November 25, 2010
A123 System filed a declaratory judgment action in Massachusetts against Hydro-Quebec (HQ), who had a license for two lithium battery patents owned by the University of Texas (UT). The district court dismissed the suit because "UT had transferred to HQ less than all substantial rights in the patents in suit, granting HQ only an exclusive field-of-use license."
A123 v. Hydro-Quebec (CAFC 2010-1059) precedential
Under long-standing prudential standing precedent, an exclusive licensee with less than all substantial rights in a patent, such as a field-of-use licensee, lacks standing to sue for infringement without joining the patent owner. Int'l Gamco, 504 F.3d at 1278-79; see also Waterman v. Mackenzie, 138 U.S. 252, 255 (1891). In general, as we discuss below, an accused infringer must likewise join both the exclusive licensee and the patentee in a declaratory action because the patentee is a necessary party. See Enzo APA & Son, Inc. v. Geapag A.G., 134 F.3d 1090, 1094 (Fed. Cir. 1998) ("Having found Geapag to be without standing for failing to join the patentee, it follows that the court lacks jurisdiction over Enzo's declaratory judgment claims under Fed. R. Civ. P. 19 for nonjoinder.").
[T]he court must determine whether the party alleging effective ownership has in fact received all substantial rights from the patent owner. Waterman, 138 U.S. at 256 ("Whether a transfer of a particular right or interest under a patent is an assignment or a license does not depend upon the name by which it calls itself, but upon the legal effect of its provisions."); Aspex Eyewear, Inc. v. Miracle Optics, Inc., 434 F.3d 1336, 1340 (Fed. Cir. 2006) ("To determine whether an agreement to transfer rights to a patent at issue amounts to an assignment or a license, we must ascertain the intention of the parties and examine the substance of what was granted.").
In summary, we hold that because HQ had acquired less than all substantial rights in the patents in suit, UT is a necessary party to A123's declaratory judgment action. See Enzo, 134 F.3d at 1094; Vaupel Textilmaschinen KG v. Meccanica Euro Italia SPA, 944 F.2d 870, 87576 (Fed. Cir. 1991).
Being a state school, UT is nominally exempt from patent suits because of the 11th (the State looks after itself) Amendment, but UT waived immunity in North Texas to join HQ in suing A123 and others for infringement after A123's DJ in MA.
Although a necessary party, the district court held that UT could not be joined as a defendant because it had not waived Eleventh Amendment sovereign immunity in the Massachusetts suit. A123 Sys., 657 F. Supp. 2d at 280-81. We review the district court's decision on Eleventh Amendment immunity de novo. Regents of Univ. of New Mexico v. Knight, 321 F.3d 1111, 1124 (Fed. Cir. 2003). A123 does not dispute that UT is an arm of the State of Texas and is therefore entitled to Eleventh Amendment immunity. See Tegic Comm'ns Corp. v. Bd. of Regents of Univ. of Texas Sys., 458 F.3d 1335, 1339-40 (Fed. Cir. 2006). Rather, A123 contends that UT waived its immunity from suit in this case when, on September 11, 2006, it filed suit against A123 for infringement of the same patents in Texas. In support of its waiver argument, A123 cites Genentech, Inc. v. Regents of University of California, 143 F.3d 1446 (Fed. Cir. 1998), vacated, 527 U.S. 1031 (1999).
In response, HQ argues that UT's voluntary participation in the Texas infringement suit against A123 does not constitute a retroactive waiver of its Eleventh Amendment immunity in this separate action. Specifically, HQ points to this court's decision in Biomedical Patent Management Corp. v. California, Department of Health Services, 505 F.3d 1328 (Fed. Cir. 2007) ("BPMC"), as holding that a state university's participation in one lawsuit does not amount to a waiver of immunity in a separate lawsuit, even one involving the same patents.
Again we agree with HQ. A123's reliance on this court's decision in Genentech, 143 F.3d 1446, is unavailing; the Supreme Court vacated that decision in light of its decision in College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board, 537 U.S. 666 (1999), making it of no precedential value. Rather, BPMC governs.
In BPMC, the CAFC:
held that where a waiver of immunity occurs in one suit, the waiver does not extend to an entirely separate lawsuit, even one involving the same subject matter and the same parties. Id. at 1339; see also Tegic, 458 F.3d at 1342-43 (holding that submitting to an infringement suit in one forum does not waive immunity in a separate infringement suit filed in a different forum). Accordingly, UT's waiver of Eleventh Amendment immunity in a patent infringement suit in the Northern District of Texas did not result in a waiver of immunity in this separate infringement action. Absent a waiver, UT cannot be joined.
Posted by Patent Hawk at November 25, 2010 10:38 PM | Standing
Whoever said the Constitution is not a suicide pact didn't read the 11th and 5th Amendments. At least they didn't read them the way Scalia did in College Savings Bank and the way Stevens did in Kelo.
The country is committing suicide by judicial fiat by allowing the slipshod thinking of 5 individuals out of a population of 300 million to evoke the Constitution in order to destroy the very rights and freedoms it defines.
BTW, for those who have not followed the Kelo story. The lot where Suzette Kelo's house once stood is empty. The neighborhood has become a wasteland. No development. No Pfizer labs. No jobs. A symbol of the suicidal power of the Constitution.
Posted by: Babel Boy at November 26, 2010 9:10 AM
"BTW, for those who have not followed the Kelo story. The lot where Suzette Kelo's house once stood is empty. The neighborhood has become a wasteland. No development. No Pfizer labs. No jobs. A symbol of the suicidal power of the Constitution."
New London, CT is my home town. My family still lives there. What was done to the Fort Trumbull neighborhood is a study in greed and incompetence.
