Does a “Beneficial” Patent Owner Have Standing?
by Pamela Chestek • September 7, 2011 • patent
This presents some interpretive problems in the United States, though, because the statutory law for patents and trademarks does not encompass any concept of beneficial ownership. Copyright does; under section 501 of the Copyright Act, “The legal or beneficial owner of an exclusive right under a copyright is entitled . . . to institute an action for any infringement of that particular right committed while he or she is the owner of it.” But we’re a bit little lost in patent and trademark cases when the concept comes up. Does a beneficial owner have standing to bring an infringement claim?
Pfizer Inc. v. Teva Pharmaceuticals USA, Inc. examines the question for patents. The inventors of the patent-in-suit were employed by Pfizer Limited, but Pfizer Limited had a “Patent Filing Agreement” with Pfizer, Inc.:
|LIMITED Property patent applications will be filed by PFIZER [INC.] in the USA…. In filing such applications, PFIZER [INC.] will act as agent for LIMITED, so that such applications and any patents issued thereon shall be held by PFIZER [INC.] in trust for LIMITED, as the beneficial owner thereof.|
Both Limited and Inc. sued for patent infringement. Teva challenged both parties’ standing to assert the patent.
Patent law provides that there are three categories of patent right owners, “those that can sue in their own name alone; those that can sue as long as the patent owner is joined in the suit; and those that cannot even participate as a party to an infringement suit.” Where does a “beneficial owner” fit in?
|“Beneficial owner” is not defined in the Patent Filing Agreement, and it specifically provides that it is to be interpreted under the laws of England. The court has undertaken a review of English law and found that “beneficial owner” is often used to describe an entity that gathers the benefits of an asset, business, or agreement without necessarily holding legal title. From the court’s research, it appears that the term “beneficial owner” has similar meanings in both English and American law. This is not surprising given that “beneficial owner” in both countries sounds in equity, which evolved from mutual roots in the common law. Black’s Law Dictionary, noting the term’s origins in the Eighteenth Century, defines “beneficial owner” as “[o]ne recognized in equity as the owner of something because use and title belong to that person, even though legal title may belong to someone else…. Also termed equitable owner…. A person or entity who is entitled to enjoy the rights in a patent, trademark, or copyright even though legal title is vested in someone else.” Further, “[t]he beneficial owner has standing to sue for infringement.” Thus, it appears that, under the general definition of “beneficial owner,” such an entity has most to all of the traditional property rights of the owner, except for actual legal title to the property.
The terms of the Patent Filing Agreement do not contradict this meaning of the rights of a beneficial owner. Under that agreement, Pfizer, Inc. holds the patents in trust for Pfizer, Ltd., while Pfizer, Ltd. has the right to grant licenses and enforce the patent. Therefore, this court concludes that Pfizer, Ltd. has sufficient proprietary rights in the patent to confer standing to sue in its name alone. However, even if the court were to conclude otherwise, Pfizer, Ltd. certainly has sufficient proprietary rights to sue for infringement in concert with the owner of the patent, as it has done here with Pfizer, Inc.
Pfizer, Inc. v. Teva Pharm. USA, Inc., Civ. No. 2:10cv128 (E.D. Va. Aug. 12, 2011).
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