[00:00:04] Speaker 02:
Our next case is Lone Star Silicon Innovations LLC versus Micron Technology Inc., number 18-1578.

[00:00:51] Speaker 02:
Council Maloney, you reserve three minutes of your time for rebuttal, is that correct?

[00:00:56] Speaker 02:
You have reserved three minutes of your time for rebuttal?

[00:01:00] Speaker 02:
Okay, you may proceed when you're ready.

[00:01:08] Speaker 01:
May it please the court, Lone Star properly brought the underlying actions without naming AMD because Lone Star owns all exclusionary rights under the patents.

[00:01:19] Speaker 01:
AMD does not own the patents.

[00:01:21] Speaker 01:
It has no right to enforce them.

[00:01:23] Speaker 01:
They can never obtain rights to enforce them.

[00:01:26] Speaker 01:
And it has absolutely no right to influence these litigations in any way.

[00:01:30] Speaker 01:
The dismissal of the actions was therefore an improper result.

[00:01:35] Speaker 01:
The district court erred as a matter of law.

[00:01:37] Speaker 02:
Does AMD, did they reserve the right to practice the patent?

[00:01:41] Speaker 01:
AMD received, after transferring ownership of the patents to Lone Star, Lone Star in turn granted a non-exclusive license back

[00:01:50] Speaker 01:
to AMD, and under that non-exclusive contractual license, AMD then had the right to practice.

[00:01:57] Speaker 02:
That was not a... Does Lone Star have the right to practice?

[00:02:01] Speaker 01:
Does Lone Star?

[00:02:02] Speaker 01:
Absolutely.

[00:02:03] Speaker 01:
Lone Star has the right to practice because Lone Star received an outright assignment of these patents.

[00:02:10] Speaker 01:
And this is a fundamental difference between the way the district court looked at the patent transfer agreement and the proper way to look at it.

[00:02:18] Speaker 01:
It's absolutely clear under sections 2.1 and 2.2 that this was an outright transfer of all right title and interest in the patents, all inventions and discoveries, all enforcement rights, all rights to recovery, so on and so on.

[00:02:32] Speaker 03:
But AMD and its affiliates have the right to practice the patents, right?

[00:02:37] Speaker 03:
AMD only have, they do have the right to practice the patents, but only because... And all distributors, resellers, customers direct and indirect, they also are protected.

[00:02:48] Speaker 03:
from any infringement claim.

[00:02:51] Speaker 03:
They are because, and yes, and the answer is... And then there's a limited list of identified companies that you've been given the right to sue.

[00:03:01] Speaker 03:
Is that right?

[00:03:03] Speaker 03:
Well, I wouldn't... Or maybe a different way to put it is you're blocked from suing anybody unless they're on that list.

[00:03:12] Speaker 03:
Is that fair to say?

[00:03:14] Speaker 01:
Well, I would say it more precisely, Your Honor, that

[00:03:17] Speaker 01:
having obtained outright ownership of all of the proprietary rights in the patents, which include the right to enforce against anybody, and Loan Star having therefore become the outright owner of the patents, Loan Star granted a covenant, a warranty, back to AMD.

[00:03:34] Speaker 01:
And under that warranty, Loan Star agreed not to pursue litigation against companies that were not on the list that you just referred to.

[00:03:43] Speaker 03:
I mean, Loan Star couldn't sue Intel if it wanted to, right?

[00:03:48] Speaker 01:
They're not on the list.

[00:03:50] Speaker 01:
If Lone Star, if they're not on the list, then it would not be able to sue Intel without being in breach of the covenant that it gave back to AMD.

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The consequence of that breach would be that AMD would then have a right to sub-license Intel, not the right to sue Intel.

[00:04:08] Speaker 01:
And this is critically important because at the end of the day, this court affirmed and really emphasized in its Abbott decision

[00:04:17] Speaker 01:
that the right of ownership of a patent includes the right to indulge infringement.

[00:04:23] Speaker 01:
A patent owner, of course, has a right to grant a sublicense, in this case, a sublicense to AMD, as the owner and loan star also had the right to covenant that it would not sue certain companies.

[00:04:35] Speaker 01:
Any time a patent owner covenants not to sue a company, it doesn't lose ownership of the patent or lose its right to pursue

[00:04:43] Speaker 01:
companies that are not subject to such a comment.

[00:04:45] Speaker 03:
But we're not suggesting that you lost all rights to the patent.

[00:04:49] Speaker 03:
What the court below is suggesting is that you did not have all substantial rights conferred through this agreement, through this transfer agreement.

[00:04:57] Speaker 01:
And we disagree with that because we have to look at the agreement for what it was.

[00:05:01] Speaker 01:
It was a two-step agreement.

[00:05:03] Speaker 01:
In step one, outright ownership was transferred to Lone Star.

[00:05:07] Speaker 01:
Then with that grant, as the new owner, Lone Star granted certain

[00:05:12] Speaker 01:
covenants and licenses and warranties back to AMD, including AMD's non-exclusive right to practice, which did not give AMD any enforcement rights, as well as this covenant not to sue companies that had not been previously cleared as entities that had not previously been given a license by AMD.

