“Right-to-Sue” Clause Does Not Give Licensee a Right to Sue

Propat v. RPost (Fed. Cir. 2006).

Standing: Only a "patentee" has standing to sue for patent infringement.  In order to qualify as a "patentee" the plaintiff must possess "all substantial rights in the patent."

Propat sued RPost for patent infringement.  The district court, however, dismissed the case for lack of standing — finding that Propat was merely a licensee and not in possession of sufficient patent. Propat appealed.

By its plain terms, the Propat’s license gives the company rights to initiate and enforce license agreements and to sue infringers.  Prior to any lawsuits, however, Propat must "consult and obtain prior approval" from the superior interest-holder.  The license can also be terminated for breach or other reasons. In addition, the license forbids transfer of Propat’s rights.

Based on the license agreement, the appellate panel agreed that Propat did not have sufficient rights to bring suit. The court pointed to several elements of the license in its decision:

  • An express provision retaining ownership in the superior interest-holder;
  • Superior party was required to pay any maintenance fees;
  • Superior party continued to enjoy some control over the use of the patent; and
  • Superior party held a right to terminate the license under certain circumstances.

In addition, the court reaffirmed that a "right to sue" clause in a license does not actually entitle the licensee to sue.

3 thoughts on ““Right-to-Sue” Clause Does Not Give Licensee a Right to Sue

  1. 3

    Hallucinations abound in patent lawyers…

    The question remains as to whether or not the correct contract remedy in this case is to blue pencil the contract so that they do have the right to sue (it was the clear intent of the parties). The further question is what is the absolute bottom limit of “exclusivity” gratned to a licensee that will allow courts to enforce the rights of the parties.

    Most of this string was focused on those two points.

  2. 1

    From a civil aspect:
    Generally, a civil unit has the civil rights, granted by law, to deal with civil matters with another civil unit. In order to assure the dealing to be legal, a contract is, generally, a legal form used. However, in this case, the two parties had signed a contract, e.g. license, in which the licencee had right to sue. According civil law, the licencee should have right to sue any infringer on the precondition of not breaking the license and any applicable laws.

    From patent law aspect:
    The case law has formed a precedential case in which [a “right to sue” clause in a license does not entitle the licensee to use] as reaffirmed by the court.

    I am a CHINESE patent agent enthusiastic in IP-related matters, and also interested in US patent-related matters. But, there are so many laws of US that I am not familiar with.

    Before the rencounter, in China, the patent law has a priority position because the patent law is a special civil law among the civil law family. In US, I do know if there exits the same rule as China?

    What really makes me confused is how the first judges or panel, who made the precedential case, decided to sacrifice an important principle of the civil law, namely, civil units having rights to freely dispose his/her/ their civil rights within the legal domain, thereby to create such a precedential case. In my opinion, such a precedential case makes this type of patent infringing cases more complicated because it is easer to confirm who has the qualification to act as the plaintiff through the apparent clauses of the contract.

    The above only stands for my own opinion.
    Any mistake in spelling, grammar, clause, phrase and so on, please inform me by mail at tom_bai@126.com or sbai@vastdigital.com, thanks very much beforehand!


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