Judge Andrews Finds Plaintiff Has Standing to Sue for Infringement of Two Patents-in-Suit

Judge Andrews has rejected a challenge to the standing of Plaintiff EMC to sue on two patents. The two patents were originally assigned by their inventors to a company called Data Domain, Inc., which was acquired by EMC in 2009. EMC then reorganized its business in several steps governed by an overarching Reorganization Agreement: “First, Data Domain, Inc. was converted to Data Domain LLC. Second, Data Domain LLC assigned ‘all right, title and interest’ in its intellectual property, including the deduplication patents, to Data Domain Holding, Inc. (‘New Data Domain’). Third, New Data Domain entered a License and Assignment Agreement (‘EIC License Agreement’) with EMC International Company (‘EIC’). Fourth, EIC granted an exclusive sublicense to EMC Information Systems International (‘EISI’). Fifth, New Data Domain transferred ‘all right, title and interest’ in its intellectual property to EMC Corporation. Additionally, EMC Corporation became an authorized reseller of Data Domain products.” EMC Corp., et al. v. Pure Storage, Inc., C.A. No. 13-1985-RGA, Memo. Op. at 2-3 (D. Del. Feb. 29, 2016).

The standing arguments turned on interpretation of the EIC License Agreement between New Data Domain and EIC. According to EMC, The EIC License Agreement granted a limited exclusive license from New Data Domain to EIC but expressly retained the primary right to sue and control litigation, which was subsequently assigned to EMC. According to Defendant Pure Storage, however, the EIC License Agreement, when read in light of the Reorganization Agreement, granted EIC “all substantial rights” in the patents-in-suit, and New Data Domain retained only an ability to “control and direct” infringement litigation on behalf of EIC. Thus, Pure Storage argued, New Data Domain did not retain all substantial rights and did not transfer all substantial rights to EMC. Pure Storage also contended that intrinsic evidence supported its position. Id. at 7-8.

Judge Andrews agreed that the EIC License Agreement and the Reorganization Agreement should be read together and found that the two agreements were not inconsistent or ambiguous. Judge Andrews went on to find that New Data Domain had “retained the primary right to sue for infringement in the EIC License Agreement and subsequently assigned that right to EMC” because: “The EIC License Agreement established that New Data Domain retained the primary right to ‘control and direct the conduct of any actions necessary to prevent or terminate any infringement . . ., including the institution of legal proceedings.’ EIC was granted a secondary right to initiate infringement ‘[i]f New Data Domain fails to take timely action.’ EIC’s right to institute and control infringement litigation is restricted because EIC must submit a written request to take over the conduct and control of infringement litigation and New Data Domain ‘may consent thereto, such consent not to be unreasonably withheld.’” Id. at 9. Important to this finding that New Data Domain had more than mere authority to sue on behalf of EIC was the fact that “New Data Domain could enforce its intellectual property rights without consulting EIC” and that the EIC License Agreement specifically stated that it did not create a principal or agent relationship. Id. at 9-10. Additionally, New Data Domain’s retention of all substantial rights was further supported by the fact that it retained the right to make, use, or sell products embodying the patents at issue and to license the patents outside of its business, which rights later were assigned to EMC. Id. at 11-12. For all of these reasons, the Court held, EMC had standing to sue.

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