United States District Court, N.D. Illinois, Eastern Division
September 30, 2005.
ROPAK CORPORATION, a Delaware corporation, JOHN W. VON HOLDT, JR., an individual, JANICE ANDERSON, an individual, and PLAS-TOOL CO., an Illinois corporation, Plaintiff,
PLASTICAN, INC., a Massachusetts corporation, Defendants.
The opinion of the court was delivered by: DAVID COAR, District Judge
MEMORANDUM OPINION AND ORDER
Before this court is the motion by Defendant Plastican, Inc.
("Plastican") to dismiss Ropak Corporation ("Ropak") and
Plas-Tool Co. ("Plas-Tool") as plaintiffs for lack of standing.
Defendant does not challenge the standing of Plaintiffs John W.
von Holdt, Jr. and Janice Anderson. For the reasons set forth
below, Defendant's motion to dismiss Ropak as plaintiff is
DENIED. Defendant's motion to dismiss Plas-Tool as plaintiff is
I. FACTUAL BACKGROUND
For the purposes of this motion, the following facts alleged in
Plaintiffs' complaint are taken as true. John W. von Holdt, Jr.
and Janice Anderson own United States Letters Patent No.
4,735,337 (the "`337 patent"), a valid and enforceable patent.
(Am. Compl. ¶ 9, 11). Plas-Tool is a licensee of the `337 patent by virtue of a license that
includes the right to join as plaintiff in any action for
infringement of the `337 patent by others. (Am. Compl. ¶ 10).
Plas-Tool and the original patent owner, John W. von Holdt,
Sr., successfully enforced the `337 patent against Ropak
Corporation in 1995. The dispute yielded a Settlement and License
Agreement entered into on June 15, 1995 ("the 1995 Agreement").
(Am. Compl. ¶ 11). By virtue of that Agreement, Ropak is now a
sublicensee of claims 9-12 of the `337 patent. The Agreement
affords Ropak the right to join as plaintiff in any action for
infringement of the `337 patent by others. (Am. Compl. ¶ 10).
At all times since issuance of the `337 patent, Plas-Tool,
under its license, has been engaged in the business of
marketing, selling, and distributing molds used to make the
plastic lids protected by the `337 patent. Since entering into
its sublicense, Ropak has been engaged in the business of making,
selling and distributing molded plastic lids covered by the `337
patent. (Am. Compl. ¶ 12).
Plaintiffs Ropak, von Holdt, Jr., Anderson, and Plas-Tool have
filed suit against Defendant for making, advertising, selling
and/or offering for sale molded plastic lids that infringe the
`337 patent. (Am. Compl. ¶¶ 14-20).
II. STANDARD OF REVIEW
In ruling on motion to dismiss for lack of standing, the court
must accept as true all material allegations of the complaint and
draw all reasonable inferences in the plaintiff's favor. Reid L.
v. Illinois State Board of Education, 358 F.3d 511, 515 (7th
Cir. 2004). Whether a licensee of a patent has co-plaintiff
standing depends upon the rights the licensee holds: To have co-plaintiff standing in an infringement
suit, a licensee must hold some of the proprietary
sticks from the bundle of patent rights, albeit a
lesser share of rights in the patent than for an
assignment and standing to sue alone. The proprietary
rights granted by any patent are the rights to
exclude others from making, using or selling the
invention in the United States.
Ortho Pharmaceutical Corp. v. Genetics Institute, Inc.,
52 F.3d 1026, 1031-32 (Fed Cir. 1995) (internal citation omitted). The
standard, stated alternatively, requires a party to "have
received, not only the right to practice the invention within a
given territory, but also the patentee's express or implied
promise that others shall be excluded from practicing the
invention within that territory as well. Rite-Hite Corp. v.
Kelley Co., Inc. 56 F.3d 1538, 1552 (Fed. Cir. 1995). A
licensee with such proprietary rights is generally called an
"exclusive" licensee. Ortho Pharmaceutical, 52 F.3d at 1032.
Thus, exclusive licensees have standing to sue, whereas bare
licensees those who hold nothing more than the patent owner's
covenant not to sue the licensee for infringement do not. Id.
"But it is the licensee's beneficial ownership of a right to
prevent others from making, using or selling the patented
technology that provides the foundation for co-plaintiff
standing, not simply that the word `exclusive' may or may not
appear in the license. Id.
