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Full Opinion
United States Court of Appeals for the Federal Circuit
2009-1094
ASYMMETRX, INC.,
Plaintiff-Appellant,
v.
BIOCARE MEDICAL, LLC,
Defendant-Appellee.
Steven M. Bauer, Proskauer Rose, LLP, of Boston, Massachusetts, argued for
plaintiff-appellant. Of counsel was Amy Crafts.
Douglas B. Otto, Morrison Mahoney LLP, of Boston, Massachusetts, argued for
defendant-appellee. With him on the brief was Jill K. Hauff.
Appealed from: United States District Court for the District of Massachusetts
Judge Richard G. Stearns
United States Court of Appeals for the Federal Circuit
2009-1094
ASYMMETRX, INC.,
Plaintiff-Appellant,
v.
BIOCARE MEDICAL, LLC,
Defendant-Appellee.
Appeal from the United States District Court for the District of Massachusetts
in Case No. 07-CV-11189, Judge Richard G. Stearns.
____________________________
DECIDED: September 18, 2009
____________________________
Before LOURIE, RADER, Circuit Judges, and CLARK, District Judge. ∗
LOURIE, Circuit Judge.
AsymmetRx, Inc. (“AsymmetRx”) appeals from the final judgment of the United
States District Court for the District of Massachusetts granting summary judgment in
favor of Biocare Medical, LLC (“Biocare”). AsymmetRx, Inc. v. Biocare Med. LLC, 578
F. Supp. 2d 333 (D. Mass. 2008). Because we conclude that AsymmetRx does not
have statutory standing to pursue this action absent the participation of the President
and Fellows of Harvard College (“Harvard”), we vacate and remand.
∗
Honorable Ron Clark, District Judge, United States District Court for the
Eastern District of Texas, sitting by designation.
BACKGROUND
The dispute in this case is over the rights to anti-p63 monoclonal antibodies (the
“p63 antibodies”), which can be used to detect malignant carcinoma, such as cervical,
breast, and prostate cancer. Harvard owns U.S. Patents 6,946,256 (“the ’256 patent”)
and 7,030,227 (“the ’227 patent”) by assignment. The patents relate to the p63
antibodies and methods for using them to detect malignant carcinoma.
In May 2002, Biocare approached Harvard seeking to license the p63 antibodies.
Later that year, Harvard entered into a Biological Materials License Agreement with
Biocare (“the Biocare License”), effective October 15, 2002, to make, use, and sell the
p63 antibodies. Section 2.5 of the Biocare License stated, “The license granted by this
Agreement does not include a license under any U.S. or foreign patents.” The ’256 and
’227 patents were pending but had not issued prior to the effective date of the Biocare
License. 1 The Biocare License also defined a limited field of use, the life science
research market, but did not actually limit the license grant to that field.
A few years later, Harvard entered into an agreement with AsymmetRx (the
“AsymmetRx License”), effective June 30, 2004, that also concerned the p63
antibodies. Under the AsymmetRx License, AsymmetRx received “an exclusive
commercial license” under the ’256 and ’227 patents and “a license” to use the p63
antibodies. The grant under the AsymmetRx License was limited to a field defined as
the “[s]ale of clinical and diagnostic products and services based on detecting p63
1
U.S. Patent Application 09/538,106 was filed March 29, 2000, and issued
as the ’256 patent on September 20, 2005. U.S. Patent Application 09/526,583 was
filed April 22, 1999, and issued as the ’227 patent on April 18, 2006.
2009-1094
2
expression or mutation.” 2 Under § 3.2(b) of the AsymmetRx License, Harvard reserved
the right to make and use the p63 antibodies for academic research purposes as well as
the right to grant non-exclusive licenses for the p63 antibodies to other non-profit or
governmental institutions for academic research purposes. In addition, §§ 3.2(d) and
(e) stated that Harvard could render the AsymmetRx License non-exclusive if
AsymmetRx did not meet certain benchmarks in terms of commercial use and
availability to the public within three years or if AsymmetRx did not meet certain FDA
filing milestones. Sections 3.4(f) and (g) indicated that, although AsymmetRx could
grant sublicenses, the sublicensees could not further sublicense, and Harvard could
suggest who received a sublicense; § 4.4 stated that AsymmetRx was to pay a portion
of the sublicense income to Harvard. Section 3.4(h) required AsymmetRx, during the
period of exclusivity in the United States, to manufacture any licensed product produced
for sale in the United States substantially in the United States unless a waiver was
obtained by the U.S. National Institutes of Health.
