Constitutional And Prudential Standing

  • Party With Any Exclusionary Right In Patent Is Exclusive Licensee And Has Constitutional Standing If The Accused Is Alleged To Violate That Right: “The touchstone of constitutional standing . . . is whether a party can establish that it has an exclusionary right in a patent that, if violated by another, would cause the party holding the exclusionary right to suffer legal injury.” One qualifies as an exclusive licensee if “it holds any of the exclusionary rights that accompany a patent.” Exclusive licensee has constitutional standing even if its license is subject to pre-existing licenses (not to the accused) “but also to future licenses that may be granted only to parties other than the accused.” WiAV Solutions (Fed. Cir. 12/22/10) (long background discussion of “constitutional standing” (vs. “prudential standing”) fundamentals). See generally Bank of America (U.S. 05/01/2017) (to “demonstrate constitutional standing …, the plaintiff must show an ‘injury in fact’ that is ‘fairly traceable’ to the defendant’s conduct and ‘that is likely to be redressed by a favorable judicial decision.’”)
  • Patent Owner That Granted Exclusive License May Sue On Patent, Without Joining Exclusive Licensee, If Retained Substantial Rights: For purposes of standing, there can only be one patent owner (which may be a group). “The question is whether the license agreement transferred sufficient rights to the exclusive licensee to make the licensee the owner of the patents in question. If so, the licensee may sue but the licensor may not. If not, the licensor may sue, but the licensee alone may not. When there is an exclusive license agreement, as opposed to a nonexclusive license agreement, but the exclusive license does not transfer enough rights to make the licensee the patent owner, either the licensee or the licensor may sue, but both of them generally must be joined as parties to the litigation.” Alfred E. Mann Found. For Sci. Research (Fed. Cir. 05/14/10) (patent owner has standing to sue on its own, despite having granted exclusive license; where it retained secondary right to sue if exclusive licensee declined to sue, right to significant portion of proceeds from infringement suit filed by licensee, right to terminate license if payments missed, and some others.); Aspex Eyewear (Fed. Cir. 05/24/10). Some of the rights to be considered: “transfer of the exclusive right to make, use, and sell products or services under the patent is vitally important to an assignment;” “the scope of the licensee’s right to sublicense, the nature of license provisions regarding the reversion of rights to the licensor following breaches of the license agreement, the right of the licensor to receive a portion of the recovery in infringement suits brought by the licensee, the duration of the license rights granted to the licensee, the ability of the licensor to supervise and control the licensee’s activities, the obligation of the licensor to continue paying patent maintenance fees, and the nature of any limits on the licensee’s right to assign its interests in the patent. Frequently, though, the nature and scope of the exclusive licensee’s purported right to bring suit, together with the nature and scope of any right to sue purportedly retained by the licensor, is the most important consideration.” Alfred E. Mann Found. For Sci. Research (Fed. Cir. 05/14/10).
  • Exclusive License: Owner’s Retained, Non-Illusory Right To Sue Infringers Decisive: “The nature and scope of the licensor’s retained right to sue accused infringers is the most important factor in determining whether an exclusive license transfers sufficient rights to render the licensee the owner of the patent.” Alfred E. Mann Found. For Sci. Research (Fed. Cir. 05/14/10) (patent owner has standing even though right to sue is secondary to exclusive licensee’s and exclusive licensee has a right to grant restricted sub-licenses); accord Luminara (Fed. Cir. 02/29/16) (Licensor’s retained right to practice patents and share in proceeds of litigation or licensing are not “individually or cumulatively … substantial enough to preclude [exclusive licensee] from bringing suit in its name alone.” Also finding title, maintenance fee responsibility, and right to notice of litigation and licensing insufficiently substantial retained rights to make patent owner indispensable party or deny exclusive licensee of standing); Alps South (Fed. Cir. 06/05/15) (no standing to sue without patent owner where exclusive license limited to a field of use, and licensee could not settle without patent owner consent, and patent owner retained right to sue if licensee did not within six months); Delano Farms (Fed. Cir. 08/24/11). “To be an exclusive licensee for standing purposes, a party must have received, not only the right to practice the invention within a given territory, but also the patentee’s express or implied promise that others shall be excluded from practicing the invention within that territory as well.” Rite-Hite (Fed. Cir. 06/15/95) (en banc).
  • “Exclusive Licensee” Without “All Substantial Rights” To Patent, Must Join Patent Owner: “If an exclusive licensee does not hold all substantial rights to the patent, … it lacks standing to maintain an infringement suit” without joining the patent owner. Keranos (Fed. Cir. 08/13/15) (aff’g proper standing of exclusive licensee where all substantial rights assigned post patent expiration); Alfred E. Mann Found. For Sci. Research (Fed. Cir. 05/14/10) (“A patent owner may transfer all substantial rights in the patents-in-suit, in which case the transfer is tantamount to an assignment of those patents to the exclusive licensee, conferring standing to sue solely on the licensee.” “[W]here an exclusive license transfers less than ‘all substantial rights’ in the patents to the exclusive licensee, the exclusive licensee may still be permitted to bring suit against infringers, but the patent owner is an indispensable party who must be joined.”); Sicom (Fed. Cir. 10/18/05) (grant that transferred exclusive right to sue for commercial infringement did not transfer all substantial rights); Abbott Labs. (Fed. Cir. 02/07/95) (patent owner “retained substantial interests” under the patents and therefore exclusive licensee “does not have an independent right to sue for infringement.”)
  • Non-Exclusive Licensee With No Right To Exclude Others Cannot Join The Lawsuit: “If the party has not received an express or implied promise of exclusivity under the patent, i.e., the right to exclude others from making, using, or selling the patented invention, the party has a “bare license,” and has received only the patentee’s promise that that party will not be sued for infringement…. The grant of a bare license to sell an invention in a specified territory, even if it is the only license granted by the patentee, does not provide standing without the grant of a right to exclude others.” Rite-Hite (Fed. Cir. 06/15/95) (en banc) (reversing for lack of standing damages awarded to patent owner’s independent sales organizations with exclusive sales territories); Alfred E. Mann Found. For Sci. Research (Fed. Cir. 05/14/10).
  • Exclusive License Limited To Particular Field Insufficient: “Clear rule” that an exclusive licensee does not have standing to sue without patent owner if exclusive license limited to a particular field. Alps South (Fed. Cir. 06/05/15).
  • Party Retaining Any Right To Sue Normally Is Indispensable Party: “As a prudential principle, an exclusive licensee having fewer than all substantial patent rights possesses standing under the Patent Act as long as it sues in the name of, and jointly with, the patent owner and meets the Lujan This principle holds true except in extraordinary circumstances, such as where the infringer is the patentee and cannot sue itself.” Intellectual Prop. Dev. (Fed. Cir. 05/07/01). Exclusive licensee did not qualify as “patentee” with power to sue without joining the patent owner where patent owner retained right to file infringement suit if licensee refused, and retained other rights. AsymmetRx (Fed. Cir. 09/18/09).
  • Patent Owner Must Be Joined When Exclusive Licensee Has Field Of Use Restriction: Patent owner is a necessary party to a DJ action against exclusive licensee in a restricted field of use. A123 Sys. (Fed. Cir. 11/10/10).