Defendant argues that neither Ropak nor Plas-Tool is an
exclusive licensee of the `337 patent; therefore, they have no
standing to sue. Plaintiffs argue that Ropak and Plas-Tool have
exclusive rights under the `337 patent that no other licensee has
been granted, and it is these exclusive rights that Defendant has
infringed. A. ROPAK'S STANDING
To determine whether Ropak has standing as a co-plaintiff, the
Court looks to Ropak's agreement with the patentee. See Ortho
Pharmaceutical, 52 F.3d at 1032 (stating that "co-plaintiff
standing is determined by whether or not the licensee acquired
proprietary rights in the patent under the contract with the
patentee"). The 1995 Agreement between Von Holdt, Sr., Plas-Tool,
and Ropak grants Ropak the right to make, use, and sell plastic
lids covered by claims 9-12 of the `337 patent.*fn1 The
Agreement states that this license "shall be exclusive with
respect to plastic lids . . . within the following size and
thickness parameters," which the Agreement then lists. (Von Holdt
Decl. Ex. G § 3B) (emphasis added). The Agreement also states
that, "[w]ith respect to the plastic lids for round containers
which do not fall within the [specified] size and thickness
parameters, ROPAK shall have a non-exclusive license." (Von Holdt
Decl. Ex. G § 3C). Thus, the Agreement's terms grant Ropak an
exclusive license to lids of a certain size under claims 9-12 of
the `337 patent. Still, the presence of the word "exclusive" in
the license, without more, does not mean that Ropak is an
exclusive licensee. Ortho Pharmaceutical, 52 F.3d at 1032.
Nor is the right to sue clause in the Agreement dispositive.
The Agreement states that, with respect to infringement claims,
the "parties agree to cooperate and assist each other . . . at no
cost to the other party, regardless of the party which prosecutes
the proceedings." (Von Holdt Decl. Ex. G § 11B). The Agreement
provides an example: "[I]n the event of prosecution by ROPAK and
if necessary in order for such prosecution to occur, VON HOLDT
and PLAS-TOOL will agree to be joined in the prosecution as nominal parties
and/or to assign ROPAK their rights to prosecute the matter."
Id. (emphasis added). This provision, however, does not
automatically grant Ropak co-plaintiff standing. As explained in
Ortho Pharmaceutical, 52 F.3d at 1034, "a right to sue clause
cannot negate the requirement that, for co-plaintiff standing, a
licensee must have beneficial ownership of some of the patentee's
proprietary rights. A patentee may not give a right to sue to a
party who has no proprietary interest in the patent."
Rather, the Court must determine whether Ropak holds some of
the proprietary sticks in the bundle. Ropak does hold the right
to exclude others who might "make, use, or sell" `337 plastic
lids within the size and thickness parameters specified in the
Agreement. Not only does the Agreement repeatedly refer to
Ropak's license as exclusive in this area, Von Holdt, Sr. and
Plas-Tool warrant in the Agreement "that it will not sell molds
to others which would grant implied licenses in conflict with the
exclusive license granted to ROPAK, except to LANDIS [PLASTICS,
INC.] under the terms [stated earlier in the Agreement]." (Von
Holdt Decl. Ex. G § 3F). Thus, Ropak has received the patentee's
express promise that others will be excluded from practicing `337
patent within Ropak's territory.*fn2
Defendants argue that because the Agreement makes the above
exception for Landis Plastics, Inc. ("Landis"), Ropak does not
have the sole right to make, use, or sell plastic lids and
therefore cannot be an exclusive licensee. Plaintiffs counter
that Landis' right to make, use, or sell lids under the `337
patent is limited to lids that incorporate both the `337
technology and technology solely owned by Landis (the `135 patent), or, plastic
lids with hinges. By contrast, the `337 patent is for
non-hinged plastic lids. Thus, according to Plaintiff, Ropak
still has the exclusive right to make, use, or sell non-hinged
lids (`337 technology only). Defendant infringed upon the `337
technology, not the `135-`337 lid with hinges made by Landis.
Therefore, Defendant infringed upon rights that Ropak has
Construing all reasonable inferences in Plaintiff's favor,
Plaintiff's explanation of Ropak's exclusive rights to `337
patent is persuasive. Moreover, Defendant is incorrect that
co-plaintiff standing requires that Plaintiff be able to exclude
all others from making, using, or selling the patented
technology. The case law requires that Plaintiff only be able to
exclude "others," not all others. See Ortho Pharmaceutical,
52 F.3d at 1032; Hill Phoenix, Inc. v. Systematic Refrigeration,
Inc., 117 F. Supp. 2d 508, 512 (E.D. Va. 2000) (stating that
"[t]he Federal Circuit has never stated that the licensee must
have the right to exclude all others") (emphasis in original).
