Case 1:15-cv-00311-RGA Document 96 Filed 03/08/16 Page 1 of 28 PageID #: 2508
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`
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`ACCELERATION BAY LLC,
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`Plaintiff,
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`v.
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`ACTIVISION BLIZZARD, INC.
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`Defendant.
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`ACCELERATION BAY LLC,
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`C.A. No. 15-228 (RGA)
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`REDACTED – PUBLIC VERSION
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`C.A. No. 15-282 (RGA)
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`REDACTED–
`PUBLIC VERSION
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`C.A. No. 15-311 (RGA)
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`REDACTED –
`PUBLIC VERSION
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`)))))))))
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`)))))))))
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`)))))))))
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`))
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`Plaintiff,
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`v.
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`ELECTRONIC ARTS INC.,
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`Defendant.
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`ACCELERATION BAY LLC,
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`Plaintiff,
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`v.
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`TAKE-TWO INTERACTIVE SOFTWARE,
`INC., ROCKSTAR GAMES, INC. and
`2K SPORTS, INC.,
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`Defendants.
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`DEFENDANTS’ OPENING BRIEF IN SUPPORT OF THEIR
`MOTION TO DISMISS FOR LACK OF STANDING
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`

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`Case 1:15-cv-00311-RGA Document 96 Filed 03/08/16 Page 2 of 28 PageID #: 2509
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`
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`MORRIS, NICHOLS, ARSHT & TUNNELL LLP
`Jack B. Blumenfeld (#1014)
`Stephen J. Kraftschik (#5623)
`1201 North Market Street
`P.O. Box 1347
`Wilmington, DE 19899
`(302) 658-9200
`jblumenfeld@mnat.com
`skraftschik@mnat.com
`
`Attorneys for Defendants
`
`
`
`
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`OF COUNSEL:
`
`Michael A. Tomasulo
`David P. Enzminger
`Gino Cheng
`David K. Lin
`WINSTON & STRAWN LLP
`333 South Grand Avenue, 38th Floor
`Los Angeles, CA 90071
`(213) 615-1700
`
`Daniel K. Webb
`WINSTON & STRAWN LLP
`35 West Wacker Drive
`Chicago, IL 60601
`(312) 558-5600
`
`Original Filing Date: March 1, 2016
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`Redacted Filing Date: March 8, 2016
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`
`
`

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`TABLE OF CONTENTS
`
`figs
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`I.
`
`H.
`
`NATURE AND STAGE OF PROCEEDINGS. .......................................................... .. 1
`
`SU1\/[MARY OF THE ARGUIVIENT .......................................................................... .. 1
`
`A.
`
`B.
`
`AB Lacks Piudential Standing. ....................................................................... .. 2
`
`AB Lacks Constitutional Standing to Assent Claims Within the Boeing
`and Sony “Fields of Use.” ............................................................................... .. 2
`
`III.
`
`STATEMENT OF FACTS. ........................................................................................ .. 4
`
`APPLICABLE LAW.................................................................................................. .. 6
`
`V.
`
`AB LACKS PRUDENTIAL STANDING TO SUE .................................................... .. 7
`
`A.
`
`AB Does Not Hold Legal Title........................................................................ .. 7
`
`
`
`C.
`
`AB Lacks Suflicient Rights in the Asserted Patents to Establish Pmdeiltial
`Standing. ...................................................................................................... .. 10
`
`1.
`
`n
`
`2. — ---------------------------
`
`3 — ....................................... -12
`
`4T ........
`
`T ------------------------------------ --14
`
`6.T ....... u Is
`
`D.
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`This Case Should Be Dismissed Because AB Lacks Legal Title and All
`Substantial Rights. ........................................................................................ .. 15
`
`VI.
`
`AB LACKS CONSTITUTIONAL STANDING BECAUSE IT LACKS AN
`
`EXCLUSIONARY RIGHT TO ENFORCE THE ASSERTED PATENTS IN
`
`FIELD OF USE FOR THE ACCUSED PRODUCTS ............................................... .. 16
`
`i
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` ........................ 19
`
`Son : Claims Within The Son Field Of Use Should Be Dismissed
`
`A.
