Internetad Systems, LLC v. Opodo Ltd.
| Decision Date | 22 January 2007 |
| Docket Number | Civil Action No. 3:06-CV-1084-P. |
| Citation | 481 F.Supp.2d 596 |
| Parties | INTERNETAD SYSTEMS, LLC, Plaintiff, v. OPODO LIMITED, Amadeus Global Travel Distribution S.A., Amadeus North America, LLC, Opentable, Inc. and Best Western International, Inc., Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Edward R. Nelson, III, Jonathan T. Suder, Michael T. Cooke, Friedman Suder & Cooke, Fort Worth, TX, for Plaintiff.
Jeffrey L. Joyce, Winstead Sechrest & Minick, Houston, TX, Mark A. Calhoun, Winstead Sechrest & Minick, Charles E. Gale, Krage & Janvey, John W. MacPete, Paul V. Storm, Robin L. Barnes, Storm LLP, Dallas, TX, Samuel A. Lewis, James A. Gale, Feldman Gale, Miami, FL, for Defendants.
Now before the Court are:
(1) Defendant Amadeus North America, Inc. f/k/a Amadeus North America, LLC's ("Amadeus NA" or "Defendant") Motion to Dismiss for Lack of Subject Matter Jurisdiction or, Alternatively, for Failure to State a Claim, filed August 10, 2006,1
(2) Plaintiff InternetAd Systems, LLC's ("InternetAd" or "Plaintiff') Motion for Leave to File an Amended Complaint, filed September 13, 2006,2 and
(3) Defendant Amadeus NA's Alternative Motion for Summary Judgment, filed October 4, 2006.3
After reviewing the briefing and applicable law, the Court GRANTS Plaintiff's Motion for Leave to File an Amended Complaint and DENIES Defendant's Motion for Summary Judgment. The Court further DENIES as MOOT Defendant's Motion to Dismiss.
Defendant Amadeus NA provides travel distribution and information technology to travel providers to enable them to succeed in the travel industry. (Def.'s Mot. to Dismiss at 2.) Amadeus NA serves customers such as travel providers (including airlines, hotels, car rental companies, railway companies, ferry lines, cruise lines, insurance companies, and tour operators), travel agencies, and travel buyers (corporations and travelers). (Id.) Plaintiff InternetAd alleges that Amadeus NA and the other defendants have infringed the patents in question by employing the technology described in the patents on their World Wide Web websites. (Id. at 3.)
InternetAd is a subsidiary of Acacia Research Corporation. (Id.) InternetAd maintains that it was formed to assist patent owners who lack the time, resources, or knowledge to license and enforce their patents against infringing companies. (Pl.'s Resp. to Mot. to Dismiss at 2.) Defendant avers that InternetAd and its parent company are examples of "patent trolls," a term coined in the technology industry to describe "a small company who enforces patent rights against accused infringers in an attempt to collect licensing fees, but does not manufacture products or supply services based on the patents in question." (Def.'s Mot. to Dismiss at 3 n. 4.) Defendant moves for dismissal and summary judgment on the basis that InternetAd lacks standing to sue pursuant to the patent agreement (the "Agreement") between InternetAd and the patent owner.
David Judson ("Judson") is the original owner of U.S. patents numbered 5,572,643, 5,737,619, 6,185,586, and 6,456,025 (the "Patents"). (Pl.'s Resp. to Mot. to Dismiss at 2.) Judson originally granted a license in the Patents to TechSearch, L.L.C. ("TS") on September 9, 2003, evidenced by the Agreement. On November 13, 2003, TS assigned and conveyed all of its rights and interest in the Agreement to InternetAd. (Id. Ex. E.) Judson assigned his rights to the patents to JS Technologies, L.P. on July 29, 2004. (Id. Ex. C.) On November 4, 2005, JS Technologies, L.P. assigned its entire right, title, and interest in the Patents to AOL. (Id. Ex. D.)
The Agreement states that the Licensor "represents that he is the sole owner of the Patents and has all right, title, claims, interest and privileges arising from such ownership rights, free and clear of liens, encumbrances, rights or restrictions." (Id. Ex. A § 1.1.) The Agreement further states that, prior to its execution, Judson did not assign, license, or transfer any other rights "except for the non-exclusive licenses or other covenants set forth on Schedule A" attached to the Agreement. (Id.) Article 2 of the Agreement reads as follows:
Subject to the Existing Licenses and to Sections 5.3 and 6.2 below, Licensor grants TS the worldwide, right and license under the Patents to, make, have made, use, offer or sell products or services covered by the Patents, including the right to grant sublicenses to third party targets of TS's licensing program and Patent enforcement as contemplated hereunder. Except for the limited circumstances as provided for in Section 5.3, Licensor shall not grant any third party a license or other rights under the Patents for so long as TS meets the Minimum Commitments as set forth in Section 6.2 hereunder.
