University of South Florida Research Foundation, Inc. v. Fujifilm Medical Systems USA, Inc. (Fed. Cir. 2021) | McDonnell Boehnen Hulbert & Berghoff LLP
The question of standing can be decisive: without it, whatever the merits of a party’s position or arguments, a court will not consider them without standing. The vagaries of standing and its importance were illustrated this fall in the opinion of the Federal Circuit in University of South Florida Research Foundation, Inc. v Fujifilm Medical Systems USA, Inc. *
The action arose out of a dispute regarding an invention described in the notice as “User-Workstation Interface for Digital Mammography”. This invention was originally disclosed by professors at the University of South Florida who ceded their rights to the University. A subsequent assignment of what is presumably a “new and improved” version of the invention was assigned by these inventors five years later, leading to the filing of an application resulting in U.S. Patent No. 6,630,937, entitled ” Workstation interface for use in digital mammography and related Methods. “
Details of the relationship between the University and the University of South Florida Research Foundation (USFRF) are obscured by editorial staff, but under a nunc pro tunc The (putatively) ‘937 patent licensing agreement between these Florida entities, the USFRF sued Fujifilm for infringement. The USFRF argued a chain of interest in the patent in the complaint ranging from the inventors to the USF to the USFRF:
The inventors of the ‘937 patent assigned their rights to the University of South Florida in Tampa, Florida. The University of South Florida in turn assigned its rights to the ‘937 patent to the plaintiff in this lawsuit, namely the University of South Florida Research Foundation, Inc. (“USFRF”). The USFRF currently owns all of the rights, title and interest in U.S. Patent No. 6,630,937.
Nonetheless, Fujifilm sought summary judgment that the USFRF lacked legal standing, arguing that the license agreement did not transfer “all substantive rights” to the Foundation to bring an action by. herself. The flaw, which USF attempted to “correct” if it was allowed to file a second amended complaint, was that instead of ceding all rights, titles and interests to the Foundation, the University had just granted a exclusive license. The district court dismissed the action (without prejudice) under federal civil procedure 12 (h) (3) for “lack of both statutory and constitutional standing”; as explained in a footnote, “legal standing” referred to 35 USC § 281, which the Federal Circuit characterized as “merely a legal requirement” rather than a separate form of standing. The license defects cited by the district court included the lack of “exclusive granting of the right to defend the patent to the USFRF”, the absence of any language regarding “the transfer of the right to sue” and the absence of any provision which “limits[ed] USF’s ability to bring legal action for alleged infringement. Importantly, the district court also considered the license “refund” provisions that allowed the University to practice the invention for “internal research, clinical and educational purposes” as permanent exclusionary provisions. . The District The court’s standing constitutional decision (Article III) was based on the USFRF’s refusal to disclose the disclosure of the invention mentioned in the license, which the court found to be a “necessary document”; another consideration was whether the right to sue had been transferred prior to the filing of the complaint. The USFRF appealed.
The Federal Circuit overturned the district court’s decision dismissing the action on permanent grounds and remanded, in an opinion of Judge Stoll, joined by Chief Justice Moore and Justice Reyna. The question, framed by the Court’s recitation of a litany of its precedents, is whether “an exclusive license equals an assignment”, which depends on “the intention of the parties. [to the license agreement] and . . . the substance of what has been granted ”, citing Alfred E. Mann Found. for Sci. Rsch. vs. Cochlear Corp., 604 F.3d 1354, 1358-1359 (Fed. Cir. 2010), citing Mentor H / S, Inc. v. Med. Appliance All., Inc., 240 F.3d 1016, 1017 (Fed. Cir. 2001). The panel noted that even though there had been decisions where the rights which had to be transferred to establish standing had been discussed, the Court had never “established a complete list of the rights which must be examined for determine whether a patentee has transferred sufficient rights to make another party the owner of a patent. Instead, the Court adopted a “whole deal” approach, in which “[a]Of the factors we consider, the exclusive right to make, use and sell, as well as the nature and extent of the patentee’s retained right to prosecute accused infringers are the most important considerations in determining whether a license agreement transfers rights sufficient to make the licensee the owner of the patent ”, citing Diamond Coating Techs., LLC v. Hyundai Motor Am., 823 F.3d 615, 619 (Cir. Fed. 2016) (citing Alfred E. Mann).
