The Zebra Case: Can a Debtor in Default Sue for Patent Infringement?
As shown by the Zebra case, a plaintiff's status as a patent owner or a licensee plays a key role in the evaluation of the plaintiff's constitutional standing in a patent infringement case.
October 02, 2024 at 12:16 PM
8 minute read
Corporate UpdateAs noted in previous columns, the sheer number of finance transactions relying heavily on intellectual property collateral has increased dramatically in recent years due to the growing value and importance of these assets to businesses. Of course, that will also typically mean a rise in the number of lawsuits involving such assets. An example of this is a case brought initially in 2019 in U.S. District Court for the Western District of Texas involving a patent infringement claim asserted against a third party by a debtor who had also pledged such patent as collateral to a lender. The interesting question in this case was whether the patent owner/pledgor had Article III constitutional standing to assert that claim given it was in default under its loan facility. On appeal, the United States Federal Circuit Court, in an opinion issued in May of this year, concluded in the affirmative (see Intellectual Tech LLC v. Zebra Techs Corp., 101 F.4th 807 (Fed. Cir. 2024)). In that decision, the Federal Circuit Court held that a patent owner retains an "exclusionary right" in the patent sufficient to satisfy the injury-in-fact requirement for constitutional standing, even if certain patent rights have been granted to a third party, such as a lender, and even if that lender has a power of attorney permitting it to, among other things, grant exclusive licenses in the patent.
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