National Licensing v. Inland Joseph Fruit

• Citation: 361 F.Supp.2d 1244
• Decision Date: 15 April 2004
• Docket Number: No. CY-03-3079-LRS.,CY-03-3079-LRS.
• Parties: NATIONAL LICENSING ASSOCIATION, LLC, a Washington limited liability company, Plaintiff, v. INLAND JOSEPH FRUIT COMPANY, et al. Defendants.
• Court: U.S. District Court — Eastern District of Washington

Page 1244

361 F.Supp.2d 1244

NATIONAL LICENSING ASSOCIATION, LLC, a Washington limited liability company, Plaintiff, v. INLAND JOSEPH FRUIT COMPANY, et al. Defendants.

No. CY-03-3079-LRS.

United States District Court, E.D. Washington.

April 15, 2004.

COPYRIGHT MATERIAL OMITTED

Patrick Harrison Ballew, Stratton Ballew PLLC, Seattle, WA, for Plaintiff.

James M. Danielson, Jeffers Danielson Sonn & Aylward PS, Wenatchee, WA, for Defendants.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION

SUKO, District Judge.

This case presents the question of who is permitted by law to be a plaintiff in a patent and trademark infringement action. The specific dispute centers on the severability and assignability of patent and trademark infringement claims.

I. FACTUAL BACKGROUND

Plaintiff Nursery Licensing Association, LLC¹ ("NLA") is a Washington limited liability company formed on February 26, 2002. Its managers are Patrick Ballew and Rex Stratton, also named counsel for NLA in this case. The defendants represented here are the "Washington defendants," as the named Chilean defendants have yet to appear in this case.

NLA's complaint alleges it "holds by assignment the right to sue for infringement, including past infringement" for the seven fruit plant patents and eight trademarks identified. NLA claims it is the first "collective enforcement" type entity created for the commercial nursery industry.

The record owners, registrants, or assignees of the subject plant patents and trademarks are not presently part of this suit. In response to defendants' motion, NLA produced copies of the patent and trademark assignment agreements entered into with the patent and trademark owners, assignees, or "exclusive master licensees". These agreements have been recorded in the United States Patent and Trademark Offices. The agreements are entitled "Assignment of Claims for Infringement of Plant Patent" and "Assignment of Claims for Infringement of Trademark." The agreements are virtually identical. Most relevant in each agreement is paragraph two, which provides that NLA is "exclusively assign[ed] all right, title, and interest to enforce any past, present, or future state or federal tort claims for infringement ... against any third party..." The NLA is expressly not granted any contract claims.

There are presently two motions before the court. The defendants have moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(1), claiming that this plaintiff does not have standing sufficient to establish subject matter jurisdiction. The defendants argue that the patent and trademark laws limit this court's jurisdiction to actions commenced by the owners, registrants, or assigns of the patents and trademarks in suit and that NLA cannot commence an action in its own name — or as a co-plaintiff — because it is at most merely a bare licensee of the owners or license or mark holders.

NLA opposes the defendants' motion to dismiss arguing that it is an assignee of the patent holders and "legal representative" of the trademark holders and thus can commence an action for infringement in its own name. While taking the position it has standing to sue alone, NLA alternatively has moved for leave to amend its complaint to add the owners of the patents, as "involuntary plaintiffs" pursuant to Fed.R.Civ.P. 15(a).

II. DEFENDANTS' MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION

A. Standards Governing 12(b)(1) Motions to Dismiss

On a Rule 12(b)(1) motion, the burden is on the plaintiff, as the party seeking to invoke the court's jurisdiction, to establish subject matter jurisdiction. Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir.1989). Where the motion presents a facial jurisdictional attack — that is, where the motion is based solely on the allegations in the complaint — the court must accept these allegations as true. Where, however, the challenge is factual — where it is based on extrinsic evidence, apart from the pleadings — the court may resolve factual disputes in order to determine whether it has jurisdiction. Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir.1987). However, the court may not resolve these disputes if "issues of jurisdiction and substance are intertwined," that is, if the jurisdictional question is dependent on the resolution of factual issues going to the merits. Id.

