Opinion
Case No. 6:21-CV-00482-ADA
2022-12-13
YILLIO, INC., Plaintiff, v. MAP LABS LTD., d/b/a Mapme, Defendant.
Fred I. Williams, Michael Simons, Williams Simons & Landis PLLC, Austin, TX, Jonathan L. Hardt, Rozier Hardt McDonough PLLC, Austin, TX, John Witten-zellner, Williams Simons and Landis PLLC, Philadelphia, PA, Todd E. Landis, Williams Simons & Landis PLLC, Dallas, TX, for Plaintiff. Matthew S. Compton, Jr., Adela Marie Pena, Compton & Associates PLLC, Spring, TX, for Defendant.
Fred I. Williams, Michael Simons, Williams Simons & Landis PLLC, Austin, TX, Jonathan L. Hardt, Rozier Hardt McDonough PLLC, Austin, TX, John Witten-zellner, Williams Simons and Landis PLLC, Philadelphia, PA, Todd E. Landis, Williams Simons & Landis PLLC, Dallas, TX, for Plaintiff. Matthew S. Compton, Jr., Adela Marie Pena, Compton & Associates PLLC, Spring, TX, for Defendant. MEMORANDUM OPINION AND ORDER ALAN D. ALBRIGHT, UNITED STATES DISTRICT JUDGE
Before the Court is Defendant Map Labs Ltd. d/b/a Mapme's ("Mapme") Motion to Dismiss for Lack of Subject-Matter Jurisdiction, for Failure to State a Claim, and for Lack of Personal Jurisdiction filed on July 30, 2021. ECF No. 10. On October 20, 2021, Plaintiff Yillio, Inc. ("Yillio") filed its Response. ECF No. 16. Mapme filed a Reply on October 27, 2021. ECF No. 21.
On May 24, 2022, the Court held a hearing on Mapme's Motion to Dismiss. ECF No. 44. On the subject-matter jurisdiction issue, the Court requested additional briefing on whether it could resolve this issue at the motion-to-dismiss stage. ECF No. 47 at 18-19. Defendant filed supplemental briefing on July 5, 2022. ECF No. 53. On July 18, 2022, Plaintiff filed a response to Defendant's supplemental briefing. ECF No. 55. Defendant filed a reply in support of its supplemental briefing on July 25, 2022. ECF No. 58.
At the hearing on May 24, 2022, the Court also granted Plaintiff leave to amend its complaint to resolve the failure to state a claim issue. Id. at 33. Plaintiff filed an amended complaint on June 14, 2022. ECF No. 48. Defendant did not file a second motion to dismiss the amended complaint for failure to state a claim. Because Defendant did not file a motion to dismiss the amended complaint, the Court does not consider whether Plaintiff's amended complaint meets the pleading requirements.
Lastly, at the hearing on May 24, 2022, the Court denied Defendant's motion to dismiss for lack of personal jurisdiction. ECF No. 47 at 41. The analysis below memorializes the Court's findings on that issue.
After considering the parties' briefing, relevant facts, and applicable law, the Court DENIES Mapme's Motion to Dismiss.
I. BACKGROUND
On May 5, 2021, Plaintiff Yillio filed this action against Mapme, alleging infringement of U.S. Patent Nos. 8,285,696 ("the '696 Patent") and 8,943,037 ("the '037 Patent") (collectively, the "Asserted Patents"). ECF No. 48 ¶ 13. Mapme is a small company with three employees all located in Israel. ECF No. 10 at 1. Mapme provides a map customization service via its website. Id. Yillio accuses Mapme's services of infringing the Asserted Patents. ECF No. 48 ¶¶ 22-31. Mapme has over 80 customers in the state of Texas. ECF No. 16 at 5.
The Asserted Patents were originally issued to inventors Vadim Droznin and Michael J. Wanyo. ECF Nos. 17-1, 17-2, 17-3. The inventors assigned the Asserted Patents to RouteCentric, Inc. ("RouteCentric") in August 2012. Id. On June 13, 2013, RouteCentric entered into an agreement with Yillio setting forth the terms of a joint venture ("Joint Venture Agreement"). ECF No. 17-4. On the same date, RouteCentric and Yillio also entered into an agreement entitled Bill of Contribution ("Contribution Agreement"). ECF No. 16-2.
