Keranos, LLC v. Silicon Storage Tech., Inc.
| Decision Date | 13 August 2015 |
| Docket Number | Nos. 2014–1360,2014–1500.,s. 2014–1360 |
| Parties | KERANOS, LLC, Plaintiff–Appellant United Module Corporation, Peter Courture, J. Nicholas Gross, Third Party Defendants v. SILICON STORAGE TECHNOLOGY, INC., Freescale Semiconductor, Inc., Microchip Technology, Inc., Samsung Semiconductor, Inc., Samsung Electronics Co. Ltd., Taiwan Semiconductor Manufacturing Co., Ltd., TSMC North America, Defendants–Appellees. Keranos, LLC, Plaintiff–Appellant v. Analog Devices, Inc., International Business Machines Corporation, Intel Corporation, National Semiconductor Corporation, NXP Semiconductors USA, Inc., Texas Instruments, Inc., Defendants–Appellees. |
| Court | U.S. Court of Appeals — Federal Circuit |
Michelle G. Breit, Agility IP Law, LLP, Menlo Park, CA, argued for plaintiff-appellant. Also represented by John J. Edmonds, Collins, Edmonds, Pogorzelski, Schlather & Tower PLLC, Houston, TX.
Daryl Joseffer, King & Spalding LLP, Washington, DC, argued for defendants-appellees. Also represented by Adam Conrad, Charlotte, NC; Jeffrey D. Mills, Austin, TX; Bruce W. Slayden II, Brian C. Banner, Slayden Grubert Beard PLLC, Austin, TX.
Before CHEN, BRYSON, and HUGHES, Circuit Judges.
This appeal involves whether appellant, an exclusive licensee, has standing to sue for patent infringement and whether the district court properly applied the local patent rules to deny appellant's motions to amend its infringement contentions. Appellant Keranos, LLC appeals from the final judgments of the United States District Court for the Eastern District of Texas entered after the district court denied Keranos's motions for leave to amend infringement contentions. Appellees Silicon Storage Technology, Inc. (SST), Freescale Semiconductor, Inc., Microchip Technology, Inc. (Microchip), Samsung Semiconductor, Inc. and Samsung Electronics Co., Ltd. (collectively, Samsung), Taiwan Semiconductor Manufacturing Co., Ltd. and TSMC North America (collectively, TSMC), Analog Devices, Inc., International Business Machines Corporation, Intel Corporation, National Semiconductor Corporation, NXP Semiconductors USA, Inc., and Texas Instruments, Inc. assert that Keranos does not have standing to sue for infringement of U.S. Patent Nos. 4,795,719 (the '719 patent), 4,868,629 (the '629 patent), and 5,042,009 (the '009 patent).
We agree with the district court that Keranos has standing to sue for infringement of the asserted patents. We cannot determine based on the record, however, whether the district court abused its discretion in denying Keranos's motions for leave to amend infringement contentions based on the local patent rules. The court therefore vacates and remands for further consideration by the district court regarding Keranos's motions for leave to amend.
On June 23, 2010, Keranos sued forty-nine parties, including all appellees listed above except for SST, in the Eastern District of Texas for infringing three of its patents that generally relate to split-gate flash memory. Keranos accused appellees of using a specific type of flash memory technology developed by SST, called “SuperFlash,” that implements a split-gate memory design.
Keranos, which was formed as a Texas corporation on February 10, 2010, obtained the rights to the asserted patents from United Module Corporation (UMC) on February 16, 2010, through an “Exclusive Patent License and Royalty Agreement.” UMC continued to hold the legal title to the asserted patents, all of which expired prior to the filing of the current action; the '719 and ' 629 patents expired in 2006, and the '009 patent expired in 2008. Keranos did not join UMC as co-plaintiff in this action.
In the Northern District of California, SST and certain defendants from the Texas action then sued Keranos, UMC, Peter Courture, and J. Nicholas Gross1 in four separate cases seeking declaratory judgments of noninfringement and invalidity of the same patents. The California actions were transferred to the Eastern District of Texas and consolidated into two cases: the original case filed by Keranos and the consolidated declaratory judgment case. Following a joint Markman hearing on December 12, 2012, the district court regrouped the defendants into two new cases: case number 2:13–cv–00017 pitting Keranos, UMC, Mr. Courture, and Mr. Gross against the manufacturers of the accused products, and case number 2:13–cv–00018, pitting Keranos against the alleged customers of the accused products who incorporated those products into larger products for sale.
