Case 1:16-cv-00455-RGA Document 237 Filed 08/24/17 Page 1 of 7 PageID #: 18873
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`Civil Action No. 16-453-RGA
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`Civil Action No. 16-454-RGA
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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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`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., ROCKST AR GAMES, INC., AND 2K
`SPORTS, INC.
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`Defendants.
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`Civil Action No. 16-455-RGA
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`MEMORANDUM ORDER
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`Presently before me is a Motion to Dismiss for Lack of Standing by Defendants
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`Activision Blizzard, Inc., Electronic Arts Inc., Take-Two Interactive Software, Inc., Rockstar
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`Games, Inc., and 2K Sports, Inc. (collectively, "Defendants"). (C.A. No. 16-453, D.I. 18; C.A.
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`Case 1:16-cv-00455-RGA Document 237 Filed 08/24/17 Page 2 of 7 PageID #: 18874
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`No. 16-454, D.I. 19; C.A. No. 16-455, D.I. 20). 1 The motion seeks to "dismiss all claims related
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`to games used on Sony platforms." (C.A. No. 16-453, D.I. 18; C.A. No. 16-454, D.I. 19; C.A.
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`No. 16-455, D.I. 20). I have considered the parties' briefing. (D.I. 19, 27, 32). I held oral
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`argument on July 10, 2017. (D.I. 235 ("Tr.")).
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`I.
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`DISCUSSION
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`Plaintiff argues that the motion is procedurally improper as "an unauthorized serial
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`motion to dismiss." (D.I. 27 at p. 2 n.3). I disagree. See Steel Co. v. Citizens for a Better Env 't,
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`523 U.S. 83, 94-95 (1998) ("The requirement that jurisdiction be established as a threshold
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`matter 'spring[s] from the nature and limits of the judicial power of the United States' and is
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`'inflexible and without exception.'"); Fed. R. Civ. P. 12(g)(2) ("Except as provided in Rule
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`12(h)(2) or (3), a party that makes a motion under this rule must not make another motion under
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`this rule raising a defense or objection that was available to the party but omitted from its earlier
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`motion.") (emphasis added); Fed. R. Civ. P. 12(h)(3) ("If the court determines at any time that it
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`lacks subject-matter jurisdiction, the court must dismiss the action.").
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`The issue arises because the prior owner of the asserted patents,2 Boeing, licensed them
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`to Sony in 2006. The licensing was accomplished pursuant to a Patent License Agreement.
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`Section 1.3 of the agreement defines the "Field of Use" for the asserted patents "as technology,
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`applications or services capable of running on or interacting with SONY gaming platform,
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`PlayStation platform or PlayStation OS and the SONY Software Development Kit .... " (D.I.
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`20-1at3, 13). Section 2.1 grants Sony Computer Entertainment America Inc. a "nonexclusive,
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`nontransferable license under the [asserted patents] within the Field of Use .... " (D.I. 20-1 at
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`1 All further references are only to the record in C.A. No. 16-453, unless otherwise provided.
`2 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 ii 10).
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`2
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`,•
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`'•
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`Case 1:16-cv-00455-RGA Document 237 Filed 08/24/17 Page 3 of 7 PageID #: 18875
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`4). Section 2.1 also gives Sony the right to grant sublicenses to Sony's "Third Party developers,
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`publishers, Affiliates and end-users of Products which shall be limited to the Field of Use." (D.I.
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`20-1 at 4). Plaintiffs briefing does not dispute that Defendants are videogame publishers that
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`publish games on the Sony gaming platforms and therefore fall within Section 2.1. (See
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`generally D.I. 27). Section 2.4 provides, "Except as expressly set forth herein, no additional
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`license, grant or working right is granted or implied by this Agreement." (D.I. 20-1 at 4).
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`Defendants argue that, because Sony had the ability since late 2006 to grant a license to
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`Defendants, this is enough to deprive Plaintiff of standing under WiA V Sols. LLC v. Motorola,
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`Inc., 631F.3d1257, 1266-67 (Fed. Cir. 2010). 3
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`The Federal Circuit has addressed the issue presented, albeit in a slightly different
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`context. I do not think the different context changes the analysis or the conclusion. This is what
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`the court stated:
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`Because an exclusive licensee derives its standing from the exclusionary rights it
`holds, it follows that its standing will ordinarily be coterminous with those rights.
