The Federal Circuit gave the University of Pittsburgh (“Pitt”) a second chance at its patent infringement suit against Varian Medical Systems, Inc. (“Varian”). Because Pitt failed to name as a plaintiff a coowner of a patent it asserted against Varian, the district court dismissed the suit with prejudice because of the deficient complaint. However, the Federal Circuit held that a dismissal for lack of standing due to failure to join a co-owner of a patent in an infringement suit should be made without prejudice, in this case, allowing Pitt to properly establish standing by joining all co-owners of the asserted patent.

Scientists at the University of Pittsburgh (“Pitt”) and Carnegie Mellon University (“Carnegie Mellon”) collaborated to develop an improved apparatus for administering radiation therapy to lung cancer patients.

Pitt filed for, and was later granted, two patents covering those inventions, where Pitt and Carnegie Mellon were named as assignees for both patents.

Pitt later sued Varian Medical Systems, Inc. (“Varian”) for infringement of the patents at issue in district court, but failed to include Carnegie Mellon as a plaintiff. Varian moved for summary judgment to dismiss the case based on its assertion that Pitt lacked standing to bring the action at issue because of failure to name Carnegie Mellon as a plaintiff. In particular, Varian alleged that because Carnegie Mellon was a co-owner of the patents at issue, Pitt did not own the entire right in the patents, and therefore lacked standing to sue Varian for patent infringement.

Pitt moved to join Carnegie Mellon as plaintiff pursuant to Federal Rule of Civil Procedure 19, which allows for joining parties to a suit, but without explanation, the district court denied Pitt’s motion. In response to Pitt’s motion, Varian alleged that it was too late for Pitt to add Carnegie Mellon and urged the district court to dismiss the action with prejudice. Dismissal with prejudice by a court operates as a bar to future action by preventing plaintiff from making further attempts at a claim based upon the same facts. The district court dismissed the action with prejudice on the grounds that Carnegie Mellon should have been joined when the action was commenced, and that joinder at this point in the litigation would be untimely and unfair to Varian.

In holding that the district court’s ruling was a clear abuse of discretion, the Federal Circuit focused on the following four factors, while not exclusive, to determine when dismissal is appropriate: 1) the degree of the plaintiff’s personal responsibility for the delay, 2) prejudice to the defendant occasioned by the delay, 3) any history that the plaintiff proceeded in a dilatory manner and 4) the effectiveness of sanctions other than dismissal. In reviewing the district court’s decision, the Federal Circuit found that, “[t]he district court’s opinion simply fails to discuss any of the relevant factors.” The district court’s only explanation for dismissing the suit with prejudice was that 1) Pitt should pathave joined the co-owner, Carnegie Mellon, of the patents at issue, at the commencement of its infringement action and 2) Pitt’s attempt to join Carnegie Mellon was “untimely and unfair” to the defendant Varian.

With respect to the district court’s first reason for dismissing the action with prejudice, the Federal Circuit stated that it is clear that a dismissal for failure to join a party is not an adjudication on the merits, and thus the dismissal should have been without prejudice. Accordingly, the Federal Circuit stated that although the district court had discretion to dismiss the action, because Pitt failed to join a co-owner of the patents in suit, the district court lacked discretion to do so with prejudice. In particular, the Federal Circuit states, “The district court should have dismissed the action without prejudice, which would allow Pitt to file a second action with the standing defect cured through the joinder of the proper parties or an assignment of the necessary patent rights.” With respect to the district court’s second reason for dismissing the action with prejudice, the Federal Circuit states that the district court cited no authority indicating why dismissal with prejudice is a proper consequence for an “untimely and unfair” attempt to join a party. The determination of whether the dismissal with prejudice is appropriate for actions, such as an “untimely and unfair” attempt to join a party, is a procedural issue not unique to pat ent law, and thus, the Federal Circuit applied the law of the regional circuit.

As held in Donnelly v. Johns- Manville Sales Corp., “dismissal [with prejudice] is a drastic sanction and should be reserved for those cases where there is a clear record of delay or contumacious conduct by the plaintiff.” 677 F.2d 339, 342 (3d Cir. 1982) .

In summary, the Federal Circuit held that the district court’s dismissal of Pitt’s infringement action with prejudice was an abuse of discretion.

Accordingly, the Federal Circuit reversed and designated the dismissal to be without prejudice allowing Pitt to establish standing by joining Carnegie Mellon in the infringement suit.