B. General Principles on Standing

As a preliminary matter, Federal Circuit² authority is abundantly clear that standing in patent cases is a jurisdictional issue and is subject to the provisions of Federal Rule of Civil Procedure 12(b)(1). Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1551 (Fed.Cir.1995) ("The question of standing to sue is a jurisdictional one."). Although it is an issue of jurisdiction, standing does not focus on the existence of a federal question or arise out of 28 U.S.C. § 1338(a), which provides the federal courts with exclusive jurisdiction over any suit "arising under any Act of Congress relating to patents." 28 U.S.C. § 1338(a). Rather, standing focuses on "the party seeking to get his complaint before a federal court..." Valley Forge Christian College v. Americans United for Separation of Church and State, 454 U.S. 464, 484, 102 S.Ct. 752, 765, 70 L.Ed.2d 700 (1982) (quoting Flast v. Cohen, 392 U.S. 83, 99, 88 S.Ct. 1942, 1952, 20 L.Ed.2d 947 (1968)).

The requirement of standing is both a constitutional limitation on federal court jurisdiction and a prudential limitation on its exercise. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130 119 L.Ed.2d 351 (1992). The constitutional requirements for standing emanate from Art. III, § 2, of the U.S. Constitution, which delineates the absolute limit on federal courts' jurisdiction to adjudicate only "cases" or "controversies." Allen v. Wright, 468 U.S. 737, 750-51, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984). The federal courts have created the standing requirements to ensure that cases or controversies are litigated by parties with an appropriate legal interest in their outcome. The Federal Circuit has summarized the constitutional requirements of standing as follows:

To demonstrate standing under Article III the plaintiff must satisfy three elements. First, the plaintiff must allege that it has suffered an "injury in fact" — "an invasion of a legally protected interest." ... Second, "there must be a causal connection between the injury and the conduct complained of." ... And third, "it must be `likely,' as opposed to merely `speculative,' that the injury will be redressed by a favorable decision."

Paradise Creations, Inc. v. U.V. Sales, Inc., 315 F.3d 1304, 1308 (Fed.Cir.2003), quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).

While standing can be a constitutional matter, the standing rules in intellectual property law are primarily rules of substantive law and frequently involve the interplay of procedural concerns relating to joinder and Civil Rule 19. In this case, whether the plaintiff has standing depends on whether the patent and trademark statutes confer on it the right to sue for patent and trademark infringement.

Furthermore, it is appropriate to address the question of standing in deciding a motion to dismiss because "[t]he elements of standing are `an indispensable part of the plaintiff's case,' and accordingly must be supported at each stage of litigation in the same manner as any other essential element of the case." Cent. Delta Water Agency v. United States, 306 F.3d 938, 947 (9th Cir.2002) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)); Warth v. Seldin, 422 U.S. 490, 517-18, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975) ("The rules of standing, whether aspects of the Art. III case-or-controversy requirement or as reflections of prudential considerations defining and limiting the role of the courts, are threshold determinants of the propriety of judicial intervention."). Failure to meet standing requirements will bar the court from having authority to adjudicate the matter on the merits. If NLA is unable to meet the statutory requirements for standing to assert federal copyright and trademark infringement claims, this court does not have subject matter jurisdiction and dismissal is appropriate. See Fed.R.Civ.P. 12(b)(1); Scott v. Pasadena Unified Sch. Dist., 306 F.3d 646, 664 (9th Cir.2002).

It is well settled that standing cannot be "inferred argumentatively from averments in the pleadings," Grace v. Am. Cent. Ins. Co., 109 U.S. 278, 284, 3 S.Ct. 207, 27 L.Ed. 932 (1883), but rather "must affirmatively appear in the record." Mansfield, C. & L.M.R. Co. v. Swan, 111 U.S. 379, 382, 4 S.Ct. 510, 28 L.Ed. 462 (1884). Additionally, the burden of establishing standing remains at all times with the party invoking federal jurisdiction. Warth v. Seldin, 422 U.S. 490, 518, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975) ("It is the responsibility of the complainant clearly to allege facts demonstrating that he is a proper party to invoke judicial resolution of the dispute and the exercise of the court's remedial powers."). In the present case, the court must determine whether there is affirmative evidence in the record indicating that NLA is a proper party to invoke judicial resolution of this infringement dispute.

The question of law presented in this case is whether the right to sue for patent and trademark infringement may be transferred to a third party, without any other rights accompanying the transfer. Otherwise stated, the issue is whether an assignee of merely the right to sue has standing to sue without the need to join the patentee, even if the latter retains ownerships of all other rights under the patent or trademark. Because the law relating to trademarks and patents is distinct, the court addresses the claims separately.

C. Standing on Patent Infringement Claims

At the outset, the...