Nunc Pro Tunc License Insufficient to Rehabilitate Standing Defect: Federal Circuit | Practical Law

Nunc Pro Tunc License Insufficient to Rehabilitate Standing Defect: Federal Circuit | Practical Law

In Alps South, LLC v. Ohio Willow Wood Co., the US Court of Appeals for the Federal Circuit reversed the district court's denial of a motion to dismiss for lack of standing. The Federal Circuit held that Alps South, LLC did not have standing to bring an infringement action because it was merely an exclusive field of use licensee and a later nunc pro tunc license agreement could not correct the defect.  

Nunc Pro Tunc License Insufficient to Rehabilitate Standing Defect: Federal Circuit

Practical Law Legal Update 9-616-3604 (Approx. 4 pages)

Nunc Pro Tunc License Insufficient to Rehabilitate Standing Defect: Federal Circuit

by Practical Law Intellectual Property & Technology
Published on 08 Jun 2015 • USA (National/Federal)
In Alps South, LLC v. Ohio Willow Wood Co., the US Court of Appeals for the Federal Circuit reversed the district court's denial of a motion to dismiss for lack of standing. The Federal Circuit held that Alps South, LLC did not have standing to bring an infringement action because it was merely an exclusive field of use licensee and a later nunc pro tunc license agreement could not correct the defect.
On June 5, 2015, in Alps South, LLC v. Ohio Willow Wood Co., the US Court of Appeals for the Federal Circuit reversed the US District Court for the Middle District of Florida's denial of a motion to dismiss for lack of standing, holding that Alps South, LLC did not have standing to bring a patent infringement action (Nos. 2013-1452, -1488, 2014-1147, -1426, (Fed. Cir. June 5, 2015)). The Federal Circuit held that standing must exist when the complaint is filed and a later executed nunc pro tunc agreement did not provide retroactive standing to Alps who was originally just an exclusive field of use licensee.
This case involved US Patent No. 6,552,109 ('109 patent), which was assigned to the patent owner's company, Applied Elastomerics, Inc. (AEI). In 2008, AEI licensed several patents, including the '109 patent, to Alps. Shortly after, Alps sued Ohio Willow Wood Co. (OWW) for patent infringement without joining AEI as co-plaintiff. OWW responded by filing a motion to dismiss for lack of standing based on Alps' failure to join AEI. In 2010, while the motion was pending, Alps and AEI entered into an amended license agreement which removed certain restrictions on Alps' rights and removed some rights retained by AEI under the original 2008 agreement. The parties intended that it be a nunc pro tunc agreement, effective on the date of the original 2008 agreement.
The district court denied OWW's motion concluding that:
  • The original agreement's terms gave Alps the right to exclude, transfer and sue, and therefore gave Alps the necessary standing.
  • The rights retained by AEI under the original agreement did not require that AEI be joined as a co-plaintiff.
  • Under the 2010 nunc pro tunc agreement, Alps clearly possessed the rights to proceed without AEI in the case.
On appeal, OWW argued that the original license agreement did not convey all substantial rights in the '109 patent, as required for Alps to have standing to bring the action. The Federal Circuit agreed with OWW, noting that:
  • The original 2008 agreement restricted Alps' rights in significant ways including by limiting Alps' rights to:
    • develop or market products covered by the '109 patent to a specific field of use;
    • bring an infringement suit to the same field of use; and
    • prohibit Alps from settling any infringement actions without AEI's previous written consent.
  • Federal Circuit precedent establishes a clear rule that where an exclusive license contains a field of use restriction, that licensee does not have standing to sue for infringement.
The Federal Circuit also rejected OWW's argument that a plaintiff can cure this type of standing defect. Instead, the court explained that:
  • Standing must exist when the complaint was filed.
  • Activity occurring after the complaint filing cannot provide standing retroactively.
The Federal Circuit also noted that Alp's:
  • Supplemental complaint, which Alps relied on for its retroactive standing argument, did not mention the nunc pro tunc agreement.
  • 28 USC § 1653 permits parties to amend a complaint to correct defective jurisdictional allegations, not defects in jurisdiction.
As a result, the Federal Circuit reversed the district court's denial of the motion, vacated the district court's judgment and remanded the case with instructions for the district court to dismiss the complaint with prejudice.