United States: Standing Must Be There from the Get Go or Plaintiff Has No Leg to Stand On

The U.S. Court of Appeals for the Federal Circuit refused to recognize standing to bring a lawsuit based solely on a state corporate revival statute that purported to confer standing retroactively where it did not exist at the time that the complaint for patent infringement was filed. Paradise Creations, Inc. v. UV Sales, Inc., Case No. 02-1283, 2003 U.S. App. LEXIS 44. (Fed. Cir. Jan. 3, 2003).

Paradise Creations, Inc. was incorporated under Florida law on March 13, 1985. On August 23, 1996, Paradise Creations was administratively dissolved. It remained administratively dissolved until June 29, 2001. During the period of dissolution, Paradise purportedly obtained "the exclusive, unlimited, irrevocable, worldwide right and license" to U.S. Pat. No. 4,681,471 (the `471 patent) and filed a complaint for patent infringement against UV Sales, Inc.

UV filed a summary judgment motion, arguing that Paradise did not have capacity to sue under Florida law or standing to invoke the court’s jurisdiction. After obtaining reinstatement as a corporation, Paradise filed its opposition, arguing that under Florida law, when an administratively dissolved corporation is reinstated, the reinstatement relates back to the date of dissolution and the corporation resumes its business as if the dissolution never occurred.

The district court rejected Paradise’s argument, finding that standing must exist at the time the action is brought and the Florida law cannot retroactively create jurisdiction that was lacking at the time the action was filed. Paradise appealed. The Federal Circuit affirmed, applying the rule in Enzo APA & Son, Inc. v. Geapag A.G., for example, that a contract could not retroactively confer standing on an exclusive licensee who did not have all substantial rights to the patent at the time that it brought suit. In applying Enzo to the facts of this case, the Federal Circuit "saw no meaningful distinction between a contract provision that purports to vest title retroactively, in the plaintiff and a state law that is alleged to vest enforceable title retroactively."

The Federal Circuit distinguished the facts in Paradise from its holding in Mentor H/S, Inc. v. Med. Device Alliance, Inc., where it had held that a defect standing was curable where an exclusive licensee with less than all substantial rights in the patent (i.e., no right to sue at the time the lawsuit was brought) filed a motion to join the patentee as a plaintiff, reasoning that as an exclusive licensee, Mentor had a cognizable injury at the time of the inception of the suit. In contrast, Paradise held no enforceable rights whatsoever in the patent at the time it filed suit and, therefore, lacked the cognizable injury necessary to assert standing under Article III.