Case 1:16-cv-00455-RGA Document 33-1 Filed 10/26/16 Page 1 of 5 PageID #: 1964
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`Exhibit 1
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`Case 1:16-cv-00455-RGA Document 33-1 Filed 10/26/16 Page 2 of 5 PageID #: 1965
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`IN THE UNITED STATES DISTRICT COURT
`OF THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
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`6:12cv369
`LEAD CASE
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`No. 6:13cv49
`CONSOLIDATED CASE
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`No. 6:13CV50
`CONSOLIDATED CASE
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`§§
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`§
`§
`§
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`§
`§
`§
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`§
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`§
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`ADAPTIX, INC.
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`V.
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`T-MOBILE USA, INC.
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`ADAPTIX, INC.
`V.
`ERICSSON INC., ET AL.
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`ADAPTIX, INC.
`V.
`ERICSSON INC., ET AL.
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`
`MEMORANDUM ORDER ADOPTING
`THE REPORT AND RECOMMENDATION OF THE
`UNITED STATES MAGISTRATE JUDGE
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`These consolidated cases were referred to United States Magistrate Judge Caroline M.
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`Craven pursuant to 28 U.S.C. § 636.1 The Report of the Magistrate Judge which contains her
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`proposed findings of fact and recommendations for the disposition of the case has been presented
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`for consideration. Ericsson Inc. and Telefonaktiebolaget LM Ericsson (collectively “Defendants”)
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`filed objections to the Report and Recommendation. Adaptix, Inc. (“Plaintiff”) filed a response to
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`1 On October 28, 2014, the Court granted the parties’ motion to consolidate Cause Nos.
`6:13cv49 and 6:13cv50 with the first-filed action, Cause No. 6:12cv369. All future filings are to be
`filed in 6:12cv369. However, considering the October 2, 2014 Report and Recommendation and
`Defendants’ objections thereto have only been filed in 6:13cv49 and 6:13cv50, the Court includes
`all three cases in the header and will instruct the Clerk of the Court to file this Order in all three
`cases.
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`Case 1:16-cv-00455-RGA Document 33-1 Filed 10/26/16 Page 3 of 5 PageID #: 1966
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`Defendants’ objections. The Court conducted a de novo review of the Magistrate Judge’s findings
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`and conclusions.
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`BACKGROUND
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`Plaintiff filed the above patent infringement suits against Defendant Ericsson, T-Mobile
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`USA, Inc., AT&T Mobility LLC, AT&T Inc., and MetroPCS Communications, Inc., asserting the
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`defendants infringe certain of the following patents: U.S. Patent No. 7,146,172 (“’172 Patent”), U.S.
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`Patent No. 7,573,851 (“’851 Patent”), U.S. Patent No. 6,904,283 (“’283 Patent”), U.S. Patent No.
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`7,072,315 (“’315 Patent”), and U.S. Patent No. 6,870,808 (“’80 Patent”). Plaintiff filed the first
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`lawsuit against T-Mobile on June 5, 2012. See Cause No. 6:12cv369. On January 10, 2013, Plaintiff
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`sued Ericsson, AT&T, and MetroPCS. See Cause Nos. 6:13cv49 and 50.
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`On February 19, 2014, in Cause Nos. 6:13cv49 and 6:13cv50, Defendants filed a motion to
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`dismiss under Federal Rules of Civil Procedure 12(b)(1), 12(b)(7), and/or 19 for lack of
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`constitutional and prudential standing. The Magistrate Judge issued a Report and Recommendation
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`on October 2, 2014, recommending Defendants’ motion be denied.
