Solarex Corp. v. Arco Solar, Inc., Civ. A. No. 87-237-JJF.

• Citation: 805 F. Supp. 252
• Decision Date: 06 November 1992
• Docket Number: Civ. A. No. 87-237-JJF.
• Parties: SOLAREX CORPORATION, Plaintiff, v. ARCO SOLAR, INC. and Siemens Solar Industries, L.P., Defendants.
• Court: U.S. District Court — District of Delaware

805 F. Supp. 252

SOLAREX CORPORATION, Plaintiff, v. ARCO SOLAR, INC. and Siemens Solar Industries, L.P., Defendants.

Civ. A. No. 87-237-JJF.

United States District Court, D. Delaware.

November 6, 1992.

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Steven J. Balick, Ashby & Geddes, Wilmington, Del., Kenneth E. Payne, Thomas W. Winland, and J. Michael Jakes, Finnegan Henderson Farabow Garrett & Dunner, Washington, D.C., for plaintiff.

Arthur G. Connolly, Jr., Connolly Bove Lodge & Hutz, Wilmington, Del., Harold E. Wurst, Robert A. Green, and Jai ho Rho, Nilsson Robbins Dalgarn Berliner Carson & Wurst, Los Angeles, Cal., for defendants.

OPINION

FARNAN, District Judge.

This action was filed by Solarex Corporation ("Solarex") in 1987 alleging infringement of Plaintiff's United States Patent Numbers 4,064,521 ("the '521 patent), 4,317,844 ("the '844 patent") and 4,217,148 ("the '148 patent") against ARCO Solar, Inc. ("ARCO"). RCA Corporation ("RCA") who owned the patents in suit and had licensed them to Solarex was joined as a third party defendant. Later, RCA realigned itself as a plaintiff and filed its own complaint in the alternative for infringement. On May 2, 1989, RCA assigned the three patents in suit to Solarex. Solarex's complaint was then amended on January 30, 1990, to reflect that it was the current owner of the patents.

On February 28, 1990, ARCO was merged into a Delaware limited partnership, Siemens Solar Industries ("Siemens"). On August 7, 1990 Siemens was added as a defendant in this action. Defendants deny infringement of the patents in suit and have raised claims for declaratory judgment of noninfringement, invalidity, and unenforceability. Defendants also challenge Solarex's standing to sue for infringement.

All parties agree that this Court has jurisdiction over the parties and the subject matter on RCA's patent infringement claim pursuant to 28 U.S.C. § 1338(a). Venue is proper in this District for this claim pursuant to 28 U.S.C. § 1400(b). The parties are in dispute, however, with respect to jurisdiction and venue regarding Solarex's claims for patent infringement. Solarex alleges that jurisdiction and venue are proper pursuant to 28 U.S.C. §§ 1338(a) and 1400(b), respectively. Defendants challenge the Court's jurisdiction over these claims alleging that Solarex lacks standing to bring this action. The parties agree that if the Court concludes Solarex has standing then jurisdiction and venue are proper pursuant to 28 U.S.C. §§ 1338(a) and 1400(b), respectively.

The Court has jurisdiction over defendants' claims for a declaratory judgment pursuant to 28 U.S.C. §§ 1331 and 1338(a). Finally, all parties have stipulated that the Court has personal jurisdiction over them.

The Court conducted a bench trial in this action on the issues of infringement, willful infringement, validity, enforceability, and standing. The issue of damages and an issue concerning a license between RCA and Siemens AG from which Siemens Solar claims to benefit, was severed to be tried at a later date.¹ In accordance with Fed. R.Civ.Proc. 52(a), this Opinion shall constitute the Court's Findings of Fact and Conclusions of Law on the issues of standing, infringement, willful infringement, validity, and enforceability.

Because the Defendants challenge the jurisdiction of the Court to hear the claims raised by Solarex, the Court will first address Solarex's standing to bring this action.

I. STANDING

The United States Constitution limits the jurisdiction of the federal courts to adjudicating "cases or controversies." U.S. Const. Art. III, § 2. A prerequisite under Art. III's case or controversy requirement is that the party seeking to invoke the jurisdiction of a federal court must have standing to do so. A plaintiff must prove three elements to establish standing: (1) personal injury in fact, (2) injury fairly traceable to the alleged unlawful conduct, and (3) the requested relief will redress the injury. Valley Forge Christian College v. Americans United for Separation of Church and State, 454 U.S. 464, 472, 102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982).

