Addressing a party’s standing to sue for patent infringement, the U.S. Court of Appeals for the Federal Circuit further clarified the relationship between an assignment of patent rights and the assignee’s standing to sue for patent infringement without joining the assignor. Sicom Systems Ltd. v. Agilent Technologies, Inc., Case No. 05-1006 (Fed. Cir. Oct. 18, 2005) (Prost, J.).

This case was the latest in a series of patent infringement cases brought by Sicom in an effort to enforce a U.S. patent that when issued was assigned to the Canadian government. Four years later, Sicom licensed the patent from Canada in an agreement under which Canada retained a number of rights in the patent.

After an attempt to sue Agilent for infringement of the patent was dismissed for lack of standing, Sicom and Canada amended their license agreement to give Sicom "(1) the exclusive right to ‘initiate commercial infringement actions’ related to the patent; (2) an extension of the term of the Agreement to coincide with the term of the patent; and (3) an extension of Sicom’s right to initiate commercial infringement actions after expiration of the patent." Sicom subsequently filed a second suit for infringement against Agilent who responded by filing another motion to dismiss for lack of standing. The district court granted the motion to dismiss with prejudice, concluding Sicom lacked the "substantial rights necessary to be an ‘effective patentee’ for purposes of granting Sicom standing to sue for infringement of the … patent." Sicom appealed.

The Federal Circuit, quoting Prima Tek II, upheld the district court’s dismissal, noting that classifying an agreement as an assignment or license was not dispositive and reiterating its position that it "‘must ascertain the intention of the parties and examine the substance of what [the licensing agreement] granted’ to determine if it conveys all of the substantial rights in the patent and is sufficient to grant standing to the licensee." The Federal Circuit agreed with Sicom’s argument that "an important substantial right is the exclusive right to sue for patent infringement." Nevertheless, it found that under Sicom’s agreement with Canada, Sicom did not have the "exclusive right to sue for all infringement" (emphasis added) because the Canadian government retained the right to sue for "non-commercial" infringement. Sicom also lacked other essential rights under its agreement with Canada, including "the right to settle litigation without the prior written consent from Canada," "the right to sublicense without Canada’s prior approval" and the right to assign its rights.

Practice Note

Sicom emphasizes the importance the Federal Circuit places on ensuring that infringers not be subject to multiple infringement suits from parties with interests in a patent. Practitioners should be aware that licensing agreements which do not convey "all substantial rights" in a patent are unlikely to convey standing to sue for infringement of the patents which are the subject of the license.

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