`
`B.
`
`

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`VII.  CONCLUSION .......................................................................................................... 20 
`VII.
`CONCLUSION ........................................................................................................ .. 20
`
`ii
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`

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`Case 1:15-cv-00311-RGA Document 96 Filed 03/08/16 Page 5 of 28 PageID #: 2512
`
`
`CASES
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`Abbott Labs v. Diamedix Corp.,
`47 F.3d 1128 (Fed. Cir. 1995) .............................................................................. 8, 11, 12, 14
`
`Alfred E. Mann Found. for Scientific Research v. Cochlear Corp.,
`604 F.3d 1354 (Fed. Cir. 2010) .......................................................................... 10, 11, 13, 14
`
`Ballentine v. United States,
`486 F.3d 806 (3d Cir. 2007) .................................................................................................. 7
`
`Blum v. Yaretsky,
`457 U.S. 991 (1982) ............................................................................................................ 17
`
`Calgon Corp. v. Nalco Chem. Co.,
`726 F. Supp. 983 (D. Del. 1995).......................................................................................... 14
`
`Clouding IP, LLC v. Google, Inc.,
`61 F. Supp. 3d 421 (D. Del. 2014) ................................................................................ passim
`
`Conte Bros. Auto. v. Quaker State-Slick 50, Inc.,
`165 F.3d 221 (3d Cir. 1998) .................................................................................................. 6
`
`DaimlerChrysler Corp. v. Cuno,
`547 U.S. 332 (2006) ............................................................................................................ 17
`
`DDB Techs., L.L.C. v. MLB Advanced Media, L.P.,
`517 F.3d 1284 (Fed. Cir. 2008) ........................................................................................... 18
`
`Fieldturf v. Sw. Recreational Inds.,
`357 F.3d 1266 (Fed. Cir. 2004) ........................................................................................... 16
`
`Green v. Green Mtn Coffee Roasters,
`279 F.R.D. 275 (D.N.J. 2011) ............................................................................................. 17
`
`Intellectual Prop. Dev., Inc. v. TCI Cablevision of Cal.,
`248 F.3d 1333 (Fed. Cir. 2001) ..................................................................................8, 10, 15
`
`International Gamco Inc. v. Multimedia Games,
`504 F.3d 1273 (Fed. Cir. 2007) ................................................................................ 1, 2, 9, 11
`
`Lewis v. Casey,
`518 U.S. 343 (1996) ............................................................................................................ 17
`
`Lieberson v. Johnson & Johnson,
`865 F. Supp. 2d 529 (D.N.J. 2011) ...................................................................................... 17
`
`iii
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`

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`Case 1:15-cv-00311-RGA Document 96 Filed 03/08/16 Page 6 of 28 PageID #: 2513
`
`Lujan v. Defenders of Wildlife,
`504 U.S. 555 (1992) .............................................................................................................. 6
`
`Morrow v. Microsoft Corp.,
`499 F.3d 1332 (Fed. Cir. 2007) ..................................................................................7, 11, 16
`
`Pfizer, Inc. v. Elan Pharm. Research Corp.,
`812 F. Supp. 1352, 1373 (D. Del. 1993) ....................................................................... 12, 15
`
`Pope Manufacturing Co. v. Gormully & Jeffery Manufacturing Co.,
`144 U.S. 248 (1892) .............................................................................................................. 9
`
`Prima Tek II, L.L.C. v. A–Roo Co.,
`222 F.3d 1372 (Fed. Cir. 2000) ............................................................................ 7, 10, 12, 13
`
`Propat Int’l Corp. v. RPost, Inc.,
`473 F.3d 1187 (Fed. Cir. 2007) ................................................................................ 13, 14, 15
`
`Rite-Hite Corp. v. Kelley Co.,
`56 F.3d 1538 (Fed. Cir. 1995) ..................................................................................... 7, 8, 16
`
`Sicom Sys. Ltd. v. Agilent Techs., Inc.,
`427 F.3d 971 (Fed. Cir. 2005) ........................................................................................... 6, 7
`
`Steel Co. v. Citizens for a Better Env’t,
`523 U.S. 83 (1998) .............................................................................................................. 17
`
`Walker Digital, LLC. v. Expedia, Inc.,
`950 F. Supp. 2d 729 (D. Del. 2013) ....................................................................................... 7
`
`Walter v. Drayson,
`2007 WL 641413 (D. Haw. Feb. 26, 2007) .......................................................................... 17
`
`Waterman v. Mackenzie,
`138 U.S. 252 (1891) ........................................................................................................ 8, 16
