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IP LitigationFederal Circuit

Rule 19 Does Not Permit A Patent Co-Owner to Involuntarily Join Other Patent Co-Owners Without Their Consent

October 21, 2014

IP LitigationFederal Circuit

Rule 19 Does Not Permit A Patent Co-Owner to Involuntarily Join Other Patent Co-Owners Without Their Consent

October 21, 2014

Back to Fish's Litigation Blog

 

STC.UNM v. Intel Corp., __ F.3d __ (Fed. Cir. Sept. 17, 2014) (en banc) (D.N.M.: Brack) (2 of 5 stars)

Federal Circuit denies rehearing en banc where a split panel had affirmed dismissal of a suit in which a patent’s co-owner had not been voluntarily joined.  The panel held that Rule 19 did not permit involuntarily joining the co-owner.

Concurrence (Judges Dyk, Moore, and Taranto):  Agreeing with the panel’s decision, Judge Dyk explained that “Rule 19 by its terms presupposes the existing parties’ substantive entitlement to ‘relief’ from another source of law.  It therefore does not authorize compulsory joinder when the plaintiff has no substantive right to relief without the consent of that person, i.e., where the right can be asserted only jointly, not unilaterally by the plaintiff.”  Concurrence at 2.  The “right to enforce the patent does not belong unilaterally to each co-owner, but requires all of the co-owners’ agreement, so that each co-owner has a substantive right not to be involuntarily joined in a patent infringement suit without such agreement.”  Id. at 3 (citing Ethicon, Schering, DDB Techs., Taylor, and Israel Bio-Eng’g Project).  Moreover, section 262, which permits co-owners to unilaterally practice the patent or grant licenses, underscores why a co-owner cannot be forced to join a suit absent its consent.

Judge Newman’s dissent (joined by Judges Lourie, O’Malley, and Wallach):  Judge Newman believed that “Rule 19 is not permissive—yet this court holds that Rule 19 uniquely does not apply in patent cases.”  Dissent at 2.  She suggested that one co-owner should have the substantive right to join another because “the patent statute has codified the rights of joint owners of patents, each to have the full enjoyment of the patent right (absent contrary agreement).  Such enjoyment includes the right to exclude.”  Id. at 3-4.  In addition, “patent owners in common have a similar duty to avoid waste of the property they own in common.”  Id. at 6.  “An arbitrary rule that excludes enforcement of a property right that is owned in common, cannot be reconciled with the principles of the rule of law.”  Id.

Judge O’Malley’s dissent (joined by Judges Newman, Lourie, and Wallach):  Judge O’Malley would have granted rehearing “to analyze whether there is any statutory or other foundation for the so-called substantive patent law right to which the panel majority clings and, if so, whether it is that right, or Rule 19, that provides the criteria for our analysis of joinder in this and other patent cases that come before us and the district courts.”  Dissent at 3.  She believed that “the Supreme Court has indicated in a non-patent case that Rule 19—not substantive law—applies when determining who must participate in a lawsuit.”  Id. at 6 (citing Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102 (1968)).  She disagreed that precedent required a contrary result because neither Ethicon nor Schering mentioned Rule 19, and subsequent cases either overstated their holdings or addressed the issue in dicta.  Finally, she argued there was no statutory basis for giving a co-owner the right to refuse to enforce the patent.  Specifically, section 262 does not permit one co-owner to release an accused infringer from another co-owner’s past damages claim, and section 281 suggests that each co-owner has an independent right to exclude.

Related Tags

CAFC Summary
CO-OWNERSHIP
JOINDER
RULE 19
Federal Circuit

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