Opinion
Cause No. IP 96-1718-C H/G
March 12, 2001
ENTRY ON MOTION TO DISMISS CLAIMS OF ELI LILLY
For the past five years, Eli Lilly and Company ("Lilly") has been a co-plaintiff in this patent infringement action against defendants St. Jude Medical, Inc., Pacesetter, Inc., and Ventritex, Inc. Defendants have moved to dismiss Lilly's claims under Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction. Defendants contend that, although Lilly holds an exclusive license for the patents in suit, Lilly lost its beneficial interest in the patents by entering into a sublicense agreement with plaintiff Cardiac Pacemakers, Inc. ("CPI"). As a result of the Lilly-CPI sublicense agreement, defendants argue, Lilly is not a "patentee" with standing under 35 U.S.C. § 281 and has not suffered an injury that could be remedied in this infringement action. As explained below, the court finds that Lilly's retained interests in the patents in suit provide it with standing to continue participating in this action as a co-plaintiff.
Background
Mieczyslaw Mirowski is the inventor and owner of the two remaining patents in suit: United States Patent No. 4,316,472 (issued Feb. 23, 1982) and No. 4,407,288 (issued Oct. 4, 1983). The patents cover medical devices and methods used to evaluate and treat abnormal conditions in a patient's heart. In 1973, Mirowski granted an exclusive worldwide license in the inventions to an entity called Medrad, Inc. Through a series of transactions completed in 1985, Medrad's interest as exclusive licensee was transferred to Lilly.
For the sake of simplicity, the court refers to all the agreements that eventually resulted in Lilly obtaining Medrad's licensing rights as the "Mirowski-Lilly agreement." Mirowski's retained interests in the patents are now owned by his estate.
Mirowski retained some rights under the exclusive license agreement, but he granted Lilly the exclusive right to make, use, sell, and sublicense the inventions disclosed in the patents. Lilly exercised its power to sublicense on several occasions, including an October 18, 1994, agreement with plaintiff CPI. See Def. App., Tab A-5. As a result of the Mirowski-Lilly agreement and the Lilly-CPI agreement, the status of the patents throughout the entire period of alleged infringement has been that Mirowski holds legal title to the patents, Lilly holds an exclusive license that can be traced to Mirowski, and CPI holds a sublicense in the patents that it obtained from Lilly.
The 1994 sublicense agreement between Lilly and CPI terminated a prior agreement between the two entities. See Def. App., Tab A-5, at 8-9. The prior agreement was dated May 15, 1985. Id. Lilly also granted a sublicense to defendant Ventritex, Inc. See Def. App., Tab A-6 (License Agreement of July 27, 1993). In fact, both Lilly and CPI were parties to the Ventritex agreement, which was actually a cross-licensing agreement. See id. at 1, 29. The terms of the Ventritex agreement and the current status of the parties' obligations under that agreement are relevant to this infringement action, but they do not affect defendants' motion to dismiss Lilly's claims.
Plaintiffs Lilly, CPI, and Guidant Sales Corporation, a CPI subsidiary, initiated this infringement action in 1996 asserting a joint right to relief against the defendants. Plaintiffs filed their First Amended Complaint on May 19, 1997. The Mirowski estate is not participating as a party in the suit. Defendants now challenge Lilly's standing as a co-plaintiff.
This action was stayed for a lengthy period during which the parties were involved in arbitration proceedings ordered by the Eighth Circuit. At the conclusion of the arbitration, this court vacated the stay. The case is scheduled for trial in June 2001.
