A123 Systems, Inc. filed suit in 2006 in D. Mass. asserting a declaration of infringement and invalidity against Patent Nos. 5,910,382 and 6,514,640 directed to cathode materials for lithium batteries, assigned to the University of Texas (UT), and licensed to Hydro-Quebec (HQ). The complaint only named HQ as a defendant. HQ and UT then sued A123 in Texas and moved to dismiss the Mass. complaint saying that A123 hadn’t named UT, a necessary party who had not waved its sovereign immunity (as an arm of the State of Texas) to be sued in Mass.
Judge Tauro exercised his discretion under the DJ statute to dismissed the Mass. case in favor of the Texas case since the case would need to have been dismissed anyway for failure to join UT, who had not consented to be sued in Mass. The Federal Circuit affirmed.
The Federal Circuit agreed that HQ was a “field-of-use” licensee only, and did not hold substantial rights in the field relevant to A123, making UT a necessary party. It also held that UT’s participation in the later Texas action did not waive its sovereign immunity relative to the earlier filed Mass. action. Finally, the Federal Circuit undertook its own Rule 19(b) analysis (as the lower court had not done so) to find that UT was an indispensible party for a variety of reasons, including UT’s ability to assert infringement claims against A123 that HQ could not bring.
A123 Systems, Inc. v. Hydro-Quebec, 2010-1059 (Fed. Cir. Nov. 10, 2010)
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