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

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

RESPONSE in Support of Motion re: 27 MOTION to Transfer Case Apple Inc.'s Notice of Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a). Response to IXI's Sur-reply on Apple's Motion to Transfer. Document filed by Apple, Inc.

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK Case No. 14-cv-7954-RJS-DF IXI Mobile (R&D) Ltd. and IXI IP, LLC, JURY TRIAL DEMANDED Plaintiffs, - against - APPLE INC., Defendant. RESPONSE TO IXI'S SUR-REPLY ON APPLE'S MOTION TO TRANSFER The Court ordered briefing on IXI Mobile's standing. Yet the first two-thirds of IXI's brief re-hashes the facts and law on third parties. When it finally addresses standing, it is manifest why IXI focused elsewhere: no reading of the documents could conceivably prove standing. The License and Patent Purchase Agreement Confirm That IXI Mobile Lacks Standing Patent plaintiffs lack standing when they "hold less than all substantial rights to the patent and lack exclusionary rights." Morrow v. Microsoft Corp., 499 F.3d 1332, 1340-41 (Fed. Cir. 2007). IXI does not dispute this settled principle. Rather, it claims that IXI Mobile has exclusionary rights because it (i) "has the right to practice the claimed inventions" and (ii) "has express or implied rights to exclude others from practicing the inventions." Dkt. No. 42 at 3. The first claim doesn't help and the second is demonstrably false. IXI argues that the license purports to be "exclusive." Dkt. No. 44 at ¶ 9. But substance controls, not labels: "in determining whether a party holds the exclusionary rights, we determine the substance of the rights conferred on that party, not. . . the characterization of those rights as exclusive licenses or otherwise." Morrow, 499 F.3d at 1340 n.7. To have standing, IXI Mobile "must have the right to exclude others from making, using, or selling the invention in the United States." Id. at 1343. The language of the license directly contradicts IXI Mobile's claim that it has any right to exclude. It plainly says IXI Mobile has no right to enforce the patents, grant sublicenses, releases, or the like. See 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; if it were to introduce a new product today, its license would not cover it. Id. at Art. 1. And it cannot transfer even this limited license to anyone else. Id. at Arts. 1 and 6. In contrast, IXI IP retained the sole and exclusive rights to: (a) file and control any infringement suit; (b) control all decisions about the patents; (c) grant licenses, covenants not to sue, or releases; and (d) prosecute and defend the patents' validity, enforceability, or scope before any court. Id. at Art. 4. Therefore, under the "touchstone" of the standing analysis, WiAV Solutions LLC v. Motorola, Inc., 631 F.3d 1257, 1265 (Fed. Cir. 2010), IXI Mobile fails because it has no exclusionary rights. The arguments on the Patent Purchase Agreement ("PPA") are worse. IXI claims that the PPA proves that IXI Mobile "has express or implied rights to exclude others from practicing the inventions." Dkt. No. 42 at 3. That is not credible in the least. None of the rights IXI enumerates is exclusionary. Future reversionary rights are irrelevant, as whatever interests "may flow. . . in the future are insufficient" to prove standing. Morrow, 499 F.3d at 1343. Likewise, none of (a) letting IXI IP "monetize the patents," (Dkt. No. 42 at 3), (b) getting updates on "monetization" activities (id.), or (c) sharing in any "monetization" proceeds (id.) creates any right to exclude. Morrow is again instructive: the plaintiff there had much greater rights, including rights to bring and control suits, but had no standing because, like IXI Mobile, it had neither an exclusive license nor the rights to license or sublicense. See id. at 1343. Now that Apple has seen the PPA, IXI's refusal to provide it before the reply is telling. Instead of giving IXI Mobile any exclusionary rights, the PPA gives them all to IXI IP: it has all rights to pursue infringement cases (see Dkt. No. 44-4 at 6, Art. 4.2.2); all rights to collect royalties (id. at 7, Art. 4.2.4); and absolute and sole discretion to decide the scope, strategy, and execution of a monetization strategy (id. at Art. 5.1). These provisions track the license, confirm the broad scope of the exclusionary rights vested solely in IXI IP, show that no such rights remained with IXI Mobile, and prove beyond a doubt that IXI Mobile lacks standing. 2 The PPA also reveals the fallacy of IXI's "trusted business partnership" with IXI Mobile: the parties are independent contractors who expressly disavowed a partnership or any other relationship. Id. at 17, Art. 10.6. Finally, neither the license agreement nor the PPA grant IXI Mobile any "implied rights to exclude." Dkt. No. 42 at 3. IXI's own case 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. The same applies here. Third Party Considerations Favor California The only new witness information is that two representatives of IXI Mobile (neither of whom are inventors) presently "intend to travel to New York" for trial. Dkt. No. 44-1 and 44-2. This fact is remarkable, but not for the reasons IXI suggests. First, IXI reuses the "intend to" language from its earlier declarations, without disputing that, as set forth in Apple's reply, such expressions of current intent offer no comfort to an opposing party like Apple who would be stripped of the certainty that compulsory process affords. See Dkt. No. 35 at 7. Second, IXI implies that these witnesses are unwilling to travel to California. That's wrong for two reasons: (i) neither witness actually says they will not go to California, nor could they because (ii) both are obligated to go there because IXI Mobile agreed to help IXI IP, including having its representatives testify in any lawsuit. DI 44-4 at 12, Art. 6.2. Thus, both witnesses bolster the analysis under the non-party witness factor, which, as previously shown in Apple, Blackberry, and Samsung's briefing, strongly favors the Northern District of California. 1 1 The Court should not credit Mr. Pedersen's new claim about IXI Mobile's "understanding" that the patents would be enforced in New York. Dkt. No. 43 at ¶ 2. Mr. Pedersen neither works for IXI Mobile nor provides any other foundation for this knowledge. Moreover, even if he were competent, this claim is not in any way relevant to the analysis, nor is it supported by IXI's cited authority. See Dkt. No. 42 at 3 (citing WiAV, 631 F.3d at 1267). 3 Dated: March 5, 2015 Respectfully submitted, By /s/ Harrison J. Frahn IV HARRISON J. FRAHN IV HARRISON J. FRAHN IV hfrahn@stblaw.com PATRICK E. KING pking@stblaw.com SIMPSON THACHER & BARTLETT LLP 2475 Hanover Street Palo Alto, California 94304 Telephone: (650) 251-5000 GREGORY T. CHUEBON gchuebon@stblaw.com SIMPSON THACHER & BARTLETT LLP 425 Lexington Avenue New York, NY 10017 Tel: (212) 455-2000 Attorneys for Defendant Apple Inc. 4