May 14, 2020Legal
Facts in Complaint That Arguably Show Patent Ownership Are Sufficient to Confer Standing

SCHWENDIMANN V. ARKWRIGHT ADVANCED COATING, INC.

Before Wallach, Reyna, and O’Malley.  Appeal from the United States District Court for the District of Minnesota.

Summary: Exclusionary rights in a patent are a prerequisite to obtaining relief for patent infringement, but need not be proven to establish constitutional standing and subject matter jurisdiction.

Jodi Schwendimann sued Arkwright Advanced Coating for infringing 6 patents.  However, a 2002 assignment by which Schwendimann obtained her rights in one of the asserted patents contained errors.  Arkwright moved to dismiss for lack of standing, arguing that the assignment was ineffective.  The district court denied the motion to dismiss, concluding that it did not have enough evidence to assess whether the 2002 assignment was effective.  After additional discovery, Schwendimann moved for summary judgment on the standing issue. The district court granted summary judgment, finding that reformation of the 2002 assignment was appropriate under Minnesota law, and the reformed 2002 assignment established standing.  The case proceeded to trial, where the jury awarded Schwendimann $2.6 million for willful patent infringement.

Defendant Arkwright appealed, alleging that Schwendimann lacked standing at the time she filed suit and the district court’s subsequent reformation of the 2002 assignment could not establish standing retroactively. The Federal Circuit majority stated that Lone Star Silicon Innovations LLC v. Nanya Tech. Corp., 925 F. 3d 1225 (Fed. Cir. 2019), decided while Schwendimann’s case was pending on appeal, was dispositive of the standing issue.  According to the majority, Lone Star held that proof of patent ownership is a prerequisite to obtaining relief for infringement, but is not a prerequisite to standing or subject matter jurisdiction.  So long as the Plaintiff alleges “facts that support an arguable case or controversy under the Patent Act, the court has both the statutory and constitutional authority to adjudicate the matter.”

Judge Reyna dissented, arguing that a plaintiff needs exclusionary rights in a patent to establish constitutional standing, and that Lone Star did not hold otherwise.  The dissent argued that Schwendimann lacked standing when she filed suit, and the reformation failed to cure that problem because standing must exist at the outset of a lawsuit.

Editor: Paul Stewart

Written by: Ryan W. McBride & Jeremy Anapol

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