Evonik Degussa GmbH v. Materia Inc.
| Decision Date | 30 September 2013 |
| Docket Number | Civil Action No. 10-cv-200 (NLH/JS),Civil Action No. 09-cv-636 (NLH/JS) |
| Parties | Evonik Degussa GmbH, Plaintiff, v. Materia Inc., et al., Defendants. Materia Inc., Counterclaim Plaintiff, and University of New Orleans Foundation and University of New Orleans Research and Technology Foundation, Inc.'s, Third-Party Plaintiffs, v. Evonik Degussa GmbH., Counterclaim and Third-Party Defendant. |
| Court | U.S. District Court — District of Delaware |
CONSOLIDATED
1
Currently pending before the Court is Third-Party Plaintiffs University of New Orleans Foundation (hereinafter "UNOF") and University of New Orleans Research and Technology Foundation, Inc.'s (hereinafter "UNORTF") Motion to be Dropped as Parties. For the reasons that follow, the Motion shall be granted.
The full factual background of this case is familiar to all parties involved, and the Court therefore only discusses the facts relevant to the instant Motion.
In this consolidated patent action, Plaintiff and Third-Party Defendant Evonik Degussa GmbH (hereinafter "Evonik") asserts that Defendant and Counterclaim Plaintiff Materia, Inc. (hereinafter "Materia") willfully infringed upon U.S. Patent No. 7,378,528 ("the '528 Patent") and U.S. Patent No. 7,652,145 ("the '145 Patent"). Materia denies infringement, and counterclaims that Evonik's patents are invalid and unenforceable based on the doctrine of inequitable conduct. [Docket Nos. 48 & 166.] In its responsive pleadings, Materia, joined by UNOF as a third-party plaintiff, likewise counterclaims that Evonik willfully infringed upon U.S. Patent No. 7,622,590 ("the '590 Patent"). [Id.] UNOF joined Materia in the counterclaim on the basis that it was the sole owner of all rights, title, and interest related to the fees pursuant to 35 U.S.C. § 285, and inequitable conduct. [Docket Nos. 85 & 362.] By way of stipulation, the parties subsequently agreed to the dismissal of Materia's counterclaims against Evonik based on inequitable conduct. [Docket No. 409.]
Thereafter, on January 27, 2012, UNORTF assigned all of its rights, title, and interest in the '590 Patent to Materia. 2 As such, UNOF and UNORTF no longer have any rights, title, or interest in the '590 Patent at this point in time. On this basis, UNOF and UNORTF filed a Motion to be Dropped as Parties from this dispute pursuant to Federal Rule of Civil Procedure 21 on December 27, 2012. [Docket Nos. 400-403.] Evonik responded in opposition on January 14, 2013 [Docket Nos. 407 & 408], and UNOF and UNORTF replied on January 25, 2013. [Docket No. 413.] Accordingly, the Motion is now ripe for review.
This Court exercises subject matter jurisdiction pursuant to 28 U.S.C. § 1331 (federal question jurisdiction) and 28 U.S.C. § 1338(a) ().
Rule 21 of the Federal Civil Rules governs the "misjoinder and nonjoinder of parties," and provides as follows:
Misjoinder of parties is not a ground for dismissing an action. On motion or on its own, the court may at any time, on just terms, add or drop a party. The court may also sever any claim against a party.
Fed. R. Civ. P. 21. Although its caption indicates that the rule is a mechanism to remedy the improper joinder of or failure to join a party, "'the courts agree that the Rule may apply even in the absence of misjoinder or nonjoinder.'" Joseph v. Baxter Intn'l Inc., 614 F.Supp.2d 868, 874 (N.D. Oh. 2009)(quoting 4A Matthew Bender, Moore's Federal Practice § 21.05 (2d ed.)). Indeed, "[t]he application of Rule 21 has not been limited to cases in which parties were erroneously omitted from the action or technically misjoined contrary to one of the party-joinder provisions in the federal rules." 7 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 1682 (3d ed. 2001). For example, Rule 21 has commonly been invoked to preserve federal court diversity jurisdiction by dropping non-diverse parties when their presence in suit is not required, or to cure a venue defect by severing a claim asserted against a party as to whom venue is improper. Id.; see also Route 27, LLC v. Getty Petro. Mktg., Inc., No.Civ.A.10-3080, 2011 WL 1256618, at *9 (D.N.J. Mar. 30, 2011)(citing Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 832 (1989); Balgowan v. State of N.J., 115 F.3d 214, 217 (3d Cir. 1997))(Rule 21 invoked for purpose of dropping non-diverse party from suit); Archway Ins. Servs., LLC v. Harris,No.Civ.A.10-5867, 2011 WL 2415168, at *4-6 (E.D. Pa. June 15, 2011)(Rule 21 invoked to cure venue defect).
