Court Opinion

ID: 4924239
Source: CourtListenerOpinion
Date Created: 2021-09-22 15:01:11.716334+00
Date Added: 2024-06-11T08:14:13.141260
License: Public Domain

Case: 21-154   Document: 36     Page: 1    Filed: 09/22/2021

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                 ______________________

         IN RE: CIRBA INC., DBA DENSIFY,
                       Petitioner
                ______________________

                        2021-154
                 ______________________

    On Petition for Writ of Mandamus to the United States
District Court for the District of Delaware in No. 1:19-cv-
00742-LPS, Judge Leonard P. Stark.
                  ______________________

                     ON PETITION
                 ______________________

    PAUL D. CLEMENT, Kirkland & Ellis LLP, Washington,
DC, argued for petitioner Cirba Inc. Also represented by
JULIE M.K. SIEGAL; ARIEL C. GREEN, COURTLAND L.
REICHMAN, Reichman Jorgensen Lehman & Feldberg LLP,
Redwood Shores, CA; AISHA MAHMOOD HALEY; CHRISTINE
E. LEHMAN, Washington, DC.

    DEANNE MAYNARD, Morrison & Foerster LLP, Wash-
ington, DC, argued for respondent VMware, Inc. Also rep-
resented by BRIAN ROBERT MATSUI, MICHAEL QIAN;
RICHARD HUNG, MICHAEL ALLEN JACOBS, San Francisco,
CA; WILLIAM F. LEE, Wilmer Cutler Pickering Hale and
Dorr LLP, Boston, MA; THOMAS SAUNDERS, SETH P.
WAXMAN, Washington, DC.
                ______________________
Case: 21-154    Document: 36      Page: 2    Filed: 09/22/2021

2                                            IN RE: CIRBA INC.

    Before TARANTO, HUGHES, and STOLL, Circuit Judges.
STOLL, Circuit Judge.
                         ORDER
    Cirba Inc. petitions for a writ of mandamus directing
the United States District Court for the District of Dela-
ware to vacate its order granting VMware, Inc.’s motion to
dismiss Cirba Inc. for lack of constitutional standing and
its order granting VMware’s motion for a new trial.
VMware opposes. We deny the petition.
                        BACKGROUND
     In April 2019, Cirba Inc. (Inc.) and Cirba IP, Inc. (IP)
(collectively, Plaintiffs) filed suit in the District of Dela-
ware against VMware for patent infringement of U.S. Pa-
tent Nos. 8,209,687 and 9,654,367, unfair competition
under the Lanham Act, deceptive trade practices under
Delaware law, and common law trademark infringement.
In May 2019, Plaintiffs moved for a preliminary injunction,
which the district court denied in favor of an expedited jury
trial that occurred in January 2020. VMware raised the
issue of whether Inc. has standing to sue VMware for in-
fringement of the patents-in-suit for the first time in the
proposed pretrial order. In response, Inc. urged the court
to address the standing issue post-trial and the court
agreed. At trial, the jury rejected VMware’s patent inva-
lidity defenses and found that VMware willfully infringed
the asserted claims of the patents-in-suit. The jury
awarded over $236 million in damages.
    Inc. and VMware are direct competitors offering com-
peting products covered by the patents-in-suit. Inc.’s em-
ployees invented the invention claimed in the patents-in-
suit, and Inc. was the original patentee. Then, for tax pur-
poses, Inc. transferred its patents to its wholly owned sub-
sidiary IP in an Assignment Agreement. In turn, IP
Case: 21-154        Document: 36   Page: 3    Filed: 09/22/2021