Standards
When a defendant moves under Rule 12(b)(1) to dismiss for lack of subject matter jurisdiction based on the allegations in the complaint, the court accepts as true all well-pleaded factual allegations and draws all reasonable inferences in favor of the plaintiff. Long v. Shorebank Development Corp., 182 F.3d 548, 554 (7th Cir. 1999); United Transp. Union v. Gateway Western Ry. Co., 78 F.3d 1208, 1210 (7th Cir. 1996). In cases where the parties submit evidentiary materials addressed to the jurisdictional question, however, the court may look beyond the complaint to evidence that calls the court's jurisdiction into doubt. Bastien v. ATT Wireless Services, Inc., 205 F.3d 983, 990 (7th Cir. 2000), citing Commodity Trend Service, Inc. v. Commodity Futures Trading Commission, 149 F.3d 679, 685 (7th Cir. 1998).Defendants contend Lilly lacks both constitutional and statutory standing. The party invoking federal jurisdiction bears the burden of establishing the elements of standing and ultimately must support its allegations with competent proof of jurisdictional facts. Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 103-04 (1998); Ortho Pharmaceutical Corp. v. Genetics Institute, Inc., 52 F.3d 1026, 1032-33 (Fed. Cir. 1995).
To establish constitutional standing, Lilly must show: (1) that it has suffered an "injury in fact;" (2) that this injury is "fairly traceable" to defendants' alleged conduct; and (3) that a favorable judicial decision would likely redress the injury. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992); Kyles v. J.K. Guardian Security Services, Inc., 222 F.3d 289, 293-94 (7th Cir. 2000). An "injury in fact" is an invasion of a legally-protected interest that is "concrete and particularized" and "actual or imminent and not merely conjectural or hypothetical." Doe v. County of Montgomery, 41 F.3d 1156, 1159 (7th Cir. 1994), citing Lujan, 504 U.S. at 560.
The Patent Act of 1952 adds to these constitutional requirements the statutory requirement that only "a patentee shall have remedy by civil action for infringement." 35 U.S.C. § 281. The "patentee" includes "not only the patentee to whom the patent was issued but also the successors in title to the patentee." 35 U.S.C. § 100(d). Thus, under the statute, the right to sue for infringement is ordinarily an incident of legal title to the patent. See Abbott Laboratories v. Diamedix Corp., 47 F.3d 1128, 1131 (Fed. Cir. 1995), citing Waterman v. Mackenzie, 138 U.S. 252 (1891).
An exclusive licensee may obtain sufficient rights in the patent to be entitled to seek relief from infringement, but to do so, the licensee ordinarily must join the patent owner as a plaintiff. See Independent Wireless Tel. Co. v. Radio Corp., 269 U.S. 459 (1926) (interpreting predecessor statute and holding that patent owner was an indispensable party in suit brought by an exclusive licensee); Abbott Laboratories, 47 F.3d at 1131. The exception to this general rule is that an exclusive licensee may bring an infringement action on its own if the license amounts to an assignment of "all substantial rights" under the patent. See Prima Tek II, L.L.C. v. A-Roo Co., 222 F.3d 1372, 1377-78 (Fed. Cir. 2000). Then the assignee-licensee may be deemed the effective "patentee" under 35 U.S.C. § 281.
A non-exclusive licensee, who has no right to exclude others from making, using, or selling the licensed products, has no legally recognized interest that entitles it to bring or join an infringement action. See Ortho, 52 F.3d at 1033-34; accord Kalman v. Berlyn Corp., 914 F.2d 1473, 1481-82 (Fed. Cir. 1990) ("It is well settled that a non-exclusive licensee of a patent has no standing to sue for infringement."). This remains true even though the license holder may have suffered an "injury in fact" caused by the infringement. See Ortho, 52 F.3d at 1031 ("economic injury alone does not provide standing to sue under the patent statute").
Patent law recognizes a status in between an assignee, who has "all substantial rights" under the patent and who may initiate an infringement action on its own, and a non-exclusive licensee, who may neither bring nor join an infringement action. The party in between is one with a sufficient interest in the action to participate as a co-plaintiff. "To have co-plaintiff standing in an infringement suit, a licensee must hold some of the proprietary sticks from the bundle of patent rights, albeit a lesser share of rights in the patent than for an assignment and standing to sue alone." Ortho, 52 F.3d at 1031 (affirming dismissal in favor of defendant because non-exclusive licensee lacked co-plaintiff standing to pursue its claims for damages). In other words, co-plaintiffs in an infringement action share the proprietary rights associated with patent ownership to some greater or lesser extent. See, e.g., Abbott Laboratories, 47 F.3d at 1132-33 (reversing district court decision denying patentee's motion to intervene where patentee had reserved substantial rights in the patents despite entering into an exclusive licensing agreement; patentee was a necessary party); Weinar v. Rollform Inc., 744 F.2d 797, 806-07 (Fed. Cir. 1984) (both patentee and holder of exclusive license to distribute patentee's products could participate as plaintiffs and recover damages).
