Rensselaer Polytechnic Inst. v. Amazon.com
| Docket Number | 1:18-cv-549 (BKS/TWD) |
| Decision Date | 15 September 2023 |
| Parties | RENSSELAER POLYTECHNIC INSTITUTE and CF DYNAMIC ADVANCES LLC, Plaintiffs, v. AMAZON.COM, INC., Defendant. |
| Court | U.S. District Court — Northern District of New York |
For Plaintiffs: Ronald S. Schutz Cyrus A. Morton Benjamen C Linden Francois Ecclesiaste Navin Ramalingam Robins Kaplan LLP Annie Huang Miles Finn Robins Kaplan LLP Li Zhu Robins Kaplan LLP Lucas M. Walker MoloLamkin LLP
For Defendant: John G. Powers Hancock Estabrook, LLP Joseph R. Re Jon W. Gurka Jeremy A. Anapol Knobbe, Martens, Olson & Bear, LLP Colin B. Heideman Nathan D. Reeves Knobbe, Martens Olson & Bear, LLP Yanna S. Bouris Knobbe Martens Olson & Bear
Plaintiffs Rensselaer Polytechnic Institute (“RPI”) and CF Dynamic Advances LLC (“CF Dynamic”) bring this patent infringement action against Defendant Amazon.com, Inc. (“Amazon”). (Dkt. No. 1). Presently before the Court is Amazon's motion to dismiss for lack of Article III standing pursuant to Federal Rule of Civil Procedure 12(b)(1). (Dkt. No. 288). The parties have filed responsive briefing. (Dkt. Nos. 312, 324). The parties filed supplemental briefing in response to the Court's May 15, 2023 Order. (Dkt. Nos. 351, 355, 374). The Court heard oral argument on June 28, 2023. For the following reasons, Amazon's motion to dismiss is denied.
Amazon's argument that Plaintiffs lack standing in this matter relies on a series of transactions involving the asserted patent in this infringement action, United States Patent No. 7,177,798 (the “'798 Patent”). The '798 Patent issued on February 13, 2007 and lists Cheng Hsu and Veera Boonjing as the inventors and RPI as the assignee. (Dkt. No. 1-1, at 2; see Dkt. No. 89-2 ()).
In December 2011, RPI granted the exclusive right to license the '798 Patent to Dynamic Advances, LLC[1] (the “RPI ELA”). (Dkt. No. 89-3 (Exclusive License Agreement dated December 16, 2011)). Specifically, RPI granted to Dynamic Advances “an exclusive license under the RPI Patent Rights to make, have made, use, import, put into use, distribute, sell and have sold Licensed Products and to practice the Licensed Method in the Territory during the term of this Agreement.” (Id. at 4; see also id. at 3, 18 ()). RPI also granted to Dynamic Advances “the exclusive right to grant sublicenses to third parties.” (Id. at 4). The RPI ELA provided that any such sublicense must “include all of the rights of and obligations due to RPI” and include certain specified provisions. (Id.). Further, “[e]ach sublicensee, and the form and substance of each sublicense, shall be subject to the prior written approval of RPI, in each case, which approval shall not be unreasonably withheld.” (Id. at 5). The agreement provided that, upon its termination for any reason, “all sublicenses granted prior to such termination shall be assigned to RPI.” (Id.).
The RPI ELA also provided that, in the event Dynamic Advances exercised its rights under the license or opted to sublicense or otherwise monetize the RPI Patent Rights, RPI was to receive twenty percent of “the gross cash consideration received by [Dynamic Advances] for the RPI Patent Rights.” (Id.). Dynamic Advances was granted “the exclusive right to prosecute any and all infringements of any RPI Patent Rights following the exercise of the RPI Patent Rights by [Dynamic Advances], its Affiliates or sublicensees.” (Id. at 6). However, RPI's “prior written consent” was required before Dynamic Advances “enter[ed] into settlements, stipulated judgments or other arrangements respecting such infringement.” (Id.). If Dynamic Advances elected “not to prosecute any such infringement,” it was required to “notify RPI in writing promptly,” and RPI would then “have the right to prosecute such infringement on its own behalf.” (Id.). If RPI prosecuted any infringement after Dynamic Advances elected not to, RPI would receive “any damages or other recovery incurred.” (Id.). The parties agreed to “cooperate” with each other “in litigation proceedings instituted hereunder but at the expense of the party on account of whom suit is brought for out-of-pocket expenses.” (Id. at 12). Litigation was to be “controlled by the party bringing the suit,” but “[e]ach party may be represented by counsel of its choice at its own expense.” (Id.). RPI also retained veto power over what parties were named “in the filing of any case naming one or more third parties” relating to the monetization efforts of the RPI Patent Rights. (Id. at 5).
