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Licensor’s Ephemeral Retention of Right to Sue Defeats Licensee’s Standing

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In weighing a patent licensee’s standing to sue for infringement, Courts often look to whether the license is exclusive and conveys all substantial rights, including the privilege to sue. But what happens when the license in question apportions the litigation right between licensor and licensee? According to District of Delaware Judge Sue L. Robinson, the licensee alone has no standing to bring suit.

The contract in question required the licensee to notify the licensor of any third-party infringement. If the licensor did not file suit within ninety days, then the licensee would be free to initiate its own action against the third party. Therein lies the problem:

While the License clearly gives [licensor] the exclusive right to sue during the first 90-day period, there is no specific, reciprocal language giving [licensee] the exclusive right to sue after the first 90-day period.

Because the licensor failed to transfer “all substantial rights” in the patent, the licensee lacked standing to sue alone. Ultimately, however, the Court suggested a cure: add the licensor as a named plaintiff.

Siemens Medical Solutions USA Inc. v. Saint-Gobain Ceramics & Plastics Inc., C.A. No. 07-190-SLR (D. Del. March 7, 2008) (Robinson, J.).

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