Keranos, LLC v. Silicon Storage Tech., Inc.

Addressing whether an exclusive licensee of an expired patent had standing to sue for patent infringement, the U.S. Court of Appeals for the Federal Circuit confirmed that a licensee has standing when it holds all substantial rights to a patent, regardless of whether that patent is expired. Keranos, LLC v. Silicon Storage Tech., Inc., Case Nos. 14-1360, -1500 (Fed. Cir., Aug. 13, 2015) (Chen, J.).

Keranos became the exclusive licensee of the asserted patents through an “Exclusive Patent License and Royalty Agreement” with United Module Corporation (UMC). Notably, the patents had expired prior to the license agreement and prior to Keranos’ filing of its complaints against 49 parties.

The defendants moved to dismiss the actions for lack of standing. In general, a licensee has standing to sue for patent infringement when it holds “all substantial rights” to the patent. If a licensee does not have all substantial rights, then it must join the patent owner to satisfy the standing requirement. The district court determined that the exclusive license agreement had transferred all substantial rights in the patents to Keranos, so Keranos did not need to join UMC for standing purposes. The defendants appealed.

The Federal Circuit concluded that Keranos had obtained all substantial rights to the patent. Specifically, the license agreement transferred to Keranos the exclusive past, present and future rights to sue for making, using, importing and selling products covered by the patents. The license agreement also transferred to Keranos the exclusive right to grant sublicenses. UMC did not retain the right to sue; and the agreement contained a catch-all grant of “any and all other substantial rights . . .  necessary and sufficient . . . to confer standing.”

The Court also rejected the defendants’ argument that, because the patents had expired, transferring all substantial rights was insufficient to confer standing. Specifically, defendants argued that standing for expired patents should require legal title to the expired patents because substantial rights do not exist after a patent expires. The Federal Circuit disagreed, declining to create separate standing rules for expired and unexpired patents. As the Federal Circuit explained, standing requires that a party hold all substantial rights to a patent, regardless of whether the transfer of rights occurred on the day before a patent expired or a day later. A holder of patent rights has standing to sue for patent infringement when it holds all substantial rights to the patent. It does not also need legal title.