Reid v. General Motors Corp.

489 F. Supp. 2d 614, 2007 U.S. Dist. LEXIS 41644, 2007 WL 1549111
District Court, E.D. Texas·Decided May 22, 2007·No. 2:07 CV 19 DF, 2:05 CV 401 DF·Published·Cited by 1 cases

Opinion

ORDER

FOLSOM, District Judge.

Before the Court is Defendants’ Motion to Dismiss for Lack of Subject Matter Jurisdiction, Dkt. No. 19. Also before the Court are Plaintiffs’ response, Defendants’ reply, and Plaintiffs’ sur-reply. Dkt. Nos. 32, 34, & 43, respectively. The defendant in Civil Action No. 2:05-cv-401, Charles Schwab Corporation, also joins in the present motion. See Civil Action No. 2:05-cv-401, Dkt. No. 119. The Court held a hearing on April 18, 2007. Having considered the briefing and all relevant papers and pleadings, the Court finds that Defendants’ motions should be GRANTED.

I. BACKGROUND

Plaintiffs allege infringement of United States Patent No. 6,131,120 (the “ ’120 Patent”). Third Amended Complaint, Dkt. No. 2. The Abstract of the ’120 Patent reads as follows:

An enterprise network using a wide area network (WAN), and having routers and servers, uses a master direct[ory] to determine access rights, including the ability to access the WAN through the routers and the ability to access the se[rv]er over the WAN.

Plaintiff William J. Reid (“Reid”) is the named inventor of the ’120 Patent. Reid purportedly relies on a conception date in April 1996, at which time Plaintiff was an officer of a company called Plancom, Inc. (“Plancom”). Dkt. No. 19 at 3, 5 & 9. Plaintiff left Plancom in May 1996. Id, at 5 & 9.

Plancom brought suit in Texas state court against Reid on May 20, 1996, alleging misappropriation of trade secrets, breach of fiduciary duty, breach of confidentiality, and theft under the Texas Penal Code. Dkt. No. 19 at 5. After the state court issued a temporary restraining order, Plancom and Reid executed a Settlement Agreement on June 10,1996, and the state court issued an Agreed Permanent Injunction on June 18, 1996. Dkt. No. 19 *616 at Exs. 6 & 7. The ’120 Patent reflects a filing date of October 24,1997.

II. LEGAL PRINCIPLES

“The burden of demonstrating standing falls to [Plaintiff], as ‘[i]t is well established ... that before a federal court can consider the merits of a legal claim, the person seeking to invoke the jurisdiction of the court must establish the requisite standing to sue.’ ” Ortho Pharm. Corp. v. Genetics Inst., Inc., 52 F.3d 1026 (Fed.Cir.1995) (quoting Whitmore v. Arkansas, 495 U.S. 149, 154, 110 S.Ct. 1717, 109 L.Ed.2d 135 (1990)).

One seeking damages for infringement of a patent must hold legal title to that patent. See, e.g., Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538 (Fed.Cir.1995). A party without title has no standing to bring suit. Filmtec Corp. v. Allied-Signal Inc., 939 F.2d 1568 (Fed.Cir.1991). “Further, all co-owners must, ordinarily, consent to join as plaintiffs in an infringement suit.” DDB Techs. v. MLB Advanced Media, LP, 465 F.Supp.2d 657, 661 (W.D.Tex.2006).

“In examining a Rule 12(b)(1) motion, the Court is empowered to consider matters of fact which may be in dispute.” Id. A court may not grant dismissal “unless it appears certain that the plaintiffs cannot prove any set of facts in support of their claim which would entitle them to relief,” and a court “must take as true all of the allegations of the complaint and the facts as set out by the [plaintiffs].” Saraw Partnership v. U.S., 67 F.3d 567, 569 (5th Cir.1995).

III. THE PARTIES’ POSITIONS

Defendants argue that Plaintiffs are not the owners of the T20 Patent because Reid assigned his interest in the ’120 Patent to Plancom through an Intellectual Property Rights Assignment (“IP Assignment”). Dkt. No. 19 at 10. Reid thereby agreed to assign all “Innovations” to Plancom, and the agreement defines “Innovations” as:

inventions, improvements, procedures, and techniques conceived or constructed by the employee during his affiliation with the company, which reasonably relate[] to the business or contemplated business of the company at the time of the conception or construction, whether produced alone or in concert with others, and irrespective of whether made during or outside the usual working hours of the employee or with or without the use of company facilities or materials.

Dkt. No. 19, Ex. 1 at Ex. A (emphasis added). As to the “business or contemplated business” of Plancom, the IP Assignment states as follows:

The company is engaged in creating and deploying easily-accessible high speed data communications services for computer users requiring connectivity to their office LAN or other computing resources when they are physically away from their normal office or work environment. Access to this service would typically involve wireless connection to wired communications infrastructure operated by or for the company.

Id. Defendants summarize Plancom’s business as including “the development and deployment of communications services whereby remote users could access the Local Area Network (‘LAN’) of their employer.” Dkt. No. 19 at 10. Because the ’120 Patent purportedly discloses an invention for providing network security that would be useful and valuable in this business, Defendants argue that the 120 Patent is subject to the IP Assignment. See id. at 13. Defendants also indicate that United States Patent No. 5,835,061 (the “ ’061 Patent”) is representative of *617 Plancom’s business, and Defendants point to similarities between the ’061 Patent and the ’120 Patent. Dkt. No. 19 at 13.

Defendants further argue that the Settlement Agreement executed between Plancom and Reid in June 1996 required Reid to comply with the IP Assignment and to return or destroy any materials related to inventions conceived during Reid’s employment at Plancom. See Dkt. No. 19 at Ex. 6.

Plaintiffs respond that the T20 Patent “is not reasonable related to the business of Plancom.” Dkt. No. 32 at 2. Plaintiffs propose that Texas state law applies to determine ownership of the ’120 Patent. Id. at 3. Plaintiffs argue that the ’120 Patent relates to enterprise network security rather than to Plancom’s business, which Plaintiffs submit was simply providing connectivity to a network from a remote location. Id. at 5. Plaintiffs argue that “[b]ecause the T20 Patent is directed to internal network security, the ’120 Patent does not address the means by which a user obtains access to the network.” Id. at 6. While the specification of the T20 Patent may describe establishing connections, Plaintiffs argue, the ’120 Patent does not claim such matter, so that matter should not be considered in comparing the T20 Patent to Plancom’s business. Id. at 7-10.

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Reid v. General Motors Corp., 489 F. Supp. 2d 614, 2007 U.S. Dist. LEXIS 41644, 2007 WL 1549111 (E.D. Tex. 2007).

489 F. Supp. 2d 614 (Reid v. General Motors Corp.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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