents are now unenforceable? That sure is not right...did I miss something? Did the Judge?

[P.A.]

You might all be missing the forest for the trees. The CAFC did not say whether title passed by operation of law or not. It merely said that federal law does not PROHIBIT title passing by operation of law, if the LOCAL laws so provide.

This is a choice of law issue, and the district court applied the incorrect body of law (and quite possibly a ficticious body of law since 35 USC 261 does not say what the district court thought it said). Since this is a question of succession, the court should apply the law of domicile of the decedent. In this case, Japanese law controls, and if Japanese laws of intestacy provide that title was vested in the heirs without a documentary transfer, then Akira has good title.

See my earlier write-up of this case here: http://reading-the-patent-law.blogspot.com/2008/04/akira-and-choice-of-law.html

[CaveMan]

P.A. thank you for zeroing in on the issue and, by the way, nice article. In any case, it seems to me that whatever defect, if any, arose in Akira's title by a lack of a written instrument can be easily cured by generating a curative Japanese instrument. Do you agree?

[P.A.]

CaveMan,

Not necessarily. Can it be cured? Most likely. Easily? That's another matter (although if the plaintiff is fairly certain that infringement is occuring, then it is probably worth the expense.

In all likelihood, probate is closed, and the administrator is probably long gone. So, if Japanese law requires the administrator to transfer assets in writing on behalf of the decedent, then there is a true defect in the chain of title. I tell you honestly that I have no idea what the process is in Japan for re-opening probate, appointing an administrator etc... I assume it can be done, but you'd have to ask a bengoshi.

[G]

"So, if Japanese law requires the administrator to transfer assets in writing on behalf of the decedent, then there is a true defect in the chain of title."

I hadn't considered this transfer. I thought it was the transfer of their rights by the daughters to their mother.

So - there are possibly to transfer issues here (?). Both may be settled by local law. But it seems getting a written document from the daughters to the mother would be easier than re-opening the estate (assuming all parties are still alive).

[G]

"So, if Japanese law requires the administrator to transfer assets in writing on behalf of the decedent, then there is a true defect in the chain of title."

I hadn't considered this transfer. I thought it was the transfer of their rights by the daughters to their mother.

So - there are possibly TWO (duh!@) transfer issues here (?). Both may be settled by local law. But it seems getting a written document from the daughters to the mother would be easier than re-opening the estate (assuming all parties are still alive).

[CaveMan]

After a little research, I found that in Japan, to the best of my understanding, title passes automatically. Therefore, title was vested in the heirs by operation of Japanese law.