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IP LitigationFederal Circuit

Patent Owner Lacks Standing to Join Infringement Suit Where it has Licensed all Substantial and Exclusionary Rights to Another

November 7, 2014

IP LitigationFederal Circuit

Patent Owner Lacks Standing to Join Infringement Suit Where it has Licensed all Substantial and Exclusionary Rights to Another

November 7, 2014

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Azure Networks, LLC v. CSR, PLC, __F.3d__ (Fed. Cir. Nov. 6, 2014) (CHEN, Reyna, Mayer (dissenting-in-part))

Federal Circuit holds that a patent owner with less than all substantial rights to the patent and no exclusionary rights under the patent statute lacks standing to join an infringement suit as a co-plaintiff.

Majority (Judge Chen, Reyna, Mayer*):

Standing: Azure initially held the patent-at-issue before assigning it as a gift to non-profit Tri-County—allegedly to establish venue in the Eastern District of Texas. Tri-County then granted an exclusive license to Azure that gave it the “full right to enforce and/or sublicense” the patent, the authority to reach settlements without Tri-County’s consent, and the exclusive right to enforce and defend the patent. In return, Tri-County retained a non-exclusive license, a right to receive royalties from the litigation or licensing of the patent, and a reversionary right after the agreement expired two years before the end of the patent term.

The court first found that Azure acquired all substantial rights to the patent, making it the effective owner for purposes of standing. It then turned to the question of Tri-County’s standing. While it maintained economic interests in the patent, the court reasoned that they must be exclusionary to bring or join the suit. Despite holding the legal title to the patent, the court found that Tri-County “serve[d] effectively as a nonexclusive licensee” and lacked standing to sue as a co-plaintiff. The court affirmed Tri-County’s dismissal.

The court went on to vacate the district court’s judgment of noninfringement due to its improper construction of the term “MAC Address.”

*Judge Mayer supported the majority’s analysis of the standing question but dissented from the court’s opinion regarding whether the patentee sufficiently redefined the term “MAC Address.”

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