(Id. § 2.1.) The Agreement further says that "[a]ll other rights in and to the Patents are hereby reserved to Licensor." (Id. § 2.2.)
Section 3.4 requires that the licensee:
provide Licensor with copies of all license offers and third party correspondence concerning the Patents and the TS licensing program and enforcement efforts .... Licensor's consent shall be required before TS, may grant a license or sublicense, or enter into any other agreement or arrangement relating to the Patents, with any related party.
(Id. § 3.4.) The licensee is further required in. Section 3.5 to consult with the Licensor on "significant matters" related to licensing and enforcement, including "licensing terms and negotiations, litigation strategy and technical matters." (Id. § 3.5.)
Section 5.1 of the Agreement dictates the enforcement rights of the licensee; specifically, it states that:
Subject to the terms of this Agreement, TS will use its best efforts to promptly and continuously pursue licensing and enforcement of the Patents at (as between Licensor and TS) its sole expense .... If, in TS's reasonable judgment (taking into consideration Licensor's suggestions and recommendations), it is necessary and appropriate, TS will institute [an] enforcement action against certain or all of the companies that TS believes are infringing the Patents.
(Id. § 5.1.) This Section also makes TS's choice of counsel in such action subject to the Licensor's approval, "which shall not be unreasonably withheld." (Id.) Section 5.2 gives TS the "sole right," even as to the Licensor, to bring an enforcement action; however, this right is subject to Section 5.3. (Id. § 5.2.) Additionally, this Section provides for the Licensor to join as a plaintiff in any suit brought by TS, either at its election or upon a finding by the court that the Licensor is an indispensable party. (Id.) Notably, Section 5.3 states that:
If for any reason TS elects not to bring suit against an infringer of any of the Patents, Licensor shall have the right to bring suit in his own name, without joining TS as a party, provided he has given TS 60 days' [sic] written notice of his intention to bring such suit and TS has not filed a suit against the infringer within such period. TS shall have the right to join in any such suit brought by Licensor.
(Id. § 5.3.)
Section 6.2 provides that "[t]he rights granted to TS under this Agreement shall automatically convert to a non-exclusive license" if certain minimum conditions are not met; such right to enforce the patent will revert back to the Licensor upon conversion of the license to a non-exclusive license. (Id. § 6.3.) Article 6 contains several consequences that will occur if the Agreement is terminated or if TS's rights are converted to a non-exclusive license. (Id. § 6.5, 6.6.) Additionally, subject to Section 5.3, the Licensor "expressly retains no right to sue for infringement of the Patents prior to any termination of this Agreement or conversion of TS' rights pursuant to Section 6.2." (Id. § 6.7.) Finally, TS must obtain the consent of the Licensor, which shall not be unreasonably withheld, before TS can assign its rights under the Agreement to a party other than the licensee' affiliate. (Id. § 7.1.)
Prior to the Agreement, Judson entered into several license agreements, one of which was exclusive for a period of time. (See Def.'s Reply to Pl.'s Resp. to Mot. Summ. J. ("Def.'s Reply to Mot. Summ. J.") at 2.) This prior license agreement, executed March 14, 1997, is entitled "Exclusive License Agreement" and states in relevant part that:
Judson hereby grants. [redacted] an exclusive license and right, with, the right to sublicense, to practice the invention(s) covered by the claims of the Patents. This license shall not be assigned by [redacted] except to a Permitted Assignee. Judson agrees that, without [redacted] consent, he shall not grant any additional license(s) to practice the invention(s) covered by the claims of the Patents except to a Permitted Assignee.
(Exclusive License Agreement § 3.1 (Def.'s App. in Supp. of Reply to Mot. Summ. J. at 44).) This license agreement was twice amended. (Def.'s Reply to Mot. Summ. J. at 2.) The Second Amendment, executed on October 31, 2001, substituted an entire new Section 3.1 in place of Section 3.1 of the original agreement. (See Amendment Number Two (Def.'s App. in Supp. of Reply to Mot. Summ. J. at 51).) This new Article 3.1 states:
Judson grants Company a non-exclusive, non-assignable (except as to Permitted Assignee), fully paid-up, worldwide license under the Patents to modify, use, reproduce, distribute and otherwise exploit (I) the existing [product] and (ii) any future-developed products and/or code created by Company where use of such products and/or code would otherwise be within the scope of any Patent. This license shall extend to end users of any...
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