Between June 13, 2013, and February 28, 2022, documents were filed with the USPTO designating RouteCentric as the assignee of the Asserted Patents. ECF Nos. 22-1 (fee transmittal letter dated January 2, 2014, designating RouteCentric as the assignee of the patent); ECF No. 22-3 (general power of attorney for patent prosecution by inventor Michael J. Wanyo with the assignee listed as RouteCentric); ECF No. 22-6 (fee transmittalletter dated February 7, 2014, designating RouteCentric as the assignee of the patent). The Joint Venture Agreement was filed with the USPTO on February 28, 2020. ECF No. 17-4.
In its Motion to Dismiss, Mapme raises three issues before the Court: (1) whether Yillio has standing to sue, (2) whether Yillio has adequately plead infringement, and (3) whether this Court has personal jurisdiction over Mapme. ECF No. 10. Because Yillio has amended its complaint and Mapme has not filed a new motion to dismiss in response to Yillio's amended complaint, the Court does not consider whether Yillio has adequately plead infringement. The Court takes up the other two issues below.
II. STANDING TO SUE
A. Legal Standard
1. Standing to Sue and Rule 12(b)(1) Motion
"The law of Article III standing, which is built on separation-of-powers principles, serves to prevent the judicial process from being used to usurp the powers of the political branches." Town of Chester v. Laroe Estates, Inc., 581 U.S. 433, 137 S. Ct. 1645, 1650, 198 L.Ed.2d 64 (2017). To have standing, a plaintiff "must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, Inc. v. Robins, 578 U.S. 330, 338, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016). "Th[at] triad of injury in fact, causation, and redressability constitutes the core of Article III's case-or-controversy requirement," and the plaintiff, as "the party invoking federal jurisdiction[,] bears the burden of establishing its existence." Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 103-04, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (footnote omitted). Regional circuit law governs standards for the "dismissal of a complaint for lack of standing unless the issue is unique to patent law and therefore exclusively assigned to the Federal Circuit." Univ. of S. Fla. Rsch. Found., Inc. v. Fujifilm Med. Sys. U.S.A., 19 F.4th 1315, 1323 (Fed. Cir. 2021). Federal Circuit law governs an entity's constitutional standing in a patent infringement action. See WiAV Sols. LLC v. Motorola, Inc., 631 F.3d 1257, 1263 (Fed. Cir. 2010). "[E]ach element of Article III standing must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, with the same evidentiary requirements of that stage of litigation." Legacy Cmty. Health Servs., Inc. v. Smith, 881 F.3d 358, 366 (5th Cir. 2018) (quotation marks omitted).
In the patent infringement context, the Federal Circuit has "recognized that those who possess 'exclusionary rights' in a patent suffer an injury when their rights are infringed." Lone Star Silicon Innovations LLC v. Nanya Tech. Corp., 925 F.3d 1225, 1234 (Fed. Cir. 2019). Where the plaintiff owns exclusionary right in the asserted patent and the plaintiff has alleged that the defendant infringes, the Federal Circuit has determined: "[I]t is clear that a court could redress an injury caused by that infringement. This is enough to confer standing at the pleadings stage." Id.
2. Considerations of Matters Outside the Pleadings
A motion to dismiss for want of subject matter jurisdiction can take the form of a facial attack on the complaint or a factual attack on the subject matter of the Court. "A factual attack on the subject matter jurisdiction of the court . . . challenges the facts on which jurisdiction depends[,] and matters outside of the pleadings, such as affidavits and testimony, are considered." Oaxaca v. Roscoe, 641 F.2d 386, 391 (5th Cir. 1981). Mapme has made a "factual attack," and the Court must therefore resolve factual disputes relating to subject matter jurisdiction:
If a defendant makes a "factual attack" upon the court's subject matter jurisdiction over the lawsuit, the defendant submits affidavits, testimony, or other evidentiary materials. In the latter case a plaintiff is also required to submit facts through some evidentiary method and has the burden of proving by a preponderance of the evidence that the trial court does have subject matter jurisdiction.Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir. 1981).
However, it is not appropriate at the motion-to-dismiss stage to consider the merits of the case. "When a challenge to jurisdiction is in fact directed only to the merits of a question of patent law, it is proper for the district comt to accept jurisdiction under § 1338." Exxon Chem. Patents, Inc. v. Lubrizol Corp., 935 F.2d 1263, 1265 (Fed. Cir. 1991).