`
`Wiav Solutions LLC, v Motorola, Inc.,
`631 F.3d 1257 (Fed. Cir. 2010) .................................................................................... passim
`
`STATUTES
`
`35 U.S.C. § 261 .......................................................................................................................... 8
`
`OTHER AUTHORITIES
`
`Fed. R. Civ. P. 12(b)(1)............................................................................................................... 7
`
`iv
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`

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`Case 1:15-cv-00311-RGA Document 96 Filed 03/08/16 Page 7 of 28 PageID #: 2514
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`I.
`
`NATURE AND STAGE OF PROCEEDINGS.
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`Defendants Activision Blizzard, Inc. (“Activision”), Electronic Arts Inc. (“EA”), and
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`Take-Two Interactive Software, Inc., Rockstar Games, Inc., and 2K Sports, Inc., are each leading
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`developers, publishers, and distributors of video game products. Plaintiff Acceleration Bay LLC
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`(“AB”) filed separate patent infringement actions against Defendants in March and April 2015.
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`AB asserts the same six patents in all three actions (collectively, “Asserted Patents”). AB claims
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`to own those patents through a Patent Purchase Agreement (“Agreement”) with the Boeing
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`Intellectual Property Licensing Company (“Boeing”). (No. 15-228, D.I. 21; No. 15-282, D.I. 84;
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`No. 15-311, D.I.78). Defendants now move to dismiss for lack of subject matter jurisdiction
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`because AB lacks both prudential and constitutional standing.
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`II.
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`SUMMARY OF THE ARGUMENT.
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`As a consequence of a variety of agreements, the rights to the Asserted Patents are
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`dispersed among at least four parties: Boeing, AB, Sony Computer Entertainment America, Inc.
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`(“Sony”), and Hamilton Capital XII LLC (“Hamilton Capital”). As a result, each of the cases
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`should be dismissed for lack of subject matter jurisdiction because AB lacks prudential standing
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`to bring this case on its own. Indeed, the fact that
`
`
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` precludes AB from bringing suit in its
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`own name, and this is true regardless of the scope of that field. Int’l Gamco Inc. v. Multimedia
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`Games, 504 F.3d 1273, 1278 (Fed. Cir. 2007) (field of use licensee lacks standing because it
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`“does not hold all substantial rights in the full scope of the [] patent”). This is in accord with
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`Federal Circuit jurisprudence and a recent decision by Judge Stark finding no prudential
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`standing. See Clouding IP, LLC v. Google, Inc., 61 F. Supp. 3d 421, 436 (D. Del. 2014).
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`In addition,
`
`
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`Thus, AB’s claims within these fields should be dismissed for lack of constitutional
`
`1
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`

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`standing because
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`
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`See Wiav Solutions LLC, v Motorola, Inc., 631 F.3d 1257, 1266 (Fed. Cir. 2010).
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`The cases should be dismissed in toto for lack of prudential standing, and the claims in
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`the Boeing and Sony Fields of Use should be dismissed for lack of constitutional standing.
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`A.
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`AB Lacks Prudential Standing.
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`AB lacks prudential standing to assert any claims because it does not own “all substantial
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`rights” to the Asserted Patents. As noted above,
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`Ex. A § 4.3(b).1 Boeing’s
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`establishes that Boeing retained “substantial rights.” Thus AB lacks standing to sue in its
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`own name. Int’l Gamco, 504 F.3d at 1278.