Discussion
Defendants here challenge Lilly's standing as a co-plaintiff, but they raise no objection (at least for now) as to CPI's standing as Lilly's sublicensee. In a nutshell, defendants argue that Lilly's sublicense agreement with CPI transferred "all substantial rights" in the patents' to that CPI became in effect Mirowski's assignee.
In this case, plaintiffs have raised all claims for relief jointly. Defendants appear to concede that CPI has standing to bring these claims in its own name. See Def. Br. at 15 ("Where an exclusive licensee, such as CPI, holds `all substantial rights' under a patent, `[s]uch a licensee is in effect an `assignee' and therefore a patentee,'" quoting Textile Productions, Inc. v. Mead Corp., 134 F.3d 1481, 1484 (Fed. Cir. 1998)). As a result, this action would not be dismissed even if defendants were correct that Lilly is a misjoined co-plaintiff. Cf., e.g., Smith v. Buckeye Incubator Co., 33 F. Supp. 71 (S.D.Ohio 1940) (denying motion to dismiss patent owner from suit where owner had granted co-plaintiff an exclusive license to make, use, and sell the patented devices).
To resolve the issues presented by defendants' motion, it is necessary to examine both the agreement between Mirowski and Lilly, and the agreement between Lilly and CPI. See Ortho, 52 F.3d at 1032 ("[The court] must examine the licensing agreement to determine whether the parties intended to effect a transfer of proprietary rights to the licensee as an incident to protection of its interests."), citing Vaupel Textilmaschinen KG v. Meccanica Euro Italia S.P.A., 944 F.2d 870, 874 (Fed. Cir. 1991) (intent of parties controlling). It is especially helpful to look at the rights retained by the grantor in each agreement. See Prima Tek II, 222 F.3d at 1378.
In this case, it is clear that Lilly became an assignee of the Mirowski patents by virtue of its status as the exclusive worldwide licensee. Through the Mirowski-Lilly license agreement, Lilly obtained the exclusive right to practice the patents, the right to sublicense the patents, and the right (indeed the obligation in some circumstances) to sue for patent infringement.
The rights retained by Mirowski included the right to receive royalties, the right to share in any infringement damages, the right to join any infringement action, and the right to initiate infringement actions under some circumstances. Mirowski's retained rights do not make his estate a necessary party to an infringement action brought by his licensee. See, e.g., Vaupel, 944 F.2d at 874-75 (holding that licensee had standing to sue for infringement without joining patent owner even though patent owner had retained a "sub-licensing veto," the right to receive infringement damages, and a reversionary right in the patent subject to conditions subsequent); Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245, 1251-52 (Fed. Cir. 2000) (holding that licensor's retained right to sue for infringement was insufficient to defeat licensee's right to sue for infringement in its own name). Thus, before execution of the sublicensing agreement with CPI, Lilly held "all substantial rights" in the patents and would have qualified as a "patentee" with standing to bring an infringement action in its own name.
Examining the initial transfer of rights from Mirowski is an important step. If Lilly never obtained a proprietary interest in the patents, then neither it nor CPI would have standing to bring this lawsuit without joining Mirowski. See Prima Tek II, 222 F.3d at 1381-82 (holding that both licensee and sublicensee lacked standing where agreement between patent owner and licensee did not convey substantial rights in the patents in suit; licensee could not convey the prerequisites of standing via sublicense when it never had acquired such rights itself). However, because Lilly did in fact obtain "all substantial rights" in the Mirowski patents, the court has subject matter jurisdiction over the action as a whole. Either Lilly, or CPI, or both Lilly and CPI must be the "patentee" for purposes of 35 U.S.C. § 281.
