Our patent attorneys have been asked a number of times by foreign associate attorneys as to whether an exclusive licensee need have exclusive rights in a patent in order to have standing to sue to protect those rights against infringement by an unauthorized third party.
In the US, the position was clarified in WiAV Solutions LLC v. Motorola, Inc. where the Federal Circuit stated that a party holding one or more of the exclusionary rights in a patent may have standing to sue to protect those rights against infringement by an unauthorized third party. In other words, the court made it clear that there is no rule that a party cannot be an exclusive licensee of a patent if others have the right to license the patent.
In Australia, the High Court held the contrary position in the Ex parte British Nylon Spinners case, a case decided under the repealed 1952 Patents Act. In this case the High Court required that the licensee have all of the exclusionary rights to “make, use, exercise and vend” the patented invention in order to be considered an exclusive licensee so as to have standing, despite any contrary intent of the parties.
However, in an apparent about-face, in Grant v Australian Temporary Fencing Pty Ltd , a decision taken under the current 1990 Patents Act, the Queensland Supreme Court held that the definition under the 1990 Act of “exclusive licensee” read with the definition of “exploit” may be construed as allowing for “a plurality of exclusive licenses”. In other words, licensees may be considered as exclusive licensees, despite sharing patent rights with other licensees.
Nevertheless, it is debatable whether the wording of the 1990 Act is sufficiently different from the 1952 Act to warrant the Grant case being followed in Australia. As such, licensing strategy should take into account the need/requirement on the licensee to sue when determining a position on exclusivity.
If you have any questions regarding drafting of licence agreements, please contact Baxter IP. Our commercialisation arm has extensive experience in licence strategy.