Issue 05/11 | February 25, 2005
Prudential Standing of Licensee to Sue is Upheld Where Patentee-Licensor is Joined as a Counterclaim Defendant

The prudential component of standing has required the patentee as an indispensable party in a patent infringement litigation, both because of the patentee's interest in the defending the validity of the patent and to ensure that the accused infringer is not subject to multiple suits on the same patent. When patentees fail to join a suit as co-plaintiffs, standing requirements are nevertheless met where patentees are added by defendants as third parties.

In Evident Corp. and Peroxydent v. Church & Dwight Co., Inc., et al, Nos. 03-1541, 04-1137, -1213 (Fed. Cir. Feb. 22, 2005), the federal circuit affirmed an award of attorney's fees under s.285, and affirmed a district court's determination that co-plaintiff Evident had standing to bring the instant suit.

Peroxydent's '782 patent issued in 1990 and was directed to toothpaste compositions. Prior to the '782 patent's issuance, Peroxydent licensed to Evident the right to make, have made, use and sell toothpaste compositions under the patent and to grant sublicenses as well. However, Peroxydent retained the right of first refusal to bring suit against infringers of the '782 patent. In 1997, Evident sued Church & Dwight, who joined Peroxydent as a third-party defendant. The '782 patent was held invalid due to inequitable conduct, which was affirmed by the federal circuit in an earlier decision. Church & Dwight sought and were awarded attorneys' fees after the case was declared exceptional.

On appeal, Peroxydent challenged Evident's standing to bring the original action, based on Evident's status as mere licensee. But the federal circuit was unpersuaded, reasoning that Evident had constitutional standing to bring the suit because it had significant rights in the patent (make use, sell, sublicense) and would be injured in fact by any party who made, used or sold the patented composition. The court also concluded that Peroxydent's presence in the suit satisfied prudential standing requirements since (1) Peroxydent was involved from the beginning of, and participated fully in the prosecution of, the suit; (2) Peroxydent had a stake in the outcome of the litigation; and (3) Peroxydent's presence in the suit precludes Dwight & Church from being subject to a separate lawsuit in the event Church & Dwight were not liable to Evident.

The federal circuit affirmed the award of attorneys' fees, finding no error in the district court's decision that Peroxydent and Evident were jointly and severally liable for the award. Consistent with New Jersey Partnership law, and as demonstrated by the parties throughout the litigation, the interests of Peroxydent and Evident were intertwined throughout the litigation, and there was no clear division of argument between Peroxydent and Evident.

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To discuss these topics further, please feel free to contact the author Michael R. Dzwonczyk, (mdzwonczyk@sughrue.com), at Sughrue Mion, PLLC in Washington DC, USA.

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