Bona Fide Purchaser (Sec. 261)

  • BASICS: “An interest that constitutes an assignment, grant or conveyance shall be void as against any subsequent purchaser or mortgagee for a valuable consideration, without notice, unless it is recorded in the Patent and Trademark Office within three months from its date or prior to the date of such subsequent purchase or mortgage.” 35 U.S.C. § 261. “When a legal title holder of a patent transfers his or her title to a third party purchaser for value without notice of an outstanding equitable claim or title, the purchaser takes the entire ownership of the patent, free of any prior equitable encumbrance. This is an application of the common law bona fide purchaser for value rule. Section 261 of Title 35 goes a step further. It adopts the principle of the real property recording acts, and provides that the bona fide purchaser for value cuts off the rights of a prior assignee who has failed to record the prior assignment in the Patent and Trademark Office by the dates specified in the statute. Although the statute does not expressly so say, it is clear that the statute is intended to cut off prior legal interests, which the common law rule did not.” Filmtec (Fed. Cir. 07/22/91) (vacating preliminary injunction in view of serious doubts re who has title to patent). Subsequent purchaser “must be more than a donee or other gratuitous transferee. There must be in fact valuable consideration paid so that the subsequent purchaser can, as a matter of law, claim record reliance as a premise upon which the purchase was made.” Id.
  • Bona Fide Purchaser Defense Does Not Extend To Non-Exclusive Licensees: “Bona fide purchaser defense to patent infringement is a matter of federal law” even if 35 U.S.C § 261 does not apply, and whether Sec. 261 applies or not, it does not extend to licenses because they do not convey title. Rhone-Poulenc (Fed. Cir. 03/27/02) (where patent license procured by fraud and voided, licensee’s sub-licensee is not shielded from infringement despite having no knowledge of that fraud. “At common law, a bona fide purchaser (also known as a “good faith buyer”) who acquired title to personal property was entitled to retain the property against the real owner who had lost title to the property, for example, by fraud.” But “a party to an executory contract to purchase title, the owner of a lease, or a purchaser from a vendor who did not have title cannot benefit from the bona fide purchaser rule.”).

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