Opinion ID: 2733694
Heading Depth: 2
Heading Rank: 2

Heading: development of the alleged

Text: “SUBSTANTIVE RIGHT” The majority relies primarily on this court’s prior decision in Ethicon, Inc. v. United States Surgical Corp., 135 F.3d 1456 (Fed. Cir. 1998) to outlaw use of involuntary joinder of co-owners in patent cases. Neither Ethicon nor the cases on which it relies specifically holds that a patent co-owner cannot be involuntarily joined under Rule 19(a). Instead, examination of the pertinent case law reveals that repeated references to unsupported dicta have morphed into a hard and fast rule from which this court refuses to deviate and which it now refuses to justify. In Ethicon, we quoted an earlier Federal Circuit decision for the proposition that “‘one co-owner has the right to impede the other co-owner’s ability to sue infringers by refusing to voluntarily join in such a suit.’” 135 F.3d at 1468 (quoting Schering Corp. v. Roussel-UCLAF SA, 104 F.3d 341, 345 (Fed. Cir. 1997)). Schering, in turn, relied solely on a Sixth Circuit decision—Willingham v. Lawton, 555 F.2d 1340 (6th Cir. 1977)—not on the Patent Act or even preexisting federal common law. But Willingham did not purport to create any substantive patent rights. In fact, the Willingham court expressly declined to address the patent co-owner’s argument that it had a substantive right not to be forced to join the action under Rule 19(a). As explained below, Rule 19 was not at issue in either Schering or Ethicon, and the court in WillingSTC.UNM v. INTEL CORPORATION 11 ham actually endorsed the application of Rule 19(a) on the facts before it. Accordingly, none of these cases gives rise to a substantive patent right that can trump application of Rule 19. First, the “crux of the problem” in Willingham was “whether a co-owner could authorize by contract another co-owner to file suit for patent infringement without the permission of the first co-owner, in an action in which the unwilling co-owner is joined as an involuntary plaintiff under Rule 19.” 555 F.2d at 1343-44. Although the patent co-owner, Star, argued that “Rule 19(a) is procedural and does not alter the substantive law requiring voluntary joinder of all co-owners of a patent in a suit for its infringement,” the court found that it “need not reach this issue,” because Star waived any objection by signing a contract that gave either co-owner the right to initiate an infringement action in its sole discretion. Id. at 1343 n.5. The court further explained that: (1) “[m]aking a patent owner an involuntary plaintiff is not new;” (2) “[j]oining Star as an involuntary plaintiff protects the interests of both the defendants”; and (3) “Rule 19(a) requires the continued joinder of Star as an involuntary plaintiff in the infringement suit.” Id. at 1346. The Sixth Circuit recognized the “general rule that all co-owners of a patent must be joined as plaintiffs before an infringement suit can be initiated,” in Willingham. Id. at 1343 (citing Waterman v. Mackenzie, 138 U.S. 252, 255 (1891)). 4 It did 4 In Waterman, the Supreme Court explained that a patentee or his assignee may grant and convey to another: (1) the whole patent; (2) an undivided part or share of that exclusive right; or (3) “the exclusive right under the patent within and throughout a specified part of the United States.” 138 U.S. at 255. “A transfer of either of these three kinds of interests is an assignment, properly speaking, and vests in the assignee a title in so much of 12 STC.UNM v. INTEL CORPORATION not create or purport to create any new substantive patent law right that would trump application of Rule 19, however. Indeed, it expressly stated it was not addressing that question because it found any rights Star might have had on that score to have been waived. Id. at 1343 n.5 (comparing Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 125 (1968) (recognizing that Rule 19(b) is “a valid statement of the criteria for determining whether to proceed or dismiss in the forced absence of an interested person” and that “judge-made doctrines of compulsory joinder” do not create substantive rights falling outside the reach of the rule), with Gibbs v. Emerson Elec. Mfg. Co., 29 F. Supp. 810, 812 (D. Mo. 1939) (concluding that “it appears that one joint owner or coowner or tenant in common of a patent right cannot compel the other coowner to join in a suit for an infringement”). Schering involved a dispute between two co-owners of a pharmaceutical patent: Schering and Roussel. Schering sued Zeneca for infringement, and two weeks later, Roussel granted a