Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_14-cv-03640/USCOURTS-cand-4_14-cv-03640-43/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 28:1338 Patent Infringement

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

TECHNOLOGY PROPERTIES LIMITED LLC 

and MCM PORTFOLIO LLC,

Plaintiffs,

v.

CANON INC. et al.,

Defendants.

________________________________/

No. C 14-3640 CW

ORDER ON MOTION TO 

DISMISS AND 

MOTIONS TO SEAL

(Docket Nos. 435, 

438, & 456)

Defendants Canon Inc. and Canon U.S.A., Inc. (collectively 

Canon) move to dismiss the claims of Plaintiff Technology 

Properties Limited LLC (TPL) for lack of standing. The Court 

GRANTS Canon's motion.

PRELIMINARY MATTERS

Canon files two motions to seal. The motion to seal at 

Docket Number 435 requests filing under seal portions of the 

opening brief and all of Exhibit 1 to protect the confidentiality 

of Plaintiffs' documents. Plaintiffs' declaration in response 

explains that Defendants' brief need not be filed under seal. 

Further, as to Exhibit 1, only certain portions of the document 

need to be sealed: section 1 of the License Agreement and the 

paragraph of definitions in Exhibit C. Docket No. 439 ¶ 9. These 

portions lay out confidential payment terms--trade secrets--that 

are not relevant to this motion, and therefore do not undermine 

policies of access and disclosure. See Kamakana v. City & Cty. of 

Honolulu, 447 F.3d 1172, 1178-79 (9th Cir. 2006). The Court 

GRANTS Canon's motion in part and DENIES it in part; Canon shall 

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refile its opening brief without any redactions and Exhibit 1 

partially redacted as Plaintiffs request. The Court employs this 

now-public information.

Canon's second motion to seal at Docket Number 456 is also 

based on Plaintiffs' confidentiality designations. Plaintiffs 

filed no declaration within the time permitted establishing that 

the designated material is sealable. This motion to seal is 

DENIED.

The Court also GRANTS TPL's Request for Judicial Notice (RJN) 

asking that the Court take notice of documents from TPL's 

Bankruptcy Proceeding. Docket No. 452-1.

BACKGROUND

On April 12, 2006, Plaintiff MCM Portfolio LLC, then known as 

both FMM and FPL, entered into a License Agreement with TPL. 

Hertko Dec. in Support, Ex. 1. At the time, MCM was the owner of 

the patents in dispute here. The License Agreement granted the 

following license to TPL:

2.1. FPL hereby grants unto TPL an exclusive, worldwide, and 

perpetual license with respect to those rights which enable 

and/or facilitate the management, development, and 

commercialization of the MCM Technology.

2.2. In conjunction with section 2.1 above, FPL hereby 

grants, sets-over, assigns, transfers, and conveys unto TPL 

the exclusive, worldwide right to:

2.2.1. Regulate and control by license, sublicense, 

affiliation, or other arrangement the practice and/or 

use of the MCM Technology;

2.2.2. Sue on and collect for its own use and benefit 

all claims and/or entitlements with respect to damages 

by reason of past infringement or use of the MCM 

Technology; and,

2.2.3. Pursue in its own name and for its own use and 

benefit all remedies of whatsoever kind or nature 

relating to the past, present, or future infringement or 

use of the MCM Technology.

2.3. Subject, however, to the non-exclusive, product-related 

rights of IntellaSys (BEC) Ltd and OnSpec Electronic, Inc. 

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License Agreement at pp. 4-5.

On March 28, 2012, TPL filed this suit in the Eastern 

District of Texas. TPL stated that it is the "exclusive licensee" 

of both patents at issue, "with ownership of all substantial 

rights . . . including the right to exclude others and to enforce, 

sue and recover damages for past and future infringement." 

Complaint ¶¶ 11, 23.

On March 20, 2013, TPL filed a bankruptcy petition in the 

United States Bankruptcy Court for the Northern District of 

California. RJN Ex. A.

On April 14, 2014, TPL filed an Amended Complaint (AC) in 

this case. The AC added MCM as a Plaintiff, stating that MCM is 

the "owner" of the two patents at issue, AC ¶¶ 12, 23, and that 

TPL is the "exclusive licensee," id. ¶¶ 13, 24. This case was 

transferred to the Northern District of California in July 2014.

On January 8, 2015, TPL and its creditors submitted a Joint 

Plan of Reorganization to the Bankruptcy Court, which the court 

confirmed on March 19, 2015. As part of the Joint Plan, TPL 

assumed the License Agreement. The Joint Plan stated that the 

License Agreement "shall be modified as follows: as a condition of 

assumption, TPL shall, at the Effective Date, reconvey all right, 

title and interest in the CORE Flash portfolio on account of its 

license back to MCM. TPL will continue to commercialize and 

negotiate license of CORE Flash patents and technology without 

change." Hertko Dec. in Support, Ex. 2, Joint Plan at 42-43.

