Exclusive licensee entitled to patent infringement standing despite third parties’ limited right to license patent in the licensee’s exclusive field of use – Wiav v. Motorola (Fed. Cir., Dec. 22, 2010)

The Federal Circuit recently determined that an exclusive licensee had standing to assert rights in several patents despite the fact that several third parties had a limited right to license the patents in the alleged exclusive field of use.

In Wiav Solutions LLC v. Motorola, Inc., 2010 U.S. App. LEXIS 25966 (Fed. Cir. Dec. 22, 2010) [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law], WiAV Solutions was the exclusive licensee in a specific field of use for patents owned by Mindspeed Technologies. At the same time, third parties held licensing rights in the Mindspeed Patents, stemming from a series of spin offs and licensing agreements dating back to the late 1990's.

WiAV filed an action accusing defendants of infringing the Mindspeed Patents. In response, defendants moved to dismiss, arguing that WiAV lacked constitutional standing to assert the Mindspeed Patents because WiAV was not an exclusive licensee of the patents. Citing Textile Prods. v. Mead Corp., 134 F.3d 1481 (Fed. Cir. 1998) [enhanced version], defendants argued that although a party could be an exclusive licensee of a patent despite its license being subject to earlier nonexclusive licenses, a licensee could not be an exclusive licensee of a patent if others retained the right to license the patent. Because WiAV's license under the Mindspeed Patents was subject to preexisting rights to sublicense held by several third parties, defendants asserted that WiAV was not an exclusive licensee of the patents.

The Federal Circuit held that Textile Productions made no suggestion that a party holding one or more of the exclusionary rights in a patent did not have standing to sue to protect those rights against infringement by an unauthorized third party. Nor was there any indication that the court created a bright-line rule that a party could not be an exclusive licensee of a patent if others had the right to license the patent. Consequently, the Federal Circuit rejected defendants' proposition that for a licensee to be an exclusive licensee of a patent, the licensee had to be the only party with the ability to license the patent. The Federal Circuit went on to hold that:

Because an exclusive licensee derives its standing from the exclusionary rights it holds, it follows that its standing will ordinarily be coterminous with those rights. Depending on the scope of its exclusionary rights, an exclusive licensee may have standing to sue some parties and not others. For example, an exclusive licensee lacks standing to sue a party for infringement if that party holds a preexisting license under the patent to engage in the allegedly infringing activity. Similarly, an exclusive licensee lacks standing to sue a party who has the ability to obtain such a license from another party with the right to grant it. In both of these scenarios, the exclusive licensee does not have an exclusionary right with respect to the alleged infringer and thus is not injured by that alleged infringer. But if an exclusive licensee has the right to exclude others from practicing a patent, and a party accused of infringement does not possess, and is incapable of obtaining, a license of those rights from any other party, the exclusive licensee's exclusionary right is violated.

This court therefore holds that an exclusive licensee does not lack constitutional standing to assert its rights under the licensed patent merely because its license is subject not only to rights in existence at the  time of the license but also to future licenses that may be granted only to parties other than the accused. If the accused neither possesses nor can obtain such a license, the exclusive licensee's exclusionary rights with respect to that accused party are violated by any acts of infringement that such party is alleged to have committed, and the injury predicate to constitutional standing is met.

With these principles in mind, the key question in determining whether WiAV has standing to assert the Mindspeed Patents against the Defendants is not, as the Defendants would have it, whether WiAV has established that it has the right to exclude all others from practicing the patent. The question is whether WiAV has shown that it has the right under the patents to exclude the Defendants from engaging in the alleged infringing activity and therefore is injured by the Defendants' conduct.