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Judge Burke denies motion to dismiss due to lack of standing

In Toshiba Samsung Storage Technology Korea Corporation v. LG Electronics, Inc., et al., C.A. No. 15-691-LPS-CJB (D. Del. Sept. 20, 2016) (unsealed Sept. 28, 2016) Magistrate Judge Christopher J. Burke denied Defendants’ motion to dismiss due to lack of standing. The parties had consented to Judge Burke conducting any and all proceedings and entering a final order with regard to Defendants’ motion to dismiss. Id. at 4.

Defendants argued that Plaintiff had not obtained all substantial rights to the patents-in-suit when third party Samsung had executed an assignment agreement with Plaintiff, because Samsung retained “the right to practice the patents, the right to license the patents, and the right to re-acquire the patents at no cost.” Id. at 9. The Court concluded that the most important factor in the “all substantial rights” analysis – the right to sue – weighed in favor of Plaintiff. Id. at 25. Having first interpreted disputed portions of the assignment agreement, the Court concluded that Plaintiff had the exclusive right to sue, and the presence of a covenant not to sue a “future licensee” not named in the agreement did not divest Plaintiffs its standing due to the mere possibility that such “future licensee” could be Defendants. See id. at 17-20. Second, “the Court [was] also swayed by the apparent intent of the parties in drafting the Agreement, as reflected by some of the wording in the document.” Id. at 26. Third, it concluded that the limits on transfer were “not so stringent as to suggest” a lack of standing where Samsung’s right of first refusal allowed only for “the possibility of re-acquiring the Assigned Patents, only if [Plaintiff] decides to transfer, sell or abandon the patents[.]” Id. at 27 (emphasis in original). Fourth, it was “important that the Agreement provides [Plaintiff] other rights indicative of ownership. For example, [Plaintiff] enjoys exclusive rights to all proceeds and other benefits obtained from its enforcement actions, and the right to make, use and sell products or services under the Assigned Patents.” Id. at 28.

Accordingly, and “[t]aking all of these considerations into account, and based on the record before it, the Court conclude[d] that the Agreement did transfer from Samsung to [Plaintiff] all substantial rights in the Assigned Patents,” and denied Defendants’ motion. Id. at 28.

Toshiba Samsung Storage Technology Korea Corporation v. LG Electronics, Inc., et al., C.A. No. 15-691-LPS-CJB (D. Del. Sept. 20, 2016) (unsealed Sept. 28, 2016)

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