The U.S. Court of Appeals for the Federal Circuit has held that a termination provision in the license agreement precludes the agreement from being held the equivalent of an assignment for purposes of determining who has standing to sue. Aspex Eyewear, Inc. v. Miracle Optics, Inc., Case No. 04-1265 (Fed. Cir. Jan. 10, 2006) (Lourie, J.).
Contour and Aspex brought suit under patents originally assigned to Contour by the inventor but that were later the subject of a broad license conveying nearly all rights in the patent, including (purportedly) the right to enforce the patent in court. The defendant argued the grant of rights from Contour to a third party (Chic Optic) was so broad that Contour had effectively lost the right to sue under the patent. The district court agreed, holding that the license (signed before this suit was filed) stripped Contour of standing to sue.
To determine whether an agreement to transfer rights to a patent at issue amounted to an assignment or a license, the Federal Circuit focused on both the intention of the parties and the substance of what was granted. While the Court agreed with the district court that Contour had transferred to Chic certain rights often associated with patent ownership (the exclusive right to make, use and sell products covered by the patent; the right to sue for infringement of the patent; and a virtually unrestricted authority to sublicense its rights under the agreement), Contour retained one indispensable right: barring the patent from being found invalid or unenforceable. As of March 16, 2006, Chic lost possession of its rights, and all rights in the patent reverted back to Contour. By having rights for only a limited portion of the patent term, the Federal Circuit held Chic "simply did not own the patent. It was merely an exclusive licensee without all substantial rights." For that reason, Contour retained the standing as a patent owner to sue as of the date the complaint was filed.
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