Court Dismisses Patent Infringement Action for Lack of Standing

In an April 28, 2015 ruling, Judge Colleen McMahon found that the plaintiff in a patent infringement action lacked standing because of a defect in the patent’s chain of title. The plaintiff’s title to the patent depended upon a transfer from the plaintiff’s wholly-owned subsidiary to the plaintiff. The Court found that not such transfer had taken place. Judge McMahon wrote that there had not been an express assignment, and that the plaintiff had not acquired the patent automatically upon the plaintiff’s filing of a certificate of dissolution for the subsidiary. According to the Court, the mere filing of the certificate does not cause the transfer, which happens only upon the filing of a plan of dissolution within three years of the filing of the initial certificate.

Court Dismisses Most of Copyright Licensee's Infringement Claims on Standing Grounds

In a February 21, 2014 ruling, Judge Katherine Polk Failla denied in part and granted in part the parties’ cross motions for summary judgment. Plaintiff John Wiley & Sons, Inc. started a declaratory judgment action against DRK Photo for a declaration that Wiley had not infringed DRK’s copyrights in certain stock photographs that DRK had previously licensed to Wiley as the representative for the photographers that originally took the photographs. DRK then counterclaimed for copyright infringement. After the completion of discovery, the parties cross-moved for summary judgment.

A threshold issue for DRK’s motion was its standing to assert copyright infringement claims. Judge Failla wrote that under 17 U.S.C. § 501(b), only legal or beneficial owners of a copyright have standing to sue, and that “the Second Circuit enforces Section 501(b) by holding that ‘[t]he Copyright Act authorizes only two types of claimants to sue for copyright infringement: [i] owners of copyrights, and [ii] persons who have been granted exclusive licenses by owners of copyrights.’” After analyzing the Representation Agreements under which DRK acquired the right to license the photographs at issue to Wiley, the Court concluded that the “record provides uncontroverted proof that the Representation Agreements are nonexclusive licenses.” Judge Failla premised her conclusion in part on the fact that “DRK admitted that the Representation Agreements are nonexclusive licenses.” Judge Failla also rejected DRK’s argument that was a beneficial owner of the copyrights at issue because it was entitled to one-half of the licensing revenue, noting that “the cases on which DRK relies in support do not prove otherwise.”

Court Awards Reasonable Royalty of 50% of Gross Margin in Patent Infringement Action

In a December 3, 2013 ruling, Judge Denise L. Cote entered a damages award in the last of a long-running series of patent infringement actions brought by Astrazeneca against generic drug manufacturers over the active ingredient in Astrazeneca’s brand-name drug Prilosec for heartburn.  Apotex Corporation, the largest generic drug manufacturer in Canada, was the remaining defendant.  The Court had previously found Apotex liable for infringement, and the December 3 ruling concerns only the assessment of a reasonable royalty as damages.  After a lengthy analysis, Judge Cote concluded that “the hypothetical licensing fee to which [the parties] would have agreed would have been at least 50% of the Apotex gross margin from its sales” of the infringing products, and ruled that Astrazeneca “is entitled to damages in the amount of $76,021,994.50 plus pre-judgment interest.”

In reaching that decision, the Court considered three threshold issues.  First, Judge Cote analyzed whether the royalty should be applied to the full value of the infringing product, or merely to the supposedly “minimal” value of the infringing component.  The Court noted that “[w]here a product, typically an electronic product, is composed of many different components, royalties for infringement are awarded ‘based not on the entire product, but instead on the smallest salable patent-practicing unit.’”  The Court further wrote, though, that under the “entire market value” rule, “a patentee may assess damages based on the market value of the entire product ‘where the patented feature creates the basis for customer demand or substantially creates the value of the component parts.’”  The Court rejected the notion that a rule developed for complex electronic products should be applied to generic pharmaceutical products.  The Court further ruled that even applying the entire market value rule, the patented component of the infringing generic drug did substantially create the value for the finished products.  So Judge Cote concluded that the royalty rate should be applied to the value of the generic pills sold by Apotex.