Thus, the fact Ropak cannot exclude one party, Landis, from
making, using and selling lids covered by both the `135 and `337
patents does not mean that Ropak cannot hold an exclusive
The Landis license is a nonexclusive license that predates Von
Holdt, Sr. and Plas-Tool's 1995 Agreement with Ropak. (Von Holdt
Decl. 7). In Hill Phoenix, the court found that held that the
existence of previous, nonexclusive licenses did not preclude a
later grant of an exclusive license:
If a patentee grants a second license that is subject
to a prior-existing, nonexclusive license, but
otherwise provides the second licensee with the right
to exclude all others except the prior licensee, then
the subsequent licensee has proprietary rights
sufficient to confer standing. Hill Phoenix, 117 F. Supp. 2d at 513. The second (exclusive)
licensee would still "be a `beneficial owner of some identifiable
part of the patentee's bundle of rights to exclude others.'"
Id. at 513 (quoting Ortho Pharmaceutical, 52 F.3d at 1032.).
The district court's conclusion finds support in language by the
Federal Circuit: In Abbott Laboratories v. Diamedix
Corporation, 47 F.3d 1128, 1132 (Fed. Cir. 1995) (emphases
added), the Federal Circuit observed that "Abbott's exclusive
license was . . . made subject to prior licenses granted by
Diamedix." Taking this and other factors into account, the court
ordered the licensee, Abbott, join the patentee, Diamedix, in an
The existence of a nonexclusive license did not preclude the
finding that Hill Phoenix was an exclusive licensee with standing
to bring a case jointly with the patentee. Nor did the existence
of a nonexclusive license preclude Abbott from serving as
co-plaintiff in an infringement suit. Accordingly, the license to
Landis for technology incorporating both the `337 and `335
patents does not preclude a finding that Ropak is an exclusive
licensee under the `337 patent with standing to bring a case
jointly with the patentee.
Finally, Defendant argues that, because Ropak lacks full rights
under the 1995 Agreement to assign its license, "it must
subscribe to the will of another" and therefore does not have
complete proprietary rights. (Def.'s Mem. Supp. Mot. to Dismiss
11). The Agreement states that Ropak may sublicense the `337
patent, but may not assign it without the consent of Plas-Tool,
unless making an assignment to a successor business. (Von Holdt
Decl. Ex. G §§ 6, 8). Defendant cites no case law in support of
this final point and the Court does not find any. The Federal
Circuit has never defined the right to assign as one of the
sticks of the proprietary bundle that a licensee must have to
be considered an exclusive licensee. In sum, the Court finds that Ropak has the exclusive right to
make, use, or sell lids under the `337 patent. Landis'
prior-issued nonexclusive license to make lids that incorporate
both its own `135 patent and the `337 patent does not negate this
exclusivity, and Ropak has received an express promise from the
patentee and Plas-Tool that others will be excluded from Ropak's
territory. Because Ropak holds an exclusive (sub)license under
the `337 patent, it has co-plaintiff standing. Defendant's motion
to dismiss Ropak as plaintiff is denied.
B. PLAS-TOOL'S STANDING
Likewise, to determine whether Plas-Tool has co-plaintiff
standing, the Court looks to Plas-Tool's agreement with the
patentee. In 1987, John von Holdt, Sr. granted Plas-Tool a
"worldwide, nonexclusive, royalty free license to make, use and
sell the inventions covered" in the patents von Holdt, Sr. owned
at the time and in the future. (Von Holdt Decl. Ex. C) (emphasis
added). The `337 patent issued after the date of the 1987 grant,
but was covered by the grant. Therefore, under the terms of the
1987 license grant, Plas-Tool has a nonexclusive right to make,
use, and sell the invention covered in the `337 patent; that is,
a plastic lid.*fn3 In 1992, Von Holdt, Sr., acting on behalf
of a trust, granted Plas-Tool a "non-exclusive, royalty-free
license to make, use or sell under the Licensed Patents
throughout this world." (Von Holdt Decl. Ex. I § 2) (emphasis
added). The patents covered under the 1992 agreement included the
`337 patent. Von Holdt., Jr. signed this 1992 patent license
agreement in 1998 as successor trustee. In 2000, von Holdt, Jr.
and Anderson purchased patent properties, including the `337
patent, from the Family Trust. (Von Holdt Decl. 9). The Memorandum of
Understanding accompanying the purchase mentions Plas-Tool's
"status as a non-exclusive licensee" of the patents affected by
the purchase. (Von Holdt Decl. Ex. K § II) (emphasis added).