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`Moreover, Boeing retained other rights that preclude AB from bringing suit in its own
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`
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`name. Clouding, 61 F. Supp. 3d at 429. Boeing’s retained rights include:
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` The Agreement is, in reality, not an assignment but is
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`instead a non-exclusive license in a certain field of use. Thus, AB lacks prudential standing and
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`all three cases should be dismissed for lack of subject matter jurisdiction.
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`B.
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`AB Lacks Constitutional Standing to Assert Claims Within the Boeing and
`Sony “Fields of Use.”
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`In a patent case, the plaintiff only has constitutional standing to the extent it has “an
`
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`1 All exhibits are attached to the Declaration of Counsel filed concurrently herewith.
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`2
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`

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`exclusionary right in a patent that, if violated by another, would cause the party holding the
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`exclusionary right to suffer legal injury.” Wiav Solutions, 631 F.3d at 1266. Moreover, even a
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`party with exclusionary rights under a patent lacks standing to sue a party for infringement if that
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`party “has the ability to obtain such a license from another party with the right to grant it.” Id.
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`
`
`
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`Because
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` it has no injury-in-fact. As a result, it lacks constitutional standing within these fields.
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`Boeing Field of Use.
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`Products within the Boeing Field of Use should be dismissed for lack of constitutional standing.
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`Sony Field of Use. The Agreement is also subject to an earlier license that Boeing
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` Ex. A, § 2.5. All claims against Accused
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`
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` Id. The
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`
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`granted to Sony (the “Sony License”, Ex. B),
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`Sony License gives Sony the right to
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`publisher that publishes games on the Sony gaming platforms
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`
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` Ex. B, § 2.1. Each Defendant is a videogame
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`games.
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` AB is specifically accusing such
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` deprives
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`AB of constitutional standing to assert claims within the Sony Field of Use. Therefore, all such
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`3
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`

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`claims should be dismissed.
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`III.
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`STATEMENT OF FACTS.
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`AB’s amended complaints allege that AB is “the sole owner” of the Asserted Patents by
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`assignment. See, e.g., No. 15-228, D.I. 7 at ¶¶ 11, 14, 17, 20, 23, 26. That claim is unfounded.
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`The Asserted Patents issued to Boeing. In December 2014, Boeing entered into the
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`Patent Purchase Agreement with AB’s predecessor, AB Inc.
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`4
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`5
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`IV. APPLICABLE LAW.
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`“Standing is comprised of both constitutional and prudential components.” Conte Bros.
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`Auto. v. Quaker State-Slick 50, Inc., 165 F.3d 221, 225 (3d Cir. 1998). Federal Circuit law
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`governs whether a plaintiff has sufficient rights in the patents-in-suit to assert infringement.
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`Wiav Solutions, at 1263. As the party invoking federal jurisdiction, AB bears the burden of
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`establishing its standing to sue. See, e.g., Lujan v. Defenders of Wildlife, 504 U.S. 555, 561
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`(1992); Sicom Sys. Ltd. v. Agilent Techs., Inc., 427 F.3d 971, 976 (Fed. Cir. 2005) (“The party
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`6
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`bringing the action bears the burden of establishing that it has standing.”). In resolving standing,
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`this Court need not accept AB’s allegations as true and may consider matters outside the
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`pleadings to satisfy itself that it has jurisdiction. See Walker Digital, LLC. v. Expedia, Inc.,
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`950 F. Supp. 2d 729, 734 (D. Del. 2013) (under a factual challenge to jurisdiction, “‘no
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`presumptive truthfulness attaches to plaintiff’s allegations, and the existence of disputed material
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`facts will not preclude the trial court from evaluating for itself the merits of jurisdictional
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`claims.’”) (internal citations omitted).
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`A plaintiff must have standing to sue when it first files suit and at all times thereafter.
