Case 1:16-cv-00455-RGA Document 25 Filed 10/12/16 Page 1 of 15 PageID #: 1371
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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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`ACTIVISION BLIZZARD, INC.
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`Defendant.
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`ACCELERATION BAY LLC,
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`ELECTRONIC ARTS INC.,
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`Defendant.
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`ACCELERATION BAY LLC,
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`TAKE-TWO INTERACTIVE SOFTWARE,
`INC., ROCKSTAR GAMES, INC. and
`2K SPORTS, INC.,
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`C.A. No. 16-453 (RGA)
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`C.A. No. 16-454 (RGA)
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`C.A. No. 16-455 (RGA)
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`Plaintiff,
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`Plaintiff,
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`Plaintiff,
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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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`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
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`Attorneys for Defendants
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`REDACTED -
`PUBLIC VERSION
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`REDACTED -
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`REDACTED -
`PUBLIC VERSION
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`Case 1:16-cv-00455-RGA Document 25 Filed 10/12/16 Page 2 of 15 PageID #: 1372
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`OF COUNSEL:
`David P. Enzminger
`Michael A. Tomasulo
`Gino Cheng
`David K. Lin
`WINSTON & STRAWN LLP
`333 S. Grand Avenue, 38th Floor
`Los Angeles, CA 90071
`(213) 615-1700
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`Dan K. Webb
`Kathleen B. Barry
`WINSTON & STRAWN LLP
`35 West Wacker Drive
`Chicago, IL 60601
`(312) 558-5600
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`Michael M. Murray
`WINSTON & STRAWN LLP
`200 Park Avenue
`New York, NY 10166
`(212) 294-3510
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`October 4, 2016
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`- Original Filing Date
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`October 12, 2016 - Redacted Filing Date
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`Case 1:16-cv-00455-RGA Document 25 Filed 10/12/16 Page 3 of 15 PageID #: 1373
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`TABLE OF CONTENTS
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`Page
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`I. 
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`II. 
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`III. 
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`IV. 
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`V. 
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`NATURE AND STAGE OF PROCEEDINGS ............................................................. 4 
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`SUMMARY OF THE ARGUMENT ............................................................................ 4 
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`STATEMENT OF FACTS ........................................................................................... 5 
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`APPLICABLE LAW.................................................................................................... 7 
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`ARGUMENT ............................................................................................................... 8 
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`A. 
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`B. 
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`C. 
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` games should be dismissed at the
`Claims against the
`outset of the case. ........................................................................................... 11 
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`VI. 
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`CONCLUSION .......................................................................................................... 12 
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`Case 1:16-cv-00455-RGA Document 25 Filed 10/12/16 Page 4 of 15 PageID #: 1374
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`TABLE OF AUTHORITIES
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`Page(s)
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`Cases
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`Alfred E. Mann Found. For Sci. Research v. Cochlear Corp.,
`604 F.3d 1354 (Fed. Cir. 2010) .......................................................................................... 5
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`Blum v. Yaretsky,
`457 U.S. 991 (1982) ........................................................................................................... 7
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`DaimlerChrysler Corp. v. Cuno,
`547 U.S. 332 (2006) ........................................................................................................... 7
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`DDB Techs., L.L.C. v. MLB Advanced Media, L.P.,
`517 F.3d 1284 (Fed. Cir. 2008) .......................................................................................... 8
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`Friedman v. Dollar Thrifty Auto. Grp., Inc.,
`304 F.R.D. 601 (D. Colo. 2015) ......................................................................................... 8
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`Green v. Green Mtn. Coffee Roasters,
`279 F.R.D. 275 (D.N.J. 2011) ............................................................................................ 8
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`Lewis v. Casey,
`518 U.S. 343 (1996) ........................................................................................................... 7
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`Lieberson v. Johnson & Johnson,
`865 F. Supp. 2d 529 (D.N.J. 2011) ..................................................................................... 8
