On September 18, in AsymmetRx, Inc. v. Biocare Medical, LLC, the US Court of Appeals for the Federal Circuit held that AsymmetRx lacked standing to bring a patent infringement suit without the patent owner. 

I. BACKGROUND

The President and Fellows of Harvard College (Harvard) owns US Patent Nos. 6,946,256 (’256 patent) and 7,030,227 (’227 patent), which relate to p63 antibodies and methods for using them to detect malignant cancers.  Harvard signed a license agreement with Biocare (Biocare License) in 2002, allowing Biocare to make, use and sell p63 antibodies.  The Biocare License did not include a license under any US or foreign patents. 

In 2004, Harvard entered into a license agreement with AsymmetRx (AsymmetRx License).  Under the AsymmetRx License, AsymmetRx received an exclusive license under the ’256 and ’227 patents and a license to use the p63 antibodies.  Harvard retained the right to make and use the p63 antibodies for academic research and to grant non-exclusive licenses to other nonprofit or government entities for research purposes.  In addition, Harvard could render the AsymmetRx License non-exclusive if AsymmetRx failed to meet certain commercial, regulatory or public availability benchmarks.  Harvard could also suggest possible sublicensees and a portion of any sublicensing income would be paid to Harvard.  The deal also gave AsymmetRx the right to prosecute infringement suits at its own expense.  Before doing so, however, 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.”  Harvard also retained the right to join as a party in any infringement suit or bring its own suit if AsymmetRx elected not to exercise its right.  Moreover, settlement, consent judgment, or other voluntary final disposition of such infringement suits required Harvard’s written consent.

AsymmetRx sued Biocare in 2007 for infringement of the ’256 and ’227 patents, alleging that Biocare’s sale of the p63 antibodies violated AsymmetRx’s exclusive rights.  The parties filed cross-motions for summary judgment and the district court granted Biocare’s motion for summary judgment. 

II. THE FEDERAL CIRCUIT’S RULING

The Federal Circuit declined the parties’ invitation to decide the case on the merits.  Rather, the court, sua sponte, addressed the antecedent question of whether AsymmetRx had the statutory standing to bring suit for patent infringement without joining Harvard.  The court turned to Waterman v. Mackenzie, 138 US 252 (1891) and its successors, noting that “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.”  Determining whether an assignment of patent rights was made involves examining whether the agreement transferred all substantial rights to the patents and whether there was an intent to do so.  Vaupel Textilmachcinen KG v. Meccanica Euro Italia S.P.A., 944 F.2d 870, 874 (Fed. Cir. 1991). 

In reasoning that AsymmetRx had no standing to sue without Harvard, the Federal Circuit found the AsymmetRx License more akin to the license in Abbott Labs. v. Diamedix Corp., 47 F.3d 1128, 1130 (Fed. Cir. 1995).  Under the license in Abbott, the patentee retained 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.  It also required the licensee not to “prejudice or impair the patent rights” in prosecuting or settling any infringement suits.  Despite the broad conveyance of rights to AsymmetRx, the court considered AsymmetRx a licensee, not an assignee, because Harvard retained substantial interests under the patents-in-suit.  As such, AsymmetRx did not have standing, on its own, to sue as a patentee under 35 U.S.C. § 281 for infringement. 

III. CONCLUSION

As evidenced in this case, determining whether a license conveyed “all substantial rights” giving rise to standing to sue for the licensee will require detailed and fact-specific analysis of the license agreement.  Courts will closely examine the rights the licensor granted to the licensee and which, if any, were retained.  In this case, the court considered Harvard’s retained rights to (1) use the patented invention for academic research purposes, (2) grant non-exclusive licenses, (3) exercise control over sublicenses and aspects of the licensed product via benchmarks, and (4) direct prosecution efforts integral to its finding.

Please contact Anthony V. Lupo or Aziz Burgy for any questions.

Anthony V. Lupo
lupo.anthony@arentfox.com
202.857.6353

Aziz Burgy
burgy.aziz@arentfox.com
202.857.6378