Cirba Inc. (d/b/a Densify) v. VMware, Inc.

District Court, D. Delaware·Decided June 3, 2020·No. 1:19-cv-00742·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE ______________________________________________________________________________ CIRBA INC. (d/b/a DENSIFY) : and CIRBA IP, INC., : : Plaintiffs, : : v. : C.A. No. 19-742-LPS : VMWARE, INC., : UNSEALED ON JUNE 4, 2020 : Defendant. : ______________________________________________________________________________ MEMORANDUM ORDER On April 25, 2019, Plaintiffs Cirba Inc. and Cirba IP, Inc. (collectively, “Densify” or “Plaintiffs”) sued Defendant VMware, Inc. (“VMware” or “Defendant”) for (among other things) infringement of U.S. Patent Nos. 8,209,687 (the “‘687 patent”) and 9,654,367 the “‘367 patent”) (the “patents-in-suit”). (D.I. 1) The Court denied Plaintiffs’ motion for a preliminary injunction on August 6, 2019. (D.I. 137) The Court then presided over an expedited, nine-day jury trial in January 2020. (See D.I. 587-97) On January 24, 2020, the jury returned a verdict finding VMware infringed both the ‘687 and ‘367 patents and awarding damages in the amount of $235,724,765 and $1,112,111, respectively. (D.I. 549) The parties filed and briefed numerous post-trial motions. (See, e.g., D.I. 601, 604) On May 15, 2020, the Court heard oral argument on all pending motions. (See Transcript (“Tr.”)) Thereafter, Densify requested leave to file additional briefing (see D.I. 745), which VMware opposes (see D.I. 747). Having considered all of the parties’ filings and arguments, and for the reasons stated below, IT IS HEREBY ORDERED that: 1. VMware’s Motion to Dismiss Cirba Inc. for Lack of Standing (D.I. 601) (“Standing Motion”) is GRANTED. 2. Cirba Inc. is DISMISSED as a party to this action. 3. The parties shall file supplemental briefing consistent with the directions provided

at the conclusion of this Order. The Standing Motion is just one of many disputes the parties have put before the Court following trial. The Court has determined that the most reasonable and appropriate manner of proceeding is to resolve this single motion and then obtain the parties’ further views as to the impact of that resolution on the still-pending issues. By its Standing Motion, VMware contends that Cirba Inc. must be dismissed as a plaintiff because it is a “bare licensee” to the patents-in-suit and, therefore, lacks standing to sue. Plaintiffs counter that Cirba Inc. is, instead, an “exclusive licensee” to the patents-in-suit and, thus, has standing to sue as a co-plaintiff with the patents’ owner, Cirba IP, Inc. The Court has determined that application of the legal standards provided by the Federal Circuit to the

agreements executed by Cirba Inc. and Cirba IP, Inc. leads to the conclusion that Cirba Inc. is a bare licensee which lacks standing to sue and must be dismissed. “Standing is a constitutional requirement pursuant to Article III and it is a threshold jurisdictional issue.” Abraxis Bioscience, Inc. v. Navinta LLC, 625 F.3d 1359, 1363 (Fed. Cir. 2010) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)).1 A plaintiff bears the burden of persuasion to show it has standing. See Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991); Sicom Sys., Ltd. v. Agilent Techs., Inc., 427 F.3d 971, 976 (Fed.

1 Standing is “comprised of both constitutional and prudential components,” Oxford Assocs. v. Waste Sys. Auth. of E. Montgomery Cty., 271 F.3d 140, 145 (3d Cir. 2001), but the Standing Motion here relates only to constitutional standing. Cir. 2005). “Federal Rule of Civil Procedure 12(b)(1) authorizes dismissal of a complaint for lack of jurisdiction over the subject matter, or if the plaintiff lacks standing to bring his claim.” Samsung Elecs. Co., Ltd. v. ON Semiconductor Corp., 541 F. Supp. 2d 645, 648 (D. Del. 2008); see also Ballentine v. United States, 486 F.3d 806 (3d Cir. 2007) (“A motion to dismiss for want

of standing is . . . properly brought pursuant to Rule 12(b)(1), because standing is a jurisdictional matter.”). “[T]he touchstone of constitutional standing in a patent infringement suit is whether a party can establish that it has an exclusionary right in a patent that, if violated by another, would cause the party holding the exclusionary right to suffer legal injury.” WiAV Sols. LLC v. Motorola, Inc., 631 F.3d 1257, 1265 (Fed. Cir. 2010). The owner of a patent has standing to enforce its right to exclude others from practicing its patent without its consent. See 35 U.S.C. § 281 (providing “patentee” has right to initiate “civil action for infringement of [its] patent”); 35 U.S.C. § 100(d) (“The word ‘patentee’ includes not only the patentee to whom the patent was issued but also the successors in title to the patentee.”); see also Sicom Sys., Ltd. v. Agilent

Techs., Inc., 427 F.3d 971, 976 (Fed. Cir. 2005) (“[I]f the patentee transfers all substantial rights under the patent, it amounts to an assignment and the assignee may be deemed the effective patentee under 35 U.S.C. § 281 for purposes of holding constitutional standing to sue another for patent infringement in its own name.”). Likewise, an exclusive licensee – that is, a party which “hold[s] exclusionary rights and interests created by patent statutes” even if it does not enjoy “all substantial rights to the patent” – also has standing to sue for infringement of any patent to which it has an exclusive license. Morrow v. Microsoft Corp., 499 F.3d 1332, 1340 (Fed. Cir. 2007); see also Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1553 (Fed. Cir. 1995) (characterizing exclusive licensee as one who “shar[es] the property rights represented by a patent”) (internal quotation marks omitted). “[A]n exclusive licensee having fewer than all substantial patent rights . . . that seeks to enforce its rights in a patent generally must sue jointly with the patent owner.” Intellectual Prop. Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333, 1347-48 (Fed. Cir. 2001).

“By contrast, a bare licensee, i.e., a party with only a covenant from the patentee that it will not be sued for infringing the patent rights, lacks standing to sue third parties for infringement of the patent.” Propat Int’l Corp. v. RPost, Inc., 473 F.3d 1187, 1193 (Fed. Cir. 2007).

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Cirba Inc. (d/b/a Densify) v. VMware, Inc., (D. Del. 2020).

Cirba Inc. (d/b/a Densify) v. VMware, Inc. (Cirba Inc. (d/b/a Densify) v. VMware, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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