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Thursday, 22 July 2010

Ten Questions about Confirmatory Assignments

There are certain recurring forms of agreement in the IP world that remain a bit of a mystery to me. Perhaps none is more puzzling than the so-called "confirmatory assignment." For my sins, perhaps, after a long hiatus, I encountered several versions of confirmatory assignment over the last month.

This got me to thinking about the why and what of a confirmatory assignment, assuming that the putative confirmation relates to an unwritten assignment of rights that took place at an earlier point in time. So what are my difficulties with a confirmatory assignment? Let me mention the following:
1. Depending upon the applicable IP rights and related law of contract of the jurisdiction, to what extent can an unwritten agreement validly assign IP rights?

2. Assuming that an unwritten assigment is valid, what is the evidentiary showing that is required?

3. Can one record an unwritten assignment on, e.g., the appropriate patent or trade mark registry? If so, what proof is required?

4. Is the evidentiary showing different in connection with establishing the validity of the assignment in the context of a transaction?

5. How can a purchaser receive sufficient comfort about the validity of the assignment, or is it a matter of risk allocation depending upon the positon of the parties?

6. Does the standard of evidence to establish an unwritten assignment differ once again in the context of a court proceeding?

7. Does the standard of evidence to establish an unwritten assignment differ yet again iin the context of taxation?

8. Is a confirmatory assignment a form of ratification?

9. If it not a form of ratification, what is the proper legal characterization for the agreement?

10. In light of all of the foregoing, does the confirmatory assignment confer any benefit to the parties, other evidentiary or substantive?
Any readers with thoughts about these questions are urged to share them.

12 comments:

Rob said...

Confirmatory assignments are frequently used where a written assignment already exists, but the parties do not want to disclose that document because it contains sensitive information (e.g. payments, etc.).

In addition, they are often used to confirm an 'automatic' assignment (e.g. from an employee to his/her employer). The latter may be useful, for example, when submitting a US application with UK inventors.

Michael F. Martin said...

In the United States, this is a statutory question:

"Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing." 35 USC Section 261.

Your questions are far more interesting as applied to licenses or servitudes more generally. Based on hundreds of years of common law, one would imagine that all personal property, including patents, would require encumbrances to be publicly recorded for them to be enforceable on subsequent purchasers for value without actual notice. In fact, equitable servitudes on personal property were not enforceable at all at common law.

As far as I can tell, patents present a unique exception to this history. For that reason I have wondered whether it is fair even to call patents property -- despite their being deemed so by statute.

On my view, this is the most underappreciated obstacle to the emergence of a healthy market for patents. Lemley and Myhrvold suggested years ago a solution to the problem -- namely, of requiring the public disclosure of all assignments and licenses. That seems to have gone nowhere thanks to an incomplete understanding by current stakeholders of how such a transition would result in an entirely new market equilibrium, or at least to the general desire for incremental rather than radical changes to the status quo.

Scott Yorke said...

Confirmatory assignments are commonly used to record assignments in writing where the commercial terms of an assignment are to remain confidential.

I cannot think of many instances where I would be happy to rely on a written confirmation of an unwritten assignment. It is my understanding that in most common law countries an assignment must be in writing for it to be legally effective, otherwise at best your unwritten assignment may only transfer an equitable interest in the relevant IP.

A type of assignment document I have occasionally seen and used is the assignment that is both operative and confirmatory. In other words, "I confirm that I assigned, but if that assignment wasn't legally effective for any reason then I hereby assign". It isn't ideal, but sometimes it's the only way to fix a break in the chain of title when you really don’t think you can rely on that unwritten assignment.

Anonymous said...

3. Can one record an unwritten assignment on, e.g., the appropriate patent or trade mark registry? If so, what proof is required?

Yes, that is possible in certain jurisdictions. At the most you would need a date of assignment and particulars of the assignee and the assignor. The relevant forms necessary to record the assignment are prepared by the agents and signed on behalf of the assignee. Example, Singapore

Aaron said...

Rob hit the nail on the head. They are used to simplify matters in circumstances where the parties may have been better to have signed short-form agreemnts.

A party will often not want to disclose a document with all of the juicy commercial terms, so a confirmatory assignment may be used.