In terms of patent filing and maintenance, § 7.2 specified that Harvard and
AsymmetRx were to cooperate fully in the preparation, filing, prosecution, and
maintenance of Harvard’s patents “so as to enable Harvard to apply for, to prosecute
and to maintain patent applications in patents in Harvard's name in any country.” With
respect to infringement of the patents, § 8.1 gave AsymmetRx “the right to prosecute in
2
A later amendment to the AsymmetRx License expanded the license grant
to all other fields of use. The parties dispute whether the amendment is properly on the
record before us. Although some numbering changed, the provisions of the
AsymmetRx License relating to the commercial diagnostic field relied upon herein were
unchanged in substance. Thus, we do not consider the amendment in reaching our
decision. All section numbers used in this opinion refer to the non-amended
AsymmetRx License.
2009-1094
3
its own name and at its own expense any infringement” within the commercial
diagnostic field, so long as AsymmetRx still had an exclusive license at the time the
action was commenced. Before commencing such an action, AsymmetRx was to “give
careful consideration to the views of Harvard and to potential effects on the public
interest in making its decision whether or not to sue.” If AsymmetRx did commence
such an action, § 8.2 stated that Harvard “may, to the extent permitted by law, elect to
join as a party in that action.” If Harvard joined such an action, Harvard and
AsymmetRx jointly controlled that action. Under § 8.4, no settlement, consent
judgment, or other voluntary final disposition of such an infringement suit could be
entered into without the prior written consent of Harvard, which was not to be
unreasonably withheld. In addition, § 8.6 of the AsymmetRx License provided,
If LICENSEE elects not to exercise its right to prosecute an infringement
of the PATENT RIGHTS pursuant to this Article, HARVARD may do so at
its own expense, controlling such action and retaining all recoveries
therefrom. LICENSEE shall cooperate fully with HARVARD in connection
with any such action.
On June 27, 2007, AsymmetRx sued Biocare for patent infringement, alleging
that Biocare’s sale of the p63 antibodies violated AsymmetRx’s exclusive rights in the
commercial diagnostic field. 3 Biocare countered that the Biocare License placed no
restrictions on the scope of Biocare’s sales. The parties made cross-motions for
summary judgment. The parties agreed that the issue before the district court involved
matters of pure contract interpretation.
3
AsymmetRx also sued four other defendants to whom Harvard had
previously granted limited, non-exclusive licenses in the research market. AsymmetRx
has settled with all defendants except for Biocare.
2009-1094
4
On September 29, 2008, the district court granted Biocare’s motion for summary
judgment. First, the court found that the Biocare License was not limited to the life
sciences research market. Second, the court found that § 2.5 of the Biocare License
excluded only rights to any materials covered by patents already in existence when
Biocare received its License. For support, the court pointed to the breadth of the
definition of “Know-How,” which specified all information disclosed by Harvard, “whether
or not patentable”; how the Biocare License remained in effect as long as the licensed
products were sold; how the Biocare License did not include the later issuance of a
patent as a terminating event or reference any pending patents; and how the issuance
of the patents had no effect on the course of dealing between Biocare and Harvard
under the Biocare License. In the alternative, the court found that Biocare had an
implied license to sell the p63 antibodies in the diagnostic market under the doctrine of
equitable estoppel. The court reasoned that Biocare had justifiably relied on what the
court deemed to be Harvard’s acquiescence in Biocare’s understanding of its rights
under the Biocare License, notwithstanding the after-acquired patents. Thus, the court
denied AsymmetRx’s motion for partial summary judgment and granted Biocare’s
motion for summary judgment.
On September 20, 3008, final judgment was entered in favor of Biocare. On
October 29, 2008, AsymmetRx filed a timely appeal. We have jurisdiction pursuant to
28 U.S.C. § 1295(a)(1).
2009-1094
5
DISCUSSION
The parties to this appeal have focused on whether the district court properly
interpreted the language of the Biocare License in finding that Biocare did not infringe
any patent rights of AsymmetRx. We believe, however, that this appeal must be
resolved by addressing an antecedent question: whether AsymmetRx had the statutory
right to bring an action for infringement without joining the patent owner, Harvard.
Because we find that AsymmetRx may pursue its infringement action against Biocare
only if Harvard also participates in that action, we conclude that the district court’s
decision must be vacated.
