Aspex Eyewear, Inc. v. E'Lite Optik, Inc.

NOTE: Pursuant to Fed. Cir. R. 47.6, this disposition is not
citable as precedent. It is a public record.

United States Court of Appeals for the Federal Circuit

04-1292

ASPEX EYEWEAR, INC.,

Plaintiff-Appellant,

and

CONTOUR OPTIK, INC.,

Plaintiff,

v.

E’LITE OPTIK, INC.,

Defendant-Appellee.

__________________________

DECIDED: March 24, 2005
__________________________

Before MICHEL, Chief Judge, RADER and SCHALL, Circuit Judges.

MICHEL, Chief Judge.

Aspex Optik, Inc. (“Aspex”) appeals the grant of summary judgment by the

United States District Court for the District of Nevada in favor of E’Lite Optik, Inc.

(“E’Lite”) that Aspex lacked standing to sue E’Lite for infringement of U.S. Patent Nos.

5,737,054 and 6,012,811 (the “’054 and ’811 patents,” respectively) as an exclusive

licensee. Aspex Eyewear, Inc. & Contour Optik, Inc. v. E’Lite Optik, Inc., No.
CV-S-00-1116PMP (D. Nev. Aug. 6, 2003). The appeal was submitted after oral

argument on March 9, 2005. Because we agree with the district court that Aspex is not

an exclusive licensee of the asserted patents, we affirm.

I. BACKGROUND

A. The Asserted Patents

The ’054 patent was filed as U.S. Application No. 766,327 (the “’327 application”)

and issued on April 7, 1998, naming Richard Chao as the sole inventor. The ’811

patent, filed as U.S. Application No. 963,299 (the “’299 application”), is a

continuation-in-part of the ’054 patent. It issued on January 11, 2000, with brothers

David and Richard Chao as the named co-inventors. The ’054 and ’811 patents are

generally directed to eyeglass frames with magnets positioned at the bridges to allow

for the attachment of auxiliary lenses.

B. Chic-Aspex Agreement

Chic Optic, Inc. (“Chic”) is a Canadian corporation based in Montreal, Canada,

and Aspex is a Delaware corporation based in Miramar, Florida. Both companies are

owned and operated by the Ifergan family. Nonu Ifergan serves as President of both

Aspex and Chic. His son, Tierry Ifergan, is the Executive Vice President of Aspex. Chic

and Aspex are engaged in the business of distributing eyewear, including auxiliary

lenses that attach to primary frames via a magnet, in Canada and the United States,

respectively.

In March 1998, Chic and Aspex entered into a written license agreement wherein

Chic was defined as the “LICENSOR” and Aspex as the “LICENSEE” (“Chic-Aspex

Agreement”). Under the terms of this agreement, Chic granted Aspex an exclusive

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license in the United States to any rights it had acquired from third parties relating to

patents involving magnetic eyewear. Since the execution of the agreement, Aspex has

purchased products made according to the asserted patents from Chic for resale in the

United States.

C. Chao-Chic Agreement

In July 1998, Richard Chao, the sole named inventor of the ’054 patent and one

of the named co-inventors of the ’811 patent, granted Chic an exclusive license in

Canada and the United States to the ’327 and ’299 applications and any patents issued

thereon (i.e., the asserted ’054 and ’811 patents) (“Chao-Chic Agreement”). In July

1999, Richard Chao and his brother David Chao together assigned the asserted patents

to their company, Contour Optik, Inc. (“Contour”), Aspex’s co-plaintiff in this litigation.

D. Prior Court Proceedings

In September 2000, Aspex and Contour filed an infringement action against

E’Lite for willful infringement of the ’054 and ’811 patents. Chic, however, was not

named as a party to the suit. E’Lite moved for summary judgment on grounds that

Aspex lacked standing to sue, alleging that Chic could not have granted an exclusive

license for the asserted patents to Aspex because, at the time that Chic and Aspex

entered into the Chic-Aspex Agreement, Chic did not have any rights to either the ’054

or ’811 patent. Aspex and Contour opposed, supporting their brief in opposition with the

deposition testimony of Thierry Ifergan (“Ifergan Deposition”), Aspex’s designated Rule

30(b)(6) witness. In its reply, E’Lite asserted that because Thierry Ifergan lacked

personal knowledge about the negotiation and scope of the Chic-Aspex Agreement, his

deposition was inadmissible under Fed. R. Evid. 602.