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`Sicom, 427 F.3d at 975-76. If the plaintiff lacked standing at the time it sued, the court lacks
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`subject-matter jurisdiction and the case must be dismissed under Rule 12(b)(1). See, e.g.,
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`Ballentine v. United States, 486 F.3d 806, 810 (3d Cir. 2007); Rite-Hite Corp. v. Kelley Co.,
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`56 F.3d 1538, 1551 (Fed. Cir. 1995) (en banc).
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`V.
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`AB LACKS PRUDENTIAL STANDING TO SUE.
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`AB lacks prudential standing, which requires that all of the cases be dismissed in their
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`entirety. To sue in its name alone, AB must establish that it owns either (1) legal title to the
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`entire bundle of patent rights or (2) all substantial rights in the patents. Clouding, 61 F. Supp. 3d
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`at 429 (citing Morrow v. Microsoft Corp., 499 F.3d 1332, 1339–40 (Fed. Cir. 2007)); see also
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`Sicom, 427 F.3d at 976; Prima Tek II, L.L.C. v. A–Roo Co., 222 F.3d 1372, 1377 (Fed. Cir.
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`2000). If AB does not own the entire patent or all substantial rights, it may only proceed with
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`the participation of the other owner(s). That is the situation here. AB does not hold legal title,
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`nor does it have all substantial rights in the Asserted Patents.
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`A.
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`AB Does Not Hold Legal Title.
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`A civil action for infringement may be brought by “a patentee.” 35 U.S.C. § 281. A
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`“patentee” is defined by statute to include the party to whom the patent was issued and the
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`7
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`successors i11 title to the patent.
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`35 U.S.C. § 100(d). Accordingly, a suit for infringement
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`ordinarily m11st be brought by a party holding legal title to the patent. See Abbott Labs. v.
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`Diamedix Corp, 47 F.3d 1128, 1130 (Fed. Cir. 1995). A conveyance of legal title by the
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`patentee can be made only of (i) the entire patent, (ii) an undivided part or share of the entire
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`patent
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`(e.g., joint owners or spouses), or (iii) all rights under the patent
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`in a specified
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`geographical region of the United States. See Rite-Hite, 56 F.3d at 1551-52; 35 U.S.C. § 261. A
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`transfer of any of these three kinds of interests “vests in the assignee a title i11 so much of the
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`patent itself, with a right to sue infringers.
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`In the second case, jointly with the assignor.
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`In the
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`first and third cases, in the name of the assignee alone.” Waterman v. Mackenzie, 138 U.S. 252,
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`255 (1891). But a transfer of “less than one of these three interests is a license, not an
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`assignment of legal title, and it gives the licensee no right to sue for infringement at law m the
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`licensee’s own name.” Rite-Hire, 56 F.3d at 1551-52 (emphasis added).
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`Whether a transfer of a particular right or interest under a patent is an assigmnent or a
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`license does not depend upon the name by which it is called, b11t upon the legal eflect of its
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`provisions. Waterman, 138 U.S. at 256; see also Intellectual Prop. Dev., Inc. v. TCI Cablevision
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`of Cal., 248 F.3d 1333, 1344 (Fed. Cir. 2001) (“actual consideration of the rights transferred is
`
`the linchpin of such a detem1ination.”). The question, then, is not how Boeing titled the “Patent
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`Purchase Agreement” or labeled the parties thereto, but the substance of what was granted. See
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`Propat Int’l Corp. v. RPost, Inc., 473 F.3d 1187, 1192 (Fed. Cir. 2007).
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`The Agreement clearly did not convey the entire patents, an undivided part or share of the
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`entire patents, nor all rights in a specific geographic region. Instead,
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`
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`(emphasis added); see also, Exhibit C to Agreement (listing Sony License).
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`In Clouding, Judge Stark found that a Patent Purchase Agreement with similar‘
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`-language was not an assignment b11t rather a license of the patent rights: “The transfer of ‘all
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`rights, title, and interest’ in the patents identified in the Agreement was made ‘subject to the
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`terms ofthis Agreement including the License set forth in [this Agreement] Section 4.5. ”’ 61 F.