A final (arguably erroneous) use may be where a party has, to settle a matter, assigned a CTM under cover of a letter or unilateral agreement signed only by the owner. In the case of a CTM, the assignment has to be signed by both parties to be valid. Therefore, whilst the mark may be assigned in the head of the previous owner, something more needs to be done to validly assign. Arguably the follow-up is not confirmatory in those circumstances, but I've seen the document that followed described as confirmatory.

Anonymous said...

Associated with the issue of confirmatory assignments is the issue of assignment documents with a purported "effective date" earlier than the date of execution of the document. In jurisdictions where rights in an application can only be assigned in writing, the writing requirement was then not fulfilled as at the "effective date". This may be particularly important in relation to priority claims.

Anonymous said...

I have seen such Confirmatory Assignments used as evidence supporting a transfer request before the EPO, but it wasn't my job to question them even though the whole procedure looked quite fishy to me.

Once upon a time there was a nice little company A which got gobbled by company B. One year later, company B was in turn purchased lock, stock and barrel by company C.

A, B and C were in three different countries.

A's European representative kept prosecuting the EP cases, but only bothered to file a transfer request when a given application was just about to mature into a grant, providing in most cases a confirmatory assignment drafted by an US notary public as evidence.

The document stated that A's IP was transferred to three entities Ca, Cb and Cc, which are all presumably 100% subsidiaries of C. I infer that the applications are jointly owned by all three companies. The assignment is signed by Ca, Cb and Cc's officers as well as the notary. The document couldn't have been signed by A's officers, since A did not exist anymore at that point. There is no mention whatsoever of company B either, so the document did not describe what actually happened, since A could never have dealt directly with C.

The representative's cover letter only requests transfer to company Ca, leaving Cb and Cc out of the picture, and Ca is the only name entered in the EPO's register.

I googled up a bit and I found out that B wrote in its ultimate annual that it now owned all of B's IP, and C later stated in its own annual report that B's IP was now located in yet another subsidiary Cd, different from Ca, Cb or Cc.

In one case the Umschreibestelle questioned the confirmatory assignment in that in only bore the signature of one of the parties. The representative adamantly replied that the assignment should be taken at face value and that's it. The EPO did not insist, and took down the transfer - in Ca's name only.

In one of the applications this examiner was bone-headed enough to be minded to consider a refusal, prompting the representative to file a "divisional" application in order to keep the show going. The weird thing was that the "divisional" was in A's name, even though it no longer existed for years. The new application was eventually abandoned, so all the interesting questions which arose did not need to be answered.

From the preceding, I think I'd start kicking and yelling about who actually owns a patent (and thus entitled to initiate action) if I were ever dragged before court in an infringement action where a confirmatory assignment was involved. The standard for proving a transfer of rights appears to be much lower as to the right to transfer of an opposition. A confirmatory assignment may appear a practical shortcut, but it could be a false saving.

As to the argument that a confirmatory assignment can keep details secret, I don't think they're worth the risk either. I've seen IP sale contracts accepted as evidence for a transfer before the EPO where more black ink was poured to obscure passages than the CIA ever used when declassifying a document. BTW, one of these contracts involved yet another of C's subsidiries transferring its IP to numbered entities conveniently located in tax flexible territories.

Neil Wilkof said...

Thanks for all of your great comments. In one off-site communication on the topic yesterday, I suggested that confirmatory assignments are among the "dirty little secrets" of IP practice. She wrote back that in fact they are the "dity little not-so-secrets" of IP. I suspect that we are both right.

Anonymous said...

Something that does not appear to be widely appreciated is that the box for the date of agreement on EPO Form 1002 is provided for the convenience of the applicant only, there being no requirement in the EPC to provide a date. I have often filed forms with no date where the information was not available, and no objection has ever been raised.

I have only seen this explicitly stated in the answer to question 80 in Dr. Günter Gall's classic book for EQE candidates "European & International patent applications: questions and answers" [ISBN 0-85121-555-6; 1989 edition]. Dr Günter Gall was a Director of the EPO and evidently wrote with authority.

I have had more knowledgeable inventors query the appropriateness of signing any sort of assignment of rights that he doesn't own because the invention belongs to the employer by virtue of UK law, and have then had to explain the USA [for example] doesn't recognise this aspect of UK law. Such assignments made in respect of a first filing are certainly useful when subsequently filing in the USA if the inventor is no longer contactable or become uncooperative, eg due to imminent redundancy.

