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Earlier Licenses Do Not Negate Exclusive Licensee’s Standing

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A recent report and recommendation from Magistrate Judge Stark found that the existence of pre-existing nonexclusive licensees does not prohibit a company from granting an exclusive license subject to those pre-existing licenses. TV Guide Online, Inc. v. Tribune Media Services, C.A. No. 05-725-SLR/LPS, Report and Recommendation Concerning Defendant Tribune’s Motion to Dismiss Plaintiff TV Guide Online, Inc. for Lack of Standing (D. Del. March 26, 2008 (Public Version)). Defendant in this case moved to dismiss one of the plaintiffs (TV Guide Online, LLC) who was likely to be the party on which plaintiffs’ claim for lost profits was based. Id. at 2 n.2. Tribune argued that TV Guide Online lacked standing to pursue this patent infringement action because they are not in fact an exclusive licensee. Id. at 2. The License Agreement between the two plaintiffs granted TV Guide Online “an exclusive license to the ‘078 patent, including the right to sue and recover for past infringement.” Id. at 3 (internal citations omitted). Tribune argued that because 19 other entities also had licenses for the same patent, and further, because an additional license was issued by the parent company of the plaintiffs after TV Guide Online obtained its license, TV Guide Online could not be an exclusive licensee. Id. at 3.

Magistrate Judge Stark found that the parties “intended” the license agreement to be an “exclusive license” as it provided TV Guide Online with the right to practice the invention, the right to exclude others (except for pre-existing licensees) and the right to grant sublicenses. Id. at 7. Furthermore, the existence of prior non-exclusive licenses “does not prevent a patentee from granting an ‘exclusive license’ going forward.” Id. at 8. Finally, Magistrate Judge Stark found that the record evidence at this stage in the proceedings (by way of a declaration and deposition testimony by the senior vice president of intellectual property for the parent company and TV Guide Online) was enough to show that the subsequent license did not defeat defendant’s exclusive licensee status. Id. at 10.

For a copy of the opinion see here.

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