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Certainteed Corporation, Plaintiff v. Knauf Insulation

March 29, 2012

CERTAINTEED CORPORATION, PLAINTIFF,
v.
KNAUF INSULATION, SPRL, DEFENDANT.



The opinion of the court was delivered by: Judge Beryl A. Howell

MEMORANDUM OPINION

In this case, plaintiff Certainteed Corporation seeks declaratory judgment that it is not infringing a patent allegedly owned by defendant Knauf Insulation, SPRL ("Knauf-BE"). The defendant has moved to dismiss the Complaint on grounds that the Court lacks subject matter jurisdiction because the defendant does not own the patent at issue.*fn1 As explained below, the Court agrees that it lacks subject matter jurisdiction because the defendant is not the owner of the patent. The plaintiff's Complaint is therefore dismissed.

I.BACKGROUND

A.Patent Application and Assignment

On January 25, 2007, three employees of Knauf Insulation Limited, a United Kingdom company, ("Knauf-UK") filed a patent application with the United States Patent and Trademark Office ("USPTO") seeking to patent a certain type of formaldehyde-free mineral fibre insulation product ("the '980 patent"). Compl., Ex. A, at 1. Before the USPTO issued the patent, on October 1, 2009, Knauf-UK entered into an agreement assigning the '980 patent application to Knauf-BE, a Belgian corporation and one of Knauf-UK's sister companies. Pl.'s Opp'n Mot. Dismiss, ECF No. 15, Decl. Barry J. Herman, Ex. 2.

A few weeks following Knauf-UK's assignment of the '980 patent application to KnaufBE, between October 14 and 29, 2009, the three Knauf-UK employees who initiated the patent application assigned their rights in the '980 patent application to their employer, Knauf-UK. Pl.'s Opp'n Mot. Dismiss, ECF No. 15, Decl. Barry J. Herman, Ex. 3. Knauf-UK then recorded the assignment executed by its employees with the USPTO. Id. Accordingly, despite the earlier transfer of interest in the '980 patent application from Knauf-UK to Knauf-BE, on December 21, 2010, the USPTO issued the '980 patent and named Knauf-UK the patent's sole assignee. Compl., Ex. A.

B.Litigation Involving the '980 Patent

Approximately two months after being issued the '980 patent, on February 28, 2011, Knauf-UK filed a case against plaintiff Certainteed Corporation in the U.S. District Court for the Southern District of Indiana alleging that the plaintiff was infringing the '980 patent. See Knauf Insulation Ltd. v. Certainteed Corp., No. 11-300 (S.D. Ind. filed Feb. 28, 2011). After the filing of that case, the plaintiff and Knauf-UK allegedly entered into settlement negotiations, and Knauf-UK therefore delayed service of the Complaint while these discussions proceeded.

Def.'s Mot. Dismiss, ECF No. 13, Decl. Felicia Boyd ("Boyd Decl."), ¶¶ 2-3.

In the midst of settlement negotiations, on March 25, 2011, Certainteed filed a Complaint against defendant Knauf-BE in this Court, asserting that the defendant was the true owner of the '980 patent and seeking declaratory judgment that it did not infringe the '980 patent. Compl. ¶¶ 8-11. The plaintiff also moved to dismiss the case in the Southern District of Indiana on grounds that Knauf-UK was not the owner of the '980 patent. See Certainteed's Mot. Dismiss, Knauf Insulation Ltd. v. Certainteed Corp., No. 11-300 (S.D. Ind. Apr. 14, 2011), ECF No. 19. Specifically, the plaintiff argued that under United Kingdom law, Knauf-UK was automatically entitled to any patent rights filed by its employees, and thus the assignment of the '980 patent from Knauf-UK to the defendant on October 1, 2009 was valid, and there is no significance to the employees' later assignment of their patent rights to Knauf-UK. Id.

In response to the plaintiff's filings in this Court and in the Southern District of Indiana, Knauf-BE sent Certainteed a letter disclaiming ownership of the '980 patent and any intention to take action against the plaintiff for infringement on the '980 patent. Boyd Decl., Ex. 1. Shortly thereafter, on April 20, 2011, the defendant executed a "Quitclaim and Assignment," which stated:

. . . for avoidance of doubt, KI-BE desires to quitclaim and release to KI-UK all residual and/or equitable rights KI-BE may have nevertheless maintained in the US Application and '980 patent by virtue of KI-UK's previous assignment of KIUK's rights in the PCT application to KI-BE.

Boyd Decl., Ex. 2. The quitclaim, however, contained a typographical error. Instead of assigning the patent's rights from Knauf-BE to Knauf-UK, the quitclaim stated: "KI-BE hereby releases and quitclaims and assigns to KI-BE any right, title, interest, claim, or demand whatsoever that KI-BE may have acquired and/or retained in the US Application and the '980 patent." (emphasis added). Id.

Following the April 20, 2011 quitclaim and assignment, Certainteed continued to maintain that the case in the Southern District of Indiana should be dismissed. See Certainteed's Reply, Knauf Insulation Ltd. v. Certainteed Corp., No. 11-300 (S.D. Ind. May 12, 2011), ECF No. 33. It argued that in a patent infringement action the party seeking to enforce its rights is required to have those rights at the time the lawsuit is filed. Id. at 6 (citing Paradise Creations, Inc. v. UV Sales, Inc., 315 F.3d 1304 (Fed. Cir. 2003)). Thus, if it was effective at all, the plaintiff argued that the April 20, 2011 quitclaim and assignment was executed too late to allow for Knauf-UK to have standing to sue for infringement. In an attempt to obviate this argument, Knauf-UK voluntarily dismissed its Complaint in the Southern District of ...


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