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Licensee May Bring Infringement Suit, For Now

On September 11, 2019, United States District J. Paul Oetken denied Defendants Tekno Products, Inc. and Max Deluxe Limited (“Max Deluxe”)’s motion for judgement on the pleadings in a patent infringement action pending in the Southern District of New York.  Defendants argued that Plaintiff MIEH, Inc. (“MIEH”) had failed to join in the action the assignee of the disputed U.S. Patent No. 9,731, 212 (the “’212 Patent”), entitling Max Deluxe to a dismissal pursuant to Federal Rule of Civil Procedure 12(c).  The Court disagreed, for now.

Who May Bring An Infringement Action?

Under the U.S. Patent Act, a patentee—which includes “the original patentee (whether the inventor or original assignee) and ‘successors in title,’” but not mere licensees—may bring a “civil action for infringement of [their] patent.”  See Lone Star Silicon Innovations LLC v. Nanya Tech. Corp., 925 F.3d 1225, 1229 (Fed. Cir. 2019) (quoting 35 U.S.C. § 100(d)).  There is, however, an exception to the rule:  “The Federal Circuit has consistently held that when an exclusive licensee acquires ‘all substantial rights’ in a patent, the licensee qualifies as a ‘virtual assignee’ and, consequently, may file an infringement suit on its own behalf.”  Applied Interact, LLC v. Vt. Teddy Bear Co., No. 04 Civ. 8713, 2005 WL 1785115, at *2 (S.D.N.Y. July 28, 2005) (emphasis added) (quoting Enzo APA & Son, Inc. v. Geapag A.G., 134 F.3d 1090, 1093 (Fed. Cir. 1998)).

The ’212 Patent

Here, the ’212 Patent was filed on December 1, 2015 and issued on August 15, 2017, listing Kwong Ming Cheung as the inventor and Every Victory Technology Limited (“Ever Victory”) as the assignee.  Plaintiff claimed that it obtained rights in the ’212 Patent through a October 2016 licensing agreement between, on the one hand, Plaintiff’s predecessor-in-interest and, on the other, Everite Transworld Limited (“Everite”), an affiliate of Ever Victory.

Invoking Federal Rule of Civil Procedure 19, Defendants moved for judgment on the pleadings given MIEH’s supposed failure to join an indispensable party, Every Victory, to this action.  MIEH unsurprisingly contended that its predecessor-in-interest had gained all substantial rights in the ’212 Patent by way of the 2016 licensing agreement; however, there is a catch:  Pending in Illinois federal court is, according to Defendants, an ongoing dispute between MIEH and Every Victory, wherein Ever Victory contests MIEH’s rights to the ’212 Patent.

Finding no authority establishing that an entity “hold[ing] all substantial rights in a patent loses the associated right to sue unilaterally merely because that right is contested,” the Court denied Max Deluxe’s motion, without prejudice.  Once the scope of MIEH’s rights in the ’212 Patent is determined within the Illinois action, the Court granted Defendants leave to renew their motion.  In the meantime, the case is stayed.

The case is MIEH, Inc. v. Tekno Prods, Inc., et al., No. 19-cv-178 (JPO) (S.D.N.Y. Sept. 11, 2019).