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Pi-Net International, Inc. v. Focus Business Bank

United States District Court, N.D. California, San Jose Division

April 6, 2015

PI-NET INTERNATIONAL, INC., Plaintiff,
v.
FOCUS BUSINESS BANK, Defendant. PI-NET INTERNATIONAL, INC., Plaintiff,
v.
BRIDGE BANK, N.A., Defendant.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS CASES AS MOOT (Re: Docket No. 83, Case No. 5:12-cv-04958) (Re: Docket No. 78, Case No. 5:12-cv-04959)

PAUL S. GREWAL, Magistrate Judge.

As this court previously noted, these cases involve the "unique" and "often puzzling" ability of patent cases to "proceed in any number of different venues, often at the same time."[1] After Plaintiff Pi-Net International, Inc. brought suit against Defendants Focus Business Bank and Bridge Bank, N.A. for patent infringement, the Patent and Trademark Office initiated inter partes review of the patents-in-suit.[2] Persuaded that a stay was proper in light of these parallel proceedings, the court entered an order staying the cases against Defendants pending resolution of the IPR proceedings.[3] During this stay, a new complicity was added to these cases when Pi-Net executed agreements transferring ownership of the asserted patents to its president Dr. Lakshmi Arunachalam.[4]

Claiming that Pi-Net now lacks standing to sue for infringement of the asserted patents, Defendants move for the court to lift the stay and dismiss these cases for mootness.[5] Because these cases became moot upon Pi-Net's assignment of its rights to the asserted patents, the court lifts the stay and GRANTS Defendants' motion to dismiss.

I.

A party may file a motion under Fed.R.Civ.P. 12(b)(1) to dismiss a complaint for lack of subject matter jurisdiction. "In considering a Rule 12(b)(1) motion, the [c]ourt is not restricted to the face of the pleadings, but may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction.'"[6] "Once challenged, the party asserting subject matter jurisdiction has the burden of proving its existence."[7]

"If the plaintiff lacks standing under Article III of the U.S. Constitution, then the court lacks subject matter jurisdiction, and the case must be dismissed."[8] To establish Article III standing, "a plaintiff must show (1) it has suffered an injury in fact' that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision."[9] "The injury required by Article III can exist solely by virtue of statutes creating legal rights, the invasion of which creates standing."[10] "In such cases, the standing question... is whether the constitutional or statutory provision on which the claim rests properly can be understood as granting persons in the plaintiff's position a right to judicial relief.'"[11]

Standing in a patent infringement derives from the Patent Act, which provides that "[a] patentee shall have remedy by civil action for infringement of his patent."[12] The term "patentee" includes "the patentee to whom the patent was issued" as well as those who are "successors in title to the patentee" because they hold legal title to the patent.[13] "A patent grant bestows the legal right to exclude others from making, using, selling or offering to sell the patented invention in the United States, or importing the invention... Constitutional injury in fact occurs when a party performs at least one prohibited action with respect to the patented invention that violates these exclusionary rights."[14]

"[S]tanding is to be determined as of commencement of suit."[15] In contrast, "[t]he question of whether the [c]ourt loses jurisdiction over a case where a plaintiff has standing at the outset... is properly characterized as one of mootness."[16] Generally, "[t]he doctrine of mootness can be described as the doctrine of standing set in a time frame: The requisite personal interest that must exist at the commencement of the litigation (standing) must continue throughout its existence (mootness).'"[17] Although "long-recognized exceptions to mootness" exist, courts may not "retain jurisdiction over cases in which one or both of the parties plainly lack a continuing interest."[18]

Pi-Net alleges that Defendants infringe U.S. Patents Nos. 5, 987, 500 and 8, 108, 492.[19] "The patents are generally directed to a method and apparatus for performing real-time, two-way transactional capabilities on the Web."[20] The 500 and 492 patents issued to Arunachalam in 1999 and 2012, respectively.[21] Both patents were later assigned to Pi-Net.[22]

In 2012, Pi-Net brought suit against Defendants for infringement of the 500 and 492 patents.[23] Pi-Net also asserted these patents against "various financial institutions in approximately twenty-eight separate actions."[24]

SAP America, Inc. then initiated IPR proceedings at the PTO challenging the validity of the patents-in-suit.[25] The court entered an order staying these cases pending resolution of those proceedings, "conditioned on Defendants' agreement to be estopped from raising any invalidity reference, or combination of references, that had been presented to the PTO in SAP's IPR petitions, including those for which the PTO declined to institute review."[26]

While this stay was in place, Pi-Net, through its President Arunachalam, executed two assignment agreements assigning to Arunachalam "the entire right, title and interest in and to [the asserted patents], including all right to sue for past infringement" and entitling Arunachalam to "retain any monetary damages, settlements, royalties or recovery" recovered or obtained in such suits taken by Arunachalam at her own expense.[27]

Arguing that these assignments divested Pi-Net of standing to pursue these cases, Defendants now move for the court to lift the stay and to dismiss ...


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