B. The Agreements Between RouteCentric and Yillio
RouteCentric and Yillio have entered into two agreements that are relevant to Yillio's standing to sue: (1) the Joint Venture Agreement and (2) the Contribution Agreement. Both agreements were entered into on June 13, 2013. The relevant language in the Joint Venture Agreement states:
Effective as of the Effective Date, RouteCentric shall contribute all of its assets to Uillio in a tax-free exchange for common stock of Yillio ("Common Stock"), as set forth below, pursuant to that bill of contribution attached hereto as Exhibit A (the "Contribution") . . . . The assets to be contributed shall include, without limitation, all of RouteCentric's intellectual property, including, without limitation, patents and patent applications, including all continuation and divisional applications thereof, and patents issuing thereon, along with all reissues, reexaminations, substitutes, and extensions thereof . . . .ECF No. 17-4 at 1. The relevant language of the Contribution Agreement states:
[Redacted] ECF No. 16-2 at 1. Exhibit C lists one patent, the '696 Patent and one patent application which later issued as the '176 Patent. Id. at 8. The '037 Patent is a continuation of the patent application that issued as the '176 Patent. ECF No. 16 at 4. The Contribution Agreement later clarifies that:
[Redacted] ECF No. 16-2 at 1-2. The Contribution Agreement also makes clear that [Redacted] Id. at 2. The Contribution Agreement states that [Redacted] Id.
The Joint Venture Agreement was filed with the USPTO on February 28, 2020. ECF No. 17-2. The Contribution Agreement was never filed with the USPTO. ECF No. 21 at 2.
C. Analysis
The first issue is whether Yillio owns "exclusionary rights" to the Asserted Patents. Mapme first argues that, based on the Joint Venture Agreement, RouteCentric never assigned its patent rights to Yillio. ECF No. 10 at 3. Mapme argues that the "shall contribute" language in the Joint Venture Agreement is merely a promise to assign the patent rights in the future. Id. Mapme argues that a promise to assign patent rights in the future is not sufficient to confer standing. Id. In response, Yillio argues that the Contribution Agreement transferred all of RouteCentric's interest in the Asserted Patents to Yillio. ECF No. 16 at 3.
The Court finds that RouteCentric assigned its rights in the Asserted Patents to Yillio under the Contribution Agreement. The Contribution Agreement assigned all of RouteCentric's rights to its intellectual property, including the Asserted Patents. ECF No. 16-2 at 1-2. To determine whether a successor-in-interest has standing, the question is whether the assignment transferred rights to the patents. Lone Star, 925 F.3d at 1229. Here, the agreement states that Yillio shall have [Redacted] of the Asserted Patents. ECF 16-2 at 2. The Contribution Agreement specifically includes the '696 Patent and the application that the '037 Patent is a continuation of. The Contribution Agreement also specifically states that it includes [Redacted] ECF No. 16-2 at 1. The Contribution Agreement does not reserve any rights to RouteCentric in the Asserted Patents. The Contribution Agreement assigns all rights to the Asserted Patents to Yillio. Thus, the Court concludes that the Contribution Agreement, if valid, assigns Yillio all rights to the Asserted Patents that may be required for standing.
Mapme raises a second argument against Yillio's standing. Mapme provides evidence showing that, after the Contribution Agreement was signed, counsel for RouteCentric continued to prosecute the '037 Patent on behalf of RouteCentric. ECF No. 21 at 3. Mapme points out that after the officers of Yillio, Messrs. Wanyo and Droznin, signed the Contribution Agreement, they provided oaths to the USPTO for the prosecution of the '037 Patent to RouteCentric. Id. at 3-4. Mapme also points to a power of attorney signed by Mr. Wanyo that lists RouteCentric as the assignee. Id. at 3. Mapme argues that because the '037 Patent was prosecuted by and issued to RouteCentric, either (1) the Contribution Agreement is not a valid assignment or (2) the'037 Patent is void because only Yillio, not RouteCentric, had the right to prosecute it. Id. at 5-6. Mapme argues the Contribution Agreement is invalid because it was contradicted by the oaths provided by Messrs. Wanyo and Droznin. Id. at 4. Mapme also argues that if Yillio had been assigned the Asserted Patents, "Yillio needed to appear before the USPTO, record its assignment, and comply with various statutes and regulations." Id. at 3.
