Rad Data Communications, Inc. v. Patton Electronics Co.

882 F. Supp. 351 (1995)

RAD DATA COMMUNICATIONS, INC., Plaintiff,
v.
PATTON ELECTRONICS CO., Defendant.

No. 95 Civ. 0018(CBM).

United States District Court, S.D. New York.

April 20, 1995.

Leonard S. Sorgi, Amster, Rothstein & Ebenstein, New York City, for plaintiff.

Jon Paul Robbins, McLaughlin & Stern, Alkalay Handler Robbins and Herman, New York City, for defendant.

OPINION

MOTLEY, District Judge.

DEFENDANT'S MOTION TO DISMISS

Defendant seeks dismissal of this patent infringement action under Rule 12(b)(1) arguing that this Court lacks subject matter jurisdiction.

Plaintiff is in the business of marketing modems which interconnect remote data terminal equipment, such as computers, printers, and video terminals. Defendant also manufactures and sells self-powered modems. At issue are two patents, the U.S. Patent Nos. 4,534,039 and 4,677,646. Plaintiff alleges that defendant's modems, infringe upon these two patents. The use of these patents have been in dispute since January 10, 1992 when plaintiff's predecessors-in-interest, Sedco, informed defendant of the alleged infringement. Defendant then contested the validity of the patents but their validity was upheld. In September 1994, plaintiff began negotiations with Develcon and Sedco to purchase the patents at issue. At the time Sedco held legal title to the patents. By early November 1994, the parties had agreed upon the sale of the patents to plaintiff. The transfer was supposed to work as follows: Sedco would assign the patents to Develcon and then Develcon would assign them to plaintiff in exchange for a substantial amount of money. Upon execution of the deal, matters turned out differently. Develcon and plaintiff executed their part of the assignment on November 7, 1994 while the Sedco/Develcon assignment was not executed by Sedco until two days later on November 9, 1994. Defendant has moved for dismissal arguing that plaintiff did not have legal title to the patents. According to defendant, the assignment by Develcon to plaintiff on November 7, 1994 was ineffective because Develcon did not obtain legal title to the patents until November 9, 1994. Therefore, plaintiff did not have legal title as of January 3, 1995 when suit was brought. Consequently, defendant argues that plaintiff does not have standing to bring this suit and this Court does not have subject matter jurisdiction.

I. Standard for Rule 12(b)(1) motion

The court may dismiss a facially sufficient complaint for lack of subject-matter jurisdiction if the court finds, based on affidavits or other evidence outside the complaint, that the asserted basis for federal jurisdiction is not sufficient. Antares Aircraft v. Federal Republic of Nigeria, 948 F.2d 90, 96 (2d Cir.1991), vacated on other grounds, ___ U.S. ___, 112 S. Ct. 3020, 120 L. Ed. 2d 892 aff'd on reh'g, 999 F.2d 33 (1993); Kamen v. American Tel. & Tel. Co., 791 F.2d 1006, 1011 (2d Cir.1986); Ensign-Bickford Co. v. ICI Explosives USA Inc., 817 F. Supp. 1018, 1024 (D.Conn.1993). It should be noted that a Rule 12(b)(1) motion will not be converted into a motion for summary judgment.

II. Application

This Court has original jurisdiction over "any civil action arising under any Act of Congress relating to patents." 28 U.S.C. § 1338(a). The statute provides that only "[a] patentee shall have a remedy by civil action for infringement of his patent." 35 U.S.C. § 281. To bring suit for patent infringement, plaintiff must have legal title to the patent in suit. For it is well established "that one seeking to recover money damages for infringement of a United States patent (an action `at law') must have held the legal title to the patent during the time of infringement." Arachnid, Inc. v. Merit Industries, Inc., 939 F.2d 1574, 1578-79 (Fed.Cir.1991), citing, Crown Die & Tool Co. v. Nye Tool & Machine Works, 261 U.S. 24, 40-41, 43 S. Ct. 254, 258, 67 L. Ed. 516 (1923).

This court finds and concludes that plaintiff does not have standing to invoke subject matter jurisdiction under 28 U.S.C. § 1338(a) because plaintiff did not have valid legal title to the patents during the time of infringement. It is obvious from the official records of the U.S. Patent and Trademark Office that plaintiff did not have valid legal title to the patents. These records show that on the date of the purported assignment of the Develcon patents by Develcon to plaintiff, Develcon had nothing to assign. Develcon had already assigned its interest in the Develcon patents to Sedco. Since Develcon had nothing to assign, the purported assignment from Develcon to plaintiff of the Develcon patents is a nullity. FilmTec Corp. v. Allied-Signal, Inc., 939 F.2d 1568, 1572 (Fed. Cir.1991).

In reply, plaintiff argues that the intent of plaintiff, Develcon, and Sedco was to transfer legal title to these patents to plaintiff. Plaintiff argues that the transfer was in actuality effected on November 21, 1994 after Develcon had legal title to the patents (Exhibit A to the Declaration of Michael J. Berger). However, this seems a rather strained argument because the November 7, 1994 agreement uses express and unconditional terms. Defendant argues that there is nothing in the language in the agreement which would make any assignment under the agreement or in the accompanying assignments conditioned on a subsequent event, or effective on any other date beside the date on which Develcon executed the agreement and assignments. Moreover, 35 U.S.C. § 261 makes the effective date of an assignment the date that it was signed by the purported patent owner. In this case Develcon was the purported patent owner and it signed the agreement on November 7, 1994 not any day later than November 9, 1994. Accordingly, plaintiff did not have valid legal title to the Develcon patents, Develcon did. Plaintiff, therefore, cannot invoke this Court's subject matter jurisdiction pursuant to 28 U.S.C. § 1338(a).

CONCLUSION

Therefore, plaintiff's complaint is dismissed pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction without prejudice.

ORDER

Pursuant to the accompanying opinion, plaintiff's complaint is dismissed without prejudice.

So ordered.