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`Supp. 3d at 432 (emphasis added). Accordingly, the court held no legal title was conveyed:
`
`[B]ased on the clear language of the transfer provisions, [Seller] did not convey
`any entire patent, an undivided part or share of any entire patent, or all rights
`imder any patent m a specified geographical region of the United States.
`Consequently, [Purchaser] does not hold formal legal title.
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`Id. For the same reason, AB does not hold legal title here.
`
`B.
`
`Boeing's Retention Of A Right To Enforce Patents In Its Field Of Use
`Precludes Standing.
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`A patentee may still effect a transfer of ownership if it conveys “all substantial rights” to
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`the transferee. Clouding, 61 F. Supp. 3d at 432.
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`‘— sufficient to defeat AB’s claim to own all substantial rights:
`
`As noted by the Supreme Court, allowing a licensee, even one with exclusive
`rights to the patent for a particular field ofuse, to sue in its own name alone poses
`a substantial risk of multiple suits and multiple liabilities against an alleged
`infringer for a single act of infringement.
`To alleviate this risk, this court’s
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`prudential standing requirement compels an exclusive licensee with less than all
`substantial rights, such as a field of use licensee, to join the patentee before
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`initiating suit.
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`Int’l Gamco Inc., 504 F.3d at 1278 (citing Pope Mfg. Co. v. Gornmlly & Jeflerjr Mfg. Co.,
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`144 U.S. 248, 251-52 (1892)) (emphasis added, intemal citations omitted). When a transferor
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`retains the right to pursue infringers in any field of use, this precludes a finding that the
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`transferee has “all substantial rights” because it does not “hold all substantial rights in the full
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`scope of the [] patent.” Id. See also A123 Sys., Inc. v. Hydro-Quebec, 626 F.3d 1213, 1217
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`(Fed. Cir. 2010) (“Under long-standing prudential standing precedent, an exclusive licensee with
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`less than all substantial rights in a patent, such as a field-of-use licensee, lacks standing to sue for
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`infringement without joining the patent owner.”). Thus,
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`
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` precludes a finding that AB has all substantial rights.
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`C.
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`AB Lacks Sufficient Rights in the Asserted Patents to Establish Prudential
`Standing.
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`Yet, even if
`
` was not
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`entirely dispositive of this issue, AB would still be unable to establish it owns all substantial
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`rights. Courts examine a number of factors to determine if all substantial rights have been
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`conveyed: “transfer of the exclusive right to make, use, and sell products or services under the
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`patent;” “the scope of the licensee’s right to sublicense;” “the nature of license provisions
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`regarding the reversion of rights to the licensor following breaches of the license agreement;”
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`“the right of the licensor to receive a portion of the recovery in infringement suits brought by
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`the licensee;” “the duration of the license rights granted to the licensee;” “the ability of the
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`licensor to supervise and control the licensee’s activities;” “the obligation of the licensor to
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`continue paying patent maintenance fees;” and “the nature of any limits on the licensee’s right
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`to assign its interests in the patent.” Clouding, 61 F. Supp. 3d at 433 (citing Alfred E. Mann
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`Found. for Scientific Research v. Cochlear Corp., 604 F.3d 1354, 1360–61 (Fed. Cir. 2010)).
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`Where parties have divided up the bundle of rights in patents asserted in litigation, the
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`court must determine which rights plaintiff has in full, which rights the plaintiff lacks, and which
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`rights are shared with the purported assignor. See Intellectual Prop. Dev., 248 F.3d at 1342–44;
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`see also PrimaTek II, LLC, 222 F.3d at 1378.
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`10
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` also
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`1.