As discussed above, the Court finds that the Contribution Agreement is a valid assignment despite the prosecution of the '037 Patent by RouteCentric. The oaths provided by Messrs. Wanyo and Droznin, the inventors of the Asserted Patents and officers of Yillio, did not contradict the Contribution Agreement. See ECF Nos. 22-2 (Wanyo Declaration), 22-4 (Droznin Declaration). These oaths do not state that RouteCentric is the owner of the rights to the '037 Patent. Rather, these oaths acknowledge that Messrs. Wanyo and Droznin are the original inventors of the '037 Patent. Additionally, Mr. Wanyo's power of attorney does not state that RouteCentric is the assignee of the '037 Patent. The Court finds that these oaths do not cast doubt on the validity of the Contribution Agreement. The Court finds that the Contribution Agreement is valid.
As for Mapme's second argument that the '037 Patent is void because RouteCentric, not Yillio, participated in the prosecution of this patent, the Court believes that a motion to dismiss is an improper avenue for determining validity of the '037 Patent. As the Federal Circuit has explained: "When a challenge to jurisdiction is in fact directed only to the merits of a question of patent law, it is proper for the district court to accept jurisdiction." Exxon Chem. Patents, 935 F.2d at 1265. In Exxon Chemical Patents, Inc. v. Lubrizol Corp., the Federal Circuit agreed with a district court that found a patent's validity was inappropriate at the motion-to-dismiss stage. Id. Here, Mapme's argument that the '037 Patent is void because, after the assignment was executed, the '037 Patent was prosecuted by the assignor, rather than the assignee, is an issue that goes to the merit of a question of patent law. This is no longer a standing issue—it is an issue of patent validity. Whether a patent is valid is a substantive patent issue that is not appropriate for the motion-to-dismiss stage. This issue "remains to be tried as a question of patent law." Id.
Because the Court finds that the Contribution Agreement assigned rights to the Asserted Patents to Yillio, the Court finds that Yillio has standing to sue Mapme for infringement of the Asserted Patents.
III. PERSONAL JURISDICTION
A. Legal Standard
Federal Rule of Civil Procedure 12(b)(2) requires a court to dismiss a claim if the court does not have personal jurisdiction over the defendant. The plaintiff has the burden of establishing jurisdiction. Patterson v. Aker Sols. Inc., 826 F.3d 231, 233 (5th Cir. 2016). When a court assesses a non-resident defendant's challenge to personal jurisdiction without holding an evidentiary hearing, the plaintiff bears the burden of presenting "sufficient facts" for a prima facie case of personal jurisdiction. Thiam v. T-Mobile USA, Inc., No. 4:19-CV-00633, 2021 WL 1550814, at *1 (E.D. Tex. Apr. 20, 2021); Celgard, LLC v. SK Innovation Co., Ltd., 792 F.3d 1373, 1378 (Fed. Cir. 2015). The court accepts as true allegations in the plaintiff's complaint, except when they are contradicted by the defendant's affidavits. Thiam, 2021 WL 1550814, at *1. However, "genuine, material conflicts" between the facts in the parties' affidavits and other evidence are construed in the plaintiff's favor. Id.
In matters unique to patent law, Federal Circuit law—rather than the law of the regional circuit—applies. See In re Cray, 871 F.3d 1355, 1360 (Fed. Cir. 2017) (citing Midwest Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356, 1359 (Fed. Cir. 1999)). Whether this Court has personal jurisdiction is just such an issue, so Federal Circuit law governs the substantive questions of law. Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1016 (Fed. Cir. 2009).
Establishing in personam jurisdiction in a federal question case is a two-step inquiry (at least when the implicated federal statute does not provide for service of process). First, a court asks whether a defendant is subject to the jurisdiction of a state court of general jurisdiction under state law. Fed. R. Civ. P. 4(k)(1)(A). This requires measuring the reach of the long-arm statute of the state in which the federal court sits. Daimler AG v. Bauman, 571 U.S. 117, 125, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014). Second, the court asks if the exercise of personal jurisdiction would exceed the limitations of due process. Id. Since the Texas long-arm statute extends to the limits of due process, see BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002), the Court need only focus on the due process aspects of the personal jurisdiction question, see Jackson v. Tanfoglio Giuseppe S.R.L., 615 F.3d 579, 584 (5th Cir. 2010).
The constitutional inquiry requires the court to consider (1) whether a defendant has purposefully availed itself of the protections and benefits of the forum state by establishing "minimum contacts" with the state, and (2) whether the exercise of jurisdiction comports with traditional notions of "fair play and substantial justice." Tanfoglio, 615 F.3d at 584. Minimum contacts are satisfied by contacts creating either general or specific jurisdiction. Thiam, 2021 WL 1550814, at *2 (citing Wilson v. Belin, 20 F.3d 644, 647 (5th Cir. 1994)).