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`Luminara Worldwide, LLC v. Liown Elecs. Co.,
`814 F.3d 1343 (Fed. Cir. 2016) .......................................................................................... 7
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`Morrow v. Microsoft Corp.,
`499 F.3d 1332 (Fed. Cir. 2007) ...................................................................................... 4, 7
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`Reilly v. Amy’s Kitchen, Inc.,
`2 F. Supp. 3d 1300 (S.D. Fla. 2014) ................................................................................... 8
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`Rite-Hite Corp. v. Kelley Co., Inc.,
`56 F.3d 1538 (Fed. Cir. 1995) (en banc) ............................................................................. 4
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`Sicom Sys., Ltd. v. Agilent Techs., Inc.,
`427 F.3d 971 (Fed. Cir. 2005) ............................................................................................ 4
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`Speedplay, Inc. v. Bebop, Inc.,
`211 F.3d 1245 (Fed. Cir. 2000) .......................................................................................... 5
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`Steel Co. v. Citizens for a Better Env’t,
`523 U.S. 83 (1998) ......................................................................................................... 4, 8
`ii
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`Case 1:16-cv-00455-RGA Document 25 Filed 10/12/16 Page 5 of 15 PageID #: 1375
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`Walker Digital, LLC. v. Expedia, Inc.,
`950 F. Supp. 2d 729 (D. Del. 2013) .................................................................................... 4
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`Warth v. Seldin,
`422 U.S. 490 (1975) ........................................................................................................... 4
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`WiAV Solutions LLC, v Motorola, Inc.,
`631 F.3d 1257 (Fed. Cir. 2010) ............................................................................... 1, 2, 5, 6
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`iii
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`Case 1:16-cv-00455-RGA Document 25 Filed 10/12/16 Page 6 of 15 PageID #: 1376
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`I.
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`NATURE AND STAGE OF PROCEEDINGS
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`Defendants Activision Blizzard, Inc., Electronic Arts Inc., and Take-Two Interactive
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`Software, Inc., Rockstar Games, Inc., and 2K Sports, Inc. (collectively, “Defendants”), are each
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`leading developers, publishers, and distributors of video game products. The currently pending
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`actions against Defendants were filed on June 17, 2016. Defendants have not answered.
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`Defendants have moved to dismiss large parts of the claims against them –
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` – for lack of subject-matter jurisdiction. This is their opening
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`brief in support of that motion.
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`II.
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`SUMMARY OF ARGUMENT
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`Acceleration Bay lacks constitutional standing to assert a large portion of each of its
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`claims against Defendants.
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`publishes games on
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` and therefore falls into the category of
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` Each Defendant is a videogame publisher that
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`companies
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`games.
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`. Acceleration Bay is specifically accusing such
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`1 U.S. Patent No. 6,701,344; U.S. Patent No. 6,714,966; U.S. Patent No. 6,732,147; U.S. Patent
`No. 6,829,634; U.S. Patent No. 6,910,069; and U.S. Patent No. 6,920,497. See D.I. 1 at ¶ 10.
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` See
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`Case 1:16-cv-00455-RGA Document 25 Filed 10/12/16 Page 7 of 15 PageID #: 1377
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`WiAV Solutions LLC, v Motorola, Inc., 631 F.3d 1257, 1266 (Fed. Cir. 2010). In a patent case,
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`the plaintiff only has constitutional standing to the extent it has “an exclusionary right in a patent
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`that, if violated by another, would cause the party holding the exclusionary right to suffer legal
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`injury.” Id. Moreover, even a party with exclusionary rights under a patent lacks standing to sue
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`a party for infringement if that party “has the ability to obtain such a license from another party
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`with the right to grant it.” Id. (emphasis added). Because Acceleration Bay does not own
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`sufficient exclusionary rights
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`, it suffers no injury-in-fact. Indeed,
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`Acceleration Bay acknowledged to the Court at the hearing on the motion to dismiss the previous
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`series of cases
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` Thus, Acceleration Bay lacks constitutional standing within
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`, and the claims directed at
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` should be
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`dismissed.
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`III.
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`STATEMENT OF FACTS
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`The Asserted Patents issued to Boeing. E.g., No. 16-453, D.I. 1-1 at 2.
