Bloomberg BNA’s Patent Trademark & Copyright Law Daily™is the IP industry’s premier news service, offering objective, timely,and reliable daily news coverage and commentary from leading IP law...
By Peter Leung
Feb. 29 — A reservation of rights for the patent licensor's affiliates was not enough to defeat the licensee's attempts to sue an alleged infringer, but a substantial question as to the patent's validity means a preliminary injunction was improper, the U.S. Court of Appeals for the Federal Circuit ruled Feb. 29.
Luminara Worldwide LLC's predecessor had licensed several patents covering flameless candles, including U.S. Patent No. 8,696,166 from Disney Enterprises, Inc., which had developed the technology for use with rides in its theme parks. Luminara sued Liown Electronics Co. Ltd. for patent infringement after a partnership between the companies fell apart and Liown continued to manufacture its own flameless candles. The trial court granted a preliminary injunction against Liown, which appealed on the grounds that Luminara was not an exclusive licensee of the patent and because of questions as to the patent's validity.
The Federal Circuit vacated the preliminary injunction, finding substantial questions surrounding the validity of the patent.
However, the court first rejected Liown's argument that Luminara could not assert the patent because it was not the exclusive licensee. Liown said that the Disney-Luminara patent licensing agreement reserved for Disney the right to allow any affiliate “operated by or under the license” of Disney to use the patent. Disney, thus, could easily create new licensees, because “affiliates” are any entities that took a license out for the flameless candle technology, Liown asserted. This meant that Luminara did not have an exclusive license.
The Federal Circuit said this reading was improper. The plain reading of this language requires the license in question to relate to the operation of the affiliate company, not just to the patented technology, as Liown claimed. The licensing agreement gives Luminara the exclusive right to assert the patents, while retaining for Disney and its affiliates various rights such as the right to use the patents, title to them and a financial interest in litigation and licensing. These Disney-reserved rights, the Federal Circuit explained, do not preclude Luminara's exclusive right to sue alleged infringers.
The Federal Circuit, however, vacated the preliminary injunction due to substantial questions about the validity of the patent the injunction was based on. The district court had construed one of the patent's claim limitations— that the flame reflector was “free to pivot”—to mean a chaotic rotation based on more than two axes, which would simulate the flicker of a flame. However, the Federal Circuit said that, as a preliminary matter, the plain language does not support a limitation requiring rotation on more than two axes. Because there is a prior art patent that teaches a flame reflector that rotates on a minimum of two axes, there is a substantial question as to the validity of the patent, making a preliminary injunction improper.
Judges Kimberly A. Moore, Kathleen M. O'Malley and Richard G. Taranto decided the case, with Moore writing the opinion. Jon Wright of Sterne Kessler Goldstein & Fox, PLLC in Washington argued for Luminara, while Dan L. Bagatell of Perkins Coie LLP argued for Liown.
To contact the reporter on this story: Peter Leung in Washington at email@example.com
To contact the editor responsible for this story: Mike Wilczek in Washington at firstname.lastname@example.org
Text is available at: http://src.bna.com/cXr.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)