In denying standing to a university licensing organization, a recent Federal Circuit decision pointedly illustrates the complications inherent in enforcing a jointly owned patent. To avert similar problems, innovators frequently engaged in joint research efforts that result in shared patent ownership, such as universities, should seek to consolidate ownership or reach agreements regarding enforcement well before bringing suit.
The would-be plaintiff in STC.UNM v. Intel Corp., a wholly owned licensing arm of the University of New Mexico, accused Intel of infringing a patent that arose from collaborative research between university personnel and an employee of Sandia Corporation, a private entity. As a result of assignments from their respective employees, STC and Sandia became co-owners of the asserted patent. Sandia refused, however, to join as a party to the lawsuit, preferring “a neutral position,” and Intel argued that STC therefore lacked standing to sue for failing to join all co-owners of the asserted patent. STC responded that Sandia should be subject to involuntary joinder under Federal Rule of Civil Procedure 19(a).
In a 2-1 decision, the Federal Circuit held that involuntary joinder does not apply to unwilling co-owners of an asserted patent. As a matter of substantive patent law, the court affirmed that ordinarily all co-owners must voluntarily consent to join as plaintiffs in an infringement suit. Furthermore, the substantive right of one co-owner to preclude another’s infringement suit overrides the procedural mechanism for involuntary joinder set out in Rule 19(a). The court defined two exceptions that permit involuntary joinder of a patentee, both predicated on voluntarily assumed obligations. First, a patentee enters a relationship of trust by executing an exclusive license and as a result can be involuntarily jointed to an infringement suit brought by an exclusive licensee. Second, a patentee that enters an agreement waiving its right to refuse joinder may be forced to join a later infringement suit brought by its co-owners.
Absent those exceptions, the court acknowledged that its holding generally leaves each co-owner of a patent “at the mercy” of its other co-owners for enforcement purposes. Nevertheless, the rule protects the right of each owner to forestall costly litigation that would risk invalidating its patent while still safeguarding against the possibility of subjecting potential defendants to multiple infringement actions based on the same patent.
In any event, the decision highlights the fundamental importance of reconciling patent ownership before litigation arises. While not critical to the court’s ultimate holding, the opinion also catalogued a series of errors regarding inventorship, assignment agreements, and priority claims that greatly complicated STC’s attempts to enforce the asserted patent. For patent owners, the bottom-line messages are clear: (1) be diligent in obtaining correct assignment documents from all inventors; (2) where practicable, attempt to consolidate patent ownership; (3) if necessary, seek out agreements with co-owners to cooperate in infringement lawsuits and forgo unilateral licensing; and (4) identify and address any unresolved ownership issues as part of a focused pre-suit investigation.