Similarly, the 1995 Agreement between Von Holdt, Sr., Plas-Tool,
and Ropak describes Plas-Tool as a "non-exclusive licensee
under the `337 patent" and contains a provision in which
Plas-Tool "warrants that it has a non-exclusive license under
the `337 patent." (Von Holdt Decl. Ex. G Pages 1, 10) (emphases
That the word "exclusive" may or may not appear in the 1987
license or any of the agreements that followed, without more,
does not mean that Plas-Tool is an non-exclusive licensee of the
`337 patent. See Ortho Pharmaceutical, 52 F.3d at 1032. Nor
are the right to sue clauses in the various agreements
dispositive. The agreement signed by Von Holdt, Sr. as trustee in
1992 and by Von Holdt, Jr. as successor trustee in 1998 states
that actions for infringement "will be initiated upon agreement
of Licensor [the Von Holdts] and Licensee [Plas-Tool]." (Von
Holdt Decl. Ex. I § 7). The 1995 Agreement between Von Holdt,
Sr., Plas-Tool, and Ropak states that "VON HOLDT and PLAS-TOOL,
collectively, shall have the initial right to bring and prosecute
infringement proceedings involving the `337 patent." (Von Holdt
Decl. Ex. G § 11B). These provisions do not automatically accord
Plas-Tool co-plaintiff standing. See id. at 1034.
Rather the Court must determine whether Plas-Tool holds some of
the proprietary sticks in the bundle of patent rights. Id.
There are two issues: (1) whether Plas-Tool has the right to
exclude others from making, using, or selling the `337 plastic
lids and (2) whether Plas-Tool's alleged exclusive right to make
and sell the molds often used to make the `337 plastic lids
translates into the right to exclude others from making, using,
or selling the `337 plastic lids. If the facts alleged in the Complaint and the attached documents
and all reasonable inferences drawn from those facts can show
either one, Plas-Tool has co-plaintiff standing.
Plaintiffs do not allege that Plas-Tool has an exclusive right
to make, use, or sell the `337 plastic lids or the right to
exclude others who might make, use, and sell those lids. Yet that
is the very exclusive right Plaintiff would need to demonstrate
to have co-plaintiff. The standard is clear: To have standing to
join the patentee in an infringement suit, a licensee must be
able to show proprietary rights "in the invention" or "on the
patent" being infringed upon. See Ortho Pharmaceutical,
52 F.3d at 1031, 1032. This Court will not find what does not appear
from the facts that Plaintiffs have alleged and what Plaintiffs
do not argue. Plas-Tool does not have proprietary rights under
the `337 patent to exclude others from making, using, and selling
the plastic lids covered by the patent.
Rather, Plaintiffs argue that Plas-Tool is an exclusive
licensee of the `337 patent because Plas-Tool "is and always has
been the exclusive licensee for making the molds for the `337
patented products." (Pl.'s Mem. Opp. Def's Mot. to Dismiss 11)
(emphasis original). Plas-Tool, Plaintiffs assert, "was the
exclusive licensee to make the molds that Plastican used to
make its infringing products." (Pl.'s Mem. Opp. Def's Mot. to
Dismiss 2) (emphasis original). Plaintiffs explain:
In practice, Plas-Tool is the sole-arbiter of `337
patent technology. . . . No license to practice `337
technology can be acquired without requesting from
Plas-Tool the mold(s) to produce under that
technology. Control of the distribution of
Plaintiff's Plas-Tool's molds is the modus for
controlling the authority to practice `337 patent
(Pl.'s Mem. Opp. Def's Mot. to Dismiss 11). Plas-Tool argues that
it has the exclusive right to make and sell molds; therefore,
almost no one can make `337 lids without purchasing a mold from Plas-Tool. See Von Holdt Decl. 2 (declaring that all
`337 lids "are typically fabricated using such molds")
(emphasis added). Given this, Plaintiffs argue, Defendant has
infringed upon Plas-Tool's exclusive rights under the `337 patent
by failing to buy a mold from Plas-Tool before making and selling
a plastic lid that infringed upon the `337 patent.
Plas-Tool, however, does not point to any license agreement
describing Plas-Tool's exclusive right to make and sell molds
under the `337 patent or any other patent. It merely describes
itself as the "only entity licensed to make the molds that
typically are used to fabricate the `337 patent products" and the
"sole authorized manufacturer and provider of injection-molding
molds commonly used to produce products under the `337 products."
(Pl.'s Mem. Opp. Def's Mot. to Dismiss 2; Von Holdt. Decl. 2).
The Court agrees with Defendant that Plas-Tool's status as an
authorized, popular mold-maker does not convert its
non-exclusive license to make, use, and sell lids into an
exclusive license to make, use, and sell lids. (Def.'s Reply
Mem. Supp. Mot. Dismiss 8).
