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CAFC in STC.UNM v. Intel Corp. Affirms Dismissal of Patent Infringement Suit in Which Co-Owner Refused to Join

Posted on Sep 19, 2014 in Blog

In STC.UNM v. Intel Corporation, case number 13-1241, decided September 17, 2014, the Court of Appeals for the Federal Circuit (“CAFC”), in a 6-4 decision, refused to conduct an en banc review of its prior panel decision dismissing a patent infringement suit brought by the licensing arm of the University of New Mexico against Intel Corporation (“Intel”), because the co-owner of the patent-in-suit, Sandia Corp. (“Sandia”), refused to join the case and couldn’t be involuntarily joined under Rule 19(a) of the Federal Rules of Civil Procedure.

In its panel decision, the CAFC stated “This court holds that the right of a patent co-owner to impede an infringement suit brought by another co-owner is a substantive right that trumps the procedural rule for involuntary joinder under Rule 19(a).” The CAFC did acknowledge two scenarios that are exceptions to the rule against involuntary joinder of a patent owner or co-owner, namely: (1) if the patent owner has granted an exclusive license and refuses to join a suit brought by its licensee: and (2) if by agreement a co-owner waives his right to refuse to join suit, his co-owners may subsequently force him to join in a suit against infringers. However, the CAFC found that neither exception applied in this case.

Judge Dyk, writing for the majority who voted not to rehear the case held 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. In that situation, without the absent person’s consent, the existing plaintiff has no right to ‘relief’ to which Rule 19 applies.” Regarding the substantive right to relief Judge Dyk stated: “This court has consistently recognized that the substantive 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.”

Thus, this case stands as a warning for any entity which collaborates on an invention with another entity that they should have an agreement between them explicitly setting forth who has the right to enforce any resulting jointly-owned patent. If an entity wants to ensure that it will have the right to bring suit on a patent that it co-owns with another entity, the terms of that agreement may explicitly require: (1) that a co-owner who does not want to enforce the patent participate in the suit when necessary; or (2) a waiver by the co-owner of its right to enforce the patent; or (3) the grant of an exclusive license to the co-owner’s interest so that the entity who wants to enforce the patent can do so.

Should you have any questions regarding your agreements and the rights that you have under them, the attorneys at Caesar Rivise stand ready to provide you with the advice you need to protect your rights.

 

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