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Judge Sleet dismisses co-plaintiff for lack of standing

In adidas AG and adidas America, Inc. v. Under Armour, Inc. and MapMyFitness, Inc., C.A. No. 14-130-GMS (D. Del. June 15, 2015), Judge Gregory M. Sleet dismissed co-plaintiff adidas America, which had been added as a plaintiff in a first amended complaint, for lack of standing.

Adidas AG is a German company and the “undisputed legal owner of each of the asserted patents in this suit,” while addidas America, its American subsidiary, was alleged to be an exclusive licensee of the asserted patents within the United States.  The Court summarized a “complex series of contracts between adidas AG and its various subsidiaries” through which Plaintiffs claimed they had standing to sue.  See id. at 2-3.

Defendants offered both facial and factual challenges to adidas America’s standing.  Id. at 4.  The Court rejected Defendants’ facial challenge based on allegedly contradictory assertions in the amended complaint: first, that adidas AG owned “all right, title, and interest in and to” the patents (emphasis in original), and second that adidas America was the exclusive licensee in the United States.  The Court agreed with Plaintiffs that “alleging that adidas AG owns all ‘right, title, and interest’ in the patents does not make it impossible for adidas America to have an exclusive license[] to use some of those rights.  Under the ‘more generous standard of review associated with’ a facial attack, the Plaintiffs’ amended complaint” was sufficient.  Id. at 6 (emphasis in original).

However, the Court then concluded that Plaintiffs had not made a showing that the patents-in-suit were actually the subject of the contractual agreements between the different entities.  See id. at 6-8.  The patents that were the subject of the agreements were not identified by number, instead by their commercial embodiments.  Id. at 6.  Instead, Plaintiffs simply made the unsupported (and disputed) assertion that the asserted patents were tied to an embodiment Plaintiffs claimed in briefing was their competitor product to the accused products.  Id.  This was insufficient to carry Plaintiffs’ burden that subject matter jurisdiction existed.  Id. at 7.

Notwithstanding this lack of proof, the Court concluded that one agreement “definitively” resolved that adidas America lacked standing.  This agreement “explicitly terminated the effectiveness of the previous [agreements],” and appointed two entities, one of them being adidas America, as the exclusive distributors for Plaintiffs’ products in the U.S.  Id. at 8.  Therefore, adidas America did not hold the exclusive right to sell the products.  As a result, this co-plaintiff lacked standing to sue, even with the patent owner joined, because it lacked any exclusionary rights to the patents-in-suit.

The Court also denied Plaintiffs’ motion to apply German and Dutch law to the interpretation of the contracts at issue, finding that, “in light of its more narrow ruling,” it was unnecessary to address the parties’ additional arguments “concerning the proper interpretation” of the agreements at issue, “which likely would have required the application of foreign law.”  Id. at 9 n.4.

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