Patentology (Mark Summerfield) said...

Anonymous' knowledgeable inventors have a point, and this has always been my rationale for obtaining confirmatory assignments. It must surely be a fundamental principle that one cannot assign what one does not own, so a written assignment from an employee to an employer that already owns the invention by terms of a contract of employment must surely be void.

The problem is not solved by writing the employment contract in such a way as to place the employee under an obligation to assign, because a subsequent assignment to another party, while being a breach of contract, will not necessarily enable the invention to be reclaimed by the employer (see, eg Stanford v Roche 583 F.3d 832 (Fed. Cir. 2009).

As I understand it, the US law relating to employee inventions is basically the common law. The issue is not that the USPTO will not recognise that the employer owns the invention, rather it is the specific requirement that the inventor assign the rights reflected in the particular patent application, ie that a suitable assignment cannot be completed until the inventor has the actual filed specification and claims before her.

A general assignment of the invention, and all notional future rights, will not suffice for this purpose. However, an assignment of a PCT application designating the US is fine (although it may take a little effort to persuade the USPTO to accept a document that is not in its standard form).

An unavailable or uncooperative inventor remains problematic even if you have a suitable assignment document, because the USPTO cannot accept the filed application until it has an inventor's declaration, or a petition has been granted to allow the application to be accepted without the signed declaration.

Though not a US attorney, for my sins I have found myself with clients in this situation, and it can be a lot of work to resolve.

Nigel Swycher said...

"This and the related topic of failure to agree or document assignment of IPRs arise all too frequently. I have been faced with the challenge of "I paid, so I own" throughout my career.

Here are 10 thoughts on this topic:

1. No one should believe that the law will come to their rescue if they do not document a written assignment and have it signed by the assignor and the assignee.

2. Assignments of IPRs are a perfect example of lack of global harmonisation. There is huge discrepancy between national laws as to what formalities are required - few require more than a written assignment signed by both parties.

3. The greatest density of disputes is between consultants and the corporations who hire them. The expectation is that IPRs in the "work product" automatically transfer. Big mistake.

4. English law enjoys equity, and can be persuaded to find an intention to assign (aka an equitable assignment). Hoping for this result is a lottery. In other parts of Europe, the odds are worse.

5. The position is not as random within an employee/employer relationship, because generally the first owner is the employer. However, at the edges ("course of employment") it is well worth documenting the position. In this context, do not assume that ownership is the end of the matter. Always think about attribution issues (such as moral rights) and economic reward (for exceptional contribution).

6. Failure to document the IPR position is statistically likely to create a significant commercial issue downstream. I have personally seen IPOs delayed, joint ventures stall and tens of disputes that frustrate and delay commercial exploitation.

7. The consolation prize in an ownership dispute is typically a licence. Within this one word, is a world of pain as the parties debate scope (field of use), term (for a project to perpetual), ambit (exclusive to non-exclusive), not to mention royalty. So whilst ownership is undoubtedly first place, bottom of the class will not get much at all.

8. Banks and investors still struggle to understand and value IPRs in the same way as tangible assets such as property and stock, so they scare easily. If chain of title and ownership is not clear, expect them to have significant concerns in all other areas such as validity and infringement.

9. Joint ownership looks like a good compromise. Normally it isn't. There is no global uniformity on the rights conferred on joint owners - and even within a jurisdiction it's different between the various IPRs.

10. Which means that I'm normally just so relieved to receive a confirmatory assignment, that I seldom have the energy to think about Neil's 10 questions - but now I will!"

Anonymous said...

Many interesting comments on assignments.
Here is a further related issue, perhaps basic compared to a confirmatory assignment under the original fact pattern.
Assume the inventor has executed an assignment to her employer for a US provisional patent application that includes assignment of all later applications, using standard language regarding assigning international applications, US, non-US applications. The assignment properly assigns the right to claim priority.
Then a PCT application is timely filed that claims priority to this provisional. The PCT application includes new disclosure in the specification, including new examples, and new claims.
Is a second assignment needed or does the assignment of the provisional suffice?
For all jurisdictions?
If a new assignment is needed, how is it worded to avoid the issue of 're-assigning' what has already been assigned in the provisional assignment? Seems one can only assign rights one has not already assigned away.

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