I saw Scott Pelley's interview with Justice Stevens on 60 Minutes last night. His decision in Kelo will go down as one of the worst, most wrongheaded 4 or 5 Supreme Court rulings of all time. His ramblings in Bilski are thankfully not the law.
Good riddance to him.
Posted by: Whalers in da house at November 29, 2010 12:01 PM
"I saw Scott Pelley's interview with Justice Stevens on 60 Minutes last night."
Did he say anything of note?
Posted by: 6000 at November 29, 2010 1:11 PM
"Did he say anything of note?"
He did say Beauregard claims are invalid and it was the biggest disappointment of his career that he didn't have a chance to rule on them.
Other than that, he was pretty unremarkable. How Scott Pelley missed the fact that J. Stevens authored the opinion in Kelo is rather irritating. I guess he was too busy asking about Gore v. Bush, one of the 4 or 5 worst decisions that J. Stevens didn't write.
The most remarkable thing about the interview was the realization that a guy who spent 35 years on the highest court in the country really doesn't know that much.
Posted by: We are the Whalers... at November 29, 2010 2:16 PM
You guys wanna hear something funny? I just went here to see the stevens interview:
A commercial popped up, for guess who? None other than Pfizer.
Posted by: 6 at November 29, 2010 3:15 PM
Thanks for the update on Kelo. But the cautionary aspect of that case has less to do with the Constitution's supposed "suicidal power" than with the inordinate sway of certain well-financed special interests. This applies across the board, whether in patent litigation, eminent domain law, or other areas.
Posted by: patent litigation at November 29, 2010 5:16 PM
"Thanks for the update on Kelo. But the cautionary aspect of that case has less to do with the Constitution's supposed 'suicidal power' than with the inordinate sway of certain well-financed special interests."
I'm not sure that "well financed special interests" (whatever those are, and by the way, isn't everybody's interest special, at least to them?) have inordinate sway with SCOTUS. The problem with SCOTUS is that none of the nine have any real world experience. They've worked for the government their whole lives, or think tanks, or whatever. None of them were ever an executive, either in government or private industry. They've never done anything except read law, study law, write about law. Watching the interview with J. Stevens was fascinating as it was apparent that he'd been living in a bubble for 35 years. His decision in Kelo, his incoherent rambling in Bilski, all make me think that he's just making shit up to suit his vision of what the law should be, not what it is. The Fort Trumbull neighborhood wasn't ever going to be mistaken for Beverley Hills, but those were people's homes and they were occupied and fairly well maintained. For an old, out of touch, douche bag like J. Stevens to decide that the Constitution allows an incompetent bunch like the "New London Development Corporation" (who've never developed a damn thing) to take those homes so Pfizer can have a parking lot for its new research facility (which was basically abandoned after Pfizer merged with some other giant pharma company) is simply disgraceful.
One good thing about the Kelo decision: it caused such an uproar that a lot of states passed laws prohibiting that sort of taking. A little silver lining in an otherwise cloudy mess.
Posted by: We are the Whalers... at November 30, 2010 12:26 PM
"to suit his vision of what the law should be, not what it is."
Amen. Especially funny is that several of the references he quotes from actually hold the opposite meaning of his position.
Posted by: Pedantic Pete at November 30, 2010 1:26 PM
"For an old, out of touch, douche bag like J. Stevens to decide that the Constitution allows . . . is simply disgraceful."
Bless you Whalers, and the keyboard you type on.
Here's another of Babel Boy's hot tips on how to save the U.S.: re-write the Constitution.
For one thing, the Constitution needs to be amended to junk the "for good behavior" crap in Article III. 20 years on the USSCt is more than sufficient. There is no benefit to the country -- zero, zip, nada, huh-uh -- for having these arrogant, self-important, ex-lawyers sit on the bench for 35 years.
Every 4 years the most senior USSCt justice should be replaced. That would guarantee that each president will have at least one appointment for each time he gets elected; i.e. check/balance. With deaths and resignations such a rule would probably have the practical effect of limiting USSCt tenures to 20 years.
Another way to accomplish the same thing would be to simply limit USSCt tenure to 20 years.
There should also be at least 20 justices, including one from each circuit court, probably the most senior member or one chosen by the respective en banc courts.
At any rate the country needs to take off it's 230 year old rose-colored glasses and see that, notwithstanding all the crap you got in 11th grade civics, the Constitution really ain't all that great and the Fondling Fathers weren't all that smart. They couldn't even write a document that would hold the country together for 75 years, unless one considers 600,000 people being butchered in a civil war a country being held together.
The Constitution needs to include its own term limits so that it is re-written from the ground up every 100 years. As it is, it's more patches than ship. And leaking fast.
Posted by: Babel Boy at December 3, 2010 9:25 AM
"They couldn't even write a document that would hold the country together for 75 years, unless one considers 600,000 people being butchered in a civil war a country being held together. "
Lulz, well, if they'd been a little more specific about what rights states had and didn't have then the civil war would not have happened. Or at least it would not have happened when it did.
So they got it pretty close. Which is better than most countries can say.
Posted by: 6000 at December 3, 2010 4:41 PM
"The Constitution needs to include its own term limits so that it is re-written from the ground up every 100 years. As it is, it's more patches than ship. And leaking fast."
I would agree with you there, in so far as the constitution from the last "term" carries over except for anything that isn't voted on specifically by the people. And here, the people can change the constitution, not the congress, who would then have to overrule the people by their normal amending procedure. If they dared. That way if the people just wanted to simplify the wording of, say, the 2nd amendment, then it wouldn't be so hard.
The people could also clarify things like the 14th amendment. And we wouldn't have to rely on half-as attempts by a disinterested court.
Posted by: 6000 at December 3, 2010 4:50 PM