Latest Federal Court Cases, 10/12/20
AntennaSys, Inc. v. AQYR Techs., Inc., Appeal No. 2019-2244 (Fed. Cir. Oct. 7, 2020)
In the only precedential opinion issued by the Federal Circuit this week, the Court declined to reach the merits of a judgment of noninfringement because it was unclear whether the district court had jurisdiction over the case.
The patent in suit was invented by two inventors, who assigned their rights to their two respective employers: AntennaSys and Windmill. Windmill then obtained an exclusive license to AntennaSys’s one-half interest in the patent for use in two markets. If Windmill failed to meet certain sales criteria, the license became non-exclusive, and either party would have the right to exploit the patent, just as they would in the absence of an agreement.
Later, AntennaSys sued Windmill and AQYR, Windmill’s wholly-owned subsidiary, for infringement of the patent. Among its affirmative defenses, AntennaSys argued that it had a license from Windmill to practice the patent. Following claim construction, AntennaSys conceded that it could not prevail, and filed a motion for summary judgment against itself (likely to moot the need to address invalidity). The district court granted judgment in favor of Windmill and AQYR.
AntennaSys then appealed the claim construction. But the Federal Circuit first had to contend with constitutional standing, and whether there was jurisdiction over the dispute. The Federal Circuit held that if AQYR had permission to practice the patent, it was not a proper party to the proceedings, and there was a lack of jurisdiction.
To start, the Federal Circuit noted that, pursuant to 35 U.S.C. § 262, all patent owners must be joined as plaintiffs in the action, with certain exceptions. Historically, the failure to do so was perceived as a failure of standing. However, following the Supreme Court’s decision in Lexmark International, Inc. v. Static Control Components, Inc., 572 U.S. 118, 128 n.4 (2014), “it is improper to discuss requirements for establishing a statutory cause of action in terms of ‘standing.’” The Court held that the failure of AntennaSys to join Windmill as a plaintiff “impacts AntennaSys’s ability to satisfy the statutory prerequisites for bringing an infringement suit; it does not impact AntennaSys’s Article III standing.” Thus, “the statutory requirements of section 262 are not jurisdictional in nature.”
However, the Court still held that the issue of proper parties was a threshold issue. That raised two subsidiary questions: (1) whether AQYR waived it by failing to raise it at the appropriate time in the district court, and (2) the merits of whether Windmill should have been named as a co-plaintiff. On both issues, the Federal Circuit punted, finding that neither argument was sufficiently developed at or addressed by the district court to give the Federal Circuit a meaningful ability to review the record on appeal. The issue of the merits revolves largely around the construction of the license agreement, which had never been addressed.
As a result, the Court remanded the case for further consideration of AQYR’s section 262 argument that Windmill was not properly named as co-plaintiff.
The opinion can be found here.
By Nika Aldrich
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- Of Counsel