The Software IP Report

Date of Assignment Limits Standing for Patent Plaintiff

A defendant was entitled to summary judgment limiting the plaintiff to damages only for infringing acts that occurred after the date of the assignment.  CSB-System Int’l., Inc. v. SAP America, Inc., No. 10-2156 (E.D. Pa. April 30, 2012).  The  holding in this software/hardware patent case was based on the principle that, ordinarily, a plaintiff has standing to sue only for acts of infringement occurring after the date on which it was assigned a patent.

The defendant argued that the plaintiff lacked standing to sue for acts of infringement occurring prior to March 29, 2010, the date on which the plaintiff was assigned rights to the patent-in-suit.  However, the case law is clear that a patent assignment does not ordinarily convey “the right to damages for infringement committed before such assignment.”  Conventional language transferring “all right, title, and interest does not normally transfer the right to sue for past infringement.”  Rather, the assignment would have had to have clearly manifested an intent to transfer such past rights.

In this case, the plaintiff’s only counter to the defendant’s argument the plaintiff CSB lacked standing before March 29, 2010, was that the defendant had not specified whether the assignment was governed by German or American law.  Here, the assignment was “short and simple.”  Regardless of whether “German, California, or Illinois law may apply,” the plaintiff made no showing that the plain meaning of the assignment, which conveyed “present and future rights in the” patent, should not control.  Therefore, the plaintiff had “no standing to seek redress for infringement occurring prior to” March 29, 2010.

The court also addressed, and agreed with, the defendant’s argument that the plaintiff did not have standing to sue for acts occurring outside of the six-year statute of limitations imposed by 35 U.S.C. § 286.  However, the court did not address this issue in detail, because the plaintiff’s standing to sue was even more limited than the statute of limitations.

Finally, the court addressed whether the plaintiff could “recover damages relating to licenses that [the defendant] sold prior to the assignment date.”  For the defendant to indirectly infringe based on the sale of such licenses, its customers’ use of the licenses must have constituted direct infringement.  Thus, the plaintiff argued that “the direct infringing activity for which it seeks to recover” was not the sale of licenses, but rather was “setting up or use of the claimed circuit arrangement, which,” alleged the plaintiff, “constitutes ongoing infringement.”  However, to show that the defendant induced infringement, the plaintiff would have to “identify affirmative acts by [the defendants] after March 29, 2010, directed to encouraging their customer’s continued infringement.”

The mere sales of licenses with the knowledge that customers would use them did not constitute affirmative acts sufficient to show inducement.  However, the plaintiff also listed several acts “that it asserts constitute inducement” by the defendant “to its customers to infringe.”  Thus, genuine issues of material fact did remain.

In sum, the Court held that while infringement prior to March 29, 2010, would have been actionable by the owner of the patent at that time, such infringement “is simply not actionable by Plaintiff under principles of standing.”  Further, although plaintiff’s claim for damages after March 29, 2010, could survive summary judgment, the plaintiff had the burden at trial of proving that “during that timeframe,” the defendant “took affirmative steps to induce continued direct infringement by [the defendant’s] customers.”