`Depending on the scope of its exclusionary rights, an exclusive licensee may have
`standing to sue some parties and not others. For example, an exclusive licensee
`lacks standing to sue a party for infringement if that party holds a preexisting
`license under the patent to engage in the allegedly infringing activity. Similarly,
`an exclusive licensee lacks standing to sue a party who has the ability to obtain
`such a license from another party with the right to grant it. In both of these
`scenarios, the exclusive licensee does not have an exclusionary right with respect
`to the alleged infringer and thus is not injured by that alleged infringer. But if an
`exclusive licensee has the right to exclude others from practicing a patent, and a
`party accused of infringement does not possess, and is incapable of obtaining, a
`license of those rights from any other party, the exclusive licensee's exclusionary
`right is violated.
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`With these principles in mind, the key question in determining whether WiA V has
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`3 As a side note, Defendants assert they have actual licenses (Tr. 37:2-12), and have produced them. (Tr. 47:8-24).
`Plaintiff disputes that any actual licenses have been produced. (Tr. 4 7:3-13). It disappoints me that the parties
`cannot agree on whether licenses have or have not actually been produced.
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`3
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`Case 1:16-cv-00455-RGA Document 237 Filed 08/24/17 Page 4 of 7 PageID #: 18876
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`I
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`standing to assert the Mindspeed Patents against the Defendants is not, as the
`Defendants would have it, whether WiA V has established that it has the right to
`exclude all others from practicing the patent. The question is whether WiA V has
`shown that it has the right under the patents to exclude the Defendants from
`engaging in the alleged infringing activity and therefore is injured by the
`Defendants' conduct.
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`Id. I think if we edit this and make a few substitutions, its applicability will become clearer.
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`Because [plaintiff] derives its standing from the exclusionary rights it holds, it
`follows that its standing will ordinarily be coterminous with those rights.
`Depending on the scope of its exclusionary rights, a [plaintiff] may have standing
`to sue some parties and not others. For example, a [plaintiff] lacks standing to sue
`a party for infringement if that party holds a preexisting license under the patent
`to engage in the allegedly infringing activity. Similarly, a [plaintiff] lacks
`standing to sue a party who has the ability to obtain such a license from another
`party with the right to grant it. In both of these scenarios, the [plaintiff] does not
`have an exclusionary right with respect to the alleged infringer and thus is not
`injured by that alleged infringer. But if a [plaintiff] has the right to exclude others
`from practicing a patent, and a party accused of infringement does not possess,
`and is incapable of obtaining, a license of those rights from any other party, the
`[plaintiff]'s exclusionary right is violated.
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`With these principles in mind, the key question in determining whether
`[Acceleration Bay] has standing to assert the [Boeing] Patents against the
`Defendants is not, as the Defendants would have it, whether [Acceleration Bay]
`has established that it has the right to exclude all others from practicing the
`patent. The question is whether [Acceleration Bay] has shown that it has the right
`under the patents to exclude the Defendants from engaging in the alleged
`infringing activity and therefore is injured by the Defendants' conduct.
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`Plaintiff asserts that this is "dicta." (D.1. 27 at p. 4). Plaintiff does not explain the basis
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`for the assertion. It primarily argues that the opinion should not be understood to address "past
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`infringement." (Id. at p. 3). The best point made in support of that argument is that if it did,
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`"then once a patent holder granted a third party a right to sublicense a patent, the patent would
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`become completely unenforceable with the scope of that right to sublicense." (Id. at p. 4).
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`I do not think it is dicta. The issue in WiA V was whether the plaintiff could sue the
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`defendants. The court explained the relevant law, and then applied it to the record facts of the
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`Case 1:16-cv-00455-RGA Document 237 Filed 08/24/17 Page 5 of 7 PageID #: 18877
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`case. That case dealt with past infringement. See WiAV, 631 F.3d at 1262. That case also
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`analyzed whether Defendants could have obtained licenses from various third party entities. Id.
