Court Opinion

ID: 2805911
Source: CourtListenerOpinion
Date Created: 2015-06-05 15:02:07.567969+00
Date Added: 2024-06-11T12:05:32.122641
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                 ______________________

                 ALPS SOUTH, LLC,
                Plaintiff-Cross-Appellant

                            v.

      THE OHIO WILLOW WOOD COMPANY,
              Defendant-Appellant
             ______________________

           2013-1452, -1488, 2014-1147, -1426
                ______________________

    Appeals from the United States District Court for the
Middle District of Florida in No. 08-CV-1893, Judge Mary
S. Scriven.
                 ______________________

                  Decided: June 5, 2015
                 ______________________

    RONALD A. CHRISTALDI, Shumaker, Loop & Kendrick,
LLP, Tampa, FL, argued for plaintiff-cross-appellant. Also
represented by MINDI M. RICHTER; DAVID WAYNE
WICKLUND, Toledo, OH.

    JOHN DAVID LUKEN, Dinsmore & Shohl LLP, Cincin-
nati, OH, argued for defendant-appellant. Also represent-
ed by JOSHUA LORENTZ, BRIAN S. SULLIVAN.
                ______________________

    Before LOURIE, MOORE, and CHEN, Circuit Judges.
2                  ALPS SOUTH, LLC   v. OHIO WILLOW WOOD CO.

CHEN, Circuit Judge.
    Alps South, LLC (Alps) sued The Ohio Willow Wood
Company (OWW), asserting infringement of U.S. Patent
No. 6,552,109 (the ’109 patent). Among other pre- and
post-trial motions, OWW filed an unsuccessful motion to
dismiss contending that Alps lacked standing to sue
under the Patent Act. At trial, a jury found that the ’109
patent was valid and that OWW had willfully infringed.
OWW now appeals the denial of its motion to dismiss for
lack of standing. In addition, OWW appeals the denial of
its motion for judgment as a matter of law of invalidity
and no willful infringement and the decisions relating to
enhanced damages, permanent injunction, attorneys’ fees,
and contempt. Alps cross-appeals the decision declining
to further enhance the damages award as well as the
decision relating to OWW’s absolute intervening rights
defense. Because the district court erred when it denied
OWW’s motion to dismiss for lack of standing, we now
reverse, vacate the judgment below, and remand with
instructions to dismiss this action.
                       BACKGROUND
    Alps and OWW both make and sell “liners” that are
used as a cushioning and protective layer between the
residuum of an amputated limb and a prosthetic limb.
The ’109 patent, entitled “Gelatinous Elastomer Composi-
tions and Articles,” is directed to composite articles of a
thermoplastic gel and a substrate, such as foam or fabric.
According to the ’109 patent, prosthetic liners that incor-
porate the claimed composite articles are not only com-
fortable and skin-friendly, but are also more durable than
previous liners. The patented articles, however, are not
limited to any particular application or use.
     After the ’109 patent issued, the inventor assigned
the patent to Applied Elastomerics, Inc. (AEI), a company
created by the inventor. On August 31, 2008, Alps signed
a license agreement with AEI covering a number of AEI’s
ALPS SOUTH, LLC   v. OHIO WILLOW WOOD CO.                3

