The U.S. Court of Appeals for the Federal Circuit again confirmed that an agent having only the authority to enforce and license a patent does not have standing to sue in its name alone, nor does it have the authority to be joined as a party-plaintiff. In this case the patent owner entered into an agreement with an agent that provided responsibility to license and enforce of the subject patent. After litigating the patent against an accused infringer, the district court dismissed the action for lack of subject-matter jurisdiction. The Federal Circuit affirmed. Propat International Corp. v. Rpost International Limited, Case Nos. 2006-1222, -1223, -1270 (Fed. Cir., Jan. 4, 2007) (Bryson, J.).
Propat, the plaintiff, had the right to license patents owned by Authentix to third parties, to enforce the licensing agreements and to sue infringers. Propat retained a percentage of the proceeds. Propat did not hold any exclusive patent license rights of its own, i.e., the exclusive right to make, use or sell the patented invention. Moreover, Authentix retained the right to approve certain actions as well as to terminate the agreement. Propat’s ability to transfer its rights was subject to Authentix’s consent.
The Court confirmed that the "right to sue" that is "unaccompanied by the transfer of other incidents of ownership, does not constitute an assignment of the patent rights that entitles the transferee to sue in its own name." The Court looked to the agreement and the rights allocated to each party. The Court held that there was no transfer of "all substantial rights" because Authentix had the obligation to maintain the patent, had an economic interest and had the right to veto licensing and litigation decisions. The agreement could also be terminated if certain conditions were not met. As such, the rights were insufficient to make Propat an assignee of the patent.
Propat was held not to have any exclusive right because of the interest retained by Authentix and thus was not even an exclusive licensee. The Court acknowledged that the facts of this case did not fit neatly between the assignee and licensee analysis and thus turned to the 1923 Supreme Court decision in Crown Die & Tool v. Nye Tool & Machine Works for guidance. In Crown Die & Tool, the Supreme Court "refused to permit the right to sue to be segregated from formal ownership of the patent, with the very narrow exceptions previously recognized, including the right accorded to exclusive licensees." Finally, Propat’s request to join Authentix as a party was denied for lack of subject-matter jurisdiction.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.