Opinion ID: 751602
Heading Depth: 1
Heading Rank: 5

Heading: retroactive licensure

Text: 62 Finally, Ethicon argues that even if the license agreement is enforceable as to the entire patent, it should still be allowed to proceed against U.S. Surgical to recover damages for pre-license infringement. Ethicon contends that to hold otherwise would contravene the decision in Schering Corp. v. Roussel-UCLAF SA, 104 F.3d 341, 41 USPQ2d 1359 (Fed.Cir.1997). This court agrees with Ethicon's challenge to the retroactive effect of Choi's license, but must affirm the dismissal of the case based on Choi's refusal to join as plaintiff in the suit. 63 In Schering, Roussel and Schering, the two co-owners of the patent in suit, entered into an agreement whereby each granted the other a unilateral right to sue third parties for infringement. Schering then sued to enjoin Zeneca, Inc. from proceeding with planned sales of an allegedly infringing product. Schering joined Roussel in the action as an involuntary plaintiff. Two weeks later, Roussel granted Zeneca a license to practice the patented invention. The district court dismissed Schering's suit. Schering appealed. 64 On appeal, Schering argued that because Roussel had granted Schering a unilateral right to sue, Roussel could not now grant a license to Zeneca. Schering contended that one grant was incompatible with the other. The court rejected Shering's argument, reasoning that [t]he right to license and the unilateral right to sue are ... not incompatible, and the granting of one does not necessarily imply the relinquishment of the other. Id. at 345. This court acknowledged the critical distinction that a license to a third party only operates prospectively. Absent agreement to the contrary, a co-owner cannot grant a release of another co-owner's right to accrued damages. Consequently, a co-owner who has granted a unilateral right to sue to another co-owner may also license a third party. Nevertheless, by virtue of the unilateral right to sue, the second co-owner can still force the first co-owner to join an infringement action against the licensee to recover the second co-owner's accrued damages for past infringement. Thus, a prospective license is not per se incompatible with a unilateral right to sue, and, barring any other applicable contractual provision, Schering could not prevent Roussel from granting a license to Zeneca: 7 65 [T]he 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. That would require a release, not a license, and the rights of a patent co-owner, absent agreement to the contrary, do not extend to granting a release that would defeat an action by other co-owners to recover damages for past infringement. 66 Id. at 345. 67 Thus, Choi's retroactive license to U.S. Surgical attempts to operate as the combination of a release and a prospective license. 8 Nonetheless Choi cannot release U.S. Surgical from its liability for past accrued damages to Ethicon, only from liability to himself. 68 One more settled principle governs this case, however. An action for infringement must join as plaintiffs all co-owners. See Waterman v. Mackenzie, 138 U.S. 252, 255, 11 S.Ct. 334, 335, 34 L.Ed. 923 (1891) (The patentee or his assigns may, by instrument in writing, assign, grant, and convey, either (1) the whole patent ...; or (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. 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 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. (emphasis added)); Moore v. Marsh, 74 U.S. (7 Wall.) 515, 520, 19 L.Ed. 37 (1868) ([W]here [an] assignment is of an undivided part of the patent, the action should be brought for every infringement committed subsequent to the assignment, in the joint names of the patentee and assignee, as representing the entire interest.). 69 Further, as a matter of substantive patent law, all co-owners must ordinarily consent to join as plaintiffs in an infringement suit. 9 Consequently, 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. Schering, 104 F.3d at 345. 70 This rule finds support in section 262 of the Patent Act: 71 In the absence of any agreement to the contrary, each of the joint owners of a patent may make, use, offer to sell, or sell the patented invention within the United States, or import the patented invention into the United States, without the consent of and without accounting to the other owners. 72 This freedom to exploit the patent without a duty to account to other co-owners also allows co-owners to freely license others to exploit the patent without the consent of other co-owners. Schering, 104 F.3d at 344 (Each co-owner's ownership rights carry with them the right to license others, a right that also does not require the consent of any other co-owner.). Thus, the congressional policy expressed by section 262 is that patent co-owners are at the mercy of each other. Willingham v. Lawton, 555 F.2d 1340, 1344, 194 USPQ 249, 252 (6th Cir.1977). 73 Although in this case, the result is effectively no different than if Choi could grant a release to U.S. Surgical of any liability to Ethicon, it should be emphasized that the principle that governs this case is not incompatible with the principle enunciated in Schering. In Schering, this court noted that the granting of a unilateral right to sue is not incompatible with the right to grant a license. Similarly, this court notes that the inability to grant a release is not incompatible with the right to refuse to consent to an infringement suit. It is true that, in some circumstances, the decision of one co-owner to not join an infringement suit may have the same effect as granting a release, but this is not true in all cases. For example, when co-owners have granted each other a unilateral right to sue, each has waived his right not to join an infringement suit, and either of them can force the other to join a suit to collect accrued infringement damages. 74 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 with its accompanying right to sue, Ethicon's complaint lacks the participation of a co-owner of the patent. Accordingly, this court must order dismissal of this suit.