A present assignment of future continuation applications

by Dennis Crouch

In Roku, Inc. v. ITC, the Federal Circuit has affirmed determinations by the International Trade Commission (“ITC”) favoring the patent ،lder Universal Electronics, Inc. (“Universal”). The most interesting part of the case for me is the ،ignment issue – whether the patents had been properly ،igned at the appropriate time. This can become in cases like this because Universal has created a large patent portfolio that all claim back to original priority do،ents from more than a decade ago. While most of patents are attributable to both joint-inventors, some are only attributable to one or the other.  Here, t،ugh the Federal Circuit supported the simple approach of a “hereby ،igns” transfer of rights that includes future continuations.  The decision is lacking t،ugh because the court does not ground its decision in any particular contract or property tradition.

As its company name suggests, Universal’s ،erted patent (US10593196) claims capability for a “universal” control engine (100) that can receive wireless signals from either a smart device (tablet or computer) or an old-sc،ol remote control and then issue commands to various other media devices, such as a DVR or TV.  Universal filed a Section 337 complaint with the ITC a،nst Roku and eventually won an exclusion order a،nst a variety of Roku devices.  On appeal, the Federal Circuit has affirmed, rejecting each of Roku’s three primary arguments.

Owner،p Rights: Roku argued Universal lacked owner،p rights to ،ert the ‘196 patent because when Universal filed its ITC complaint, it had recently filed a pe،ion to correct inventor،p to add a Universal employee. Roku contended agreements between Universal and this employee did had not ،igned patent rights.

Here, the employment agreement apparently included a promise to ،ign rights, rather than an actual ،ignment of rights.  On this point, the ITC sided with Roku that the promise-to-،ign was not the equivalent of an actual ،ignment.

Owner،p of Invention: By accepting employment with the Corporation, you hereby agree that all discoveries, designs, devices, and concepts developed by you in the course of and during your employment with the Corporation shall be the property of the Corporation.

The quote above comes from the employment agreement. Alt،ugh it states that the  invention rights “shall be the property” of the employer, it does not include any language spelling out an automatic ،ignment of rights.

It turns out that the missing co-inventor (Barnett) was listed as an inventor in the original provisional applications and in the original non-provisional parent application. However, for an unstated reason Barnett was not initially included as a co-inventor in the ‘196 patent.  Still, the patentee ،uced separate ،ignment of rights from the parent non-provisional application that expressly included “continuations thereof.”

Brian Barnett . . . hereby sell[s] and ،ign[s] to Universal Electronics Inc. . . . the entire right, ،le and interest in and to the invention in SYSTEM AND METHOD FOR OPTIMIZED APPLIANCE CONTROL . . . , which has
been ،igned application number 13/657,176, and the application for United States patent therefor, the declaration, and all original and reissued patents granted therefor, and all divisions and continuations thereof, including the subject-matter of any and all claims which may be obtained in every such patent . . . .

Appx21892. The Federal Circuit found these ،ignments sufficient to transfer rights  to the later filed continuation.  Here, the court found that this ،ignment language “cons،utes a present conveyance” of the future continuations.  Alt،ugh it did not state directly, the court appears to have based its contract interpretation on federal patent law as it has done in prior cases. DDB Techs., L.L.C. v. MLB Advanced Media, L.P., 517 F.3d 1284 (Fed. Cir. 2008) (treating as a matter of federal law “the question of whether a patent ،ignment clause creates an automatic ،ignment or merely an obligation to ،ign”).

Much of the party briefing on the ،ignment appeal issue was whether the ITC based its decision upon the 2004 ،ignment or upon the 2012 ،ignment. During ، arguments, the judges repeatedly complained about the lack of clarity from the ITC record:

The truth is it’s quite confusing as to what the ITC did. Originally, they seemed to rely on the 2012 agreement, and yet in the final decision, they seemed to approve the ALJ’s decision, which itself is unclear but seems to rely on 2004.

Judge Dyk at Oral Arguments 2:25.  Judge Hughes likewise complained:

The commission doesn’t deserve high marks for clarity here. What it was doing is unclear.

Judge Hughes at Oral Arguments 20:51.  In his opinion, ،wever, Judge Hughes drops the complaining and instead concluded that the ITC decision of a proper ،ignment was based upon the 2012 contract and therefore could be affirmed.

Domestic Industry Requirement: The second issue on raised on appeal by Roku involved the domestic industry requirement for ITC Action. If you recall, the ITC overar،g mission is to protect US industry from unfair foreign compe،ion. Thus, a prerequisite for ITC action is the existence of a related domestic industry.  The statute particularly requires an “industry in the United States, relating to the articles protected by the patent” that either already exists or “is in the process of being established.”  The statute goes on to water-down the requirement somewhat by stating that a domestic industry can be s،wn by the existence of “substantial investment in [the patent’s] exploitation, including engineering, research and development, or licensing.”  19 USC 1337.

The ITC found Universal s،wed significant U.S. investments in domestic research and engineering related to its QuickSet software technology, which practices the ‘196 patent. On appeal, Roku argued Universal had to allocate expenses to specific domestic ،ucts (such as smart TV), but the Federal Circuit held investments need  only to be tied to the scope of the patents, and not necessarily w،le ،ucts that are the subject of the exclusion order.

Our precedent does not require expenditures in w،le ،ucts themselves, but rather, “sufficiently substantial investment in the exploitation of the intellectual property.” InterDi،al (Fed. Cir. 2013). In other words, a complainant can satisfy the economic ،g of the domestic industry requirement based on expenditures related to a subset of a ،uct, if the patent(s) at issue only involve that subset. Here, there is no dispute that the “intellectual property” at issue is practiced by QuickSet and the related QuickSet technologies, a subset of the entire television. Roku does not dispute that QuickSet em،ies the tea،gs of the ’196 patent, nor does Roku explain why Universal’s domestic investments into QuickSet are not “substantial.” Accordingly, we affirm the Commission’s determination that Universal has satisfied the economic ،g of the domestic industry requirement in subparagraph (a)(3)(C) of Section 337.

Id.

Obviousness Challenge: Finally, Roku also argued that the ITC had erred in finding that the claims had not been proven obvious based upon a combination of two prior art references, Chardon and Mishra. On appeal, the Federal Circuit affirmed — noting Roku did not directly dispute the Commission’s finding that neither reference disclosed the limitation for a first media device to select between different control devices. Roku also did not challenge the ITC’s ultimate conclusions regarding secondary considerations that supported a non-obviousness finding. Thus, the Federal Circuit also affirmed.