Case 1:20-cv-00842-CFC-JLH Document 520 Filed 01/23/23 Page 1 of 11 PageID #: 31129
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`AMO DEVELOPMENT, LLC,
`AMO MANUFACTURING USA,
`LLC and AMO SALES AND
`SERVICE, INC.,
`
`Plaintiffs,
`
`v.
`
`ALCON VISION, LLC, ALCON
`LABORATORIES, INC. and
`ALCON RESEARCH, LLC
`
`Defendants.
`
`Civil Action No. 20-842-CFC
`
`Jack B. Blumenfeld, Anthony D. Raucci, Brian P. Egan, MORRIS, NICHOLS,
`ARSHT & TUNNELL LLP, Wilmington, Delaware; Michael A. Morin, Matthew
`J. Moore, Rachel W. Cohen, Sarang V. Damle, Holly K. Victorson, Carolyn M.
`Homer, Susan Y. Tull, Michael E. Bern, LATHAM & WATKINS LLP,
`Washington, DC; Roger J. Chin, Allison Harms, Joseph R. Wetzel, LATHAM &
`WATKINS LLP, San Francisco, California; S. Giri Pathmanaban, LATHAM &
`WATKINS LLP, Menlo Park, California; P. Anthony Sammi, Rachel R. Blitzer,
`LATHAM & WATKINS LLP, New York, New York; Aaron Macris, LA THAM
`& WATKINS LLP, Boston, Massachusetts
`
`Counsel for Plaintiffs
`
`John W. Shaw, Nathan R. Hoeschen, Andrew Russell, Karen E. Keller, David Fry,
`SHAW KELLER LLP, Wilmington, Delaware; Jeanne M. Heffernan, James J.
`Lomeo, Ryan J. Melde, KIRKLAND & ELLIS LLP, Austin, Texas; Gregg F.
`Locascio, Sean M. McEldowney, Noah S. Frank, Kelly Tripathi, Elizabeth
`Hedges, Mary E. Miller, Nicholas Teleky, KIRKLAND & ELLIS LLP,
`Washington, DC; Joshua L. Simmons, KIRKLAND & ELLIS LLP, New York,
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`AMO DEVELOPMENT, LLC,
`AMO MANUFACTURING USA,
`LLC and AMO SALES AND
`SERVICE, INC.,
`
`Plaintiffs,
`
`v.
`
`ALCON VISION, LLC, ALCON
`LABORATORIES, INC. and
`ALCON RESEARCH, LLC
`
`Defendants.
`
`Civil Action No. 20-842-CFC
`
`Jack B. Blumenfeld, Anthony D. Raucci, Brian P. Egan, MORRIS, NICHOLS,
`ARSHT & TUNNELL LLP, Wilmington, Delaware; Michael A. Morin, Matthew
`J. Moore, Rachel W. Cohen, Sarang V. Damle, Holly K. Victorson, Carolyn M.
`Homer, Susan Y. Tull, Michael E. Bern, LATHAM & WATKINS LLP,
`Washington, DC; Roger J. Chin, Allison Harms, Joseph R. Wetzel, LATHAM &
`WATKINS LLP, San Francisco, California; S. Giri Pathmanaban, LATHAM &
`WATKINS LLP, Menlo Park, California; P. Anthony Sammi, Rachel R. Blitzer,
`LATHAM & WATKINS LLP, New York, New York; Aaron Macris, LA THAM
`& WATKINS LLP, Boston, Massachusetts
`
`Counsel for Plaintiffs
`
`John W. Shaw, Nathan R. Hoeschen, Andrew Russell, Karen E. Keller, David Fry,
`SHAW KELLER LLP, Wilmington, Delaware; Jeanne M. Heffernan, James J.
`Lomeo, Ryan J. Melde, KIRKLAND & ELLIS LLP, Austin, Texas; Gregg F.
