Fresh From the Bench: Latest Federal Circuit Court Cases
CASE OF THE WEEK
Uniloc 2017 LLC v. Hulu, LLC, Appeal No. 2019-1686 (Fed. Cir. July 22, 2020)
In this appeal, the Federal Circuit held for the first time that in inter partes review (“IPR”) proceedings, when substitute claims are proposed, the Patent Trial and Appeal Board (“Board”) may consider patent eligibility issues under Section 101. For substitute claims, the Board is not limited by 35 U.S.C. § 311(b) to the grounds that govern its review of issued claims—i.e., “section 102 or 103 and only on the basis of prior art consisting of patents or printed publications.” This decision may dramatically reshape strategies concerning the proposal of substitute claims in IPRs.
Gensetix, Inc. v. Bd. of Regents of Univ. of Texas, Appeal No. 2019-1424 (Fed. Cir. July 24, 2020)
In this case, the Federal Circuit considered whether the Eleventh Amendment precludes involuntary joinder under Fed. R. Civ. P. 19 of a state patent owner as plaintiff in an infringement suit brought by its exclusive licensee. Here, Gensetix was the exclusive licensee of patents owned by the University of Texas, who was a required party in light of the secondary right to sue it retained under the license agreement, but refused to participate in Gensetix’s lawsuit. The district court found that UT’s sovereign immunity prohibited coercive joinder of UT under Rule 19(a), found that the lawsuit could not proceed in UT’s absence under Rule 19(b), and dismissed the case.
The Federal Circuit affirmed-in-part, reversed-in-part, and remanded, with a splintered majority as to the judgment only. Judge O’Malley delivered the opinion of the Court, affirming the lower court’s determination that it could not compel joinder of UT as a plaintiff under Rule 19(a), but finding that the district court abused its discretion by dismissing the case without properly considering the factors enumerated in Rule 19(b). Because Gensetix was required by the agreement in this case to fully represent UT’s interest in the validity of the patents and was left without remedy if the suit was dismissed, the Court found that Rule 19(b) favored allowing the lawsuit to proceed in UT’s absence, and that the district court erred by apparently considering UT’s immunity from suit to be the overriding consideration.
Judge Newman concurred in the judgment but opined that UT should have been joined as a plaintiff, having agreed to “cooperate fully” in any lawsuit initiated by Gensetix, and that the Eleventh Amendment did not release UT from that contractual obligation. Judge Taranto dissented and would have affirmed the judgment of the district court.