Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_12-cv-04959/USCOURTS-cand-5_12-cv-04959-5/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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Case Nos.: 5:12-cv-04958-PSG, 5:12-cv-04959-PSG.

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS CASES AS MOOT

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United States District Court

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA 

SAN JOSE DIVISION

PI-NET INTERNATIONAL, INC.,

 Plaintiff,

v.

FOCUS BUSINESS BANK,

 Defendant. 

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Case No. 5:12-cv-04958-PSG

Case No. 5:12-cv-04959-PSG

ORDER GRANTING DEFENDANTS’ 

MOTION TO DISMISS CASES AS 

MOOT

(Re: Docket No. 83, Case No. 5:12-cv- 04958)

(Re: Docket No. 78, Case No. 5:12-cv- 04959)

PI-NET INTERNATIONAL, INC.,

 Plaintiff,

v.

BRIDGE BANK, N.A.,

 Defendant.

As this court previously noted, these cases involve the “unique” and “often puzzling” 

ability of patent cases to “proceed in any number of different venues, often at the same time.”1

After Plaintiff Pi-Net International, Inc. brought suit against Defendants Focus Business Bank and 

Bridge Bank, N.A. for patent infringement, the Patent and Trademark Office initiated inter partes 

 1 See Case No. 5:12-cv-05958: Docket No. 58 at 2.

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Case Nos.: 5:12-cv-04958-PSG, 5:12-cv-04959-PSG.

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS CASES AS MOOT

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review of the patents-in-suit.

2 Persuaded that a stay was proper in light of these parallel

proceedings, the court entered an order staying the cases against Defendants pending resolution of 

the IPR proceedings.

3 During this stay, a new complicity was added to these cases when Pi-Net 

executed agreements transferring ownership of the asserted patents to its president Dr. Lakshmi 

Arunachalam.4

Claiming that Pi-Net now lacks standing to sue for infringement of the asserted patents, 

Defendants move for the court to lift the stay and dismiss these cases for mootness.5 Because these 

cases became moot upon Pi-Net’s assignment of its rights to the asserted patents, the court lifts the 

stay and GRANTS Defendants’ motion to dismiss. 

I.

A party may file a motion under Fed. R. Civ. P. 12(b)(1) to dismiss a complaint for lack of 

subject matter jurisdiction. “In considering a Rule 12(b)(1) motion, the [c]ourt ‘is not restricted to 

the face of the pleadings, but may review any evidence, such as affidavits and testimony, to resolve 

factual disputes concerning the existence of jurisdiction.’”6 “Once challenged, the party asserting 

subject matter jurisdiction has the burden of proving its existence.”7

“If the plaintiff lacks standing under Article III of the U.S. Constitution, then the court lacks 

subject matter jurisdiction, and the case must be dismissed.”8 To establish Article III standing, “a

plaintiff must show (1) it has suffered an ‘injury in fact’ that is (a) concrete and particularized and 

 2 See id. at 3-4.

3 See Case No. 5:12-cv-04985: Docket No. 77; Case No. 5:12-cv-04959: Docket No. 72. 

4 See Case No. 5:12-cv-04985: Docket Nos. 83-5, 83-6.

5 See Docket No. 83, Case No. 5:12-cv-04959: Docket No. 78.

6 See Moran v. HSBC Bank USA, N.A., Case No. 5:14-cv-00633-LHK, 2015 WL 139705 at *2 

(citing McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988)).

7 See Rattlesnake Coalition v. EPA, 509 F.3d 1095, 1102 n.1 (9th Cir. 2007) (internal citations 

omitted).

8 See Moran, 2015 WL 139705 at *2 (citing Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 

101-02 (1998)).

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Case Nos.: 5:12-cv-04958-PSG, 5:12-cv-04959-PSG.

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS CASES AS MOOT

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(b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the 

challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the 

injury will be redressed by a favorable decision.”9 “The injury required by Article III can exist 

solely by virtue of statutes creating legal rights, the invasion of which creates standing.”10 “In such

cases, the ‘standing question . . . is whether the constitutional or statutory provision on which the 

claim rests properly can be understood as granting persons in the plaintiff’s position a right to 

judicial relief.’”11

Standing in a patent infringement derives from the Patent Act, which provides that “[a] 

patentee shall have remedy by civil action for infringement of his patent.”12 The term “patentee” 

includes “the patentee to whom the patent was issued” as well as those who are “successors in title 

to the patentee” because they hold legal title to the patent.13 “A patent grant bestows the legal right 

to exclude others from making, using, selling or offering to sell the patented invention in the 

United States, or importing the invention...Constitutional injury in fact occurs when a party 

performs at least one prohibited action with respect to the patented invention that violates these 

exclusionary rights.”14

“[S]tanding is to be determined as of commencement of suit.”15 In contrast, “[t]he question 

of whether the [c]ourt loses jurisdiction over a case where a plaintiff has standing at the outset...is 

 9 See Nuclear Information & Resource Service v. Nuclear Regulatory Com’n, 457 F.3d 941, 949 

(9th Cir. 2006) (internal citations omitted). 

