Opinion ID: 175042
Heading Depth: 2
Heading Rank: 5

Heading: Standing and Lost Profits

Text: Medtronic asserts that the court abused its discretion in allowing SSI to amend its complaint to add Synthes Spine and Synthes, Inc. as co-plaintiffs. Medtronic argues that Synthes Spine and Synthes, Inc. lack standing to sue for infringement of the '071 patent because they are neither owners nor exclusive licensees of the patent. The question of standing to sue is a jurisdictional one, which we review de novo. Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1551 (Fed.Cir.1995) (en banc). The party bringing the action bears the burden of establishing that it has standing. Sicom Sys. v. Agilent Techs., Inc., 427 F.3d 971, 976 (Fed.Cir.2005). It is well-settled that [o]nly a patent owner or an exclusive licensee can have constitutional standing to bring an infringement suit; a non-exclusive licensee does not. Mars, Inc. v. Coin Acceptors, Inc., 527 F.3d 1359, 1367 (Fed.Cir.2008). To be an exclusive licensee for standing purposes, a party must have received, not only the right to practice the invention within a given territory, but also the patentee's express or implied promise that others shall be excluded from practicing the invention within that territory as well. Id. (citing Rite-Hite, 56 F.3d at 1552). If the party has not received an express or implied promise of exclusivity under the patent, i.e., the right to exclude others from making, using, or selling the patented invention, the party has only a bare license  and a bare license to sell an invention in a specified territory, even if it is the only license granted by the patentee, does not provide standing without the grant of a right to exclude others. Rite-Hite, 56 F.3d at 1552, 1553. It is undisputed that SSI is the sole owner of the '071 patent. With respect to Synthes, Inc., SSI's parent corporation, the record contains no evidence that Synthes, Inc. is an exclusive licensee of the '071 patent. In fact, the amended complaint does not even allege that Synthes, Inc. licenses the '071 patent. Given that nothing in the record indicates that Synthes, Inc. is an owner or exclusive licensee of the '071 patent, we agree with Medtronic that SSI failed to show that Synthes, Inc. had standing to bring this suit. Therefore, the district court abused its discretion in allowing SSI to amend its complaint to add Synthes, Inc. as a co-plaintiff. The question remains whether Synthes Spine, SSI's sister corporation that makes and sells ProDisc II, is an exclusive licensee for purposes of standing. Medtronic argues that the record does not contain sufficient evidence to establish that Synthes Spine has an exclusive license to the '071 patent. SSI acknowledges that there is no agreement, either oral or written, between SSI and Synthes Spine with respect to the '071 patent. However, SSI asserts that an understanding exists within the Synthes family that Synthes Spine has the exclusive right to practice the '071 patent. SSI points to deposition testimony from its corporate representative  Robert Donohue, the Chairman of SSI and Chief Financial Officer of Synthes, Inc.  that this understanding is based on the fact that [Synthes Spine] has the exclusive right to market and distribute all spine-related products in the U.S.... I'm not aware of an expressed agreement that is oral or written. I believe it's an agreement between the parties based on the way Synthes is organized. J.A. 13588. SSI also relies on Mr. Donohue's testimony that based on the way Synthes is organized and operates, SSI would not be able to license the '071 patent to any party other than Synthes Spine. J.A. 14101. SSI asserts that the only reasonable conclusion to be drawn from Synthes' organizational structure is that SSI has made an implied promise to exclude entities other than Synthes Spine from practicing the '071 patent. We agree with Medtronic that SSI failed to establish that Synthes Spine had standing to join SSI's infringement suit. The evidence of record shows that SSI owns and enforces the '071 patent and that Synthes Spine is the only entity that makes and sells products practicing the patent. Based solely on this organization, SSI asks us to infer that it made an implied promise to exclude all entities other than Synthes Spine from practicing the '071 patent. However, the fact that Synthes Spine is currently the only entity practicing the '071 patent does not mean that SSI has promised to exclude all others from doing so. Nothing in the record shows that SSI would be prohibited from licensing the '071 patent to a third party, should it so desire. Indeed, Mr. Donohue's testimony shows that the understanding regarding the '071 patent is based on nothing more than the way in which the various Synthes entities presently operate. This indicates that by allowing Synthes Spine to practice the claimed invention, SSI has granted it at most a bare license. If we were to find standing on these facts, this would mean that any company related to a patent owner could be treated as an exclusive licensee, so long as the patent owner allows only that company to practice the patent, regardless of any actual agreement as to exclusivity. This is plainly contrary to our case law, which specifies that a bare license ... even if it is the only license granted by the patentee, does not provide standing without the grant of a right to exclude others. Rite-Hite, 56 F.3d at 1553. Given that SSI fails to point to any evidence other than its current organization to show that Synthes Spine is an exclusive licensee, we conclude that SSI failed to meet its burden of establishing that Synthes Spine has standing to bring suit. Therefore, the district court abused its discretion in allowing SSI to amend its complaint to add Synthes Spine as a co-plaintiff. SSI asserts that Medtronic waived the right to challenge the availability of lost profits through reliance on any corporate distinctions between the Synthes entities because Medtronic allegedly treated the various Synthes entities as one throughout discovery. Regardless of how SSI characterizes Medtronic's position, however, Medtronic is challenging the standing of Synthes, Inc. and Synthes Spine to bring suit on the '071 patent. Under Article III of the Constitution, standing ... is jurisdictional and not subject to waiver. Pandrol USA, LP v. Airboss Ry. Prods., 320 F.3d 1354, 1367 (Fed. Cir.2003) (citation omitted). Because we conclude that neither Synthes Spine nor Synthes, Inc. has standing to sue on the '071 patent, SSI is not entitled to recover for any lost profits suffered by Synthes Spine or Synthes, Inc. It is undisputed that SSI does not itself sell any products. Therefore, SSI is not entitled to any lost profits damages. See Poly-America, L.P. v. GSE Lining Tech., Inc., 383 F.3d 1303, 1311 (Fed.Cir.2004) (the patentee needs to have been selling some item, the profits of which have been lost due to infringing sales, in order to claim damages consisting of lost profits). We reverse the district court's denial of Medtronic's motion for JMOL of no lost profits and vacate the jury's award of lost profits damages. We remand to the court for a determination of the proper reasonable royalty to which SSI might be entitled on the infringing sales of Maverick and A-Maverick for which the jury awarded lost profits.