patents, including the ’109 patent. Shortly thereafter, on
September 23, 2008, Alps, without naming the patent
owner, AEI, as a co-plaintiff, filed a patent infringement
suit against OWW. Because Alps declined to join AEI as
a co-plaintiff, OWW filed a motion to dismiss for lack of
standing. While the motion was pending, Alps and AEI
executed an amended license agreement that eliminated
several limitations on Alps’s rights and removed certain
rights retained by AEI. Although the amended agree-
ment was executed on January 28, 2010, almost sixteen
months after Alps commenced the action, the parties
apparently intended this to be a nunc pro tunc agreement
that lists the effective date as the date of the original
agreement, August 31, 2008.
    The district court rejected OWW’s standing argument
and denied the motion to dismiss. The court concluded
that the terms of the original agreement, giving Alps the
right to exclude, transfer, and sue, sufficed to provide
Alps with standing. The district court further explained
that none of the rights retained or reserved by AEI were
“substantial enough under the language of the agreement
or case law construing similar agreements to require that
[AEI] be joined as a co-plaintiff.” Order on Motion to
Dismiss 2, Alps South, LLC v. The Ohio Willow Wood Co.,
No. 8:08-cv-01893-T-33MAP (M.D. Fla. Feb. 11, 2010),
ECF No. 73. Alternatively, the district court noted that
under the nunc pro tunc amended agreement, Alps “clear-
ly possesses the substantial rights to proceed without
[AEI] in the case.” Id.
    Shortly before trial, the district court sua sponte re-
considered the standing issue and expressed concern
about Alps’s standing to maintain the action. The court
indicated that, although it had come to believe that Alps
lacked standing when it filed the action, it had not found
any binding authority that precluded a party from curing
a standing defect through a post-filing agreement. Based
on these concerns, the district court invited Alps to join
4                  ALPS SOUTH, LLC   v. OHIO WILLOW WOOD CO.

the patent owner as a co-plaintiff. Alps declined to do so,
however, and the case proceeded to trial, after which a
jury found the ’109 patent valid and infringed.
     OWW now appeals, arguing, among other things, that
the original license did not convey sufficient rights in the
’109 patent to provide Alps with standing to pursue this
infringement litigation in its own name, without AEI.
OWW also argues that the nunc pro tunc agreement could
not cure this defect. We agree with OWW and therefore
reverse the district court’s denial of OWW’s motion to
dismiss for lack of standing, vacate the judgment entered
against OWW, and remand with instructions to dismiss
the action for lack of jurisdiction.
                        DISCUSSION
     Standing is a jurisdictional question, which we review
de novo. Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1551
(Fed. Cir. 1995) (en banc). Neither party disputes that
Alps possessed standing under Article III. Before we may
exercise jurisdiction over a patent infringement action,
however, we must also satisfy ourselves that, in addition
to Article III standing, the plaintiff also possessed stand-
ing as defined by § 281 of the Patent Act. Under 35
U.S.C. § 281, a “patentee” has standing to pursue a patent
infringement action. H.R. Techs., Inc. v. Astechnologies,
Inc., 275 F.3d 1378, 1384 (Fed. Cir. 2002). The word
“patentee” is not limited to the person to whom the patent
issued, but also includes “successors in title to the patent-
ee.” 35 U.S.C. § 100(d); see also H.R. Techs., 275 F.3d at
1384 (“In order to have standing, the plaintiff in an action
for patent infringement must be a ‘patentee’ pursuant to
35 U.S.C. §§ 100(d) and 281 . . . .”). The parties in this
case dispute whether Alps was a “patentee” under § 281.
    In addition to the patent owner, our case law provides
that “[a]n exclusive licensee has standing to sue in its own
name, without joining the patent holder where ‘all sub-
stantial rights’ in the patent are transferred.” Int’l
ALPS SOUTH, LLC   v. OHIO WILLOW WOOD CO.                   5

