Mhl Tek, LLC v. General Motors Corp.

• Decision Date: 31 March 2009
• Docket Number: Civil Action No. 2:08-CV-0125.
• Citation: 622 F.Supp.2d 400
• Parties: MHL TEK, LLC, Plaintiff, v. GENERAL MOTORS CORPORATION, et al., Defendants.
• Court: U.S. District Court — Eastern District of Texas

622 F.Supp.2d 400

MHL TEK, LLC, Plaintiff, v. GENERAL MOTORS CORPORATION, et al., Defendants.

Civil Action No. 2:08-CV-0125.

United States District Court, E.D. Texas, Marshall Division.

March 31, 2009.

Samuel Franklin Baxter, McKool Smith, Marshall, TX, David C. Doyle, Eric M. Acker, M. Andrew Woodmansee, Richard C. Kim, Sarah E. Simmons, Stephen D. Keane, Morrison & Foerster, San Diego, CA, for Plaintiff.

Matthew J. Moore, Andrew R. Sommer, Ann Marie Phillips, Howrey LLP, Frank C. Cimino, Jr., Megan S. Woodworth, Dickstein Shapiro, LLP, John M. Caracappa, Scott W. Doyle, Paul D. Lall, Steptoe & Johnson, Washington, DC, A. Erin Dwyer, Michael Edwin Jones, Donald Colleluori, Parker Douglas Young, Figari & Davenport LLP, Neil J. McNabnay, Timothy Kelly Brown, Fish & Richardson, Dallas, TX, Allen Franklin Gardner, Potter Minton PC, Deron R. Dacus, Ramey & Flock, Tyler, TX, J. Thad Heartfield, The Heartfield Law Firm, Beaumont, TX, Michael J. Lennon, Kenyon & Kenyon, New York, NY, David McDonald Prichard, Prichard, Hawkins, McFarland & Young, San Antonio, TX, Elizabeth L. Derieux, Nancy Claire Abernathy, Sidney Calvin Capshaw, III, Capshaw Derieux, LLP, Longview, TX, for Defendants.

MEMORANDUM OPINION AND ORDER

T. JOHN WARD, District Judge.

Defendants General Motors Corporation, Saturn Corporation, Ford Motor Company, Land Rover North America, Inc., Volvo Cars of North America, LLC, American Suzuki Motor Corporation, Mitsubishi Motors North America, Inc., American Honda Motor Co., Inc., Honda of America Manufacturing, Inc., and Honda Manufacturing of Alabama, LLC (collectively "Defendants") move the Court to Dismiss Claims One and Three of the First Amended Complaint filed by MHL TEK, LLC ("MHL"), on the grounds that MHL does not own the patents at issue in those counts and therefore lacks standing under Fed.R.Civ.P. 12(b)(1) to enforce them. (Dkt. No. 65). After carefully considering the parties' written submissions, the Court GRANTS defendants' motion for the reasons set forth in this opinion.

I. Background

Plaintiffs MHL filed this patent infringement suit against various automobile manufacturers on March 24, 2008. In this action, the plaintiff alleges that tire monitoring systems manufactured and sold by the defendants infringe U.S. Patent Nos. 5,663,496 ("the '496 patent"), 5,731,516 ("the '516 patent"), and 5,741,966 ("the '966 patent"), all related to automobile tire monitoring systems.¹

Michael Handfield and Helene Laliberte are named inventors on all three patents-in-suit. The two patents-in-issue in this motion, the '496 patent and the '966 patent are based on U.S. Patent Application No. 08/101,379 ("the '379 Application"), titled "A Method and System for Monitoring a Parameter of a Vehicle Tire," which was filed on August 3, 1993. The '379 application resulted in U.S. Patent No. 5,473,938 ("the '938 patent").² The '496 patent issued on September 2, 1997 based on a divisional application, U.S. Patent Application No. 08/466,219, filed on June 6, 1995. The '966 patent issued on April 21, 1998 based on a divisional application, U.S. Patent Application No. 08/465,763, filed on June 6, 1995. On August 5, 1993, the inventors assigned all rights in the inventions leading up to the '496 and the '966 patents to Animatronics, Inc. ("Animatronics"). The assignment was recorded with the U.S. Patent and Trademark Office ("PTO").

In 1993, Animatronics entered into a "development agreement" with McLaughlin Electronics ("ME") for the design and development of a tire pressure monitoring system ("TPMS"). Mr. Handfield signed the agreement on behalf of Animatronics. The Court has been presented with two substantially similar versions of the agreement, both dated March 1, 1993. See Defs' Supp. Brief, Dkt. No. 163, Ex. B, C (hereinafter referred to as the "MHL" or "McLaughlin" "Development Agreement" respectively). On November 1, 1993, Mr. Handfield signed a separate document on behalf of Animatronics entitled "Assignment of Patent Rights." See Pltf's Sur-reply, Dkt. No. 118, Keane Aff., Ex. B (hereinafter "Patent Assignment"). Under the Development Agreement as well as the Patent Assignment document, Animatronics agreed to assign the patents issued for the TPMS to ME. On November 26, 2007, Animatronics assigned each of the patents-in-suit to MHL effective as of July 7 2007.³ Plaintiff has also presented to the Court another agreement between Animatronics and ME, also dated November 1, 1993. See Pltf's Sur-reply, Dkt. No. 118, Bruhn Aff., Ex. A (hereinafter "Potential Rescission Agreement"). Plaintiff contends this agreement allows for a possible rescission of the prior patent assignment.⁴

