VOXX INTERNATIONAL CORP. v. JOHNSON SAFETY, INC.

Filing 80

ORDER GRANTING DEFENDANTS MOTION TO DISMISS 31 by Judge Otis D. Wright, II:The Court GRANTS Johnsons motion to dismiss. The dismissal of Counts 4, 5, 6, and 7 from Voxxs FAC is without leave to amend. (lc). Modified on 5/2/2017 .(lc).

O

1
2
3
4
5
6
7

United States District Court
Central District of California

8
9
10
11
12

VOXX INTERNATIONAL CORP.; and
ROSEN ENTERTAINMENT SYSTEMS,
LLP,
Plaintiffs,

13
14

v.

15

Case № 2:17-cv-00358-ODW (DTB)
ORDER GRANTING
DEFENDANT’S MOTION TO
DISMISS [31]

JOHNSON SAFETY, INC.,

16

Defendant.

17
18

I.

INTRODUCTION

19

This case is an action for patent infringement brought by Plaintiff Voxx

20

International Corporation (“Voxx”) and Rosen Entertainment Systems, LLP

21

(“Rosen”) against Defendant Johnson Safety, Inc. (“Johnson”). (First Am. Compl.

22

(“FAC”) ¶¶ 1–4, ECF No. 24.) The case originated in the Southern District of

23

Indiana. (See id.) While the case was in that district, Johnson filed a motion to

24

dismiss some of Voxx’s claims and to transfer the case to the Central District of

25

California. (ECF No. 31.) The Indiana court granted Johnson’s motion to transfer

26

and transferred the case to this Court on January 17, 2017. (ECF No. 47.) Johnson’s

27
28

1

motion to dismiss remained pending after the transfer.1 (See id.) For the reasons

2

discussed below, the Court GRANTS the motion.

3

II.

FACTUAL BACKGROUND

4

Voxx claims that Johnson’s products infringe seven patents. (FAC ¶¶ 19–46.)

5

The products involved in this suit—both the patented products and the accused

6

products—are all models of video systems for vehicles. Voxx owns three of the

7

asserted patents, and Rosen owns the other four but licenses them to Voxx (“the

8

Rosen Patents”). (See id.) Voxx states in the FAC that it joins Rosen as a party

9

plaintiff because “[i]t is possible that [Johnson] would be exposed to suit from Rosen

10

if not joined herein.” (Id. ¶ 18.)

11

Voxx alleges that it is the “exclusive licensee” of the Rosen Patents. (Id. ¶ 15.)

12

Further, Voxx claims that its exclusive license permits it to enforce the Rosen Patents

13

through litigation and to initiate suit in Rosen’s name or to join Rosen in such suit.

14

(Id. ¶ 16.)

15

The license in question is a Patent License Agreement (“PLA”) between Voxx

16

and Rosen. (See PLA, Ex. A, ECF No. 32-1.) It gives Voxx a license of the Rosen

17

Patents exclusive to making and selling products for original equipment manufacturers

18

of vehicles (“OEMs”) and suppliers who directly or indirectly supply services or

19

products to and for an OEM (“Tier Suppliers”). (Id. at 1.) The license is explicitly

20

non-exclusive to and for entities other than OEMs and Tier Suppliers. (Id.) In

21

addition, Rosen retains the right to sell products covered by the relevant patents to

22

Land Rover Corporation, USA (“Land Rover”). (Id. at 4.)

23

III.

DISCUSSION

24

Johnson asserts two bases for dismissing portions of Voxx’s FAC: (1) lack of

25

standing as to the Rosen Patents; and (2) failure to state a claim on which relief can be

26

granted.

27
28

1

After considering the papers filed in connection with these motions, the Court deemed the matters
appropriate for decision without oral argument. Fed. R. Civ. P. 78(b); C.D. Cal. L.R. 7-15.

2

1
2
3

A.

Standing
Johnson moves to dismiss Voxx’s claims for lack of standing only with respect

to the Rosen Patents.

4

1.

5

Standing is a requirement in order for a federal court to hear a plaintiff’s claim.

