An exclusive licensee in the field of use lacks standing to sue without joining the patent owner.

A123 Systems, Inc. v. Hydro-Quebec, No. 2010-1059 (Fed. Cir. Nov. 10, 2010).

The alleged infringer filed a declaratory judgment action for noninfringement and invalidity against an exclusive licensee in the field of use in Massachusetts. The exclusive licensee moved to dismiss for failure to include a necessary party—the patent owner. As the alleged infringer conceded, the patent owner as an arm of the state of Texas was entitled to qualified immunity unless the immunity was waived. Shortly thereafter, the patent owner and the exclusive licensee sued the alleged infringer in the Northern District of Texas. After reexamination proceedings, the Massachusetts court exercised its discretion to dismiss the declaratory judgment action. The alleged infringer appealed, and the Federal Circuit affirmed.

“[A]n 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.” The alleged infringer asserted that the exclusive licensee had made statements asserting that it had all substantial rights. The Federal Circuit found that those statements were consistent with the exclusive licensee’s assertion that the license was only in the field of use. In any event, the actual agreement is controlling of the rights transferred.

The Federal Circuit also affirmed the patent owner’s right to qualified immunity and the lack of a waiver. The alleged infringer argued that the patent owner had waived its right to qualified immunity by suing the alleged infringer in the Northern District of Texas. The Federal Circuit had previously 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.”

Finally, the court held that the patent owner was an indispensible party. Although the patent owner and the exclusive licensee have similar interests, their interests are not identical. The patent owner had the potential to be prejudiced if the district court declared the patents invalid. Further, there was a potential for inconsistent liability as the patent owner could separately sue the alleged infringer. Moreover, there was an appropriate forum—the Northern District of Texas—for both the patent owner’s claims and the alleged infringer’s claims.

A copy of the opinion can be found here.