Takeaway: Make sure that you have been transferred “all substantial rights” in a patent before you initiate a lawsuit. Receiving a license on the patent from a parent company is not enough, you must have rights to the patent directly from the entity that owns the patent itself.

In an action that has been pending since October 1, 2014, Max Sound attempted to sue Google for infringement of United States Patent No. 7,974,339 (the “’339 Patent”).

Alexander Krichevsky and Constance Nash are the named inventors of the ’339 Patent. Subsequently, the two of them assigned their rights to an entity called Cornerstone who eventually assigned their rights to an entity called Vedanti who is the current owner of the ’339 Patent.

Vedanti happened to be a subsidiary of a company named VSL. Before this action, Max Sound entered a license agreement with VSL that allowed them to sue based upon VSL’s patent rights.

When the Defendants filed a motion to dismiss under FRCP 12(b)(1) challenging standing to sue the court found that the “essential issue regarding the right to sue on a patent is who owns the patent.” Here, Max Sound did not own the patent but they asserted that they had the right to sue because they had made an agreement with VSL to license the right to sue on their patent rights. With that said, the court pointed out two things that were determinative in this action: (1) that VSL technically did not own the ’339 Patent, but rather their subsidiary Vedanti did; and (2) the agreement allowing to sue on VSL’s patent rights did not reference the ’339 Patent anywhere in the document. For these reasons, Max Sound had no rights in the ’339 Patent because Vedanti did not assign them any rights in the patent.

The court found that because Max Sound had no rights in the ’339 Patent they, therefore, had no standing to sue and the Defendants were awarded attorneys fees.