Federal Circuit Finds Reservation of Exclusive Right to Enforce Field of Use In Particular Area Does Not Confer Right to Sue Without Patent Owner

In Int’l Gamco, Inc. v. Multimedia Games, Inc., 504 F3d 1273; 84 USPQ2d 2017 (Fed. Cir. 2007), International Gamco, Inc. (“Gamco”) was the owner of U.S. Patent No. 5,324,035 (the ‘035 patent) which relates to a gaming system network.   Gamco assigned the ‘035 patent to International Game Technology (“IGT”), but reserved sublicensing and enforcement rights in the New York State Lottery Market.   In a first attempt to enforce this provision, Gamco sued Multimedia, who runs the New York State Lottery forNew York, for infringement of the ‘035 patent.  The District Court for the Northern District of California dismissed the suit for lack of subject matter jurisdiction since Gamco’s reservation was not an exclusive license permitting Gamco to sue without the patent owner, IGT.  In response, Gamco and IGT executed a second license in which IGT affirmatively assigned Gamco “the exclusive right and license, within the Territory, to make, use, sell, and offer to sell, with the right to sublicense others

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Federal Circuit Finds That Licensee Not Granted Sufficient Rights to Sue despite Right to Sue Clause

In Propat Intern. Corp. v. Rpost, Inc., 473 F.3d 1187, 81 U.S.P.Q.2d 1350 (Fed. Cir. 2007), the inventors of U.S. Patent No. 6,182,219 had assigned the patent to Authenticational Technologies LTD (hereinafter “Authentix”).  In May 2002, Authentix entered into an agreement with Propat, allowing Propat to license the patent to third parties, to enforce the license agreement, and to sue infringers.  In return, Propat was given a percentage of licensing royalties and a percentage of any judgment or settlement.  However, the license also placed certain restrictions on the licensee’s right to sue without consultation, and was not allowed to assign its patent rights without consent.  Moreover, Propat was required to use its best efforts to develop licenses for the technology, the royalties for which Authenticational received a share. Propat International Corporation sued RPost, Inc in the United States District Court for the Central District of California, charging RPost with patent infringement.  The District Court held that Propat was not the

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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

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