Bushnell, Inc. v. Brunton Co.

• Decision Date: 03 September 2009
• Docket Number: Civil Action No. 09-cv-2009 KHV/JPO.
• Citation: 659 F.Supp.2d 1150
• Parties: BUSHNELL, INC., et al., Plaintiffs, v. The BRUNTON COMPANY, et al., Defendants.
• Court: U.S. District Court — District of Kansas

659 F.Supp.2d 1150

BUSHNELL, INC., et al., Plaintiffs, v. The BRUNTON COMPANY, et al., Defendants.

Civil Action No. 09-cv-2009 KHV/JPO.

United States District Court, D. Kansas.

September 3, 2009.

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Jennifer C. Bailey, Matthew B. Walters, Scott R. Brown, Hovey Williams LLP, Overland Park, KS, for Plaintiffs.

Deborah J. Swedlow, J. Michael Huget, Butzel Long, PC, Ann Arbor, MI, Samuel P. Logan, Scott C. Nehrbass, Overland Park, KS, for Defendants.

NUNC PRO TUNC MEMORANDUM AND ORDER

KATHRYN H. VRATIL, District Judge.

Under 35 U.S.C. § 101 et seq., Bushnell, Inc. ("Bushnell") and Laser Technology, Inc. ("LTI") bring suit against The Brunton Company, Lanshuo Photoelectric Science and Technology Co. Ltd. and LS Global LLC d/b/a I-On Optics (collectively "defendants") for infringement of five U.S. patents: LTI patent Nos. 5,612,779, 5,652,651, 6,057,910 and 6,226,077 and Bushnell patent No. 5,926,259 (hereafter referred to as the "'259 patent").¹ Plaintiffs seek preliminary and permanent injunctive relief, monetary damages, costs and attorneys' fees under 35 U.S.C. §§ 283-285. Complaint (Doc. # 1) filed January 7, 2009 at 15. Defendants allege that the patents are invalid and are not infringed, and seek declarative relief, costs and attorneys' fees. The Brunton Company's, LS Global LLC's, And Lanshuo Photoelectric Science And Technology Co.'s Answer, Affirmative Defenses, And Counterclaims (Doc. # 34) filed April 27, 2009 at 31.

This matter comes before the Court on Plaintiffs' Motion For Preliminary Injunction (Doc. # 16) filed April 6, 2009, Defendants' Motion To Dismiss Plaintiffs' Complaint (Doc. # 33) filed April 27, 2009 and Plaintiffs' Motion For Leave To File Their First Amended Complaint (Doc. #52) filed May 11, 2009. Defendants argue that (1) the Court lacks subject matter jurisdiction because plaintiffs lack constitutional and prudential standing to sue for infringement and (2) plaintiffs have failed to join a required party under Rule 19, Fed.R.Civ.P. Plaintiffs seek leave to amend to cure the alleged defects.

For reasons set forth below, the Court finds that LTI and Bushnell have constitutional standing but not prudential standing to sue for infringement of the LTI patents,² and that Bushnell lacks both constitutional and prudential standing to sue for infringement of the '259 patent.³ The Court finds that Kama-Tech (HK) Limited, which co-owns the four LTI patents, cannot be involuntarily joined pursuant to Rule 19, Fed.R.Civ.P. Absent Kama-Tech, the Court dismisses plaintiffs' claims under the LTI patents. Because the Court finds that the proposed amended complaint adequately alleges that Bushnell has constitutional and prudential standing to sue for infringement of the '259 patent, it in part sustains plaintiffs' motion to amend. Finally, the Court overrules plaintiffs' motion for a preliminary injunction as moot.

Factual Background

As noted, Bushnell and LTI filed suit against Brunton, Lanshuo and I-On on January 7, 2009, alleging infringement of four patents co-owned by LTI and one patent owned by Bushnell.

A. LTI Patents

1. Standing of LTI

Plaintiffs allege that pursuant to an agreement between LTI and Kama-Tech, which co-owns the LTI patents, LTI has the right to sue for infringement of the LTI patents without joining Kama-Tech. Plaintiffs cite a pre-suit agreement between LTI and Kama-Tech, dated January 6, 2009, which provides as follows:

KAMA-TECH hereby waives all rights to pursue or participate in . . . litigation involving one or more of the [LTI] patents and one or more of the [defendants in this suit] and hereby agrees to be bound by any judgments relating to said litigation, and hereby agrees to not license any of the Laser Range Finder Patents to any of the Third Parties. KAMA-TECH waives no rights to the Laser Range Finder Patents or any other LTI patents owned by it, however, except as provided herein.

Exhibit 3 to Motion To Dismiss (Doc. # 38-3) ("Kama-Tech Waiver").

2. Standing of Bushnell

The complaint alleges that Bushnell is a field restricted exclusive licensee of the LTI patents.⁴ Complaint (Doc. # 1) at 3, 6, 10, 13. Bushnell contends that it acquired its license through an agreement dated September 14, 2004 between LTI, Kamakura Koki Co., Ltd. and Bushnell Performance Optics. Under the agreement, LTI and Kamakura granted Bushnell Performance Optics an exclusive license under the LTI patents and "any applicable KAMAKURA Intellectual Property" to make and sell for outdoor recreational and sport uses products that retail for $400 or less. Doc. #38-4 at 1, 3. Kamakura agreed to exclusively design and manufacture products for LTI and Bushnell Performance Optics in that field. On November 17, 2005, Bushnell Performance Optics changed its name to Bushnell, Inc. (plaintiff in this case).

