International Gamco, Inc. v Multimedia Games, Inc.
Lexis: 2007 U.S. App. LEXIS 24099
Decided Oct. 15, 2007
Facts: Oasis Technologies, Inc. (“Oasisâ€), was the initial assignee of Patent No. 5,324,035 (the ‘035 patent) for a gaming system network. Oasis assigned the ‘035 patent to International Gamco, Inc. (“Gamcoâ€). Gamco, in turn, assigned the ‘035 patent to International Game Technology (IGT), but reserved the right to sublicense the patent in the “New York State Lottery Market.†In May, 2004, Gamco, without IGT, sued Multimedia Games, Inc. (“Multimediaâ€), the New York State Lottery’s sole contractor for lottery games, for infringement. The district court dismissed the suit for lack of standing, finding that Gamco had sold its proprietary interest in the ‘035 patent. Gamco and IGT entered into a new agreement, characterized as an “exclusive license,†giving Gamco the exclusive right to make, use, sell, offer to sell, and sublicense the subject matter of the ‘035 patent, and the right to sue for infringement, within the license area of “the lawful operation of lottery games authorized by the New York State Lottery in the state of New York.†Gamco filed an amended complaint against Multimedia.
Procedural History: Multimedia moved to dismiss for lack of standing. The district court found that Gamco owned an “exclusive enterprise†license, which was a combination territorial license and field of use license, and concluded that Gamco did have standing under this license. The court then certified the case for interlocutory appeal to the Federal Circuit.
Issue: Whether “an exclusive patent license, with exclusive right of enforcement, restricted to the activities of a specific enterprise within a specific geographical territory, is sufficient to confer standing on the exclusive licensee to bring a patent infringement action in its name only.â€
Holding: Because the holder of an exclusive enterprise license does not hold all substantial rights in the licensed patents within the licensed territory, the licensee lacks standing. The denial of the motion to dismiss is reversed.
Analysis:
• An exclusive licensee does have standing to sue in its own name, without joining the patent holder, when all substantial rights are conveyed.
• Additionally, exclusive territorial licensees have standing to sue in their own names, under Waterman v. Mackenzie, 138 U.S. 252, because all substantial rights are conveyed for enforcement in a certain area.
• However, exclusive field of use licensees do not have standing:
o Although the Supreme Court has not addressed this question, it provided guidance in Pope Manufacturing Co., 144 U.S. 248 (1892). The Court here held that a plaintiff with exclusive rights to a particular embodiment of a claimed invention did not have standing to sue in his own name. The Court reasoned that allowing standing would potentially lead to multiple litigations against an infringer, and among the licensees, allowing multiple recoveries by different persons holding various portions of a single patent right.
o Field of use licensee are indistinguishable from the Pope licenses, in that both divide the scope of a patent right by subject matter. Thus, to avoid the same problem addressed by the Pope Court, and because courts and commentators have relied on Pope for the same conclusion, exclusive field of use licensees, who own less than all substantial rights to the patent, do not have standing.
• Gamco’s “exclusive enterprise†license specifies both an exclusive territory (New York State) and field of use (the operations of the New York State Lottery Market). The territorial field does not cure the potential of the field of use to lead to multiple suits. For example, Gamco and IGT could both potentially recover from Multimedia for a single game system that had both lottery and non-lottery games. Therefore, because Gamco does not own all substantial rights in the ‘035 patent, Gamco lacks standing.
Notes:
• An opinion dubitante was filed by Judge Friedman, questioning the application of Pope in this case and noting that the plain language of 35 U.S.C. § 261 seems to treat territorial and field of use assignments the same.
• As a side note, according to a law review article by Prof. Jason J. Czarnezki, an opinion dubitante “indicates that ‘the judge doubted a legal point but was unwilling to state that it was wrong.’†Jason J. Czarnezki, The Dubitante Opinion, 39 Akron L. Rev. 1, 2 (2006). According to Prof. Czarnezki’s article, only 626 written opinion dubitantes had been written in the United States as of June 30, 2005. Id. at 2 n. 7.
