Intellectual Property Development Inc. v. TCI Cable Inc.

Decision Date07 May 2001
Docket NumberDEFENDANT-APPELLANT,PLAINTIFF-APPELLEE,No. 00-1236,00-1236
Citation58 USPQ2d 1681,248 F.3d 1333
Parties(Fed. Cir. 2001) INTELLECTUAL PROPERTY DEVELOPMENT, INC.,, v. TCI CABLEVISION OF CALIFORNIA, INC.,
CourtU.S. Court of Appeals — Federal Circuit

Senior Judge Mariana R. Pfaelzer

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] David Zaslowsky, and Robin L. Filion, Baker & McKenzie, of New York, New York, argued for plaintiff-appellee. On the brief were David Zaslowsky, and James David Jacobs. Of counsel was Frank M. Gasparo.

Scott F. Partridge, Baker Botts L.L.P., of Houston, Texas, argued for defendant-appellant. With him on the brief was Roger S. Donley. Also on the brief were Neil P. Sirota, of New York, New York; and David G. Willie, and Samir A. Bhavsar, of Dallas, Texas.

Before Lourie, Schall, and Gajarsa, Circuit Judges.

Gajarsa, Circuit Judge.

TCI Cablevision of California, Inc. ("TCI-California") appeals the January 27, 2000 order of the United States District Court for the Central District of California, No. 99-CV-2982 (C.D. Cal. Jan. 27, 2000). The district court granted the motion filed by Intellectual Property Development, Inc. ("IPD") and Communications Patents Ltd. ("CPL") to dismiss its complaint against TCI-California with prejudice and to dismiss TCI-California's counterclaims without prejudice. We affirm.

BACKGROUND

CPL, a United Kingdom limited company, is the assignee of United States Patent No. 4,135,202 ("the '202 patent"), which issued in 1979. The '202 patent covers certain wired broadcasting systems. CPL entered liquidation on May 12, 1993. On June 30, 1993, acting through a liquidator, CPL and IPD entered into an agreement that granted IPD numerous rights in the '202 patent.

The agreement accords IPD "an exclusive license, to make, use, and sell the inventions, the right to grant sublicenses, the right to collect monies, damages and/or royalties for past infringement and the right to bring legal action to collect the same." Further, the agreement provides:

[IPD] shall be entitled to take action under the ['202 patent] in [IPD's] own name to prevent infringement, or to collect damages for past infringement, or to defend proceedings for revocation in circumstances where [CPL] is not a necessary party to that action (a "Sole Action") provided that [IPD] notifies [CPL] in writing . . . . [IPD] shall keep [CPL] fully informed and consult with [CPL] about the conduct of the Sole Action. [IPD] shall not without the prior written consent of [CPL], which shall not be unreasonably withheld, settle or agree to any compromise . . . . In the event that [CPL] may be a necessary party to any litigation or legal action under the ['202 patent] (a "Joint Action") [IPD] shall not proceed with the Joint Action without the prior written consent of [CPL]. [CPL] reserves the right to withdraw consent to the Joint Action proceeding at any time up to termination of the Joint Action . . . . [IPD] further agrees to pay [CPL] fifty percent (50%) of the net profit of [IPD] derived from . . . realizations [sic] realized [sic]: such as but not limited to litigation.

The rights CPL granted to IPD are subject to a nonexclusive license in the '202 patent that CPL previously granted to Cabletime Limited, Cabletime Systems Ltd., and their customers (collectively "Cabletime") on October 3, 1991. Additionally, the agreement provides that CPL maintains the right to "assign all [of its] rights and obligations" under the agreement and further allows CPL to prevent IPD from assigning its benefits under the agreement to a third party without prior written consent from CPL.

On September 1, 1994, IPD filed a suit against UA-Columbia Cablevision of Westchester, Inc. ("UA-Westchester") and Tele-Communications, Inc. ("TCI") in the United States District Court for the Southern District of New York (the "New York case"). IPD asserted that UA-Westchester and TCI infringed the '202 patent prior to its expiration on January 16, 1996. TCI is the parent company of both UA-Westchester and the appellant in the case at issue-TCI-California. On May 15, 1995, TCI filed a motion to dismiss the New York case on the grounds that IPD lacked standing, or alternatively, because CPL was an indispensable party. Subsequently, by letter, CPL agreed to be bound by any judgment in the New York case. On September 8, 1995, the judge in the New York case determined that IPD maintained standing to bring the suit in its own name. A Markman hearing, construing the claims of the patent, was held in the New York case in June, 1997. Intellectual Prop. Dev., Inc. v. UA-Columbia Cablevision of Westchester, Inc., No. 94-6296, 1998 WL 142346 (S.D.N.Y. Mar. 26, 1998).

