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A patent grants its holder the right to bring suit againstan infringer of the claimed invention. As a result, the transferors and thetransferees of patent rights should be vigilant in granting or receiving rightsunder a patent: Will the party lose or acquire the right to sue in its ownname; will the transferee be required to join the transferor as a partyplaintiff. The following paragraphs explore when an “assignee,” an “exclusivelicensee,” or a “non-exclusive licensee” may bring suit in its name and, if bychance suit is not brought by the proper party, whether the error may becorrected. This discussion raises the interesting interplay betweenArticle III jurisdiction and prudential jurisdiction. Although none of theprinciples are new, recent cases have clarified the law. THE ASSIGNEE Under the U.S. patent statute, only a patentee may bring a patentinfringement suit. 35 U.S.C. � 281 (1994). Not surprisingly, an assignee of apatent is considered a “patentee.” 35 U.S.C. � 100(d). An assignee is one towhom all substantial rights in a patent have been transferred. VaupelTextilmaschinen KG v. Meccanica Euro Italia S.P.A., 944 F.2d 870, 873-74(Fed. Cir. 1991). Moreover, the form that the transfer takes is notdeterminative. Courts look beyond whether the transfer is termed an assignmentor a license. Waterman v. Mackenzie, 138 U.S. 252, 256 (1891); OrthoPharm. Corp. v. Genetics Inst., Inc., 52 F.3d 1026, 1030 (Fed. Cir. 1995); Vaupel,944 F.2d at 873-74. The sole inquiry as to a transferee having standing to suein patent infringement cases is whether the transferee has receivedsubstantially all rights in the patent. When that happens the transfer isregarded as an assignment. See Speedplay, Inc. v. Bebop, Inc., 211 F.3d1245, 1250 (Fed. Cir. 2000) (“A party that has been granted all substantialrights under the patent is considered the owner regardless of how the partiescharacterize the transaction that conveyed those rights.”) This transferee can bring a patent infringement suit in itsown name. To determine whether a patent transfer agreement conveys allsubstantial rights under a patent to a transferee or fewer than all of thoserights, courts assess the substance of the rights transferred and the intentionof the parties involved. Vaupelat 874. In making such a determination,considering the rights retained by the grantor is generally more helpful thanconsidering the rights transferred to the grantee. Id.at 875. However, while the principles applicable to a patentassignment may be straightforward, the application of such principles to themyriad business relationships that parties may create can be complex. Examininga few cases and their facts brings home the critical factors in determiningwhether the transferor has retained substantial rights. Although in Vaupelthe transferor retained a vetoover the transferee’s right to sublicense, the right to obtain patents on theinvention in other countries, a reversionary right to the patent in the eventof the transferee’s bankruptcy or its termination of production, and the rightto receive infringement damages, the Vaupelcourt nevertheless held thatthe agreement was an assignment of all substantial rights in the patent atissue. Id.at 870, 875. The court stated that it found “particularlydispositive” that the provision transferring the right to sue for infringementof the patent at issue was subject only to the obligation to inform thetransferor. Id.at 870. In Speedplay, the transferee had the unlimited rightboth to sublicense and to sue infringers. The transferor retained only tworights: to initiate suit against an alleged infringer if the transferee failedto bring suit within three months and to consent to an assignment, whichconsent it could not unreasonably withhold. Speedplay, 211 F.3d at 1251.The court did not consider either retained right as “substantial.” Id.The court concluded that the transferor’s right to sue an infringer wasillusory — by licensing an alleged infringer, possibly royalty free, thetransferee could defeat the transferor’s right to sue. Id. Furthermore,the transferee had unlimited management of any action it brought, and thetransferor had no right to participate in that action. Id. Lastly, thecourt deemed the transferor’s consent to an assignment, which could not beunreasonably withheld, not significantly restrictive. Id. at 1252. Another factor, albeit apparently less important than theright to sue and assign, is whether a transferee has a right to sub-license. SeePrima Tek II L.L.C. v. A-Roo Co., 222 F.3d 1372, 1380 (Fed. Cir. 2000)(Prima II) (“A licensee’s right to sub-license is an important consideration inevaluating whether a license agreement transfers all substantial rights.”). Seealso Vaupel, 944 F.2d at 875-76 (stating “a restriction on a transferee’sright to assign is a substantial right reserved by the transferor”). In Intellectual Property Development, Inc. v. TCICablevision Of California, Inc., the transferee possessed an “exclusivelicense to make, use, and sell” the invention claimed in a patent. 