Standing – Feet Planted Firmly in Mid-Air.

You have to go to the Western District of Washington to find an IP case with “murky facts,” “forgeries,” “void or voidable” rights, a “resurrection,” and an accused infringer “now armed with a license” from the resurrected, who offered new life becomes an “indispensable” party to a suit by a “duped purchaser” of patent rights.  Oh, and the dupee is the fifth richest man in N. America (manlaw – the ultra-rich recover from being duped more quickly than the rest of us).

Standing to sue for patent infringement seems such a tedious, administrative requirement, until, you have a winning case snatched from your grasp.  The requirement actually is as serious as a heatbeat, and without it, the infringement case ends.

The murky facts and mistaken death of the original patentee forced the subsequent owner of the patent to dismiss voluntarily.  The Judge in Seattle already had waded through, and ruled on the issues of claims construction, and probably, he felt the case was getting close to dispositive motions.  The decision and case, now being reported as another sad commentary on another troll’s action to extort tribute from the true innovators, can be accessed at Digeo, Inc. v. Audible, Inc., 5-CV-464 (W.D. Wash.).

Digeo, owned by Paul Allen of Microsoft reknown, bought a patent portfolio at a bankruptcy auction.  Those auctions should be held under a banner sign, with Caveat Emptor in large letters.  During the prosecution of the patent “someone submitted an updated power of attorney …indicating that [inventor] Edward Chang was deceased.”  The signatures on these and other documents filed with the PTO were “forgeries,” and inventor Chang was not deceased, nor had he assigned his rights.  Thus, the bankrupt entity did not own all right and title, and what was offered at auction was less than complete ownership of the patent.

It was bad when the plaintiff learned that an inventor and owner was not dead, but worse when learned that the accused infringer already had obtained a license from the un-deceased.  Being beat to that punch underscores how the cure for a lack of standing can be as problematic as the malady.

Presuming that the due diligence was not done, or failed to disclose a defect in title to a patent, the ostensible ‘owner’ has to act fast to cure the defect by getting all the rights.  Approaching a partial rights owner, seeking an assignment or license always provokes the questions: why do you need it, and how much are you willing to pay (and how much by the other party), oh, and how much have you already made off of the [my] patent.  This negotiation will definitely conflict with the progress of the case, so it’s best just to find a way to stall the suit, without creating undue suspicion, and use that time to work out a deal that gives the patentee full ownership and/or the exclusive right to sue for infringement.

The Digeo case goes off a bit inquiring about legal title (real) and equitable title (apparent, or believed bona fide), but in the end, the Judge notes that the patentee has headed back to the bankruptcy court in Missouri, and the accused infringer’s motion for counsel fees is denied.  “Although a forged assignment and a back-from-the-dead inventor render this case ‘exceptional’ in many ways, there is no indication that it is exceptional within the meaning of 35 U.S.C. §285.”  That means the Digeo case was an exception, but was not “exceptional.”