Azure Networks v. CSR: When Is A Licensee Unable to Join Infringement Suit With Licensor

Category: Infringement 
By: Christian Hannon, Contributor  
TitleAzure Networks v. CSR, No. 2013-1459 (Fed. Cir. Nov. 6, 2014).
[Standing] [Did the District court properly grant] the Appellees' motion to dismiss Tri-County for lack of standing, finding that Tri-County had effectively assigned Azure the '129 patent.
Azure Networks at *3 (text added).
[Claim Construction] [Did the district court properly construe] the term "MAC address" in the '129 patent as "a device identifier gerenated by the hub device".
Id. (text added).
[Standing] We agree that the agreement between Tri-County and Azure constituted an effective assignement for purposes of standing, we affirm the dismissal of Tri-County.
[Claim Construction] The district court improperly construed the term ["MAC address"], we vacate the judgmenet of noninfringement and remand.

Procedural HistoryPlaintiffs Azure Networks, LLC (Azure) and TriCounty Excelsior Foundation (Tri-County) sued CSR PLC, Cambridge Silicon Radio International, LLC, Atheros Communications, Inc., Qualcomm Inc., Broadcom Corp., Marvell Semiconductor, Inc., Ralink Technology Corp. (Taiwan), and Ralink Technology Corp. (USA) (collectively, Appellees) for alleged infringement of U.S. Patent No. 7,756,129 (the ’129 patent). The district court granted the Appellees’ motion to dismiss Tri-County for lack of standing, finding that Tri-County had effectively assigned Azure the ’129 patent. […]vThe district court also construed the term “MAC address” in the ’129 patent as “a device identifier generatedvby the hub device” and not, as Azure and Tri-Countyvsuggested, “an address that uniquely identifies a device orvgroup of devices on a shared communication medium.”vAzure stipulated to a judgment of noninfringement undervthe district court’s construction of “MAC address.”
Azure Networks, at *3.


Legal Reasoning (Reyna, Mayer, CHEN)
Tri-County's License of the '129 Patent to Azure[T]he Agreement [to transfer rights in the '129 patent between Tri-County and Azure] granted Azure the exclusive, worldwide, transferable right to (i) make, have made, use, sell, offer to sell, import, and lease any products, (ii) use and perform any method, process, and/or services, and (iii) otherwise practice any invention in any manner under the ’129 patent. [...] Specifically, the Agreement provided that “Azure will have the exclusive right, but not the obligation, to maintain, enforce, or defend” the ’129 patent, but has the “obligation to exercise good faith business judgment to monetize” the ’129 patent, “including but not limited to licensing [it] to third parties.” Azure also received the right to assign the entire Agreement or any of Azure’s rights under the Agreement, without Tri-County’s consent, to any Azure affiliate in connection with the sale of a material portion of any Azure business unit.
Azure Networks, at *6-7 (internal citations omitted).
I. Standing
Applicable LawA party is a patentee if it holds legal title to the patent, either by issuance or assignement. Even if a patentee does not transfer legal title, it may transfer significant right ot the patent. When the patentee transfers rights, the party that has been granted all substantial rights under the patent is considered the owner regardless of how the parties characterize the transaction that conveyed those rights. [...] And whichever party has all, or substantially all, rights in the patent alone has standing to sue for infringement.
Azure Networks, at *8. (internal citations and quotations omitted).
A Unique Fact Scenario[W]e are typically confronted with one of two scenarios: (1) cases in which the exclusive licensee brings suit alone, requiring us to decide whether the license agreement conferred sufficient rights on the licensee for standing; or (2) cases in which the licensor brings suit alone, and we decide whether the licensor has transferred away enough rights to divest it of the right to sue. This is not the typical case.
Id. at *9.
Present Case Requires Two Fold Inquiry
[O]ur inquiry in this case is twofold: (1) whether Tri-County transferred all substantial rights under the ’129 patent to Azure, making Azure the effective owner; and if so, (2) whether Tri-County may nevertheless join in an infringement suit brought by the licensee, but now effective owner, Azure.
Transfer of all substantial rightsAfter weighing all the factors, we agree with the district court that Azure acquired significant rights under the ’129 patent, including the right to enforce, to license, to control the licensing and litigation, to sublicense, to practice exclusively, and to maintain the patent. Tri-County’s economic interests, limited termination rights, and unfixed reversionary interest with only a very limited amount of time remaining on the patent do not demonstrate that it retained ownership. As the district court found, the balance of factors establishes that Tri-County transferred all substantial rights in the ’129 patent to Azure, making Azure the effective owner for purposes of standing.
Id. at *18.
Non-substantial Right Holder Transferor Able to Join Infringement Suit With TranfereeTri-County serves effectively as a nonexclusive licensee. The district court properly concluded that Tri-County lacks standing to bring suit, but more importantly, to even join the suit. Because Tri-County does not have any exclusionary rights under the ’129 patent, it lacks standing to join the suit as a coplaintiff.
Id. at *19.
II. Claim Construction
Heavy Presumption Claim Terms Carry Accustomed MeaningThere is a “heavy presumption” that claim terms “carry their accustomed meaning in the relevant community at the relevant time.” The district court, however, construed “MAC address” narrowly as a local address generated by the hub, even though the ordinary and customary meaning included either local or universal MAC addresses. Departure from the ordinary and customary meaning is permissible only when the patentee has acted as his own lexicographer or disavowed claim scope in the specification or during the prosecution history. The heavy presumption that “MAC address” carries its well-established meaning in the relevant industry has not been overcome here.
Azure Networks, at *19-20.
Affirmed-in-part, vacated-in-part, and remanded.
Azure Networks, at *25.


MAYER, Circuit Judge, dissenting-in-part. Azure Networks, Mayer Op., at *1.
Contributor Comment: While agreeing with the court's decision regarding the standing issue, Judge Mayer wrote separately to express disagreement with the claim interpretation issue.
The specification of U.S. Patent No. 7,756,129 (the “’129 patent”) repeatedly and unambiguously indicates that the term “Media Access (MAC) address” refers to an address that is assigned to a peripheral device by a hub device. The patent neither contemplates nor enables any other method of network communication. The court offers no plausible justification for disregarding the unequivocal disclosure in the specification and dramatically expanding the definition of “Media Access address” to cover any address that uniquely identifies a device on a shared communication system. The decision to jettison the trial court’s claim construction is predicated almost exclusively on a purported industry definition of the term “Media Access Control address,” but that term is found nowhere in the ’129 patent.
Azure Networks, Mayer Op., at *2.


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