Judge Robinson Denies Motion to Dismiss for Lack of Standing

Last month, Judge Robinson issued an opinion considering the standing required to file a patent infringement suit. In MobileMedia Ideas, LLC v. Apple Inc., C.A. No. 10-258-SLR (D. Del. Aug. 16, 2012), the plaintiff, MobileMedia Ideas (“MMI”), filed suit against Apple for infringement of sixteen patents. Apples filed a motion to dismiss on the ground that MMI lacked subject matter standing. Judge Robinson ultimately denied Apple’s motion to dismiss, finding that MMI had sufficient standing.

At issue was whether MMI could sue on its own or whether it needed to also joint its three licensees. The licensees were former owners of the patents-in-suit who had entered into an assignment and license-back agreement with MMI. Each licensee also partially owned MMI. “Typically,” Judge Robinson noted, “courts are presented with the situation where an exclusive licensee sues an alleged infringer, and it must be determined whether the licensee has standing. [Here] the court is presented with the rather unique, converse scenario ‘in which the patent owner seeks to bring suit, requiring [the court] to determine whether the patent owner transferred away sufficient rights to divest it of any right to sue.’” Id. at 12 (citations omitted).

“[T]o have constitutional standing, a party’s interests in the patents must ‘include sufficient exclusionary rights such that [it] suffers an injury in fact from infringing activities. If [it] holds all substantial rights, it can sue in its name alone. If [it] holds less than all substantial rights but sufficient exclusionary rights that it suffers injury in fact, it can sue as a co-party.’” Id. at 10. Proceeding to examine the transfer of patent rights between MMI and its licensees, Judge Robinson found that one licensee “was delegated the ‘responsibility’ to bring suit, [but] the ‘right’ to sue lies with MMI, [and] [t]he right to sue is of paramount importance in the ‘substantial rights’ analysis.” Id. at 13. She noted that the licensees had assigned MMI “‘the entire right, title and interest in the patents-in-suit,’ . . . [a] transfer of [which] is well known to mean a full assignment of the patent.” Id. at 14. MMI also had other rights “for which the associated enforcement ‘responsibilities’ have been delegated to [a licensee]. MMI has the right to receive patent royalties, for example . . . irrespective of the fact that MMI later allocates its profits to the owners.” Id. Furthermore, “‘the fact that a patent owner has retained a right to a portion of the proceeds of the commercial exploitation of [a] patent . . . does not necessarily defeat what would otherwise be a transfer of all substantial rights in the patent.’” Id. (citations omitted). Finally, “‘[t]he right to dispose of an asset is an important incident of ownership, and such a restriction on that right is a strong indicator’ that not all substantial rights under the patent have been transferred.” Because unanimous approval of all three licensees/owners was required for MMI to sell a patent, this indicated that MMI, not any individual licensee, owned the substantial rights of the patent. Id. (citations omitted).

“In conclusion,” Judge Robinson explained that while the licensees “have retained (or have been granted back) certain rights in the patents-in-suit, the court does not deem such rights ‘substantial’ vis a vis those held by MMI. There is no indication that . . . nonexclusive licensees of MMI holding no legal title to the patents-in-suit, have constitutional standing to sue.” Id. at 15. Accordingly, she found that MMI had standing to sue and denied the motion to dismiss.

MobileMedia Ideas, LLC v. Apple Inc., C.A. No. 10-258-SLR (D. Del. Aug. 16, 2012).

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