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Judge Stark dismisses Clouding IP cases for lack of standing

Judge Leonard P. Stark recently dismissed Clouding IP’s claims against numerous defendants finding that Clouding IP lacked standing.  Clouding IP, LLC v. Google Inc., et al., C.A No. 12-639-LPS, 12-641-LPS, 12-675-LPS, 13-1338-LPS, 13-1341-LPS, 13-1342-LPS, 13-1453-LPS, 13-1454-LPS, 13-1455-LPS, 13-1456-LPS, 13-1458-LPS (July 28, 2014).  The patent assignment agreement at issue covered “the purported sale to Clouding of all title, rights, and interest in the patents, subject to provisions by which Symantec retained particular rights in the patents.”  Id. at 1-2.  Judge Stark found that Clouding did not have “prudential standing,” however, finding that:

The transfer of “all rights, title, and interest” in the patents identified in the Agreement was made “subject to the terms of this Agreement including the License set forth in Section 4.5.  Under the Agreement, . . . Clouding encumbered its right to sell or assign the patents, grant an exclusive license, indulge infringement, allow the patent to lapse, and dictate the terms of licenses. Thus, based on the clear language of the transfer provisions, Symantec did not convey any entire patent, an undivided part or share of any entire patent, or all rights under any patent in a specified geographical region of the United States. Consequently, Clouding does not hold formal legal title.”

Id. at 11.  In particular, under the Agreement, Symantec retained the right to “make, use, sell offer to sell, and import the claimed inventions in all the patents”; the right to sublicense to its customers; and, most importantly, the right to bring suit.  Id. at 14-15. Judge Stark also determined that the Agreement included a “restraint on alienation” imposed on Clouding in which Clouding may not, under certain scenarios, make an assignment of the patents to another party without Symantec’s consent.  Id. at 17.  Accordingly, since Symantec did not transfer formal legal title to Clouding such that Clouding would qualify as the “effective” patentee, Clouding lacked standing to sue for infringement of the patents-in-suit.  Id. at 20.

 

UPDATE November 18, 2014:  Clouding IP moved for reargument of Judge Stark’s July 28 decision to dismiss its cases for lack of standing.  Clouding IP, LLC v. AT&T Mobility LLC, et al., C.A No. 13-1342-LPS, 13-1454-LPS, 13-1455-LPS, 13-1458-LPS (D. Del. Nov. 17, 2014). Clouding IP asked the Court to reconsider its decision “in order to grant Clouding IP relief it never previously sought: a change to try to fix its jurisdictional defect in prudential standing.”  Id. at 1.  Judge Stark denied Clouding IP’s motion declining to “provide Plaintiff with what amounts to a ‘do over’ after all the time the parties and Court devoted to analyzing the facts and circumstances that Plaintiff was (to all appearances) content to have the Court evaluate.”  Id. at 2.  

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