Case 1:15-cv-00311-RGA Document 138 Filed 05/24/16 Page 1 of 6 PageID #: 4076
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`M O R R I S , N I C H O L S , A R S H T & T U N N E L L L L P
`1201 NORTH MARKET STREET
`P.O. BOX 1347
`WILMINGTON, DELAWARE 19899-1347
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`(302) 658-9200
`(302) 658-3989 FAX
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`STEPHEN J. KRAFTSCHIK
`(302) 351-9378
`skraftschik@mnat.com
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`
`May 17, 2016
`HIGHLY CONFIDENTIAL- OUTSIDE COUNSEL ONLY
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`VIA ELECTRONIC FILING
`FILED UNDER SEAL
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`The Honorable Richard G. Andrews
`United States District Judge
` For the District of Delaware
`844 North King Street
`Wilmington, DE 19801
`Re: Acceleration Bay LLC v. Activision Blizzard, Inc., et al, 15-228, 15-282, 15-311-RGA
`Dear Judge Andrews:
`You have asked the Parties to address the following issue: “If the Court concludes that
`Acceleration Bay is the owner of the patents-in-suit, is Boeing required to be joined as a party
`under Fed. R. Civ. P. 19?” The answer is yes.
`Boeing is a “required party” under Rule 19(a) because substantive patent law requires
`both the owner and its exclusive licensee be parties to an infringement action. Aspex Eyewear,
`Inc. v. Miracle Optics, Inc., 434 F.3d 1336, 1344 (Fed. Cir. 2006) (holding that “[f]or the same
`policy reasons that a patentee must be joined . . ., there must be a joinder of any exclusive
`licensee.”).
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` and therefore it is a required party under Rule 19 whose absence
`deprives this Court of subject-matter jurisdiction. Int’l. Gamco Inc. v. Multimedia Games, 504
`F.3d 1273, 1278 (Fed. Cir. 2007); Aspex, 434 F.3d at 1344; Clouding IP v. Google, 61 F. Supp.
`3d 421, 430, n.8 (D. Del. 2014). Plaintiff lacks sufficient rights to sue alone,
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` No court has found a
`plaintiff lacking rights such as these to have standing to sue alone. Whether Plaintiff is an owner
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`We are unaware of any case finding that a patentee transferred ownership where the
`patentee retained exclusionary rights as broad as those Boeing retained here.
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` See Clouding, 61 F. Supp.
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`3d at 436.
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`Case 1:15-cv-00311-RGA Document 138 Filed 05/24/16 Page 2 of 6 PageID #: 4077
`The Honorable Richard G. Andrews
`May 16, 2016
`Page 2
`or licensee is irrelevant—it lacks all substantial rights necessary to bring this suit without
`Boeing, a required party. See Clouding, 61 F. Supp. 3d at 436.
`Rule 19 provides that an absent party is “required” when it has “an interest relating to the
`subject of the action” and proceeding without it would “impede the person’s ability to protect the
`interest” or subject an existing party to “substantial risk of incurring double . . . obligations.”
`Both the Supreme Court and Federal Circuit have confirmed that both the owner and exclusive
`licensee are “required parties” in a patent infringement action. In a case later incorporated into
`Rule 19, the Supreme Court held that the presence of both the patent owner and any exclusive
`licensee “is indispensable . . . to enable the alleged infringer to respond in one action to all
`claims of infringement for his act.” Independent Wireless Tel. Co. v. Radio Corp., 269 U.S. 459,
`466, 468 (1926) (“[B]oth the owner and the exclusive licensee are generally required parties in
`the action in equity.”). The Federal Circuit has twice held that a patent owner must join its
`exclusive licensee, and vice versa. In Aspex Eyewear, the Federal Circuit held that even though
`the owner, Contour, was a party, “[f]or the same policy reasons that a patentee must be joined
`. . . there must be a joinder of any exclusive licensee.” 434 F.3d at 1344. The Federal Circuit
`directed the district court to determine whether another party, Chic, was an exclusive licensee
`because, if so, “Chic was a necessary party and it has not been joined.” Id. In Alfred E. Mann,
`the Federal Circuit again reaffirmed this principle: “When there is an exclusive license
`agreement, . . . but the exclusive license does not transfer enough rights to make the licensee the
`patent owner, either the licensee or the licensor may sue, but both of them generally must be
`joined[.]” Alfred E. Mann Found. For Sci. Research v. Cochlear Corp., 604 F.3d 1354, 1360
`(Fed. Cir. 2010). It again held that even though the plaintiff was the patent owner, it was
`necessary on remand to “consider whether, under [Aspex and Independent Wireless] [the absent
`exclusive licensee] is an indispensable party” under Rule 19. Id. at 1361–63. Furthermore,
`Judge Stark acknowledged this rule in Clouding, advising that “where the plaintiff is a patentee
`who has given away some but not all substantial rights, it must join its exclusive licensee.” 61 F.
