Search Team

Search by Last Name
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
V
W
X
Y
Z

Lone Star Silicon Innovations LLC v. Nanya Technology Corp.

Licensee’s Failure to Join Patent Owner Affects Statutory Rights But Not Constitutional Standing

Lone Star Silicon Innovations LLC v. Nanya Technology Corp., __ F.3d __, 2019 WL 2292485 (Fed. Cir. May 30, 2019) (O’MALLEY, Reyna, Chen) (N.D. Cal.: Alsup) (3 of 5 stars)

Fed Cir vacates Rule 12(b)(1) case dismissal. The district court did not err in determining that Lone Star did not hold “all substantial rights” in the patents it was asserting. The opinion describes how the transfer agreement between Lone Star and AMD reserved substantial rights to AMD, such as the right to approve any enforcement and limits on Lone Star’s ability to transfer the patents. The opinion also notes that AMD retains a right to a portion of any recoveries Lone Star might make. The opinion rejects Lone Star’s arguments that the reserved rights were insubstantial.

The opinion rejects Nanya’s argument that Lone Star lacked constitutional standing. Discussing Morrow, 499 F.3d 1332 (Fed. Cir. 2007), the opinion reasons that Lone Star had sufficient exclusionary rights to confer constitutional standing at the pleadings stage. The district court erred in reasoning that AMD’s absence from the case deprived Lone Star of constitutional standing. “[T]reating 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.” Op. at 16–17. The opinion discusses Lexmark, 572 U.S. 118 (2014), as “recently clarif[ying]” that defects in statutory standing (as here) do not implicate subject-matter jurisdiction. “Lexmark is irreconcilable with our earlier authority treating § 281 as a jurisdictional requirement.” Op. at 17. The opinion notes that in several regional circuits post-Lexmark, “motions to dismiss based on ‘statutory standing’ defects are properly brought under Rule 12(b)(6) rather than Rule 12(b)(1) in recognition of the fact that such defects are not jurisdictional.” Id. at 17–18. The Fed Cir embraces that rule.

The district court erred in failing to apply Rule 19 to evaluate joining AMD as a necessary party. The opinion describes how Rule 19 and Independent Wireless Telegraph Co., 269 U.S. 459 (1926), permit and require joinder of AMD, if feasible, in this circumstance. The opinion describes how AMD’s joinder was both “required” (as the patentee) and “necessary” (as Lone Star lacked certain rights on its own), and thus the court “should have considered whether AMD’s joinder was feasible.” Op. at 22. It notes, “[T]he application of Rule 19 is mandatory, not discretionary.” Id. The opinion rejects Nanya’s argument that Rule 19 applied only to a dismissal for failure to join a party (Rule 12(b)(7)); the rule applies “whether a defendant invokes Rules 12(b)(1), (6), (7), or none of the above.” Id. at 23. The opinion distinguishes past cases affirming dismissal where the licensee lacked all substantial rights, such as Sicom, 427 F.3d 971 (Fed. Cir. 2005), Prima Tek II, 222 F.3d 1372 (Fed. Cir. 2000), and Propat, 473 F.3d 1187 (Fed. Cir. 2007).

KEYWORDS: CIVIL PROCEDURE; STANDING; ARTICLE III; EXCLUSIVE LICENSEE; NECESSARY PARTY; JOINDER