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

• Court: Court of Appeals for the Federal Circuit
• Decided: May 19, 2026
• Docket: 25-1998
• Status: Unpublished

Opinion

Case: 25-1998 Document: 51 Page: 1 Filed: 05/19/2026

NOTE: This disposition is nonprecedential.

United States Court of Appeals for the Federal Circuit ______________________

RECOR MEDICAL, INC., Plaintiff-Appellee

v.

MEDTRONIC IRELAND MANUFACTURING UNLIMITED CO., Defendant-Appellant

MEDTRONIC VASCULAR, INC., MEDTRONIC, INC., Defendants ______________________

2025-1998 ______________________

Appeal from the United States District Court for the Northern District of California in Nos. 3:22-cv-03072-TLT, 3:25-cv-05881-TLT, Judge Trina L. Thompson. ______________________

Decided: May 19, 2026 ______________________

ASHLEY M. FRY, Latham & Watkins LLP, Washington, DC, argued for plaintiff-appellee. Also represented by GABRIEL K. BELL, MATTHEW J. MOORE, JACOB VANNETTE; ROGER J. CHIN, San Francisco, CA. Case: 25-1998 Document: 51 Page: 2 Filed: 05/19/2026

GREGORY A. CASTANIAS, Jones Day, Washington, DC, argued for defendant-appellant. Also represented by ROBERT BREETZ, Cleveland, OH; JENNIFER SERAPHINE, KEELEY IRENE VEGA, Thompson Hine LLP, San Mateo, CA. ______________________

Before CHEN, HUGHES, and STARK, Circuit Judges. CHEN, Circuit Judge. Medtronic Ireland Manufacturing Unlimited Co. (Med- tronic Ireland) appeals from a decision of the United States District Court for the Northern District of California dis- missing its counterclaims of patent infringement against Recor Medical, Inc. (Recor) for lack of constitutional stand- ing. Recor Med., Inc. v. Medtronic Ireland Mfg. Unlimited Co., No. 22-CV-03072-TLT, 2025 WL 2272414, at *1 (N.D. Cal. July 7, 2025) (Decision). Prior to filing suit, Medtronic Ireland licensed several rights under the as- serted patents to an exclusive licensee, but retained others, including the right to sue third parties for patent infringe- ment. In a precedential opinion we issued today in a dif- ferent appeal addressing constitutional standing, A.L.M. Holding Co. v. Zydex Industries Private Ltd., No. 25-1317 (Fed. Cir. May 18, 2026), we held that the patent owner in that case had constitutional standing because it retained a right to sue for patent infringement that was not rendered illusory by the rights it granted to its licensee. Because Medtronic Ireland’s retained rights are materially the same as the patent owner’s in A.L.M., we hold that Med- tronic Ireland retained an exclusionary right sufficient to satisfy the “irreducible constitutional minimum of stand- ing,” and we reverse and remand. BACKGROUND A. The Patent License Agreement Medtronic Ireland is the owner of U.S. Patent Nos. 8,845,629 (’629 patent) and 11,801,085 (’085 patent) Case: 25-1998 Document: 51 Page: 3 Filed: 05/19/2026

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(collectively, Asserted Patents). The Asserted Patents de- scribe systems and methods for renal neuromodulation, in which thermal energy is used to heat or cool neural fibers that contribute to kidney function. Medtronic Vascular Galway Unlimited Company (Medtronic Galway) is the manufacturer of Medtronic’s 1 Symplicity SpyralTM renal denervation (RDN) system, which uses renal neuromodu- lation to treat hypertension. Through an April 2023 license agreement (Exclusive License Agreement or ELA), Medtronic Ireland licensed certain rights in the Asserted Patents to Medtronic Gal- way. J.A. 3641–52. These include the “exclusive license” “to use, make, [] have made,” “import, offer for sale, and sell” “Product.” Id. at 3643 §§ 2.1, 2.2. “Product” is defined as “any finished medical device, as specifically designated by [Medtronic Ireland] and agreed to by [Medtronic Gal- way] for sale into the medical field including the products for catheter-based therapies to treat hypertension and re- lated conditions.” Id. at 3642 § 1.9. In the event of any third-party patent infringement, Medtronic Galway has the first right to sue to enforce the patents. Id. at 3644–45 § 3.6(a). Medtronic Ireland retains the right to participate in such an action. Id. Moreover, Medtronic Ireland may bring an enforcement action itself if Medtronic Galway declines or fails to act within a rea- sonable time. Id. The ELA further provides that any set- tlement amounts will first be used to pay each party’s share of litigation costs, with the remaining amounts “allocated ratably between the Parties based upon the economic dam- ages suffered by each Party.” Id. § 3.6(b).

