Suffolk Technologies LLC v. AOL Inc.

910 F. Supp. 2d 850, 2012 WL 6125377, 2012 U.S. Dist. LEXIS 174823
CourtDistrict Court, E.D. Virginia
DecidedDecember 7, 2012
DocketCase No. 1:12cv625
StatusPublished
Cited by4 cases

This text of 910 F. Supp. 2d 850 (Suffolk Technologies LLC v. AOL Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Suffolk Technologies LLC v. AOL Inc., 910 F. Supp. 2d 850, 2012 WL 6125377, 2012 U.S. Dist. LEXIS 174823 (E.D. Va. 2012).

Opinion

MEMORANDUM OPINION

T.S. ELLIS, III, District Judge.

This patent infringement suit presents the increasingly common, but always vexing jurisdictional question whether plaintiff, the assignee of the patent in issue, possesses “all substantial rights”1 to the patent, such that it has standing to sue putative infringers. More precisely, the question is whether plaintiff Suffolk Technologies, LLC (“Suffolk”), the owner by assignment of the patent in issue, has standing to sue infringers where, as here, the assignment:

(i) assigns to Suffolk all right, title, and interest in the patent;
(ii) assigns to Suffolk unfettered power to decide whom to license to practice the patent and the royalty rate to charge;
(iii) grants-back to the assignor a nonexclusive license to practice the patent;
(iv) assigns to Suffolk unfettered power to decide whether to sell the patent and to whom to sell the patent;
(v) assigns to Suffolk the responsibility to maintain the patent;
(vi) compensates the assignor for the assignment by requiring payment to the assignor a portion of the stream of revenue from licensing, enforcement, or selling the patent; and,
(vii) does not explicitly address the right to practice the patent.

For the reasons that follow, Suffolk has the requisite standing to sue for infringement because it possesses “all substantial rights” to the patent in issue.

I.2

Plaintiff Suffolk, a Delaware limited liability company with a principal place of business in Bridgewater, New Jersey, is a wholly owned subsidiary of Corporate Re[853]*853search Partners, which in turn is a wholly owned subsidiary of IPValue. IPValue was formed in late 2001 by iFormation, a joint venture of Goldman Sachs, General Atlantic Partners, and the Boston Consulting Group.

Defendants, the alleged infringers, are AOL, Inc. (“AOL”), a Delaware corporation with its corporate headquarters in New York, New York, and Google, Inc. (“Google”), a Delaware corporation with its corporate headquarters in Mountain View, California.

In its amended complaint, Suffolk alleges that AOL and Google have infringed U.S. Patent No. 6,082,835 ('835 patent) entitled “Internet Server and Method of Controlling an Internet Server.”3 The '835 patent claims a method of controlling an internet server whereby the server receives a hypertext transfer protocol file request from a web browser with an identification signal and then compares the identification signal with one or more predetermined identification signals, and based on the results of the comparison, a file may be transmitted from the server back to the requesting web browser. Suffolk alleges (i) that since December 3, 2008, when Google was provided written notice regarding the '835 patent, Google has knowingly infringed claims of the '835 patent by operating, using, and selling Google’s AdSense and AdWords services, and (ii) that since September 18, 2009, when AOL was provided with written notice of the '835 patent, AOL has knowingly indirectly infringed claims of the '835 patent by actively inducing Google to make, use, and sell advertisements generated in a manner covered by the '835 patent.

The history of the '835 patent title is central to the resolution of the standing question presented. The United States Patent and Trademark Office (“PTO”) issued the '835 patent on March 11, 1997 to three British Telecommunications, PLC, (“BT”) employees — Stuart J. Antcliff, John C. Regnault, and Laurence D. Bradley— who promptly assigned the patent to their employer. BT is a British public limited company that provides telecommunication services in Europe. Thereafter the path of the title to the '835 patent is defined by two assignments: (1) the assignment from BT to IPValue (“BT Assignment”) and (2) the assignment from IPValue to Suffolk (“Suffolk Assignment”). On December 12, 2011, BT and IPValue entered into the BT Assignment, which

assigned and transferred to IPVALUE [BT’s] entire right, title and interest in the ['835 patent,]4 including but not limited to all of its rights to sue third parties for patent infringement and to collect royalties under [the '835 patent.]

Section 2.1. This assignment included the right to sue for infringement “based on activities occurring prior to the execution date.” Id. Notably, this assignment was “absolute and irrevocable.” Id. The BT Assignment also assigned to IPValue the “sole discretion to determine whether to assert or pursue infringement of, or settle infringement claims relating to the ['835 patent, and] to determine whether and to [854]*854whom to license the ['835 patent.]” Section 2.2.5

In addition to assigning to IPValue the sole and complete discretion to license the patent, the BT Assignment also assigned to IPValue the sole right to sell the patent. Specifically, the Assignment provides that “[a]bsent a sale or assignment of [the '835 patent] as part of the good faith pursuit of the Business [i.e., exploitation of the patent] no third party shall be entitled to acquire title to or a license in or under [the '835 patent] except as expressly permitted in this Agreement.” Section 5.1.4 (emphasis added). Finally, in addition to all right, title, and interest in the '835 patent, the BT Assignment also assigned to IPValue the sole responsibility “for paying any fees, costs and expenses incurred ... for patent maintenance, patent prosecution or patent enforcement^]” Section 5.1.2.

As compensation for the BT Assignment, IPValue agreed to pay BT 50% of the “Adjusted Gross Proceeds” derived from exploitation of the '835 patent, except “that, where there is a sale of any [patent] during the first twelve (12) months, [BT] will receive 90% of the Adjusted Gross Proceeds received from such a sale.” Sch. B. The “Adjusted Gross Proceeds” are the revenue stream from the exploitation of the patent less certain costs of generating that revenue stream. In other words, as compensation for the assignment, BT receives either 50% of the profits from exploiting the '835 patent or 90% of the profit from the sale of the '835 patent. As a means of preserving adjusted gross proceeds, the BT Assignment restricts IPValue from retaining outside counsel in a contingent fee arrangement, where outside counsel “would be entitled to collect contingent fees of more than 20% of the damages or other revenues received in any litigation or exploitation of the ['835 patent.]” Section 5.1.1. Finally, IPValue is required to provide quarterly written or telephonic progress updates to BT regarding the exploitation of the '835 patent.

Certain events trigger an “exclusive option to acquire all of IPValue’s and [Suffolk’s] rights in and to the [patent] for the consideration of [$10.]” Section 5.1.4. The triggering events include: (i) the failure to meet initial performance requirements, (ii) the decision to cease exploiting the patents, (iii) the failure to pay the renewal or maintenance fee on a patent, or (iv) the abandonment of a pending application.

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

Related

In re TLI Communications LLC Patent Litigation
87 F. Supp. 3d 773 (E.D. Virginia, 2015)
N5 Technologies LLC v. Capital One N.A.
56 F. Supp. 3d 755 (E.D. Virginia, 2014)
Suffolk Technologies LLC v. AOL Inc.
942 F. Supp. 2d 600 (E.D. Virginia, 2013)

Cite This Page — Counsel Stack

Bluebook (online)
910 F. Supp. 2d 850, 2012 WL 6125377, 2012 U.S. Dist. LEXIS 174823, Counsel Stack Legal Research, https://law.counselstack.com/opinion/suffolk-technologies-llc-v-aol-inc-vaed-2012.