Federal Circuit No. 2013-1241

The Federal Circuit affirmed a district court’s dismissal of a suit on the ground that STC.UNM lacked standing to sue Intel for infringement because patent co-owner Sandia Corp. had not voluntarily joined the suit, and could not be involuntarily joined under Federal Rule of Civil Procedure 19(a).

STC.UNM, the licensing arm of the University of New Mexico, became co-owners with Sandia of U.S. Patent No. 6,042,998 after an assignment agreement between the two parties. STC accused Intel of infringing the ‘998 patent but Sandia refused to join as a party to the lawsuit. The District Court for the District of New Mexico dismissed the case for lack of standing on the basis that both patent co-owners must join the case. STC appealed, arguing that Sandia should have been involuntarily joined under FRCP 19(a).

In a 2-1 decision, the Federal Circuit affirmed, citing its decision in Ethicon, Inc. v. U.S. Surgical Corp. that as a matter of substantive patent law, all co-owners must ordinarily consent to join as plaintiffs in an infringement suit. 135 F.3d 1456 (Fed. Cir. 1998). The court held that the right of a patent co-owner to impede an infringement suit brought by another co-owner is a substantive right that trumps the procedural rule for involuntary joinder under Rule 19(a). The court recognized two exceptions that permit involuntary joinder of a co-owner, both predicated on the co-owner affirmatively giving up its right to refuse to join the suit. First, a patent owner that has granted an exclusive license can be involuntarily joined in the licensee’s infringement suit. Second, a patent co-owner that waives its right to refuse joinder may subsequently be forced to join an infringement suit brought by its co-owners.

Absent these exceptions, the court recognized that the requirement to join all co-owners protects a co-owner's right to forestall costly litigation where its patent is subject to the risk of invalidation, while still safeguarding against the possibility to subject an accused infringer to multiple infringement suits on the same patent.

Judge Newman issued a dissenting opinion arguing that the majority’s opinion ignores the language of FRCP 19(a) requiring joinder and prevents a patent co-owner from enforcing its patent.

The case highlights risks for joint owners of a patent who fail to carefully specify enforcement rights in the relevant agreements. Patentees frequently involved in collaborations and joint inventions should try to consolidate ownership or specify in agreements the obligation for co-owners to cooperate in infringement suits.

Erkang Ai