Wednesday, December 22, 2010

Licensing/standing issue in WiAV Solutions case

The issue in the case:

The sole issue presented by this appeal is whether
WiAV has constitutional standing to assert the Mind-
speed Patents against the Defendants. This is a question
of law that this court reviews de novo, applying Federal
Circuit precedent. Prima Tek II, L.L.C. v. A-Roo Co., 222
F.3d 1372, 1376 (Fed. Cir. 2000).

WiAV argues on appeal that, at the behest of the De-
fendants, the district court improperly fashioned a new
legal rule based on dicta in Textile Productions. Accord-
ing to WiAV, Textile Productions did not mention the type
of third-party licensing rights at issue, much less hold
that such rights prevent a party from being an exclusive
licensee of a patent. WiAV contends that this court has
never concluded that a party holding the exclusive rights
in a patent held by WiAV lacks constitutional standing,
even when those rights were subject to prior nonexclusive
licenses. WiAV asserts that under our precedent a party
is an exclusive licensee of a patent—and therefore has
constitutional standing to assert the patent—when it
holds any of the exclusionary rights in a patent.

One must observe footnote 1 of the decision:

An exclusive licensee generally must join the
patent owner to the suit to satisfy prudential standing
constraints, i.e., the “judicially self-imposed limits on the
exercise of federal jurisdiction.” Elk Grove Unified Sch.
Dist. v. Newdow, 542 U.S. 1, 11 (2004) (citation omitted).
See Indep. Wireless Tel. Co. v. Radio Corp. of Am., 269
U.S. 459, 468-69 (1926) (explaining that, subject to an
exception, an exclusive licensee must join the patent
owner to an infringement suit initiated by the licensee);
Prima Tek II, L.L.C. v. A-Roo Co., 222 F.3d 1372, 1377
(Fed. Cir. 2000) (characterizing the requirement that an
exclusive licensee add the patent owner to any patent
infringement suit brought by the licensee “as being pru-
dential rather than constitutional in nature”).

It is undisputed that WiAV addressed any prudential standing
concerns by adding Mindspeed to the suit as the “defen-
dant patent owner.”

The CAFC noted:

In sum, neither of these cases supports the proposi-
tion pressed by the Defendants on appeal: that for a
licensee to be an exclusive licensee of a patent, the licen-
see must be the only party with the ability to license the
patent. Indeed, this court has recently held otherwise.
See Alfred E. Mann Found. For Scientific Research v.
Cochlear Corp., 604 F.3d 1354 (Fed. Cir. 2010) (conclud-
ing that a licensee was an exclusive licensee of a patent
despite the licensor retaining the ability to license the
patent to settle lawsuits). As explained above, a licensee
is an exclusive licensee of a patent if it holds any of the
exclusionary rights that accompany a patent.

Because an exclusive licensee derives its standing
from the exclusionary rights it holds, it follows that its
standing will ordinarily be coterminous with those rights.
Depending on the scope of its exclusionary rights, an
exclusive licensee may have standing to sue some parties
and not others. For example, an exclusive licensee lacks
standing to sue a party for infringement if that party
holds a preexisting license under the patent to engage in
the allegedly infringing activity. Similarly, an exclusive
licensee lacks standing to sue a party who has the ability
to obtain such a license from another party with the right
In both of these scenarios, the exclusive
licensee does not have an exclusionary right with respect
to the alleged infringer and thus is not injured by that
alleged infringer. But if an exclusive licensee has the
right to exclude others from practicing a patent, and a
party accused of infringement does not possess, and is
incapable of obtaining, a license of those rights from any
other party, the exclusive licensee’s exclusionary right is
This court therefore holds that an exclusive licensee
does not lack constitutional standing to assert its rights
under the licensed patent merely because its license is
subject not only to rights in existence at the time of the
license but also to future licenses that may be granted
only to parties other than the accused. If the accused
neither possesses nor can obtain such a license, the exclu-
sive licensee’s exclusionary rights with respect to that
accused party are violated by any acts of infringement
that such party is alleged to have committed, and theinjury
predicate to constitutional standing is met.

to grant it.


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