Dentsply Sirona Inc. v. Edge Endo, LLC

• Decision Date: 06 May 2021
• Docket Number: 1:17CV1041-JFB-SCY
• Parties: DENTSPLY SIRONA INC., TULSA DENTAL PRODUCTS LLC D/B/A DENTSPLY SIRONA ENDODONTICS, Plaintiffs, v. EDGE ENDO, LLC, US ENDODONTICS, LLC, Defendants.
• Court: U.S. District Court — District of New Mexico

DENTSPLY SIRONA INC., TULSA DENTAL PRODUCTS LLC D/B/A DENTSPLY

SIRONA ENDODONTICS, Plaintiffs, v. EDGE ENDO, LLC, US ENDODONTICS, LLC, Defendants.

1:17CV1041-JFB-SCY

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO

May 6, 2021

MEMORANDUM AND ORDER

This matter is before the Court on the motion to dismiss for lack of Article III standing, Doc. 410, filed by the defendants pursuant to Fed. R. Civ. P. 12(b)(1) and 12(h)(3).

BACKGROUND

The two Plaintiffs, Dentsply Sirona Inc. (DSI) and Tulsa Dental Products LLC D/B/A Dentsply Sirona Endodontics (DSE), assert claims for infringement of four patents-in-suit against defendants: U.S. Patent Nos. 8,882,504, 8,932,056, and 9,351,803 (collectively, the "Scianamblo patents") and U.S. Patent No. 9,801,696 (the "Rota Patent"). Both Plaintiffs seek to recover damages for infringement of all four patents.

In February 2016, DII was renamed Den

Dentsply Sirona Inc., following a merger between one of its wholly owned subsidiaries with Sirona Dental Systems, Inc., Tulsa Dental Products LLC d/b/a Dentsply Sirona Endodontics, the other Plaintiff in this lawsuit. DSI allegedly controls all entities. DSE is, according to plaintiffs, a wholly owned subsidiary of DSI and is therefore an "Affiliate" of DSI under the Scianamblo License. Defendants did not and have not obtained a license to practice the Scianamblo patents.

Similarly, On November 14, 2017, Maillefer Instruments Holding Sarl (hereinafter Maillefer), who owns the Rota patent, granted DSE "an exclusive right and license under the [Rota Patent] to make, have made, use, offer to sell, sell and import Licensed Products in the [United States]." Doc. 410-4 Maillefer License) § 2.1. Both Maillefer and DSE, contend plaintiffs, are wholly owned subsidiaries of DSI. McCarthy Decl. Doc. 418-1, ¶ 3. DSI states it has the authority to assert the Rota Patent against infringers, and such authority includes joining DSE to the litigation. Defendants do not have nor have ever had a license to use the Rota Patent from Maillefer, DSE or any other entity.

As stated in this Court's previous Memorandum and Order on Claim Construction,

This case involves patents relating to the specific design of a particular type of endodontic instrument, called an endodontic file, which is used by a dentist or endodontist to prepare a root canal. Dentsply Sirona uses this particular file design in its commercial product marketed under the brand name ProTaper NEXT&reg. Defendant Edge Endo LLC ("Edge Endo") is a supplier of dental instruments. It competes directly with Dentsply Sirona in the U.S. The first three patents (the '504, '056 and '803 patents) are in the same family and share a common specification. Those three patents all claim inventions by Dr. Michael Scianamblo and are referred to collectively herein as the "Asserted Scianamblo Patents." The fourth patent, the '696 patent, claims an invention by Dr. Gilbert Rota and Dr. Paul-Henri Vallotton (both employees of a Dentsply Sirona subsidiary called Maillefer) and is also referred to as the "Rota Patent." The design of ProTaper NEXT includes, inter alia, a unique off-centered cross section along at least a portion of the file.

Doc. 237 at 2.

LAW

A complaint can be challenged under Fed. R. Civ. P. 12(b)(1) either "on its face or on the factual truthfulness of its averments." Titus v. Sullivan, 4 F.3d 590, 593 (8th Cir.1993). "In a facial challenge to jurisdiction, all of the factual allegations concerning jurisdiction are presumed to be true and the motion is successful if the plaintiff fails to allege an element necessary for subject matter jurisdiction." Id. In a factual attack on the jurisdictional allegations of the complaint, however, the court can consider competent evidence such as affidavits, deposition testimony, and the like in order to determine the factual dispute. Id.

"As a jurisdictional requirement, standing to litigate cannot be waived or forfeited." Virginia House of Delegates v. Bethune-Hill, 139 S. Ct. 1945, 1951 (2019). "If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action." Fed. R. Civ. P. 12(h)(3). A plaintiff's Article III standing to sue is "a constitutional requirement" and "a threshold jurisdictional issue." Abraxis Bioscience, Inc. v. Navinta LLC, 625 F.3d 1359, 1363 (Fed. Cir. 2010) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). As such, it is "not subject to waiver," and can be raised at any time in the case. Spine Sols., Inc. v. Medtronic Sofamor Danek USA, Inc., 620 F.3d 1305, 1318-19 (Fed. Cir. 2010) (quoting Pandrol USA, LP v. Airboss Ry. Prods., 320 F.3d 1354, 1367 (Fed. Cir. 2003)), abrogated on other grounds, Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (2016). Standing to sue "is a question of law, which [the Federal Circuit] reviews de novo." MHL TEK, LLC v. Nissan Motor Co., 655 F.3d 1266, 1273-74 (Fed. Cir. 2011). Each plaintiff bears the burden of proving it has Article III standing. Id.; see also Lujan, 504 U.S. at 561.

