Precision in Patent Assignments
During friendly mergers of corporate entities, legal departments and attorneys can sometimes let their guards down when conducting diligence or drafting language for agreements. For example, they may fail to precisely draft patent assignments. Doing so can have undesirable results many years later.
That may be what happened in Tyco Healthcare Group L.P. v. Ethicon Endo-Surgery, Inc. Four years into the patent infringement case, the defendant (Ethicon) filed a motion to dismiss the case because, according to Ethicon, the plaintiff (Tyco Healthcare) did not own the asserted patents.
Tyco Healthcare (now Covidian) had acquired various patents many years earlier. An agreement executed during the acquisition assigned all assets and patents except "patents and patent applications relating to any pending litigation" to Tyco Healthcare. The assignor also entered into a settlement with Ethicon on the same day to settle a patent dispute. Neither the assignment nor the settlement agreement identified the patents that each contemplated.
The court agreed with Ethicon and dismissed the case without prejudice because it could not tell from the documents whether the patents now asserted related to the settlement with Ethicon and so were unintentionally left off the assignment to Tyco Healthcare.
Even when transactions are friendly, attorneys should draft patent assignments with precision. One way to be precise is to specify by number which patents and patent applications are being assigned and/or which are not. Moreover, the assignments should be recorded with the United States Patent and Trademark Office as quickly as possible so that the world can easily determine to whom a patent is assigned.