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 The district court ruled in favor of E’Lite, concluding that the Ifergan Deposition

was not proper summary judgment evidence because Thierry Ifergan lacked personal

knowledge regarding the Chic-Aspex Agreement. Aspex Eyewear, Inc. & Contour

Optik, Inc. v. E’Lite Optik, Inc., No. CV-S-00-1116, slip op. at 8. The district court also

concluded that the Aspex lacked standing to sue because it failed to show that it was an

exclusive licensee of the asserted patents under the Chic-Aspex Agreement. After

careful examination of the terms of the Chic-Aspex Agreement, the district court

reasoned that Chic did not convey any future-acquired patent rights, but instead only

those that it owned at the time that it executed the Chic-Aspex Agreement and those

that derive from or are related to its then-owned patents. Id., slip op. at 7-8. Thus, the

district court initially ordered all claims against E’Lite dismissed, but later amended its

order to dismiss only Aspex’s claims, not Contour’s.

Aspex and Contour filed a motion for reconsideration or, in the alternative, to add

Chic as a necessary party under Fed. R. Civ. P. 19(a). The district court denied that

motion without opinion. Aspex timely appealed. We have jurisdiction pursuant to 28

U.S.C. § 1295(a)(1).

II. DISCUSSION

“A licensee is not entitled to bring suit in its own name as a patentee, unless the

licensee holds ‘all substantial rights’ under the patent.” Textile Prods., Inc. v. Mead

Corp., 134 F.3d 1481, 1484 (Fed. Cir. 1998) (quoting Vaupel Textilmaschinen KG v.

Meccanica Euro Italia S.P.A., 944 F.2d 870, 875 (Fed. Cir. 1991)). “Determining

whether a licensee is an exclusive licensee or a bare licensee is a question of

ascertaining the intent of the parties to the license as manifested by the terms of their

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agreement and examining the substance of the grant. Id. (internal citations and

quotations omitted).

Aspex asserts that it has standing to enforce the asserted patents against E’Lite

as an exclusive licensee under the Chic-Aspex Agreement because (1) that agreement

granted Aspex an exclusive license not only to then-owned patents, but also to future-

acquired patents; and (2) Chic acquired an exclusive license to the asserted patents

after execution of the Chic-Aspex Agreement by way of the Chao-Chic Agreement.

E’Lite responds by arguing that the plain language of the Chic-Aspex Agreement refers

to only then-owned patents and is silent as to the asserted patents as well as any other

future-acquired patents. E’Lite, therefore, maintains that Chic had no rights to the ’054

and ’811 patents at the time it entered into the Chic-Aspex Agreement and that Aspex,

as a result, cannot be an exclusive licensee of the asserted patents with standing to

sue.

Like the district court, we agree with E’Lite that the plain language of the

Chic-Aspex Agreement makes it clear that the agreement relates only to patents

then-owned by Chic, not future-acquired ones. The relevant portions of the Chic-Aspex

Agreement provide:

WHEREAS, LICENSOR is the owner of rights (“LICENSED
PATENTS”) embodied in various Agreements (“LICENSOR’S
AGREEMENTS”) relating to magnetic eyewear for eyeglasses;

WHERAS, immediately upon entering into the LICENSOR’S
AGREEMENTS, LICENSOR vested and/or shall vest in LICENSEE its
rights under the LICENSOR’S AGREEMENTS . . .

...

1. LICENSOR grants to LICENSEE an exclusive license to
make, use, sell, or have made any products under the LICENSED

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 PATENTS including all divisional, continuations, continuations-in-part,
continuing patent applications (whether related to such application(s)
directly or through one or more intervening applications), extensions or
reissues of said licensed patents, and any patent which may issue
thereon. LICENSOR shall update and advise the LICENSEE when
pending applications which are divisional, continuations, continuations-in-
part, extensions or reissues of the LICENSED PATENTS have been filed
or have issued as patents (whether related to such application(s) directly
or through one or more intervening applications).

(Emphases added).

In the first “WHEREAS” clause, the language “is the owner” and “embodied in

various Agreements” suggests that Chic owned the patents that it exclusively licensed

to Aspex through the agreement. If the parties had intended to include future-acquired

patents, it more likely would have stated “is and/or will become the owner.” Additionally,

use of the past tense “LICENSED” in term “LICENSED PATENTS” even more strongly

suggests that Chic had already acquired rights in these patents by its LICENSOR’S

AGREEMENTS. Otherwise, the agreement with Aspex would have referred to the

subject patents, either then-owned or future-acquired, generically as “PATENTS.”

The second “WHEREAS” clause does not contradict our reading of the first by

including the future-sounding phrase “immediately upon entering” and the past and

future verb forms “vested” and “shall vest.” Rather, this language shows that Chic

intended to convey both the patents then-owned and any progeny of those patents,

such as continuation, continuation-in-part, and divisional patents. It does not, contrary

to Aspex’s contention, reasonably suggest that Chic intended to license some patents

upon execution and, at the same time, license others in the future, all of which qualify as

licensed to Aspex under the terms of the Chic-Aspex Agreement.

