In Diamond Coating Techs., LLC v. Federal-Mogul Corp., Appeal Nos. 2015-1844, -1861, the Federal Circuit affirmed the district court’s dismissal for lack of standing because Diamond failed to obtain all substantial rights in the patents-in-suit from the original patentee, Sanyo.
Diamond and Sanyo entered into a Patent Assignment and Transfer Agreement (“PATA”) to transfer certain rights to the patents at issue. Diamond then filed suit, alone, alleging infringement of two patents. The district court held that the PATA did not convey all substantial rights in the patents to Diamond and that Diamond therefore lacked standing. Diamond appealed.
The Federal Circuit affirmed. It explained that, under the agreement, Sanyo retained a license to make, use, and sell products covered by the patents and that “the PATA does not even grant Diamond a right to practice the patents-in-suit.” The Court also noted that the PATA (1) conditioned Diamond’s litigation and enforcement activities on Sanyo’s best interests, (2) limited Diamond’s authority to license the patents-in-suit, and (3) limited Diamond’s discretion to refrain from suing certain companies. The Court therefore held that Diamond did not receive “substantial rights” in the patents-in-suit.
Diamond and Sanyo also executed nunc pro tunc (“having retroactive legal effect”) agreements after the district court’s decision in an attempt to cure Diamond’s standing problem. Diamond relied on these agreements on appeal, but the Federal Circuit held that such agreements cannot repair standing retroactively.