1 Medtronic Ireland and Medtronic Galway are part of a broader global group of related entities called Med- tronic. Case: 25-1998 Document: 51 Page: 4 Filed: 05/19/2026

The ELA also addresses Medtronic Galway’s ability to transfer its rights. While Medtronic Galway may subli- cense patent rights, this right is subject to Medtronic Ire- land’s “prior written consent” which is “not to be unreasonably withheld.” Id. at 3643 § 2.4. Likewise, the ELA prohibits any assignment of Medtronic Galway’s rights under the agreement without the express written consent of Medtronic Ireland. Id. at 3648 (Article XI). Medtronic Galway must also pay Medtronic Ireland royal- ties, including on sales by sublicensees, “at a rate agreed between the Parties.” Id. at 3645 § 6.1. The ELA provides that Medtronic Galway “shall not at any time do . . . or otherwise fail to do any act or thing that would have the effect of[] contesting or impairing [Med- tronic Ireland’s] ownership or exclusive rights in the Intel- lectual Property.” Id. at 3647–48 § 9.1. The parties retain the right to terminate the ELA in the event of a material breach. Id. at 3648 §§ 10.2, 10.3. The ELA is set to expire on “the last Friday of April, 2028,” at which time all patent rights will revert to Medtronic Ireland. Id. § 10.1. B. District Court Litigation In May 2022, Recor sued Medtronic Ireland and Med- tronic Vascular, Inc. in the Northern District of California, seeking a declaration that the claims of the ’629 patent are invalid and not infringed by Recor’s Paradise System, which competes with Medtronic’s RDN system. Medtronic Ireland answered Recor’s complaint and asserted counter- claims of patent infringement, alleging that Recor in- fringed the ’629 and ’085 patents. In response, Recor asserted counterclaims, seeking a declaratory judgment that the claims of the ’085 patent are invalid and not in- fringed. During discovery, Medtronic Ireland produced the ELA to Recor and subsequently moved to join Medtronic Galway as a party to the litigation under Federal Rule of Civil Pro- cedure 19. Recor opposed Medtronic Ireland’s motion and Case: 25-1998 Document: 51 Page: 5 Filed: 05/19/2026

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instead moved to dismiss Medtronic Ireland’s counter- claims, asserting that Medtronic Ireland’s transfer of rights to Medtronic Galway under the ELA deprived it of the exclusionary rights necessary for Article III standing. The district court granted Recor’s motion to dismiss. Decision, 2025 WL 2272414, at *8. The district court first determined that Medtronic Ireland’s right to sue was not an exclusionary right sufficient to establish Article III standing. Id. at *4–6. In doing so, the district court relied on this court’s decision in Morrow v. Microsoft Corp., 499 F.3d 1332 (Fed. Cir. 2007), where we held that when patent rights are split among multiple entities, a non-pa- tentee plaintiff’s contractual right to sue for infringe- ment—separated from all other patent rights—did not confer an exclusionary right sufficient for constitutional standing. Id. at 1342–43. The district court then deter- mined that Medtronic Ireland’s right to veto any subli- censes, its right to limit sublicenses and assignments, and its revisionary rights were likewise insufficient to establish constitutional standing. Decision, 2025 WL 2272414, at *6–8. After it concluded that Medtronic Ireland lacked con- stitutional standing, the district court dismissed Medtronic Ireland’s counterclaims without prejudice, dismissed for lack of subject matter jurisdiction Recor’s declaratory judg- ment claims of noninfringement and invalidity as to both Asserted Patents, and denied as moot Medtronic Ireland’s motion for joinder. Id. at *8–9. Medtronic Ireland timely appealed. We have jurisdic- tion under 28 U.S.C. § 1295(a)(1). STANDARD OF REVIEW We review Article III standing determinations de novo. Intell. Tech LLC v. Zebra Techs. Corp., 101 F.4th 807, 813 (Fed. Cir. 2024) (citing Abraxis Bioscience, Inc. v. Navinta LLC, 625 F.3d 1359, 1363 (Fed. Cir. 2010)). In interpreting Case: 25-1998 Document: 51 Page: 6 Filed: 05/19/2026