By sale agreement dated May 2, 2014, Dynamic Advances was sold to DA Acquisition LLC, a wholly owned subsidiary of Marathon Patent Group, Inc. (“Marathon”). (Dkt. No. 89-4). Although Dynamic Advances continued operating, the parties appear to agree that this transaction gave Marathon, by virtue of its ownership, control over Dynamic Advances's rights under the RPI ELA. (See generally id.; id. at 3 ()). The sale agreement provided that the RPI ELA, among other licenses, “shall remain in full force and effect, shall remain binding on Dynamic and any successor or assignee of Dynamic or of the Patents or Patent Rights and shall not be terminable by Dynamic or any successor or assignee of Dynamic or of the Patents or Patent Rights.” (Id. at 9).
On January 29, 2015, Marathon obtained a loan from DBD Credit Funding LLC (“DBD Credit”) which was governed by a Revenue Sharing and Securities Purchase Agreement (“RSSPA”). (Dkt. No. 89-6). To secure the funding, Marathon and its subsidiaries, including Dynamic Advances, were required to “grant to [DBD Credit], for the benefit of the Secured Parties, a non-exclusive, royalty free, license (including the right to grant sublicenses) with respect to the Patents, which shall be evidenced by, and reflected in, the Patent License Agreement.” (Id. at 11-12; see id. at 54, 74 ()). The parties agreed, however, that DBD Credit “shall only be entitled to use such license following acceleration of the Note Obligations.” (Id. at 12). As required by the RSSPA, Marathon and DBD Credit simultaneously entered into a Patent License Agreement (“PLA”) which provided:
Subject to the terms and conditions herein and in the [RSSPA], Licensor hereby grants to Licensee a non-exclusive, transferrable, sub-licensable, divisible, irrevocable, fully paid-up, royalty-free, and worldwide license to the Licensed Patents, including, but not limited to, the rights to make, have made, market, use, sell, offer for sale, import, export and distribute the inventions disclosed in the Licensed Patents and otherwise exploit the Licensed Patents in any lawful manner in Licensee's sole and absolute discretion solely for the benefit of the Secured Parties (“Patent License”), provided that Licensee shall only use the Patent License following acceleration of the Note Obligations.
(Dkt. No. 358-3, at 3). DBD Credit did not have the right under the PLA to bring infringement actions. (Id.).
On October 18, 2016, RPI and Dynamic Advances entered into an Amended and Restated Exclusive License Agreement (the “Amended RPI ELA”). (Dkt. No. 92-3). RPI again “grant[ed] to [Dynamic Advances] an exclusive license under the RPI Patent Rights to make, have made, use, import, put into use, distribute, sell and have sold Licensed Products and to practice the Licensed Method in the Territory during the term of this Agreement.” (Id. at 3). RPI also granted Dynamic Advances “the exclusive right to grant sublicenses to third parties . . ., provided RPI's written consent, which shall be in the sole discretion of RPI, is first obtained.” (Id. at 4 (emphasis added)). Under the Amended RPI ELA, Dynamic Advances was required to “identify potential sublicensees to RPI,” who then had thirty calendar days to “approve [Dynamic Advances] contacting any such potential sublicensee.” (Id. (“Licensee will not contact a Potential Licensee without RPI's prior written approval.”)). RPI's prior written approval, in its “sole discretion,” was also required before Dynamic Advances “fil[ed] suit against a Potential Licensee.” (Id.). Further, the “form and substance of each sublicense shall be subject to the prior written approval of RPI” in its “sole discretion,” and RPI was required to “convey its approval or rejection” of the form and substance of each sublicense no later than five business days after notice thereof. (Id.). If Dynamic Advances did not receive RPI's “approval or rejection within such time period,” RPI was “deemed to have consented to the form and substance of the sublicense.” (Id.). In addition, under the Amended RPI ELA, RPI was entitled to a share of proceeds from Dynamic Advances's sublicensing and monetization activities. (Id. at 5).
Under the Amended RPI ELA, Dynamic Advances again retained the exclusive right to prosecute any infringement, though RPI retained the right to prosecute such infringement in the event Dynamic Advances elected not to. (Id. at 5-6). Dynamic Advances was required to “copy or blind copy RPI (as requested by RPI) on any written communications pertaining to a potential settlement or license with a Potential Licensee” and to provide RPI at least twenty-four hours' advance notice “of...
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