Judge Joseph J. Farnan, Jr.: No Standing Where No Control Over Exclusionary Rights
It is black letter law that a party asserting patent infringement must have standing to sue before it can bring a claim for infringement. Enhanced Security Research, LLC v. Cisco Systems, Inc., C.A. No. 09-390-JJF, Memo. Op. (D. Del. June 25, 2010). Defendants in Enhanced Security Research, LLC v. Cisco Systems, Inc., brought a motion to dismiss arguing that pursuant to terms of a Purchase Agreement, the plaintiff did not maintain any rights to the patents-in-suit and “divorced nominal legal title to the patents-in-suit from the exclusionary rights to the those patents.” Id. at 3. The issue in this case came down to whether plaintiff can sue in its own name or must include the other party to the Purchase Agreement. Id. at 7. The court found that as a result of the Purchase Agreement, plaintiff retained title to the patents-in-suit and “the rights to use, exploit, enforce, [the patents-in-suit]” but “control over the exclusionary rights” resided with the other party to the Agreement. Id. at 9 (internal citations omitted). By virtue of the agreement, plaintiff is “prohibited from making any decision with respect to assertion of its patent rights, the conduct of litigation relating to the patents-in-suit, or the settlement of such litigation without the prior written consent” of the other party to the Agreement. Id. at 9. It further “relinquished its ability to freely assign, transfer, or license its rights in the patents-in-suit without the prior written consent” of the other party. Id. at 10. Therefore, under the Purchase Agreement, plaintiff lacks standing to bring the lawsuit and joinder of the other party cannot cure the defect. Id. at 11.