Steelcase, Inc. v. Smart Technologies, Inc.

Decision Date05 March 2004
Docket NumberNo. 1:03-CV-476.,1:03-CV-476.
Citation336 F.Supp.2d 714
PartiesSTEELCASE INC., Polyvision Corporation, and Greensteel, Inc., Plaintiffs, v. SMART TECHNOLOGIES INC. and Smart Technologies Corporation, Defendants.
CourtU.S. District Court — Western District of Michigan

Francis DiGiovanni, George Pazuniak, Connolly Bove Lodge & Hutz LLP, Wilmington, DE, for PolyVision Corp.

Scott M. Gettleson, Timothy J. Vezeau, Katten Muchin Zavis Rosenman, Chicago, IL, Kevin J. O'Dowd, Dickinson Wright, PLLC, Grand Rapids, MI, for Smart Technologies Corp. and Smart Technologies, Inc.

Richard A. Glaser, Dickinson Wright, PLLC, Grand Rapids, MI, for Smart Technologies, Inc.

Craig H. Lubben, Miller, Johnson, Snell & Cumminskey, PLC, Kalamazoo, MI, Jon G. March, Miller, Johnson, Snell & Cumminskey, PLC, Grand Rapids, MI, for Greensteel, Inc.

OPINION

QUIST, District Judge.

Background

Plaintiffs, Steelcase Inc. ("Steelcase"), PolyVision Corporation ("PolyVision"), and Greensteel, Inc. ("Greensteel"), filed their complaint against Defendant, Smart Technologies, Inc. ("STI"), on July 15, 2003, alleging that STI is willfully infringing United States Patent No. 5,838,309 (the "'309 patent"), and that Plaintiffs are not infringing United States Patent Nos. 5,448,263 (the "'263 patent") and 6,141,000 (the "'000 patent"), owned by STI. Count I alleged a claim for patent infringement, Count II requested a declaratory judgment that Plaintiffs are not infringing the '263 and '000 patents, and Count III requested a declaratory judgment that the '263 and' 000 patents are invalid. On September 11, 2003, Plaintiffs filed a first amended verified complaint, which added another defendant, Smart Technologies Corporation ("STC"), a subsidiary of STI, and added further allegations supportive of Plaintiffs' claim of an actual controversy for purposes of the declaratory judgment counts. On December 17, 2003, the Court issued an opinion and order granting STI's motion to dismiss in part and dismissing without prejudice the declaratory judgment claims regarding the '263 and '000 patents (Counts II and III). Thus, the only remaining claim is the claim for infringement of the '309 patent (Count I).

Now before the Court is STI's and STC's joint consolidated motion to drop misjoined parties, to dismiss, and to transfer, filed on November 25, 2003. Because the Court has already dismissed the declaratory judgment claims, the only issues presented by the instant motion are: (1) whether Steelcase and PolyVision are proper parties with respect to the only remaining claim, for infringement of the '309 patent; and (2) whether the case should be transferred to the District of Delaware pursuant to 28 U.S.C. § 1404(a).

Discussion
I. Motion to Drop Misjoined Parties

Defendants contend that the Court should dismiss Steelcase and PolyVision from this case because they have no rights in the '309 patent. Defendants point out that in their First Amended Verified Complaint, Plaintiffs admit that only Greensteel owns the '309 patent. (1st Am. Verified Compl. ¶ 12.) Therefore, Defendants contend, Steelcase and PolyVision lack standing and are not proper parties to this action.

Plaintiffs respond that Defendants' motion must be denied because PolyVision and Steelcase are both proper parties to this action. According to Plaintiffs: (1) PolyVision acquired Greensteel in a reverse merger in 1994, (Dunn Decl. ¶ 1, Pl.'s Mem. Ex. B); (2) in May 2000, Greensteel acquired all of the right, title and interest in the '309 patent from MicroTouch Systems, Inc., (1st Am. Verified Compl. ¶ 12); (3) prior to January 2, 2004, Greensteel was a wholly-owned subsidiary of PolyVision and served as the holding company for PolyVision's operational assets, including the '309 patent, (Dunn Decl. ¶ 6); (4) prior to January 2, 2004, Greensteel permitted PolyVision to solely and exclusively practice Greensteel's rights under the '309 patent in the United States and Greensteel granted PolyVision the right to bring actions to enforce the patent against third parties, (Id. ¶¶ 10, 11; 1st Am. Verified Compl. ¶ 13); (5) on January 2, 2004, Greensteel was merged into PolyVision, and all of Greensteel's assets, including the '309 patent, became PolyVision's assets, (Brondyk Decl. ¶ 3, Pls.' Mem. Ex. C); and (6) Steelcase is the parent company of PolyVision.1 Plaintiffs state that the merger was completed for corporate purposes unrelated to this suit and that preparations for the merger were made several months prior to the merger and independently of this lawsuit. (Id. ¶ 4.)

