There are two main types of marital property regimes in the United States: “separate property” (followed by most common law countries and the majority of states in the U.S.) and “community property” (followed by most civil law countries and currently followed by nine states in the U.S.1). In “separate property” states, property acquired by a spouse during marriage is that person’s own separate property. In “community property” states, on the other hand, each spouse has a present, vested, one-half ownership interest in all property acquired by either spouse during the marriage. Patent ownership is governed by state law, and in community property states, patents acquired during marriage are owned equally by both spouses. Each state’s law, however, is different, with some states recognizing the property at the time of conception, and others recognizing it some time later, perhaps not until filing or not until the patent issues.
This simple rule could have profound implications for patent law. For example, a joint owner of a patent must join all co-owners to have standing to sue for infringement. Also, depending on the governing state law and the specific facts, operation of state law could make an inventor’s assignment of the patent invalid, or could allow the spouse, unbeknownst to the inventor, to separately assign away the rights to the patent.
The impact of a community property regime on patent litigation arose at the Federal Circuit in 2010 in Enovsys LLC v. Nextel Communications, Inc. In Enovsys, a married inventor from California assigned two patents to Enovsys, and Enovsys asserted the patents against Nextel. Nextel moved to dismiss, arguing that Enovsys lacked standing because it did not join the inventor’s ex-wife. The Federal Circuit held that the ex-wife did have an ownership interest in the patents at one point because the two patent applications were filed during the marriage. During the divorce, however, the inventor and spouse declared there was no community property, and the Federal Circuit held that the divorce decree was a valid state judgment entitled to res judicata effect. In other words, it seems that absent the divorce decree, Nextel’s defense might have worked!
But even without the divorce decree, Nextel may not have won the motion to dismiss because in most community property states, subject to some exceptions, either spouse can independently sell personal property. That means that in the ordinary course of business, such as employment agreements and inventor-employer assignments, the employer or assignee probably does not need to get the spouse’s signature to have a valid transfer of ownership. But this may not provide much comfort to a risk-averse patent attorney. What if the law and circumstances implicate one of the exceptions to the general rule and both spouses’ signatures are required for a valid transfer? What if the spouse had already assigned the invention to someone else before the inventor did?
Marital property laws in community property states can have serious implications on patent ownership. Lawyers and business owners that are involved in the purchase and sale of patents, or patent litigation, may want to evaluate how these state laws could impact their business and seek to perfect any ownership questions that may exist.
1 While a minority of states, most of the West and Southwest of the United States follows some variation of a community property regime. The nine states are Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, and Wisconsin. Alaska is by default a separate property state but spouses have the option of electing to have community property rules govern the ownership of marital property.
This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617.439.2000.
This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.
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Maximizing the protection and value of intellectual property assets is often the cornerstone of a business's success and even survival. In this blog, Nutter's Intellectual Property attorneys provide news updates and practical tips in patent portfolio development, IP litigation, trademarks, copyrights, trade secrets and licensing.