Federal Circuit Review - Issue 54
Standing Defect Cannot Be Cured by a Retroactive License Agreement
Alps South, LLC v. The Ohio Willow Wood Company, No. 2013-1452, -1488, 2014-1147, -1426, 2015 U.S. App. LEXIS 9368 (Fed. Cir. Jun. 5, 2015) (Chen, J.). Click Here for a copy of the opinion.
Alps South (“Alps”), an exclusive licensee of US Patent 6,552,109, sued The Ohio Willow Wood Company (“OWW”) for infringement without joining the patent owner (AEI) as a co-plaintiff. OWW moved to dismiss the case for lack of standing under the Patent Act, which the district court denied. At trial, a jury found the ‘109 patent valid and willfully infringed. OWW appealed.
The main issue addressed by the Federal Circuit on appeal was whether Alps, without joining AEI as a co-plaintiff, had standing to sue. “An exclusive licensee has standing to sue it its own name, without joining the patent holder where ‘all substantial’ rights’ in the patent are transferred.” Here, the license “granted Alps the right to enforce the ‘109 patent and provided that AEI would cooperate ‘to the extent necessary… to enable [Alps] to enforce the patent rights…’” Concurrently, the license limited the licensee’s rights to prosthetic products, even though the ‘109 patent does not limit the patented articles to any application or use. Because AEI retained the patent right for all areas outside of the prosthetics field, the Federal Circuit concluded that the license “did not convey sufficient rights” in the ‘109 patent to provide Alps with standing to sue independently, without joining AEI as a plaintiff.
Alps also argued that it cured the standing defect by executing a nunc pro tunc amended agreement while the motion to dismiss was pending. In addition to expanding Alps’ rights by eliminating the field of use restriction, the amended agreement purported to be effective as of the date of the original license. Neither party disputed that the amended agreement, if executed prior to Alps filing suit, would have given Alps standing to sue without joining AEI. However, applying the holding in Enzo APA & Son, Inc. v. Geapag A.G., 134 F.3d 1090 (Fed. Cir. 1998), the Federal Circuit concluded that the standing defect “could not be cured by a retroactive license agreement“ and that “a party may not vindicate rights in court before the party actually possesses the rights.”
The Court also rejected Alps’ argument that its supplemental complaint, which it filed after the reexamination certificate issued on the ‘109 patent, cured the standing defect since “the trial proceeded on the patent claims that emerged from reexamination”. Even though the supplemental complaint referenced the exclusive license agreement, it did not specifically mention the amended nunc pro tunc agreement. In addition, the Court disagreed with Alps’ characterization of the supplemental complaint as an amended complaint. A party may amend a complaint to correct “statements about jurisdiction that actually exists,…not defects in the jurisdictional facts themselves.”
Because Alps failed to join AEI as a co-plaintiff when it lacked standing to sue by itself, the Federal Circuit reversed the district court’s motion to dismiss, vacated the judgment below, and remanded with instruction to dismiss the complaint without prejudice.
Trademark Registration Successfully Opposed for Lack of “Bona Fide Intent to Use”
M.Z. Berger & Co., Inc., v. Swatch AG, No. 2014-1219, 2015 U.S. App. LEXIS 9276 (Fed. Cir. Jun. 4, 2015) (Chen, J.). Click Here for a copy of the opinion.
In 2008, Swatch filed a Notice of Opposition to M.Z. Berger’s application for registration of the mark “iWatch” for use on watches, clocks, and related goods. The Trademark Trial and Appeal Board (TTAB) agreed with Swatch that Berger lacked a bona fide intent to use the mark in commerce, and the opposition was sustained. The Federal Circuit affirmed, finding that an applicant’s lack of bona fide intent to use a mark in commerce at the time of the application constitutes grounds to oppose the registration. The Court clarified that proving a bona fide intent requires objective evidence that an applicant’s intent to use the mark is “firm” and is not merely an attempt to reserve a right in the mark.
The Federal Circuit agreed with the TTAB’s long standing position that lack of bona fide intent to use a mark in commerce is a valid basis to oppose a trademark application. The Court found that to establish a “bona fide intention” under Section 1(b)(1) of the Lanham Act, the applicant’s intent must be “demonstrable and more than a mere subjective belief.” Whether an applicant’s intention is bona fide should be assessed on an objective basis, taking into consideration the totality of the circumstances. While the bar to prove a bona fide intention is not high and does not require actual use of the mark at the time of the application, it requires more than a mere intent to reserve a right to use the mark to “leave [] options open.”
Viewing the testimonial and documentary evidence presented by Berger as a whole, the court agreed with the TTAB that Berger had not demonstrated a bona fide intent to use the “iWatch” mark in commerce at the time the application was filed. The documentary evidence presented by Berger only related to prosecution of the application and not use of the mark. In addition, conflicting testimony presented by Berger and his associates indicated that, when the application was filed, Berger had not yet made a firm decision about whether to use the mark in commerce. The fact that Berger had a history in the watch industry and the capacity to produce watches was irrelevant to the any specific intent to use the iWatch mark. The TTAB’s decision was consistent with USPTO practice and was based on an “objective inquiry” of the evidence presented by Berger.
The following opinions are not reported in this newsletter:
Shire Development, LLC v. Watson Pharmaceuticals, Inc., No. 2013-1409, 2015 U.S. App. LEXIS 9250 (Fed. Cir. Jun. 3, 2015) (reversing the district court’s construction of claim terms and determination of infringement based thereon). Click Here for a copy of the opinion.
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