Intellectual property owners should remain mindful of their IP assets during corporate reorganization. The Eastern District of California has held that plaintiff, an original patent owner, was not entitled to win lost profits damages from a defendant infringer because, following a corporate reorganization, the exploitation and use of plaintiff’s patent (e.g., the corporate operations) were made by the non-party parent company to which plaintiff had neglected to transfer or license the patent rights during the reorganization. Duhn Oil Tool, Inc. v. Cooper Cameron Corporation (CAED January 24, 2011):
[Plaintiff] has not assigned the patent-in-suit to [Parent] nor granted a license to [Parent]. This evidence establishes that, since the stock acquisition and restructuring of operations, as a matter of law, these profits and losses are, in effect, the profits and losses of [Parent], a non-party.
Take-away: The Duhn Oil ruling would be equally applicable to other types of intellectual property rights (copyright, trademark, etc…). Corporations must take extra care to properly assign IP rights to the parents or subsidiaries that will actually perform operations and exploit those rights because only those entities will be entitled to lost profits damages from infringement following reorganization.
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