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STC.UNM v. Intel Corp.

United States Court of Appeals, Federal Circuit

June 6, 2014

STC.UNM, Plaintiff-Appellant,
INTEL CORPORATION, Defendant-Appellee

Appeal from the United States District Court for the District of New Mexico in No. 10-CV-01077, Judge Robert C. Brack.

GEORGE C. SUMMERFIELD, Stadheim & Grear Ltd., of Chicago, Illinois, argued for plaintiff-appellant. With him on the brief were ROLF O. STADHEIM and STEVEN R. PEDERSEN.

ROBERT A. VAN NEST, Keker & Van Nest LLP, of San Francisco, California, argued for defendant-appellee. With him on the brief were STEVEN A. HIRSCH and BRIAN L. FERRALL. Of counsel on the brief were CHAD S. CAMPBELL and DAN L. BAGATELL, Perkins Coie LLP, of Phoenix, Arizona.

Before NEWMAN, RADER,[*] and DYK, Circuit Judges. Opinion for the court filed by Circuit Judge Rader. Dissenting opinion filed by Circuit Judge Newman.


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Rader, Circuit Judge .

The United States District Court for the District of New Mexico dismissed STC.UNM's (STC) suit against Intel Corp. for infringement of U.S. Patent No. 6,042,998 ('998 patent) for lack of standing. The district court held that STC could not maintain its suit because non-party Sandia Corp. is a co-owner of the patent, had not voluntarily joined as a co-plaintiff, and could not be involuntarily joined. Because, " as a matter of substantive patent law, all co-owners must ordinarily consent to join as plaintiffs in an infringement suit," Ethicon, Inc. v. U.S. Surgical Corp., 135 F.3d 1456, 1468 (Fed. Cir. 1998), and because Sandia cannot be involuntarily joined under Federal Rule of Civil Procedure 19, this court affirms.


The background of this case begins with U.S. Patent No. 5,705,321 ('321 patent). The invention disclosed in the '321 patent resulted from contributions of four people: Steven Brueck, Saleem Zaidi, An-Shyang Chu, and Bruce Draper. J.A. 25. At the time of invention, Brueck, Zaidi, and Chu were employed by the University of New Mexico (UNM). Id. Draper, however, was employed by Sandia. Id. The applicants filed their patent application on June 6, 1995, which issued as the '321 patent on January 6, 1998. The patent carries the title " Method for Manufacture of Quantum Sized Periodic Structures in Si Materials." The '321 patent claims technology similar to that disclosed in the asserted '998 patent. See J.A. 252-53.

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In mid-1996, the four inventors executed a Joint Assignment to UNM of the invention disclosed in the application that issued as the '321 patent ('321 Assignment). J.A. 436-41. The '321 Assignment erroneously defined all assignors as " employees of the University of New Mexico." J.A. 436. Draper was not employed by UNM. UNM was the named assignee. Id. In pertinent part, the '321 Assignment reads:

Assignors do hereby sell, assign, and transfer unto Assignee all their right, title, and interest in and to the invention . . . and their entire right, title, and interest in and to any and all Patents which may be issued thereon . . . and in and to any and all divisions, reissues, continuations, and extensions thereof.


In October 1996, UNM executed an assignment to Sandia to correct Draper's prior assignment to UNM, which " was made in error" (Draper Assignment). J.A. 444. The Draper Assignment referenced the invention that led to the '321 patent and explicitly transferred to Sandia " those rights and interests previously assigned to [UNM] by Bruce Draper . . . and to any and all Patents which may be issued thereon . . . and to any and all divisions, reissues, continuations, and extensions." Id.

While the application that led to the '321 patent was pending, Brueck and Zaidi (two of the named '321 inventors working for UNM) continued their research. J.A. 25. On September 17, 1997, they filed the application that led to the '998 patent, titled " Method and Apparatus for Extending Spatial Frequencies in Photolithography Images." The application incorporated the '321 patent by reference, but did not claim priority to any earlier-filed application. The record shows that Sandia's employee, Draper, was not listed as an inventor to the '998 patent and had no inventive contribution to any claim in the patent. J.A. 26. UNM obtained assignments from both Brueck and Zaidi for the '998 patent. J.A. 5.

During prosecution of the '998 patent, the U.S. Patent and Trademark Office (PTO) twice rejected its claims for double patenting over the '321 patent, which shared two common inventors. The examiner stated that " [t]he subject matter claimed in the instant application is fully disclosed in the ['321] patent and is covered by the patent since the patent and the application are claiming common subject matter." J.A. 252-53, 263-64. To overcome these double-patenting rejections, UNM filed a terminal disclaimer, which specified that " any patent granted on this instant application shall be enforceable only for and during such period" that the '998 and '321 patents " are commonly owned." J.A. 274. In the terminal disclaimer, UNM stated that it was " the owner of record of a 100 percent interest in the instant application." Id. The '998 patent issued on March 28, 2000.

In July 2002 and August 2007, respectively, UNM assigned its own interest in the '321 and '998 patents to STC--a wholly-owned licensing arm of UNM. J.A. 25. In 2008, STC successfully petitioned the PTO to correct the inventorship of the '998 patent to include two more named inventors--Steve Hersee and Kevin Malloy. J.A. 315-27. Hersee and Malloy were employees of UNM at the time of invention and assigned their interests in the '998 patent to UNM. J.A. 25. Also in 2008, STC successfully sought a certificate of correction from the PTO to indicate that the '998 patent is a continuation-in-part of the '321 patent. J.A. 328-35.

