Ixi Mobile (R&D) Ltd. et al v. Apple, Inc.

Northern District of California, cand-4:2015-cv-03755

LETTER addressed to Judge Richard J. Sullivan from Harrison J. Frahn IV dated 5/20/2015 re: pre-motion conference for motion to dismiss IXI Mobile (R&D) Ltd. for lack of standing. Document filed by Apple, Inc.

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SIMPSON THACHER & BARTLETT LLP 2475 HANOVER STREET PALO ALTO, CA 94304 (650) 251-5000 FACSIMILE (650) 251-5002 DIRECT DIAL NUMBER E-MAIL ADDRESS (650) 251-5065 hfrahn@stblaw.com VIA ECF AND EMAIL (SULLIVANNYSDCHAMBERS@NYSD.USCOURTS.GOV) May 20, 2015 Re: IXI Mobile (R&D) Ltd. and IXI IP, LLC v. Apple Inc., 14-cv-7954 (RJS) Honorable Richard J. Sullivan United States District Judge Thurgood Marshall United States Courthouse 40 Foley Square New York, NY 10007 Dear Judge Sullivan: This firm represents Defendant Apple Inc. ("Apple") in the above-captioned case. Apple respectfully requests a pre-motion conference for a motion to dismiss IXI Mobile (R&D) Ltd. ("IXI Mobile") for lack of standing. This letter sets forth the basis for that motion. As the Court may recall from the briefing on the pending transfer motion, IXI Mobile, the Israeli entity, transferred all of its rights in the patents to IXI IP, LLC ("IXI IP"), the New York entity. In opposing transfer, Plaintiffs argued that IXI Mobile's presence as a party supported venue in this District, despite the facts set forth in Apple's briefing that show that IXI Mobile lacks standing. Apple has repeatedly requested that Plaintiffs' counsel agree to drop IXI Mobile as a co-plaintiff. More than a month ago, Plaintiffs sought Apple's permission to file an amended complaint adding allegations about pre-suit discussions. Apple agreed not to oppose that amendment as long as IXI Mobile, given its lack of standing, did not continue as a plaintiff. Apple also asked Plaintiffs if there were any additional facts or documents, beyond those provided during the briefing on the motion to transfer, that would contradict IXI Mobile's lack of standing. At that point, Plaintiffs conceded there was no other support for IXI Mobile's standing, but made clear they were not willing to drop IXI Mobile while the Court was still considering the transfer motion. BEIJING HONG KONG HOUSTON LONDON LOS ANGELES NEW YORK S ÃO P A U L O SEOUL TOKYO WASHINGTON, D.C. SIMPSON THACHER & BARTLETT LLP Honorable Richard J. Sullivan -2- May 20, 2015 Regardless of the transfer motion, there is no reason to delay dismissing IXI Mobile. For example, the discovery rules treat parties and third parties differently, and discovery of foreign third parties has its own set of rules. It makes sense to have IXI Mobile's status resolved as discovery proceeds. A patent plaintiff lacks standing when it holds less than all substantial rights and lacks exclusionary rights under the asserted patents. See Morrow v. Microsoft Corp., 499 F.3d 1332, 1340-41 (Fed. Cir. 2007). Plaintiffs IXI IP and IXI Mobile do not dispute this settled principle. A review of the facts reveals that IXI Mobile has neither any substantial rights nor any exclusionary rights under the patents-in-suit. On May 16, 2014, IXI Mobile assigned its rights in the patents-in-suit to IXI IP, as reflected in the Patent Purchase Agreement ("PPA") filed under seal during the transfer briefing. See PPA, Dkt. No. 44-4 at 6, Art. 4. In return, IXI Mobile received a license (the "License") to continue to make products that it had already commercially released that practiced the patents-in-suit. See License, Dkt. No. 44-5 at Art. 1. Far from giving IXI Mobile any exclusionary rights in the patents-in-suit, the PPA and License give these rights all to IXI IP. Indeed, IXI IP has the sole and exclusive rights to file and control lawsuits for all past, present, and future infringement (see PPA, Dkt. No. 44-4 at 6, Art. 4.2.2; License, Dkt. No. 44-5 at Art. 4); all rights to collect royalties (see PPA Dkt. No. 44-4 at 7, Art. 4.2.4); absolute and sole discretion to decide the scope, strategy, and execution of a monetization strategy (id. at Art. 5.1); all rights to control all decisions about the patents (see License, Dkt. No. 44-5 at Art. 4(b)); sole and exclusive rights to grant licenses, covenants not to sue, or releases (id. at Art. 4(c)); and sole and exclusive rights to prosecute and defend the patents' validity, enforceability, or scope before any court or tribunal (id. at Art. 4(d)). Consequently, IXI IP is the only party with standing to sue for infringement of these patents. See WiAV Solutions LLC v. Motorola, Inc., 631 F.3d 1257, 1265 (Fed. Cir. 2010); see also Morrow, 499 F.3d at 1340 ("When a party holds all rights or all substantial rights, it alone has standing to sue for infringement."). Plaintiffs' arguments for standing find no support in the facts or law. Plaintiffs claim that the PPA and License prove that IXI Mobile "has express or implied rights to exclude others from practicing the inventions." Dkt. No. 42 at 3. However, none of the express "rights" Plaintiffs enumerated are exclusionary. Plaintiffs claim that the License granted IXI Mobile exclusionary rights because it "has the right to practice the claimed inventions." Dkt. No. 42 at 3. But the mere right to practice the invention is not exclusionary and does not equal "the right to exclude others from making, using, or selling the invention in the United States." Morrow, 499 F.3d at 1343. The language of the License plainly says IXI Mobile has no right to enforce the patents, grant sublicenses, releases, or the like. See License, Dkt. No. 44-5 at Art. 2. IXI Mobile has nothing more than a license to continue to make products that it had already commercially released. Id. at Art. 1. SIMPSON THACHER & BARTLETT LLP Honorable Richard J. Sullivan -3- May 20, 2015 Finally, neither the License nor the PPA grants IXI Mobile any "implied rights to exclude." Dkt. No. 42 at 3. The case cited by Plaintiffs to support their position held that "courts will not imply an exclusive license when there is no indication that the licensor granted its licensee any of the exclusionary rights in a patent." WiAV, 631 F.3d at 1266. For the reasons set forth above, Apple respectfully requests a pre-motion conference for its motion to dismiss IXI Mobile from this Action. Apple greatly appreciates the Court's willingness to consider this request. Respectfully submitted, /s/ Harrison J. Frahn IV Harrison J. Frahn IV cc: Thomas Steven Biemer, Esq. Gregory A. Blue, Esq. Joshua D. Wolson, Esq. John J. Higson, Esq. Mark W. Halderman, Esq. Gary D. Colby. Esq. Marshall Beil, Esq. Jason W. Cook, Esq. Brian C. Riopelle, Esq. Derek H. Swanson, Esq. Gregory S. Arovas, Esq. Todd M. Friedman, Esq. James E. Marina, Esq. David Rokach, Esq. James Henry McConnell, Esq.