`Locascio, Sean M. McEldowney, Noah S. Frank, Kelly Tripathi, Elizabeth
`Hedges, Mary E. Miller, Nicholas Teleky, KIRKLAND & ELLIS LLP,
`Washington, DC; Joshua L. Simmons, KIRKLAND & ELLIS LLP, New York,
`
`
`
`Case 1:20-cv-00842-CFC-JLH Document 520 Filed 01/23/23 Page 2 of 11 PageID #: 31130
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`New York; Caroline Lourgos, KIRKLAND & ELLIS LLP, Chicago, Illinois;
`Kristen P.L. Reichenbach, KIRKLAND & ELLIS LLP, San Francisco, California
`
`Counsel for Defendants
`
`MEMORANDUM OPINION
`
`January 23, 2023
`Wilmington, Delaware
`
`11
`
`
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`Case 1:20-cv-00842-CFC-JLH Document 520 Filed 01/23/23 Page 3 of 11 PageID #: 31131
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`CHIEF JUDGE
`
`Plaintiffs AMO Development, LLC, AMO Manufacturing USA, LLC, and
`
`AMO Sales and Service, Inc. have sued Defendants Alcon Vision, LLC, Alcon
`
`Laboratories, Inc., and Alcon Research, LLC (collectively, Alcon) for copyright
`
`infringement. Pending before me is a motion titled "Alcon's Motion for Summary
`
`Judgment (No. 2) That Only AMO Development, LLC Is Entitled to Actual
`
`Damages." D.I. 360. Alcon seeks by the motion two declarations. First,
`
`notwithstanding the title of the motion, it asks for a declaratory judgment that
`
`"AMO Development, LLC is not entitled to lost profits prior to December 30,
`
`2019, or for any sales of intraocular lenses." D.I. 360-1 at 2 ( emphasis added).
`
`Plaintiffs did not oppose this request in their briefing, see D.I. 422, and therefore I
`
`will grant the motion in this respect. Second, Alcon seeks a declaratory judgment
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`that "Johnson & Johnson Surgical Vision, Inc., AMO Manufacturing USA, LLC,
`
`AMO Sales and Service, Inc., and AMO Ireland are not entitled to claim lost
`
`profits." D.I. 360-1 at 1. This request is very much challenged by Plaintiffs, see
`
`D.I. 422; but for the reasons explained below, I will issue this declaratory
`
`judgment.
`
`
`
`Case 1:20-cv-00842-CFC-JLH Document 520 Filed 01/23/23 Page 4 of 11 PageID #: 31132
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`I.
`
`A court shall grant summary judgment only if "the pleadings, depositions,
`
`answers to interrogatories, and admissions on file, together with the affidavits, if
`
`any, show that there is no genuine issue as to any material fact and that the moving
`
`party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The
`
`moving party bears the burden of proving that no genuine issue of material fact
`
`exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
`
`n.10 (1986). "Facts that could alter the outcome are 'material,' and disputes are
`
`'genuine' if evidence exists from which a rational person could conclude that the
`
`position of the person with the burden of proof on the disputed issue is
`
`correct." Horowitz v. Fed. Kemper Life Assurance Co., 57 F.3d 300,302 n.1 (3d
`
`Cir. 1995) (citations omitted). If the· moving party has demonstrated an absence of
`
`material fact, the nonmoving party then "must come forward with 'specific facts
`
`showing that there is a genuine issue for trial."' Matsushita, 475 U.S. at 587
`
`(emphasis omitted) (quoting Fed. R. Civ. P. 56(e)). The court will "view the
`
`underlying facts and all reasonable inferences therefrom in the light most favorable
`
`to the party opposing the motion." Pa. Coal Ass 'n v. Babbitt, 63 F.3d 231, 236 (3d
`
`Cir. 1995). The mere existence of some evidence in support of the nonmoving
`
`party, however, will not be sufficient for denial of a motion for summary
`
`judgment; there must be enough evidence to enable a jury reasonably to find for
`
`2
`
`
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`Case 1:20-cv-00842-CFC-JLH Document 520 Filed 01/23/23 Page 5 of 11 PageID #: 31133
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`the nonmoving party on that issue. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
`
`249 ( 1986). If the nonmoving party fails to make a sufficient showing on an
`
`essential element of its case with respect to which it has the burden of proof, the
`
`moving party is entitled to judgment as a matter of law. Celotex Corp. v.
