Canon Inc. v. Tesseron Ltd.

146 F. Supp. 3d 568, 2015 U.S. Dist. LEXIS 156402, 2015 WL 7308663
District Court, S.D. New York·Decided November 19, 2015·No. 14cv5462(DLC)·Published·Cited by 2 cases

Opinion

OPINION & ORDER

DENISE COTE, United States District Judge

This patent infringement action arises out of a licensing agreement in which the patent holder, in exchange for a one-time payment, granted a non-exclusive license that allowed the licensee and the licensee’s affiliates to buy and sell the patented goods without restriction. The parties now dispute the éffectiveness of a retroactive sublicense that the licensee recently granted to one of its affiliates; Finding that the issuance of a retroactivé sublicense does not violate the terms of the licensing agreement, this Opinion grants the licensee’s motion for summary judgment.

The patent holders are defendants Tes-serson Ltd. (“Tesseron”), Industrial Print Technologies L.L.C. (“IPT”), and Forrest P. Gauthier (“Gauthier”; collectively, “defendants”). They seek a declaratory judgment that the plaintiffs’ purported subli-cense is invalid as well as damages for the plaintiffs’ sale-in this country of high speed industrial-sized printing presses manufactured by the Netherlands-based company Océ N.V.,1 which the defendants assert contain components that infringe the defendants’ patents (the “Patents”). •

[572]*572The defendants’ licensee is plaintiff Canon Inc. (“CINC”). CINC asserts that, as permitted by its 2006 license agreement with Tesseron (“Agreement”), it issued an oral sublicense to its subsidiary Canon U.S.A. (“CUSA”) in 2006. Since the existence of that oral sublicense is a hotly disputed question of fact, CINC recently executed a. written' sublicense to CUSA (“2015 Sublicense”). This motion practice addresses, inter alia, the retroactive effect of that 2015 Sublicense.

If the 2015 Sublicense has retroactive effect, the plaintiffs contend that the Subli-cense covers the purchase and resale by CUSA of Océ printing presses from 2013 to the present. CUSA importéd the Océ presses and resold them to its affiliate Canon Solutions America, Inc. (“CSA”). Although a CINC affiliate, and as further explained below, CSA is n.ot an eligible sublicensee pursuant to the Agreement.

Accordingly, CINC asserts that the sales of Océ products in the United States that have been made since 2013 — products purchased and imported by CUSA from Océ — are authorized by its Agreement with the defendants and that no additional licensing fees must be paid.2 The defendants disagree. The critical facts that serve as background to this dispute follow.

BACKGROUND

The following, facts are undisputed, unless otherwise noted. In January 2006, Tesseron and CINC executed the patent licensing Agreement. , The Agreement grants CINC a “fully paid-up, nonexclusive, license ... to ... sell ... import ... and/or otherwise dispose of’ products re-latéd to and derived from the Patents. The license explicitly covers the sales of infringing products to CINC, including claims of infringement against CINC’s suppliers arising from the sales to CINC and its authorized affiliates. Section 2.03 states that Tesseron

agrees not to assert any of its rights under the Licensed Patents against any direct or indirect suppliers of [CINC] and its Affiliates including, without limitation, Electronics for Imaging Inc.3 for infringement or alleged infringement ... of any Licensed Patents only to the extent of the Licensed Products which have been purchased by [CINC]' or such Affiliates during the term

of the Agreement.4 The Agreement also includes broad releases for CINC, its Affiliates, and their “direct or indirect suppliers,” extinguishing past liability for “infringement or alleged infringement ... to the extent of the Licensed Products which have been purchased by [CINC] or such Affiliates at any time prior to the Effective Date.” The Agreement identifies the Effective Date as December 31, 2005.

The Agreement allows CINC to extend the license to any of its current affiliates and to any future affiliates so long as the future affiliate is not a “major competitor” of Tesseron as of the effective date of the Agreement. The affiliates may not, however, extend additional sublicenses. Specifically, Section 2.02 grants CINC the right, [573]*573“subject to compliance with the terms and conditions” of the Agreement, “to grant to any ... Affiliates sublicenses under the licenses granted to it under this Agreement but without any right to sublicense further.”5

.The Agreement is retroactive, stating that it is effective as of December 31, 2005, and that it extinguishes liability for any claims regarding past infringement. It is governed by the laws of the State of New York. Read as a whole, the Agreement represents a broad grant of rights to CINC and its Affiliates, including releases from liability for their suppliers. The term of the Agreement extends through the life of the Patents.

CINC wholly owns CUSA; CUSA was at all relevant times an “Affiliate” of CINC as that term is defined in the Agreement. Plaintiffs previously offered evidence that CINC orally issued a sublicense to CUSA during a meeting between representatives of CINC and CUSA in Tokyo on January 31, 2006. That sublicense was purportedly retroactive to December 31, 2005. Plaintiffs acknowledge that no documents or other contemporaneous corroborating evidence of this oral agreement have been located. The existence of the oral subli-cense presents a disputed issue of fact that may only be resolved at trial. See Canon Inc. v. Tesseron Ltd., No. 14cv5462 (DLC), 2015 WL 4508334 (S.D.N.Y. July 24, 2015) [“Summary Judgment Opinion”].

As. of December, 31, 2005, which is the effective date of the Agreement, Océ wholly owned two subsidiaries: Océ North America Inc. (“Océ NA”), which sold Océ printers in the United States, and Océ-Printing Systems GmbH and Co. (“Océ GmbH”), which designed and manufactured Océ printers. All three Océ entities were major competitors of Tesseron as of the Agreement’s effective date. Accordingly, in the event one or more of them ever became an affiliate of CINC, the Océ entities would be ineligible to receive subli-censes under the Agreement.

In March 2010, CINC acquired a majority ownership in Océ, and on January 1, 2013, CINC merged its subsidiary Canon Business -Solutions, Inc. with Océ NA, forming CSA. Canon has since acquired 100% control or ownership of Océ and Océ GmbH. Since CSA was created on January 1, 2013, CSA has sold Océ printers to consumers, but has not purchased the printers directly from Océ GmbH. Instead, CSA orders Océ printers from CUSA, which purchases the printers from Océ GmbH.

In January 2014, IPT, the current owner of right and title in the Patents, sued both CUSA and CSA in the United States District Court for- the Eastern District of Texas for patent infringement due to the sale of Océ printers through CSA. On January 27, 2015, the Texas action was transferred to this Court as related to the instant case. Industrial Print Technologies, L.L.C. v. Canon U.S.A., Inc. and Canon Solutions America, Inc., No. 15cv672 (DLC).

Plaintiffs filed the instant action in this Court on July 21, 2014. Their complaint asserts six claims; among others, it asserts claims of breach of contract for improper termination of the Agreement; a declaratory judgment that CUSA holds a valid sub-[574]

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Canon Inc. v. Tesseron Ltd., 146 F. Supp. 3d 568, 2015 U.S. Dist. LEXIS 156402, 2015 WL 7308663 (S.D.N.Y. 2015).

146 F. Supp. 3d 568 (Canon Inc. v. Tesseron Ltd.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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