Applying this precedent, the panel compared the rights transferred here with the transfers of rights deemed sufficient to meet the standing requirements. In Alfred E. Mann, for example, the fact that the licensor retains the right to bring an infringement action was “the most important factor in determining whether an exclusive license transfers sufficient rights to make the licensee the owner of the patent”. “[A] the general right to decide whether to bring an action and to control the litigation is quite incompatible with an assignment of the patents in question to [a licensee]”according to that opinion, thus establishing a well-defined basis for concluding that there was no standing. Similar considerations were applied in AsymmetRx, Inc. v Biocare Med., LLC, 582 F.3d 1314, 1321 (Fed. Cir. 2009), where the patentee retained “substantial interests in the patents at issue”, including the right to sue for infringement. Finally, in Diamond coating, the limitations imposed on the licensee (including the prohibition on licensing the patent without the grantor’s permission, a retrocession license that included the right to sell patented products and the review of decisions regarding application) precluded the dismissed from having standing to act in his own name.
Here, the panel held that the district court was not wrong in concluding that the USFRF was not a patentee within the meaning of § 281 and could not sue without joining the USF. The Court’s decision was based in the first place on the absence in the license to transfer the USF to the USFRF of the right to sue the patent. As synthesized by the Federal Circuit, “[t]The silence of the agreement on the right to prosecute accused infringers does not demonstrate an intention to transfer this right. On the contrary, it shows that the USF retained the important right to enforce the patent against the accused infringer, “and the panel’s ruling was therefore consistent with their Alfred E. Mann, AsymetRx, and Diamond coating previous. Additional features of the license (including drafted provisions on the reservation of undisclosed rights and a weighting of recovery amounts from infringement suits) supported this conclusion. And the panel rejected the USFRF’s attempt to rely on its decision by Speedplay, Inc. v Bebop, Inc.., 211 F.3d 1245 (Fed. Cir. 2000), concerning a sublicensing right transferred without royalty.
With respect to Article III, the Court applied the Law of the Second Circuit regarding the failure of the USFRF to disclose the disclosure of the invention and the failure to provide proof of the date of signature of the license agreement. On this issue, the Federal Circuit held that the district court erred in ruling that production of the disclosure of the invention was the only way for the USFRF to meet the requirement that the license covered the ‘937 patent, as it would imply the waiver of solicitor-client privilege and work-product protections. The Court found sufficient disclosure in the license of the equivalence of disclosure of the invention and the ‘937 patent to establish that the license extended to that patent. According to the opinion, “[t]The correlation between the serial number of the patent application on the assignment and the face of the patent should have been sufficient in this case to prove that the license agreement covered the ‘937 patent.
In addition, the Federal Circuit ruled that the District Court erred in concluding that there was no standing under Article III due to the non-date nunc pro tunc license that was not displayed when signing. According to the panel, “[e]Even if the license agreement had been signed after the filing of the complaint, the USFRF would have held at least one exclusionary right to the patent under [a Revenue Allocation Agreement previously entered into by the parties]. “Constitutional standing arises when a party has at least one right of exclusion under the precedents of the Court, including WiAV floors. LLC v Motorola, Inc., 631 F.3d 1257, 1265 (Fed. Cir. 2010); Morrow v. Microsoft, 499 F.3d 1332, 1340–41 (Fed. Cir. 2007); and Inform. Prop. Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333, 1347 (Fed. Cir. 2001), according to the opinion.
Whether the USFRF can remedy the deficiencies in standing under § 281 will be the issue the district court will be asked to decide on remand, because, as explained in the opinion, “the dismissal of the district court was based on [USFRF’s lack of] constitutional quality “and therefore did not take into account the USFRF’s attempt to remedy in its second amended complaint. may be by arranging their agreements to be consistent with the topics discussed in this opinion.
University of South Florida Research Foundation, Inc. v Fujifilm Medical Systems USA, Inc. (Fed. Cir. 2021)
Panel: Chief Justice Moore and Circuit Judges Reyna and Stoll
Opinion of circuit judge Stoll
* The notice was sealed on October 22 and reissued on November 23 in a partially redacted form.