The issue of AsymmetRx’s standing to bring suit without Harvard joining as a
plaintiff was not raised by either party or by the district court. However, an appellate
court must satisfy itself that it has standing and jurisdiction whether or not the parties
have raised them. See Mentor H/S, Inc. v. Med. Device Alliance, Inc., 240 F.3d 1016,
1018 (Fed. Cir. 2001). If standing and jurisdiction of a trial court are lacking, an
appellate court may vacate a decision that was rendered on the merits at the trial level
or, in rare instances, order joinder of a necessary party at the appellate level. See
Prima Tek II, L.L.C. v. A-Roo Co., 222 F.3d 1372, 1381 (Fed. Cir. 2000) (reversing and
vacating a decision on the merits for lack of standing and stating that the exercise of this
court’s authority to join a party at the appellate level should be used “sparingly”). Here,
because neither party asserts that Harvard should be joined in this action at this point in
the case, we vacate and remand.
A civil action for infringement may be brought by “a patentee.” 35 U.S.C. § 281.
A “patentee” is defined by statute to include the party to whom the patent was issued
2009-1094
6
and the successors in title to the patent. 35 U.S.C. § 100(d). Accordingly, a suit for
infringement ordinarily must be brought by a party holding legal title to the patent. See
Abbott Labs. v. Diamedix Corp., 47 F.3d 1128, 1130 (Fed. Cir. 1995). Parties not
holding title to the patent have been accorded the right to sue, or “standing,” only in
certain limited circumstances.
In Waterman v. Mackenzie, 138 U.S. 252 (1891), the Supreme Court addressed
the question of standing to sue for infringement. The Court stated that an assignment
by the patent owner of the whole of a patent, an undivided part or share of the patent
right, or all rights in a specified part of the United States gave an assignee the right to
bring an infringement action in his own name. See id. at 255. “Any assignment or
transfer, short of one of these, is a mere license, giving the licensee no title in the
patent, and no right to sue at law in his own name for an infringement.” Id. In the case
of a license only,
the title remains in the owner of the patent; and suit must be brought in his
name, and never in the name of the licensee alone, unless that is
necessary to prevent an absolute failure of justice, as where the patentee
is the infringer, and cannot sue himself. Any rights of the licensee must be
enforced through or in the name of the owner of the patent, and perhaps,
if necessary to protect the rights of all parties, joining the licensee with him
as a plaintiff.
Id. The Court also stated that whether a transfer of a particular right or interest was an
assignment or license did not depend on the name applied to it, but on the intention of
the parties as revealed by the record. See id.
The reasoning of Waterman was applied in Independent Wireless Telegraph Co.
v. Radio Corp. of America, 269 U.S. 459 (1926), when the Court rejected the argument
that an exclusive licensee could sue for infringement without joining the patent owner.
2009-1094
7
The Court held that the participation of the patent owner “as a party is indispensable not
only to give jurisdiction under the patent laws, but also in most cases to enable the
alleged infringer to respond in one action to all claims of infringement for his act.” Id. at
468. The court noted an exception to this rule: “If the owner of a patent, being within
the jurisdiction, refuses or is unable to join an exclusive licensee as co-plaintiff, the
licensee may make him a party defendant by process and he will be lined up by the
court in the party character which he should assume.” Id. Before this exception to
joining the patentee can be applied, the patentee must be given the opportunity to join
the infringement action. Id. at 473-74. Thus, as summarized in Abbott,
The right to sue for infringement is ordinarily an incident of legal title to the
patent. A licensee may obtain sufficient rights in the patent to be entitled
to seek relief from infringement, but to do so, it ordinarily must join the
patent owner. And a bare licensee, who has no right to exclude others
from making, using, or selling the licensed products, has no legally
recognized interest that entitles it to bring or join an infringement action.
47 F.3d at 1131.
Under Waterman and its successors, the critical determination regarding a
party’s ability to sue in its own name is whether an agreement transferring patent rights
to that party is, in effect, an assignment or a mere license. To determine whether an
assignment of patent rights was made, we must “examine whether the agreement
transferred all substantial rights” to the patents and “whether the surrounding
circumstances indicated an intent to do so.” Vaupel Textilmaschinen KG v. Meccanica
Euro Italia S.P.A., 944 F.2d 870, 874 (Fed. Cir. 1991).
We have stated that the exclusive right to sue is “particularly dispositive” in cases
where, as here, we are deciding whether a patent owner must be joined as a party.
Vaupel, 944 F.2d at 875; see also Abbott, 47 F.3d at 1132 (discussing Vaupel).
