Recor Medical, Inc. v. Medtronic Ireland Manufacturing Unlimited Co.

Recor Medical, Inc. v. Medtronic Ireland Manufacturing Unlimited Co. A patent owner that retains a secondary right to sue, royalty interests, and veto authority over sublicenses under an exclusive license agreement retains a non-illusory exclusionary right sufficient to satisfy the Article III constitutional minimum for standing. Because Medtronic Ireland's retained rights were materially identical to those found sufficient in the companion precedential decision A.L.M. Holding Co. v. Zydex Industries Private Ltd. (No. 25-1317), the district court's dismissal for lack of constitutional standing was reversed. Patent owners who have granted exclusive licenses but retained a secondary right to sue, sublicense veto rights, and royalty interests should have constitutional standing to assert their patents directly—even without joining the exclusive licensee—so long as those retained rights are not rendered illusory by the licensee's granted rights. Reversed and remanded. Costs to appellant Medtronic Ireland. Medtronic Ireland, as patent owner of the '629 and '085 renal neuromodulation patents, granted Medtronic Galway an exclusive license to make, use, and sell designated 'Products,' but retained: (1) a secondary right to sue for infringement if Galway declines to act; (2) royalty interests including on sublicensee sales; and (3) veto authority over any sublicenses. The district court relied on Morrow v. Microsoft Corp. to hold that a contractual right to sue, standing alone and separated from all other patent rights, does not confer constitutional standing—but the Federal Circuit distinguished Morrow because Medtronic Ireland's right to sue was not illusory: Galway could not unilaterally grant a royalty-free sublicense to an accused infringer without Medtronic Ireland's consent. The court applied its same-day precedential ruling in A.L.M. Holding Co. v. Zydex Industries Private Ltd. (No. 25-1317), holding that a patent owner's retained right to sue is not illusory where the licensee cannot nullify it through unilateral, royalty-free sublicensing—and that this principle controls here because Medtronic Ireland's retained rights are materially the same. The court also noted that the exclusive license grant is limited to 'Products' specifically designated by Medtronic Ireland, meaning Medtronic Ireland retains full exclusionary rights over any non-designated finished devices and all unfinished medical products. The appeal was not moot despite Medtronic's amendment of the ELA and filing of a new lawsuit (Recor II), because reversal would have concrete legal consequences—including undermining Recor's unclean hands defense in Recor II, which depends on the premise that Medtronic Ireland lacked sufficient rights to sue in Recor I. standing / jurisdiction remand non-precedential infringement standing / jurisdiction remand non-precedential infringement standing / jurisdiction remand non-precedential