McNeilab v. Scandipharm and BASF
United States Court of Appeals for the Federal Circuit
1996 U.S. App. LEXIS 19073 (1996)
- Written by Tammy Boggs, JD
Facts
BASF Aktiengesellschaft (BASF) (defendant) held two patents that covered a cylindrical pharmaceutical microtablet. Through its subsidiary, BASF granted McNeilab, Inc. (McNeil) (plaintiff) an exclusive license to make, use, and sell the microtablet covered by the patents. BASF retained no right to make, use, or sell the product. Either McNeil or BASF could terminate the license agreement in the event of the other party’s default or in a few other scenarios. McNeil was also required to obtain BASF’s consent to assign the license to an unaffiliated company, a requirement that constituted a restriction on alienation. Finally, under a negation-of-warranties clause, BASF was not obligated to sue any patent infringers and made no representations that the patents would not be infringed. McNeil was permitted under the clause to bring an infringement action in its own right and to retain any recovered award. Thereafter, McNeil sued Scandipharm, Inc. (defendant) for infringing the patents. Scandipharm filed a third-party complaint against BASF on the basis that BASF was a necessary party. On BASF’s motion, Scandipharm’s complaint was dismissed. The court then dismissed McNeil’s action for failure to join a necessary party and for McNeil’s lack of standing to sue on its own. McNeil appealed.
Rule of Law
Issue
Holding and Reasoning (Newman, J.)
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