Following a trial that included a jury verdict of patent validity and willful infringement, the Federal Circuit dismissed the action on the grounds that the plaintiff lacked standing when it originally filed its complaint. Section 281 of the Patent Act requires that the patentee bring suit, which means, in the case of a licensee, that the licensee have all substantial rights in the patent before it can bring an action alone, without also joining the patent owner as a plaintiff. The plaintiff Alps had a license agreement with the patent owner AEI which conferred it some, but not all, rights to the patent-in-suit. Most importantly, for the purposes of standing, the license limited Alps rights to a certain field of use. Because the license restricted Alp’s rights in the patent to a certain field of use, Alps lacked standing to sue without also naming AEI as a co-plaintiff. AEI refused to be joined. Alps and AEI later attempted to cure this deficiency by executing a nunc pro tunc amended license agreement. This agreement did grant Alps the necessary substantial rights to sue on its own. But, this agreement, executed after the original complaint had been filed was insufficient to cure the standing defects that existed when the suit was initially filed: “[A] party may not vindicate rights in a court before the party actually possesses the rights.” Lastly, Alps’ supplemental complaint (also characterized as an amended complaint) could not cure standing defects. Accordingly, because Alps lacked standing to sue, the Federal Circuit vacated the judgment and remanded with instructions to dismiss Alps’ complaint without prejudice.
The lesson from this case is clear – a plaintiff relying on a license to the patent for standing must assure itself that it possesses all necessary substantial rights to the patent, or that the patentee will join the action, before it initiates any action for infringement of the patent.
Alps South, LLC v. The Ohio Willow Wood Company, Case Nos. 2013-1452, -1488, 2014-1147, -1426 (June 5, 2015); Opinion by: Chen, joined by Lourie and Moore; Appealed From: District Court for the Middle District of Florida, Scriven, J. Read the full opinion here.