Abogado Aly: Seven Years, and a Verdict, Down the Drain

Monday, June 8, 2015

Seven Years, and a Verdict, Down the Drain

Originally published by Barry Barnett.

Snares

Patent law features so many traps that even the wary fall in one now and then. It happened again last week. This time the ruling concerned standing, an issue that goes to the power of a court to decide a case.

A narrow license

The case involved a patent on “Gelatinous Elastomer Compositions and Articles”. Alps South sued The Ohio Willow Wood Company for infringing the patent by making and selling prosthetic liners.

Alps never owned the patent. Instead, before filing suit in 2008, it signed a license with the patent owner, Applied Elastomerics. But Applied granted Alps a license to practice the patent only in the field of prosthetic liners.

Motion on standing

Ohio WIllow Wood moved to dismiss the case on the ground that Alps lacked standing. Alps responded by signing a new license with Applied. This one eliminated the field restriction (prosthetic liners only). The district court denied the motion.

As trial approached, the trial judge expressed concern about Alps’ standing and urged it to join Applied to the case. Alps declined the request.

The case went to trial before a Florida jury. After more than a week of evidence, the juror found for Alps in all respects and awarded Alps almost $4 million for Ohio Willow Wood’s infringement of the patent.

Standing from the start

Ohio Willow Wood’s appeal raised several questions, but it won on standing. The Federal Circuit therefore had no need to delve into the merits.

The court noted that a plaintiff generally must have the right to bring suit — it must have standing to sue — at the time it brings the case. A corollary to the standing-from-the-start rule posits that the plaintiff cannot cure a lack of standing retroactively.

The corollary knocked out Alps’ case. The license it got from Applied before filing the action against Ohio Willow Wood didn’t give Alps enough rights to qualify as a “patentee” for purposes of the standing requirement in 35 U.S.C. 100(d) and 281. The later elimination of the field of use restriction in the Applied license cured the problem as of the date of the amendment.But “[t]he party asserting patent infringement is “required to have legal title to the patents on the day it filed the complaint and that requirement can not be met retroactively.” Alps South, LLC v. The Ohio Willow Wood Company, No. 13-1452, slip op. at 10 (Fed. Cir. June 5, 2015) (quoting Abraxis Bioscience, Inc. v. Navinta, LLC, 625 F.3d 1359, 1366 (Fed. Cir. 2010)).

The court conceded that it permits retroactive curing of an initial lack of standing if the plaintiff joins the patent owner after filing suit. But that didn’t happen in the Alps case. And the panel said it couldn’t ignore its precedent barring a cure that involves a nunc pro tunc license amendment.

Highlighting risk

Alps highlights the riskiness of patent infringement cases. Unless your client has always owned the patent, its status as an assignee or licensee may expose it to a motion to dismiss for lack of standing. Because such a motion implicates the court’s jurisdiction — its basic authority to handle and decide the case — the defendant may raise a standing question at any time. It may bring the issue up after an adverse verdict and judgment, as Ohio Willow Wood did. And the loss of such a motion essentially wipes out everything that happened in the trial court.

Blawgletter’s advice: Make sure before bringing a patent infringement case that your client has all of the “substantial” rights relating to each patent it will sue on. Insist on reviewing any assignment or license of the patent to your client. That should save you and your client much grief later.