Gamco, Inc. v. Multimedia Games, Inc., 504 F.3d 1273,
1276 (Fed. Cir. 2007). When a patent owner transfers all
substantial rights, “the transferee is treated as the pa-
tentee and has standing to sue in its own name.” Propat
Int’l Corp. v. Rpost, Inc., 473 F.3d 1187, 1189 (Fed. Cir.
2007); see also Int’l Gamco, 504 F.3d at 1276 (observing
that a licensee with all substantial rights “is effectively an
assignee”); Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245,
1250 (Fed. Cir. 2000) (explaining that an entity “that has
been granted all substantial rights under the patent is
considered the owner regardless of how the parties char-
acterize the transaction that conveyed those rights.”). If,
however, the transferee or licensee does not hold all
substantial rights, it may “sue third parties only as a co-
plaintiff with the patentee.” Mentor H/S, Inc. v. Med.
Device Alliance, Inc., 240 F.3d 1016, 1017 (Fed. Cir. 2001)
(quotation marks omitted).
                              I
    OWW first argues that Alps’s original license agree-
ment with AEI did not convey all substantial rights in the
’109 patent to Alps. In response, Alps asserts that it did
possess all substantial rights in the ’109 patent because it
held the right to exclude and the right to pursue in-
fringement litigation under its own control and at its own
cost.
     “To determine whether an exclusive license is tanta-
mount to an assignment, we ‘must ascertain the intention
of the parties [to the license agreement] and examine the
substance of what was granted.’” Alfred E. Mann Found.
for Scientific Research v. Cochlear Corp., 604 F.3d 1354,
1359 (Fed. Cir. 2010) (alteration in original) (quoting
Mentor, 240 F.3d at 1017). Here, the original agreement
was an exclusive license covering numerous patents,
including the ’109 patent. The license also granted Alps
the right to enforce the ’109 patent and provided that AEI
would cooperate “to the extent necessary . . . , including
6                  ALPS SOUTH, LLC   v. OHIO WILLOW WOOD CO.

(without assignment of ownership to any Patent Rights)
transferring of such rights to [Alps] as are necessary to
enable [Alps] to enforce the PATENT RIGHTS in its own
name.” Joint Appendix (J.A.) 18373.
     At the same time, however, the original agreement
restricted Alps’s rights in significant ways and provided
that AEI would retain certain rights for itself. For exam-
ple, the original agreement prohibited Alps from settling
any infringement actions without AEI’s prior written
consent. AEI also retained the right to pursue infringe-
ment litigation if Alps declined to do so within six months
of learning of suspected infringement. Most importantly,
the license agreement limited Alps’s right to “develop,
make, have made, use, sell, offer to sell, distribute, lease,
and import” products covered by the ’109 patent, J.A.
18367, to a particular “field of use”:
    1.2 “FIELD” shall mean prosthetic products.
    1.3 “LICENSED PRODUCTS” shall mean pros-
    thetic liners, suspension sleeves, knee braces, and
    related health care gel products limited to said
    FIELD, which are covered by a VALID CLAIM of
    any patent listed in Schedule A hereof.
J.A. 18364. The license similarly limited Alps’s right to
pursue patent infringement to the same field of use:
    So long as [Alps] remains the exclusive licensee
    under [this agreement] of any PATENT RIGHTS
    with respect to LICENSED PRODUCTS in the
    FIELD IN THE territory . . . , [Alps] shall have
    the exclusive right, under its own control and at
    its own expense, to prosecute any third party in-
    fringement of any patents within PATENT
    RIGHTS with respect to LICENSED PRODUCTS
    in the FIELD in the TERRITORY . . . .
J.A. 18373 (emphasis added). To establish standing, Alps
relies solely on its receipt of the right to exclude and the
ALPS SOUTH, LLC   v. OHIO WILLOW WOOD CO.                  7

