by Dennis Crouch
In the civil procedure focused Keranos v. Silicon Storage (Fed. Cir. 2015), the Federal Circuit has ruled that a trial court must consider good cause when determining whether to allow parties to amend their infringement contentions. The is a likely precursor to future disputes if Congress enacts patent reform measures that require traditional infringement contention elements be asserted in the original complaint.
Here, Keranos sued several dozen defendants in E.D. Texas for infringing its transistor programming patents. See U.S. Patent Nos. 4,795,719, 4,868,629, and 5,042,009.
In its original infringement contentions (filed prior to discovery as required by local rules), Keranos identified a number of allegedly infringing products and product families. After uncovering further information regarding infringing products, the patentee filed a motion to amend its infringement contentions to particularly identify the offending product numbers. However, the district court denied that motion – noting that the local rules required identification of products by number, not family, and that the patentee had not acted diligently in using the public domain to identify the product numbers. As a result, the trial court limited the case only to the accused products particularly identified in the original infringement contentions.
On appeal, the Federal Circuit has vacated the district court ruling and remanded with instructions to consider on a defendant-by-defendant basis whether product number information was publicly available when the infringement contentions were filed. For those that were not publicly available based upon a diligent search, the court should allow amended infringement contentions. However, those product numbers that could have been identified (and identified as infringing) will seemingly remain off the list.
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The Keranos decision also includes an interesting discussion of standing. Keranos (a Nicholas Gross company) obtained the patents from the United Module Corporation (UMC) just before filing suit in what was termed an “Exclusive Patent License and Royalty Agreement.” UMC, however, was not joined as a plaintiff in the cases.
The rule for patent cases is that all parties holding substantial ownership rights of a patent must be joined as plaintiffs in any action asserting that patent. However, title-holder may create an exclusive licenses that is so extensive as to be considered an assignment of all substantial patent rights. In that case, the licensee is “‘deemed the effective ‘patentee’ under 35 U.S.C. § 281’ with effective title to the patent, and alone has ‘standing to maintain an infringement suit in its own name.’ Quoting Prima Tek II v. A-Roo Co., 222 F.3d 1372 (Fed. Cir. 2000).
Here, the patents had expired and UMC transferred the “exclusive past, present, and future rights to sue and recover for infringement, to make, use, import, and sell products covered by the patents, and to negotiate and grant sublicenses” and did not retain any right to sue infringers. Since the patent was expired, the question of whether UMC retained a right to use the invention was moot. As such, the Federal Circuit affimed that the licensee had proper standing.