Wednesday, November 10, 2010

A123 loses appeal in "all substantial rights" licensing issue

The bottom line of the A123 case at the CAFC:

A123 Systems, Inc. (“A123”) appeals from the final de-
cision of the United States District Court for the District
of Massachusetts denying A123’s motion to reopen and
dismissing its declaratory judgment action against Hydro-
Quebec (“HQ”). A123 Sys., Inc. v. Hydro-Quebec, 657 F.
Supp. 2d 276 (D. Mass. 2009). We affirm.

An underlying issue at district court involved the
University of Texas:

On September 28, 2008, the district court denied
A123’s motion to reopen, yielding jurisdiction over A123’s
declaratory judgment suit to the later-filed suit in Texas
in light of its conclusion that A123’s first-filed action, if
reopened, would be subject to imminent dismissal for
failure to join a necessary party. A123 Sys., 657 F. Supp.
2d at 279-80. Specifically, the district court held that, by
granting HQ only a field-of-use license, UT had trans-
ferred less than all substantial rights in the patents in
suit to HQ, making UT a necessary party to A123’s suit
under this court’s prudential standing requirement.
(citing Int’l Gamco, Inc. v. Multimedia Games, Inc., 504
F.3d 1273, 1278-79 (Fed. Cir. 2007)). The court then held
that A123 could not join UT because UT had not waived
Eleventh Amendment sovereign immunity in the Massa-chusetts court. Id. at 280-81.

The CAFC noted:

In general, as we
discuss below, an accused infringer must likewise join
both the exclusive licensee and the patentee in a declara-
tory action because the patentee is a necessary party. See
Enzo APA & Son, Inc. v. Geapag A.G., 134 F.3d 1090,
1094 (Fed. Cir. 1998) (“Having found Geapag to be with-
out standing for failing to join the patentee, it follows that
the court lacks jurisdiction over Enzo’s declaratory judgment
claims under Fed. R. Civ. P. 19 for nonjoinder.”).

A123 failed in its challenge about all substantial rights:

A123 challenges the district court’s conclusion that
UT had not transferred all substantial rights in the
patents in suit to HQ in light of what A123 casts as HQ’s
own actions and representations to the contrary. (...)
We agree with HQ. Based on the evidence of record,
the district court did not err in finding that HQ was a
field-of-use licensee and thus in concluding that UT had
not transferred all substantial rights to the patents to HQ.

***From a news story earlier in the week:

In the U.S., A123 Systems has quickly evolved from hot startup to the largest battery maker in North America. By supplying a key energy technology that gives the country a foothold in a strategic global market, A123 also could be one of the best hopes for reviving U.S. manufacturing. “Our goal is to create an entire [battery] ecosystem,” says CTO and co-founder Bart Riley.
Meanwhile, the Chinese government is pouring huge amounts of money into development of a battery industry infrastructure. The Asian giant’s nascent electric vehicle industry will be a steady customer, driving volume manufacturing that will help relatively inexperienced Chinese manufacturers move up the battery technology learning curve.


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