STC.UNM v. Intel Corp.
In a divided opinion addressing whether a patent co-owner has a substantive right not to join in an infringement suit, the U.S. Court of Appeals for the Federal Circuit denied a petition for rehearing en banc, leaving in place a panel decision affirming a district court's dismissal of a patent co-owner's suit for lack of standing when a fellow co-owner refused to voluntarily join in the suit. STC.UNM v. Intel Corp., Case No. 13-1241 (Sept. 17, 2014) (per curiam) (Dyk, J., concurring) (Newman, J., dissenting) (O'Malley, J., dissenting).
The plaintiff-appellant STC.UNM sued Intel for patent infringement. During the litigation, non-party Sandia Corp. was found to be a co-owner of the asserted patent. Sandia refused to join in the litigation, and the district court granted Intel's motion to dismiss based on STC.UNM's lack of standing, finding that, as a co-owner, Sandia had the substantive right to block STC.UNM's infringement action by refusing to voluntarily join the suit, despite STC.UNM's motion to join Sandia as a necessary party under Rule 19(a).
A divided Federal Circuit panel affirmed the district court ( IP Update, Vol. 17, No. 7). The Court in the panel ruling first noted that rules of procedure, such as Rule 19(a), cannot abridge, enlarge or modify any substantive right. The panel found that "the right of a patent co-owner to impede an infringement suit brought by another co-owner is a substantive right that trumps the procedural rule for involuntary joinder under Rule 19(a)."
The Federal Circuit has now denied STC.UNM's petition for rehearing en banc 6–4 with a concurrence and two dissents. In the concurrence, Judge Dyk explained that Rule 19 presupposes a substantive entitlement to relief that was not present here, because STC.UNM can only assert its right jointly, not unilaterally. In addition, Sandia lacked any substantive obligation, such as a contractual agreement, to join in the suit, a prerequisite to involuntary joinder under Rule 19(a). Finally, Judge Dyk explained that 35 U.S.C. § 262 provides a foundation for the conclusion that an individual co-owner has a substantive right not to be involuntarily joined in an infringement suit.
In dissent, Judge Newman stressed the constitutional, statutory and common law principles violated by the Federal Circuit's holding. Constitutionally, there should be the highest presumption of access to the courts. Statutorily, the Federal Rules mandate that a necessary party must be joined when feasible. Under common law, the "all co-owners rule" flows from the common law to protect defendants from multiple suits for infringement. In her dissent, Judge O'Malley traced the origins of the panel majority's holding, finding that "repeated references to unsupported dicta have morphed into a hard and fast rule."
Practice Note: Practitioners may consider including express provisions requiring participation in litigation when drafting joint research agreements.
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