Defendants argue that under these agreements, Animatronics had previously assigned the '496 and the '966 patents to ME. Defendants argue that any subsequent assignment by the inventors or by Animatronics to MHL did not transfer any rights in these two patents to plaintiff MHL. Therefore, they argue, this Court should dismiss the two claims involving the two patents at issue for lack of subject matter jurisdiction. Plaintiff contends that the assignment of the patents to ME was either void or later rescinded, effectively returning ownership to Animatronics. Alternatively, they argue that the original agreement carved the '496 and the '966 patents out of the assignment to ME. In any case, plaintiff contends that MHL now has standing to assert the '496 patent and the '966 patent against defendants.

II. Discussion

Federal Rule of Civil Procedure 12(b)(1) is the procedural mechanism for challenging a court's subject matter jurisdiction. See Ramming v. U.S., 281 F.3d 158, 161 (5th Cir.2001). "Lack of subject matter jurisdiction may be found in any one of three instances: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." Id. The party asserting jurisdiction bears the burden of proof. Id. "The burden of demonstrating standing falls to [the plaintiff], as `[i]t is well established ... that before a federal court can consider the merits of a legal claim, the person seeking to invoke the jurisdiction of the court must establish the requisite standing to sue.'" Ortho Pharm. Corp. v. Genetics Inst., Inc., 52 F.3d 1026 (Fed.Cir. 1995) (quoting Whitmore v. Arkansas, 495 U.S. 149, 154, 110 S.Ct. 1717, 109 L.Ed.2d 135 (1990); citing Sicom Sys., Ltd. v. Agilent Tech., Inc., 427 F.3d 971, 975-76 (Fed. Cir.2005)); see also Voda v. Cordis Corp., 476 F.3d 887, 892 (Fed.Cir.2007). "In examining a Rule 12(b)(1) motion, the court is empowered to consider matters of fact which may be in dispute." Id. at 161. Conversely, undisputed facts present in the record are accepted as true. Id. When jurisdiction rests on a disputed factual issue, however, the court reviews the parties' submitted evidentiary materials, and the plaintiff must prove that the facts supporting subject matter jurisdiction are true by a preponderance of the evidence. Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir.1981).

The Patent Act provides that a "patentee" shall have remedy by civil action for patent infringement. 35 U.S.C. § 281 (1994). A plaintiff seeking damages for infringement of a patent must hold legal title to that patent. See, e.g., Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538 (Fed.Cir.1995); Speedplay, Inc. v. Bebop, 211 F.3d 1245, 1249-50 (Fed.Cir.2000) (citing 35 U.S.C. §§ 100(d), 261, 281). A party without title has no standing to bring suit. Filmtec Corp. v. Allied-Signal Inc., 939 F.2d 1568 (Fed.Cir.1991); Abbott Labs. v. Diamedix Corp., 47 F.3d 1128, 1131 (Fed.Cir.1995) ("The right to sue for infringement is ordinarily an incident of legal title to the patent."). "Where one co-owner possesses an undivided part of the entire patent, that joint owner must join all the other co-owners to establish standing." Israel Bio-Engineering Project v. Amgen, Inc., 475 F.3d 1256, 1264 (Fed.Cir. 2007). Legal title, which confers standing, must be held at the inception of the lawsuit. Lujan v. Defenders of Wildlife, 504 U.S. 555, 570 n. 5, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (plurality opinion). Section 100(d) provides that a "`patentee' includes not only the patentee to whom the patent was issued but also the successor in title to the patentee." 35 U.S.C. § 100(d).

Initial ownership of a patent vests in the inventor by operation of law. See Regents of University of New Mexico v. Knight, 321 F.3d 1111, 1118 (Fed.Cir. 2003); Bellehumeur v. Bonnett, 127 Fed. Appx. 480, 484 (Fed.Cir.2005). Section 261 of the Patent Code, however, provides that inventors can assign all or part of their interest in a patent and imposes minimal requirements for such assignment. Id. Under Section 261:

Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing. The applicant, patentee, or his assigns or legal representatives may in like manner grant and convey an exclusive right under his application for patent, or patents, to the whole or any specified part of the United States....

35 U.S.C. § 261.

When determining ownership of a patent in the context of a contract or agreement, state law governs. Akazawa v. Link New Tech. Int'l, Inc., 520 F.3d 1354, 1357 (Fed.Cir.2008); Jim Arnold Corp. v. Hydrotech Systems, Inc., 109 F.3d 1567, 1578-79 (Fed.Cir.1997). Moreover, "[c]onstruction of patent assignment agreements is a matter of state contract law." Mars, Inc. v. Coin Acceptors, Inc., 527 F.3d 1359, 1370 (Fed.Cir.2008). In Jim Arnold, the Federal Circuit held that "when the infringement suit involves an assignment, unless the assignment may be declared null and void by operation of law-either through a forfeiture provision present in the agreement or under a provision of applicable state law-an assignor suing for infringement must first affirmatively seek equitable relief from a...