IN RE: CIRBA INC.                                             3

granted back to Inc. rights in a License Agreement; this
License Agreement is key to the standing issue.
    After trial, VMware moved to dismiss Inc. from the
case for lack of standing, asserting that Inc. is only a bare
licensee to the patents-in-suit. In response, Inc. argued
that it has standing because Inc. holds an exclusive license
to the patents-in-suit. The district court analyzed the As-
signment Agreement—assigning the patents from Inc. to
IP—and the License Agreement—granting Inc. a license to
the patents-in-suit—and concluded that “the Assignment
Agreement left Inc. with no rights whatsoever in the pa-
tents-in-suit” other than “those rights granted to Inc. by IP
in the License Agreement.” Cirba Inc. v. VMware, Inc., No.
CV 19-742-LPS, 2020 WL 2992348, at *4 (D. Del. June 3,
2020) (emphasis omitted). The district court acknowledged
that the License Agreement describes Inc.’s license as “an
exclusive, transferable, worldwide license to use.” Id.
(quoting J.A. 120). But the court noted that the License
Agreement also expressly states that “IP remains ‘the ex-
clusive owner of all proprietary rights, including rights
based upon . . . patent . . . laws,’” and that it “‘gives [Inc.]
no rights in such proprietary rights.’” Id. at *4 (quoting
J.A. 121–22) (emphasis omitted). Given this language, the
district court concluded that Inc. is “a bare licensee, and
not an exclusive licensee,” and “lacks any right to exclude.”
Id. The court quoted our precedent holding that “the touch-
stone of constitutional standing in a patent infringement
case is whether a party can establish that it has an exclu-
sionary right in a patent that, if violated by another, would
cause the party holding the exclusionary right to suffer le-
gal injury.” Id. at *2 (quoting WiAV Sols. LLC v. Motorola,
Inc., 631 F.3d 1257, 1265 (Fed. Cir. 2010)). The district
court dismissed Inc. for lack of constitutional standing,
holding that “Inc. is a bare licensee, lacks standing to sue,
and must be dismissed.” Id. at *5; see id. at *1 n.1 (“[T]he
Standing Motion here only relates to constitutional stand-
ing.”). The district court also granted a new trial with IP
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4                                            IN RE: CIRBA INC.

as the sole plaintiff. This petition followed. We have juris-
diction under the All Writs Act, 28 U.S.C. § 1651.
                        DISCUSSION
     A writ of mandamus is a “drastic and extraordinary
remedy reserved for really extraordinary causes” and the
legal standard for mandamus relief is demanding. Cheney
v. U.S. Dist. Court for Dist. of Columbia, 542 U.S. 367,
380–81 (2004) (internal quotation marks and citation omit-
ted). “As the writ is one of the most potent weapons in the
judicial arsenal, three conditions must be satisfied before
it may issue.” Id. at 380 (internal quotation marks and ci-
tation omitted). The petitioner must demonstrate: (1) that
he has “no other adequate means to attain the relief he de-
sires”; (2) a “clear and indisputable” right to the writ; and
(3) that the “writ is appropriate under the circumstances.”
Id. at 380–81.
    In its petition seeking a writ of mandamus, Inc. asserts
that the district court erred in two respects: (1) holding
that Inc. is a bare licensee without the right to exclude;
and, in any event, (2) holding that exclusionary rights are
necessary for Article III standing. We address these two
issues in turn, bearing in mind the heavy burden required
for a writ of mandamus.
                             A
     Section 2 of the License Agreement states that “[IP]
hereby grants, and [Inc.] accepts, an exclusive, transfera-
ble, worldwide license to use the Products.” J.A. 120 (em-
phasis added). Section 8, titled “Proprietary Rights,” states
that “[Inc.] acknowledges that, between [Inc.] and [IP], [IP]
is the exclusive owner of all proprietary rights, including
rights based upon trade secret, patent and copyright laws,”
and “[t]his Agreement gives [IP] no rights in such proprie-
tary rights.” J.A. 121–22. We agree with the district court
that the License Agreement does not grant Inc. exclusion-
ary rights.
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IN RE: CIRBA INC.                                           5

     A patent grant confers on the patentee “the right to ex-
clude others from” making, using, offering for sale, selling,
or importing the invention. 35 U.S.C. § 154(a)(1). “If [a
licensee] has not received . . . the right to exclude others
from making, using, or selling the patented invention, the
party has a ‘bare license,’ and has received only the pa-
tentee’s promise that the party will not be sued for infringe-
ment.” Rite-Hite Corp. v. Kelley Co. Inc., 56 F.3d 1538,
1552 (Fed. Cir. 1995) (citing Western Elec. Co. v. Pacent Re-
producer Corp., 42 F.2d 116, 118 (2d Cir. 1930)). A right
“to use” the invention—under a license to use—is not a
right to exclude others, and the Supreme Court has long
made clear that it is not a right granted by the Patent Act.
See Impression Products, Inc. v. Lexmark Int’l, Inc., 137 S.
Ct. 1523, 1534 (2017) (“The right to use, sell, or import an
item exists independently of the Patent Act. What a patent
adds—and grants exclusively to the patentee—is a limited
right to prevent others from engaging in those practices.”
(citing Crown Die & Tool Co. v. Nye Tool & Machine
Works, 261 U.S. 24, 35 (1923)); Cont’l Paper Bag Co. v. E.
Paper Bag Co., 210 U.S. 405, 425 (1908); Patterson v. Ken-
tucky, 97 U.S. 501, 507 (1878) (“The sole operation of the
statute is to enable him to prevent others from using the
products of his labors except with his consent. But his own
right of using is not enlarged or affected.”).
    Inc. argues that it has exclusionary rights by virtue of
the words “exclusive” and “transferable” in § 2. Pet. 23–25.
But what is “exclusive” and “transferable” is only a right
“to use.” Moreover, “[t]he use of the word ‘exclusive’ is not
controlling; what matters is the substance of the arrange-
ment.” Textile Prods., Inc. v. Mead Corp., 134 F.3d 1481,
1484 (Fed. Cir. 1998). Nor does transferability of the right
granted alter the scope of that right. Here, the above-
quoted language in § 8, stating that the License Agreement
gives Inc. no proprietary rights under the patent laws, un-
dermines any suggestion that § 2 conveys a right to ex-
clude. Read in context, the word “exclusive” in § 2 is most
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6                                             IN RE: CIRBA INC.

