In Brief: Euclid Chemical v. Vector Corrosion

Posted on | July 8, 2008 | 3 Comments

2008-1170 Euclid Chemical v. Vector Corrosion
ND/OH 05-cv-080
Judge Christopher Boyko

Disputed is the ownership of 6,217,742.  Euclid was found not to infringe that patent (a finding that was not appealed by Vector), but the court ruled on summary judgment that Vector was assigned the patent despite Euclid’s claim (and a subsequent, competing assignment) to the contrary.

We previously reported on the case here. 

Oral argument is scheduled for Monday, August 4, 2008 at 10:00 A.M., Courtroom 402.

Summary of the Argument from Euclid Chemical.  Tom Shunk, Baker & Hostetler (Cleveland) and Jude Fry, Fay Sharpe (Cleveland) on brief.

The trial court erred in refusing to permit a jury to hear evidence on the question of whether the 2001 Assignment transferred the ‘742 Patent to Vector Ltd. By its terms, the 2001 Assignment transfers “all Letters Patent which may issue or be reissued for said invention,” (emphasis supplied) having earlier in the document defined the invention as “the specific use of LiNO3 and LiBr to enhance the performance of metallized zinc anodes.” The ‘742 Patent does not relate to metallized zinc anode technology. The court should have permitted Euclid to put before a jury the substantial amount of evidence showing that the intentions of the parties and their behavior regarding the Assignment made it clear that all concerned believed the Assignment did not transfer the ‘742 Patent.

The trial court erred further in refusing to give any consideration to the evidence and legal argument proffered by Euclid of its status as a bona fide purchaser for value of the ‘742 Patent. None of the Defendants filed the 2001 Assignment of record in connection with the ‘742 Patent, and Euclid did not have actual knowledge that Defendants claimed ownership of the ‘742 Patent at the time Euclid took its exclusive license in the ‘742 Patent, which license was later confirmed to be an assignment of all rights to Euclid. The trial court’s unsupported statement that Euclid had “abandoned” that argument is directly contradicted by Euclid’s explicit reference to the bona fide purchaser issue in its briefs opposing Defendants’ motion for summary judgment of ownership.

Finally, the Court erred in declaring Vector Inc. to be the owner of the ‘742 Patent, when all the evidence showed that Vector Inc. had never claimed ownership of the patent in the litigation. In its examination of the facts, the trial court apparently overlooked the fact that the assignment purported to be to another defendant, Vector Ltd.

In sum, the trial court moved too quickly to “clean up” issues it apparently took to be tangential to the patent infringement claims that had otherwise been concluded in Euclid’s favor, glossing over material facts in dispute that should have been submitted to a trier of fact. While the trial court may have concluded that these “tangential” matters were of little concern, in fact the ownership of the ‘742 Patent is important to Euclid, and it is critical that ownership of the patent be subject to the scrutiny of a fact finder in a full evidentiary presentation.

Summary of the Argument from Vector Corrosion.  Brewster Taylor, Robert Scully, Jr., and Emily Harwood Smith, Stites & Harbison (Alexandria, VA) on brief.

The Trial Court granted the motion for summary judgment filed by Vector, Ltd. and Whitmore on their counterclaim that Vector, Ltd. was the owner of the ‘742 Patent. The Court correctly found that the 2001 Assignment to Vector, Ltd. was “plain and unambiguous,” that the ‘742 Patent was a continuation in part of the ‘553 Patent, that the 2001 Assignment assigned “all rights in the 553 Patent and any and all continuations in part thereof,” and that since no ambiguity existed it could not consider “evidence extrinsic to the clearly expressed intent of the parties contained within the four corners of the 2001 assignment.” (JA16.) The Trial Court further found that Euclid had failed to argue that it was a BONAFIDE purchaser for value without notice, because “[a]n educational footnote, merely reciting the existence of a statute and not stating the relevancy to these parties, facts or how it provides relief, is not sufficient to frame a defense for the Court’s consideration.” (JA18.)

The Trial Court certainly did not err by refusing to consider Euclid’s irrelevant and inadmissible extrinsic evidence since under Ohio law no external evidence of any kind can be used to change the terms of an agreement when the terms have been found to be clear and unambiguous. Even though Euclid acknowledges that under Ohio law extrinsic evidence is to be considered only if ambiguity in the agreement is found (Euclid Br. 23), it nevertheless improperly presents as its primary argument on appeal that this Court should consider that extrinsic evidence and “resolve the 2001 Assignment’s ambiguity in Euclid’s favor” (Euclid Br. 22).

There is no basis for Euclid’s argument that the 2001 Assignment did not include the ‘742 Patent because the ‘742 Patent had already issued at the time of the Assignment. The 2001 Assignment included not only all continuation in part “applications” based on the named ‘553 Patent but all continuations in part (which would include issued patents). It further assigned not only “all Letters Patent which may issue” but also all Letters Patent which may “be reissued.”

There is no basis for Euclid’s argument that the phrase “for said invention” is ambiguous. The Trial Court correctly found that “…the plain language of the assignment can only mean the invention is those claims that comprise the 553 patent, of which the 742 patent is a continuation in part.” (JA17.)

There is no basis for Euclid’s argument, based on its irrelevant extrinsic evidence, that a “reasonable interpretation” of “for said invention” is that it was intended by the parties to limit the 2001 Assignment to Vector Ltd. to transfer only of patents and applications embodying a particular type of “metallized zinc technology.”

There is no basis for Euclid’s argument that its inadmissible evidence tends to prove Whitmore’s subjective intent at the time of the Assignment much less that he and Bennett did not intend at the time that all “divisional applications, continuations, and continuations in part” of the listed patent and applications were to be transferred. The extrinsic evidence could not show that Whitmore was even aware of the ‘742 Patent at the time of the Assignment, much less that he intended to exclude it from the Assignment.

Moreover, the Assignment without question contemplates assignment of more than one patentable invention. Euclid has not shown that the CIP applications specifically listed in the Assignment are all directed to any single invention, much less the invention of the ‘553 Patent. Moreover, CIP applications are, by their very nature, each directed to a different invention. Further, the Assignment does not contain an express or implied limitation as to a particular “metallized zinc technology.” Euclid’s assertion that the Assignment was intended to transfer only patents and patent applications directed to this technology is based on the sentence that “[t]his patent claims the specific use of LiNo3 and LiBr to enhance the performance of metallized zinc anodes” (Euclid Br. 25-26) and is not supported by the record. Euclid has not shown that even the applications specifically listed in the Assignment claim the use of LiNO3 and LiBr to enhance performance of zinc anodes that have been metallized. Having failed to make that showing, Euclid has not explained, and cannot explain, why the allegedly limiting sentence supports their argument that the conveyance was restricted to patents and applications which are directed to metallized zinc anodes even if they do not claim “the use of LiNO3 and LiBr,” as opposed to patents and applications directed to the “use of LiNO3 aild LiBr to enhance performance” of zinc anodes but not to metallized zinc anodes. Thus, Euclid has not shown, and cannot show, why that sentence excludes the ‘742 Patent but includes, e.g., the listed applications.

The Trial Court did not err in rejecting Euclid’s bonafide purchaser for value “argument” allegedly made in response to the motion for summary judgment. No such argument was made, and under no circumstances could the alleged argument and evidence be construed to have raised any genuine issue of material fact.

Finally, to the extent the Trial Court confused the Defendant “Vector, Inc.” and the Counterclaimant “Vector, Ltd.” in its written opinion, as is clear from the Statement of the Case, this is no more than an easily corrected clerical mistake.

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