`
`Catrett, 477 U.S. 317 (1986).
`
`II.
`
`Plaintiffs accuse Alcon of infringing certain copyrights ( the Asserted
`
`Copyrights) based on Alcon' s incorporation of certain computer programs in its
`
`LenSx® Laser System, a femtosecond laser assisted cataract surgery (FLACS)
`
`system approved by the FDA in 2009 and commercially launched in 2011. D.I.
`
`141 ,r,r 84, 101. Cataract surgery is performed by removing the patient's natural,
`
`opacified crystalline lens and replacing it with an artificial intraocular lens (IOL ).
`
`Plaintiffs seek damages in part based on the theory that Alcon' s sales of the
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`LenSx and IOLs caused Counter-Defendant Johnson & Johnson Surgical Vision,
`
`Inc. (JJSV) to lose sales of the Catalys® Precision Laser System, which competes
`
`directly with the LenSx, and IOLs. D.I. 422 at 8-9. Plaintiffs also seek profits
`
`allegedly lost by three of JJSV' s subsidiaries-Plaintiffs AMO Manufacturing
`
`USA, LLC and AMO Sales and Service, Inc., and nonparty AMO Ireland-based
`
`on their share of JJSV's revenue stream for Catalys sales. D.I. 422 at 8-9. Alcon
`
`argues that neither JJSV nor any of the three subsidiaries had an ownership interest
`
`3
`
`
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`Case 1:20-cv-00842-CFC-JLH Document 520 Filed 01/23/23 Page 6 of 11 PageID #: 31134
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`in the Asserted Copyrights at the time of the alleged infringement and that
`
`therefore a declaration that none of these entities can recover for lost profits is
`
`warranted. D.I. 361 at 1-2. Plaintiffs counter that JJSV is entitled to the lost
`
`profits they seek because "JJSV was a legal owner of the [A]sserted [C]opyrights
`
`until it transferred both its copyright ownership and its right to seek past damages
`
`for infringement to AMO Development" and because "at all [relevant] times, ... it
`
`has been a beneficial owner" of the Asserted Copyrights. D.I. 422 at 7. Plaintiffs
`
`argue that JJSV' s three subsidiaries are entitled to lost profits because they "are
`
`involved in the manufacturing, sale, and/or service of Catalys systems throughout
`
`the world" and "[a]s such, they directly profit from the sale of Catalys, and have
`
`lost revenue due to Alcon's infringement." D.I. 422 at 8-9 (citations omitted).
`
`III.
`
`Section 501(b) of the Copyright Act provides in relevant part that "[t]he
`
`legal or beneficial owner of an exclusive right under a copyright is entitled ... to
`
`institute an action for any infringement of that particular right committed while he
`
`or she is the owner of it." 17 U.S.C. § 501(b). See also Bandai Am. Inc. v. Bally
`
`Midway Mfg. Co., 775 F.2d 70, 73-74 (3d Cir. 1985) ("[B]oth the legal and the
`
`beneficial owners of copyrights have standing to sue infringers."). Section 106 of
`
`the Act sets forth the six "exclusive rights" that a copyright confers. Five of those
`
`rights apply to computer programs, which Congress made copyrightable in 1980-
`
`4
`
`
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`Case 1:20-cv-00842-CFC-JLH Document 520 Filed 01/23/23 Page 7 of 11 PageID #: 31135
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`namely, the rights to reproduce, display, perform, distribute to the public copies of,
`
`and make derivative works based upon the copyrighted work. 17 U.S.C. § 106(1)-
`
`(6).
`
`Legal ownership of a copyrighted work "vests initially in the author or
`
`authors of the work." § 201(a). "In the case of a work made for hire, the employer
`
`or other person for whom the work was prepared is considered the author ...
