MD Florida reversed by CAFC in Alps case: "all substantial rights" interpreted
The CAFC observed:
Alps South, LLC (Alps) sued The Ohio Willow Wood
Company (OWW), asserting infringement of U.S. Patent
No. 6,552,109 (the ’109 patent). Among other pre-
and post-trial motions, OWW filed an unsuccessful motion to
dismiss contending that Alps lacked standing to sue
under the Patent Act. At trial, a jury found that the ’109
patent was valid and that OWW had willfully infringed.
OWW now appeals the denial of its motion to dismiss for
lack of standing. In addition, OWW appeals the denial of
its motion for judgment as a matter of law of invalidity
and no willful infringement and the decisions relating to
enhanced damages, permanent injunction, attorneys’ fees,
and contempt. Alps cross-appeals the decision declining
to further enhance the damages award as well as the
decision relating to OWW’s absolute intervening rights
Because the district court erred when it denied
OWW’s motion to dismiss for lack of standing, we now
reverse, vacate the judgment below,
and remand with
instructions to dismiss this action.
The technology involved “liners” that are
used as a cushioning and protective layer between the
residuum of an amputated limb and a prosthetic limb.
Both plaintiff and defendant made product, so there were
no "trolls" involved.
Licensing matters were implicated in the case:
After the ’109 patent issued, the inventor assigned
the patent to Applied Elastomerics, Inc. (AEI), a company
created by the inventor. On August 31, 2008, Alps signed
a license agreement with AEI covering a number of AEI’s
patents, including the ’109 patent. Shortly thereafter, on
September 23, 2008, Alps, without naming the patent
owner, AEI, as a co-plaintiff, filed a patent infringement
suit against OWW. Because Alps declined to join AEI as
a co-plaintiff, OWW filed a motion to dismiss for lack of
standing. While the motion was pending, Alps and AEI
executed an amended license agreement that eliminated
several limitations on Alps’s rights and removed certain
rights retained by AEI. Although the amended agree-
ment was executed on January 28, 2010, almost
sixteen months after Alps commenced the action, the parties
apparently intended this to be a
nunc pro tunc agreement
that lists the effective date as the date of the original
agreement, August 31, 2008.
The district court rejected OWW’s
standing argument and denied the motion to dismiss.
The court concluded that the terms of the original agreement, giving Alps the
right to exclude, transfer, and sue, sufficed to provide
Alps with standing.
Yes, the words "all substantial rights" appear:
In addition to the patent owner, our case law provides
that “[a] n exclusive licensee has standing to sue in its own
name, without joining the patent holder where ‘all sub-
stantial rights’ in the patent are transferred.”
504 F.3d 1273, 1276 (Fed. Cir. 2007)
see also Int’l Gamco, 504 F.3d at 1276 (observing
that a licensee with all substantial rights “is effectively an
assignee”); Speedplay , Inc. v. Bebop, Inc., 211 F.3d 1245, 1250
(Fed. Cir. 2000) (explaining that an entity “that has
been granted all substantial rights under the patent is
considered the owner regardless of how the parties char-
acterize the transaction that conveyed those rights.”).
The CAFC noted there were limits in the license:
At the same time, however, the original agreement
restricted Alps’s rights in significant ways and provided
that AEI would retain certain rights for itself. For exam-
ple, the original agreement prohibited Alps from settling
any infringement actions without AEI’s prior written consent.
AEI also retained the right to pursue infringe-
ment litigation if Alps declined to do so within six months
of learning of suspect ed infringement. Most importantly,
the license agreement limited Alps’s right to “develop,
make, have made, use, sell, offer to sell, distribute, lease,
and import” products covered by the ’109 patent, J.A.
18367, to a particular “field of use”
Precedent dictates that the original agreement’s field
of use restriction is fatal to Alps’s argument that it had
standing to file this action. The Supreme Court has long
recognized that an exclusive licensee cannot sue for
infringement without joining the patent owner if the
license grants merely “an undivided part or share of th[e]
exclusive right [granted under the patent].”
Waterman v. Mackenzie, 138 U.S.252, 255 (1891);
see also Pope Mfg. Co. v. Gormully & Jeffery Mfg. Co.
, 144 U.S. 248, 252(1892) (explaining a licensee may not file suit in its own
name, without joining the patent owner, when the owner
has conveyed only one pa
rt of the exclusive rights to
make, use, and sell as conferred by the patent)
Yes, A123 was cited:
see also A123 Sys., Inc. v. Hydro-Quebec, 626 F.3d 1213, 1217
(Fed. Cir. 2010).
Our case law thus establishes a clear rule for cases
involving licenses with field of use
The matter of "nunc pro tunc" also arose:
Neither party seems to dispute that if the amended
agreement had been executed prior to Alps filing suit,
Alps would have had standing to sue without joining AEI.
The parties’ dispute focuses on whether a
nunc pro tunc agreement may cure a
defect in standing that existed
when the suit was initiated. Alps urges us to conclude
that the nunc pro tunc
nature of the agreement cured the
jurisdictional defect. OWW, on the other hand, asserts
that Alps cannot correct a jurisdictional defect that
existed at the time the complaint was filed by post-filing
activity. OWW is correct.
“[N]unc pro tunc assignments are not sufficient to
confer retroactive standing.” Enzo APA & Son, Inc. v.
Geapag A.G., 134 F.3d 1090, 1093 (Fed. Cir. 1998)
Other Alps legal arguments did not fare well:
Alps misinterprets Enzo
by describing it as a case about Article III standing.
Enzo addressed whether the
licensee possesses “all substantial rights” at the
time the complaint was filed, in other words, whether a licensee
may be considered a “patentee” under §281. Consequent-
ly, the reasoning and holding of Enzo are binding on the
Alps also broadly argues that we have routinely per-
mitted plaintiffs to cure this type of standing defect
during the course of a lawsuit. The cases cited by Alps,
however, involve our practice of endorsing joinder of
patent owners, under Rule 21 of the Federal Rules of Civil
Procedure, in order to avoid dismissal for lack of standing.
Alps’s attempt to characterize its supplemental com-
plaint as an amended complaint fares no better.
To be sure, 28 U.S.C. §1653 permits parties to amend their
complaints to correct “[d]efective allegations of jurisdic-
tion.” But the Supreme Court has explained that this
provision is drafted in terms of “allegations
tion,” which means that the ability to amend applies only
to “incorrect statements about jurisdiction that actually
exists, and not defects in the jurisdictional facts them-
Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S.826, 830–
32 (1989) (emphasis added) (“[E]very Court of
Appeals that has considered the scope of §
1653 has held that it allows appellate courts to remedy inadequate
jurisdictional allegations, but not defective jurisdictional
facts.”); see also Pressroom Unions-Printers League In-
come Sec. Fund v. Cont’l Assurance Co., 700 F.2d 889, 893
(2d Cir. 1983) (“[W]e have never allowed [§1653] to create
jurisdiction retroactively where none existed.”); Field v.
Volkswagenwerk AG, 626 F.2d 293, 306 (3d Cir. 1980
The bottom line on the MD Florida decision:
REVERSED, VACATED, AND REMANDED