10 See Deacon v. Pandora Media, Inc., 901 F. Supp. 2d 1166, 1171 (N.D. Cal. 2012) (quoting 

Edwards v. First Am. Corp., 610 F.3d 514, 517 (9th Cir. 2010)).

11 See id. (quoting Edwards, 610 F.3d at 517).

12 See 35 § U.S.C. 281.

13 See Morrow v. Microsoft Corp., 499 F.3d 1332, 1339 (Fed. Cir. 2007) (internal citations 

omitted).

14 See id. (internal citations omitted).

15 See Media Techs. Licensing, LLC v. Upper Deck Co., 334 F.3d 1366, 1370 (Fed. Cir. 2003) 

(quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 570 n.5 (1992) (plurality opinion)); see also 

Sicom Sys., Ltd. v. Agilent Techs., Inc., 427 F.3d 971, 975-76 (Fed. Cir. 2005) (“Standing to sue is 

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Case Nos.: 5:12-cv-04958-PSG, 5:12-cv-04959-PSG.

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS CASES AS MOOT

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properly characterized as one of mootness.”16 Generally, “[t]he doctrine of mootness can be 

described as ‘the doctrine of standing set in a time frame: The requisite personal interest that must 

exist at the commencement of the litigation (standing) must continue throughout its existence 

(mootness).’”17 Although “long-recognized exceptions to mootness” exist, courts may not “retain 

jurisdiction over cases in which one or both of the parties plainly lack a continuing interest.”18 

Pi-Net alleges that Defendants infringe U.S. Patents Nos. 5,987,500 and 8,108,492.19 “The 

patents are generally directed to a method and apparatus for performing real-time, two-way 

transactional capabilities on the Web.”20 The ’500 and ’492 patents issued to Arunachalam in 1999 

and 2012, respectively.21 Both patents were later assigned to Pi-Net.

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In 2012, Pi-Net brought suit against Defendants for infringement of the ’500 and ’492 

patents.23 Pi-Net also asserted these patents against “various financial institutions in approximately 

twenty-eight separate actions.”24

SAP America, Inc. then initiated IPR proceedings at the PTO challenging the validity of the 

patents-in-suit.

25 The court entered an order staying these cases pending resolution of those 

 

a threshold requirement in every federal action” which “must be present at the time the suit is 

brought.”) (internal citations omitted).

16 See Qimonda AG v. LSI Corp., 857 F. Supp. 2d 570, 574 (E.D. Vir. 2012) (emphasis in original).

17 See Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 520 U.S. 167, 189 (2000) 

(quoting Arizonans for Official English v. Arizona, 520 U.S. 43, 68 n.22 (1997)).

18 See id. at 190-92.

19 See Case No. 5:12-cv-04958: Docket No. 1 at 5-6; Case No. 5:12-cv-04959: Docket No. 1 at 4-6.

20 See Case No. 5:12-cv-04958: Docket No. 58 at 3 (internal citations omitted).

21 See Docket No. 1 at 2-3. 

22 See id.; see also Docket Nos. 83-2, 83-3.

23 See Docket No. 1; Case No. 12-cv-04959: Docket No. 1.

24 See Case No. 5:12-cv-04958: Docket No. 58 at 4.

25 See id. 

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Case Nos.: 5:12-cv-04958-PSG, 5:12-cv-04959-PSG.

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS CASES AS MOOT

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proceedings, “conditioned on Defendants’ agreement to be estopped from raising any invalidity 

reference, or combination of references, that had been presented to the PTO in SAP’s IPR petitions, 

including those for which the PTO declined to institute review.”26

While this stay was in place, Pi-Net, through its President Arunachalam, executed two 

assignment agreements assigning to Arunachalam “the entire right, title and interest in and to [the 

asserted patents], including all right to sue for past infringement” and entitling Arunachalam to 

“retain any monetary damages, settlements, royalties or recovery” recovered or obtained in such 

suits taken by Arunachalam at her own expense.