a contract, we generally apply state law, including to de- termine “who owns the patent rights and on what terms.” Bd. of Trs. of Leland Stanford Junior Univ. v. Roche Mo- lecular Sys., Inc., 583 F.3d 832, 841 (Fed. Cir. 2009) (inter- nal quotation marks and citation omitted). “Contract interpretation is a question of law that [appellate courts] review de novo.” Carroll Shelby Licensing, Inc. v. Halicki, 138 F.4th 1178, 1186 (9th Cir. 2025) (citation omitted); see also Tex. Instruments Inc. v. Tessera, Inc., 231 F.3d 1325, 1329 (Fed. Cir. 2000). DISCUSSION A. Mootness We begin by addressing whether this appeal has been rendered moot by intervening developments in related dis- trict court litigation. Article III of the Constitution limits the jurisdiction of federal courts to actual cases and controversies. U.S. CONST. art. III, § 2, cl. 1. “A case becomes moot—and there- fore no longer a ‘Case’ or ‘Controversy’ for purposes of Arti- cle III—when the issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the out- come.” Already, LLC v. Nike, Inc., 568 U.S. 85, 91 (2013) (internal quotation marks and citation omitted). Recor argues that no live controversy remains because the Medtronic parties amended the ELA to address the dis- trict court’s dismissal of Medtronic Ireland’s claims for lack of constitutional standing and filed a new lawsuit in Med- tronic Ireland Manufacturing Unlimited Co. v. Recor Med- ical, Inc., No. 25-cv-05881-TLT (Recor II) that purportedly provides a means to obtain the same relief sought in the original lawsuit in Recor Medical, Inc. v. Medtronic Ireland Manufacturing Unlimited Co., et al., No. 22-cv-03072-TLT (Recor I). ECF No. 44 at 1. We disagree. This case is not moot because legal consequences con- tinue to flow from the district court’s dismissal in Recor I. Case: 25-1998 Document: 51 Page: 7 Filed: 05/19/2026

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These consequences include, at a minimum, the viability of Recor’s affirmative defense of unclean hands, which is based on Medtronic Ireland’s assertion of counterclaims in Recor I. Although Recor attempts to recast its defense as “not based on the merits of the district court’s decision,” ECF No. 50 at 6, it alleges in Recor II that it was “materi- ally prejudiced” by “Medtronic’s misrepresentations re- garding rights and interests in the Asserted Patents.” Am. Answer, Recor II, Dkt. No. 34 (N.D. Cal. Aug. 19, 2025) at 11. That theory depends, in part, on the premise that Med- tronic Ireland lacked sufficient rights to sue in its own name in Recor I. A reversal would undercut that premise and, in turn, weaken the basis for Recor’s unclean hands defense. Accordingly, because a reversal by this court would have legal consequences (for at least this reason), we find the case is not moot. B. Constitutional Standing We now turn to the merits of the appeal. Medtronic Ireland argues that, as the patent owner, its rights to sue and receive royalties together are sufficient to show that it retained an exclusionary right necessary for Article III standing. Appellant Br. 26–29. 2 See Zebra Techs., 101 F.4th at 814 (“In general, the question for the injury-in-fact threshold is whether a party has an exclusionary right.”). We agree. In a separate order issued today, we held that a patent owner retained an exclusionary right under a materially similar license agreement. A.L.M. Holding Co. v. Zydex In- dus. Priv. Ltd., No. 25-1317, slip op. at 1 (Fed. Cir. May 19,