To have Article III standing, "(1) the plaintiff must have suffered an injury in fact[;] (2) there must be a causal connection between the injury and the conduct complained of; and (3) it must be likely . . . that the injury will be redressed by a favorable decision." MHLTEK, 655 F.3d at 1273-74 (quoting Lujan, 504 U.S. at 560-61) (quotations omitted). "The touchstone of constitutional standing in a patent infringement suit 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 suffer legal injury." WiAV Sols. LLC v. Motorola, Inc., 631 F.3d 1257, 1265 (Fed. Cir. 2010). The Federal Circuit has stated with regard to constitutional standing in a patent infringement case that:

First, a patentee, i.e., one with "all rights or all substantial rights" in a patent, can sue in its own name. Second, a licensee with "exclusionary rights" can sue along with the patentee. And, finally, a licensee who lacks exclusionary rights has no authority to assert a patent (even along with the patentee).

Lone Star Silicon Innovations LLC v. Nanya Tech. Corp., 925 F.3d 1225, 1228 (Fed. Cir. 2019). "[I]f an exclusive licensee has the right to exclude others from practicing a patent, and a party accused of infringement does not possess, and is incapable of obtaining, a license of those rights from any other party, the exclusive licensee's exclusionary right is violated." WiAV Sols., 631 F.3d at 1266-67. "Standing cannot be cured by joining a patentee as a party." Propat Int'l Corp. v. RPost, Inc., 473 F.3d 1187, 1193-94 (Fed. Cir. 2007); Sicom Sys. Ltd. v. Agilent Techs., Inc., 427 F.3d 971, 976 (Fed. Cir. 2005) ("A nonexclusive license confers no constitutional standing on the licensee to bring suit or even to join a suit with the patentee because a nonexclusive licensee suffers no legal injury from infringement.").

ARGUMENTS

A. Arguments of defendants

Defendants argue that neither plaintiffs Dentsply Sirona nor Tulsa Dental have Article III standing in this case, contending that neither hold "exclusionary rights" in apatent that were violated by the defendant's infringement. WiAV Sols.LLC, 631 F.3d at 1257. Plaintiffs, argue defendants, rely on the following:

A November 30, 2011 License Agreement between Dr. Michael J. Scianamblo and Dentsply International Inc. (a predecessor to DSI), see Ginsberg Decl., Ex. 1 (JTX-012, the "Scianamblo License"); and A November 14, 2017 Patent License Agreement between Maillefer Instruments Holding Sarl ("Maillefer") and DSE, see Ginsberg Decl., Ex. 2 (JTX-016, the "Maillefer License").

Doc. 410-1 at 2. Defendants contend that the Scianamblo License grants coextensive rights to DSI, DSE and a number of other entities. The Scianamblo License purports to grant "exclusive and all substantial worldwide rights to the Licensed Patents" not just to DSI's predecessor, but also to all "Affiliates" of DSI's predecessor, including (but not limited to) DSE: "3.1 License Grant. Licensor hereby grants to Licensee (which shall include its Affiliates) the exclusive and all substantial worldwide rights to the Licensed Patents to make, have made, further develop, research, use, sell, import, export and otherwise distribute Licensed Devices." Doc. 410-2 and 3, Ginsberg Decl., Ex. 1 (Scianamblo License), Recitals, §§ 1, 2.4, 3.1.

Further, the licensees were granted "the right to sublicense any of the rights and licenses granted herein," provided that Dr. Scianamblo receives "50% of any royalties received . . . under any such sublicenses".¹ Thus, assert defendants, DSI and DSEcannot have "exclusive" rights under the Scianamblo patents. Further, argue defendants, DSI does not have any rights under the Rota patent as the Maillefer License grants rights only to DSE. In addition, the Maillefer License grants to [DSE] the right to grant sublicenses of any of its rights under the Licensed Patents to an affiliate of DSE. Doc. 410-2 § 15.2. Accordingly, defendants ask this Court to (1) dismiss DSI's and DSE's claims for infringement of the Scianamblo patents, and (2) dismiss DSI's claim for infringement of the '696 Rota patent.

Plaintiffs, argue defendants, cannot sue in their own names as they are not assignees of legal title to the patent in suits and do not hold all substantial rights to the patents/lawsuit. See Enzo APA & Son, 134 F.3d 1090, 1093 (Fed. Cir. 1998); Lone Star Silicon Innovations, 925 F.3d at 1228. According to defendants, DSI and DSE are not assignees as Dr. Scianamblo who "owns the Patents" and retains the rights to prosecute and maintain the patents, participate in and recover from infringement suits, approve any assignments of DSI's rights, receive royalties, approve settlements. See Alfred E. Mann Found. For Sci. Research v. Cochlear Corp., 604 F.3d 1354,1357-58, 1361-63 (Fed. Cir. 2010) (finding no assignment of "all substantial rights"...