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`REPORT AND RECOMMENDATION
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`In the October 2, 2014 Report and Recommendation, the Magistrate Judge first found
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`Plaintiff has constitutional standing. The Magistrate Judge then considered whether Rule 19(a)
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`requires that Samsung be joined as a necessary party. The Magistrate Judge noted, among other
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`things, that Samsung’s option under the Confidential License Agreement (“Agreement”) expired as
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`of April 24, 2014. According to the Magistrate Judge, this lapsed option was the focus of
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`Defendants’ motion to dismiss. Considering the option had lapsed and further considering the
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`reasoning of the Administrative Law Judge (“ALJ”) in a related ITC investigation, the Magistrate
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`2
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`Case 1:16-cv-00455-RGA Document 33-1 Filed 10/26/16 Page 4 of 5 PageID #: 1967
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`Judge found Samsung is a “bare, non-exclusive licensee with limited rights to the Asserted Patents,
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`including the now-expired option to purchase the right to grant a sublicense to Ericsson.” Report
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`and Recommendation at pg. 17. The Magistrate Judge found Samsung’s remaining rights under the
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`Agreement and the amendment to the Agreement were insufficient to require joinder of Samsung.
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`OBJECTIONS
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`Defendants object to the Magistrate Judge’s finding that Plaintiff has standing, asserting
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`Plaintiff’s right to exclude was rendered illusory by Samsung’s right to grant royalty-free sublicenses
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`pursuant to the November 15, 2011 Agreement entered into by Plaintiff and Samsung, as later
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`amended on August 6, 2012. Specifically, Defendants assert that regardless of the status of
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`Samsung’s option now, “Samsung’s ability to grant royalty free sublicenses when these cases were
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`filed dictates a ruling that [Plaintiff] lacked constitutional standing to bring these suits, and the lack
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`of constitutional standing at the time these lawsuits were filed cannot be cured. Objections at pgs.
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`1, 3.
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`Defendants attempt to distinguish Alfred E. Mann Found. for Scientific Research v. Cochlear
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`Corp., 604 F.3d 1354 (Fed. Cir. 2010), relied upon by the ALJ in the ITC investigation and by the
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`Magistrate Judge in the October 2 Report and Recommendation. Among other things, Defendants
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`contend that unlike the licensee in the Mann case, “as of the filing of these cases, Samsung had the
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`ability to grant a sublicense to Ericsson on any terms it chose, including granting royalty free
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`sublicenses,” rendering Plaintiff’s right to sue illusory. Objections at pg. 2. Defendants further
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`assert that unlike the Mann case, here upon “initiating the suits required by the amended agreement,
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`[Plaintiff] did not have the ability to discontinue the suits. Instead, [Plaintiff] was required to
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`provide an opportunity for Samsung to exercise its option before [Plaintiff] could accept any license
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`3
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`Case 1:16-cv-00455-RGA Document 33-1 Filed 10/26/16 Page 5 of 5 PageID #: 1968
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`agreements or discontinue litigation against any of the four listed companies (including
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`[Defendants]).” Id. at pg. 3.
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`DE NOVO REVIEW
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`The Court, having reviewed the relevant briefing, the Report and Recommendation,
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`Defendants’ objections, and Plaintiff’s response to the objections, finds Defendants’ objections
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`without merit. In their objections, Defendants raise the same arguments that were previously rejected
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`by the ALJ in the ITC investigation and the Magistrate Judge. Despite its attempts to distinguish the
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`Mann case relied upon by both the ALJ in the ITC investigation and the Magistrate Judge, the Court
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`agrees with the Magistrate Judge that Samsung’s limited right to bring suit against two third parties
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`does not divest Plaintiff, the undisputed owner of the Asserted Patents, of standing.
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`The Court adopts the Report and Recommendation of the Magistrate Judge as the findings
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`and conclusions of the Court. Accordingly, it is hereby
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`ORDERED that The Ericsson Defendants’ Motion to Dismiss for Plaintiff’s Lack of
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`Constitutional and Prudential Standing (Dkt. Nos. 95, 93 in Cause Nos. 6:12cv49 and 50) are
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`DENIED.
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`4
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`It is SO ORDERED.
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`____________________________________
`MICHAEL H. SCHNEIDER
`UNITED STATES DISTRICT JUDGE
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`SIGNED this 5th day of November, 2014.
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