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Arguing that these assignments divested Pi-Net of standing to pursue these cases, 

Defendants now move for the court to lift the stay and to dismiss these cases with prejudice as 

moot.

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II.

This court has jurisdiction under 28 U.S.C. §§ 1331 and 1338. The parties further 

consented to the jurisdiction of the undersigned magistrate judge under 28 U.S.C. § 636(c) and 

Fed. R. Civ. P. 72(a).

III.

The issue is whether the court should lift the stay and grant Defendants’ motion to dismiss 

these cases for lack of subject matter jurisdiction. Because these cases became moot when Pi-Net 

lost standing to sue for infringement of the asserted patents, the court lifts the stay and grants 

Defendants’ motion to dismiss.

 26 See Docket No. 77 at 2; Case No. 5:12-cv-04959: Docket No. 72 at 2. The court originally 

conditioned the stay “on each defendant’s consent to be estopped from raising any invalidity 

defense that SAP raised or reasonably could have raised in the IPR proceedings.” See Case No. 

5:12-cv-04959: Docket No. 58 at 10. The court later modified this condition. See Docket No. 74 at 

4.

27 See Case No. 5:12-cv-04958: Docket No. 83-5 at §§ 1-2; Docket No. 83-6 at §§ 1-2. Pi-Net and 

Arunachalam also executed an accession agreement in which Arunachalam acknowledged that she 

is bound by agreements that resolved prior litigation relating to the patents-in-suit. See Docket No. 

83-4 at § 1.

28 See Docket No. 83 at 1; Case No. 5:12-cv-04959: Docket No 78 at 1. 

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ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS CASES AS MOOT

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First, the court lifts the stay for the purpose of deciding whether to dismiss these cases. 

Whether to stay litigation “pending the PTO’s review of a patent involved in the lawsuit is within 

the court’s discretion.”29 “The same court that imposes a stay of litigation has the inherent power 

and discretion to lift the stay.”30 “The court may lift the stay if the circumstances warranting its 

imposition have since changed significantly.”31

Pi-Net’s contention that a lift of the stay is “unwarranted” lacks merit.

32 The court 

previously concluded that imposing a stay made sense under the factors outlined in Telemac Corp. 

v. Teledigital, Inc.

33 in part because the PTO’s determinations regarding the “vast majority of the 

asserted claims in this litigation” were “likely to simply the issues before the court.”34 Pi-Net is 

correct that the IPR proceedings have not concluded because Arunachalam filed a notice of appeal 

with the Patent Trial and Appeal Board indicating her intention to appeal its decision regarding the 

patents-in-suit to the Federal Circuit.35 However, as stated below, the court has determined that PiNet no longer has standing to pursue the claims asserted in this litigation. Accordingly, 

“circumstances have changed such that the court’s reasons for imposing the stay no longer exist” 

because the court can completely resolve these cases by granting Defendants’ motion to dismiss.36

 29 See Case No. 5:12-cv-04958: Docket No. 58 at 6 (citing Ethicon, Inc. v. Quigg, 849 F.2d 1422, 

1426-27 (Fed. Cir. 1988)). 

30 See Cascades Computer Innovation LLC v. RPX Corp., Case No. 12-cv-1143-YGR, 2015 WL 

1383818, at *1 (N.D. Cal. Mar. 23, 2015) (internal citations omitted).

31 See id. (internal citations omitted).

32 See Docket No. 84 at 2.

33 See Docket No. 58 at 6 (“Courts traditionally consider the following three, non-exhaustive 

factors in determining whether to stay a case pending the PTO’s review of a patent in suit: “(1) 

whether discovery is complete and whether a trial date has been set; (2) whether a stay will 

simplify the issues in question and trial of the case; and (3) whether a stay would unduly prejudice 

or present a clear tactical disadvantage to the non-moving party.”) (citing Telemac Corp. v. 

Teledigital, Inc., 450 F. Supp. 2d 1107, 1111 (N.D. Cal. 2006)).