Lexis: 2007 U.S. App. LEXIS 24099
Decided Oct. 15, 2007
Facts: Oasis Technologies, Inc. (“Oasisâ€), was the initial assignee of Patent No. 5,324,035 (the ‘035 patent) for a gaming system network. Oasis assigned the ‘035 patent to International Gamco, Inc. (“Gamcoâ€). Gamco, in turn, assigned the ‘035 patent to International Game Technology (IGT), but reserved the right to sublicense the patent in the “New York State Lottery Market.†In May, 2004, Gamco, without IGT, sued Multimedia Games, Inc. (“Multimediaâ€), the New York State Lottery’s sole contractor for lottery games, for infringement. The district court dismissed the suit for lack of standing, finding that Gamco had sold its proprietary interest in the ‘035 patent. Gamco and IGT entered into a new agreement, characterized as an “exclusive license,†giving Gamco the exclusive right to make, use, sell, offer to sell, and sublicense the subject matter of the ‘035 patent, and the right to sue for infringement, within the license area of “the lawful operation of lottery games authorized by the New York State Lottery in the state of New York.†Gamco filed an amended complaint against Multimedia.
Procedural History: Multimedia moved to dismiss for lack of standing. The district court found that Gamco owned an “exclusive enterprise†license, which was a combination territorial license and field of use license, and concluded that Gamco did have standing under this license. The court then certified the case for interlocutory appeal to the Federal Circuit.
Issue: Whether “an exclusive patent license, with exclusive right of enforcement, restricted to the activities of a specific enterprise within a specific geographical territory, is sufficient to confer standing on the exclusive licensee to bring a patent infringement action in its name only.â€
Holding: Because the holder of an exclusive enterprise license does not hold all substantial rights in the licensed patents within the licensed territory, the licensee lacks standing. The denial of the motion to dismiss is reversed.
Analysis:
• An exclusive licensee does have standing to sue in its own name, without joining the patent holder, when all substantial rights are conveyed.
• Additionally, exclusive territorial licensees have standing to sue in their own names, under Waterman v. Mackenzie, 138 U.S. 252, because all substantial rights are conveyed for enforcement in a certain area.
• However, exclusive field of use licensees do not have standing:
o Although the Supreme Court has not addressed this question, it provided guidance in Pope Manufacturing Co., 144 U.S. 248 (1892). The Court here held that a plaintiff with exclusive rights to a particular embodiment of a claimed invention did not have standing to sue in his own name. The Court reasoned that allowing standing would potentially lead to multiple litigations against an infringer, and among the licensees, allowing multiple recoveries by different persons holding various portions of a single patent right.
o Field of use licensee are indistinguishable from the Pope licenses, in that both divide the scope of a patent right by subject matter. Thus, to avoid the same problem addressed by the Pope Court, and because courts and commentators have relied on Pope for the same conclusion, exclusive field of use licensees, who own less than all substantial rights to the patent, do not have standing.
• Gamco’s “exclusive enterprise†license specifies both an exclusive territory (New York State) and field of use (the operations of the New York State Lottery Market). The territorial field does not cure the potential of the field of use to lead to multiple suits. For example, Gamco and IGT could both potentially recover from Multimedia for a single game system that had both lottery and non-lottery games. Therefore, because Gamco does not own all substantial rights in the ‘035 patent, Gamco lacks standing.
Notes:
• An opinion dubitante was filed by Judge Friedman, questioning the application of Pope in this case and noting that the plain language of 35 U.S.C. § 261 seems to treat territorial and field of use assignments the same.
• As a side note, according to a law review article by Prof. Jason J. Czarnezki, an opinion dubitante “indicates that ‘the judge doubted a legal point but was unwilling to state that it was wrong.’†Jason J. Czarnezki, The Dubitante Opinion, 39 Akron L. Rev. 1, 2 (2006). According to Prof. Czarnezki’s article, only 626 written opinion dubitantes had been written in the United States as of June 30, 2005. Id. at 2 n. 7.