CAFC addresses licensing, standing, and FRCP 19 in Lone Star; appellant wins

The outcome:



Lone Star Silicon Innovations LLC (“Lone Star”) sued
Appellees1 for infringing various patents.2 The district
court concluded that Lone Star does not own these patents
and therefore lacks the ability to assert them. In re Lone
Star Silicon Innovations LLC, No. 3:17-cv-03980-WHA,
2018 WL 500258, at *1 (N.D. Cal. Jan. 20, 2018). We agree
with the district court that Lone Star cannot assert these
patents on its own. But the district court should not have
dismissed this case without considering whether Advanced
Micro Devices, Inc. (“AMD”), the relevant patentee, should
have been joined. Its failure to address this issue was legally
erroneous in view of Federal Rule of Civil Procedure
19 and our case law. We therefore vacate the district court’s
dismissal and remand for further proceedings consistent
with this opinion.



Lone Star's problem:


The asserted patents were originally assigned to AMD,
which later executed an agreement purporting to transfer
“all right, title and interest” in the patents to Lone Star.
The transfer agreement, however, imposes several limits
on Lone Star. For example, Lone Star agreed to only assert
the covered patents against “Unlicensed Third Party Entit[ies]”
specifically listed in the agreement. J.A. 2025; J.A.
2032. New entities can only be added if Lone Star and
The asserted patents were originally assigned to AMD,
which later executed an agreement purporting to transfer
“all right, title and interest” in the patents to Lone Star.
The transfer agreement, however, imposes several limits
on Lone Star. For example, Lone Star agreed to only assert
the covered patents against “Unlicensed Third Party Entit[ies]” specifically
listed in the agreement. J.A. 2025; J.A.
2032. New entities can only be added if Lone Star and


As to standing,



Appellees argue that, because Lone Star is not a patentee and
never explicitly alleged that it was an exclusive
licensee, it lacks standing to bring suit. We disagree.

The Constitution of the United States vests judicial
power in the federal courts. U.S. Const. art. III, § 1.
That power may only be exercised to resolve “Cases” or
“Controversies.” Id. art. III, § 2. “The doctrine of constitutional standing serves to identify which disputes fall within
these broad categories and therefore may be resolved by a
federal court.” WiAV Sols. LLC v. Motorola, Inc., 631 F.3d
1257, 1264 (Fed. Cir. 2010). A party must establish standing, i.e. show that its case or controversy is amenable to
resolution by a federal court, by demonstrating that it suffers an injury which can be fairly traced to the defendant
and likely redressed by a favorable judgment. Lujan v.
Defs. of Wildlife, 504 U.S. 555, 560–61 (1992). At the pleading stage, “general factual allegations . . . may suffice” to
satisfy these requirements. Id. at 561.

We have recognized that those who possess “exclusionary rights” in a patent suffer an injury when their rights
are infringed. See, e.g., WiAV, 631 F.3d at 1264–65 (“[A]
party holding one or more of those exclusionary rights—
such as an exclusive licensee—suffers a legally cognizable
injury when an unauthorized party encroaches upon those
rights and therefore has standing to sue.”).


The key point


Although Lone Star cleared this constitutional threshold, the district court concluded that it lacked standing to
proceed without AMD. But treating AMD’s absence as
implicating Lone Star’s standing confuses the requirements of Article III—which establish when a plaintiff may
invoke the judicial power—and the requirements of § 281—
which establish when a party may obtain relief under the
patent laws. The district court’s mistake, repeated by the
parties on appeal, is understandable. Indeed, we have often treated “statutory standing,” i.e. whether a party can
sue under a statute such as § 281, as jurisdictional. See
AsymmetRx, 582 F.3d at 1318 (‘The issue of AsymmetRx’s
standing to bring suit without Harvard joining as a plaintiff was not raised by either party or by the district court.
However, an appellate court must satisfy itself that it has
standing and jurisdiction whether or not the parties have
raised them.”).
But the Supreme Court has recently clarified that socalled “statutory standing” defects do not implicate a
court’s subject-matter jurisdiction:

(...)

Where intervening Supreme Court precedent makes clear that our earlier decisions
mischaracterized the effects of § 281, we are bound to
follow that precedent rather than our own prior panel decisions. Cf. Troy v. Samson Mfg. Corp.,
758 F.3d 1322, 1326
(Fed. Cir. 2014) (“It is established that a later panel can
recognize that the court’s earlier decision has been implicitly overruled as inconsistent with
intervening Supreme
Court authority.”). We therefore firmly bring ourselves
into accord with Lexmark and our sister circuits by concluding that whether a party possesses all substantial
rights in a patent does not implicate standing or subject matter jurisdiction.6



As to Rule 19:


Lone Star argues that, because it has standing, even if
it lacks all substantial rights in the patents, it should be
given an opportunity to join AMD as a necessary party before this case is dismissed. We agree.
This result is compelled by Federal Rule of Civil Procedure 19 and our case
law.

(...)

The rule of Independent Wireless, as incorporated into
Rule 19, provides a clear command. A necessary party who
is subject to service of process and whose joinder will not
otherwise destroy a court’s subject-matter jurisdiction
“must be joined.” Fed. R. Civ. P. 19(a)(1). The rule extends
its command directly to courts. See Fed. R. Civ. P. 19(a)(2)
(“If a person has not been joined as required, the court must
order that the person be made a party.” (emphasis added)).