For purposes of defendants' motion to dismiss Lilly's claims, the central question is how the October 18, 1994, sublicense agreement between Lilly and CPI affected Lilly's status as a potential co-plaintiff in an infringement action. Article II of the sublicense agreement covers the grant from Lilly to CPI and provides as follows:
Section 2.01. Patents. Lilly hereby grants to CPI a worldwide non-exclusive license and right not revocable by Lilly to manufacture, have manufactured, use, sell, rent and lease or otherwise dispose of any and all devices and practice any and all methods, under the Patent Rights, Improvements and Future Developments, subject to the terms and conditions set forth in this Agreement.
Section 2.02. Know-How. Lilly hereby grants to CPI a worldwide non-exclusive license and right not revocable by Lilly to manufacture, have manufactured, use, sell, rent and lease or otherwise dispose of any and all devices, and practice any and all methods, employing Know-How.
Section 2.03. Sublicense. The rights granted to CPI in Sections 2.01 and 2.02 shall include the right to grant sublicenses.
Section 2.04. No Other Sublicenses. Lilly hereby agrees that it will not practice the Patent Rights, Improvements, Future Developments, or Know-How, nor enter into any additional sublicenses which would grant to a third party any right under the Patent Rights, Improvements, Future Developments, or Know-How. CPI and Lilly acknowledge, however, that prior to entering into this Agreement, Lilly entered into certain license agreements with third parties (including but not limited to: Medtronic, Inc.; Ventritex, Inc.; and Telectronics Holdings Ltd. and affiliated Telectronics entities) granting to such third parties certain rights in the Patent Rights, Improvements and Future Developments. CPI and Lilly agree such license agreements shall not be deemed a violation of this Agreement and that such license agreements shall continue in full force and effect in accordance with their terms.
Section 2.05. Lilly Warranty. Lilly hereby warrants that it is a licensee under the Exclusive License Agreement, that it is the owner of Know-How, and that it has the legal right to grant the licenses set forth in Sections 2.01 and 2.02.
Def. App., Tab A-5, at 4-5.
Under Article IV of the sublicense agreement, Lilly also granted CPI, subject to several restrictions, the right to sue for infringement:
Section 4.02. CPI shall have the right to bring and conduct suit or actions in its name against others for infringement of any patent subject to this Agreement, including the right to recover for past infringement, the same as if such patent were the exclusive property of CPI; and CPI shall have the obligation, subject to the mutual agreement between Lilly and Mirowski to bring and conduct suit or actions against any infringer whose annual sales, rentals, and leases of infringing devices exceed $75,000. Lilly agrees to join and to request that Mirowski join as a party plaintiff in any infringement suit or action brought by CPI under the terms of this Agreement. CPI and Lilly acknowledge that, pursuant to the terms of the Exclusive License Agreement, Mirowski has the right to participate in any infringement suit or action brought by CPI under the terms of this Agreement. CPI shall pay costs and expenses of such suit or action. The proceeds of such suit or action, less all costs and expenses incurred by CPI in connection therewith, shall be divided equally between CPI and Lilly. Lilly agrees that it will pay the proceeds which it receives from CPI to Mirowski in accordance with the terms of the Exclusive License Agreement.
Section 4.03. CPI and Lilly acknowledge that Mirowski has the right to initiate an infringement suit or action in accordance with the terms of Article VIII, Section 3 of the Exclusive License Agreement. Lilly agrees that in the event Mirowski notifies Lilly of an infringement as provided in such Article VIII, Section 3 of the Exclusive License Agreement, Lilly shall promptly inform CPI of its receipt of such notification. Lilly agrees that it will join with CPI as a party plaintiff and initiate an infringement suit or action for such infringement if CPI so requests within 30 days of the date of Mirowski's notice to Lilly. In such event, CPI shall pay costs and expenses of such suit or action. The proceeds of such suit or action, less all costs and expenses incurred by CPI in connection therewith, shall be divided equally between CPI and Lilly. Lilly agrees that it will pay the proceeds which it receives from CPI to Mirowski in accordance with the terms of the Exclusive License Agreement.