`Supp. 3d at 430, n.8 (holding that the plaintiff was not the owner).2
`The three cases cited by Plaintiff at the hearing do not suggest a different conclusion.
`First, Alfred E. Mann plainly supports Defendants. Second, Bluestone is distinguishable because
`the exclusive field of use licensee was never an owner of the patent, never had any rights beyond
`its field of use, and did not receive sufficient rights to sue on its own. Bluestone Innovations
`LLC v. Nichia Corp., 2013 WL 1729814, at *3 (N.D. Cal. Apr. 22, 2013). And the plaintiff-
`assignee had “covenanted not to sue under any Patent” for products within the exclusive
`licensee’s field. Id. Third, Princeton Digital is distinguishable because the assignor – unlike
`Boeing – had no exclusionary rights and “therefore [was] not a necessary party” under Rule 19.
`Princeton Digital Image Corp. v. Hewlett-Packard, 2013 WL 1454945, at *4, *6 (S.D.N.Y. Mar.
`21, 2013).
`Rule 19 by its terms mandates this outcome. Under Rule 19(a)(1),
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`Other courts have routinely applied these principles to require either dismissal or joinder
`of an exclusive licensee. E.g., Personalized Media Commc’ns v. Echostar Corp., 2012
`WL 8251515, at *3 (E.D. Tex. July 10, 2012) (holding that an exclusive field-of-use
`licensee was a required party); IRIS Corp. Berhad v. United States, 82 Fed. Cl. 488, 499
`(2008) (same); Superguide Corp. v. DirectTV Enters., 202 F.R.D. 460, 462 (W.D.N.C.
`2001) (same).
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`Case 1:15-cv-00311-RGA Document 138 Filed 05/24/16 Page 3 of 6 PageID #: 4078
`The Honorable Richard G. Andrews
`May 16, 2016
`Page 3
`and Boeing’s absence “impede[s] [its] ability to protect [its] interest,” and places Defendants at
`“risk of incurring double, multiple, or otherwise inconsistent obligations.” Rule 19(a)(1).
`Boeing is thus a required party even if Plaintiff owns the Patents. As an absent party, Boeing’s
`“ability to protect” its exclusionary rights and financial stake in the patents is “impaired.” Rule
`19(a).
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`The Court should dismiss these suits because of Plaintiff’s delay and prejudice to
`Defendants. See MOSAID Techs. Inc. v. LSI Corp., 2014 WL 3361924, at *2 (D. Del. July 2,
`2014) (denying leave to amend based on delay and undue prejudice). Plaintiffs lack any good
`cause for the delay; The rule of International Wireless—that a case cannot proceed without both
`the patent owner and the exclusive licensee—has long been the law and is evident from the
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` Courts, including Judge Stark in Clouding, have ordered a
`dismissal under these circumstances. In Clouding, Judge Stark rejected plaintiff’s late attempt to
`join Symantec as a required party when neither the licensee nor patentee had ever previously
`sought such relief. Clouding IP, 2014 WL 6466833, at *2 (D. Del. 11/17/14). Moreover, joinder
`would prejudice Defendants. These suits have been litigated for over a year, discovery is
`moving forward, infringement and invalidity contentions have been served and the parties are
`entering depositions and claim construction.
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`Dismissal is also appropriate because, as Plaintiff stated at the hearing,
` Rule 19 permits
`“involuntary joinder of plaintiffs only if the proposed plaintiff is substantively obligated to join.”
`STC.UNM v. Intel Corp., 767 F.3d 1351, 1353 (Fed. Cir. 2014) (Dyk, J., concurring in the denial
`of rehearing en banc).
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` See D.I. 102-1, Ex. A, § 4.3(b)
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`(emphasis added); id. § 5.1.
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`Boeing and Plaintiff may sue together, but only after these cases are dismissed and they
`re-file with all required parties. If the Court nevertheless delays dismissal of these cases to allow
`Plaintiff to try to join Boeing, at a minimum, the cases should be held in abeyance in the interim,
`and a new schedule should be set and the filing date should also be reset for purposes of damages
`calculations if Boeing is joined.
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`Case 1:15-cv-00311-RGA Document 138 Filed 05/24/16 Page 4 of 6 PageID #: 4079
`The Honorable Richard G. Andrews
`May 16, 2016
`Page 4
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`SJK/bac
`Attachments
`Cc:
`Clerk of the Court (by hand delivery; w/attachments)
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`All Counsel of Record (by electronic mail; w/attachments)
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`Stephen J. Kraftschik (#5623)
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`Respectfully,
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`/s/ Stephen J. Kraftschik
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`Case 1:15-cv-00311-RGA Document 138 Filed 05/24/16 Page 5 of 6 PageID #: 4080
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