`
`unless the parties have expressly agreed otherwise .... " § 201 (b ). Plaintiffs
`
`contend that JJSV was the legal owner of the Asserted Copyrights by virtue of
`
`work performed in and around 2008 by one of its employees. D.I. 422 at 4; D.I.
`
`424 ,r 7; D.I. 427, Ex. 2, ,I 103 n.79. But it is undisputed that in a written transfer
`
`agreement executed by JJSV and AMO Development on August 21, 2020, JJSV
`
`transferred to AMO Development "effective April 2, 2007" "any and all of its
`
`rights, titles and interests in, to and under the [Asserted] Copyright[s]." D.I. 427-1
`
`at 554-55. Thus, by the clear and unambiguous terms of the agreement, JJSV
`
`relinquished all of its legal rights "in, to, and under" the Asserted Copyrights as of
`
`April 2, 2007. 1 Accordingly, as a matter of law, JJSV is not a legal owner of the
`
`Asserted Copyrights. Cf. Intel!. Ventures I LLC v. T-Mobile USA, Inc., 2017 WL
`
`1 The transfer agreement is governed by Delaware law. "When interpreting a
`contract, Delaware courts read the agreement as a whole and enforce the plain
`meaning of clear and unambiguous language." Manti Holdings, LLC v. Authentix
`Acquisition Co., Inc., 261 A.3d 1199, 1208 (Del. 2021).
`
`5
`
`
`
`Case 1:20-cv-00842-CFC-JLH Document 520 Filed 01/23/23 Page 8 of 11 PageID #: 31136
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`3723934, at *3 (D. Del. Aug. 29, 2017) (granting summary judgment that
`
`retroactive sublicense exhausted plaintiffs patent rights).
`
`Plaintiffs argue that JJSV is a beneficial owner of the Asserted Copyrights
`
`"based on its corporate relationship with AMO Development and economic
`
`interest in the copyrights." D.I. 422 at 5 n.3. But as Plaintiffs concede, see D.I.
`
`422 at 7, a parent-subsidiary relationship does not by itself confer a parent
`
`company with beneficial ownership of the subsidiaries' copyrights. Cf Hologic,
`
`Inc. v. Minerva Surgical, Inc., 163 F. Supp. 3d 118, 122 (D. Del. 2016) ("The fact
`
`that a corporate parent's subsidiary owns a patent is not enough to establish that
`
`the parent has a legal ownership interest in the subsidiary's patent." ( emphasis and
`
`citation omitted)). And Plaintiffs do not assert, let alone identify any record
`
`evidence that shows, that JJSV had an economic interest in "an exclusive right
`
`under" the Asserted Copyrights. § 501 (b ).
`
`JJSV states only ( and without citing any record evidence) that it has an
`
`"economic interest in the [Asserted J[C]opyrights." D.I. 422 at 5 n.3 (emphasis
`
`added). But even if that were true, it would not make JJSV a beneficial owner of
`
`"an exclusive right under" the Asserted Copyrights. As the Second Circuit
`
`explained in John Wiley & Sons, Inc. v. DRK Photo, 882 F.3d 394 (2d Cir. 2018):
`
`It is ... not enough that a putative beneficial owner
`obtains a mere interest in a copyright, even if that interest
`is valuable. The interest must be one that derives its
`value directly from another person's use of an exclusive
`
`6
`
`
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`Case 1:20-cv-00842-CFC-JLH Document 520 Filed 01/23/23 Page 9 of 11 PageID #: 31137
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`right, such that the interest is necessarily "diluted" by
`infringement.
`
`Id. at 415 ( citation omitted). Thus, the paradigmatic example of a beneficial owner
`
`is the author who transfers her legal title in a copyrighted work to another person in
`
`exchange for royalties based on future sales or licensing of the copyrighted work.
`
`See H.R. Rep. No. 94-1476, at 159 ("A 'beneficial owner' for th[e] purpose[s] [of
`
`§ 501(b)] would include, for example, an author who had parted with legal title to
`
`the copyright in exchange for percentage royalties based on sales or license fees.").