right to sue. Yet, because the license restricted these
rights to a field of use, the end result is that AEI retained
the exclusive right to make, use, and sell products covered
by the ’109 patent in all areas outside the field of pros-
thetic products.
    Precedent dictates that the original agreement’s field
of use restriction is fatal to Alps’s argument that it had
standing to file this action. The Supreme Court has long
recognized that an exclusive licensee cannot sue for
infringement without joining the patent owner if the
license grants merely “an undivided part or share of th[e]
exclusive right [granted under the patent].” Waterman v.
Mackenzie, 138 U.S. 252, 255 (1891); see also Pope Mfg.
Co. v. Gormully & Jeffery Mfg. Co., 144 U.S. 248, 252
(1892) (explaining a licensee may not file suit in its own
name, without joining the patent owner, when the owner
has conveyed only one part of the exclusive rights to
make, use, and sell as conferred by the patent). More
recently, in International Gamco, we explained that
finding that a field of use licensee has standing “to sue in
its own name alone poses a substantial risk of multiple
suits and multiple liabilities against an alleged infringer
for a single act of infringement.” 504 F.3d at 1278.
Accordingly, we concluded that our standing jurispru-
dence “compels an exclusive licensee with less than all
substantial rights, such as a field of use licensee, to join
the patentee before initiating suit.” Id. (emphasis added);
see also A123 Sys., Inc. v. Hydro-Quebec, 626 F.3d 1213,
1217 (Fed. Cir. 2010). Our case law thus establishes a
clear rule for cases involving licenses with field of use
restrictions. Because the license restricted Alps’s rights
in the ’109 patent to the field of prosthetic products, Alps
lacked standing to pursue this litigation without naming
AEI as a co-plaintiff.
8                  ALPS SOUTH, LLC   v. OHIO WILLOW WOOD CO.

                             II
     Alps next argues that, even if it lacked standing un-
der the original agreement, it cured this defect by execut-
ing a nunc pro tunc amended agreement. Specifically, on
January 28, 2010, while the motion to dismiss was pend-
ing, Alps and AEI executed an amended license agree-
ment, which eliminated the field of use restriction and
instead covered “any products that are covered by a
VALID CLAIM . . . , including, but not limited to, pros-
thetic liners, suspension sleeves, knee braces, and related
health care gel products.” J.A. 18397 (emphasis added).
The amended agreement also eliminated the provision
permitting AEI to pursue litigation against potential
infringers if Alps declined to do so. Importantly, the
amended agreement purported to be effective as of August
31, 2008, the same date as the original license agreement.
    Neither party seems to dispute that if the amended
agreement had been executed prior to Alps filing suit,
Alps would have had standing to sue without joining AEI.
The parties’ dispute focuses on whether a nunc pro tunc
agreement may cure a defect in standing that existed
when the suit was initiated. Alps urges us to conclude
that the nunc pro tunc nature of the agreement cured the
jurisdictional defect. OWW, on the other hand, asserts
that Alps cannot correct a jurisdictional defect that exist-
ed at the time the complaint was filed by post-filing
activity. OWW is correct.
     “[N]unc pro tunc assignments are not sufficient to
confer retroactive standing.” Enzo APA & Son, Inc. v.
Geapag A.G., 134 F.3d 1090, 1093 (Fed. Cir. 1998). In
Enzo, the licensee filed a patent infringement suit, but
the written license agreement that existed at the time of
filing did not include any rights to the asserted patent.
134 F.3d at 1092. After the licensee filed the action, the
licensee sought to retroactively acquire title to the assert-
ed patent by executing an amended license agreement
ALPS SOUTH, LLC   v. OHIO WILLOW WOOD CO.                  9

with an effective date that predated the initiation of the
suit. Id. The licensee argued that this agreement provid-
ed a basis for standing. We disagreed and concluded that
this standing defect could not be cured by a retroactive
license agreement. Id. at 1093–94. We further noted that
a party may not vindicate rights in court before the party
actually possesses the rights. Id. (citing Procter & Gam-
ble Co. v. Paragon Trade Brands, Inc., 917 F. Supp. 305,
310 (D. Del. 1995)); see also Abraxis Bioscience, Inc. v.
Navinta LLC, 625 F.3d 1359, 1365–66 (Fed. Cir. 2010)
(recognizing that a plaintiff could not execute a nunc pro
tunc assignment of the asserted patent to remedy the fact
that the plaintiff lacked legal title to that patent at the
time it filed the lawsuit).
     Alps misinterprets Enzo by describing it as a case
about Article III standing. Enzo addressed whether the
licensee possesses “all substantial rights” at the time the
complaint was filed, in other words, whether a licensee
may be considered a “patentee” under § 281. Consequent-
ly, the reasoning and holding of Enzo are binding on the
present case.
     Alps also broadly argues that we have routinely per-
mitted plaintiffs to cure this type of standing defect
during the course of a lawsuit. The cases cited by Alps,
however, involve our practice of endorsing joinder of
patent owners, under Rule 21 of the Federal Rules of Civil
Procedure, in order to avoid dismissal for lack of standing.
See Mentor, 240 F.3d at 1019 (recognizing that defects in
standing ordinarily require dismissal, but Rule 21 per-
mits courts to drop or add parties at any stage of the
litigation and on such terms as are just); Intellectual Prop.
Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333,
1348 (Fed. Cir. 2001) (“[T]his court has recognized the
principle that a patent owner may be joined by an exclu-
sive licensee” without dismissing the case for lack of
jurisdiction.). But Enzo precludes us from expanding this
practice to permit a plaintiff to cure a standing defect by
10                 ALPS SOUTH, LLC   v. OHIO WILLOW WOOD CO.