license to Zeneca. Schering argued that the terms of its co-ownership agreement with Roussel—which provided that, “if one of the co-owners files an infringement suit, it can call on the non-suing co-owner to provide ‘reasonable assistance’ in connection with the litigation”— meant that the non-suing party could not grant a license to a defendant or prospective defendant. Schering, 104 F.3d at 345-46. Undertaking a contract analysis, we held the patent itself, with a right to sue infringers; in the second case, jointly with the assignor; in the first and third cases, in the name of the assignee alone.” Id. Importantly, the “development of the practice of joining a party as an involuntary plaintiff was a response” to Waterman. 7 Charles Alan Wright et al., Federal Practice and Procedure § 1606 (3d ed. 2013). STC.UNM v. INTEL CORPORATION 13 that nothing in the agreement limited the right to grant licenses under the patent, but that “the grant of a license by one co-owner cannot deprive the other co-owner of the right to sue for accrued damages for past infringement.” Id. at 345. Involuntary joinder was not at issue on appeal in Schering because, at the district court level, “Schering joined Roussel as an involuntary plaintiff pursuant to Rule 19(a).” Schering Corp. v. Zeneca Inc., 958 F. Supp. 196, 197 (D. Del. 1996); see also Schering, 104 F.3d at 346 (noting that the “co-ownership agreement made Roussel subject to being named as an involuntary plaintiff in an infringement action brought by Schering”). Accordingly, this court in Schering did not address or analyze Rule 19; it proceeded on the assumption that joinder under Rule 19(a) had occurred and that no objection to it had been raised on appeal. While we did cite the Sixth Circuit’s Willingham decision for the proposition that, “[o]rdinarily, one co-owner has the right to impede the other co-owner’s ability to sue infringers by refusing to voluntarily join,” the “impediment” to which we referred was not due to non-joinder or a “refus[al] to voluntarily join”—it was due to the co-owner’s decision to license the patent to the accused infringer prospectively. Schering, 104 F.3d at 345 (citing Willingham, 555 F.2d at 1344). We explained that, “by granting a license to a prospective infringement defendant, or to a defendant that has already been sued for infringement, a patent co-owner can effectively deprive its fellow co-owner of the right to sue for and collect any infringement damages that accrue after the date of the license.” Schering, 104 F.3d at 345 (emphasis added). Again, we never said a co-owner could deprive a fellow coowner of his or her rights merely by not joining in an infringement action. In Ethicon, the co-owner of the patent—Dr. Choi— granted a “retroactive license” to the accused infringer— U.S. Surgical—and thus could not consent to an infringe14 STC.UNM v. INTEL CORPORATION ment suit against it. Ethicon, 135 F.3d at 1459. Because the parties stipulated to Choi’s intervention as defendantintervenor in the case, the majority neither cited nor discussed Rule 19. Id. at 1458. Instead, the court focused on the scope of the “retroactive license.” Specifically, the court found that: (1) “a license to a third party only operates prospectively;” and (2) absent agreement otherwise, “a co-owner cannot grant a release of another co-owner’s right to accrued damages.” Id. at 1467 (concluding that “Choi cannot release U.S. Surgical from its liability for past accrued damages to Ethicon, only from liability to himself”). In the context of its retroactive licensure discussion, the court explained that, “as a matter of substantive patent law, all co-owners must ordinarily consent to join as plaintiffs in an infringement suit.” Id. at 1468. 5 The court did not cite any authority for this socalled “substantive patent law,” but subsequently cited Schering for the proposition that one co-owner can “impede” the other co-owner’s ability to pursue an infringement action. Id. (quoting Schering, 104 F.3d at 345). As in Schering, however, Choi’s ability to “impede” Ethicon’s 5 The court recognized two exceptions: (1) “when any patent owner has granted an exclusive license, he stands in a relationship of trust to his licensee and must permit the licensee to sue in his name”; and (2) “[i]f, by agreement, a co-owner waives his right to refuse to join suit, his co-owners may subsequently force him to join in a suit against infringers.” Ethicon, 135 F.3d at 1468 n.9 (citing Indep. Wireless Tel. Co. v. Radio Corp. of Am., 269 U.S. 459, 469 (1926); Willingham, 555 F.2d at 1344-45). As the dissent in