This post was written by Craig P. Opperman.
The United States Court of Appeals for the Federal Circuit has just overturned a lower court’s decision to throw out a patent infringement action brought by AsymmetRx against Biocare Medical. Why, you ask? The Appeals Court concluded in AsymmetRx, Inc. v. Biocare Medical LLC that the patent owner, Harvard, should have been included in the lawsuit. Why should you care? Bear with me, especially if you are involved in any way in licensing, exploiting or otherwise commercializing technology, inventions or other intellectual property related to colleges and universities – or in litigating related licensing disputes.
Harvard gave AsymmetRx an exclusive license (including the right to enforce its rights) under a fairly standard and typical “university” licensing agreement. AsymmetRx sued Biocare and won. So far, all is right and ‘normal’ with the world. BUT, not so fast. Biocare appealed the decision and – are you ready?- The Appeals Court for the Federal Circuit sent the case right back to the District Court saying, exclusive? Not really. Harvard should have been joined in the infringement action. What, you say? How can this be? Read on.
The appellate court ruled that reading all the terms and conditions of the standard university license altogether, AsymmetRx didn’t really have the equivalent of full ownership of the patent or the subject matter – exclusive license notwithstanding. So Harvard, the owner, must be a party to the action for any determination on the merits. Specifically, the Court stated: “When viewing the retention of the right to sue in conjunction with all of the other rights retained by Harvard, it is clear that Harvard conveyed less than all substantial rights under the patents. While any of these restrictions alone might not have been destructive of the transfer of all substantial rights, their totality is sufficient to do so.”
In other words, since Harvard, under the terms of its license, still kept a significant amount of control over the patent rights, AsymmetRx as a licensee did not have enough of an interest in the patents to sue without joining Harvard – even though the license terms purported to give AsymmetRx the right to do so. Hmmmm.
Who cares? First of all, universities may now end up having to be joined in every intellectual property infringement action or disputes over intellectual property rights – even though it/they may have given an exclusive license, including the right to bring an action in its own name, to someone else. Are the litigators seeing dollar signs, and are university officials seeing legal costs and additional expenses, in the licensing process?
Just as significantly, if you are a transactional or intellectual property lawyer (or if you are involved in the licensing process from a transactional, contractual or licensing point of view), it gets more complicated. Universities have crafted standard licensing terms which, with rare exceptions, are used in virtually all of their licensing arrangements. So do you change the terms and conditions of these license agreements, relinquishing a greater degree of control – in which case the contract might look more like an ‘assignment’ than a ‘license’ – OR do colleges and universities start gearing up for being involved in more and more intellectual property infringement and rights disputes and lawsuits? If so, does the license agreement specifically need to state that the university is willing or amenable to being joined in the action? What if it’s not? What if it wants to decide on a case-by-case basis? What if the Court decides the university must be joined anyway? What if . . .?
So, are you a licensee? An investor? A university? A rights holder? Doing due diligence? Negotiating licensing agreements? Representing any of these folks? You can do nothing and hope for the best, or you can contact Rimon’s Craig P. Opperman. In uncertain times, no one may have all the answers, but at least you will have an informed basis to make some decisions from lawyers who know.