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Midwest Athletics and Sports Alliance LLC v. Ricoh USA, Inc.

United States District Court, E.D. Pennsylvania

July 25, 2019



          SAVAGE, J.

         In this patent infringement case, plaintiff Midwest Athletics and Sports Alliance, LLC (MASA) moves for leave to file a second amended complaint to add an averment that it had been assigned two terminal disclaimer patents necessary to enforce three of the patents allegedly infringed. Defendant Ricoh USA, Inc. (Ricoh) argues the proposed amendment would be futile because MASA lacks standing to enforce the patents subject to the terminal disclaimers because it did not commonly own the disclaimers with the patents when it filed this lawsuit. Ricoh also moves for judgment on the pleadings on MASA's claims for infringement of the patents subject to the disclaimers. MASA replies that the assignment “confirmed” that it owned the terminal disclaimers, curing any standing defect.

         We conclude that MASA lacks standing to assert infringement of the subject patents because it did not own the terminal disclaimers to which they are subject when it initiated this action. Therefore, we shall deny MASA's motion for leave to amend and grant Ricoh's motion for judgment on the pleadings.


         The patents at issue are U.S. Patent Nos. 7, 502, 582 (‘582 Patent); 7, 720, 425 (‘425 Patent); and 8, 005, 415 (‘415 Patent) (collectively, Pentachrome Patents); and U.S. Patent Nos. 7, 236, 734 (‘734 Patent) and 7, 340, 208 (‘208 Patent) (together, Terminal Disclaimer Patents). Eastman Kodak Company (Kodak), the prior owner of the Pentachrome Patents, overcame double patenting rejections by terminally disclaiming them to the Terminal Disclaimer Patents.[1] Specifically, the ‘582 and ‘425 Patents were disclaimed to both Terminal Disclaimer Patents, and the ‘415 Patent was terminally disclaimed to the ‘734 Patent.[2] Each of the terminal disclaimers contained the same language:

The owner hereby agrees that any patent so granted on the instant application shall be enforceable only for and during such period that it and [the associated Terminal Disclaimer Patent(s)] are commonly owned. This agreement runs with any patent granted on the instant application and is binding upon the grantee, its successors or assigns.[3]

         On December 9, 2016, Kodak assigned the Terminal Disclaimer Patents to Commercial Copy Innovations, Inc. (CCI).[4] On June 29, 2017, Kodak assigned the Pentachrome Patents to MASA.[5] MASA filed its complaint on January 5, 2018.[6] Two and a half months later, on April 18, 2019, CCI assigned the Terminal Disclaimer Patents to MASA.[7]

         Standard of Review

         Leave to amend a pleading is freely granted “when justice so requires.” Shane v. Fauver, 213 F.3d 113, 115-17 (3d Cir. 2000) (quoting Fed.R.Civ.P. 15(a)); Berkshire Fashions, Inc. v. M.V. Hakusan II, 954 F.2d 874, 886-87 (3d Cir. 1992). Factors considered are undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by previously allowed amendments, undue prejudice to the opposing party, and futility of the amendment. Foman v. Davis, 371 U.S. 178, 182 (1982). Futility alone can be a reason to deny a motion to amend a complaint. Futility means that after amendment, the complaint would still fail to state a claim. In re Alpharma Sec. Litig., 372 F.3d 137, 153 (3d Cir. 2004) (quoting In re Burlington Coat Factory, 114 F.3d 1410, 1434 (3d Cir. 1997)). Thus, leave to amend will be denied where the proffered amendments fail to cure the deficiencies in the earlier complaint. Winer Family Tr. v. Queen, 503 F.3d 319, 331-34 (3d Cir. 2007).

         In deciding a motion for judgment on the pleadings made pursuant to Rule 12(c), we consider the facts alleged in the pleadings and documents attached as exhibits or incorporated by reference in the pleadings. See Fed. R. Civ. P. 12(c); Commercial Money Ctr., Inc. v. Ill. Union Ins. Co., 508 F.3d 327, 335 (6th Cir. 2007); cf. Steinhardt Grp. Inc. v. Citicorp, 126 F.3d 144, 145 & n.1 (3d Cir. 1997) (in Rule 12(b)(6) context). All the well-pleaded factual assertions in the non-movant's pleadings are accepted as true and all contrary allegations in the movant's pleadings are disregarded. Zimmerman v. Corbett, 873 F.3d 414, 417-18 (3d Cir. 2017). To prevail, the movant must clearly establish that there are no material issues of fact and that it is entitled to judgment as a matter of law. Bedoya v. Am. Eagle Express Inc., 914 F.3d 812, 816 (3d Cir. 2019).



         To have standing to assert patent infringement under 35 U.S.C. § 271, a plaintiff must demonstrate that it held enforceable title to the patent at the inception of the lawsuit. Abraxis Bioscience, Inc. v. Navinta LLC, 625 F.3d 1359, 1364 (Fed. Cir. 2010); Paradise Creations, Inc. v. UV Sales, Inc., 315 F.3d 1304, 1309 (Fed. Cir. 2003). If the plaintiff did not hold enforceable title, the suit must be dismissed. The jurisdictional defect cannot be cured by the purchase of an interest in the patent after the suit was initiated. Schreiber Foods, Inc. v. Beatrice Cheese, Inc., 402 F.3d 1198, 1203 (Fed. Cir. 2005) (citing Gaia Techs., Inc. v. Reconversion Techs., Inc., 93 F.3d 774, 780 (Fed. Cir. 1996)).

         To enforce a patent subject to a terminal disclaimer filed to obviate a double patenting rejection, the plaintiff must also own the disclaimer patent. 37 C.F.R. § 1.321(c)(3); see also In re Hubbell, 709 F.3d 1140, 1148 (Fed. Cir. 2013) (citing In re Fallaux, 564 F.3d 1313, 1319 (Fed. Cir. 2009)). A plaintiff who does not also own the terminal disclaimer patent lacks standing to bring an infringement claim. In re Certain Digital Cable & Satellite Prods., Set-Top Boxes, Gateways & Components Thereof, Inv. No. 337-TA-1049, 2017 WL 6350230, at *9 (USITC Oct. 19, 2017); see also LG Philips LCD Co., Ltd. v. Tatung Co. of Am., No. 02-6775, at 10, 11 n.4 (C.D. Cal. Sept. 19, 2005) (fifty-percent ownership in terminal disclaimer patent insufficient) (Doc. No. 99-11). The plaintiff may not cure this defect by acquiring the terminal disclaimer patent and amending its ...

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