Federal Circuit finds Patent Owner Retains Standing to Enforce Patent After Exclusive License That Does Not Transfer All Substantial Ownership Rights

In Aspex Eyewear, Inc. v. Miracle Optics, Inc., Contour and Aspex sued Miracle for infringement of U.S. Patent No. 6,109,747 (hereinafter referred to as the ‘747 patent).  The ’747 patent was originally assigned by the inventor to Contour. After this assignment, Contour and nonparty Chic Optic, Inc. executed an agreement that gave Chic Optic, Inc. certain rights under the ’747 patent, including exclusive right to make, use and sell the product in the United States, the first right to commence legal action against third parties for infringement and virtually unlimited right to sublicense all of its rights to third parties. Under the agreement, Contour retained the right to commence legal action against third parties for infringement if Chic refused to do so, and the agreement contained a clause providing an expiration date for the agreement, a single option to extend, and a second expiration date if the option to extend was exercised. The expiration date was well before the expiration date of the patent. Chic sublicensed all of its rights to the patent to Aspex, Inc. This sublicense was not entered into until after Contour and Aspex had sued Miracle for infringement. 

The U.S. District Court for the Central District of California dismissed the suit on the grounds that neither Contour nor Aspex had standing to sue because neither possessed the “rights of the patentee” at the time that the original complaint was filed.

The Federal Circuit held that Contour had standing to sue because its agreement with Chic did not transfer all substantial rights to the ’747 patent. The Court found that the most important factor was the provision limiting the term of the agreement with Chic. Because of this provision, the Court found that Chic was an exclusive licensee and not an assignee. The Court reasoned that if Chic were considered to be the assignee of all rights under the patent, the risk of multiple lawsuits would increase, since Chic could assert the patent against an accused infringer during the term of the agreement and then, when Contour regained its rights after the termination of the agreement, Contour could bring an infringement action against the same infringer. The Court vacated the District Court decision that Contour lacked standing to sue and remanded the case to the District Court to determine whether Chic was a necessary party that should have been joined. 

A copy of the case can be found at Aspex Eyewear, Inc. v. Miracle Optics, Inc., 434 F.3d 1336; 77 U.S.P.Q.2D 1456 (Fed. Cir. 2006).

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