2 In the alternative, Medtronic Ireland asserts other bases for having constitutional standing, including that its allegations of monetary harm independently satisfy the constitutional injury in fact requirement. Appellant Br. 40–46. We need not reach these issues. Case: 25-1998 Document: 51 Page: 8 Filed: 05/19/2026

2026). There, we explained that when a patent owner re- tains a right to sue third parties for patent infringement that is not rendered illusory by the rights granted to a li- censee, that patent owner retains an exclusionary right sufficient for constitutional standing. Id. at 10–15. That same principle controls here. In A.L.M., we em- phasized that a plaintiff’s right to sue, right to veto subli- censes, and royalty interests ensured that that the plaintiff retained both a concrete stake in excluding unauthorized practice of the patents and a mechanism to enforce that in- terest. Id. at 10–11. The A.L.M. plaintiff’s sublicensing veto helped preserve its exclusionary interest because it prevented the licensee from unilaterally authorizing an ac- cused infringer’s practice of the patents without plaintiff’s approval and free of plaintiff’s royalty interests. Id. We distinguished Morrow, where the plaintiff’s right to sue was “illusory.” Id. at 13–14 (citing Morrow, 499 F.3d at 1342–43, 1336, 1338). We explained that in Morrow, the patent owner could moot any suit brought by the plaintiff by granting a royalty-free sublicense to the accused in- fringer. Id. By contrast, a patent owner’s right to sue is not rendered illusory in light of its retained royalty inter- ests that attach to sublicenses, as well as its right to with- hold consent to sublicenses that may moot any suit brought by the patent owner. Id. (citing Alfred E. Mann Found. for Sci. Rsch. v. Cochlear Corp., 604 F.3d 1354, 1362 (Fed. Cir. 2010)). Here, Medtronic Ireland retains patent rights materi- ally similar to the rights retained by the patent owner in A.L.M. It holds a secondary right to sue (J.A. 3644–45 § 3.6), royalty interests (Id. at 3645 § 6.1), and veto author- ity over sublicenses (Id. at 3643 §§ 2.4, 2.5). Taken to- gether, these rights ensure that Medtronic Ireland’s right to enforce the patents it owns is not illusory and that its exclusionary interests remain intact. The same rights that conferred standing in A.L.M. thus confer standing here. Case: 25-1998 Document: 51 Page: 9 Filed: 05/19/2026

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The fact that Medtronic Ireland’s right to sue is second- ary to Medtronic Galway’s does not change our analysis. See Appellee Br. 30. In Mann, we rejected the argument that a secondary right to sue was insubstantial for stand- ing. 604 F.3d at 1361–63; see also Abbott Lab’ys v. Di- amedix Corp., 47 F.3d 1128, 1132 (Fed. Cir. 1995) (finding no transfer of all substantial rights where the patent owner retained, among other rights, a secondary right to sue). We explained that while the patent owner’s right to choose to sue did not vest until the licensee chose not to sue, it was “otherwise unfettered” because once that right activated, the owner had complete control and discretion over the lit- igation. Mann, 604 F.3d at 1362. We reaffirmed in A.L.M. that this analysis regarding a patent owner’s right to sue— though developed in the context of statutory standing—is instructive in assessing whether that same right is real or nullified by a licensee’s granted rights for purposes of Arti- cle III standing. A.L.M., slip op. at 8–9. Recor contends that Medtronic Ireland’s right to sue is not an exclusionary right because it cannot grant a license itself to settle a lawsuit. Appellee Br. 31, 37. Article 3.6(b), however, provides for the allocation of settlement proceeds between the parties, indicating that Medtronic Ireland re- tains the authority to settle lawsuits (at least for damages) that it initiates. J.A. 3644–45 § 3.6. Thus, even in light of Medtronic Galway’s right to sublicense, Medtronic Ireland retains a meaningful ability to settle the lawsuits it initi- ates. 3