2009-1094
8
Accordingly, we found in Abbott that the patent owner had retained too great an interest
in the patents to enable the licensee to sue for infringement on its own. Those interests
included “a limited right to make, use, and sell products embodying the patented
inventions, a right to bring suit if [the licensee] declined to do so, and the right to prevent
[the licensee] from assigning its rights under the license to any party other than a
successor in business.” Abbott, 47 F.3d at 1132. More specifically, the agreement
stated that if the patent owner asked the licensee to bring suit against an alleged
infringer and the licensee declined to do so, the patent owner had the right to bring its
own infringement action. Thus, although the licensee had the option to initiate a suit for
infringement, “it [did] not enjoy the right to indulge infringements, which normally
accompanies a complete conveyance of the right to sue.” Id. In addition, even if the
licensee did exercise its option to sue for infringement, it was “obligated under the
agreement not to ‘prejudice or impair the patent rights in connection with such
prosecution or settlement.’” Id.
In contrast, the right to sue was granted in its entirety in Vaupel, subject only to
the obligation to inform the patent owner of the existence of the suit. See Vaupel, 944
F.2d at 875. The only rights under the patent that the patent owner retained were a
veto right on sublicensing, the right to obtain patents on the invention in other countries,
a reversionary right in the patent in the event of bankruptcy, and a right to receive
infringement damages. In light of the complete transfer of the right to sue for
infringement, we found that the retained rights were not so substantial as to reduce the
transfer of patents rights to a mere license, as they did not substantially interfere with
the full use of the exclusive rights under the patent and were thus not inconsistent with
2009-1094
9
an assignment. See id. Similarly, in Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245
(Fed. Cir. 2000), we distinguished Abbott and found that a licensee had standing
because “the license grant was not subject to any prior-granted licenses or to any
retained rights by the licensor to practice the patent.” Speedplay, 211 F.3d at 1251.
Significantly, the license in Speedplay did not grant the original patent owners “the right
to participate in an infringement action brought by [the licensee], nor [did] it limit [the
licensee’s] management of any action,” in contrast to the agreement in Abbott. Id.
(distinguishing Abbott). In addition, and unlike in Abbott, a clause allowing the patent
owners to bring their own infringement action if the licensee failed to do so within three
months was an “illusory” retention of the right to sue because the licensee could “render
that right nugatory by granting the alleged infringer a royalty-free sublicense.” Id.
(distinguishing Abbott). Thus, in both Vaupel and Speedplay, the transfer was as if title
had passed, at least for the purposes of standing to sue. See Morrow v. Microsoft
Corp., 499 F.3d 1332, 1340 (Fed. Cir. 2007) (“[I]f a patentee transfers all substantial
rights to the patent, this amounts to an assignment or a transfer of title, which confers
constitutional standing on the assignee to sue for infringement in its own name alone.”
(internal quotation and footnote omitted).
This case is more similar to Abbott than to Vaupel or Speedplay in terms of what
rights Harvard retained under the patents. Although the AsymmetRx License effected a
broad conveyance of rights to AsymmetRx, Harvard retained substantial interests under
the ’256 and ’227 patents, including the right to sue for infringement, and AsymmetRx
therefore does not have the right to sue for infringement as a “patentee” under the
patent statute.
2009-1094
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Under the AsymmetRx License, Harvard also retained the right to make and use
the p63 antibodies for its own academic research purposes, as well as the right to
provide the p63 antibodies to non-profit or governmental institutions for academic
research purposes. In addition, Harvard retained a great deal of control over aspects of
the licensed products within the commercial diagnostic field, such as requiring
AsymmetRx to meet certain commercial use, availability, and FDA filing benchmarks;
specifying that manufacture had to take place in the United States during the period of
exclusivity; and maintaining input on sublicensing and receiving a share of those
royalties. AsymmetRx was required to grant sublicenses suggested by Harvard,
provided they were not contrary to sound and reasonable business practices and
materially increased the availability to the public of the licensed products. The
agreement also specified that AsymmetRx was to cooperate with Harvard to maintain
the patent rights, so as to enable Harvard to apply for, to prosecute, and to maintain
patent applications and patents in Harvard’s name. Retention of all of those rights is
inconsistent with an assignment of the patents. See Abbott, 47 F.3d at 1132
(discussing the patent owner’s retention of “the right to make and use, for its own
benefit, products embodying the inventions claimed in the patents”).
Moreover, although AsymmetRx was given the right of first refusal in suing
alleged infringers, the AsymmetRx License provides that if AsymmetRx elects not to
exercise its right to sue, Harvard has the right to bring its own infringement action.