Def. App., Tab A-5, at 6-8.
As quoted above, sections 2.01 and 2.02 of the Lilly-CPI sublicense agreement recite the grant of a "non-exclusive" license to CPI. However, the parties' label for the agreement as a "non-exclusive" sublicense is not dispositive. See Vaupel, 944 F.2d at 875 (whether a transfer of rights is an assignment or mere license is to be determined based on the substance of the agreement). Reviewing the agreement as a whole, CPI's license was "non-exclusive" only in the sense that it was subject to several prior licenses that Lilly had granted to other entities. In all other significant respects, Article II of the sublicense agreement transfers Lilly's proprietary interest in the patents to CPI. Lilly relinquished the right to practice the patents, as well as the right to issue any additional sublicenses. Those substantial rights flowed to CPI, and Lilly may not unilaterally revoke the agreement.
The effect of Article IV's "right to sue" provisions on each party's interest in the patents is less certain. Assuming the express terms of the relevant agreements can be given their full effect, it is clear that CPI does not have the exclusive right to sue for (or to indulge) infringement. Under the Mirowski-Lilly agreement, for example, Mirowski purports to retain the right to initiate infringement actions under some circumstances and the right to participate in any infringement action. Def. App., Tab A-8, at 12-13. These rights were incorporated into the Lilly-CPI sublicense agreement. Def. App., Tab A-5, at 6-8. Remaining provisions in Article IV of the Lilly-CPI sublicense agreement are similarly designed to account for Mirowski's and Lilly's various rights and obligations. Under Section 4.02, for example, Lilly purports to retain a joint right with Mirowski to insist that CPI bring certain infringement actions.
As the Federal Circuit has pointed out, the reservation of a right to sue by a licensor may be an illusory right. A licensee with an unrestricted right to sublicense the patents would have the power to grant an alleged infringer a royalty-free sublicense. See Speedplay, 211 F.3d at 1251.
The Federal Circuit has given varying weight to "right to sue" clauses. Compare Prima Tek II, 222 F.3d at 1381 ("Standing to sue for infringement depends entirely on the putative plaintiff's proprietary interest in the patent, not on any contractual arrangements among the parties regarding who may sue and who will be bound by judgments."), and Textile Productions, 134 F.3d at 1485 ("The right to participate in litigation does not necessarily encompass the right to participate as a party."), with Vaupel, 944 F.2d at 875-76 (holding that transfer of the exclusive right to sue was "particularly dispositive" of the question whether the licensee had standing to sue without joining the grantor), and Abbott Laboratories, 47 F.3d at 1132 (reversing denial of motion to intervene by patent owner; one factor indicating that owner was a necessary party was that licensee had only the right of first refusal in suing alleged infringers; patent owner retained right to sue if licensee declined to do so). Under these cases, the court cannot assign much weight to a right to sue clause without considering the larger context of the agreement.
In this case, the Article IV right to sue provisions do not reveal a great deal about the parties' intent. See Textile Productions, 134 F.3d at 1484 ("Determining [a licensee's standing] is a question of ascertaining the intent of the parties to the license as manifested by the terms of their agreement and examining the substance of the grant."). One interpretation of Article IV might focus on the limits imposed on CPI's right to sue, while another interpretation would focus on the fact that Lilly attempted to convey to CPI nearly everything that it had a right to convey, subject only to constraints imposed by Lilly's own agreement with Mirowski. Similarly, the fact that the Lilly-CPI sublicense agreement requires Lilly to "join" in any infringement action initiated by CPI could suggest (1) that Lilly and CPI acted out of an abundance of caution given the uncertainty as to the retained interests that might make Lilly a necessary party, (2) that Lilly and CPI viewed the sublicense agreement as establishing a genuine shared interest in the patent rights, and/or (3) that Lilly and CPI were concerned that Lilly be able to honor its obligations to Mirowski. Given the ambiguity reflected in the right to sue provisions, the court focuses instead on the other substantive provisions of the agreement.
