Standing on Substantial Rights

June 18, 2013, 1:08 PM

Often in patent cases, courts are faced with the issue of whether the assignee of a patent possesses all substantial rights to the patent such that the assignee has standing to sue potential infringers. Generally, for a patent assignee to have standing to sue, the patentee must have conveyed all substantial rights under the patent to the transferee. Propat Int'l Corp. v. RPost, Inc., 473 F.3d 1187, 1189 (Fed. Cir. 2007). Furthermore, [t]o be an exclusive licensee for standing purposes, a party must have received, not only the right to practice the invention within a given territory, but also the patentees express or implied promise that others shall be excluded from practicing the invention within the territory as well. Spine Solutions, Inc. v. Medtronic Sofamor Danek USA, Inc., 620 F.3d 1305, 1317 (Fed. Cir. 2010).

Recently, in Porto Technology, Co., et. al. v. Cellco Parnership d/b/a Verizon Wireless, a Richmond U.S. District Court was asked to determine whether Plaintiffs Porto Technology, Co. and Porto Technology, LLC (collectively, Porto), the assignees of the patent in issue, had standing to sue the alleged infringers under the specific terms of the assignment. The district court concluded that although the license agreement at issue was styled Exclusive Patent License Agreement, it did not confer sufficient rights to Porto to confer standing. Specifically, the court noted that: 1) the license agreement at issue gave the patent owner the right to veto any transfer of a sublicensing agreement entered into by Porto, 2) the license agreement gave the patent owner the right to dictate non-exclusive licensing of the patent to third parties without Portos consent, 3) the license agreement did not specifically convey to Porto the exclusive right to bring suit to enforce the patent, and 4) the license agreement was silent as to Portos right to practice the invention. Thus, the Richmond District Court ultimately concluded that even setting aside the absence of a specific right to practice or enforce the patent, the restriction on Portos right to sublicense, coupled with the patent owners retained right to independently license the patent, defeat constitutional, precedential and statutory standing. Porto Tech., Co. v. Cellco P'ship, 2013 U.S. Dist. LEXIS 38748, *9-10 (Hudson) (E.D. Va. Mar. 19, 2013).

This case should serve as a reminder that a demonstration of standing will often be the first hurdle for a patent assignee seeking to sue for infringement. A patent assignee should assess whether the patent assignment at issue conveyed all substantial rights to the patent such that: 1) the assignee has the right to make use, or sell the service under the patent and 2) has the exclusive right to sue for infringement. --Lauren Tallent Rogers