[00:05:32] Speaker 02:
That's a problem here.

[00:05:34] Speaker 02:
You claim that you were granted substantially all substantive rights to the patent.

[00:05:39] Speaker 02:
Yes.

[00:05:40] Speaker 02:
and that you turn around and you granted back to ADM the same.

[00:05:46] Speaker 02:
Is that correct, AMD?

[00:05:48] Speaker 01:
We did not grant AMD back all substantial rights.

[00:05:51] Speaker 01:
We did not grant AMD any enforcement rights whatsoever.

[00:05:54] Speaker 01:
Any of the rights that matter.

[00:05:55] Speaker 01:
You granted back substantial rights to AMD.

[00:05:59] Speaker 01:
No, I disagree that substantial rights were granted to AMD.

[00:06:03] Speaker 01:
All of the rights granted to AMD are the type of rights that this court's potential standing case law

[00:06:09] Speaker 01:
is acknowledged are not substantial rights.

[00:06:11] Speaker 01:
AMD retained a non-exclusive license to practice.

[00:06:17] Speaker 01:
We've cited a number of cases that confirm that such a right is not a substantial right.

[00:06:22] Speaker 01:
Azure Networks and Luminar, for example, because it didn't give AMD the right to enforce.

[00:06:29] Speaker 01:
And patent owners grant licenses all the time to third parties.

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If it were true that by granting a license to practice to a third party,

[00:06:37] Speaker 01:
the patent owner no longer had substantial rights.

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No patent owner could sue anybody after it had granted a non-exclusive right to use to a third party.

[00:06:46] Speaker 03:
We're talking about the relationship between AMD and Lone Star, though.

[00:06:50] Speaker 03:
We're not talking about some random third party.

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So in Diamond Coding, for example, we identified the fact that Sanyo, the original patent owner, retained the right to practice the patented technology as a factor in considering

[00:07:07] Speaker 03:
why we ultimately held that Diamond Coding, the plaintiff, didn't have all substantial rights.

[00:07:14] Speaker 01:
That was a factor in a Diamond Coding decision, but the most significant factor in that decision, I submit, was the fact that Sanyo, the original owner, retained significant control over the litigations that Diamond Coding was able to bring.

[00:07:29] Speaker 03:
There was a list of companies and... What if your white list of companies you could sue under the transfer agreement

[00:07:37] Speaker 03:
was limited to just one company.

[00:07:40] Speaker 03:
What if it was just Micron?

[00:07:42] Speaker 03:
Here are the list of companies you can sue.

[00:07:44] Speaker 03:
We're giving you this patent.

[00:07:46] Speaker 03:
And here's the list.

[00:07:47] Speaker 03:
It's Micron.

[00:07:49] Speaker 03:
Would you say that you would have been conferred all substantial rights to the patent?

[00:07:56] Speaker 01:
Well, I'd have to know the remaining rights that were transferred.

[00:07:58] Speaker 01:
But if I understand, I think you're asking me about this PTA, if we change the list to only include one company, Micron.

[00:08:06] Speaker 01:
And I would say that would make this case on all fours with the Alfred Mann case.

[00:08:10] Speaker 01:
In the Alfred Mann case, Alfred Mann had granted to his licensee the first right to sue.

[00:08:17] Speaker 01:
And only if the licensee did not sue did Alfred Mann's right to sue best.

[00:08:23] Speaker 01:
And so in that scenario, Alfred Mann could have the right to sue only one company.

[00:08:27] Speaker 01:
And the court said it still had all substantial rights.

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The reason is because once Alfred Mann

[00:08:34] Speaker 01:
had the right to sue even one company, it had complete control over that litigation.

[00:08:40] Speaker 01:
So it didn't raise any of the concerns of the Prudential Standing Doctrine, which are, of course, to protect defendants from facing multiple claims and to make sure that third parties that have substantial enforcement rights don't have those rights implicated by the pending litigation.

[00:08:58] Speaker 01:
Here, AMD has no enforcement rights and can never obtain any enforcement rights, and therefore

[00:09:05] Speaker 01:
these pending cases don't put any of the defendants at the risk of facing multiple claims, nor do they implicate AMD's exclusionary rights, because it hasn't.

[00:09:17] Speaker 02:
Wouldn't you say that restricting Loan Star's ability to sue is an enforcement right, assertion of an enforcement right?

[00:09:26] Speaker 01:
Well, Loan Star's ability to sue is certainly an enforcement right, Your Honor.

[00:09:29] Speaker 01:
I agree with that.

[00:09:32] Speaker 01:
I believe that's critically important to understand the structure of this PTA.

[00:09:37] Speaker 02:
So when we add to that a limit of companies that you cannot sue, that's another indication of an enforcement right.

[00:09:48] Speaker 01:
That list in Loan Star's covenant not to sue parties not on the list was an exercise of Loan Star's right as the patent owner

[00:10:00] Speaker 01:
to indulge infringement.

