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The court addressed two issues on Liown’s appeal of the grant of a preliminary injunction to Luminara.  First, Liown contended that Luminara lacked standing to bring the litigation, because its license agreement with Disney did not give Luminara exclusive rights, as Disney retained the right to license the patent through the “affiliate” clause and Disney retained the right to sue, meaning that Disney was required to joined as a plaintiff, but Disney was not joined.  The court held that Luminara correctly possessed the necessary exclusive rights to sue Liown without joining Disney.  The court held that the “affiliate” clause in the license could not be construed to confer licensing rights to Disney, because such construction would be contrary to the parties’ intent to confer standing on Luminara.  The court further held that, even though the license gave Disney the right to practice the invention, that right was not substantial enough to prevent Luminara from having sufficient, exclusive rights to the patent in order to be able to sue without having to join Disney.  Disney would not lose the right to continue to practice the patent if the patent was invalidated, and thus this right was not a substantial right requiring joinder.

Second, the court addressed the merits of the preliminary injunction itself and reversed the grant of the injunction, because there was a substantial question of invalidity.  The court held that the district court’s construction for the term “free to pivot” was too narrow, as it required both chaotic movement and movement that is more than rotation around two axes.  There was no disclaimer or disavowal in the specification regarding movement in four different ways or directions, but did find a disclaimer for non-chaotic pivoting, and therefore construed “free to pivot” to require chaotic pivoting.  Because the closest prior art reference disclosed chaotic pivoting, there was a substantial question of validity that prevented the entry of a preliminary injunction.  

Luminara Worldwide, LLC v. Liown Electronics Co. Ltd., Case No. 2015-1671 (February 29, 2016); Opinion by: Moore, joined by O’Malley and Taranto; Appealed From: United States District Court for the District of Minnesota, Nelson, J. Read the full opinion here.

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