The sublicense agreement as a whole shows that Lilly granted to CPI most of the "proprietary sticks" from the bundle of patent rights. The major reservation of rights concerned Lilly's prior sublicenses. Magistrate Judge Erickson of the District of Minnesota examined CPI's interest in these same patents and concluded that the Lilly-CPI sublicense agreement conveyed to CPI "all" of Lilly's "substantial rights" in the Mirowski patents. See Intermedics, Inc. v. Cardiac Pacemakers, Inc., No. 4-95-716, Order and Report and Recommendation, at 29-32 (D.Minn. Feb. 17, 1998). As a result, Magistrate Judge Erickson concluded in that case that CPI had standing to assert counterclaims for patent infringement in its own name, without Lilly's participation. See id.
If the issue here were CPI's ability to proceed without Lilly's participation as a co-plaintiff, this court likely would concur with Magistrate Judge Erickson's thorough analysis of the relevant agreements. However, defendants have not shown that CPI's standing to proceed without Lilly in an infringement action and Lilly's standing to participate as a co-plaintiff with CPI in an infringement action are necessarily two sides of the same coin. Magistrate Judge Erickson addressed this very issue:
While we reiterate, that the issue of Lilly's standing in the Indiana action is presently of no moment, Lilly's presence, as a plaintiff in that suit, is not, of necessity, inconsistent with CPI's assertion of standing to raise its Counterclaims in this action. As but one explanation, it is readily conceivable that Lilly could be proceeding in the Indiana action at CPI's request, as is contemplated by the Sublicense Agreement, and such "co-plaintiff" standing would not, necessarily, conflict with CPI's standing to proceed with its Counterclaims here.Id. at 31 n. 10.
Similarly, defendants' motion to dismiss would raise substantially different issues if Lilly were attempting to bring this infringement action without CPI's participation as a co-plaintiff.
The issue presented by defendants' motion in this case is akin to the case of a patent owner who has granted "all substantial rights" to an exclusive licensee, but retained some limited interest in the patent. In such a case, the licensee might be deemed the effective "patentee" for purposes of 35 U.S.C. § 281. As a prudential matter, the court might find that it was unnecessary for the licensee to join the patent owner in an infringement action. See Prima Tek II, 222 F.2d at 1377. However, where an exclusive licensee with "all substantial rights" initiates an infringement action and also joins the patent owner as a co-plaintiff — perhaps out of an abundance of caution or perhaps to satisfy a contractual obligation — it seems unlikely that the court would be required to dismiss the patent owner from the case, at least where the patent owner's continued participation in the action causes no readily identifiable harm or prejudice to the defendants.
The court recognizes the fact that, whatever the nature of Lilly's retained rights, a patent owner, such as Mirowski, and a licensee, such as Lilly, stand on different ground with respect to legal title in the patents. Nonetheless, like a patent owner who grants an exclusive license, Lilly has retained some interest in the patents in suit. Most significant, Lilly's agreement with CPI was subject to prior sublicenses granted by Lilly. CPI does not have the power to terminate those prior agreements unilaterally. Lilly also retains reversionary rights in the patents if Lilly and CPI mutually agree to terminate the sublicense agreement. Finally, Lilly has numerous other rights and obligations under both the Mirowski-Lilly license agreement and the Lilly-CPI sublicense agreement.
Lilly's retained interests are probably not sufficient to make it a necessary party in this action, but they are sufficient to give Lilly constitutional standing to seek, among other requested relief, a declaration that the Mirowski patents are "valid, enforceable, and infringed." See Cplt. ¶ 36(A). Therefore, the court rejects defendants' contention that Lilly has suffered no "injury in fact." See generally Clinton v. City of New York, 524 U.S. 417, 434-36 (1998) ("[M]ore than one party may have standing to challenge a particular action or inaction. Once it is determined that a particular plaintiff is harmed by that defendant, and that the harm will likely be redressed by a favorable decision, the plaintiff has standing — regardless of whether there are others who would also have standing to sue."); accord Weinar v. Rollform Inc., 744 F.2d at 807 ("That the present fact pattern may be comparatively rare does not require a departure from the general rule that two parties sharing the property rights represented by a patent may have their respective rights protected by injunction and each, when properly joined in a suit, may be entitled to damages.").