[00:10:03] Speaker 01:
That is the principle, one of the key principles of the Abbott case.

[00:10:07] Speaker 01:
In Abbott, the plaintiff, Abbott did not have the right.

[00:10:11] Speaker 02:
The right to indulge infringement.

[00:10:12] Speaker 02:
Yes.

[00:10:13] Speaker 02:
That signifies one way or another an enforcement, an enforcement right.

[00:10:20] Speaker 01:
Yes.

[00:10:21] Speaker 01:
The right to indulge infringement is an enforcement right.

[00:10:25] Speaker 01:
It is a substantial right.

[00:10:27] Speaker 01:
Loan Star exercised that right as the patent owner.

[00:10:30] Speaker 01:
It covenanted that we won't go after companies prior to being put on the list.

[00:10:35] Speaker 01:
And the significance of being put on the list was that by being put on the list, AMD was warranting that that's a company that it has never previously granted license rights to.

[00:10:46] Speaker 02:
What about the limitation on recovery rights?

[00:10:49] Speaker 02:
Does that reflect an enforcement right?

[00:10:53] Speaker 01:
The AMD's passive interest in the recoveries?

[00:10:56] Speaker 02:
Yeah, the fact that they're entitled by contract to a share of anything that's recovered by Lone Star.

[00:11:04] Speaker 01:
No, that's just a passive financial interest.

[00:11:06] Speaker 01:
It has been recognized by this court and by the Supreme Court in Root v. Westcott as not being an enforcement right or a substantial right.

[00:11:14] Speaker 01:
It is a passive financial interest.

[00:11:15] Speaker 01:
And in Root v. Westcott in the 1800s, the Supreme Court recognized that that's just a manner of deferred payment.

[00:11:23] Speaker 01:
convey any enforcement rights to AMD, and therefore it's not a substantial right.

[00:11:27] Speaker 01:
But to get back to your question, Your Honor, I agree that the right to indulge infringement is a substantial right, and that's where we are fundamentally looking at this differently than the district court.

[00:11:39] Speaker 01:
AMD, like, I'm sorry, Lone Star, like every patent owner, has a right to grant covenants to anyone it wants to that says, I won't sue you, or I won't sue your customers, or I won't sue these other companies.

[00:11:51] Speaker 01:
That's all Lone Star did here.

[00:11:52] Speaker 03:
You're running out of time.

[00:11:53] Speaker 03:
And let's assume that we agree with the district court that Lone Star was not conferred all substantial rights.

[00:12:02] Speaker 03:
Can you please get to the jointer question now?

[00:12:05] Speaker 01:
Sure.

[00:12:06] Speaker 01:
We believe that the denial of Lone Star's alternative request to join AMD was an abuse of discretion.

[00:12:12] Speaker 01:
And we've cited the case law that demonstrates the favored outcome here, if Lone Star did not have independent standing, was to cure the problem by allowing

[00:12:21] Speaker 01:
Lone Star to add the absent party here, AMD.

[00:12:25] Speaker 01:
Rule 19 and cases applying rule 19 are consistent with that.

[00:12:29] Speaker 01:
So both in the patent context, cases like independent wireless, intellectual property development, et cetera, and in the non-patent context, the case law and rule 19 strongly favor joiner as opposed to dismissal.

[00:12:42] Speaker 01:
Here, Lone Star requested joiner in the alternative.

[00:12:45] Speaker 01:
That's not disputed.

[00:12:47] Speaker 01:
In fact, two of the appellees

[00:12:50] Speaker 01:
had moved under Rule 19 for failure to join.

[00:12:54] Speaker 01:
There was a delay in producing the Patent Transfer Agreement.

[00:12:59] Speaker 01:
We acknowledge that.

[00:12:59] Speaker 01:
Did you ever plead that you were an exclusive licensee?

[00:13:03] Speaker 01:
We didn't use those terms, Your Honor, but there's no requirement to use any sort of magical language.

[00:13:09] Speaker 01:
What we pled was that Lone Star is the sole owner of the right title and interest in the patents

[00:13:16] Speaker 02:
And in all rights to enforce.

[00:13:18] Speaker 02:
Your complaint alleged that you were basically an owner.

[00:13:21] Speaker 02:
You were the owner.

[00:13:22] Speaker 01:
The owner of all right, title, and interest, and all enforcement rights, and all recovery rights.

[00:13:26] Speaker 02:
Then how would Rule 19 play into that if it didn't plead otherwise?

[00:13:30] Speaker 02:
If all you pled was that you're an owner, how does Rule 19 apply?

[00:13:34] Speaker 01:
Well, the district court implicitly found that AMD's presence was necessary because it found that we didn't have substantial rights to be considered the true owner.

[00:13:46] Speaker 01:
uh, in that circumstance, cases like independent wireless and cases under rule 19.

[00:13:52] Speaker 02:
You didn't plead in the alternative, did you?