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`counsels heavily against a finding that AB owns all substantial rights. When “the licensor retains
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`a right to sue accused infringers, that right often precludes a finding that all substantial rights
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`were transferred to the licensee.” Alfred E. Mann, 604 F.3d at 1361. Indeed, “the nature and
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`scope of the licensor’s retained right to sue accused infringers is the most important factor in
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`determining whether an exclusive license transfers sufficient rights to render the licensee the
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`owner of the patent.” Id.; see also Abbott Labs, 47 F.3d at 1129 (holding the plaintiff lacked
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`standing where the patent owner retained its right to “bring such suit against … infringer[s].”). If
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`it were not so, multiple entities could attempt to assert independent standing to sue—risking
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`duplicative suits and inconsistent relief over the same act of alleged infringement—in
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`contravention of the prudential standing doctrine. See Clouding, 61 F. Supp. 3d at 434-35 (citing
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`Morrow, 499 F.3d at 1340); cf. Int’l Gamco, Inc., 504 F.3d at 1279 (“exclusive field of use
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`license subjects an infringer to suit by multiple parties because the license has split the patented
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`subject matter amongst various parties”).
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`2.
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`Another key ownership right is the right to exclude others from practicing the patent. See
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`Alfred E. Mann, 604 F.3d at 1360 (“[T]ransfer of the exclusive right to make, use, and sell
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`products or services under the patent is vitally important to an assignment.”). The more limited a
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`plaintiff’s right to exclude, the more likely it will be deemed a licensee as opposed to a true
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`owner by assignment. See, e.g., Abbott, 47 F.3d at 1132 (finding Abbott was not a “patentee”
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`where Diamedix retained extensive rights to make, use, and sell and Abbott’s rights were subject
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`to previous licenses by Diamedix); Prima Tek II, 222 F.3d at 1379 (“[W]e pay particular
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`attention to whether the agreement conveys in full the right to exclude others from making, using
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`and selling the patented invention in the exclusive territory.”) (emphasis in original).
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`
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` Ex. A, § 4.3. Finally, the
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`Agreement is subject to the Sony license, which gives Sony and all of its sub-licensees the right
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`to practice the patents in connection with the Sony PlayStation platform. Ex. A, § 6.2; Ex. B, §
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`2.1. Under similar circumstances, in Pfizer, Inc. v. Elan Pharm. Research Corp., cited by the
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`Federal Circuit with approval (see Abbott, 47 F.3d at 1133), this Court held that the plaintiff
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`lacked standing where the transferor retained, inter alia, the right to market patented products
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`commercially in the United States. 812 F. Supp. 1352, 1373 (D. Del. 1993).
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`3.
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`Another fundamental attribute of ownership is the right to license others to practice the
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`patent on terms of the owner’s choosing. Prima Tek II, 222 F.3d at 1380 (an “agreement does
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`not transfer all substantial rights in the patents” when its right to sub-license is limited).
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`Here,
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`Ex. A, § 6.2; Ex. B, § 2.1.
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` Ex. C, §§ 1.1, 2.2.
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` Id. at § 5.7; Enhanced Security
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`Research, LLC, v. Juniper Networks, Inc., 2010 WL 2898298 (D. Del. 2010) (plaintiff lacked
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`standing where litigation finance company had, inter alia, veto rights over settlements).
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`4.
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`Courts also consider “the nature of license provisions regarding the reversion of rights to
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`the licensor following breaches of the license agreement.” Alfred E. Mann, 604 F.3d at 1360.
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` Ex. A, §§ 3.4(c), 4.5.
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`This factor, too, undermines AB’s position on standing. See, e.g., Propat Int’l Corp.,
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`473 F.3d at 1191-92
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`5.
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`A patent owner has the right to refrain from suing for infringement, and limitations on
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`that right indicate that the holder is not a true owner. In Abbott Labs, for example, “the
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`agreement provide[d] that if Diamedix ask[ed] Abbott to bring suit against an alleged infringer
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`and Abbott decline[d] to do so, Diamedix ha[d] the right to prosecute its own infringement
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`action.” 47 F.3d at 1132. The Federal Circuit held that Abbott “d[id] not enjoy the right to
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`indulge infringements, which normally accompanies a complete conveyance of the right to sue,”
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`indicating that Abbott was not an assignee entitled to sue in its own name. Id.; see also Calgon
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`Corp. v. Nalco Chem. Co., 726 F.Supp. 983, 986-87 (D. Del. 1995) (describing the right to sue
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`infringers as “most important[]” and holding that Calgon was not an assignee where another
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`party, Kurita, “retain[ed] a measure of control over infringement suits”).