executing a nunc pro tunc license agreement after filing a
case.
     Alps also relies on its supplemental complaint, which
it filed after the reexamination certificate issued on the
’109 patent. Alps argues that, because the trial proceeded
on the patent claims that emerged from reexamination—
the subject matter of the supplemental complaint—the
supplemental complaint’s reference to the nunc pro tunc
agreement also cured any defect in standing. We disa-
gree. The party asserting patent infringement is “re-
quired to have legal title to the patents on the day it filed
the complaint and that requirement can not be met retro-
actively.” Abraxis, 625 F.3d at 1366. Finally, although
the supplemental complaint refers to an August 31, 2008,
exclusive license agreement, nothing in the supplemental
complaint mentions the amended nunc pro tunc agree-
ment.
    Alps’s attempt to characterize its supplemental com-
plaint as an amended complaint fares no better. To be
sure, 28 U.S.C. § 1653 permits parties to amend their
complaints to correct “[d]efective allegations of jurisdic-
tion.” But the Supreme Court has explained that this
provision is drafted in terms of “allegations of jurisdic-
tion,” which means that the ability to amend applies only
to “incorrect statements about jurisdiction that actually
exists, and not defects in the jurisdictional facts them-
selves.” Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S.
826, 830–32 (1989) (emphasis added) (“[E]very Court of
Appeals that has considered the scope of § 1653 has held
that it allows appellate courts to remedy inadequate
jurisdictional allegations, but not defective jurisdictional
facts.”); see also Pressroom Unions-Printers League In-
come Sec. Fund v. Cont’l Assurance Co., 700 F.2d 889, 893
(2d Cir. 1983) (“[W]e have never allowed [§ 1653] to create
jurisdiction retroactively where none existed.”); Field v.
Volkswagenwerk AG, 626 F.2d 293, 306 (3d Cir. 1980)
(“[Section] 1653 . . . allow[s] amendment only of defective
ALPS SOUTH, LLC   v. OHIO WILLOW WOOD CO.                  11

allegations of jurisdiction; it does not provide a remedy for
defective jurisdiction itself.”). Here, when Alps filed its
complaint, it was merely an exclusive field of use licensee
that lacked all substantial rights in the ’109 patent.
There were no errors in the jurisdictional facts as pleaded
in the original complaint. Thus, Alps could not avail itself
of § 1653 to amend the jurisdictional allegations that
appeared in its original complaint.
                        CONCLUSION
    Because Alps possessed neither legal title nor all sub-
stantial rights at the outset of this litigation, our standing
jurisprudence required that Alps join the patent owner,
AEI, as a co-plaintiff. Because Alps failed to do so, we
reverse the district court’s denial of the motion to dismiss
for lack of standing. We therefore vacate the judgment
below and remand with instructions for the district court
to dismiss Alps’s complaint without prejudice. Because
the district court lacked jurisdiction to adjudicate the
parties’ dispute, we need not reach the parties’ remaining
arguments.
     REVERSED, VACATED, AND REMANDED