[00:13:54] Speaker 01:
We didn't plead it in the alternative and I don't believe we had to.

[00:13:57] Speaker 01:
The case law, what we rely on is the electric property development case, which indicates that in order for Joinder to be appropriate to cure a prudential standing problem, the plaintiff must have only had constitutional standing at the time of filing the complaint.

[00:14:14] Speaker 01:
We clearly have pled

[00:14:16] Speaker 01:
that Lone Star owns all right title and interest, all enforcement rights, all recovery rights, and that the infringement injured Lone Star.

[00:14:24] Speaker 01:
That is constitutional standing.

[00:14:27] Speaker 01:
If the plaintiff had to plead it in a certain way in order to avail itself of Rule 19, I think a lot of cases would have come out different, because the whole point of Rule 19 is going to allow you to amend your pleading to bring the party in.

[00:14:43] Speaker 01:
I think it's the wrong

[00:14:45] Speaker 01:
analysis and the wrong result to say, because we didn't characterize ourselves as an exclusive licensee, that we don't have the right, once the court disagreed with us, to fix that under Rule 19 and a Prudential Standing Doctrine.

[00:15:00] Speaker 01:
Now, the reasons that the district court gave, in our view, were not just reasons.

[00:15:07] Speaker 01:
The first reason he gave for saying that the delay in joining AMD would be unfair

[00:15:13] Speaker 01:
was on a theory that had we joined AMD originally, we would have been forced to file the case in the Northern District of California as opposed to the Eastern District of Texas where these litigations began.

[00:15:26] Speaker 01:
And that's just incorrect.

[00:15:28] Speaker 01:
We filed these lawsuits before T.C.

[00:15:30] Speaker 01:
Hartland.

[00:15:31] Speaker 01:
Under the law at that time, AMD could have been and would have been joined in the Eastern District of Texas.

[00:15:38] Speaker 01:
It sells products all over the country.

[00:15:41] Speaker 01:
and was subject to jurisdiction there, therefore subject to venue.

[00:15:44] Speaker 01:
I'm going to ask you to wrap up.

[00:15:46] Speaker 01:
Sure.

[00:15:46] Speaker 01:
And the last reason that the judge gave for not allowing us to join AMD was this theory that the defendants were prejudiced in not having the ability to bring counterclaims for infringement against AMD and get the same timing to the damages clock for those cases.

[00:16:04] Speaker 01:
We submit, number one, the defendants, it was just kind of a throw-in argument.

[00:16:10] Speaker 01:
They never identified any potential patent infringement claims they had against AMB.

[00:16:15] Speaker 01:
And second, they were always free to sue AMB for patent infringement.

[00:16:18] Speaker 01:
We did not prevent them from doing that.

[00:16:20] Speaker 01:
And it's not a sound reason under the Prudential Danning Doctrine, which is to protect the existing defendants, not to allow the defendants to bring independent unrelated counterclaims against the third party.

[00:16:34] Speaker 01:
Thank you.

[00:16:35] Speaker 02:
Thank you.

[00:16:45] Speaker 00:
Good morning, Your Honors, and may it please the Court.

[00:16:52] Speaker 00:
The District Court got the decision right here because Lone Star did not receive all substantial rights to the patent for at least three reasons.

[00:17:02] Speaker 00:
And I think the Court has touched on a couple of those.

[00:17:05] Speaker 00:
First and the most evident one is they did not gain all rights to exclude.

[00:17:11] Speaker 00:
Now, Lone Star tries to portray it as, well, they're just indulging, and they're by covenanting not to sue people who have not been approved by AMD.

[00:17:20] Speaker 00:
But the fact that AMD can later come in and say, well, we'll add someone to the list, means that, in fact, it's AMD that is indulging the infringement with respect to parties that are not on the list.

[00:17:33] Speaker 00:
So to use the example of Intel, AMD could, at some point,

[00:17:38] Speaker 00:
add Intel to the list and then Lone Star would be able to sue.

[00:17:44] Speaker 00:
Alternatively, AMD could essentially reach a side agreement with Intel and say, you know what, pay us and we'll agree to never put you on that list.

[00:17:55] Speaker 00:
So AMD effectively has the right to license anyone who's not currently on that list.

[00:18:01] Speaker 00:
And so Lone Star never received

[00:18:05] Speaker 00:
all of the exclusionary rights, which are a key part of patent ownership.

[00:18:11] Speaker 00:
Lone Star also, I believe it was Your Honor Judge Reyna, who asked whether Lone Star had the right to practice.

[00:18:19] Speaker 00:
And we respectfully submit that they do not.

[00:18:22] Speaker 00:
The only basis that they've given for that is going back to section 2.1 of

[00:18:29] Speaker 00:
of the agreement which claims to be this assignment of all right, title, and interest.

[00:18:34] Speaker 00:
Why wouldn't they have the right to practice under that clause?

[00:18:39] Speaker 00:
Because if there was not an effective assignment, then they get only the rights that are actually granted explicitly in the agreement.

[00:18:48] Speaker 00:
And the agreement never talks about them practicing it.