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`Case 1:16-cv-00455-RGA Document 25 Filed 10/12/16 Page 8 of 15 PageID #: 1378
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`In
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` Boeing entered into an agreement with Acceleration Bay that
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`purported to assign the Asserted Patents to Acceleration Bay. In March and April 2015,
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`Acceleration Bay sued Defendants, alleging that Defendants’ products infringed the Asserted
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`Patents it acquired from Boeing. During discovery, Defendants learned of Boeing’s Patent
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`Purchase Agreement
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`, and moved to dismiss for lack of standing.
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`Defendants argued (1) that all claims had to be dismissed for lack of prudential standing, because
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`Acceleration Bay did not own or have all substantial rights to the Asserted Patents, and
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`. See No. 15-228, D.I. 101.
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`This Court concluded that Acceleration Bay lacked prudential standing and dismissed all
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`claims without prejudice. No. 15-228, D.I. 148; No. 15-282, D.I. 142; No. 15-311, D.I. 144.
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`The Court did not reach Defendants’ arguments that Acceleration Bay lacked constitutional
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`standing to assert claims within the Boeing
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`. Id. at 11 (“I need not reach
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`the other arguments raised by Defendants unless Boeing joins this action.”).
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`Case 1:16-cv-00455-RGA Document 25 Filed 10/12/16 Page 9 of 15 PageID #: 1379
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`On June 17, 2016, Acceleration Bay filed a second round of suits against each of the
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`Defendants. As with its previous complaints, Acceleration Bay identifies as “Accused Products”
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`products
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`. E.g., No. 16-453, D.I. 1-4, at 2; No. 16-453,
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`D.I. 1-4 at 145; No. 16-454, D.I. 1-3 at 13; No. 16-454, D.I. 1-3 at 74; No. 16-454, D.I. 1-3 at
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`134; No. 16-454, D.I. 1-3 at 180; No. 16-455, D.I. 1-3 at 2; No. 16-455, D.I. 1-3 at 65
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`(“‘Accused Product’ refers to the PlayStation 3, PlayStation 4, Xbox One and Xbox 360
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`versions ….”). Defendants now move to dismiss, again on the basis that Acceleration Bay lacks
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`constitutional standing to assert claims against products within
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`IV. APPLICABLE LAW
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`Constitutional standing “is a threshold question in every federal case.” Warth v. Seldin,
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`422 U.S. 490, 498 (1975). The plaintiff must 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. Morrow
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`v. Microsoft Corp., 499 F.3d 1332, 1338–39 (Fed. Cir. 2007). Whether a plaintiff has standing to
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`sue is a matter of law to be determined by the court, Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d
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`1538, 1551 (Fed. Cir. 1995) (en banc), and it must be addressed at the outset of the case. Steel
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`Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94-95 (1998) (“The requirement that jurisdiction
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`be established as a threshold matter . . . is inflexible and without exception.”).
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`“The party bringing the action bears the burden of establishing that it has standing.”
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`Sicom Sys., Ltd. v. Agilent Techs., Inc., 427 F.3d 971, 976 (Fed. Cir. 2005). In determining
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`whether the plaintiff has standing, the Court need not accept plaintiff’s allegations as true and
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`may consider matters outside the pleadings to satisfy itself that it has jurisdiction. See Walker
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`Digital, LLC. v. Expedia, Inc., 950 F. Supp. 2d 729, 734 (D. Del. 2013) (under a factual
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`challenge to jurisdiction, “‘no presumptive truthfulness attaches to plaintiff’s allegations, and the
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`Case 1:16-cv-00455-RGA Document 25 Filed 10/12/16 Page 10 of 15 PageID #: 1380
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`existence of disputed material facts will not preclude the trial court from evaluating for itself the
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`merits of jurisdictional claims.’”) (internal citations omitted). If the plaintiff cannot establish
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`standing, “the complaint must be dismissed.” Warth, 422 U.S. at 502.
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`V.
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`ARGUMENT
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`A.
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`B.
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`In a patent case, the “touchstone of constitutional standing” is “whether a party can
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`establish that it has an exclusionary right in a patent that, if violated by another, would cause the
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`party holding the exclusionary right to suffer legal injury.” WiAV Solutions, 631 F.3d at 1265.