the present case points out, it makes little sense to say “that when an infringement suit is brought by an exclusive licensee, the patent owner can be joined; but when an infringement suit is brought by a coowner, the other co-owner cannot be involuntarily joined.” STC.UNM, 754 F.3d at 951 (Newman, J., dissenting). STC.UNM v. INTEL CORPORATION 15 infringement action was not due to non-joinder, particularly since Choi was already a voluntary party to the case. Instead, it was because Choi had granted a license to U.S. Surgical. The court concluded that dismissal was warranted because “Choi did not consent to an infringement suit against U.S. Surgical and indeed can no longer consent due to his grant of an exclusive license,” and thus “Ethicon’s complaint lacks the participation of a co-owner of the patent.” Id. at 1468. Because the court’s decision in Ethicon did not involve joinder or Rule 19, it cannot stand for the proposition that Rule 19 cannot be invoked to force joinder when no license impedes doing so. The panel majority here states that “[w]hether this court in Ethicon expressly mentioned Rule 19(a)—the involuntary joinder provision—does not change the effect the holding had on it.” STC.UNM, 754 F.3d at 946. But the majority in Ethicon did not discuss joinder under Rule 19, did not purport to harmonize the requirements of Rule 19 with preexisting substantive patent law, and—because the decision was focused on licensing issues—did not create any new principles of law applicable to future cases involving the involuntary joinder of patent co-owners. Importantly, the Ethicon majority’s silence cannot be evidence of its position with respect to Rule 19, even though the dissenting opinion discussed the rule. Ethicon, 135 F.3d at 1472 (Newman, J., dissenting) (“There is no barrier to the involuntary joinder of a joint inventor and/or co-owner under Rule 19, if such is needed to bring before the court all persons deemed necessary to the suit.”); see also United Haulers Ass’n v. Oneida-Herkimer Solid Waste Mgmt. Auth., 261 F.3d 245, 260 (2d Cir. 2001) (“[W]e require more than the Court’s silence on this point before concluding that it either rejected or accepted the public/private distinction advocated by the concurring and dissenting opinions.”). Although our Ethicon decision was not based on Rule 19, we subsequently stated that it “explicitly held that 16 STC.UNM v. INTEL CORPORATION Rule 19 does not permit the involuntary joinder of a patent co-owner in an infringement suit brought by another co-owner.” DDB Technologies, L.L.C. v. MLB Advanced Media, L.P., 517 F.3d 1284, 1289 n.2 (Fed. Cir. 2008) (citing Ethicon, 135 F.3d at 1468). It is unclear, however, why the court in DDB would say that Ethicon made an explicit holding with respect to Rule 19 when it was not even mentioned in the majority opinion. In any event, the reference to Ethicon in DDB was dictum because the sole issue before the court in that case dealt with entitlement to jurisdictional discovery. Id. at 1286 (“[W]e hold that the district court erred in denying DDB’s request for jurisdictional discovery.”). 6 Tracing the origin of this so-called rule of substantive patent law makes clear that, prior to the panel majority’s decision in this case, we had never explicitly held that one patent co-owner cannot involuntarily join the other. Neither Schering nor Ethicon made any pronouncements 6 Other decisions from this court have perpetuated the idea that all co-owners must ordinarily join as plaintiffs in an infringement suit, but, again, Rule 19(a) was neither raised nor addressed in those cases. See Isr. BioEng’g Project v. Amgen, 475 F.3d 1256, 1264 (Fed. Cir. 2007) (citing Ethicon and Schering to find that “one coowner has the right to limit the other co-owner’s ability to sue infringers by refusing to join voluntarily in the patent infringement suit”); Int’l Nutrition Co. v. Horphag Research Ltd., 257 F.3d 1324, 1331 (Fed. Cir. 2001) (citing Ethicon for the proposition that United States patent law “requires that all co-owners normally must join as plaintiffs in an infringement suit”). Mere repetition of dicta— without any accompanying analysis and without consideration of Rule 19—cannot give rise to a substantive patent right sufficient to overcome application of that rule. STC.UNM v. INTEL CORPORATION 17 on involuntary joinder that were necessary to the resolution of those cases. As it stands, therefore, there is no preexisting federal common law supporting the panel majority’s declaration of a substantive patent right that wholly trumps application of Rule 19. 7