On May 7, 2009, LTI, Kamakura, Kama-Tech and Bushnell executed an amended license agreement to reflect that on March 10, 2004, LTI had assigned Kama-Tech (not Kamakura) an undivided half interest in the LTI patents.⁵ See Amendment to the Exclusivity Agreement of September 14, 2004 ("Amendment to Agreement"), attached as Exhibit C to plaintiffs' Motion To Amend (Doc. #54-4). The amendment gave Kama-Tech the same rights and obligations as Kamakura in the original agreement, i.e. it provided that Kama-Tech would exclusively design and manufacture products in the field for Bushnell and granted Bushnell an exclusive license under the LTI patents. Id. The amendment also granted Bushnell the right to seek damages for past and future infringement of the LTI patents. Id.

B. Bushnell's '259 Patent

Plaintiffs allege that Bushnell is the sole owner of the '259 patent. Complaint (Doc. # 1) at 8. According to the United States Patent and Trademark Office ("USPTO") and the face of the patent, however, Stephen Bamberger and Jeremy Dunne assigned the '259 patent to Bushnell Corporation, a wholly owned subsidiary of Bushnell. On November 17, 2005, Bushnell Corporation changed its name to Bushnell Holdings, Inc.⁶ Ex. C attached to Plaintiff's Opposition (Doc. # 51-4) filed May 11, 2009. On May 7, 2009, after plaintiffs filed suit, Bushnell Holdings, Inc. assigned to Bushnell its entire interest in the '259 patent, including the right to sue for past infringement. Assignment, attached as Exhibit D to Plaintiffs' Opposition (Doc. # 51-5) filed May 11, 2009.

Subject Matter Jurisdiction

Defendants claim that LTI lacks prudential standing to sue and that Bushnell lacks constitutional and prudential standing to sue on the LTI patents. Defendants also assert that LTI and Bushnell lack constitutional and prudential standing to sue for infringement of the '259 patent.

Standing to sue is jurisdictional. Aspex Eyewear, Inc. v. Miracle Optics, Inc., 434 F.3d 1336, 1339 (Fed.Cir.2006). The Court may exercise jurisdiction only when specifically authorized to do so, see Castaneda v. INS, 23 F.3d 1576, 1580 (10th Cir.1994), and must "dismiss the cause at any stage of the proceeding in which it becomes apparent that jurisdiction is lacking." Scheideman v. Shawnee County Bd. of County Comm'rs, 895 F.Supp. 279, 280 (D.Kan.1995) (citing Basso v. Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir.1974)); Fed.R.Civ.P. 12(h)(3). Because federal courts are courts of limited jurisdiction, the law imposes a presumption against their jurisdiction. Marcus v. Kan. Dep't of Revenue, 170 F.3d 1305, 1309 (10th Cir.1999). If defendants challenge federal jurisdiction, plaintiffs bear the burden of showing that jurisdiction is proper. See Jensen v. Johnson County Youth Baseball League, 838 F.Supp. 1437, 1439-40 (D.Kan.1993).

Motions to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1) generally take two forms: facial attacks on the complaint and factual attacks on the accuracy of the allegations in the complaint. See Holt v. United States, 46 F.3d 1000, 1002-03 (10th Cir.1995). A facial attack questions the sufficiency of the complaint, see id. at 1003, and requires the Court to determine whether the complaint contains sufficient jurisdictional facts to state a claim which is "plausible on its face" and raises a right to relief "above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).⁷ A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do, and a complaint is not sufficient if it tenders naked assertions devoid of further factual enhancement. Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 555, 557, 127 S.Ct. 1955). Here, defendants make a factual attack on the accuracy of the jurisdictional allegations. Where the challenge to subject matter jurisdiction is factual, the Court must resolve factual disputes to determine if it has jurisdiction. See Holt, 46 F.3d at 1002-03.

Constitutional standing in patent infringement cases is governed by patent statutes. Morrow v. Microsoft Corp., 499 F.3d 1332, 1337-39 (Fed.Cir.2007). To sue for patent infringement, plaintiffs must have both constitutional and prudential standing—each plaintiff must have constitutional standing, and plaintiffs individually or together must have prudential standing with respect to each patent in suit. See id. at 1339-41. A patent ownership interest is required for constitutional standing and joinder of all co-owners (i.e. complete ownership on plaintiffs' side) is required for prudential standing. See id. at 1339-40; Israel Bio-Eng'g Project v. Amgen, Inc., 475 F.3d 1256, 1262, 1264 (Fed.Cir.2007); Ethicon, Inc. v. United States Surgical Corp., 135 F.3d 1456, 1468 (Fed.Cir.1998); Ortho Pharm. Corp. v. Genetics Inst., Inc., 52 F.3d 1026, 1031 (Fed. Cir.1995) (for constitutional standing, economic injury not enough; licensee must hold some patent rights).

I. Constitutional...