## Facts

- Raffel Systems, LLC alleged that Man Wah entities infringed four utility patents covering lighted cup holders for seating arrangements and one design patent covering the ornamental design of such cup holders.
- Raffel asserted it held ownership of the asserted patents by assignment and sued for infringement based on Man Wah’s alleged making, using, selling, offering for sale, importing, and distributing accused products.
- To obtain financing, Raffel granted its lender security interests in the asserted patents as collateral.
- The lender perfected the security interests by recording them with the USPTO.
- Man Wah argued the recorded security interests effectively transferred patent ownership such that Raffel was only a licensee lacking independent standing to sue.

## Issues

1. What constructions should be given to disputed terms in the asserted utility-patent claims and to the claimed ornamental design in the design patent?
2. Whether granting and recording a security interest in patents as loan collateral divests the assignee of ownership such that it lacks standing to sue for infringement in its own name.

## Decision

- The court issued a Markman order construing disputed terms in the four utility patents and construing the design patent by reference to the drawings and the design as a whole.
- The court rejected Man Wah’s standing challenge, holding that the recorded security interests did not transfer ownership or “all substantial rights” in the patents.
- Raffel was treated as the patent owner with standing to proceed on its infringement claims.

## Legal Principles

- Claim construction is a question of law for the court; the court must resolve fundamental disputes about claim scope.
- Claim terms generally receive their ordinary and customary meaning in view of the intrinsic record (claims, specification, and prosecution history), and courts should avoid importing limitations from preferred embodiments.
- Design patents are construed as an overall ornamental design, primarily from the drawings, without unduly narrowing the claim to unclaimed details.
- A security interest in a patent, even if perfected and recorded with the USPTO, is generally a lien rather than an assignment; it does not, without more, convey “all substantial rights” required to shift standing away from the owner-assignee.
- Recording under the Patent Act provides notice and perfection effects; it does not itself change the substantive nature of a security interest into a transfer of patent ownership.

## Conclusion

The court construed the asserted utility and design patent claims for the lighted cup-holder technology and held that Raffel’s recorded patent security interests remained liens, leaving Raffel as the owner-assignee with standing to sue for infringement.


Raffel Sys., LLC v. Man Wah Holdings Ltd., Inc., No. 18-CV-1765, 2020 WL 3211684 (E.D. Wis. June 15, 2020)