Western Digital Technologies, Inc. v. Viasat, Inc.

Background

Five plaintiffs—Western Digital Technologies, Inc.; Western Digital Ireland Ltd.; SanDisk 3D IP Holdings Ltd.; SanDisk Technologies LLC; and SanDisk Storage Malaysia Sdn. Bhd.—alleged that Viasat, Inc. infringed claims of three patents: U.S. Patent Nos. 9,424,400, 10,447,667, and 8,504,834.

In an earlier order, the court allowed the plaintiffs to amend their complaint after finding that their general allegation that one or more plaintiffs owned rights in the patents did not identify which plaintiff owned which rights. The amended complaint alleged that Western Digital Technologies held legal title to the ’400 and ’667 patents and had enforcement and licensing rights; SanDisk 3D IP Holdings was the exclusive licensee; and Western Digital Ireland owned the other rights and interests. For the ’834 patent, the amended complaint alleged that SanDisk Technologies was the owner and patentee with all substantial rights and that SanDisk Storage Malaysia was the exclusive licensee.

Viasat moved under Federal Rule of Civil Procedure 12(b)(1), which concerns the court’s subject-matter jurisdiction, to dismiss the claims brought by Western Digital Ireland and SanDisk Storage Malaysia. Viasat argued that the amended complaint did not identify what exclusionary rights—rights to prevent others from practicing the patent—those plaintiffs held.

Court’s Analysis

The court first held that the plaintiffs adequately pleaded constitutional standing. Constitutional standing is the requirement that a plaintiff show an injury fairly connected to the defendant’s conduct and likely to be remedied by the court. The plaintiffs alleged that Western Digital Ireland and SanDisk Storage Malaysia possessed some exclusionary rights in the asserted patents and that Viasat infringed those rights. The court found those allegations sufficient at the pleading stage.

The court explained that whether a party has all substantial rights in a patent does not determine constitutional standing or subject-matter jurisdiction. Questions about a party’s statutory right to sue under the Patent Act are properly considered under Rule 12(b)(6), which tests whether a complaint states a legally sufficient claim, rather than Rule 12(b)(1).

The court nevertheless considered whether the amended allegations plausibly supported the plaintiffs’ statutory right to sue. The Patent Act allows a “patentee” to bring a patent-infringement action. A patentee includes the person to whom the patent was issued and successors in title, but not a mere licensee. A licensee with exclusionary rights may sue together with the patentee, while a licensee without any exclusionary rights may not sue.

Although the court described the allegation that Western Digital Technologies and Western Digital Ireland “together are owner and patentee” as “needlessly cagey,” it found the allegation sufficient, when viewed in the plaintiffs’ favor, to support a plausible inference that Western Digital Ireland held some exclusionary rights in the ’400 and ’667 patents.

For the ’834 patent, the court rejected Viasat’s argument that SanDisk Technologies could not simultaneously hold “all substantial rights” while licensing an exclusionary right to SanDisk Storage Malaysia. The court treated the wording as a matter of semantics and found that the allegations plausibly showed that SanDisk Technologies was the owner and SanDisk Storage Malaysia was the exclusive licensee, with both possessing some exclusionary rights.

Disposition

The court found that all five plaintiffs had adequately pleaded some exclusionary rights in the asserted patents and therefore had adequately pleaded the right to sue under 35 U.S.C. § 281. The court DENIED Viasat’s motion to dismiss. It added that if discovery later undermined the allegations, it would consider a partial motion for summary judgment concerning the plaintiffs’ right to sue.