CopyTele, Inc. v. E Ink Holdings, Inc.

962 F. Supp. 2d 1130, 2013 WL 3456737, 2013 U.S. Dist. LEXIS 95706
CourtDistrict Court, N.D. California
DecidedJuly 9, 2013
DocketNo. C-13-0378 EMC
StatusPublished
Cited by4 cases

This text of 962 F. Supp. 2d 1130 (CopyTele, Inc. v. E Ink Holdings, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CopyTele, Inc. v. E Ink Holdings, Inc., 962 F. Supp. 2d 1130, 2013 WL 3456737, 2013 U.S. Dist. LEXIS 95706 (N.D. Cal. 2013).

Opinion

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS FOR LACK OF STANDING

(Docket No. 38)

EDWARD M. CHEN, United States District Judge

Plaintiff CopyTele, Inc. has filed a patent infringement action against Defendants E Ink Holdings, Inc. and. E Ink Corporation (collectively, “E. Ink”). According to CopyTele, it is the sole owner of all rights, title, and interest in three patents (the ’935 patent; the ’810 patent, and the ’488 patent), see Compl. ¶¶ 8-10, and E Ink has infringed on those patents. Currently pending before the Court is E Ink’s motion to dismiss for lack of standing. In essence, E Ink contends that Copytele’s lawsuit is premature because (1) it previously assigned all substantial rights to the patents at issue to a third-party exclusive licensee, AU Optronics Corp. (“AUO”); (2) it has not yet secured a judgment (in a related case, CopyTele, Inc. v. AU Optronics Corp., No. C-13-0380 EMC) that the assignment has been rescinded; and (3) even upon rescission CopyTele will have standing only to sue prospectively and not retroactively.

Having considered the parties’ briefs, as well as the oral argument of counsel, the Court hereby GRANTS E Ink’s motion but without prejudice pending the resolution of CopyTele’s case against AUO.

I. FACTUAL & PROCEDURAL BACKGROUND

For purposes of the pending motion, the relevant facts are not so much contained within the complaint in this case as within the complaint in the related action, CopyTele, Inc. v. AU Optronics Corp., No. C-13-0380 EMC. For convenience, the Court shall hereinafter refer to the related case as the conspiracy case.

In the conspiracy case, CopyTele has filed suit against both E Ink and AUO. The relevant allegations are as follows.

CopyTele is a company with “a 30-year history of inventing, developing, and patenting pioneering display technologies.” No. C-13-0380 Compl. ¶ 23. It has patented certain display technologies, including electrophoretic display (“EPD”) technologies. See No. C-13-0380 Compl. ¶ 2. EPDs “are low voltage, high resolution, [1134]*1134black-and-white displays that can be easily viewed in a variety of lighting conditions including bright sunlight.” No. C-13-0380 Compl. ¶ 23. They are used, inter alia, in eReaders with brand names, such as “Kindle” and “Nook.” No. C-13-0380 Compl. ¶ 23.

“E Ink is the dominant, worldwide manufacturer and supplier of [EPDs], including those used in eReaders sold under the ‘Kindle’ and ‘Nook’ brand names.” No. C-13-0380 Compl. ¶ 28. “AUO is one of the world’s largest manufacturers of flat panel LCD displays for televisions, computers, and tablets, including the Apple iPads.” No. C-13-0380 Compl. ¶ 26.

“In September 2010, AUO approached CopyTele about purchasing a subset of CopyTele’s EPD Patents for $1.5 million.” No. C-13-0380 Compl. ¶ 29. CopyTele declined and proposed instead that the two companies work together to jointly develop, EPD products. Accordingly, in May 2011, the parties entered into a contract, known as the EPD Agreement. See Compl., Ex. A (EPD Agreement).