6

Lujan v. Defenders of Wildlife, 504 U.S. 555, 555 (1992). Standing pertains to subject

7

matter jurisdiction and is thus properly raised in a motion to dismiss under Federal

8

Rule of Civil Procedure 12(b)(1). White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000).

9

“In resolving a factual attack on jurisdiction, the district court may review evidence

10

beyond the complaint without converting the motion to dismiss into a motion for

11

summary judgment.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir.

12

2004).

Legal Standard

13

The plaintiff bears the burden of demonstrating that it meets both constitutional

14

and prudential standing requirements. Visioneer, Inc. v. KeyScan, Inc., 626 F. Supp.

15

2d 1018, 1023 (N.D. Cal. 2009).

16

jurisdiction must show that it has suffered an “injury in fact,” defined as the invasion

17

of a legally protected interest which is (1) concrete and particularized and (2) actual or

18

imminent. Lujan, 504 U.S. at 560. The prudential requirement for standing is that

19

“the plaintiff generally must assert his own legal rights and interests, and cannot rest

20

his claim to relief on the legal rights or interests of third parties.” Smelt v. Cnty. of

21

Orange, 447 F.3d 673, 682 (9th Cir. 2006).

Constitutionally, a party invoking federal

22

In the realm of patent infringement actions, standing hinges on the plaintiff’s

23

rights pertaining to the patent(s) at issue. A patent owner is entitled to bring a civil

24

action for infringement of its patent. Morrow v. Microsoft Corp., 499 F.3d 1332,

25

1339 (Fed. Cir. 2007). Where all substantial rights under a patent have been assigned

26

to a third party, that third party can also sue in its own name for infringement. Id.

27

However, a plaintiff holding exclusionary rights and interests but not all substantial

28

rights to the patent can only enforce its exclusionary rights “through or in the name of

3

1

the owner of the patent.” Id. at 1340 (quoting Indep. Wireless Tel. Co. v. Radio Corp

2

of Am., 269 U.S. 459, 469 (1926)). And if the plaintiff lacks exclusionary rights under

3

the patent statutes, it lacks the constitutional standing necessary to bring a patent

4

enforcement action. Id. at 1341 (adding that “[t]his standing deficiency cannot be

5

cured by adding the patent title owner to the suit”); see also Propat Int’l Corp. v.

6

Rpost, Inc., 473 F.3d 1187, 1189 (Fed. Cir. 2007).

7

2.

8

The Court will first address prudential standing, which it finds that Voxx has,

9
10

Analysis

and then turn to constitutional standing, which Voxx lacks.
i.

Prudential Standing

11

In order to answer the question whether Voxx has prudential standing to bring

12

this suit, the Court must first characterize Voxx’s license to enforce the Rosen Patents

13

within one of the definitions described above. The Court determines that Voxx holds

14

exclusionary rights but not all substantial rights.

15

First, the Court can easily conclude that Voxx is neither the patent owner nor a

16

de facto patent owner holding all substantial rights in the Rosen Patents. The PLA

17

clearly carves out certain areas in which Voxx does not have exclusive rights to use

18

and enforce the Rosen Patents. (See PLA 3–4.) For instance, Voxx does not have

19

exclusive rights outside of the OEM and Tier Supplier markets, such as in the field of

20

products sold directly to consumers. (Id. at 3.) Further, as previously mentioned,

21

Rosen retains the right to sell to Land Rover and to third parties for direct sale or

22

resale to Land Rover. (Id. at 4.) Therefore, Voxx does not own all substantial rights

23

to these patents.

24

Second, the Court can rule out the possibility of Voxx lacking any exclusionary

25

rights with respect to the Rosen Patents. The plain language of the PLA grants Voxx

26

an exclusive license in certain fields, and therefore, Voxx is not without any

27

exclusionary rights. (See id. at 1.) As such, Voxx is subject to the rule that in order to

28

enforce its exclusionary rights, it must do so through or in the name of Rosen, the

4

1

patent owner. See Morrow, 499 F.3d at 1340.

