Standing: Patentee Retains Standing When Assignment of Rights is Only for Limited Term

Aspex Eyewear v. Miracle Optics (Fed. Cir. 2006).

The district court dismissed Aspex’s action against Miracle on the ground that neither Aspex nor co-plaintiff Contour Optik had standing to sue for infringement of Patent No. 6,109,747.  Prior to initiating the infringement suit, Contour had transferred some rights to a licensee, Chic Optic.  The question presented on appeal was whether the transfer of rights was (1) merely a license to the patent or (2) a transfer of all substantial ownership rights.  If the transfer was merely a license, then the patentee, Counter, would retain the right to sue an infringer.  However, if the transfer was for all substantial ownership rights, then the patentee would no longer have rights in enforcing the patent.

Under the agreement Chic was granted (1) the exclusive right to make, use, and sell in the United States products covered by the patent, (2) the first right to commence legal action against third parties for infringement of the patent and the right to retain any award of damages from actions initiated by Chic, and (3) a virtually unfettered right to sub-license all of its rights to a third party. However, under the agreement all of Chic’s rights ended as of March 2006, when the rights reverted to Contour.  Contour also retained the right to commence infringement actions against third parties if Chic refused to do so.

On appeal, the Federal Circuit reviewed the question of standing de novo.  “[A]t bottom, the question [of standing] is ‘who owns the patent’?”  Here, the appellate court determined that, because the agreement had a term that was shorter than the life of the patent, that the licensee “never had all substantial rights to the patent, i.e., it never was the effective owner of the patent.”

The ’747 patent was never assigned; it was exclusively licensed for only a fixed period of years, which does not meet the all substantial rights standard. Thus, we hold that the Contour/Chic agreement was a license, not an assignment, and Contour was the owner of the patent when the complaint was filed and entitled to sue.

Dismissal vacated and remanded.