STC.UNM v. Intel: When is a Patent Co-Owner Not Subject to Involuntary Joinder?

Category: 103 
 By: Christian Hannon, Contributor 
TitleSTC.UNM v. Intel Corp., No. 2013-1241 (Fed. Cir. June 6, 2014).
Issue[Whether] Sandia can[] be involuntarily joined under Federal Rule of Civil Procedure 19 [to allow STC to assert the '998 patent against Intel].
STC.UNM at *2 (text added).
Holding[T]his court holds that the right of a patent co-owner to impede an infringement suit brought by another co-owner is a substantive right that trumps the procedural rule for involuntary joinder under Rule 19(a).
Id. at *11.
Procedural History
The district court rejected both of STC’s theories [that the assignment automatically granted rights and alternatively that assignment's language granted rights in view of the USPTO's grant of CIP status] and granted partial summary judgment for Intel. [...] The court did not grant summary judgment on the remaining issue of whether it was truly the same Sandia entity that co-owned each of [U.S. Patent No. 5,705,321 (the ’321 patent)] and [U.S. Patent No. 6,042,998 (the ’998 patent)]. []
STC.UNM at *6. (internal citations omitted) (text added).
STC appeal[s] whether Sandia can be involuntarily joined under Rule 19(a) as well as the district court's partial grant of summary judgment on the timing of Sandia's co-ownership.
Id. at *7.  
Legal Reasoning (Rader, Dyk)
321 Invention Assigned to UNM & SandiaIn mid-1996, the four inventors [of the '321 patent] executed a Joint Assignment to UNM of the invention disclosed in the application that issued as the ’321 patent (’321 Assignment). The ’321 Assignment erroneously defined all assignors as “employees of the University of New Mexico.” Draper was not employed by UNM. UNM was the named assignee. [...] In October 1996, UNM executed an assignment to Sandia to correct Draper's prior assignment to UNM which "was made in error" (Draper Assignment). The Draper Assignment referenced the invention that led to the '321 patent and explicitly transferred to Sandia "those rights and interests previously assigned to [UNM] by Bruce Draper ... and to any and all Patents which may be issued thereon ... and to any and all divisions, reissues, continuations, and extensions."
STC.UNM at *3 (text added).
Creation of the Asserted PatentWhile the application that led to the '321 patent was pending, Brueck and Zaidi (two of the named '321 inventors working for UNM) continued their research. On September 17, 1997, they filed the application that led to the '998 patent[.] [...] The application incorporated the '321 patent by reference, but did not claim priority to any earlier-filed application. [...] To overcome double-patenting rejections [during prosecution before the USPTO], UNM filed a terminal disclaimer, which specified that "any patent granted on this instant application shall be enforceable only for and during such period" that the '998 and '321 patents are commonly owned.
Id. at *3-4 (internal citations and quotations omitted, text added).
STC Perfects '998 Patent's Priority to the '321 ApplicationIn July 2002 and August 2007, respectively, UNM assigned its own interest in the '321 and '998 patents to STC-- a wholly-owned licensing arm of UNM. [...] [I]n 2008, STC successfully sought a certificate of correction from the PTO to indicate that the '998 patent is a continuation-in-part of the '321 patent.
Id. at *4.
Patent Owner Must Join All Co-ownersThis court has long applied the rule that a patent co-owner seeking to maintain an infringement suit must join all other co-owners. And, in Ethicon, this court held that, “as a matter of substantive patent law, all co-owners must ordinarily consent to join as plaintiffs in an infringement suit.”
STC.UNM at *7.
Rebuttal of STC's argumentAs support for its position, STC notes that “[n]owhere in the majority opinion in Ethicon is Rule 19 mentioned.” [...] Whether this court in Ethicon expressly mentioned Rule 19(a)—the involuntary joinder provision—does not change the effect the holding had on it. Rules of procedure, such as that in Rule 19(a), must give way to substantive patent rights.
Id. at *8, 11 (internal citations omitted).
Exceptions to The Rule
There are, of course, scenarios that will overcome this rule against involuntary joinder of a patent owner or co-owner in particular instances. As this court acknowledged in Ethicon and DDB Techs., two such scenarios have as yet been recognized.
Id. at *11.
1. Exclusive License ExceptionFirst,when any patent owner has granted an exclusive license, he stands in a relationship of trust to his licensee” and can be involuntarily joined as a plaintiff in the licensee’s infringement suit[.]
Id. at *11.
2. Waiver Exception[S]econd, “[i]f, by agreement, a co-owner waives his right to refuse to join suit, his co-owners may subsequently force him to join in a suit against infringers." [...] Hence, as stated in Ethicon, ordinarily an absent co-owner must consent to join the suit.
Id. at *11 (internal citations omitted).
Analysis of Exceptions in the Instant CaseIn the present case, neither of the above scenarios applies. And STC has not argued that some third scenario should be recognized that would bring about a different result based on the facts of this case. Moreover, each of the recognized exceptions relies predominantly on an absent co-owner who has in some way affirmatively given up its substantive right to refuse to join the suit. In this case, Sandia has—at the other end of the spectrum—affirmatively retained this right by consistently expressing its desire to not join the case. Accordingly, because Sandia has not voluntarily joined this suit, and because no exception to this general substantive rule applies, STC lacks standing to maintain its suit against Intel.
Id. at *11-12.
Because co-owner Sandia did not consent to join this infringement suit against Intel and cannot otherwise be involuntarily joined on these facts, STC cannot maintain its suit. Accordingly, this court affirms the district court’s dismissal of the case.
STC.UNM at *13.
NEWMAN, Circuit Judge, dissenting. STC.UNM v. Intel Corp., Newman Op., at *1.
On Involuntary JoinderPrecedent establishes that all entities with the right to enforce the patent are necessary parties to an action for enforcement; the purpose is to shield the accused infringer from multiple suits, as well as to resolve all potential claims efficiently and fairly. Entities with enforcement rights who do not voluntarily join in such suit “must” be joined involuntarily, as provided by Federal Rule of Civil Procedure 19(a) (“Required Joinder of Parties”). Departing from this clear and compulsory procedure, the panel majority holds that co-owner Sandia cannot be involuntarily joined with the University in this infringement suit, thus preventing the University from enforcing the patent, for Sandia is a necessary party. That holding is not correct. When a party declines voluntarily to join in a legal action for which it is deemed necessary, involuntary joinder is provided by Federal Rule 19.1 The panel majority’s ruling that joinder under Rule 19 does not apply to co-owners of a patent unless the co-owners had previously agreed to joinder is contrary to law.
STC.UNM v. Intel Corp., Newman Op., at *1.
 Image Attribution Statement: Benjamin Franklin, “Join or Die”, available as a public domain in the United States, and those countries with a copyright term of life of the author plus 100 years or less, https://docs.google.com/spreadsheets/d/1A0xdIp9nQYFv2MzHB8OyZIOndm01PsHNHvRo6oMSdas/edit#gid=0 (last visited July 25, 2014) (image edited).
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