Here is a story and
let me know if it sounds familiar: once upon a time, a man invented a fabulous gadget
and obtained a patent on the gadget. He
subsequently started a company making and selling the gadget. Starting a company was hard—the man worked
night and day and traveled extensively to sell his gadgets while his wife
stayed at home taking care of the kids and keeping the household running. They were a hardworking but happy
couple. The company grew into a
commercial success while the husband and wife grew apart. Wife filed for divorce. It was a bitter fight—the couple bickered
about kids’ custody, visitation rights, who gets the house, who gets the cars, who
gets how much of the company ownership, who gets the control or lost control of
the company and how to split the licensing income from the patent. The ever-wise divorce court ordered “equitable distribution of marital
property,” including the wife receiving 60% of proceeds from the patent and
husband receiving 40%. The husband and
wife went their separate ways.
Now ask yourself—who now owns the patent? That is the question answered by the Fed.
Cir. in its recent ruling in the case of James Taylor v Taylor Made Plastics
(Fed. Cir. 2014).
In James Taylor case, the husband is James
T., the wife is Mary T., the patent in dispute is U.S. Patent No. 5,806,566 and
the company is Taylor Made Plastics, Inc. The patent, directed to a “storm drainage
conduit plug and sealing band,” is essentially an elastic plug that fits into
the open end of a storm drainage conduit or sewer pipe.
Apparently, a few years after the divorce, James
T. lost control of the company and the relationship between James T. and the
company went sour. The company continues
to sell the devices James T invented and has stopped paying royalty on the
patent. So, James T. filed his
infringement lawsuit against the Company.
Mary T., who remained on the good terms with the company that continues
to be family run, refused to join and sided with the company. The district
court dismissed the case – finding that title to the patent was divided between
the two former spouses, James T. and Mary T., and, as a consequence, any
infringement lawsuit must be filed by both co-owners acting in concert. Federal Circuit agreed.
As in most states, assets acquired during a
Florida marriage are presumed to be community assets, which are subject to
equitable distribution on divorce. Because James T. obtained his patent during
his marriage with Mary T., Mary T. became a co-owner of the patent through
Florida community property law. According
to the Federal Circuit, the equitable distribution of the marital property by the
divorce court only addressed the equity interest in the patent but did not
address the legal title of the patent.
Therefore, the patent remained co-owned by both ex-spouses.
The lesson here is: in a divorce proceeding, both
the economic interest and the legal title of a co-owned patent(s) need to be
addressed. An assignment from one spouse
to the other would provide a clean break on patent ownership between the
parties. In this case, a simple assignment
from Mary T. to James T. would have avoided the dismissal of the case from the get-go.
Thanks for reading.
Connie
