Plaintiff bore the burden of proving ownership of the patents pursuant to a contractual agreement and failed to do so; the district court correctly dismissed the suit without prejudice.

Tyco Healthcare Group LP v. Ethicon Endo-Surgery, Inc., No. 2008-1269, -1270 (Fed. Cir. Dec. 7, 2009)

The district court dismissed the plaintiff´s (Tyco´s) patent infringement suit without prejudice because Tyco failed to prove ownership of the asserted patents and thus lacked standing to sue. On appeal, and cross-appeal that the dismissal should have been with prejudice, the Federal Circuit affirmed the dismissal without prejudice.

All necessary rights to enforce the patents, directed to medical instruments, initially resided in U.S. Surgical Corporation (“USSC”). On April 1, 1999, USSC entered into an agreement transferring all assets, including patents, from USSC to Tyco, but excluded any patents or patent applications “relating to pending litigation involving USSC.” The Federal Circuit found that this phrase should be interpreted as its ordinarily broad meaning, and required Tyco to “prove that the patents-in-suit could not have been asserted in or affected by any litigation pending as of April 1, 1999.” The record was silent as to the litigation pending as of April 1, 1999. Thus, Tyco failed to meet its burden in proving ownership.

The district court did not abuse its discretion in dismissing the case without prejudice. Tyco may become able to cure the ownership deficiency and given that the issue was only first raised by the defendant on cross-examination at trial, there was no undue prejudice to the defendant.

Judge Newman dissented, stating that the district court and majority ignored the testimonial evidence of Tyco´s 30(b)(6) witness that the patents-in-suit were not related to any pending litigation, and adopted an overbroad interpretation of the agreement. In her view, Tyco successfully proved ownership, but in any event, the defendant, as a third party to the agreement, bore the burden of proving the patents-in-suit were excluded from the agreement.

A copy of the opinion can be found here.