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 Paragraph 1 of the Chic-Aspex Agreement, which recites the exact license grant

from Chic to Aspex, dispels any doubt as to the scope of the agreement. Paragraph 1

states: “including all divisional, continuations, continuations-in-part, continuing patent

applications . . . extensions or reissues of said licensed patents, and any patent that

may issue thereon.” This grant shows that the parties intended to license only those

patents owned as of the execution date of the agreement and their progeny.

Significantly, there is no mention of any future-acquired patents, distinct from the

“licensed patents.”

That Chic and Aspex entered into an exclusive license agreement covering

patents “relating to magnetic eyewear for eyeglasses,” a provision which certainly

covers the ’054 and ’811 patents, does not change our interpretation of the Chic-Aspex

Agreement. The specific grant provisions control the scope of the license agreement,

not the general subject matter of the license. Accordingly, we hold that Chic did not

grant an exclusive license to either of the asserted patents to Aspex.

Even if the Chic-Aspex Agreement covered future-acquired patents, Aspex still

does not qualify as an exclusive licensee of the ’811 patent. When the Chao-Chic

Agreement was executed in July 1998, brothers Richard and David Chao co-owned the

’811 patent. Nevertheless, only Richard Chao conveyed a license of the ’811 patent to

Chic; David Chao was not a party to the Chao-Chic Agreement.

To be an exclusive licensee for standing purposes, a party must have
received, not only the right to practice the invention within a given territory,
but also the patentee’s express or implied promise that others shall be
excluded from practicing the invention within that territory as well. If the
party has not received an express or implied promise of exclusivity under
the patent, i.e., the right to exclude others from making, using, or selling
the patented invention, the party has a “bare license,” and has received

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 only the patentee’s promise that that party will not be sued for
infringement.

Rite-Hite, 56 F.3d at 1552 (internal citations and quotations omitted). Because David

Chao was entitled to practice the invention claimed in the ’811 patent by virtue of his co-

ownership of that patent, Richard Chao could not legally promise Chic that others would

be excluded from practicing the ’811 patent. Hence, although we have already held that

Aspex did not obtain any rights to either the ’054 patent or the ’811 patent under the

Chic-Aspex Agreement, we hold that Aspex could not have obtained exclusive rights

under the ’811 patent from Chic, because Chic was never properly granted exclusive

rights to the ’811 patent.

Alternatively, Aspex argues that it has an implied or oral license to the asserted

patents based upon Contour’s and Chic’s conduct since the execution of the Chic-

Aspex Agreement. We observe that Aspex did not raise this argument before the

district court until its motion for reconsideration. Generally, we will not consider an

argument that was raised for the first time in a motion for reconsideration. Lamle v.

Mattel, Inc., 394 F.3d 1355, 1359 n.1 (Fed. Cir. 2005) (citing Intercontinental Travel

Mktg. v. Fed. Deposit Ins. Corp., 45 F.3d 1278, 1286 (9th Cir. 1994) (“Raising an issue

for the first time on motion to reconsider is not considered adequate preservation of the

issue at a summary judgment stage.”)). This “waiver rule” is, however, not jurisdictional

but instead prudential. As such, we retain broad discretion to consider issues not timely

raised before the district court. This court has enumerated select situations that might

justify deviating from the “waiver rule,” one of which is whether “the issue involves a

pure question of law and refusal to consider it would result in a miscarriage of justice.”

L.E.A. Dynatech, Inc. v. Allina, 49 F.3d 1527, 1531 (Fed. Cir. 1995). Because

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resolution of Aspex’s oral or implied license argument is not a pure question of law, but

likely involves factfinding, a function reserved exclusively to the trial court, we decline to

consider it in this case. Nor is a miscarriage of justice shown.

Related to its standing challenge, Aspex contends that the district court erred in

excluding the Ifergan Deposition under Fed. R. Evid. 602 for lack of personal

knowledge. Because resolution of this issue does not impact the question of standing,

we need not and decline to decide it. Even if it were germane, we conclude, after

reviewing the Ifergan Deposition in detail, that Thierry Ifergan exhibits minimal, if any,

knowledge about the negotiation and scope of the Chic-Aspex Agreement. In fact, his

testimony reveals that the extent of his knowledge about the Chic-Aspex Agreement is

limited to the mere text of the agreement. Such information, however, is equally

ascertainable by anyone presented with the agreement to read.

Finally, Aspex asserts that the district court erred in denying its motion to add

Chic as a necessary party to the suit under Fed. R. Civ. P. 19(a). We again need not

and do not decide this issue. At the time Aspex filed its motion to add Chic, Aspex

technically was no longer a party to the litigation. Hence, Aspex was not entitled to file

any substantive motions, other than one requesting the district court to reconsider its

grant of summary judgment for lack of standing.

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