248 F.3d at1336. The agreement, however, provided that when the transferor was a “necessary”party the transferor had the right to require the transferee to obtain itsconsent to proceed with litigation, the right when the transferor is not a”necessary” party to be fully informed and to be consulted with regard tolitigation, the right to assign “all [of its] rights and obligations” under theagreement, the right to prevent the transferee from assigning its benefit underthe agreement to a third party without prior written consent from thetransferor, the right to require its consent to settlements (which shall not be”unreasonably withheld”), and the right in the profits realized fromlitigation. In light of the transferor’s right to permit infringement incertain cases, the requirement that the transferor consent to certain actions andbe consulted in others, and the limits on the transferee’s right to assign itsinterests, the court held that the agreement at issue did not convey allsubstantial rights and thus was a license. Id. at 1345-46. Abbott Laboratories v. Diamedix Corp. is another casein which the court held that there was a transfer of less than all substantialrights. 47 F.3d 1128, 1133 (Fed. Cir. 1995). The transferor retained the rightto make and use for its own benefit the products claimed in the patents and theright to sell those products to parties with whom the transferor maintainedpre-existing contracts and licenses. Most importantly, while the transferee wasgiven the right of first refusal to sue alleged infringers, the transferor hadthe right to bring its own infringement actions and to prevent the transfereefrom assigning its rights under the license to any party other than a successorin business. Id. at 1132. The transferor also apparently retained theright to participate in a suit brought by the transferee. In Mentor H/S, Inc. v. Medical Device Alliance, thetransfer of patent rights was deemed to be an exclusive license of fewer thanall substantial rights. 240 F.3d 1016, 1018 (Fed. Cir. 2001). The court heldthat the transferor’s initial right to sue alleged infringers and thetransferee’s obligation to sue for infringement were substantial rights in thepatent retained by the transferor. Id. Thus, the factors that weigh most heavily, indeed that maybe determinative, as to whether an agreement transfers all substantial rightsare the transferor’s right to sue other parties for infringement and thetransferee’s right to assign, and to a lesser extent sub-license, its patentrights. If the transferee is substantially restricted in exercising these rights,a court will likely not find an assignment. THE EXCLUSIVE LICENSEE An exclusive licensee receives more substantial rights in apatent than a non-exclusive licensee, but receives fewer rights than anassignee of all the substantial patent rights. Like an assignee, an exclusivelicensee receives the exclusive right to practice an invention within a giventerritory; unlike an assignee, an exclusive licensee does not receivesubstantially all the rights in the patent. Rite-Hite Corp. v. Kelley Co.,56 F.3d 1538, 1552 (Fed. Cir. 1995). Whether an exclusive licensee can bring suit requiresanalysis of both Article III standing and prudential standing. Article IIIstanding requires a party invoking federal jurisdiction to establish threeelements. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61(1992). First, the plaintiff “must have suffered an ‘injury in fact — aninvasion of a legally protected interest which is (a) concrete andparticularized and (b) ‘actual or imminent, not conjectural or hypothetical.’ ” Id. at 560 (citations omitted). Second, “there must be a causalconnection between the injury and the conduct complained of — the injury hasto be ‘fairly … traceable to the challenged action of the defendant and not … the result [of] the independent action of some third party not before thecourt.’ ” Id. (citations omitted). Third, “it must be ‘likely,’ asopposed to merely ‘speculative,’ that the injury will be ‘redressed by afavorable decision.’ ” Id. (citation omitted). Constitutional standing in a patent infringement case isderived from the Patent Act, which provides that “[a] patentee shall haveremedy by civil action for infringement of his patent.” 35 U.S.C. � 281. A partythat has the right to exclude others from making, using and selling aninvention described in the claims of a patent is constitutionally injured byanother entity that makes, uses, or sells the invention. The U.S. Supreme Courthas stated that a patent owner who grants “the exclusive right to make, use, orvend [a patented invention], which does not constitute a statutory assignment … must allow the use of his name as plaintiff in any action brought by thelicensee … to obtain damages for the injury to his exclusive right.” IndependentWireless Telegraph Co. v. Radio Corp. of America, 269 U.S. 459, 469 (1926). Further, an exclusive licensee’s injury is directly relatedto the allegedly infringing conduct of the alleged infringer, and therelationship meets the “fairly traceable” standard for causation described in Lujan.Finally, the exclusive licensee’s injury is redressable because, if successfulin