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Exclusive Licensee Lacked Standing to Sue Without Joining Patent Owner

00-1041
February 07, 2001
Boyle Ph.D., James J.

Decision icon Decision

Last Month at the Federal Circuit - March 2001

Judges: Mayer, Lourie, and Schall (per curiam)

In Mentor H/S, Inc. v. Medical Device Alliance, Inc., No. 99-1532 (Fed. Cir. Feb. 12, 2001), the Federal Circuit, on its own motion, determined that Plaintiff Mentor H/S, Inc. (“Mentor”) lacked standing to sue on the infringement, validity, and enforceability of U.S. Patent No. 4,886,491 (“the ‘491 patent”) without joining the apparent legal owner of the patent, Sonique Surgical Systems, Inc. (“Sonique”). The Court invited Mentor to move to join Sonique on appeal.

On appeal from a jury trial on the infringement, validity, and enforceability of the ‘491 patent, the Federal Circuit raised the issue of Mentor’s standing to sue, where none of the Defendants, Medical Device Alliance, Inc.; Lysonix, Inc.; and Misonix, Inc. (collectively “Medical Device”), had previously done so. The Federal Circuit ordered briefing on the issue, and sought to determine whether Mentor, as exclusive licensee of the ‘491 patent, held “all substantial rights” in the patent.

Upon review of documents produced by Mentor, the Court determined that the apparent legal owner of the patent, Sonique, had retained significant ownership rights in the ‘491 patent. Among other rights, Sonique has the first obligation to sue parties for infringement, where failure to take appropriate action against infringers constitutes a breach of the agreement between Mentor and Sonique. Thus, Mentor can sue for infringement only if Sonique fails to do so.

Mentor argued that it had satisfied the constitutional requirements for standing; that standing issues other than those associated with constitutional requirements are “prudential” in nature and cannot be raised for the first time on appeal; and that Defendants had waived such “prudential” requirements by not raising them in district court. The Federal Circuit agreed that Mentor, as an exclusive licensee, had satisfied the constitutional requirements for standing. It rejected, however, Mentor’s contentions that issues regarding Mentor’s ability to sue in its own name are waivable or beyond the jurisdiction of the Federal Circuit.

Concluding that Mentor does not hold all substantial rights in the ‘491 patent, the Court found that Mentor does not have standing to sue without joining the patent owner. The Court noted that ordinarily, when the plaintiff who brought suit is found to lack standing, the suit is dismissed, but chose instead to consider a motion by Mentor to join Sonique on appeal.