District of Massachusetts IP Blog

Magistrate Bowler Reversed on Patent Standing

In December 2010 Magistrate Judge Bowler issued a decision denying a motion to dismiss on lack of standing.  Considering the significant facts favoring the movant, this blog wondered whether this might be a rare case where the Magistrate is reversed.  And so it came to pass. 

Here the plaintiff ATI asserted it has rights to the asserted patents based on an arbitration decision so stating.  However the arbitration decision also stated that ATI was a co-owner.  In reversing Magistrate Judge Bowler, Judge Gorton holds that ATI lacks standing to assert the patents without joining the co-owners.  The case was dismissed without prejudice. 

Acoustic Technologies, Inc. v. Itron, Inc., 10-10500-NMG (D. Mass. Mar. 18, 2011)

Summary Judgment Granted Due to Faulty Assignments

A relationship between Staples and a supplier of file folders deteriorated resulting in a breach of contract and patent infringement lawsuit against Staples originally filed in the Central District of California.  The case was transferred to D. Mass. where Staples moved for summary judgment on both counts. 

The supplier had tried to assign its rights in the distribution contract and patent to a third party entity.  Staples moved for judgment that (1) the contract prohibited assignment by the supplier without Staples’ consent and (2) the contract required assignment of the patent to Staples.  Judge Stearns agreed that the contract prohibited the supplier’s assignment of its rights and so granted judgment that the third party had no standing to sue for breach of contract.  Judge Stearns also granted summary judgment on the patent claim but on alternative grounds.  The patent assignment only gave the third party the right to make products under the patent and was thus not an assignment of rights sufficient to grant standing to sue.  Summary judgment granted. 

Filer, Inc. v. Staples, Inc., 10-11380-RGS (D. Mass. Mar. 1, 2011)

Motion to Dismiss on Standing Falls Just Short

Back in March Acoustic Technology (ATI) sued Itron for infringement and inducement to infringe Patent Nos. 5,986,574; 6,239,722; and 6,509,841 directed to systems and methods for remote meter reading.  ATI had obtained its rights in the patents following an arbitration which held that ATI had rights in the patents, but also implied ownership by other entities.  Itron moved to dismiss on the grounds that ATI lacked standing to sue without joining those other parties. 

The decision (see below) on the motion by Magistrate Judge Bowler includes an extensive review of the factual background, which seems to support Itron’s position that ATI is a co-owner of the patents and therefore must join the other co-owners to have standing.  Ultimately, however, she recommends denying the motion to dismiss as she felt Itron could not meet its burden of proof to use the arbitration decision against ATI.  Given the extensive factual analysis in favor of Itron, I wonder if this is one of those rare Magistrate decisions that might get resolved differently by the district judge, in this case Judge Gorton. 

Download ATI standing order

Acoustic Technologies, Inc. v. Itron, Inc., 10-10500-NMG (D. Mass. Dec. 21, 2010)

Judge Tauro Procedural Dismissal Affirmed By Federal Circuit

A123 Systems, Inc. filed suit in 2006 in D. Mass. asserting a declaration of infringement and invalidity against Patent Nos. 5,910,382 and 6,514,640 directed to cathode materials for lithium batteries, assigned to the University of Texas (UT), and licensed to Hydro-Quebec (HQ).  The complaint only named HQ as a defendant.  HQ and UT then sued A123 in Texas and moved to dismiss the Mass. complaint saying that A123 hadn’t named UT, a necessary party who had not waved its sovereign immunity (as an arm of the State of Texas) to be sued in Mass.  

Judge Tauro exercised his discretion under the DJ statute to dismissed the Mass. case in favor of the Texas case since the case would need to have been dismissed anyway for failure to join UT, who had not consented to be sued in Mass.  The Federal Circuit affirmed. 

The Federal Circuit agreed that HQ was a “field-of-use” licensee only, and did not hold substantial rights in the field relevant to A123, making UT a necessary party.  It also held that UT’s participation in the later Texas action did not waive its sovereign immunity relative to the earlier filed Mass. action.  Finally, the Federal Circuit undertook its own Rule 19(b) analysis (as the lower court had not done so) to find that UT was an indispensible party for a variety of reasons, including UT’s ability to assert infringement claims against A123 that HQ could not bring. 

A123 Systems, Inc. v. Hydro-Quebec, 2010-1059 (Fed. Cir. Nov. 10, 2010)