Plaintiffs contend that PolyVision is an indispensable party because it now owns the '309 patent. In addition, Plaintiffs assert that PolyVision was a proper party from the outset because prior to January 2, 2004, Greensteel permitted PolyVision to solely and exclusively practice all of the rights under the patent, including the right to enforce the patent against third parties, giving PolyVision sufficient rights in the patent to have standing as a plaintiff. Plaintiffs also contend that Steelcase is properly joined as a party because it is PolyVision's parent corporation and has an equitable interest in the enforcement of its wholly-owned subsidiary's patent rights.

The Patent Act provides that "[a] patentee shall have remedy by civil action for infringement of his patent." 35 U.S.C. § 281. Generally, a plaintiff in a patent infringement action must hold legal title to the patent at the time of the infringement. Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1551 (Fed.Cir.1995). In some circumstances, however, a licensee with substantial rights in the patent may have standing to sue as a plaintiff or co-plaintiff for infringement. Prima Tek II, L.L.C. v. A-Roo Co., 222 F.3d 1372, 1377 (Fed.Cir.2000); Ortho Pharm. Corp. v. Genetics Inst., Inc., 52 F.3d 1026, 1031 (Fed.Cir.1995). To have "standing in an infringement suit, a licensee must hold some of the proprietary sticks from the bundle of patent rights, albeit a lesser share of rights in the patent than for an assignment and standing to sue alone." Ortho, 52 F.3d at 1031. "The proprietary rights granted by any patent are the rights to exclude others from making, using or selling the invention in the United States." Id. at 1031-32. A nonexclusive or "bare" license is insufficient to confer standing because such a license amounts to no more than the patent owner's promise not to sue the licensee for making, using, or selling the patented invention; thus, a nonexclusive licensee suffers no legal injury from infringement. Intellectual Prop. Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333, 1345 (Fed.Cir.2001). On the other hand, an exclusive license, which allows the licensee to prevent others from making, using or selling the patented technology, is sufficient to confer standing. Ortho, 52 F.3d at 1032.

The facts set forth in Plaintiffs' exhibits are sufficient to establish that at the time this suit was filed, PolyVision possessed sufficient rights in the '309 patent to confer standing on PolyVision to prosecute a suit on the '309 patent. Specifically, Greensteel, the owner of the patent, was a wholly-owned subsidiary of PolyVision. Although there apparently was no written license agreement, PolyVision was the sole licensee of the patent, Greensteel permitted PolyVision to exclusively practice the patent, and Greensteel granted PolyVision the right to enforce the patent. Moreover, there is no evidence to suggest that since its acquisition of the '309 patent Greensteel has ever granted rights in the patent to any party other than PolyVision. The facts in the instant case are analogous to those in Mi-Jack Products, Inc. v. The Taylor Group, Inc., No. 96 C 7850, 1997 WL 441796 (N.D.Ill. July 30, 1997), where the court found standing based upon the "very extremely close" relationship between the patentee and the sole licensee. Id. at *8. In that case, the wholly-owned subsidiary obtained the patent and assigned it to the parent. The parent then licensed the patent back to the subsidiary. The court noted that the subsidiary-sole licensee was essentially the exclusive licensee because the parent and subsidiary were "one and the same." Id. The facts in this case provide an even stronger basis for concluding that the licensee has standing because Greensteel, the patentee, was the wholly-owned subsidiary of the licensee, PolyVision. Thus, PolyVision effectively had exclusive control of the '309 patent and was essentially one and the same with Greensteel. Therefore, PolyVision is a proper party in this case.

The Court reaches a different conclusion with respect to Steelcase. Plaintiffs' claim of standing for Steelcase, as PolyVision's parent corporation, is based entirely upon the decision in Pipe Liners, Inc. v. American Pipe & Plastics, Inc., 893 F.Supp. 704 (S.D.Tex.1995). In Pipe Liners, the court held that a parent corporation had standing to seek equitable remedies relating to a patent owned by its subsidiary. Id. at 706. Although the court noted that the presence or absence of the parent corporation would not change the case, primarily because the subsidiary held legal title to the patent and there was no claim that the parent held any legal right in the patent, the court found "no reason why [the parent] cannot be joined in the equitable remedies of declaratory and injunctive relief." Id. The court in Beam Laser Systems, Inc. v. Cox Communications, Inc., 117 F.Supp.2d 515 (E.D.Va.2000), found the Pipe Liners decision unpersuasive because "[o]wnership of corporate stock does not create equitable title in that corporation's property." Id. at 521 (citing Murray v. Mares (In re Murray), 147 B.R. 688, 690 & n. 3 (Bankr.E.D.Va.1992)). This Court agrees with the analysis in Beam Laser Systems that for purposes of standing, a parent does not have equitable title in a patent solely by virtue of its ownership of the subsidiary. Therefore, the Court...

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