Prior to filing the suit at issue, IPD offered, and TCI declined to accept, an agreement to toll the damage limitation period for all TCI subsidiaries. Subsequently, IPD filed suit against twelve TCI subsidiaries (the "1999 cases"), alleging infringement of the '202 patent. This case is one of the twelve 1999 cases; it was filed in the United States District Court for the Central District of California on March 4, 1999. In this action, TCI-California counterclaimed, seeking declaratory judgment on the issues of noninfringement, invalidity, and unenforceability of the '202 patent.

On April 6, 1999, IPD filed a motion with the Judicial Panel for Multi-district Litigation ("JPML") to consolidate the 1999 cases and the New York case. On April 19, 1999, while the motion to consolidate was pending before the JPML, TCI-California moved to dismiss this case pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction, or alternatively, based on IPD's failure to join an indispensable party-CPL-under Federal Rule of Civil Procedure 19(b). On May 26, 1999, the district court issued an order (the "May 26, 1999 order") in which it granted TCI-California's motion to dismiss for "lack of standing." The court, however, delayed signing the order to allow IPD to amend its complaint to add CPL as a party plaintiff and thereby rectify its "lack of standing." On May 28, 1999, TCI-California brought a motion for reconsideration of the May 26, 1999 order. Thereafter, IPD amended its complaint to add CPL as a party on June 21, 1999.

The district court, on June 28, 1999, denied TCI-California's motion for reconsideration and also clarified its May 26, 1999 order. The court stated that in the May 26, 1999 order, it had not held "that [IPD] lacked any element of constitutional standing so as to deprive the [c]court of jurisdiction over this case." It explained that "IPD made an adequate showing on the three elements required by the Constitution for standing to exist: a legally cognizable injury, a causal connection between the injury and the conduct and redressability of the injury." The court also indicated that it "found IPD to be an exclusive licensee that alleged a legally cognizable injury" and therefore noted that "[t]he [c]court's use of the words `lack of standing' in the May 26 [, 1999] Order referred to a prudential limitation on IPD's right to bring suit without joining the patentee." That is, the court determined that the rights retained by the patent owner, CPL, are "of the type that make a patent owner who granted an exclusive license a necessary party to an infringement action brought by the licensee." Therefore, the court concluded by indicating that in its May 26, 1999 order it recognized that as an exclusive licensee, IPD did not have standing to sue in its own name and consequently the court required joinder of the patent owner, CPL.

On August 19, 1999, the JPML consolidated the 1999 cases and the New York case and transferred them to the United States District Court for the Central District of California, where this case was pending, for joint pretrial proceedings. IPD subsequently entered into tolling agreements with several TCI subsidiaries, which resulted in the stipulated dismissal of all of the 1999 cases other than the case at bar. 1

IPD and CPL, on December 27, 1999, filed a motion to voluntarily dismiss this case with prejudice pursuant to Federal Rule of Civil Procedure 41(a) and to dismiss TCI-California's counterclaims for lack of subject matter jurisdiction. IPD and CPL attached a "Statement of Non-Liability" to this motion, which provides: "[TCI-California] has no liability to CPL or IPD or any successors-in-interest to the '202 patent for infringement of the '202 patent and CPL and IPD and any successors-in-interest to the '202 patent will not sue [TCI-California] for infringement of the '202 patent." IPD and CPL further requested, in accordance with JPML Rule 7.6, that the district court suggest to the JPML that it remand the New York case to the United States District Court for the Southern District of New York. 2

On January 27, 2000, the district court granted IPD and CPL's motion for voluntary dismissal, which effected the dismissal of its complaint with prejudice and the dismissal of TCI-California's counterclaims for lack of subject matter jurisdiction without prejudice. TCI-California appeals the district court's failure to dismiss the initial complaint-filed solely by IPD-for lack of standing and its subsequent grant of the motion for voluntary dismissal.

DISCUSSION
A. Standard of Review

Whether a party has standing to sue is a question of law that this court reviews de novo. Prima Tek II L.L.C. v. A-Roo Co., 222 F.3d 1372, 1376, 55 USPQ2d 1742, 1745 (Fed. Cir. 2000). The legal effect of an agreement transferring patent rights is an issue of law that we review de novo. Vaupel Textilmaschinen KG v. Meccanica Euro Italia S.P.S., 944 F.2d 870, 873, 20 USPQ2d 1045, 1047 (Fed. Cir. 1991).

B. TCI-California's Standing to Appeal

IPD contends that TCI-California lacks standing to bring this appeal. It asserts that TCI-California was not aggrieved...

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