[00:18:51] Speaker 00:
And I think what's instructive here is if you look at a case like PROPAT and

[00:18:57] Speaker 00:
and which says you look at what the intent of the parties was.

[00:19:02] Speaker 00:
And clearly, there was never any intent between AMD and Lone Star that Lone Star would be practicing these patents.

[00:19:08] Speaker 00:
Lone Star is a non-practicing entity.

[00:19:11] Speaker 00:
And so there's no indication that the parties intended Lone Star to do that.

[00:19:19] Speaker 00:
And so similar to Propat, where the agreement is silent on it, this court concluded that therefore, no, they don't have

[00:19:26] Speaker 00:
They weren't given a right to practice the patents.

[00:19:32] Speaker 00:
And so that's a second key provision.

[00:19:36] Speaker 00:
And that's why this case is, in fact, similar to PROPAT and similar to what this court in Primatech described as a hunting license, simply an attempt to allow another party to enforce the patents.

[00:19:55] Speaker 00:
Judge Chen, you asked the scenario, what if the list was limited to a single company?

[00:20:02] Speaker 00:
And actually, the case that I believe is directly on point there is the Crown Die case, because that's specifically what had happened in that case, is the patentee had attempted to assign their exclusionary rights and their right to sue, but only with respect to one infringer.

[00:20:18] Speaker 00:
And that's a case where the Supreme Court said, no, you can't divide it up that way.

[00:20:22] Speaker 00:
You cannot create these

[00:20:24] Speaker 00:
what this court has called hunting licenses with respect to assertions of infringement.

[00:20:33] Speaker 00:
An additional indication that Lone Star didn't receive all substantial rights, which your honors did not address, is the fact that there are restrictions on their ability to assign whatever rights they do have under this agreement.

[00:20:48] Speaker 00:
And that's something that the court has said in several cases is highly important.

[00:20:54] Speaker 00:
Whatever rights they do have, they can assign only with AMD's consent, only if they keep all the patents together, and only if whoever they attempt to assign to agrees to have the same obligations to AMD that Lone Star currently has.

[00:21:13] Speaker 00:
And so that's an indication, once again, that AMD is keeping control of the patents, of the litigation,

[00:21:21] Speaker 00:
and therefore did not in fact convey all substantial rights to the patents.

[00:21:29] Speaker 03:
Can we get to the Rule 19 jointer question?

[00:21:32] Speaker 03:
Because that's the one that concerns me the most.

[00:21:34] Speaker 03:
And Rule 19 has pretty strong language when it comes to ordering the jointer of a necessary party.

[00:21:45] Speaker 03:
And if it appears, as it may well be here, that AMD

[00:21:52] Speaker 03:
is a necessary party in order for the lawsuit to go forward, because collectively, AMD and Lone Star have all the substantial rights to the patents, then why shouldn't per rule 19 AMD have been ordered to join the case?

[00:22:12] Speaker 00:
Absolutely, Your Honor.

[00:22:14] Speaker 00:
And rule 19 has strong language, but I submit this court also has strong language.

[00:22:19] Speaker 00:
In the Mentor case,

[00:22:21] Speaker 00:
The court said quite clearly that ordinarily, and this is the court's terms, ordinarily where a plaintiff that has brought suit is found not to have standing, the suit is dismissed.

[00:22:32] Speaker 00:
So dismissal is not an odd remedy.

[00:22:35] Speaker 03:
But here there was a request in the alternative.

[00:22:39] Speaker 03:
If the district court were to deem Lone Star as lacking all substantial rights, then please let's join AMD.

[00:22:50] Speaker 00:
Two points on that, Your Honor.

[00:22:53] Speaker 00:
First is that that is similar to the situation that occurred in the Field Turk case, where a very similar scenario.

[00:23:02] Speaker 00:
The party said, let us add the missing patent donor.

[00:23:08] Speaker 00:
And this court said that, and remanded and said, well,

[00:23:16] Speaker 00:
It's unclear from the record whether or not this particular party actually is the patent donor.

[00:23:21] Speaker 00:
But the district court on remand should either dismiss without prejudice if it believes that the standing issue can be corrected, or with prejudice if it turns out that this party is not the patentee and so the standing issue cannot be corrected.

[00:23:40] Speaker 00:
But it was clear there that under either circumstance, whether or not it could be corrected,

[00:23:45] Speaker 00:
the district court would dismiss the case, which is exactly what the court did here.

[00:23:53] Speaker 00:
It dismissed without prejudice.

[00:23:55] Speaker 03:
Don't we have other cases, maybe Abbott or Asymmetrix?

[00:24:00] Speaker 03:
I can't remember.

[00:24:01] Speaker 03:
That's where we had to remand the question on Rule 19.

[00:24:05] Speaker 03:
And if Rule 19 applied because the party was a necessary party and it was feasible to join them, then the district court ought to

[00:24:14] Speaker 03:
joined that party?

[00:24:17] Speaker 00:
There are certainly cases where this court has allowed Joinder.

