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In re CTP Innovations, LLC, Patent Litigation

United States District Court, D. Maryland

November 30, 2016

IN RE CTP INNOVATIONS, LLC, PATENT LITIGATION Nos. 14-cv-3894-MJG, 14-cv-3884-MJG, 14-cv-3886-MJG, 14-cv-3887-MJG, 14-cv-3888-MJG, 14-cv-3889-MJG, 14-cv-3890-MJG, 14-cv-3893-MJG, 15-cv-1469-MJG, 15-cv-1470-MJG, 15-cv-1471-MJG, 15-cv-1550-MJG, 15-cv-1646-MJG, 15-cv-1692-MJG, 15-cv-1693-MJG, 15-cv-1807-MJG, 15-cv-1813-MJG, 15-cv-1975-MJG, 15-cv-2016-MJG, 15-cv-2052-MJG, 15-cv-2389-MJG, 15-cv-2391-MJG, 15-cv-2682-MJG, 15-cv-3123-MJG, 15-cv-3124-MJG Date Event Rights Owner Individual Case Nos. ECF No.

          MEMORANDUM & ORDER RESOLVING MOTIONS

          Marvin J. Garbis United States District Judge

         The Court has before it the following motions:

Defendants' Consolidated Motion to Dismiss Under 35 U.S.C. Section 101 [ECF No. 343];
Defendants' Consolidated Rule 12 Motion to Dismiss or, Alternatively, for Judgment on the Pleadings [ECF No. 345]; Defendants' 12(b)(6) Motion to Dismiss Willful Infringement Claims [ECF No. 346][1]; and
Defendants' Joint Rule 12(b)(1) Motion to Dismiss for Lack of Subject Matter Jurisdiction due to Plaintiff's Lack of Standing [ECF No. 354],
together with the materials submitted relating thereto.

         The Court has held a hearing and has had the benefit of the arguments of counsel.

         I. BACKGROUND

         Plaintiff, CTP Innovations, LLC (“CTP”) is a non-practicing patent assertion entity. In March 2013, CTP obtained a purported assignment of United States Patent Nos. 6, 611, 349 (“the ‘349 Patent”) and 6, 738, 155 (“the ‘155 Patent”) (collectively, “the Patents in Suit”) from Media Innovations, LLC (“Media”). The Patents in Suit pertain to systems and methods relating to the printing industry.

         Thereafter, CTP contacted many printing companies stating that they may have infringed the Patents in Suit and offering a “fully paid-up, one-time license” including “past, present, and future uses of the technology.” Compl. Ex. C at 3, ECF No. 1-3 in MJG-14-3894. In the one letter of this type on the record, CTP offered a license for $75, 000 if agreement was reached in two weeks and $95, 000 if agreement was reached in three weeks. Id.

         Not all recipients of CTP's letter accepted the offer. Beginning in 2013, CTP has sued more than 75 printing companies for infringement of the Patents in Suit. In addition, one printing company filed suit against CTP seeking a declaratory judgment of non-infringement, and CTP counterclaimed for infringement. Taylor Publishing Company (“Taylor”) v. CTP Innovations, LLC, MJG-14-3894.

         While many of these cases settled, by December 12, 2014, nine remained pending. On that date, the United States Judicial Panel on Multidistrict Litigation (“MDL”) issued its Transfer Order [ECF No. 1] consolidating the then-pending actions and transferring them for pretrial purposes to this Court. In 2015, more than 20 additional tag-a-long cases were filed and subsequently transferred to this Court under the MDL.

         At present, the instant MDL proceeding consists of 26 cases filed in 18 districts. In addition, CTP has stated an intention to file as many as 200 additional tag-a-long cases.[2]

         II. SUMMARY

         As discussed herein, the Court shall grant Defendants' Joint Rule[3] 12(b)(1) Motion to Dismiss for Lack of Subject Matter Jurisdiction due to Plaintiff's Lack of Standing [ECF No. 354].

         CTP did not, prior to filing any of the pending cases, obtain ownership of a right to sue for infringement of the Patents in Suit. Accordingly, CTP lacked the necessary constitutional standing to sue for patent infringement of the Patents in Suit. “A court may exercise jurisdiction only if a plaintiff has standing to sue on the date it files suit.” Abraxis Bioscience, Inc. v. Navinta LLC, 625 F.3d 1359, 1364 (Fed. Cir. 2010). “Standing is a constitutional requirement pursuant to Article III and it is a threshold jurisdictional issue.” Id. at 1363.

         The Court's holding that it lacks jurisdiction over CTP's infringement claims, moots Defendant's motions other than the Joint Motion seeking dismissal pursuant to Rule 12(b)(1) as well as Taylor's claim for a declaratory judgment of non-infringement.[4]

         III. LEGAL STANDARD

         The plaintiff bears the burden of proving jurisdiction to survive a Rule 12(b)(1) motion to dismiss. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Generally, whether a court has subject matter jurisdiction over a patent case is determined by the law of the regional circuit[5] because it is a “procedural question[] not unique to patent law.” Univ. of Utah v. Max-Planck-Gesellschaft zur Forderung der Wissenschaften E.V., 734 F.3d 1315, 1319 (Fed. Cir. 2013).

         However, standing to sue for patent infringement flows from the patent statutes. Israel Bio-Eng'g Project v. Amgen Inc., 475 F.3d 1256, 1264 (Fed. Cir. 2007) (citing 35 U.S.C. § 281, which provides that “[a] patentee shall have remedy by civil action for infringement of his patent.”). Therefore, subject matter jurisdiction in the instant case implicates Federal Circuit law on standing. See, e.g., Paradise Creations, Inc. v. UV Sales, Inc., 315 F.3d 1304, 1308 (Fed. Cir. 2003)(“Whether a party has standing to sue in federal court is a question of federal law.”); Bushnell, Inc. v. Brunton Co., 659 F.Supp.2d 1150, 1163 n. 15 (D. Kan. 2009)(citing Madey v. Duke Univ., 307 F.3d 1351, 1358 (Fed. Cir. 2002)).

         The standing requirement imposes both constitutional and prudential limitations on federal court jurisdiction. Morrow v. Microsoft Corp., 499 F.3d 1332, 1338 (Fed. Cir. 2007). The constitutional component of standing arises from the “case-or-controversy requirement of Article III.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Constitutional standing is jurisdictional and must be present on the date a suit is filed. WiAV Solutions LLC v. Motorola, Inc., 631 F.3d 1257, 1263-64 (Fed. Cir. 2010). “[T]he touchstone of constitutional standing in a patent infringement suit is whether a party can establish ...


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