## Facts

- BASF Aktiengesellschaft owned patents covering pharmaceutical microtablets containing pancreatic enzymes used to aid fat digestion.
- BASF’s wholly owned subsidiary granted McNeilab an exclusive license to make, use, and sell products covered by the patents.
- The license gave McNeilab authority to sue infringers in its own name and retain any recovery; BASF disclaimed any duty to enforce.
- McNeilab sued Scandipharm for patent infringement in the Eastern District of Pennsylvania.
- Scandipharm filed a third-party complaint against BASF, asserting BASF was a necessary party.
- The district court dismissed the third-party complaint against BASF, then granted summary judgment for Scandipharm and dismissed McNeilab’s infringement suit for lack of standing and failure to join BASF under Rule 19.
- Scandipharm relied in part on BASF letters to a third party (Eurand) stating BASF would not assert certain patents against specified products, arguing this limited the rights transferred to McNeilab.

## Issues

1. Whether McNeilab’s exclusive license conveyed “all substantial rights” such that McNeilab had standing to sue for patent infringement in its own name.
2. Whether BASF, as record patent owner, was a required party under Federal Rule of Civil Procedure 19 whose absence required dismissal.

## Decision

- The Federal Circuit held McNeilab had standing because the license transferred all substantial rights, including exclusionary and enforcement rights in the licensed field.
- The court held BASF was not a necessary party under Rule 19 given the rights transferred to McNeilab and the lack of a remaining protectable BASF interest requiring joinder.
- The court affirmed dismissal of Scandipharm’s third-party complaint against BASF.
- The court reversed dismissal of McNeilab’s infringement action and remanded for further proceedings on the merits.

## Legal Principles

- A non-exclusive licensee lacks standing to sue for infringement because it has no judicially enforceable right to exclude others.
- An exclusive licensee has independent standing when it receives all substantial rights in the patent, evaluated functionally based on the rights actually transferred (not labels).
- Contractual limits such as termination provisions or consent-to-assignment restrictions do not defeat standing if the licensee retains the core exclusionary and enforcement rights.
- Separate non-assertion arrangements by the patent owner may operate as potential defenses or encumbrances but do not necessarily negate an exclusive licensee’s standing where enforcement control and substantial rights remain with the licensee.
- Rule 19 joinder is distinct from standing; a patent owner need not be joined when complete relief can be afforded among existing parties and the owner retains no concrete interest that would be impaired by adjudication.

## Conclusion

The Federal Circuit reinstated the infringement case, holding that McNeilab’s exclusive license conveyed all substantial rights sufficient for standing and that the patent owner, BASF, was not a required party under Rule 19.


McNeilab, Inc. v. Scandipharm, Inc., 95 F.3d 1164 (Fed. Cir. 1996)