Thus, as in Abbott, although AsymmetRx has the option to initiate suit for infringement,
“it does not enjoy the right to indulge infringements, which normally accompanies a
complete conveyance of the right to sue.” Abbott, 47 F.3d at 1132. In addition, even if
2009-1094
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AsymmetRx exercises its option to sue for infringement, it is obligated under the
AsymmetRx License to consider Harvard’s views and the public interest, and Harvard’s
approval is necessary for any settlement of suit. Such consideration of Harvard’s views
is akin to the licensee in Abbott being required “not to ‘prejudice or impair the patent
rights in connection with such prosecution or settlement.’” Id. Finally, if AsymmetRx
does commence an infringement action, Harvard may elect to join as a party in that
action and, if Harvard does join such an action, it jointly controls the suit with
AsymmetRx. In short, Harvard did not convey the entire right to enforce the patents to
AsymmetRx. 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 ’256 and ’227 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.
The provisions of the AsymmetRx License may all have met the respective
needs of the parties; after all, they negotiated and executed the agreement. They may
also reflect the perceived needs of a university attempting to balance the public interest
with commercializing the results of its professors’ research. Be that as it may, in
attempting to meet these goals, the contractual result is that Harvard retained
substantial control over the patent rights it was exclusively licensing, such that its
agreement with AsymmetRx did not convey all substantial rights under the patents and
thus did not make the license tantamount to an assignment. AsymmetRx must
therefore be considered a licensee, not an assignee. Under Waterman and its
successors, AsymmetRx does not have a sufficient interest in the ’256 and ’227 patents
2009-1094
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to sue, on its own, as the “patentee” entitled by 35 U.S.C. § 281 to judicial relief from
infringement. Harvard, by retaining the various rights to its patents, must join in any
infringement suit its licensee chooses to bring.
Furthermore, the policies underlying Federal Rule of Civil Procedure 19, the
federal joinder rule, argue for Harvard’s joinder in this case. Rule 19(a) provides that a
person who can be joined as a party should be joined if (1) the person’s absence would
make it impossible to grant complete relief to the parties, or (2) the person claims an
interest in the subject matter of the action and is so situated that the disposition of the
action in his absence could impede his ability to protect that interest or leave any of the
parties subject to a substantial risk of incurring multiple inconsistent obligations.
Harvard obviously retains an interest in the patents, and the disposition of AsymmetRx’s
suit against Biocare could either prejudice Harvard’s interests or expose Biocare to the
risk of multiple litigations. This is especially true because the Biocare License provides
that, upon reasonable notice by Biocare, Harvard is obligated to help Biocare defend
against any infringement suit by a third party. Harvard, by granting licenses to two
parties involving the same subject matter, has potentially put itself in the conflicting
position of having to aid two licensees opposed to each other. Complicating matters is
the fact that Harvard is continuing to accept royalty payments from Biocare resulting
from sales in the commercial diagnostic market that AsymmetRx asserts are infringing
its patent rights. If anything, this added complication indicates that the purpose of Rule
19 to avoid multiple suits or incomplete relief arising from the same subject matter is
best served by joinder of Harvard, which would permit the relationships between
2009-1094
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AsymmetRx, Biocare, and Harvard to all be resolved at the same time as well as solve
the standing problem.
That is not to say that if Harvard declines to participate voluntarily, the action
cannot go forward. “A patentee that does not voluntarily join an action prosecuted by its
exclusive licensee can be joined as a defendant or, in a proper case, made an
involuntary plaintiff if it is not subject to service of process.” Abbott, 47 F.3d at 1133
(citing Fed. R. Civ. P. 19(a); Indep. Wireless Tel. Co., 269 U.S. at 268-74; Phila. Brief
Case Co. v. Specialty Leather Prods. Co., 145 F. Supp. 425 (D.N.J. 1956), aff’d, 242
F.2d 511 (3d Cir. 1957)). For the purposes of this case, we need not decide the nature
of Harvard’s participation, as it is unclear whether Harvard was ever given the
opportunity to join the action at the district court. We thus conclude that Harvard did
not convey all substantial rights under the ’256 and ’227 patents to AsymmetRx in the
AsymmetRx License, and, as a result, AsymmetRx lacks statutory standing, on its own,
to bring an infringement suit against Biocare.
CONCLUSION
For the foregoing reasons, the grant of summary judgment by the district court is
vacated, and the case is remanded to the district court for further proceedings in
accordance with this opinion.
VACATED and REMANDED
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