reasonably read to give Inc. no more than a breach of con-
tract claim were IP to license others to use the patent. See
Rite-Hite, 56 F.3d at 1553 (explaining that the bare licen-
see’s remedy would lie in a breach of contract action instead
of a patent infringement action against infringers). Fur-
thermore, read in context with the language in § 8, the
grant of a “transferable, worldwide license to use the Prod-
ucts” simply allows Inc. to transfer a covenant not to sue
for using the Products. J.A. 120 (emphasis added). It does
not give Inc. the right to exclude others from using the pa-
tented invention. Inc. is therefore a “bare licensee,” even if
one with a promise of exclusivity, in that it has use rights
but no part of the right to exclude granted by the statute.
     We note that in Morrow v. Microsoft Corporation we
explained that “a party with the rights of an exclusive li-
censee holds exclusionary rights and has standing to sue
for infringement if the patentee joins the suit to satisfy any
[statutory standing] concerns present in that case.” 499
F.3d 1332, 1343 (Fed. Cir. 2007) (citing Evident Corp.
v. Church & Dwight Co., 399 F.3d 1310, 1314 (Fed. Cir.
2005)). What may follow from the use of the phrase “exclu-
sive license” in license agreements as a general matter,
however, does not eliminate the need to “pay particular at-
tention” to the specific language of the licensing contract at
issue in a given case. Id. (citing Prima Tek II, L.L.C. v. A-
Roo Co., 222 F.3d 1372, 1379 (Fed. Cir. 2000)). Here, as we
noted above, § 8 of the license removes any possibility of
reading § 2 as conveying exclusionary rights because it
states that IP is the “exclusive owner of all proprietary
rights, including . . . patent” and that Inc. has “no rights in
such proprietary rights.” J.A. 121–22. In the present case,
the overall substance of the license simply does not grant
Inc. any exclusionary rights. Accordingly, we see no error
in the district court’s holding that Inc. is a bare licensee
without the right to exclude.
                              B
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IN RE: CIRBA INC.                                             7

     Inc. also asserts that it is sufficient for Article III
standing that a party demonstrate a concrete injury, trace-
able to the challenged conduct (here infringement), and re-
dressable in the suit. Pet. 13, 16, citing, e.g., TransUnion
LLC v. Ramirez, 141 S. Ct. 2190, 2204 (2021) (holding that
only a plaintiff with a concrete injury has Article III stand-
ing); Lexmark Int’l, Inc. v. Static Control Components, Inc.,
572 U.S. 118, 125 (2014) (citing Lujan v. Defenders of Wild-
life, 504 U.S. 555, 560 (1992) and explaining that constitu-
tional standing requires a concrete injury). According to
Inc., exclusionary rights are not necessary for a concrete
injury, and it has been sufficiently injured for Article III
standing by virtue of the competitive injury it suffered
based on VMware’s use of the patented invention.
    VMware counters that the cases relied on by Inc. hold
only that a showing of concrete injury, causation, and re-
dressability is necessary for Article III standing, not that
such a showing is sufficient, and that many Supreme Court
cases, including Inc.’s principal authorities on Article III
standing, also require a “legally and judicially cognizable”
injury in fact, i.e., “an invasion of a legally protected inter-
est.” Opp. 20–21; see Raines v. Byrd, 521 U.S. 811, 819
(1997) (explaining that Article III standing requires a le-
gally and judicially cognizable injury that is concrete and
particularized); TransUnion, 141 S. Ct. at 2205, 2206;
Lujan, 504 U.S. at 560. According to VMware, a bare licen-
see like Inc. suffers no legally cognizable injury from patent
infringement.
     We are not firmly convinced that Inc. has demon-
strated a clear and indisputable right to issuance of the
writ based on the district court’s holding that Article III
requires an injury to the plaintiff’s right to exclude. See
Cheney, 542 U.S. at 381. As VMware notes, Inc. seeks a
change in the law because Inc.’s position would confer Ar-
ticle III standing on a bare licensee, contrary to our
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8                                            IN RE: CIRBA INC.