2

Here, Voxx has joined Rosen in the action. (See FAC ¶ 18.) Johnson argues

3

that this joinder is insufficient, as Rosen has not made an appearance in the suit or

4

been joined through a Rule 19 motion.2 The Court disagrees. Johnson provides no

5

authority for its contention that a plaintiff who has consented to be named in an action,

6

has been joined and named in the Complaint, and who is represented in the action

7

(albeit here, by the same attorney as Voxx) is not properly joined unless that plaintiff

8

makes an appearance in its own right. The Court finds that Rosen is properly joined

9

in this action and that Voxx has thus met the prudential standing requirements.

10

ii.

Constitutional Standing

11

However, Voxx lacks a constitutionally cognizable injury in the relevant field.

12

Because Voxx holds exclusionary rights but not all substantial rights in the Rosen

13

Patents, it must join Rosen as a party in order to enforce the exclusionary rights that it

14

has. But that does not mean that Voxx can join Rosen and then sue to enforce the

15

patents outside of the scope of the rights it holds. Here, Voxx’s exclusionary rights

16

are limited to products sold to or made for OEMs and Tier Suppliers.

17

importantly, Johnson’s overhead entertainment systems (corresponding with the

18

products covered in the Rosen Patents) are sold only in the aftermarket—that is,

19

directly to consumers, and not to OEMs or Tier Suppliers. (Chang Decl. ¶¶ 28–34,

20

Ex. B, ECF No. 33.) As Voxx points out, Johnson does sell some products to OEMs

21

and Tier Suppliers. (Opp’n 17–19, ECF No. 45; Chang Decl. ¶ 35.) However, those

22

products are not the ones relevant to this action. (See generally FAC.) Voxx’s

23

fixation on this point is simply an attempt to distract from the fact that Johnson’s

24

accused products are not within the field in which Voxx has exclusionary rights.

25
26
27
28

2

And,

Federal Rule of Civil Procedure 19 requires that a party who is subject to service of process and
whose joinder will not destroy subject-matter jurisdiction be joined if: (1) complete relief cannot be
accorded without the party; (2) the party’s absence will impede the plaintiff’s ability to protect its
interests; or (3) the party’s absence creates a substantial risk of the defendant incurring double,
multiple, or inconsistent verdicts/obligations because of the absent party’s interest. Fed. R. Civ. P.
19(a).

5

1

Where a plaintiff has only a non-exclusive license in a field, it has no

2

constitutional right to sue to enforce the patent(s). See Morrow, 499 F.3d at 1341.

3

Voxx’s license in the field of aftermarket (non-OEM or Tier Supplier) sales is non-

4

exclusive. (PLA 3 (“[Rosen] hereby further grants to [Voxx] a paid-up, non-exclusive

5

license to make, have made, import, use, sell, and offer for sale products covered by

6

the Rosen Patents to and for entities other than OEMs and TIER Suppliers.”).) Thus,

7

the field relevant to Johnson’s products, aftermarket sales, is outside the domain of

8

Voxx’s exclusive rights. As per Morrow, without exclusionary rights, a plaintiff is

9

void of a constitutionally cognizable injury for purposes of standing. 499 F.3d at 341.

10

Therefore, Voxx has no constitutional standing to enforce the Rosen Patents against

11

products sold in the field of aftermarket sales. The Court thus DISMISSES Counts 4,

12

5, 6, and 7, which pertain to the Rosen Patents, from Voxx’s FAC. This dismissal is

13

without leave to amend, since no allegations consistent with the PLA could cure the

14

deficiency.

15

B.

Failure to State a Claim

16

Johnson alternatively moves to dismiss on the basis that some of Voxx’s claims

17

with respect to the Rosen patents do not state a claim on which relief can be granted.

18

However, the Court need not consider this alternative argument since it has already

19

dismissed without prejudice the Rosen Patent claims.

20

//

21

//

22

//

23

//

24

//

25

//

26

//

27

//

28

//

6

1

IV.

CONCLUSION

2

For the reasons discussed above, the Court GRANTS Johnson’s motion to

3

dismiss. (ECF No. 31.) The dismissal of Counts 4, 5, 6, and 7 from Voxx’s FAC is

4

without leave to amend.

5
6

IT IS SO ORDERED.

7
8

May 2, 2017

9
10
11
12

____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

7