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`Case 1:16-cv-00455-RGA Document 25 Filed 10/12/16 Page 11 of 15 PageID #: 1381
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`Ex. B, May 2, 2016 Hr’g Tr. at 57:12–15. An exclusionary right
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`subject to a third party’s unfettered ability to sublicense is “illusory,” because that party “can
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`render that right nugatory by granting the alleged infringer a royalty-free sublicense.”
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`Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245, 1251 (Fed. Cir. 2000); see also Alfred E. Mann
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`Found. For Sci. Research v. Cochlear Corp., 604 F.3d 1354, 1361 (Fed. Cir. 2010) (opining that
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`a licensor’s right to sue can be “rendered illusory by the licensee’s ability to settle licensor-
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`initiated litigation by granting royalty-free sublicenses to the accused infringers”) (citing
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`Speedplay, 211 F.3d at 1251). Having suffered no legal injury from the alleged infringement, the
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`plaintiff lacks constitutional standing to challenge that infringement. WiAV Solutions, 631 F.3d
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`at 1266.
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`The Federal Circuit explained in WiAV Solutions that “[b]ecause the legally protected
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`interests in a patent are the exclusionary rights created by the Patent Act, a party holding one or
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`more of those exclusionary rights—such as an exclusive licensee—suffers a legally cognizable
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`injury when an unauthorized party encroaches upon those rights and therefore has standing to
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`sue. Id. at 1264–65 (citations omitted). And because standing is derived from exclusionary
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`rights, “standing will ordinarily be coterminous with those rights.” Id. at 1266.
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`It does not matter that Acceleration Bay may hold other exclusionary rights in the
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`patents—even a party with some exclusionary rights lacks standing if the accused infringer (i)
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`“holds a preexisting license under the patent to engage in the allegedly infringing activity”; or
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`(ii) “has the ability to obtain such a license from another party with the right to grant it.” WiAV
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`Solutions, 631 F.3d at 1266–67 (concluding that the plaintiff had standing because there was “no
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`Case 1:16-cv-00455-RGA Document 25 Filed 10/12/16 Page 12 of 15 PageID #: 1382
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`argument or evidence” that the defendants could obtain a license from a third-party). In both
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`scenarios, that purported patent holder, even though it possesses certain exclusionary rights,
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`“does not have an exclusionary right with respect to the alleged infringer and thus is not injured
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`by that alleged infringer.” Id. at 1266. In WiAV Solutions, none of the third-parties ultimately
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`possessed the right to sublicense the defendants. Id. at 1267 (“[N]either Rockwell Science
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`Center, Mindspeed, Conexant, Skyworks, Qualcomm, nor Sipro has the right to extend licenses
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`to the Defendants . . . .”).
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`The principle of WiAV Solutions—that the ability of a defendant to obtain a license from
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`a third-party deprives a plaintiff of constitutional standing—has been acknowledged by other
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`courts. In Luminara Worldwide, LLC v. Liown Elecs. Co., 814 F.3d 1343, 1348 (Fed. Cir. 2016),
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`the Federal Circuit again observed that an accused infringer’s ability to obtain a license from a
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`third party deprives the patent plaintiff of the requisite “exclusionary rights.” Id. The Federal
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`Circuit reasoned that “[i]f Disney Enterprises[, a third-party,] could indeed license any entity to
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`manufacture and sell candles having Artificial Flame Technology, Candella would not have had
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`exclusionary rights to the asserted patents.” Id. (holding that the plaintiff had standing because
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`Disney lacked those broad licensing rights). Similarly, Magistrate Judge Burke recently applied
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`WiAV Solutions in analyzing whether a plaintiff lacked constitutional standing because the
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`defendant “could be (either now or in the future)” a beneficiary of a covenant not to sue. Ex. C,
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`Memorandum Order, Toshiba Samsung Storage Tech. Korea Corp. v. LG Elecs., Inc., No. 15-
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`691-LPS-CJB, D.I. 91 at 18–20 (D. Del. Sept. 20, 2016) (holding that the defendant was
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`precluded from asserting the benefit of the covenant, either at the time of the suit or in the future,
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`Case 1:16-cv-00455-RGA Document 25 Filed 10/12/16 Page 13 of 15 PageID #: 1383
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`and thus the plaintiff had constitutional standing). These cases demonstrate that “[t]he question
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`is whether [plaintiff’s] interests in the patent include sufficient exclusionary rights such that
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`[plaintiff] suffers an injury in fact from infringing activities.” Morrow, 499 F.3d at 1341.