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`at 1267-68. The District Court dismissed, and the Federal Circuit reversed, reasoning that the
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`defendants could not get a license from any of the third parties who had a limited right to grant a
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`license. I think the implication was that if the third parties had the ability to issue a license to
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`defendants, then the plaintiff would not have standing to sue. See id.
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`As to Plaintiffs point that this would render the patent completely unenforceable within
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`the scope of the right to sub license, I do not think it is well-taken. I think the contract reflects an
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`intent by Boeing not to go after any of Sony's potential licensees within the Field of Use. (See
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`D.I. 20-1 at 4). I also think, by the way the language was drafted, that Boeing surrendered its
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`right to enforce the patent with respect to Sony's potential licensees within the Field of Use.
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`This does not offend public policy or patent law because a patentee should not be allowed to
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`enforce that which it surrendered. If Boeing wanted to enforce the patent against Sony's
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`potential licensees, it could have bargained for different language with Sony.
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`Defendants had the ability to obtain a license from Sony at all relevant times because
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`Sony could have granted Defendants licenses as oflate 2006. (See D.I. 20-1 at 4). Because of
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`this, Plaintiff has not shown that it had the right under the patents to exclude the Defendants from
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`engaging in the alleged infringing activity. It therefore could not have been injured as a result.
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`Plaintiff lacks standing to sue Defendants with respect to games covered by the Sony license.
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`Plaintiff argues thatAdaptix, Inc. v. T-Mobile USA, Inc., No. 6:12-cv-00369,
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`Memorandum Order Adopting the Report and Recommendation of the U.S. Magistrate Judge at
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`3--4 (E.D. Tex. Nov. 5, 2014), stands for the proposition that a licensee's ability to grant royalty
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`free sublicenses to a defendant at the time a case was filed does not render illusory the
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`Case 1:16-cv-00455-RGA Document 237 Filed 08/24/17 Page 6 of 7 PageID #: 18878
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`owner/licensor's standing to bring suit against that defendant. This citation is not persuasive for
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`this proposition because it does not mention, let alone discuss, WiA V.
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`Alternatively, even if this was not enough to defeat standing, Defendants also have the
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`ability to obtain a retroactive license from Sony. The license agreement evinces the intent to
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`give Sony the rights necessary to protect their "Third Party developers, publishers, Affiliates and
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`end-users of Products" within the Field of Use. (D.I. 20-1 at 4). Consistent with that intent,
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`Section 2.1 broadly confers Sony sublicensing rights, including the right to issue retroactive
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`licenses to protect those entities. (D.I. 20-1at4). Section 2.4 does not apply because Section 2.1
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`expressly provides Sony with the right to issue licenses without limitation, whether prospective
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`or retroactive.
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`Plaintiff argues thatEthicon, Inc. v. U.S. Surgical Corp., 135 F.3d 1456 (Fed. Cir. 1998)
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`bars retroactive licenses. I understand Ethicon to be confined to "the scope of licensing rights in
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`the context of co-ownership, not sole ownership" and that it does not reflect an "intent to restrict
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`a sophisticated patent holder's right to negotiate and issue a broad license agreement granting
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`both retrospective and prospective rights." Canon Inc. v. Tesseron Ltd., 146 F. Supp. 3d 568,
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`577 (S.D.N.Y. 2015). Because there is no hint that this is a co-ownership case, there is no legal
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`bar against retroactive licenses. See id. ("[T]he arguments against retroactive patent licensing
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`have real force only in the context of co-ownership."). Thus, because Defendants have the
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`ability now to obtain a retroactive license, there cannot be standing with respect to the Sony
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`license. See WiAV, 631 F.3d at 1266.
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`Ill
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`Ill
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`6
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`I
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`...
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`Case 1:16-cv-00455-RGA Document 237 Filed 08/24/17 Page 7 of 7 PageID #: 18879
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`II.
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`CONCLUSION
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`Defendant's Motion to Dismiss for Lack of Standing (No. 16-453, D.I. 18; No. 16-454,
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`D.I. 19; No. 16-455, D.I. 20) is GRANTED with respect to all claims related to games used on
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`Sony platforms. It is SO ORDERED this l!J. day of August, 2017.
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