A primary goal of the EPD Agreement “was for CopyTele and AUO to, jointly develop EPD Products that would successfully compete with electrophoretic displays manufactured by E Ink.” No. C-13-0380 Compl. ¶¶ 4, 12. Key terms in the agreement include the following:

• CopyTele granted to AUO — as well as its subsidiaries — “an exclusive, worldwide license under [the EPD Patents] to make, have made, sell, offer for sale, [etc.] the Licensed Products, and also [to] sub-license the Licensed Patents, during the term of the Agreement [ie., until the last to expire of the Licensed Patents].” No. C-13-0380 Compl., Ex. A (EPD Agreement §§. 2.2, 5.1).
• AUO was given- “the right at its discretion to commence,- prosecute, compromise and settle any claim, action or proceeding for infringement (past or future), unfair competition, unauthorized use, misappropriation or violation of any of the [EPD Patents] by any unlicensed third party within the territory where the [EPD -Patents] may be enforced.” No. C-13-0380 Compl, Ex. A (EPD Agreement § 3.1). The contract specified that “[i]t is the intent and agreement of the parties that this Agreement transfers to [AUO] the full exclusive rights and all substantial rights in the Licensed Patents such that Licensee shall be able to bring an Enforcement Proceeding in its own name, and that no rights have been maintained by [CopyTele] that would require [CopyTele] to be a named party to any Enforcement Proceeding.” No. C-13-0380 Compl., Ex. A (EPD Agreement § 3.1).
• Each party agreed to an anti-assignment provision as follows. “Except as otherwise specifically provided in [the] Agreement, neither [the] Agreement nor any rights hereunder nor any [EPD Patents] may be assigned or otherwise transferred by any party ... including by way of sale, of assets, merger or consolidation, without the prior written consent of the other party, provided that [AUO] may transfer[ ] its rights and obligations under this Agreement to a Subsidiary or affiliate without [Copytele’s] consent.”, No. C-13-0380 Compl., Ex. A (EPD Agreement § 6.3).
• The parties “will discuss and conclude a joint development agreement for the Subject EPD Products as soon as practicable after the Effective Date hereof and will make their best efforts to jointly develop the Subject,EPD Products.” No. C-13-[1135]*11350380 Compl., Ex. A (EPD Agreement § 6.12).

In consideration for the license granted by CopyTele, AUO was to pay “a de minimis initial payment, considerable progress payments, and significant running royalties that were tied to the sales of the [jointly developed] EPD Products.” No. C-13-0380 Compl. ¶ 31. According to CopyTele, “[w]ithout the joint development commitment from AUO, CopyTele was unwilling to license or sell any of its EPD Patents to AUO.” No. C-13-0380 Compl. ¶ 29.

In its complaint, CopyTele maintains that AUO breached its “best efforts” obligations under the EPD Agreement. See No. C-13-0380 Compl. ¶¶ 40^16. Moreover, according to CopyTele, AUO never had any intention of using its “best efforts” to jointly develop EPD products. See No. C13-0380 Compl. ¶49. “Instead, AUO used the EPD Agreement as an excuse to obtain a license to the EPD Patents, which AUO intended to pass on to E Ink, in conjunction with and in exchange for the $50 million paid by E Ink to AUO in connection with the sale of SiPix [an AUO subsidiary] to E Ink.”1 No. C-13-0380 Compl. ¶ 49. E Ink desired to acquire SiPix not to obtain manufacturing capacity but rather to immunize itself from patent infringement actions (by acquiring SiPix’s intellectual property) and avoid price wars. See No. C-13-0380 Compl. ¶¶ 58-59. According to CopyTele, “[s]hortly after the announced sale of SiPix to E Ink, and after receiving written notice form CopyTele of CopyTele’s intent to terminate the EPD Agreement due to AUO’s repeated failures to adhere to its “best efforts” obligations to jointly develop the EPD Products, with no notice to CopyTele, AUO surreptitiously purported to sublicense CopyTele’s patented EPD Technologies to E Ink, again breaching AUO’s obligations to CopyTele.” No. C-13-0380 Compl. ¶ 7. AUO received no consideration for the sublicense. See No. C-13-0380 Compl. ¶ 12. But see No. C-13-0380 Compl.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
962 F. Supp. 2d 1130, 2013 WL 3456737, 2013 U.S. Dist. LEXIS 95706, Counsel Stack Legal Research, https://law.counselstack.com/opinion/copytele-inc-v-e-ink-holdings-inc-cand-2013.