3 To the extent that Recor contends that the ELA permits Medtronic Galway to grant a royalty-free subli- cense to any accused infringer, see Oral Arg. at 26:43– 26:50, available at https://www.cafc.uscourts.gov/oral-ar- guments/25-1998_03032026.mp3, any such grant would be expressly subject to Medtronic Ireland’s consent. See J.A. 3643 § 2.4. It would be reasonable for Medtronic Case: 25-1998 Document: 51 Page: 10 Filed: 05/19/2026

Medtronic Ireland also retains control over the scope of its license grant. Medtronic Ireland’s grant of exclusive rights to Medtronic Galway under Articles 2.1 and 2.2 are limited to rights related to “Product,” which is defined as “any finished medical device, as specifically designated by Licensor and agreed to by Licensee.” Id. at 3642–43 §§ 1.9, 2.1, 2.2. Thus, for Medtronic Galway to have any exclu- sionary right, Medtronic Ireland must first “specifically designate[]” a finished medical device as a “Product.” Id. at 3642 § 1.9. Beyond that, Medtronic Ireland retains all rights, including exclusionary rights, to all un-“designated” products, as well as unfinished medical products. 4 Recor also argues that Medtronic Ireland lacks any ex- clusionary right because it granted to Galway the “exclu- sive right to exclude others” from practicing the invention. Appellee. Br. 30 (citing J.A. 3643 §§ 2.1, 2.2, 2.4), 37. This language, however, is limited to the scope of designated “Products,” see J.A. 3642–43 §§ 1.9, 2.1, 2.2, and even for rights to “Products,” Medtronic Ireland retains the second- ary right to sue, see id. at 3644–45 § 3.6. Medtronic Ire- land’s right to join in infringement suits, as well as to initiate suits if Medtronic Galway declines to act, ensures

Ireland to withhold consent in such a circumstance to pro- tect its patent rights. 4 Recor argues that Medtronic Ireland does not re- tain rights through Article 1.9 because “Product” “in- clude[s] the products for catheter-based therapies to treat hypertension and related conditions,” which are co-exten- sive with the Asserted Patents. Oral Arg. 21:08–23:49. But we read the “including” clause as delimiting the cate- gory of products eligible for designation under the provi- sion, not as dispensing with the requirement that a “finished medical device” must be “specifically designated” by Medtronic Ireland. See J.A. 3642 § 1.9 (emphasis added). Case: 25-1998 Document: 51 Page: 11 Filed: 05/19/2026

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that it retains meaningful enforcement authority. See J.A. 3644–45 § 3.6. Accordingly, on these facts, we hold that Medtronic Ire- land retained an exclusionary right sufficient for the “irre- ducible constitutional minimum of standing,” Lujan, 504 U.S. at 560, namely the non-illusory right to sue that its licensee, Medtronic Galway, could not nullify through unilateral, royalty-free sublicensing. C. Joinder of Necessary Party Medtronic Ireland next argues that because its coun- terclaims at most suffered from a curable defect in statu- tory standing, the district court should have allowed Medtronic Galway to be joined as a counterclaim plaintiff. Appellant Br. 46–48. Recor does not dispute that joinder may be appropriate if this court determines that Medtronic Ireland had constitutional standing. Appellee Br. 58. The district court did not reach the merits of the par- ties’ arguments on joinder under Rule 19. Decision, 2025 WL 2272414, at *9. Thus, we remand for the district court to determine, for the purposes of satisfying statutory standing, whether all necessary parties to this action were joined, or could be joined. See Lone Star Silicon Innova- tions LLC v. Nanya Tech. Corp., 925 F.3d 1225, 1238–39 (Fed. Cir. 2019). CONCLUSION Medtronic Ireland retained at least an exclusionary right after its transfer of rights to Medtronic Galway under the ELA. Because Medtronic Ireland has constitutional standing, we reverse and remand. REVERSED AND REMANDED COSTS Costs to Appellant.