The U.S. Court of Appeals for the Federal Circuit reversed a decision by a district court, finding that a party can be an exclusive licensee for the purposes of standing even when others have the future right to grant sublicenses. WiAV Solutions LLC v. Motorola et al., Case No. 10-1266 (Fed. Cir., Dec. 22, 2011) (Linn, J.).
WiAV filed a complaint in the Eastern District of Virginia alleging patent infringement against several technology giants, including Motorola, Nokia and Palm. WiAV asserted nine patents—two that it owned outright and seven to which it purported to be the exclusive licensee from Mindspeed.
The defendants sought to dismiss the seven Mindspeed patents for lack of constitutional standing. The district court agreed and concluded that WiAV lacked constitutional standing to assert the Mindspeed patents because several third parties have a limited right to license the patents. WiAV appealed.
On appeal, the Federal Circuit considered whether WiAV had constitutional standing to assert the Mindspeed patents against the defendants. In patent cases, the Patent Act establishes the legally protectable interests that create the foundation for constitutional standing. Under the Patent Act, both a patentee and an exclusive licensee have standing to sue for infringement of a patent. Thus, the touchstone of constitutional standing in a patent case is whether a party can establish that it has an exclusionary right in a patent that, if violated by another, would cause the party holding the exclusionary right to suffer legal injury.
The Court found that nothing in its earlier Textile Productions decision supported the proposition that for a licensee to be exclusive, the licensee must be the only party with the ability to license the patent. Instead, the Court found that a licensee is an exclusive licensee of a patent if it holds any of the exclusionary rights that accompany a patent and that it held the exclusionary right for a period of time, coterminous with the exclusivity of the rights granted—i.e., a party may have standing to sue some parties, but not others.
By way of example, the Court stated that an exclusive licensee lacks standing to sue a party for infringement if that party holds a preexisting license to the patent or if the party has the ability to obtain such a license from another party with the right to grant it. Thus, the Court reasoned that an exclusive licensee does not lack constitutional standing merely because its license is subject to rights that existed prior to the license and to future licenses that may be granted, as long as none of the other existing or possible licenses rights could result in a grant of a license to the defendants. In this case, the defendants did not have the right to license the patents from any other party. Thus, the Court concluded that WiAV had standing because it established the right to exclude the defendants from engaging in the infringing activity and that WiAV was injured by defendants’ conduct.