precedent. 1 Opp. 23. For its part, Inc. contends that this
change in the law is required by the Supreme Court’s deci-
sion in Lexmark, as well as our court’s decision in Lone Star
Silicon Innovations LLC v. Nanya Tech. Corp., 925 F.3d
1225, 1235–36 (Fed. Cir. 2019).
    Our decisions prior to Lexmark have routinely held
that constitutional standing requires at least one exclu-
sionary right. See WiAV, 631 F.3d at 1264–65, 1267; Mor-
row, 499 F.3d at 1340–41; Intell. Prop. Dev., Inc. v. TCI
Cablevision of Cal., Inc., 248 F.3d 1333, 1347 (Fed. Cir.
2001). Post-Lexmark, we noted that our precedent treating
35 U.S.C. § 281 as a jurisdictional requirement was irrec-
oncilable with Lexmark and we clarified that “whether a
party possesses all substantial rights in a patent does not
implicate standing or subject-matter jurisdiction.” Lone
Star, 925 F.3d at 1235–36. It is not clear, however, that
Lexmark and Lone Star also require us to alter our prece-
dent holding (as the district court summarized it) that “the
touchstone of constitutional standing in a patent infringe-
ment case is whether a party can establish that it has an
exclusionary right in a patent that, if violated by another,
would cause the party holding the exclusionary right to suf-
fer legal injury.” Cirba, 2020 WL 2992348, at *2 (citing
WiAV, 631 F.3d at 1265). Lexmark and Lonestar warn
against     conflating   statutory    requirements     with

    1     A hypothetical may aid in understanding the scope
of Inc.’s view. During argument, Inc.’s counsel agreed that,
under Inc.’s view, a third party that made an acceptable
non-infringing alternative would suffer a concrete injury
sufficient for Article III standing to sue VMware for patent
infringement because the third party would benefit eco-
nomically if VMware could no longer practice the invention
claimed in IP’s patent.           Oral Arg. at 7:52–9:04,
http://oralarguments.cafc.uscourts.gov/default.aspx?fl=21-
154_09032021.mp3.
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IN RE: CIRBA INC.                                            9

jurisdictional/standing requirements. These cases do not
answer the question of whether an injury must be both “le-
gally cognizable” and “concrete” or simply “concrete” for Ar-
ticle III standing. The same is true of Schwendimann
v. Arkwright Advanced Coating, Inc., 959 F.3d 1065 (Fed.
Cir. 2020), also relied on by Inc. Accordingly, we deny Inc.’s
petition.
                               C
    Like the district court, we have concluded that, under
the License Agreement, Inc. lacks any right to exclude or
any other exclusionary right against VMware. It follows
from that premise that Inc. lacks any statutory right under
35 U.S.C. § 281 to be a patent plaintiff in this case (even
with Cirba as a co-plaintiff). Indeed, Inc. does not appear
to dispute that conclusion if the premise of no exclusionary
right (which Inc. disputes) is correct. And the clarity of the
statutory requirement suggests that the statute (not the
Constitution) should decide plaintiff status in disputes like
the current one in the future.
     Inc. argues, however, that in this case VMware for-
feited any statutory objection. Pet. 5–6; Reply 8–9. The
district court seems to have rejected Inc.’s forfeiture con-
tention. J.A. 515–16 (“VMware’s challenge . . . was timely
even if it was a statutory challenge and not a constitutional
challenge.”). At the same time, the district court never
stated that it was dismissing Inc. under the statute, and in
its initial ruling, the court stated that VMware’s “Standing
Motion here relates only to constitutional standing.”
Cirba, 2020 WL 2992348, at *1 n.1. Regardless, we cannot
say that the record before us compels a finding of forfeiture
of a statutory objection.
     In support of its forfeiture contention, Inc. points to no
assertion by VMware that it was making only a constitu-
tional, and not a statutory, objection. Moreover, VMware’s
express rationale for objecting to Inc.’s presence as a plain-
tiff has been the same from the beginning: VMware has
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 10                                           IN RE: CIRBA INC.

