CONFUSION, CONFLICT, AND CASE LAW: ANALYZING THE LANGUAGE OF THE UNITED STATES PATENT ACT AND CONFLICTING CASE LAW REGARDING THE TRANSFER OF PATENT RIGHTS IN THE 21st CENTURY.

• Author: Logic, Lucas C.

1. INTRODUCTION II. OVERVIEW OF PATENTS AND THE SIGNIFICANCE A CLEAR AND TIMELY TRANSFER III. THE EVOLUTION OF THE LANGUAGE AND PROTECTIONS OF THE PATENT ACT IV. FOCUS ON WISCONSIN PROBATE AND PROPERTY STATUTORY DEFINITIONS V. CONFUSION IN CASE LAW OVER VALID AVENUES OF PATENT TRANSFER VI. FEDERAL CASE LAW AFFIRMING PATENT TRANSFER VIA OPERATION OF LAW VII. CONCLUSION I. INTRODUCTION

   Intellectual property can be a complicated area of the law as it relates to the right to assign, pass on, or distribute the rights and ownership interests in intellectual property. Patents, in particular, pose unique issues due to their regulation in both state and federal law. (1) Unlike copyrights and trademarks, patents are almost exclusively subject to governance by federal law. (2) Because patents are largely governed by the United States Patent Act (hereinafter "Patent Act"), the majority of patent litigation takes place in federal courts, however, one key area where federal law does not exclusively control is the transfer of patents as personal property. (3) Issues of probate and the classification of what makes up personal property is an issue reserved to the states, however, not all states make it abundantly clear whether patents are classified as property, muddying the waters on patent transfer in the event of an intestate decedent. (4)

   This Comment analyzes the language of the Patent Act as it relates to the transfer of ownership interests as they relate to patents, focusing specifically on how interests in a patent would transfer in the event of the owner dying intestate and not otherwise assigning the interest in the patent. Additionally, it will address how Wisconsin classifies property and does not explicitly list patents as property, which creates a potential issue in the probate of patent interests. Section II will introduce patents and some of the issues regarding patent transfer. The development of the Patent Act and its language regarding the transfer of interests in a patent will be discussed in Section III of this Comment. Section IV will introduce a focused example of how patents are treated in Wisconsin specifically and the issues with how states classify personal property for the sake of probate law. This Comment will discuss why the Patent Act can be interpreted to show a thread of treating patents as personal property, even if not explicitly stated in the earlier iterations of the Patent Act. Sections V and VI will look at the reasoning and interpretation used by courts in the 21st century, focusing primarily on three cases from the 2000s that shaped and refined the ways in which the Patent Act is applied. Additionally, the public policy reasoning behind the United States Court of Appeals for the Federal Circuit decisions in Akazawa v. Link New Technology Intern, Inc., and Sky Technologies LLC v. SAP AG will be addressed. The Comment will conclude in Section VII with a brief assessment of the Federal Circuit's interpretation of the Patent Act and a suggested course of action for states to resolve uncertainty regarding the status of patents as personal property.

2. OVERVIEW OF PATENTS AND THE SIGNIFICANCE A CLEAR AND TIMELY TRANSFER

   A patent is a grant given by the United States Patent and Trademark Office that allows the owner of the patent to maintain a monopoly on the subject of the patent for a set period of time to have exclusive use and development of an invention. (5) "To obtain a patent, the new invention must be both (1) novel, meaning the invention is different from the prior art ... and (2) nonobvious, meaning generally remote or surprising to one skilled in the art." (6) Additionally, an invention or idea must have utility to be patentable. (7) Most patents are nonrenewable, and the subject of the patent enters the public domain once the term of the patent expires. (8)

   The value in a patent largely stems from the exclusive right to produce, use and profit from the invention. (9) The time restrictions on the ownership of a patent creates a need for certainty and timeliness in determining how ownership interests in a patent are transferred. (10) Time spent deliberating on the transfer may affect the rights of the owner to capitalize on and profit from the patent. (11) These issues are further complicated when the rights to such a patent need to be determined when the decedent owner dies without first assigning the interest or creating a testamentary document to devise the interest in the patent. Additionally, patent owners must pay regular maintenance and renewal fees to prevent lapse and retain enforceable rights and interests in the patent. (12) These fees cannot be paid in advance, which creates the potential for loss in opportunity to profit off a patent if an owner of a patent does not devise their interest in the patent or dies intestate without establishing who will take ownership of the patent. (13)

   The Patent Act is much more complex regarding the transfer of patent ownership than other intellectual property codes, such as copyrights. (14) For example, 17 U.S.C. [section] 201(d) states, "The ownership of a copyright may be transferred in whole or in part by any means of conveyance or operation of law, and may be bequeathed by will or pass as personal property by the applicable laws of intestate succession." (15) The United States Code makes it abundantly clear that copyrights are to be treated and transferred in the same manner as personal property and explicitly addresses the intestate transfer of a copyright. (16) This is a stark contrast to how the U.S. Code deals with property rights in patents. (17)

   One of the most significant attributes of personal property is the ability the owner of that property has to transfer, convey, or dispose of that property. (18) This attribute extends to and applies in the same manner to patents. (19) Under 35 U.S.C. [section] 261, the federal statutes address the issue of ownership of patent rights and the ability to assign said patents. (20) In the opening line of the section it states, "[s]ubject to the provisions of this title, patents shall have the attributes of personal property ...." (21) This, however, creates an immediate issue, as the section further touches on what can be done with the interests in a patent, stating "[a]pplications for a patent, patents, or any interest therein, shall be assignable in law by an instrument in writing. The applicant, patentee, or his assigns or legal representative may in like manner grant and convey an exclusive right under his application for patent, or patents ...." (22) An assignment of a patent is sufficient so long as it meets those statutory requirements. (23)

   This language alone creates an immediate issue, as property is said to have attributes of personal property which is typically left for the states to determine how personal property can be transferred. However, 35 U.S.C. [section] 261 immediately follows up with conflicting language controlling how the interest in the patent must be assigned in writing. (24) If the patent is not assigned before the death of the owner, what happens to the patent? What testamentary documents constitute a property assignment? In the absence of assignment or testamentary disposition of the patent, does the patent move through the probate process and intestacy as personal property? The general rule would seem to be that patents transfer by operation of law in a similar manner in which any other personal property under the same circumstances would. (25)

   Additionally, 35 U.S.C. [section] (26) 1 states that after the assignment of the patent, the assignees "may in like manner grant and convey an exclusive right under his ... patent ...."26 There is "[n]o particular form [that] is required for the assignment of a patent interest and patent assignments are subject to the same rules of construction that apply to contracts generally, the intention of the parties being or primary concern in construing them." (27) While this language establishes that the rules of assignment are similar to those of contracts and that the courts take the intent of the parties into account, this does not help to clarify what should take place in the event of the death of the owner of the patent before assignment. (28) This language directly implicates the way in which an assignee, heir, or devisee may use and distribute the interest in the patent.

   35 U.S.C. [section] 154 states, "Every patent shall contain ... a grant to the patentee, his heirs or assigns, of the right to exclude others from making, using, offering for sale, or selling the invention ...." (29) This section of the Patent Act makes the issue of assignment even more uncertain through the explicit phrasing of "heirs or assigns," which opens the door to the possibility of testate or intestate heirs and their potential rights to interest in a patent, even in a scenario in...