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`Similarly in Alfred E. Mann, the original owner, AMF, executed an agreement granting
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`broad and exclusive rights to the transferee. 604 F.3d at 1357. As to litigation, however, the
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`transferee had merely the rights of first refusal to sue and to share proceeds. AMF could bring
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`suit if the transferee did not, and the latter had no right to control AMF’s conduct of that suit.
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`The Court stressed that “a broad right to decide whether to bring suit and to control litigation is
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`thoroughly inconsistent with an assignment of the patents-in-suit to [transferee],” id. at 1362, and
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`ultimately held that AMF retained substantial rights and thus remained the patent owner.
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`.
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`6.
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`The right of the licensor to “receive a portion of the recovery in infringement suits” is
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`also pertinent to the “all substantial rights” inquiry. Clouding, 61 F. Supp. 3d at 436 (citing
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`Alfred E. Mann, 604 F.3d at 1360-61); see also Propat, 473 F.3d at 1191 (retention of “a
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`substantial share of the proceeds is consistent with Authentix’s retaining ownership rights in the
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`patent, while allocating to Propat the duty to provide licensing and enforcement services.”).
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` Ex. A, § 3.4(d); see also Intellectual Prop. Dev., 248 F.3d at 1342, 1345
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`(holding transferee lacked all substantial rights where transferor retained, inter alia, rights to
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`50% of profits realized from patent litigation), Pfizer, 812 F. Supp. at 1374 (Pfizer lacked all
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`substantial rights where Bayer retained, inter alia, rights to 50% of infringement damages).
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`
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`D.
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`This Case Should Be Dismissed Because AB Lacks Legal Title and All
`Substantial Rights.
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`Taking all of these factors into consideration, it is clear that Boeing did not convey (i) all
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`rights to any of the patents in their entirety; (ii) an undivided part or share of any patent in its
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`entirety; or (iii) all rights under any patent in a specified geographical region of the United
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`States. See Rite-Hite, 56 F.3d at 1551-52 (citing Waterman, 138 U.S. at 255); see also Clouding,
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`61 F. Supp. 3d at 432. On the contrary,
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`
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`Ex. A, § 4.3(a-b). As in Clouding, these encumbrances fetter AB’s
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`rights and rule out the possibility that it has legal title.
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`AB bears the burden of proving that it possesses all substantial rights in the patents. See
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`Fieldturf v. Sw. Recreational Indus., 357 F.3d 1266, 1268 (Fed. Cir. 2004) (holding that party
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`asserting standing “has the burden to provide evidence endowing it with all substantial rights in
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`the patent”). Given the substantial rights retained by Boeing, AB cannot meet its burden. In
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`Clouding, based on a careful review of the Patent Purchase Agreement, the Court found no
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`transfer of legal title and that transferee did not receive enough of the bundle of rights to
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`establish prudential standing. 61 F. Supp. 3d at 436. So too here.
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`VI. AB LACKS CONSTITUTIONAL STANDING BECAUSE IT LACKS AN
`EXCLUSIONARY RIGHT TO ENFORCE THE ASSERTED PATENTS IN
`FIELD OF USE FOR THE ACCUSED PRODUCTS.
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`Constitutional standing requires the plaintiff demonstrate an “injury in fact” that is “fairly
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`traceable” to the defendant’s conduct and likely to be redressed by a favorable decision. Id.;
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`Morrow, 499 F.3d at 1338–39. In a patent case, the “touchstone of constitutional standing” is
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`“whether a party can establish that it has an exclusionary right in a patent that, if violated by
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`another, would cause the party holding the exclusionary right to suffer legal injury.” Yet, even a
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`party