On April 16, 2015, TPL and MCM executed an assignment 

agreement. The CORE Flash Assignment stated that the Joint Plan 

provided for "(i) the divestiture of The Patents by TPL and the 

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rejection of all agreements with TPL pursuant to which TPL may 

have acquired rights with respect to the Patents; and, (ii) the 

reinstatement of certain TPL commercialization rights." Docket 

No. 456, Hertko Dec. in Reply, Ex. 5 at 1. The CORE Flash 

Assignment stated that TPL "grants, sets over, assigns, transfers, 

conveys, and acquits unto MCM . . . all of TPL's right, title, and 

interest of whatsoever kind or nature now existing or hereafter 

arising in and/or with respect to" the patents, including "the 

right to sue thereon," as well as "[a]ll of the existing License 

Agreements with respect to The Patents heretofore entered into by 

TPL with TPL Licensees." Id. The CORE Flash Assignment gave to 

MCM "the exclusive, worldwide right . . . to regulate and control 

by license, sublicense, affiliation, or other agreement the 

practice and/or use of The Patents," as well as the right "to sue 

and collect for its own use and benefit all claims for damages by 

reason of past infringement or use of The Patents," among other 

rights. Id. TPL agreed to the "continuing obligation" to refrain 

from "litigation involving The Patents." Id. at 2. However, in 

Paragraph E of this agreement, MCM granted to TPL "the right to 

represent MCM in connection with the CORE Flash Portfolio and to 

commercialize and negotiate licenses on behalf of MCM as under the 

MCM-TPL Agreement and License dated December 31, 2006 as amended 

on August 6, 2008, which said licenses negotiated by TPL shall be 

executed by MCM at the direction of TPL." Id. 

LEGAL STANDARD

Constitutional standing requires injury in fact, 

traceability, and redressability. In the patent context, whether 

a party is capable of suffering injury in fact is governed by 

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statute. See Morrow v. Microsoft Corp., 499 F.3d 1332, 1339 (Fed. 

Cir. 2007).

A "patentee," which includes the patentee and the "successors 

in title to the patentee," is entitled to bring "a civil action 

for infringement of his patent." Id. at 1339 (quoting 35 U.S.C. 

§§ 100(d), 281). These patentees and assignees are entitled to 

sue for patent infringement in their own name because they suffer 

constitutional injury in fact from infringement. Id. at 1339-40. 

Grantees of exclusionary rights, or "exclusive licensees," 

are "injured by any party that makes, uses, sells, offers to sell, 

or imports the patented invention." Id. at 1340. These rights 

"must be enforced through or in the name of the owner of the 

patent." Id. Usually, the patentee is joined to suits filed by 

exclusive licensees to satisfy prudential standing concerns. Id.

Plaintiffs who "hold less than all substantial rights to the 

patent" lack constitutional standing. Id. at 1340-41. This 

deficiency cannot be cured by adding the patentee to the suit. 

Id. at 1341.

DISCUSSION

Canon argues that the CORE Flash Assignment divested TPL of 

its constitutional standing. TPL disagrees. TPL also argues 

that, if the Court finds that TPL lost standing, this loss can be 

cured. As explained below, the Court concludes that the CORE 

Flash Assignment divested TPL of its constitutional standing. 

Further, although a party who originally had standing may regain 

it after losing it, TPL may not be able to cure its loss.

//

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I. Impact of CORE Flash Assignment

"Determining whether the right to sue for prior infringement 

has been transferred turns on the proper construction of the 

assignment agreements, which is a matter of state contract law." 

Minco, Inc. v. Combustion Eng'g, Inc., 95 F.3d 1109, 1117 (Fed. 

Cir. 1996). Canon and TPL agree that California law governs the 

interpretation of the contracts at issue here.

Under California law, if a contract's language is "clear and 

explicit" and "does not involve an absurdity," it governs 

interpretation. F.B.T. Prods., LLC v. Aftermath Records, 621 F.3d 

958, 963 (9th Cir. 2010) (quoting Cal. Civ. Code § 1638). "It is 

only in relation to contracts that are uncertain, or of doubtful 

construction on their face, that the conduct of the parties is to 

be looked to in aid of construction." Pierce v. Merrill, 128 Cal.

464, 472 (1900); see also Cal. Civ. Code §§ 1637 (stating that the 

statutes governing interpretation govern where the intention of 

the parties to a contract is "otherwise doubtful"), 1639 ("When a 

contract is reduced to writing, the intention of the parties is to 

be ascertained from the writing alone, if possible; subject, 

however, to the other provisions of this Title.").