STC filed the present infringement suit concerning the '998 patent against Intel on November 15, 2010. J.A. 110. Although Sandia has had an ownership interest in the '321 patent since October 1996 through

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the Draper Assignment, Sandia had never claimed any interest in the '998 patent. See J.A. 414. STC and Sandia's relationship also reflected this understanding. For example, in 2009, STC and Sandia entered into a royalty-sharing " Commercialization Agreement" for the '321 patent, which does not mention the '998 patent. J.A. 880-82.

STC had also on multiple occasions held itself out to be the sole owner of the '998 patent. For instance, STC filed its requests with the PTO in 2008 as the sole " owner of record." E.g., J.A. 274. STC had also filed multiple suits asserting the '998 patent without joining Sandia. See J.A. 340, 351. Further, STC had entered licenses with other parties on the '998 patent without sharing any royalty proceeds with Sandia. See J.A. 344, 359-68.

During discovery in the present litigation, non-party Sandia indicated that it believed it had no ownership interest in the '998 patent. Intel then asserted that STC could not enforce the '998 patent under the terms of the terminal disclaimer, which required identical ownership of both the '321 and '998 patents. J.A. 274, 458-59. In response, STC contended (as it does on appeal here) that Sandia did in fact co-own the '998 patent since it issued by operation of the Draper Assignment. Alternatively, Sandia obtained ownership of the '998 patent when it formally became a continuation-in-part of the '321 patent. Nevertheless, in December 2011, out of " an abundance of caution," STC " confirm[ed] the prior [Draper] [A]ssignment" and " assign[ed] an undivided interest in each of" the '321 and '998 patents to Sandia (2011 Assignment). J.A. 460.


In January 2012, Intel moved for summary judgment, asserting that the '998 patent was unenforceable for failing to comply with the common-ownership requirement of the terminal disclaimer. STC contended that the language of the Draper Assignment from UNM to Sandia--specifically, the terms " the invention" and " issued thereon" --operated automatically to give Sandia an interest in the '998 patent the moment it issued. J.A. 10. Alternatively, STC relied on the Draper Assignment, which gave Sandia an interest in " any and all divisions, reissues, continuations, and extensions thereof." STC claimed that this language operated to effect Sandia's ownership when the PTO issued the certificate of correction in December 2008, formally making the '998 patent a continuation-in-part of the '321 patent. J.A. 11.

The district court rejected both of STC's theories and granted partial summary judgment for Intel. The district court reasoned that ownership rights must derive from inventorship and, because Draper did not co-invent any claims of the '998 patent, he had no interest in the '998 patent to assign. Thus, the court held that Sandia did not co-own the '998 patent with UNM or STC at any point prior to the December 2011 Assignment. J.A. 16. The court did not grant summary judgment on the remaining issue of whether it was truly the same Sandia entity that co-owned each of the '321 and '998 patents.

The parties then cross-moved on the issue of standing, given Sandia's co-ownership of the '998 patent (since at least December 2011) and absence from the case. Sandia refused to join the case, " prefer[ring] to take a neutral position with respect to this matter." J.A. 884-85. The district court granted Intel's motion to dismiss for lack of standing.

Relying on Ethicon, Inc. v. United States Surgical Corp., 135 F.3d 1456 (Fed. Cir. 1998), the district court explained that

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when a patent is co-owned, a co-owner seeking to enforce the patent must join all other co-owners as plaintiffs to establish standing. Without this joinder, the plaintiff cannot pursue an infringement suit. J.A. 31. The district court acknowledged that Federal Rule of Civil Procedure 19(a) generally gives a court the ability to join a required party involuntarily. However, the district court explained that Ethicon states that a co-owner ordinarily has the substantive right to impede another co-owner's infringement action by refusing to voluntarily join the suit. The court noted that only two limited circumstances have been as yet recognized that would allow for involuntary joinder, but neither was present here. J.A. 31-39.

Finally, the district court rejected STC's assertion that it should be able to proceed equitably without joining a necessary party under Rule 19(b). The district court weighed each Rule 19(b) factor and found that " equity and good conscience require that this action not go forward without Sandia." J.A. 39-43. STC does not appeal this ruling, but does appeal whether Sandia can be involuntarily joined under Rule 19(a) as well as the district court's partial grant of summary judgment on the timing of Sandia's co-ownership.


This court reviews a district court's dismissal for lack of standing de novo. Isr. Bio-Eng'g Project v. Amgen, Inc., 475 F.3d 1256, 1262-63 (Fed. Cir. 2007). This court has long applied the rule that a patent co-owner seeking to maintain an infringement suit must join all other co-owners. See, e.g., id. at 1264-65. And, in Ethicon, this court held that, " as a matter of substantive patent law, all co-owners must ordinarily consent to join as plaintiffs in an infringement suit." 135 F.3d at 1468; see also Schering Corp. v. Roussel-UCLAF SA, 104 F.3d 341, 345 (Fed. Cir. 1997) (" Ordinarily, one co-owner has the right to impede the co-owner's ...

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