 consistently argued that Inc. must be dismissed because
 Inc. lacked any exclusionary right under the License Agree-
 ment—which (as just noted) is a sufficient basis for Inc.
 lacking a statutory right to sue. But Inc. argues that
 VMware indirectly implied that it was limiting its argu-
 ment to a constitutional one because, in VMware’s key fil-
 ings, it (a) did not separately assert that the statute barred
 Inc.’s presence and (b) quoted from one of this court’s cases
 referring to “constitutional” standing, cited Fed. R. Civ. P.
 12(b)(1), and used the term “jurisdiction.” See J.A. 254; see
 also J.A. 370–71.
      The bases on which Inc. relies do not compel a determi-
 nation that a statutory ground for the objection to Inc.’s
 presence was forfeited. VMware’s omission of a separate
 “statutory” label, its accurate quotation of “constitutional”
 from the cited case, and its use of “jurisdiction” (and cita-
 tion to Fed. R. Civ. P. 12(b)(1)) all merely reflect the fact
 that “jurisdiction” and “constitutional” were terms used too
 loosely in our past cases, as we made clear in Lone Star,
 925 F.3d at 1235. Cf. Arbaugh v. Y&H Corp., 546 U.S. 500
 (2006) (Supreme Court noting its own overuse of “jurisdic-
 tion” in prior cases); Fort Bend Cnty., Texas v. Davis, 139
 S. Ct. 1843 (2019) (same). Moreover, we have approved
 treating a dismissal for want of jurisdiction as a dismissal
 for failure to state a claim where “there were no practical
 differences between the two forms of dismissal under the
 facts of th[e] case.” Adair v. United States, 497 F.3d 1244,
 1251 (Fed. Cir. 2007) (citing Brodowy v. United States, 482
 F.3d 1370, 1376 (Fed. Cir. 2007)); see Lone Star, 925 F.3d
 at 1236 n.6 (explaining that the district court’s error in
 treating a statutory objection as jurisdictional was harm-
 less because 12(b)(1) and 12(b)(6) motions are reviewed un-
 der an analogous standard). 2 On the record before us, with

      2 See also Morrison v. Nat’l Australian Bank Ltd.,
 561 U.S. 247, 254 (2010); Sioux Honey Ass’n v. Hartford
Case: 21-154     Document: 36     Page: 11    Filed: 09/22/2021

 IN RE: CIRBA INC.                                          11

 VMware having consistently relied on a single substantive
 rationale (Inc.’s lack of exclusionary rights), Inc. has not
 shown any practical difference—between a statutory, non-
 jurisdictional objection and a constitutional, jurisdictional
 objection—that would show prejudice so as to compel a de-
 termination of forfeiture of the statutory objection.
      Inc. contends there is such a difference. Citing
 Schwendimann, 959 F.3d at 1068–70, Inc. insists that a
 merely statutory defect that precludes its presence as a
 plaintiff in this case (unlike a constitutional defect) could
 be cured by altering the License Agreement, with retroac-
 tive effect to the filing of the complaint and, indeed, to the
 start of the damages period. Pet. 19–20. But this conten-
 tion concerns what is at present only a hypothetical possi-
 bility. Inc. did not attempt to effect a cure through any
 such alteration in the district court, and it has not done so
 to date (though it says that it stands ready to do so). Ac-
 cordingly, we have no factual record addressing a specific
 contract alteration and no development of, or district court
 ruling on, legal arguments about the consequences of such
 an alteration for Inc.’s rights, including whether an altera-
 tion in the circumstances of this case would come within
 the narrow holding of Schwendimann (whose facts are
 hardly matched by anything Inc. suggests occurred here in
 entering into the License Agreement). We therefore do not
 address what if any possibility of cure Inc. might have had
 or might yet have. In so stating, we are neither inviting
 nor discouraging an attempt at cure. We simply conclude
 that, on the present record, Inc. could readily have been
 dismissed for want of a statutory right to sue for the very

 Fire Ins. Co., 672 F.3d 1041, 1062 n.7 (Fed. Cir. 2012);
 Wright & Miller, 5C Fed. Prac. & Proc. Civ. § 1366 n.9 (3d
 ed.) (citing authorities for treating a Rule 12(b)(1) motion
 as a Rule 12(b)(6) motion where no prejudice results from
 the recharacterization of the procedural vehicle).
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 12                                             IN RE: CIRBA INC.

 reason the district court dismissed Inc. for want of consti-
 tutional standing.
     Inc. has not demonstrated a clear and indisputable
 right to a writ directing the district court to vacate its order
 granting VMware’s motion to dismiss and motion for a new
 trial based on the court’s finding that Inc. does not have
 constitutional standing.
      Accordingly,
      IT IS ORDERED THAT:
      (1) Inc.’s petition for a writ of mandamus is denied.
      (2) Each side shall bear its own costs.
                                      FOR THE COURT

 September 22, 2021                   /s/ Peter R. Marksteiner
       Date                           Peter R. Marksteiner
                                      Clerk of Court