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`Nor does it matter that Acceleration Bay may have standing for other claims and with
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`respect to
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` games. “[S]tanding is not dispensed in gross.” Lewis v.
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`Casey, 518 U.S. 343, 358 n.6 (1996). Not only must a plaintiff “demonstrate standing for each
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`claim,” it must also “demonstrate standing separately for each form of relief.” DaimlerChrysler
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`Corp. v. Cuno, 547 U.S. 332, 352 (2006). A plaintiff injured by “conduct of one kind [does not]
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`possess by virtue of that injury the necessary stake in litigating conduct of another kind, although
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`similar.” Blum v. Yaretsky, 457 U.S. 991, 999 (1982); accord Lewis, 518 U.S. at 358 n.6; Cuno,
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`547 U.S. at 353 n.5.
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`Acceleration Bay has no exclusionary rights—and thus no standing—with respect to any
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`products
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`C.
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`Claims against
`of the case.
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` should be dismissed at the outset
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`Because Acceleration Bay has not suffered an injury with respect to
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`, those claims should be dismissed at the outset of the case. See Steel Co. v. Citizens for a
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`Better Env’t, 523 U.S. 83, 94–95 (1998) (“The requirement that jurisdiction be established as a
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`threshold matter . . . is inflexible and without exception.”). Courts may not assume “hypothetical
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`jurisdiction” over the merits, id. at 93–94, particularly where, as here, the jurisdictional facts are
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`Case 1:16-cv-00455-RGA Document 25 Filed 10/12/16 Page 14 of 15 PageID #: 1384
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`“not so intertwined with the substantive federal patent law . . . that dismissal on jurisdictional
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`grounds would be inappropriate.” DDB Techs., L.L.C. v. MLB Advanced Media, L.P., 517 F.3d
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`1284, 1291 (Fed. Cir. 2008).
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`In other contexts, courts routinely dismiss claims against products where the plaintiff has
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`failed to establish an injury-in-fact from those products. See, e.g., Reilly v. Amy’s Kitchen, Inc.,
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`2 F. Supp. 3d 1300, 1303 (S.D. Fla. 2014) (holding, in a consumer fraud suit, that plaintiff had
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`standing only with respect to the products actually purchased and thus the cause of an actual
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`injury); Green v. Green Mtn. Coffee Roasters, 279 F.R.D. 275, 280 (D.N.J. 2011) (same);
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`Lieberson v. Johnson & Johnson, 865 F. Supp. 2d 529, 537 (D.N.J. 2011) (same); Friedman v.
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`Dollar Thrifty Auto. Grp., Inc., 304 F.R.D. 601, 613 (D. Colo. 2015) (“Plaintiffs lack standing to
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`assert claims regarding products they did not purchase.”).
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`VI. CONCLUSION
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`12
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`Case 1:16-cv-00455-RGA Document 25 Filed 10/12/16 Page 15 of 15 PageID #: 1385
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`MORRIS, NICHOLS, ARSHT & TUNNELL LLP
`
`
`/s/ Stephen J. Kraftschik
`_____________________________________
`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:
`David P. Enzminger
`Michael A. Tomasulo
`Gino Cheng
`David K. Lin
`WINSTON & STRAWN LLP
`333 S. Grand Avenue, 38th Floor
`Los Angeles, CA 90071
`(213) 615-1700
`
`Dan K. Webb
`Kathleen B. Barry
`WINSTON & STRAWN LLP
`35 West Wacker Drive
`Chicago, IL 60601
`(312) 558-5600
`
`Michael M. Murray
`WINSTON & STRAWN LLP
`200 Park Avenue
`New York, NY 10166
`(212) 294-3510
`
`October 4, 2016
`
`13
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`- Original Filing Date
`
`October 12, 2016 - Redacted Filing Date
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`