`
`In this case, however, there is no allegation, let alone record evidence that
`
`suggests, that JJSV earns royalty payments or derives any other economic benefit
`
`directly from another person's exercise of one of the five applicable exclusive
`
`rights set forth in § 106.
`
`Plaintiffs quote in their briefing part of a sentence from SBK Catalogue
`
`Partnership v. Orion Pictures Corp., 723 F. Supp. 1053 (D.N.J. 1989), for the
`
`proposition that "[b ]eneficial owners include parties that 'retain[] an economic
`
`interest in the copyright' related to revenue 'derived from its exploitation."' D.I.
`
`422 at 5-6 (second alteration in original) (emphasis added) (quoting SBK
`
`Catalogue, 723 F. Supp. at 1062). But the entirety of that sentence and the
`
`immediately preceding sentence in SBK Catalogue make clear that the court in
`
`SBK Catalogue did not hold that an economic interest "related to revenue derived
`
`7
`
`
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`Case 1:20-cv-00842-CFC-JLH Document 520 Filed 01/23/23 Page 10 of 11 PageID #: 31138
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`from [the copyright's] exploitation," is sufficient to make a party a beneficial
`
`owner of the copyright:
`
`"[B Jeneficial owners" are individuals who have given up
`the exclusive § 106 rights in exchange for a percentage
`fee or royalties derived from use or sale of the copyright
`and, consequently, do not have an independent right to
`use or license others to use the copyright. Id. A
`"beneficial owner" retains an economic interest in the
`copyright, which only extends to the proceeds derived
`from its exploitation.
`
`723 F. Supp. At 1062 (emphasis added).
`
`As noted above, Plaintiffs have not asserted here that JJSV is entitled to
`
`royalty payments or any other share of proceeds derived from another party's
`
`exercise of an exclusive right under the Asserted Copyrights. Accordingly, as a
`
`matter of law, JJSV is not a beneficial owner of the Asserted Copyrights. And
`
`because JJSV is neither a legal nor beneficial owner of the Asserted Copyrights, it
`
`lacks standing to bring an action for infringement of the Asserted Copyrights under
`
`§ 501 (b) and cannot recover damages for infringement of the Asserted Copyrights.
`
`See§ 504(b) ("The copyright owner is entitled to recover the actual damages
`
`suffered by him or her as a result of the infringement .... ").
`
`Plaintiffs do not contend that AMO Manufacturing USA, LLC, AMO Sales
`
`and Service, Inc., or AMO Ireland are legal owners of the Asserted Copyrights.
`
`They imply that these subsidiaries are beneficial owners of the Asserted
`
`Copyrights because they "directly profit from [JJSV's] sale of Catalys." D.I. 422
`
`8
`
`
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`Case 1:20-cv-00842-CFC-JLH Document 520 Filed 01/23/23 Page 11 of 11 PageID #: 31139
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`at 8. But since JJSV is not a beneficial owner of the Asserted Copyrights, the
`
`subsidiaries' sharing in JJSV' s revenues cannot make them beneficial owners of
`
`the Asserted Copyrights.
`
`IV.
`
`For the reasons discussed above, I will grant Alcon's Motion for Summary
`
`Judgment (No. 2) That Only AMO Development, LLC Is Entitled to Actual
`
`Damages (D.I. 360). Plaintiffs having failed to show a genuine dispute of material
`
`fact about whether JJSV, AMO Manufacturing USA, LLC, AMO Sales and
`
`Service, Inc., and AMO Ireland lack legal and beneficial ownership of the Asserted
`
`Copyrights, I will grant Alcon' s request for a declaratory judgment that those four
`
`entities are not entitled to claim lost profits. I will also grant Alcon' s unopposed
`
`request for a declaratory judgment that "AMO Development, LLC is not entitled to
`
`lost profits prior to December 30, 2019, or for any sales of intraocular lenses." D.I.
`
`360-1 at 2.
`
`The Court will enter an Order consistent with this Memorandum Opinion.
`
`9
`
`
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