[00:24:22] Speaker 00:
And that is where the Abbott case that your honor cites is a good example.

[00:24:29] Speaker 00:
Because if you look at the discussion there, it makes clear that standing is actually a separate question from the Rule 19 necessary party issue.

[00:24:38] Speaker 00:
And so first off, in denying standing,

[00:24:43] Speaker 00:
District court in this case was not necessarily reaching Rule 19.

[00:24:48] Speaker 00:
The second point, and this goes to some questions that Judge Raina asked, is that the Lone Star never pleaded that they were an exclusive licensee below.

[00:25:02] Speaker 02:
Can a court sui sponte invoke Rule 19?

[00:25:07] Speaker 00:
A court could sui sponte invoke Rule 19, yes.

[00:25:10] Speaker 00:
I don't believe that that's what was happening in this case.

[00:25:14] Speaker 00:
But as the court recognized, though, to correct standing, even assuming that by joining AMD you could correct standing, it was not simply a question of Rule 19, but it was also a question of Rule 21, which is the addition of parties, and Rule 15, which is the amendment of the pleadings because Lone Star had never pleaded that it was an exclusive licensee.

[00:25:40] Speaker 00:
And so under both of those standards, the court does have

[00:25:44] Speaker 00:
some discretion.

[00:25:45] Speaker 03:
And I would respectfully submit- Why would it need to plead that it's alternatively an exclusive licensee?

[00:25:52] Speaker 03:
I guess the point is that they took the position that under this transfer agreement, they had all substantial rights.

[00:25:59] Speaker 03:
That was their view.

[00:26:01] Speaker 03:
And then they said, OK, if the district court disagrees and thinks some of the substantial rights were held back by AMD, then please

[00:26:12] Speaker 03:
order the joiner of AMD.

[00:26:15] Speaker 03:
And some of our case law has made clear that we shouldn't be too caught up in labels.

[00:26:22] Speaker 03:
Is this person a patent owner?

[00:26:25] Speaker 03:
That term is used in Section 281.

[00:26:27] Speaker 03:
Is this person an exclusive licensee?

[00:26:30] Speaker 03:
It's more about who has the substantial rights and where are they located.

[00:26:34] Speaker 03:
And if the district court deems that the substantial rights are split within two companies, then

[00:26:41] Speaker 03:
Why isn't it reasonable for the plaintiff here to request the second party to be joined under those circumstances?

[00:26:50] Speaker 00:
The issue there, Your Honor, is the fact that each of the parties still has to have standing.

[00:26:58] Speaker 00:
And so it's not simply a question of getting all the rights together in one room.

[00:27:03] Speaker 00:
It's a question of each of the parties having standing.

[00:27:06] Speaker 00:
And for the Lone Star to have standing, if it doesn't have all substantial rights,

[00:27:10] Speaker 00:
it needs to be an exclusive licensee.

[00:27:12] Speaker 00:
It needs to have some exclusionary right that has been violated so that it has constitutional Article III standing.

[00:27:19] Speaker 03:
And they argued all along that they do have constitutional standing.

[00:27:24] Speaker 03:
And I don't recall the district court pushing back on that argument, because after all, they do have

[00:27:34] Speaker 03:
the exclusive right to sue those companies on that white list.

[00:27:38] Speaker 03:
Nobody else is allowed to sue those companies.

[00:27:42] Speaker 03:
And then if those companies are in fact practicing the patent and infringing the patent, then the Lone Star's rights are being violated in that instance, which is redressable through a patent infringement action.

[00:27:56] Speaker 03:
So none of that was ever pushed back on by the district court.

[00:28:01] Speaker 03:
The district court appeared to

[00:28:04] Speaker 03:
find that there was no standing because of this prudential reason of needing AMD to be in the case?

[00:28:16] Speaker 00:
I agree, Your Honor, that the district court decided it on prudential standing grounds.

[00:28:20] Speaker 00:
I would disagree slightly in that simply because they don't have all substantial rights is the same as them saying

[00:28:32] Speaker 00:
well, they must have at least some exclusionary right.

[00:28:34] Speaker 00:
And I point the court to the Moro case, where you had a situation where one party undisputably had the right to sue for infringement and the sole right to sue for infringement, but did not have ownership.

[00:28:46] Speaker 00:
And the court said that the party with the right to sue did not have constitutional standing.

[00:28:55] Speaker 00:
And so therefore, simply joining the party that had ownership of the patent

[00:29:02] Speaker 00:
did not solve the standing problem.

[00:29:06] Speaker 00:
And PROPAD is similar, where you had a party that had the right to sue, and so accepting your honor's premise that Lone Star has the right to sue the parties on the whitelist, that's not recognized as a constitutional injury that can be, that provides standing, even with the jointer of

[00:29:28] Speaker 00:
even with the joiner of the patentee.

[00:29:30] Speaker 00:
District Court didn't say any of this, though, right?

