I'm Ready to Sue for Patent Infringement But First, Do I Have the Right Plaintiffs?

You think you are ready to assert your patent rights. You have done your due diligence, carefully selected the proper defendants, and have selected the proper venue for your case. Now what? What patent plaintiffs often overlook is naming the correct plaintiffs before filing a complaint.

Who Are the Right Plaintiffs?

To be a proper plaintiff, a party must generally either own the patent, usually by assignment, or be an exclusive licensee. In the vast majority of cases, a non-exclusive licensee is not a proper plaintiff, and should not be named.

Second, if you intend to seek lost profits damages, then one of the parties named as a plaintiff must have suffered lost profits. Take a close look at the exact corporate entity or entities that are the owner or exclusive licensee of the patents, and ensure that one of those entities is the party making the sales the selling entity must be named as a plaintiff.

Who Owns the Patent?

The three most basic places to look to confirm who owns the patent are: (1) the assignment records, (2) the face of the patent, and (3) the prosecution history. Because the information can sometimes be misleading, the best place to look is to examine your corporate records and make sure there is a clear chain of unbroken title documents from each named inventor to the entity on the face of the patent. Reorganizations, mergers, name changes, and mistakes often identify the wrong party either on the face of the patent or the prosecution history, and sometimes assignments are not properly recorded with the U.S. Patent and Trademark Office ("USPTO").

A useful place to look after checking your corporate records is on the USPTO website. The website has a dedicated Patent Assignment Search feature in which the patent number, application number, or even company name can be used to find the history of assignments of a particular patent. This type of information is also available via the Public Pair search database, where one can input the patent or application number and check the associated assignments. Any mismatch between the names of the assignee between the prosecution history, the face of the patents, and the assignment documents should be thoroughly investigated to identify the source of the discrepancy.

What's The Deal With Patent Licenses?

As noted above, some licensees with the right to market and sell a patented product may need to be included as plaintiffs in a patent infringement suit. For a patent licensee to be included as a plaintiff in a patent lawsuit, the licensee must be "exclusive" in other words, that licensee must have all substantive rights under the patent conferred in the license agreement.

But what constitutes having all substantive rights? It is not as simple as looking for the word "exclusive" in the patent license. Instead, this is fact-specific inquiry that involves looking at the specifics of the rights granted to the licensee. Generally, potential plaintiffs should look first to see if the license agreement specifically addresses patent enforcement. If yes, this heavily weighs in favor of the licensee being considered a proper plaintiff. If enforcement was simply not addressed in the terms of the license, the scope of the rights conferred under the license, including but not limited to whether the licensee has unfettered rights to practice the licensed patents, will largely be determinative of whether the licensee is a proper plaintiff. Moreover, one must look at the scope of the license grant, for example, whether the license only permits a licensee to operate within a certain market or industry sector. If so, there may be additional licensees operating in discrete areas, and the nature of the lawsuit and the accused product will determine which licensees are in fact proper plaintiffs.

Are There Other Parties That Should be Included?

Remember, the patent infringement statute 35 U.S.C. 271(a) specifies that "whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States" is liable as an infringer. Typically, in order to get "lost profits" damages for those unauthorized sales, a plaintiff will need to prove via a multifactor analysis that one of the named plaintiffs would have made those lost sales themselves "but for" the defendant's infringement. In many cases, the selling entity is different from the entity which owns the patent. Thus, the entity that actually sells the patented product, who typically has a license to manufacture and sell that product, also needs to be a plaintiff in the litigation. But as noted above, that party must be an exclusive licensee in order to be properly named.

Moreover, in certain special situations, such as in a Hatch-Waxman lawsuit, in addition to the relevant patent holder(s) and branded drug seller, prospective litigants must also ensure that the holder of the New Drug Application ("NDA") for the drug at issue is named as a plaintiff as well. Sometimes this results in the need for multiple related and unrelated companies to join together to file a lawsuit, including the company who owns the patent(s), the company who holds the NDA, and the company who actually markets and sells the branded drug. All are essential plaintiffs.

More questions? Contact the authors or visitFish's Intellectual Property Law Essentials.