A123 Systems, Inc. v. Hydro-Quebec
626 F.3d 1213
Fed. Cir.2010Background
- A123 filed a declaratory judgment action in the District of Massachusetts seeking noninfringement and invalidity of two UT-owned patents licensed to HQ.
- HQ moved to dismiss, arguing UT was a necessary/indispensable party and could not be joined due to Eleventh Amendment immunity.
- HQ and UT later sued A123 for infringement in the Northern District of Texas; a reexamination narrowed patent scope, and the Massachusetts case was stayed/dismissed with an option to reopen.
- A123 timely moved to reopen in 2008; the district court denied, concluding joinder of UT would be required and would doom the first-filed action.
- The district court held UT was a necessary (and indispensable) party because HQ held only a field-of-use license, not all substantial rights.
- The Federal Circuit affirmed, holding UT is a necessary and indispensable party and that UT’s Eleventh Amendment immunity in Massachusetts prevents joinder; thus the declaratory judgment action was properly dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether UT is a necessary party | A123 argues UT's absence defeats standing and jurisdiction. | HQ contends UT retained essential rights; HQ is a field-of-use licensee, so UT is necessary. | UT is a necessary party. |
| Whether UT's Eleventh Amendment immunity prevents joinder | UT waived immunity by filing a Texas infringement suit. | Waiver does not extend across separate actions; BPMC controls and tolls waiver effect. | UT immunity cannot be waived by Texas suit; cannot be joined. |
| Whether UT is indispensable under Rule 19 | Rule 19 analysis not properly conducted; joinder feasible via equitable/adequate remedy. | Dispositive Rule 19 factors weigh in favor of indispensability due to prejudice and risk of inconsistent relief. | UT indispensable; action should be dismissed. |
Key Cases Cited
- Enzo APA & Son, Inc. v. Geapag A.G., 134 F.3d 1090 (Fed. Cir. 1998) (patentee necessary for standing in declaratory judgment actions)
- Waterman v. Mackenzie, 138 U.S. 252 (U.S. 1891) (rights transfer focus, not mere labeling)
- Int'l Gamco, Inc. v. Multimedia Games, Inc., 504 F.3d 1273 (Fed. Cir. 2007) (exclusive licensee lacking standing unless all substantial rights transferred)
- Vaupel Textilmaschinen KG v. Meccanica Euro Italia Spa, 944 F.2d 870 (Fed. Cir. 1991) (indispensable party analysis and prejudice considerations)
- Dainippon Screen Mfg. Co., Ltd. v. CFMT, Inc., 142 F.3d 1266 (Fed. Cir. 1998) (Rule 19 analysis; distinguishing cases where absence matters more)
- Biomedical Patent Management Corp. v. California, Department of Health Services, 505 F.3d 1328 (Fed. Cir. 2007) (waiver of Eleventh Amendment immunity does not extend to separate actions)
- Tegic Communications Corp. v. Bd. of Regents of Univ. of Texas Sys., 458 F.3d 1335 (Fed. Cir. 2006) (considerations of sovereign immunity in related litigation contexts)
- Republic of the Philippines v. Pimentel, 553 U.S. 851 (U.S. 2008) (sovereign immunity considerations in Rule 19 factor analyses)
- Schwarz Pharma, Inc. v. Paddock Labs., Inc., 504 F.3d 1371 (Fed. Cir. 2007) (indispensable-party concerns and potential for multiple suits)