[00:29:33] Speaker 00:
No, the District Court said that they had never pled that they were an exclusive licensee, so they had never pled and not able... But Lone Star made the case for why it has constitutional standing, and the District Court never addressed that question.

[00:29:52] Speaker 03:
It dismissed this case for lack of standing or

[00:29:58] Speaker 03:
court said there was no jurisdiction because Loan Star is technically not a patentee, as that term is used in the patent statute.

[00:30:11] Speaker 00:
Yes, because, Your Honor, one can have constitutional standing in one of two ways, either as being the patentee or as being an exclusive licensee.

[00:30:21] Speaker 00:
And to be an exclusive licensee, there are certain requirements, including that

[00:30:26] Speaker 00:
you have a certain portion of the exclusionary right.

[00:30:29] Speaker 00:
And I wonder if it's that rigid.

[00:30:32] Speaker 03:
Do you have to be either an exclusive licensee or the patentee?

[00:30:38] Speaker 03:
Why can't it be that one party has some of the substantial rights and then another party has the other substantial rights, kind of like in diamond coding, for example, where technically there were two parties that combined had all the substantial rights.

[00:30:56] Speaker 03:
And then we indicated in that case, well, the plaintiff, Diamond Coding, never sought to have the other party, Sanyo, joined.

[00:31:06] Speaker 03:
And so therefore, it was proper to dismiss the case.

[00:31:09] Speaker 00:
Because I think the case law is, if not perhaps rigid, is clear that it does have to be an exclusive licensee.

[00:31:19] Speaker 00:
And so again, the Morrow case, the Propak case, the textile productions case, those were all cases in which you had

[00:31:25] Speaker 00:
a attempted plaintiff, which had at least some of the substantial rights, but did not have exclusionary rights, which is what this court is focused on in terms of constitutional standing.

[00:31:40] Speaker 00:
And the right to sue is not the exclusionary right.

[00:31:45] Speaker 03:
The district court dismissed this under 12B1?

[00:31:48] Speaker 00:
I believe the district court didn't specify,

[00:31:53] Speaker 00:
believe that would probably be the appropriate understanding.

[00:31:56] Speaker 03:
And is that appropriate to do that under this more prudential statutory standing kind of theory?

[00:32:03] Speaker 03:
I thought the Supreme Court has said, in cases like Lexmark, these types of statutory standing questions aren't appropriate to be considered a jurisdictional defect.

[00:32:16] Speaker 03:
Instead, it's perhaps a failure to state a claim or something like that.

[00:32:23] Speaker 00:
I guess I again would point the court to the mentor case, which said that in cases where a lack of standing is found, dismissal is the ordinary response.

[00:32:34] Speaker 00:
Now, whether it would be 12-1 or 12-6, that's not something I think that has been addressed.

[00:32:43] Speaker 00:
And unfortunately, I'm not sure if I can address your honor's question on that.

[00:32:50] Speaker 02:
OK, thank you.

[00:32:50] Speaker 00:
Thank you.

[00:32:54] Speaker 02:
We'll restore your time to four minutes.

[00:32:57] Speaker 02:
Four minutes.

[00:32:58] Speaker 01:
Thank you very much, Your Honor.

[00:33:00] Speaker 01:
I want to start with a couple of these Joinder cases.

[00:33:02] Speaker 01:
First of all, field turf and Microsoft morrow both involved a circumstance where the plaintiff didn't have constitutional standing.

[00:33:09] Speaker 01:
In field turf, it was because the plaintiff didn't have the right to enforce.

[00:33:13] Speaker 01:
In Microsoft, it was because the plaintiff didn't have the right to license.

[00:33:17] Speaker 01:
And that's why it couldn't be fixed by Joinder.

[00:33:21] Speaker 01:
Counsel referred to the mentor case a couple of times.

[00:33:24] Speaker 01:
In that case, the Federal Circuit actually invited the plaintiff to amend the complaint during the appeal to fix a prudential standing problem.

[00:33:34] Speaker 01:
So that case certainly doesn't stand for the proposition that adding AMD would have been inappropriate.

[00:33:44] Speaker 01:
Diamond coding is another one.

[00:33:46] Speaker 01:
Diamond coding was only dismissed after the plaintiff was given an opportunity to join the absent party, Samuel.

[00:33:53] Speaker 01:
and for whatever reason decided not to try to join Sanyo.

[00:33:57] Speaker 01:
So Diamond Coding is another case that actually supports us here.

[00:34:02] Speaker 01:
Back to the standing issue, if I might.

[00:34:05] Speaker 03:
Actually, before you go back to standing, you had filed a subsequent litigation where I think you, among the defendants, you included AMD as a defendant.

[00:34:20] Speaker 01:
We did file one.

[00:34:21] Speaker 01:
Yes, Your Honor.

[00:34:22] Speaker 01:
We have filed a case.

[00:34:23] Speaker 01:
Is that still alive?

[00:34:25] Speaker 01:
It is.

[00:34:26] Speaker 01:
That's a case against Micron.

[00:34:28] Speaker 01:
We filed that case.