"Parol evidence is properly admitted to construe a contract 

only when its language is ambiguous." F.B.T. Prods., 621 F.3d at 

963. California courts follow a two-step process to determine 

whether extrinsic evidence should be admitted to resolve an 

ambiguity. First, a court examines extrinsic evidence without 

admitting it to determine whether the language is "reasonably 

susceptible" to the interpretation urged by the party seeking 

admission. Id. (quoting Winet v. Price, 4 Cal. App. 4th 1159, 

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1165 (1992)). If the language is reasonably susceptible to the 

interpretation urged, the extrinsic evidence is admitted to aid in 

the second step of interpreting the contract. Id. (quoting Winet,

4 Cal. App. 4th at 1165).

The first question is whether the language of the CORE Flash 

Assignment is susceptible to two meanings. Canon argues that "TPL 

unequivocally assigned all of its proprietary interests in the 

Asserted Patents to MCM via the CORE Flash Assignment." Opening 

Br. at 6. TPL responds that "the parties intended that TPL would 

be granted the exact same rights that it had under the 

Commercialization Agreement, however, subject to a modified split 

of the proceeds from TPL's activities." Opp. Br. at 7.

As described above, the CORE Flash Assignment stated as 

background that the Joint Plan provided for both "divestiture" of 

patents by TPL and rejection of all agreements whereby TPL may 

have acquired patent rights. Pursuant to this Assignment, TPL 

assigned all interests in the patents and all existing licensing 

agreements back to MCM, including the "worldwide right . . . to 

sue and . . . to pursue all remedies," as well as the right to 

regulate and control the patents by licensing or other agreements. 

CORE Flash Assignment. It is clear from these passages that TPL 

is no longer an exclusive licensee.

TPL argues that Paragraph E of the CORE Flash Assignment

creates an ambiguity by reinstating the provisions of the License 

Agreement that originally granted to TPL exclusive licensing 

rights. The plain language of Paragraph E undercuts TPL's 

argument. MCM granted to TPL "the right to represent MCM . . . 

and to commercialize and negotiate licenses on behalf of MCM 

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. . . ." Id. Nothing in Paragraph E suggests that MCM regranted 

to TPL an exclusive license. Further, Paragraph E describes the 

Agreement and License as a document "which said licenses 

negotiated by TPL shall be executed by MCM at the discretion of 

TPL." Id. This clause limits the relevance of the Agreement and 

License to the CORE Flash Assignment, rather than incorporating 

the Agreement and License therein.

Because the CORE Flash Assignment is not susceptible to more 

than one interpretation, the Court need not admit the extrinsic 

evidence provided, including the Venkidu Declaration and MCM's 

Bankruptcy Court motions. TPL is not an exclusive licensee. As a 

result, TPL does not have constitutional standing, even though MCM

is a party to the suit. 

II. Curing Mootness

TPL argues that, even if the Court decides that the CORE 

Flash Assignment divested TPL of standing, it should deny Canon's 

motion "and allow TPL and MCM to amend the agreement to more 

accurately reflect their true intention." Opp. Br. at 8.

TPL cites Schreiber Foods, Inc. v. Beatrice Cheese, Inc., 402 

F.3d 1198 (Fed. Cir. 2005), in support of its argument. There, 

Schreiber Foods owned a patent when it filed suit. It later 

assigned the patent to its subsidiary, which gave back to 

Schreiber Foods a non-exclusive license. After a trial and 

verdict, while the defendants' motion for judgment as a matter of 

law was pending, Schreiber Foods reacquired the patent. This 

reassignment came to light after judgment was entered, and a 

defendant moved to vacate judgment. The Federal Circuit 

considered whether judgment was void due to lack of jurisdiction

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to adjudicate the case. It concluded that the "temporary"

mootness between assignment and reassignment did not void the 

judgment. Id. at 1203. The court explained that in 

"circumstances where dismissal for lack of initial standing is not 

required, . . . jurisdictional defects can be cured before 

judgment." Id. (citing Caterpillar Inc. v. Lewis, 519 U.S. 61

(1996)). Thus, Schreiber Foods's temporary mootness did not 

undermine its standing because the standing problem was remedied 

before judgment.

Canon argues that Schreiber Foods's procedural posture 

renders its analysis inapposite. It is not. Here, as in 

Schreiber Foods, TPL had standing when it filed its complaint.1 

Further, the Federal Circuit's analysis squarely addresses the 

effect of TPL remedying its standing issue before judgment--it 

would not render judgment moot. Therefore, under Schreiber Foods, 

it is possible to cure a standing lapse by subsequent agreement.

CONCLUSION

The Court GRANTS Canon's motion to seal at Docket Number 435 

in part and DENIES it in part. The Court DENIES Canon's motion to 

seal at Docket No. 456.

The Court will GRANT Canon's motion to dismiss TPL's claims. 

The dismissal is stayed for one month from the date of this order 

 1 For this reason, Diamond Coating Technologies, LLC v. 

Hyundai Motor America, 2016 WL 2865704 (Fed. Cir.), is 

distinguishable. There, the Federal Circuit held that, where the

plaintiff did not have standing when it filed suit, a 

subsequently-executed nunc pro tunc agreement clarifying the 

original intent to grant full ownership of the patents at issue 

did not fix the standing problem.

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to permit TPL to reach an agreement with MCM. TPL may move to set 

aside the order within one month if it can regain its standing.

IT IS SO ORDERED. 

Dated: 6/17/2016

CLAUDIA WILKEN

United States District Judge

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