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Substantial Rights
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Substantial Rights

by YourPatentGuy on January 9, 2007

Periodically, the US Court of Appeals for the Federal Circuit is asked when someone other than the patent owner of record may bring a patent infringement suit. The answer: the patentee (person that the patent issued to) and successors in title to the patentee. If the analysis stopped there, you could sue only if you held legal to the patent. PROPAT INTERNATIONAL CORP. et al. v. RPOST, INC., and RPOST US, INC., et al. helps explain other instances when suit is proper.

It is sometimes the case that a patentee does not transfer formal legal title, but otherwise effects transfer of ownership for standing purposes when the patentee conveys all substantial rights in the patent. The transferee is treated as the patentee and may sue others in its own name.

The patent owner retained enough rights that it did not transfer all substantial rights. In this case, the patent owner expressly retained ownership, and included the right to maintain the patent which is an additional indication of retained ownership.

Further, the patent owner retained an economic interest in the patent and a substantial measure of control over decisions affecting the patent rights. The patentee enjoyed an equity position in the proceeds of licensing and litigaiton activities, including among other things a right to veto power over licensing and litigation. Additionally, the patentee held an unrestricted power to prevent the licensee from transferring its interest in the patent.

Finally, if the licensee failed to meet certain benchmarks, the patentee could terminate the contract and end all of the licensee’s rights.

An express clause that grants the licensee the right to sue was ineffective in actually enabling the licensee to sue, at least absent transfer of all substantial rights.

In this case, the court went further and dismissed the case rather than add the patent owner into the litigation. Since the licensee was held to be a bare licensee and lacked sufficient interest in the patent to give it standing even as?


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