A divided Federal Circuit on Friday affirmed a district court's dismissal of a suit brought by the University of New Mexico's patent arm alleging Intel Corp. infringed a patent for lithographic methods used in semiconductor manufacturing, ruling that the plaintiff lacks standing because the patent's co-owner elected to not join the suit.
In a 2-1 ruling, the appellate panel agreed with U.S. District Judge Robert C. Brack that STC.UNM lacks standing to sue Intel for infringement of U.S. Patent number 6,042,998 because patent co-owner Sandia Corp. hadn't voluntarily joined the suit and couldn't be involuntarily joined.
"Because co-owner Sandia did not consent to join this infringement suit against Intel and cannot otherwise be involuntarily joined on these facts, STC cannot maintain its suit," Judge Randall R. Rader wrote for the majority.
STC filed suit in November 2010, accusing Intel of making and selling semiconductor devices that infringe the '998 patent. Sandia refused to join the case, opting to "take a neutral position with respect to this matter," according to court documents.
In January 2013, Judge Brack granted Intel's cross-motion to dismiss STC's claims for lack of standing. Relying on the Federal Circuit's 1998 ruling in the case of Ethicon Inc. v. United States Surgical Corp., the district judge explained that when a patent is co-owned, a co-owner seeking to enforce the patent must join all other co-owners as plaintiffs in the suit to establish standing, according to court documents.
While Judge Brack acknowledged that Federal Rule of Civil Procedure 19(a) generally gives courts the ability to join a required party involuntarily, he said Ethicon establishes that a patent co-owner ordinarily has the right to impede another co-owner's infringement suit by refusing to voluntarily join the suit, court documents said. The judge said neither of two limited circumstances that would allow for involuntarily joinder were present in this case.
STC contended that Ethicon doesn't address a Rule 19(a) involuntary joinder at all and that there is "no rule of substantive patent law that precludes the application of Rule 19" in the instant case, according to court documents.
The Federal Circuit majority rejected STC's arguments and agreed with Judge Brack. While the majority opinion in Ethicon doesn't explicitly refer to Rule 19, STC is wrong in arguing that Rule 19 trumps the holding that substantive patent law ordinarily requires consent to joinder from all co-owners of a patent, Judge Rader wrote.
"Whether this court in Ethicon expressly mentioned Rule 19(a) — the involuntary joinder provision — does not change the effect the holding had on it," Judge Rader wrote. "Rules of procedure, such as that in Rule 19(a), must give way to substantive patent rights."
In a 10-page dissenting opinion, Judge Pauline Newman wrote that the majority's opinion is contrary to Rule 19 and legal precedent.
"There is no support, in law of logic or justice, for today's holding that the co-owner of a patent cannot be involuntarily joined in an infringement suit and can thereby, by its absence, bar the suit," Judge Newman wrote.
Judge Newman said that Rule 19 is "not permissive" and requires joinder of Sandia, which is indisputably a necessary party and within the court's personal jurisdiction.
STC's attorney, George C. Summerfield of Stadheim & Grear Ltd., told Law360 on Friday that, "while we are obviously disappointed by the decision, we were heartened by Judge Newman's thoughtful and thorough dissent analyzing the Rule 19 issue." He said he and his client are considering their options.
"Judge Newman's compelling discussion of Rule 19 case law from the Federal Circuit's sister circuits that effectively treat joinder under Rule 19 as mandatory presents an excellent prospect for a petition for certiorari," Summerfield said.
An attorney for Intel did not immediately respond to a request for comment late Friday.
Judges Pauline Newman, Randall Ray Rader and Timothy B. Dyk sat on the Federal Circuit panel. STC is represented by George C. Summerfield, Rolf O. Stadheim and Steven R. Pedersen of Stadheim & Grear Ltd.
Intel is represented by Robert A. Van Nest, Steven A. Hirsch, Brian L. Ferrall, Benedict Hur and Paven Malhotra 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 2013-1241, in the U.S. Court of Appeals for the Federal Circuit.