MIT, like many universities, engages in licensing programs where other entities are given the responsibility for enforcing the university owned patent rights. In this case MIT kept too many rights to itself, leading to its licensee being dismissed from the suit as a “bare licensee” (a licensee holding less than all substantial rights and lacking exclusionary rights to the patent) who lacked standing to sue.
MIT is the assignee of Patent No. 6,703,228 directed to genetic analysis. MIT entered into a license with E8 Pharmaceuticals to sublicense and enforce the patent. E8 sued Affymetrix for infringement, including MIT as a plaintiff. Affymetrix moved to dismiss E8 as a plaintiff for lack of standing. Judge O’Toole found that E8 lacked standing and dismissed them.
The primary fact relied upon was that the license from MIT to E8 did not grant E8 the right to actually practice the ‘228 patent (despite clever arguments from E8 to the contrary). The court here relied on an old Supreme Court case which has never been challenged, Crown Die & Tool Co. v. Nye Tool & Machine Works, 261 U.S. 24 (1923), as support for that fact having serious implications for E8’s standing. But the court also listed a variety of other facts about the relationship between E8 and MIT which support the finding that E8 is a bare licensee, and therefore lacked standing. Examples include:
-E8 was obligated to use diligent efforts to identify potential sublicensees;
-MIT retained the right to demand termination of any sublicense if the sublicensee challenges the patent;
-All sublicenses were required to incorporate terms from the original agreement with MIT;
-MIT was a third-party beneficiary under all sublicense agreements and could step in and enforce payments if E8 failed to do so;
-MIT retained the right to approve any settlement; and
-E8 could not assign its interests without MIT’s consent.
E8 was dismissed as a plaintiff and MIT is left on its own asserting infringement. Time will tell how hard MIT will push this case on its own.
E8 Pharmaceuticals LLC and MIT v. Affymetrix, Inc., 08-11132-GAO (D.
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