In the original Texas action, the defendants moved to dismiss Keranos's actions for lack of standing under the Patent Act, because the patents asserted had expired before Keranos acquired them and filed suit. The district court concluded that the license agreement between UMC and Keranos transferred all substantial rights in the patents, giving Keranos standing to sue for infringement without joining UMC.
On December 19, 2011, before the cases were regrouped, Keranos served its Local Patent Rule 3–1 Disclosure of Asserted Claims and Infringement Contentions (colloquially, infringement contentions). These original infringement contentions identified some of defendants' allegedly infringing products with specificity, by product name or number, and others more generally, by product family. After some discovery, on June 20, 2012, Keranos moved for leave to amend its infringement contentions. All defendants except Samsung opposed Keranos's motion. The cases progressed until August 5, 2013, when the district court in the case against the manufacturers denied Keranos's motion. Keranos unsuccessfully moved for reconsideration. In its order denying reconsideration, the district court explained that the local patent rules required Keranos to identify infringing products by specific product numbers, rather than by product families, and that Keranos's failure to do so led to the denial of its motion to amend its infringement contentions. The district court also found that Keranos had not demonstrated that it was diligent in “search[ing] for and identify[ing] infringing products to the extent possible based on publicly available information.” J.A. 8.
On January 29, 2014, the magistrate judge held a hearing where he explained that the only accused products remaining in the case against the manufacturers were the two products specifically identified by product number in the original infringement contentions. Keranos agreed to dismiss with prejudice its patent infringement claims against those products (having determined that the potential damages recovery for those two products would be de minimis ), and stipulated to summary judgment in favor of the defendants. The district court then granted summary judgment for the manufacturers and entered final judgment against Keranos.
In the case against the customers, the district court denied Keranos's motion for leave to amend infringement contentions and Keranos's motion to reconsider on similar grounds. Again, Keranos agreed to dismiss with prejudice its patent infringement claims against the remaining products, and the district court granted summary judgment for the customers and entered final judgment against Keranos.
On appeal, Keranos contends that the district court abused its discretion in denying Keranos's motions for leave to amend infringement contentions. Appellees disagree, and further contend that Keranos lacked standing to sue for infringement of the asserted patents. Because we find Keranos has standing, we have jurisdiction under 28 U.S.C. § 1295(a)(1) to decide whether the district court abused its discretion in denying Keranos's motions for leave to amend infringement contentions.
Appellees contend that Keranos lacks standing to sue for past infringement of the asserted patents, which expired before Keranos acquired rights in the patents and before Keranos filed its complaint for patent infringement.
“The question of standing to sue is a jurisdictional one, which we review de novo. ” Rite–Hite Corp. v. Kelley Co., 56 F.3d 1538, 1551 (Fed.Cir.1995) (en banc) (citations omitted). If Keranos lacked standing to sue in the district court, then jurisdiction is not proper on appeal. Prima Tek II, LLC v. A–Roo Co.,
222 F.3d 1372, 1376 (Fed.Cir.2000).
“Standing to sue for patent infringement derives from the Patent Act, which provides that ‘[a] patentee shall have remedy by civil action for infringement of his patent.’ ” Prima Tek II, 222 F.3d at 1376–77 (quoting 35 U.S.C. § 281 ). A “patentee” can be the entity to whom the patent was issued or the successors in title. Id. at 1377 (citing 35 U.S.C. § 100(d) ). When the entity that holds legal title to the patent “makes an assignment of all substantial rights under the patent,” then that assignee is “deemed the effective ‘patentee’ under 35 U.S.C. § 281 ” with effective title to the patent, and alone has “standing to maintain an infringement suit in its own name.” Id. (emphasis added).
“[A]n exclusive license may be tantamount to an assignment for purposes of creating standing if it conveys to the licensee all substantial rights to the patent at issue.” Aspex Eyewear, Inc. v. Miracle Optics, Inc., 434 F.3d 1336, 1340 (Fed.Cir.2006) (citing Vaupel Textilmaschinen KG v. Meccanica Euro Italia SPA, 944 F.2d 870, 875 (Fed.Cir.1991) ). If an exclusive licensee does not hold all substantial rights to the patent, however, then it lacks standing to maintain an infringement suit in its own name. In such a scenario, the exclusive licensee may have standing to participate in a patent infringement suit, but it must join the owner of legal title to satisfy the standing requirement. Prima Tek II, 222 F.3d at 1377. The patent owner is a necessary party in a suit brought by an exclusive licensee if “in [the patent owner's] absence, the court cannot accord complete relief among existing parties,” or if the disposition of an action in the patent...
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