As far as defendants' argument that Lilly lacks statutory standing, important prudential considerations weigh in favor of allowing Lilly to proceed as a co-plaintiff. First, there is certainly room for argument under Federal Circuit case law that Lilly may participate in this action as a co-plaintiff by virtue of its retained interests in the patents. See, e.g., Abbott Laboratories, 47 F.3d at 1132 (finding patent owner's substantial retained interests included fact that patent owner had granted exclusive license subject to prior licenses).
Second, Lilly's continued presence as a co-plaintiff will not affect the nature or complexity of the claims presented to any significant degree. Lilly presents no claims other than those presented by CPI, and Lilly's participation as a co-plaintiff for the remaining portions of this case will not cause any identifiable harm or prejudice to defendants. For example, it does not appear that multiple recoveries are involved here.
Third, the costs of erroneously dismissing a co-plaintiff are potentially high. One important purpose of the rules regarding co-plaintiff standing and necessary parties in patent law is to avoid the possibility of duplicative litigation. See Vaupel, 944 F.2d at 875. Allowing Lilly to participate in this action furthers that purpose. There is also a small chance (as this court reads the law) that CPI might be deemed not to have the authority to bring this suit in its own name. (The arguments to that effect were developed in the Minnesota case.) If the Federal Circuit were so to hold on appeal, everything accomplished in this case from now until the end of trial would have been a waste of time and resources for all concerned. See, e.g., Prima Tek II, 222 F.3d at 1382 (vacating lower court judgment on appeal because both co-plaintiffs lacked standing). Further, although defendants have indicated here that CPI does have standing, there is no estoppel on questions of subject matter jurisdiction. See Dunklebarger v. Merit Systems Protection Bd., 130 F.3d 1476, 1480 (Fed. Cir. 1997) (holding in context of dispute over the jurisdiction of an administrative tribunal that "no action of the parties can confer subject-matter jurisdiction on a tribunal and that the principles of estoppel do not apply to vest subject-matter jurisdiction where Congress has not done so."). Nothing would prevent defendants from later abandoning what appears to be their current view that CPI is the only party with standing to bring an infringement action.
Defendants assert that Lilly's participation in this case wastes the court's time and resources. See Def. Reply Br. at 4. The court does not agree. Both the court and the parties are straining to keep this case on track for the June trial date. If time and resources devoted to the issue of Lilly's standing were wasted, the waste resulted from the timing of defendants' motion to dismiss, not from Lilly's inclusion as a co-plaintiff.
Fourth, even if the court is wrong in allowing Lilly to continue as a co-plaintiff, the costs of such an error would be minimal. If plaintiffs ultimately obtain a judgment in their favor, and if the Federal Circuit were later to hold that Lilly had no standing as a co-plaintiff, such an error could be remedied easily to ensure that all relief ran in favor of only CPI.
Weighing against these factors, defendants assert (without supporting evidence) that "Plaintiffs wish to keep Lilly in this litigation solely to benefit from the goodwill associated with Lilly's name in this community, a consideration wholly irrelevant to the merits of the case." Def. Reply Br. at 4. This appears to be the practical nub of defendants' motion, but it does not offer a good reason to throw Lilly out of the case. Voir dire of prospective jurors and appropriate jury instructions will be used to avoid such irrelevant prejudice at trial. As compared to the prospect that defendants could first have Lilly's claims dismissed and could then argue that CPI lacks standing because it is not an exclusive sublicensee with "all substantial rights" to the patents in suit, defendants' fears pale.
The court therefore denies defendants' motion to dismiss Lilly as a co-plaintiff from this action. Allowing Lilly to continue to participate as a co-plaintiff is a prudent response to some degree of legal uncertainty governing the question of standing as applied to the Lilly-CPI sublicense. With both Lilly and CPI appearing as plaintiffs in this action, the court has subject matter jurisdiction under 35 U.S.C. § 281 to entertain plaintiffs' claims.
So ordered.