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New Medium Technologies LLC v. Barco N.V.

July 2, 2007

NEW MEDIUM TECHNOLOGIES LLC, AV TECHNOLOGIES LLC, IP INNOVATION LLC, AND TECHNOLOGY LICENSING CORPORATION, PLAINTIFFS,
v.
BARCO N.V., MIRANDA TECHNOLOGIES, LG PHILIPS LCD, LTD., TOSHIBA CORPORATION, TOSHIBA AMERICA CONSUMER PRODUCTS, L.L.C., AND SYNTAX- BRILLIAN CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge

MEMORANDUM OPINION AND ORDER

Before the Court is Defendants' Joint Motion to Dismiss or in the Alternative for Summary Judgment for Lack of Standing as to the '780, '637, and '964 Patents. For the following reasons, Defendants' motion is denied.

BACKGROUND

New Medium Technologies, LLC, AV Technologies LLC, IP Innovation LLC ("IP"), and Technology Licensing Corporation ("TLC") have sued Barco N.V., Miranda Technologies ("Miranda"), LG Philips LCD, Ltd., Toshiba Corporation, Toshiba America Consumer Products, L.L.C., and Syntax-Brillian Corporation, alleging patent infringement. (R. 104-1, Third Am. Compl.) The suit alleges infringement of a total of eleven patents, but, with the exception of Barco (which is accused of infringing all eleven patents), only some of the patents are relevant to the claims involving any given plaintiff or defendant. All of the Defendants in this matter other than Miranda ("Defendants") have moved to dismiss, or in the alternative, for summary judgment, for lack of standing as to three of patents: U.S. Pat. Nos. 5,424,780 ("the '780 patent); 6,529,637 ("the '637 patent); and 6,870,964 (the '964 patent). Defendants argue that IP's and TLC's ownership interest in the three patents at issue ("the three patents") is insufficient to provide them with standing to sue.

J. Carl Cooper is the sole inventor of all three of the patents. On March 3, 1995, Cooper assigned two patent applications that eventually issued as the '637 and '964 patents to Pixel. (R. 254-1.) The parties agree that as of March 22, 1999 -- the date that certain parties executed an agreement on which much of Defendants' motion turns -- Cooper held legal title to the '780 patent, and Pixel held legal title to the '637 and '964 patents.

On March 14, 1997, Cooper conveyed certain rights in the '780 patent to TLC. (R. 290-5, "the Cooper Agreement.") On that same day, Pixel conveyed rights in a number of patents to TLC. (R. 290-4, "the Pixel Agreement.") Through a "Patent Addition Confirmation" that Pixel and TLC executed in March 2003, the two parties confirmed that the '637 patent -- as well as "any divisions, continuations, continuations in part, reissues and/or reexaminations thereof," which includes the '964 patent -- is one of the "licensed patents" subject to the terms of the Pixel Agreement. (R. 290-4.) The parties dispute the legal effect of both of these transfers, which collectively cover all three of the relevant patents, and whether they conveyed "all substantial rights" in the patents to TLC or rendered TLC an exclusive licensee of the patents.

While Defendants claim that the Cooper and Pixel Agreements rendered TLC something less than an exclusive licensee or a holder of all substantial rights, the heart of their motion revolves around a later agreement. On March 22, 1999, TLC, Pixel, and Cooper, collectively as "Assignor," assigned to IP "an undivided ownership interest in and to all rights of Assignor" in the three patents.*fn1 (R. 240-1, Agreement dated Mar. 22, 1999, Ex. C to Joint Mot. to Dismiss or in the Alternative for Summ. J. ("the 1999 Agreement").) Defendants argue that the 1999 Agreement divided rights in the three patents such that all four entities involved are "co-owners" that must join in the suit to establish standing. They further argue that because the standing issue here is one of "constitutional" standing rather than "prudential" standing, TLC and IP cannot cure the standing deficiency by joining Cooper and Pixel as parties. As a result, Defendants argue that the Court must dismiss Plaintiffs' claims regarding the three patents. The Court disagrees.

LEGAL STANDARDS

Standing to sue is a threshold jurisdictional requirement in every federal action. Sicom Sys., Ltd. v. Agilent Techs., Inc., 427 F.3d 971, 975 (Fed. Cir. 2005). Rule 12(b)(1) motions address standing issues, and federal courts "may not grant relief when standing does not exist." Heartland Direct, Inc. v. Chevron U.S.A. Inc., No. 06 C 1029, 2006 WL 2524139 at *2 (N.D. Ill. Aug. 30, 2006). When considering a Rule 12(b)(1) motion challenging the factual basis for subject matter jurisdiction, district courts look beyond the pleadings and consider all competent evidence. Id.; Hay v. Indiana State Bd. of Tax Comm'rs, 312 F.3d 876, 879 (7th Cir. 2002).

The party bringing the action bears the burden of establishing that it has standing to sue. Sicom, 427 F.3d at 976. "A patentee shall have remedy by civil action for infringement of his patent." 35 U.S.C. § 281. The term "patentee" includes "not only the patentee to whom the patent was issued but also the successors in title to the patentee." Id. § 100(d). Furthermore, if a patentee transfers "all substantial rights" under the patent, the transfer constitutes an assignment, and the assignee is deemed "the effective patentee . . . for purposes of holding constitutional standing to sue another for patent infringement in its own name." Sicom, 427 F.3d at 976.

Licensees that do not receive "all substantial rights" to a patent through a licensing agreement may still have standing to sue in some circumstances. "A party that is neither the legal owner of the patent nor the transferee of all substantial rights in the patent still has standing to sue for infringement if that party has a legally protected interest in the patent created by the Patent Act, so that it can be said to suffer legal injury from an act of infringement." Propat, 473 F.3d at 1193. Exclusive licensees, meaning those parties with "the exclusive right to make, use, or vend the invention," have this type of interest. Id. (quoting Independent Wireless Tel. Co. v. Radio Corp. of Am., 269 U.S. 459, 469 (1926)). But "[u]nlike the patentee or the transferee of all substantial rights in the patent . . . an exclusive licensee ordinarily may not sue in its name alone, but must join the patent owner in an action brought against an accused infringer." Propat, 473 F.3d at 1193. The requirement that an exclusive licensee must ordinarily join the patent owner is a prudential requirement rather than a constitutional requirement based on Article III, and as a result, an exclusive licensee that initially brings its action alone may maintain its suit so long as the patent owner is joined in the course of the litigation.

Id., Intellectual Prop. Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333, 1348-49 (Fed. Cir. 2001).

Unlike exclusive licensees, "bare licensees," or parties possessing only a covenant from the patentee that the patentee will not sue it for infringing patent rights, lack standing to sue third parties for patent infringement. Propat, 473 F.3d at 1193. Bare licensees cannot cure their lack of standing by joining the patentee as a party, and as a ...


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