Exclusionary Rights Do Not Need to Be Exclusive

In Intellectual Tech LLC v. Zebra Technologies Corporation, No. 22-2207 (May 1, 2024), the Federal Circuit reversed and remanded the district court’s finding that Intellectual Tech (“IT”) did not have constitutional standing to raise an infringement claim because its lender, Main Street, retained an unconditional right to license.

IT entered into a patent and trademark security agreement with Main Street granting Main Street a security interest in U.S. Patent No. 7,233,247 (“the ’247 patent”) as part of a loan agreement. Under the agreement, Main Street could exercise certain rights upon IT’s default on the loan including licensing the patent.

The Federal Circuit held that a patent owner has exclusionary rights sufficient to meet the injury-in-fact requirement even when a licensee has a right to sublicense the patent. The Court found that IT retained exclusionary rights despite Main Street’s ability to license the patent because a licensee does not necessarily obtain an interest in preventing others from practicing a patent. The Federal Circuit held that IT would suffer an injury-in-fact from patent infringement because it still had an exclusionary right in the ’247 patent and would therefore have constitutional standing.