Moreover, the text of Rule 21 is noticeably silent as to what precisely constitutes the "misjoinder" or "nonjoinder" of a party. It has previously been recognized that misjoinder is present if no relief is demanded from one or more of the parties joined as defendants. Wright & Miller, Fed. Prac. & Proc. § 1683. Misjoinder has likewise been found when "one of several plaintiffs does not seek any relief against [a] defendant and is without any real interest in the controversy." Id. Similarly, "if a litigant is neither a proper nor an indispensable party, dismissal for misjoinder pursuant to Rule 21 is appropriate." Biovail Labs., Inc. v. TorPharm, Inc., No.Civ.A.01C9008, 2002 WL 31687610, at *1 (N.D. Ill. Nov. 26, 2002)(citing Proctor & Gamble Co. v. Kimberly-Clark Corp., 684 F.Supp. 1403, 1407 (N.D. Tex. 1987)).
At least one federal court has held that a party's assignment of its interest in the patent-in-suit to another party nullifies its status as an indispensable party, and the assigning party is therefore dismissible from suit pursuant to Rule 21. See Biovail, 2002 WL 31687610 at *2. In Biovail, pharmaceutical company TWFC, Inc. obtained a patent on its invented technology. Id. at *1. TWFC subsequently entered into an assignment agreement with Biovail, pursuant to which TWFC would relinquish all rights, titles, and interest that it held in the patent, and Biovail would obtain the rights to the patent. Id. However, before Biovail became the rightful owner of the patent, TWFC filed a patent infringement actionagainst TorPharm. Id. Since Biovail had not yet acquired ownership of the patent prior to the commencement of suit, TWFC was joined as a plaintiff in the patent infringement action. Id. Less than two months later, however, the assignment agreement was fully executed and Biovail became the rightful owner of the patent-in-suit. Id. TWFC therefore moved to be dismissed from suit under Rule 21 on the premise that the assignment of its interest in the patent-in-suit nullified its status as an indispensable party. Id. at *2. The court agreed, finding that TWFC no longer maintained a sufficient interest to justify its continuing presence as a co-plaintiff in the case as a result of the complete assignment: Id.
The situation at hand is directly comparable to the one faced by our fellow district court in Biovail. Both cases involve the complete assignment of rights and responsibilities in a patent to another party already involved in the litigation. Therefore, adopting the reasoning of the Biovail Court and applying it here, it is clear that UNOF and UNORTF no longer have a stake in the underlying infringement suit between Evonik and Materia. Indeed, '"in the event of a complete assignment of title to a patent, only the assignee of the patent or the assignee's exclusive licensee has standing to claim protection rights under the patent.'" Id. at *1 (quoting Gilson v. Rep. ofIreland, 606 F.Supp. 38, 41 (D.D.C. 1984); citing Waterman v. MacKenzie, 138 U.S. 252, 255 (1891); Michod v. Walker Magnetics Grp., Inc., 115 F.R.D. 345, 346 (N.D. Ill. 1987)). As such, UNOF and UNORTF no longer maintain a sufficient interest in this case to justify their continuing presence. Therefore, since they are no longer indispensable or necessary parties to this dispute, their dismissal from suit is appropriate under these circumstances.
Despite the complete transfer of UNOF and UNORTF's rights and interest to Materia, Evonik argues it would be severely prejudiced if UNOF and UNORTF were dismissed from suit because this would inhibit discovery, raise substantial evidentiary issues, and prevent Evonik from potentially obtaining attorneys' fees owed to them.
The Court first addresses Evonik's concern related to discovery. UNOF and UNORTF have been parties in this litigation since 2010 and 2011, respectively. Discovery has been ongoing since at least that time, and, as proffered by UNOF and UNORTF, a great deal of information related to their role in the '590 Patent litigation has already been turned over to date. It is true, however, that the discovery process remains ongoing and that the Magistrate Judge assigned to this case has deferred the resolution of certain discovery disputes pending this Court's release of a Markman ruling, which was just recently issued. However, incomplete discovery is not a sufficient basis for keeping an otherwise unnecessary and uninterested party tethered to a suit in which it has no stake. The Biovai...
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