Intell. Tech. LLC v. Zebra Techs. Corp
Authored by: Jeremy J. Gustrowsky
A recent decision clarifies an important issue for patent owners who have granted security interests in their patents to lenders. The case involved Intellectual Tech LLC, which owned U.S. Patent No. 7,233,247. After taking out a loan, its parent company and later Intellectual Tech itself gave the lender, Main Street Capital Corporation, a security interest in the patent. When both companies defaulted on their loans, the lender gained certain rights under the agreement, including the ability to license or assign the patent if it chose to do so.
The key question was whether Intellectual Tech lost its right to sue for patent infringement simply because the lender had the option to license or assign the patent after default. The district court originally said yes, reasoning that the lender’s rights meant Intellectual Tech no longer had the “exclusionary rights” needed to bring a lawsuit. However, the appeals court disagreed, holding that as long as the patent owner retains at least some exclusionary rights—such as the right to sue for infringement—it still has standing to bring a case, even if another party (like a lender) also has the ability to license the patent.
The court explained that just because a lender has the option to license or assign a patent after default, this does not automatically strip the patent owner of all its rights. The patent owner only loses those rights if the lender actually exercises its options, such as by assigning the patent to someone else. Until then, the patent owner still suffers a legal injury if someone infringes the patent and can sue to stop it.
This decision provides reassurance to patent owners and their lenders: granting a security interest or even the option to license does not mean the patent owner loses the ability to enforce its patent in court. The court also clarified that issues about who should be joined in the lawsuit can be addressed later, and that the right to sue is not automatically lost just because another party holds some rights in the patent.