According to Plaintiffs, the right of first refusal provision
in the 1995 Agreement between Von Holdt, Sr., Plas-Tool, and
Ropak is evidence of Plas-Tool's exclusive rights under the `337
patent. (Pl.'s Mem. Opp. Def's Mot. to Dismiss 12). The 1995
Agreement provides that Ropak can purchase a mold from a third
party only if Plas-Tool elects not supply one. First, however,
however, Ropak must submit the third party's quote to Plas-Tool
to give Plas-Tool the opportunity to make the mold at the third
party's rate. In addition, Ropak must include this right of first
refusal provision in any sublicense agreement. Plaintiff argues
that, even though Ropak has this right to purchase molds from
other companies, Ropak has never exercised the right. Hence, Plas-Tool, "continues to be the `exclusive' licensed
mold-maker" for the lids that Defendant infringed. (Pl.'s Mem.
Opp. Def's Mot. to Dismiss 4).
The right of refusal provision does nothing but highlight that
Plas-Tool is, first and foremost, a maker of molds. The present
action, however, is one for infringement of the `337 patent for
plastic lids, not for the molds that make the plastic lids.
Plas-Tool has not alleged a cause of action for infringement of
an exclusive license to make molds for the `337 plastic lids.
Plas-Tool has not even identified a patent for its molds. Thus,
even a showing (which the Court determines that Plas-Tool cannot
make) that Plas-Tool is the exclusive maker of molds does not
amount to a showing that Plas-Tool has the right to exclude
others from making, using, or selling lids.
Finally, Plaintiffs argues that the patent owners "have always
had an `ownership' interest" in Plas-Tool and "never
contemplated" licensing the mold-making operation to anyone else.
(Pl's Mem. Opp. Def's Mot. to Dismiss 12). "Plas-Tool is the sole
licensee of the `337 patent technology, through which all
subsequent licenses flow." (Id.) Plaintiffs cite Kalman v. Belyn
Corp., 914 F.2d 1473, 1482 (Fed. Cir. 1990), for the proposition
that "when the nexus between the sole licensee and the patentee
is so clearly defined as here, the sole licensee must be
recognized as the real party in interest."
The Kalman case is distinguishable because (a) it is
restricted to a two-supplier market and (b) Plas-Tool is not a
sole licensee with the meaning of Kalman and the cases cited
therein. First, Kalman allows a sole licensee to join as
co-plaintiff when the sole licensee is "damaged by an infringer
in a two supplier market." Kalman 914 F.2d at 1482. Defendants
are correct that Plaintiffs are not operating in a two-supplier
market when: Since 1995, Ropak and Plas-Tool have cooperated in stopping multiple infringers of the `337
patent. (Von Holdt Decl. ¶ 29). Second, Kalman granted
co-plaintiff standing because the licensee was the sole licensee
to sell the patented product. See also Weinar v. Rollform,
Inc., 722 F.2d 797, 806 (Fed. Cir. 1984) (permitting licensee
with an exclusive right to sell patented product co-plaintiff
standing); Duplan Corp. v. Deering Milliken Research Corp.,
522 F.2d 809, 812 (4th Cir. 1975) (permitting exclusive-use
licensee under the patent to join as co-plaintiff). Plas-Tool
does not hold the sole or exclusive license to make `337 lids,
use `337 lids, or sell `337 lids. At most, Plas-Tool has the
exclusive honor of being the sole mold-maker the patent owners
In sum, Plas-Tool has alleged no facts that show it has the
right to exclude others from making, selling, or using `337
plastic lids. At most, Plas-Tool has demonstrated its dominance
of the market for molds that can be used to make `337 plastic
lids. Plas-Tool has received the patentee's express or implied
promise that others will be excluded from making molds that are
used to make `337 lids, but not the "express or implied promise
that others shall be excluded from practicing the invention"
in dispute, which is the `337 patent for plastic lids. See
Rite-Hite, 56 F.3d at 1552. Because Plas-Tool has not shown
the "beneficial ownership of a right to prevent others from
making, using or selling the patented technology that provides
the foundation for co-plaintiff standing," it is not an exclusive
licensee of the `337 patent. Ortho Pharmaceutical,
52 F.3d at 1032. Defendant's motion to dismiss Plas-Tool as plaintiff is
granted. IV. CONCLUSION
For the foregoing reasons, Defendant's motion to dismiss Ropak
as plaintiff is DENIED. Defendant's motion to dismiss Plas-Tool
as plaintiff is GRANTED.
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