Although the standing issue in this case grew more complicated and confused as the litigation continued, the basic arguments of the parties remained fairly consistent. ARCO alleges that Solarex does not have standing because as a "mere" non-exclusive licensee, Solarex does not possess a sufficient personal interest in the patents. Solarex, on the other hand, advances three main arguments in support of its standing: (1) the May 2, 1989 assignment from RCA to Solarex of all of RCA's rights in the patents in issue,² and the subsequently amended complaint³ are sufficient to confer standing on Solarex; (2) Solarex was an exclusive licensee at the time it initiated the lawsuit; and (3) the presence of RCA as plaintiff, alleging infringement against ARCO precludes dismissal based on Solarex's alleged lack of standing. The parties have raised numerous factual and legal arguments for and against a finding of standing. The Court has considered all of the arguments raised by both parties, but does not deem it necessary to address each one individually.

The Court concludes that Solarex does have standing to sue ARCO for patent infringement. First, the Court finds that Solarex is an exclusive licensee. An exclusive licensee, as opposed to a non-exclusive licensee, has standing to sue for infringement against those operating within the scope of exclusivity without authority. Independent Wireless Telegraph Co. v. Radio Corp. of America, 269 U.S. 459, 468, 46 S.Ct. 166, 169, 70 L.Ed. 357, reh'g denied, 270 U.S. 84, 46 S.Ct. 224, 70 L.Ed. 481 (1926). The policy behind granting an exclusive licensee standing to sue is best articulated in Philadelphia Brief Case Co. v. Specialty Leather Prods. Co., 145 F.Supp. 425, 428 (D.N.J.1956), aff'd, 242 F.2d 511 (3rd Cir.1957)).

Since the creation of such rights in the ... exclusive licensee ... prevents the proprietary owner of the patent from creating further rights therein in unknown third parties, this so-called exclusive licensee ... comes so close to having truly proprietary interests in the patent, that courts have held that he is equitably entitled to sue on the patent, provided he joins the true proprietor of the patent in such suit, either as a willing or unwilling plaintiff or defendant....

Whether or not a party is an exclusive licensee must be determined according to this policy. Specifically, if the patent owner is precluded from granting further licenses after the date of the license, then the license is exclusive. See 6 Donald S. Chisum, Patents § 21.032c (1992). Thus, the Court's inquiry into whether Solarex has standing as an exclusive licensee must begin with an examination of the RCA-Solarex agreements.

The "Original Agreement" entered into on August 18, 1983 between RCA and Solarex granted Solarex exclusive and non-exclusive license rights under a number of U.S. patents then owned by RCA. (PX-198 and DX-16). The exclusive rights granted were to run until December 31, 1986 and were subject to four pre-existing rights. As such, in the Original Agreement RCA granted Solarex:

an exclusive license, right and privilege under the Subject Patents to manufacture, use, sell, lease or otherwise dispose of Contract Apparatus.

(DX-16 and PX-198, Article IV, Section 1(a)(i)). The Subject Patents were defined as:

those United States Patents of RCA listed in Appendix A to this Agreement and, in addition, shall include any United States Patents which issue in favor of RCA based upon any of the patent applications or invention disclosures listed in Appendix A.

(DX-16 and PX-198, Article I, Section 1(e)). Appendix A, which contains a list of all Subject Patents, includes the three patents at issue here. (DX-16 and PX-198, Appendix A). The agreement then defined Contract Apparatus as:

amorphous silicon solar panels (exclusive of hardware, i.e., frames and junction boxes) comprising one or more solar cells which generate current by the absorption of light by amorphous silicon designed or adapted for the generation of electrical power.

(DX-16 and PX-198, Article I, Section 1(f)).

Further, pursuant to the agreement, Solarex was granted:

(ii) an exclusive license, right and privilege under the counterparts of the Subject Patents of all countries of the world other than Japan to manufacture Contract Apparatus, and a non-exclusive license, right and privilege under such Patents to use, sell, lease or otherwise dispose of Contract Apparatus; and

(iii) a non-exclusive license under all other Patents of RCA, including RCA's Patents of Japan excluded from the foregoing Section (1)(a)(ii), to manufacture, use, sell, lease and otherwise dispose of Contract Apparatus.

(DX-16 and PX-198, Article IV, Sections 1(a)(ii) and (iii)). RCA's Patents were defined as patents

owned, controlled and/or obtained by RCA at any time during the term of this Agreement with respect to which and to the extent to which, and subject to the conditions under which, RCA shall have the right to grant licenses or any other rights granted by RCA pursuant to the terms of this Agreement, specifically including pre-existing rights of third parties as set forth in letter to Solarex of even date herewith and attached hereto as Appendix B.

(DX-16 and PX-198, Article I, Section 1(d)). Section 1(g) of Article IV stated that the licenses granted under Section 1, including the exclusive license in Sections (1)(a)(i) and (ii) were subject to certain preexisting rights under prior agreements between RCA and different entities as set out in Appendix B. (DX-16 and PX-198, Article I, Section 1(g)). Appendix B first describes the pre-existing non-exclusive licenses under RCA's patents. Appendix B goes on to list five contracts between RCA and the federal government under which RCA conducted extensive research. With regard to these government...