"The Federal Circuit applies a three-prong test to determine if specific jurisdiction exists: (1) whether the defendant purposefully directed activities at residents of the forum; (2) whether the claim arises out of or relates to those activities; and (3) whether assertion of personal jurisdiction is reasonable and fair." Nuance Commc'ns, Inc. v. Abbyy Software House, 626 F.3d 1222, 1231 (Fed. Cir. 2010). The plaintiff has the burden to show minimum contacts exist under the first two prongs, but the defendant has the burden of proving the exercise of jurisdiction would be unreasonable under the third. Elecs. For Imaging Inc. v. Coyle, 340 F.3d 1344, 1350 (Fed. Cir. 2003). The Federal Circuit has counseled, however, that the exercise of jurisdiction is unreasonable only in "the rare situation in which the plaintiff's interest and the state's interest in adjudicating the dispute in the forum are so attenuated that they are clearly outweighed by the burden of subjecting the defendant to litigation within the forum." Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1568 (Fed. Cir. 1994) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477, 105 S. Ct. 2174, 85 L.Ed.2d 528 (1985)).
B. Analysis
Yillio's complaint alleges that this Court has jurisdiction over Mapme under the Texas Long Arm Statute. ECF No. 1 ¶ 7. Yillio alleges that Mapme "intends to and does business in Texas directly or through its subsidiaries or intermediaries and makes, uses, advertises, makes available, and/or markets products and services within the State of Texas, and more particularly, within this district, that infringe the patent-in suit." Id. ¶ 8. Mapme argues that this Court does not have jurisdiction over Mapme under the Texas Long Arm Statute because Yillio has not made plausible allegations that any specific customers in the State of Texas are direct or indirect infringers of the method claims in the Asserted Patents. ECF No. 10 at 16. Mapme claims that "[t]here are critical distinctions between the sale of infringing goods and the performance of an infringing method that Plaintiff's complaint fails to account for." Id. In response, Yillio points out that Mapme has [Redacted] customers in the State of Texas, and transactions with these customers relate directly to the accused products. ECF No. 16 at 5. Yillio argues that these transactions are sufficient to confer personal jurisdiction. Id.
While the Federal Circuit has provided a three-prong test to determine specific jurisdiction, the Court understands Mapme's arguments to only challenge one prong—whether the claim arises out of or relates to the defendant's purposefully directed activities at residents of the forum. The Court does not consider the first prong, whether the defendant purposefully directed activities at residents of the forum, or the third prong, whether assertion of personal jurisdiction is reasonable and fair.
The Court finds that Yillio has met its burden of showing that its claim arises out of or relates to Mapme's purposefully directed activities at the residents of the forum. Yillio's complaint alleges that Mapme directs activities to the forum state that give rise to Yillio's claim of infringement. ECF No. 1 ¶ 8. More specifically, Yillio points to [Redacted] customers in the State of Texas that use the accused products. ECF No. 16 at 5. While Mapme disputes whether any of these [Redacted] directly or indirectly infringe, at this stage of the proceedings, the Court must accept Plaintiff's allegations as true. Thiam, 2021 WL 1550814, at *1. Any genuine factual conflicts must be resolved in favor of the plaintiff. Id.
Yillio's complaint also alleges that this Court has personal jurisdiction over Mapme under the federal long-arm statute because it has substantial contacts and it is not subject to jurisdiction in any state's courts of general jurisdiction. ECF No. 1 ¶ 6. In its initial Motion, Mapme argued that the federal long-arm statute did not apply. ECF No. 10 at 17. Because the Court finds that the Texas Long Arm Statute applies, the Court agrees with Mapme that the federal long-arm statute cannot apply. Fed. R. Civ. P. 4(k)(2)(A).
Based on the Texas Long Arm Statute, the Court finds that Yillio has adequately alleged personal jurisdiction over Mapme.
IV. CONCLUSION
For the foregoing reasons, the Court DENIES Mapme's Motion to Dismiss for Lack of Subject-Matter Jurisdiction and for Lack of Personal Jurisdiction. The Court also DENIES-AS-MOOT Mapme's Motion to Dismiss for Failure to State a Claim in view of Yillio's amended complaint.