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Brian Ferrall and His Team Score Another Patent Win for Intel in the Federal Circuit


In a sharply split decision Wednesday, the full Federal Circuit declined to review a ruling in a semiconductor patent dispute that found infringement suits must be thrown out when the co-owner of a patent decides not to participate, with the judges at odds over whether unwilling co-owners can be forced to join a case.

The appeals court voted 6-4 not to conduct an en banc review of a June panel decision dismissing a semiconductor patent suit by the University of New Mexico's licensing arm against Intel Corp. because the co-owner of the patent, Sandia Corp., decided to "take a neutral position" and not join the case.

The six judges who voted not to rehear the case held that although Federal Rule of Civil Procedure 19(a) generally allows courts to join required parties involuntarily, patent owners cannot unilaterally enforce patents without the consent of their co-owners.

As a result, patent owners like Sandia cannot be forced to join cases and the university's suit against Intel was properly dismissed, Judge Timothy Dyk wrote Wednesday in a concurrence to the decision not to rehear the case.

The rule "does not authorize compulsory joinder when the plaintiff has no substantive right to relief without the consent of that person," he wrote, and requiring Sandia to join the case would improperly abridge its rights in favor of the rights of the university.

Judge Pauline Newman wrote in one of two separate dissenting opinions that Rule 19(a) actually requires courts to join unwilling parties in a case and that the majority effectively held that the rule does not apply in patent litigation, which she said remove patent cases "from the mainstream of the law."

"Rule 19 is not permissive — yet this court holds that Rule 19 uniquely does not apply in patent cases," she wrote.

Requiring that the university's suit be dismissed because Sandia did not wish to participate improperly prevents that university from enforcing its rights, Judge Newman wrote, and "when access to the courts is barred, a foundation of the nation is eroded."

"An arbitrary rule that excludes enforcement of a property right that is owned in common cannot be reconciled with the principles of the rule of law," she wrote.

The suit against Intel was filed in 2010 by STC.UNM, the University of New Mexico's patent licensing arm. The patent-in-suit is co-owned by the university and Sandia under a complex series of assignments, but Sandia decided not to participate in the case.

Rule 19(a) provides that if "the court cannot accord complete relief" because one required party is missing, the court "must order that the person be made a party," either as an involuntary defendant or an involuntary plaintiff.

However, the district court and the Federal Circuit panel held that Sandia could not be joined involuntarily and the university's suit must be dismissed for lack of standing. They cited a 1998 Federal Circuit ruling that all co-owners of a patent, who have equal rights to assert it against whoever they choose, must be joined as plaintiffs to establish standing.

"The right of a patent co-owner to impede an infringement suit brought by another co-owner is a substantive right that trumps the procedural rule for involuntary joinder," the panel wrote.

In his concurrence, Judge Dyk wrote that Rule 19(a) presupposes that the party that filed the suit is entitled to "relief," but a patent co-owner has no right to any relief unless the suit is filed with the consent of the other co-owners. The panel therefore properly held that the rule cannot require involuntary joinder of unwilling co-owners, he wrote.

"Without the absent person's consent, the existing plaintiff has no right to 'relief' to which Rule 19 applies," he wrote, adding that "changing that rule would upset settled expectations."

In a separate dissenting opinion Wednesday, Judge Kathleen O'Malley wrote that there is no question that patent co-owners are necessary parties in infringement cases, so "the question we must address is whether a co-owner's mere recalcitrance can prevent enforcement of another co-owner's rights."

The provision of Rule 19(a) requiring parties to be joined "makes no exception for recalcitrant patent owners and we, to date, have not explained from where such an exception derives," Judge O'Malley wrote.

Attorneys for the parties could not immediately be reached for comment Wednesday.

The patent-in-suit is U.S. Patent Number 6,042,998.

Federal Circuit Judges Sharon Prost, Timothy Dyk, Kimberly Moore, Richard Taranto, Raymond Chen and Todd Hughes voted not to rehear the case. Judges Pauline Newman, Alan Lourie, Kathleen O'Malley and Evan Wallach dissented.

STC is represented by George C. Summerfield and Rolf O. Stadheim of Stadheim & Grear Ltd.

Intel is represented by Robert A. Van Nest, Steven A. Hirsch and Brian L. Ferrall of Keker & Van Nest LLP and Chad S. Campbell and Dan L. Bagatell of Perkins Coie LLP.

The case is STC.UNM v. Intel Corp., case number 13-1241, in the U.S. Court of Appeals for the Federal Circuit.