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Standing to sue: Alfred E. Mann Foundation for Scientific Research v. Cochlear Corp.

In Alfred E. Mann Foundation for Scientific Research v. Cochlear Corp., No. 2009-1447 (Fed. Cir. 5/14/2010) the issue was whether a patent licensor had standing to sue.  The Mann Foundation (AMF) licensed US 5609616 and US5938691, both pertaining to cochlear implants for the treatment of hearing loss, to a firm called Advanced Bionics (AB) in 2004.  AMF later became aware of allegedly infringing activities and AMF (not AB) brought suit in December 2007 against Cochlear for alleged infringement of the patents.  Cochlear moved to dismiss for lack of standing to sue, asserting that the license was a “virtual assignment” of the patents, and that AMF therefore lacked standing to sue. The district court agreed with Cochlear and dismissed the case.

On appeal, the Federal Circuit panel (Michel, Newman, Dyk, opinion by Michel) noted that the issue is a matter of contract law.  A license may be tantamount to an assignment, so the issue here is whether the patentee retained sufficient rights to maintain standing.  The Federal Circuit has not established a list of rights that must be examined for standing to sue (slip op. at 9).   Here, AB was an exclusive licensee, but the license agreement expressly provided that AMF retained the right to sue infringers if AB declined to sue.  Slip op. at 10–11.  Cochear argued that the license gave AB an unfettered right to sublicense the patents, which renders AMF right to sue “illusory.”   Slip op. at 11.  However, AMF retained rights to pass-through royalties even if sublicensed, so the court holds that AMF’s right to sue is intact. The district court was reversed and the case remanded.

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