an infringement suit against the alleged infringer, the injunction ordamages that it obtained would redress its injury. Indeed, the Federal Circuithas awarded damages to exclusive licensees as compensation for patentinfringement injuries. See Weinar v. Rollform, Inc., 744 F.2d 797,807-08 (Fed. Cir. 1984). Thus, an exclusive licensee can meet the three-pronged Lujantest for Article III standing. Although an exclusive licensee has constitutional standingto sue, it curiously does not have the right to bring and maintain a suit inits own name. In addition to the three-prong Article III standing testdelineated in Lujan, the standing doctrine embraces judicially self-imposedlimits, known as prudential or statutory limits, on the exercise ofjurisdiction. Allen v. Wright, 468 U.S. 737, 751 (1984). For example, the Supreme Court has held that a “plaintiffmust assert his own legal rights and interests, and cannot rest his claim torelief on the legal rights or interests of third parties.” Warth v. Seldin,422 U.S. 490, 499 (1975). Additionally, even in circumstances where a plaintiffhas alleged a constitutionally redressable injury, the Supreme Court hasrefrained from “adjudicating ‘abstract questions of wide public significance’which amount to ‘generalized grievances’ … most appropriately addressed in therepresentative branches.” Valley Forge Christian Coll. v. Americans Unitedfor Separation of Church and State, Inc., 454 U.S. 464, 475 (1982) ( quoting Warth, 422 U.S. at 499-500). The Supreme Court has also required aplaintiff’s complaint to fall within “the zone of interests to be protected orregulated by the statute or constitutional guarantee in question.” Associationof Data Processing Serv. Orgs. v. Camp, 397 U.S. 150, 153 (1970). The Supreme Court addressed the right to sue for patentinfringement under a predecessor patent statute in Independent Wireless.In Independent Wireless, an exclusive licensee sought to obtain aninjunction and damages against an alleged patent infringer without joining thepatent owner to the suit. 269 U.S. at 466. There the Court stated, “Thepresence of the owner of the patent as a party is indispensable, not only togive jurisdiction under patent laws, but also in most cases to enable thealleged infringer to respond in one action to all claims of infringement forhis act … .” Id. at 468. The Court in Independent Wirelessalso recognized anexception to this rule in circumstances where a patent owner refuses, or isunable, to be joined as a co-plaintiff with an exclusive licensee. Id.In such cases, “the licensee may make [the patent owner] a party defendant byprocess [that is, involuntarily], and he will be lined up by the court in theparty character he should assume.” Id. As a general rule, in accordance with IndependentWireless, the Federal Circuit adheres to the principle that a patent ownershould be joined, either voluntarily or involuntarily, in any patentinfringement suit brought by an exclusive licensee having fewer than allsubstantial patent rights. Intellectual Property Development, 248 F.3dat 1347; Prima Tek II, 222 F.3d at 1377; Abbott Labs., 47 F.3d at1131; Rite-Hite, 56 F.3d at 1552; Mentor H/S, 240 F.3d at 1017. Apatent owner’s agreement to be bound by judgments cannot circumvent the rule of Independent Wirelessthat the patent owner must ordinarily be joinedwith an exclusive licensee in a patent infringement suit. Prima Tek II,222 F.3d at 1380-81. Thus, both constitutional standing and prudential standingare important. Assuming Article III jurisdiction exists, under the discretionthat Fed. R. Civ. P. 15, 19 and 21 provide, courts may permit the joining of aparty to retroactively create statutory or prudential standing. SeeCalifornia Credit Union League v. City of Anaheim, 190 F.3d 997, 1001 (9thCir. 1999) (finding that United States’ joinder cured jurisdictional defect); AbbottLaboratories, 47 F.3d at 1128 (although the court held plaintiff Abbott tobe an exclusive licensee, the court did not dismiss the case, but insteadpermitted the lawsuit to go forward and allowed the patentee to intervene). NON-EXCLUSIVE LICENSEE A non-exclusive license is merely a covenant not to sue,also known as a “bare” license. Ortho Pharmaceutical Corp. v. GeneticsInstitute, Inc., 52 F.3d 1026, 1030 (Fed. Cir. 1995). The non-exclusivelicensee has no protectable expectation or interest in the patent itself andcannot sue infringers or force the patent holder to sue infringers on itsbehalf. Id. Specifically, a non-exclusive license or “bare” licenseconfers no constitutional standing on the licensee under the Patent Act tobring suit or even to join a suit with the patentee because a nonexclusivelicensee suffers no legal injury from infringement. Ortho, 52 F.3d at1031; Rite-Hite Corp. 56 F.3d at 1552. James D. Jacobs is a partner in Baker & McKenzie‘sNew York office. Frank M. Gasparo and Eunhee Park are associates, and Robin L.Filion is counsel in that office. Baker & McKenzie represented IPD in theIntellectualProperty Development, Inc. v. TCI Cablevision Of California, Inc . casediscussed in this article.

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