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Dispute over the Vesting of Derivative Technology During Technological Collaboration
Although a patentee often tends to ensure his/her vesting of derivative technology in a technological collaboration by entering into a collaboration agreement with relevant provisions, in practice, disputes still arise over the vesting issue. A real case for reference can be seen in the 2021 Min-Zhuan-Shang No. 2 Civil Judgment rendered by the Intellectual Property and Commercial Court (IPCC) on December 23, 2021.
In this reference case, plaintiff A claimed that he was the patentee of patent A and entered a collaboration agreement ("Agreement") with company C represented by defendant B. Both parties agreed that plaintiff A would provide the technology of patent A to company C to assist in its mass production of the contracted products. Company C would then be exclusively responsible for the sales by paying a certain amount of royalties to plaintiff A as profits based on the sales volume.
Having found that company C failed to perform its obligation following the Agreement, plaintiff A discontinued said agreement. Nevertheless, plaintiff A later observed that defendant B had already applied for other patents (i.e., patents 1 and 2 in dispute) in the names of others by imitating the technical features of patent A. Plaintiff A then filed a litigation claiming the Agreement as a cause of action, and requested a declaratory judgment confirming the vesting of the patent rights as well as assignment of the preceding patent rights to plaintiff A.
After confirming the content of the Agreement, the IPCC held that plaintiff A could not claim the vesting of patents 1 and 2 in dispute. According to Article 1 of the Agreement:
Definition: Product's Patent Number: As listed in Attachment (A) (where patent A is recorded), any patents extended from improvements or revisions of the patent in Attachment (A) shall still be covered by the claims of the patent referred to herein in the agreement. The preceding rule shall also apply to any utility model patents extended from specific products.
The Agreement simply defines the patent claims without expressly providing the vesting of the derivative patent rights. Furthermore, the other provisions of the Agreement, as the IPCC prudentially deemed, do not explicitly provide for the vesting of derivative patent rights. Moreover, as the parties to the Agreement were plaintiff A and company C, not defendant B, the IPCC considered it doubtful whether plaintiff A could claim the Agreement as a cause of action.
Plaintiff A, though evidencing that the product manufactured according to the patent in dispute fell within several claims of patent A after undergoing a patent infringement assessment, claimed that the patent in dispute was a derivative patent of patent A. However, the IPCC held that the litigation filed by plaintiff A was to request a declaratory judgment confirming the vesting of a patent right, not litigation related to patent infringement. Deeming that the preceding ground held by plaintiff A had nothing to with the vesting of the patent in dispute, the IPCC finally rejected plaintiff A's request. Such judgement was upheld by the second-instance court.
Consequently, regarding whether a patentee could claim the vesting of the derivative technology from his/her licensed patented technology during technological collaboration, the collaboration agreement thereof shall clearly define what subject identities shall apply. Furthermore, the agreement shall also specify the vesting of the derivative technology in order to avoid ambiguity and disputes arising from different interpretations in the future.