34 See Docket No. 74 at 3.

35 See Docket No. 90 at 1; see also Docket No. 84 at 2.

36 See Canady v. Erbe Elektromedizin GmbH, 271 F. Supp. 2d 64, 74 (D.D.C. 2002). Pi-Net’s 

contention that a lift of the stay is improper because Defendants requested the stay “in the first 

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Second, Pi-Net rendered these cases moot when it assigned away its rights to the asserted 

patents. A “patentee who holds all the exclusionary rights and suffers constitutional injury in fact 

from infringement” as well as an assignee to whom the patentee has transferred “all substantial 

rights to the patent” have standing to sue for patent infringement.37 In contrast, “those that hold 

less than all substantial rights to the patent and lack exclusionary rights under the patent statutes to 

meet the injury in fact requirement” lack constitutional standing because “[t]hey are not injured by 

a party that makes, uses or sells the patented invention because they do not hold the necessary 

exclusionary rights.”38 Accordingly, “if a patentee transfers all substantial rights to a patent, the 

transferee becomes the effective patentee and is the only party who may sue for infringement.”39

Like the plaintiff in Schreiber Foods, Inc. v. Beatrice Cheese, Inc., Pi-Net divested itself of 

standing to sue for infringement by assigning the asserted patents to Arunachalam.

40 In Schreiber 

Foods, the plaintiff owned the asserted patent at the time it filed suit against the defendant but 

assigned the asserted patent and the right to sue for past infringement to its subsidiary while the 

case was being litigated.41 The court held that although the plaintiff retained a non-exclusive 

license to practice the patent, “there was no question” that the plaintiff had “lost its personal stake 

in the outcome” of the litigation once the assignment was complete.

42 Accordingly, the court 

reasoned that “the case became moot” because the “plaintiff had “lost standing to sue for 

infringement.”43

 

instance” is also unavailing because Defendants made this request before Pi-Net assigned the 

patents to Arunachalam. See Docket No. 84 at 2; see also Docket No. 85 at 2.

37 See Morrow, 499 F.3d at 1340.

38 See id. at 1340-41.

39 See Advanced Audio Devices, LLC v. Bay Consumer, Inc., Case No. 10-c-7699, 2011 WL 

6016242, at *2 (N.D. Ill. Dec. 2, 2011) (citing Vaupel Textilmaschinen KG v. Meccanica Euro 

Italia S.P.A., 944 F.2d 870, 875-76 (Fed. Cir. 1991)).

40 See 402 F.3d1198 (Fed. Cir. 2005).

41 See id. at 1200, 1202.

42 See id. at 1202-3.

43 See id. at 1203.

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ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS CASES AS MOOT

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Similar to the plaintiff in Schreiber Foods, here Pi-Net had standing to sue for patent 

infringement at the onset of these cases because it owned both of the asserted patents at the time it 

initiated these suits. However, as stated above, Pi-Net later executed agreements which assigned to 

Arunachalam “the entire right, title and interest in and to the [p]atent[s], including all right to sue 

for past infringement.”44 Thus, like the plaintiff in Schreiber Foods, Pi-Net has assigned away all 

substantial rights in the asserted patents, including the right to sue for past infringement.45 Pi-Net 

therefore lacks legal capacity to maintain these actions because it does not hold “all substantial 

rights” to the asserted patents and thus is “not injured by a party” that practices the patented 

inventions.

46

In light of Pi-Net’s lack of a legally cognizable interest in these cases, the assignment 

agreements’ purported grant to Arunachalam of the right to sue for past infringement “in the name 

of [Pi-Net] or in [her] own name” is insufficient to confer standing on Pi-Net.47 In support of its 

position that these grants are “valid and enforceable” Pi-Net claims that “[p]arties have the freedom 

to contract” and that Pi-Net and Arunachalam each have “an interest in the litigation.”48 However,

Pi-Net’s attempt to contract around Article III’s standing requirement is unavailing because 

“[s]tanding to sue for infringement depends entirely on the putative plaintiff’s proprietary interest 

in the patent, not on any contractual arrangements among the parties regarding who may sue and 

 44 See Docket No. 83-5 at § 1 (emphasis added); see also Docket No. 83-6 at § 1 (emphasis added).

45 See 402 F.3d at 1202-3.

46 See Morrow, 499 F.3d at 1340-41. The Federal Circuit held that “the mootness [in Schreiber 

Foods] was only temporary” because the plaintiff “regained its stake in the litigation when it 

reacquired the [asserted] patent before the entry of judgment.” See 402 F.3d at 1203. As a result, the Federal Circuit reversed the district court’s judgment of dismissal in part because “[t]he 

jurisdictional defect that had existed was cured before the entry of judgment.” See id. at 1204, 

1207. In contrast, here dismissal for mootness is proper because there is no indication that Pi-Net 

has cured the jurisdictional defect by reacquiring the patents-in-suit. 

47 See Docket No. 83-5 at § 2; see also Docket No. 83-6 at § 2.

48 See Docket No. 84 at 2.

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