[00:34:30] Speaker 01:
AMD refused to join voluntarily.

[00:34:32] Speaker 01:
So under the independent wireless standard, we named AMD as a defendant, and we're planning on asking the court to realign AMD as a co-plaintiff.

[00:34:40] Speaker 01:
That case was stayed in view of not only this appeal, but a number of IPR proceedings.

[00:34:46] Speaker 01:
And we have recently settled the litigation with Micron, so that case will be

[00:34:49] Speaker 01:
We'll be going away.

[00:34:50] Speaker 03:
How about these other defendants, appellees?

[00:34:53] Speaker 03:
Are you planning on doing more lawsuits against them?

[00:34:59] Speaker 01:
We did not refile.

[00:35:01] Speaker 01:
The district court said if we did refile, we would lose essentially our priority on the claim.

[00:35:07] Speaker 01:
And we would lose roughly a year's worth of damages.

[00:35:09] Speaker 01:
So we felt the better course was to appeal.

[00:35:11] Speaker 01:
We believe we have the right to proceed without MP.

[00:35:14] Speaker 01:
And we believe we should have been given the right

[00:35:17] Speaker 01:
join AMD in the alternative so that we could take advantage of the litigation that did happen.

[00:35:21] Speaker 01:
There was significant amount of litigation that transpired and we shouldn't have to start all over and we shouldn't lose a year's worth of damages.

[00:35:29] Speaker 01:
If I might just briefly, I don't have much time, but on this issue of standing this was in no way a hunting license.

[00:35:37] Speaker 01:
Here's why.

[00:35:37] Speaker 01:
We got ownership of the patents with absolutely no obligation to do anything with them.

[00:35:44] Speaker 01:
that's different than all of cases like Diamond Coding and Propat where the plaintiff had affirmative obligations to enforce and license the patents or face risk of termination.

[00:35:57] Speaker 01:
Our client could have done nothing with these patents because it's the owner.

[00:36:00] Speaker 01:
It also had the right as the owner to covenant not to sue certain companies, covenant not to sue AMD.

[00:36:06] Speaker 01:
It was an owner like every other patent owner who has a right to decide what to do and what not to do with its patents.

[00:36:13] Speaker 01:
Lone Star absolutely had the right to practice.

[00:36:15] Speaker 01:
I'm surprised that it's still even an issue, because the appellants have conceded this point in their brief.

[00:36:20] Speaker 03:
Is Lone Star what we call a non-practicing entity?

[00:36:26] Speaker 01:
Yes.

[00:36:27] Speaker 01:
They don't practice these patents.

[00:36:29] Speaker 01:
And for that matter, there's no evidence that AMD does either.

[00:36:32] Speaker 01:
To me, that's completely irrelevant.

[00:36:34] Speaker 01:
Under the Supreme Court's crown die decision, the owner of an invention

[00:36:40] Speaker 01:
has the natural common law right to practice the invention.

[00:36:43] Speaker 01:
The grant clauses here specifically include all rights in and to the inventions, not just the patents.

[00:36:50] Speaker 01:
As the owner of the inventions, Lone Star had a common law right to practice them.

[00:36:55] Speaker 01:
The whole purpose of the patent is to then give it the right to exclude others from practicing so it can enjoy its natural right to use.

[00:37:02] Speaker 02:
Doesn't that status lend to the definition of the hunting license?

[00:37:05] Speaker 01:
I'm sorry?

[00:37:05] Speaker 02:
Doesn't the NPE status lend to the definition of the hunting license?

[00:37:10] Speaker 01:
No, Your Honor, I guess I have a sort of a moral objection to all attempts to characterize MPEs in a pejorative way by referring to this as a hunting license or anything like that.

[00:37:24] Speaker 01:
My client is a licensing entity.

[00:37:26] Speaker 01:
This agreement was an absolutely proper transfer of rights, and the mechanism that limited my client's rights to sue certain companies was simply a mechanism to make sure that

[00:37:41] Speaker 01:
Lone Star didn't sue companies that already had rights under these patents.

[00:37:45] Speaker 01:
That was a very pragmatic and laudable way of structuring the agreement.

[00:37:51] Speaker 01:
And it's no different than any other circumstance where a patent owner decides not to pursue certain companies for whatever reason it chooses.

[00:37:59] Speaker 01:
That is the fundamental right of ownership that AVID confirmed, the right to indulge infringement.

[00:38:04] Speaker 01:
And of course, any party that already has license rights through previous agreements with AMD, my client has no claim

[00:38:12] Speaker 01:
and has no constitutional standing to pursue those claims.

[00:38:14] Speaker 02:
Can you conclude for us?

[00:38:17] Speaker 01:
Well, in conclusion, Your Honor, we obviously believe that the court got the standing issue wrong, and the case should be reversed on that basis.

[00:38:25] Speaker 01:
But in the alternative, we should have at least had the opportunity to join AMD, and none of the reasons that have been argued for why we were denied the joiner, none of those are valid reasons.

[00:38:37] Speaker 01:
Thank you.