Personalized User Model LLP v. Google Inc.

Filing 313

REDACTED VERSION of 310 Brief (Combined Opening and Answering), Brief (Combined Opening and Answering), Brief (Combined Opening and Answering), Brief (Combined Opening and Answering) by Personalized User Model LLP, Konig Yochai. (Tigan, Jeremy)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
PERSONALIZED USER MODEL, L.L.P.,

)
)
Plaintiff,
)
)
v.
)
)
GOOGLE, INC.,
)
)
Defendant.
)
______________________________________ )
GOOGLE, INC.,
)
)
Counterclaimant,
)
)
v.
)
)
PERSONALIZED USER MODEL, L.L.P.
)
and YOCHAI KONIG,
)
)
Counterclaim-Defendants.
)
)
______________________________________ )

C.A. No. 09-525 (LPS)
PUBLIC VERSION

ANSWERING BRIEF IN OPPOSITION TO GOOGLE INC’S MOTION TO DISMISS
PERSONALIZED USER MODEL, LLP’S PATENT INFRINGEMENT CLAIMS FOR
LACK OF SUBJECT MATTER JURISDICTION AND OPENING BRIEF
IN SUPPORT OF PUM’S ALTERNATIVE CROSS-MOTION
MORRIS, NICHOLS, ARSHT & TUNNELL LLP
Karen Jacobs Louden (#2881)
Jeremy A. Tigan (#5239)
1201 N. Market Street
P.O. Box 1347
Wilmington, DE 19899-1347
[phone]
[e-mail]
[e-mail]
Attorneys for Personalized User Model, L.L.P
and Yochai Konig.
Confidential Version Filed: August 12, 2011
Public Version Filed: August 18, 2011

TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ...................................................................................................... ii
NATURE AND STAGE OF PROCEEDINGS ............................................................................ 1
SUMMARY OF ARGUMENT ................................................................................................... 1
STATEMENT OF FACTS .......................................................................................................... 2
ARGUMENT .............................................................................................................................. 5
I.

THIS COURT HAS SUBJECT MATTER JURISDICTION
BECAUSE THE ASSIGNMENT VALIDLY TRANSFERRED
LEGAL TITLE TO THE PATENTS-IN-SUIT TO PUM, GIVING
PUM STANDING AS OF THE DATE THIS SUIT WAS FILED. ....................... 5
A.
B.

II.

The Assignment from Levino to PUM Transferred Valid,
Legal Title to PUM. .................................................................................. 6
PUM’s Ratification of the Assignment Also Effected
Transfer of Legal Title to the Patents to PUM. .......................................... 9

IF THE COURT FINDS THAT PUM LACKED LEGAL TITLE
TO THE PATENTS, RULE 17(A)(3) REQUIRES THAT THE
COURT GRANT LEAVE TO FILE AN AMENDED
COMPLAINT SUBSTITUTING LEVINO AS PLAINTIFF. ............................. 11

CONCLUSION ......................................................................................................................... 13

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TABLE OF AUTHORITIES
Page(s)
CASES
02 Dev., LLC v. 607 S. Park, LLC,
71 Cal. Rptr. 3d 608 (Cal. Ct. App. 2008)............................................................................ 10
Barker v. Roelke,
105 S.W.3d 75 (Tex. App.—Eastland 2003) ........................................................................ 10
BCP Liquidating LLC v. Union Tank Car Co.,
No. 03-52532, 2004 WL 632867 (D. Del. Bankr. Mar. 30, 2004) ........................................ 12
Bhandari v. Cadence Design Sys., Inc.,
485 F. Supp. 2d 747 (E.D. Tex. 2007) ................................................................................. 11
Broussard v. San Juan Prods.,
273 S.W.3d 400 (Tex. App.—Beaumont 2008) ..................................................................... 9
Carl Zeiss Meditec, Inc. v. Optovue, Inc.,
No. 10-084-GMS, No. 2011 WL 1419714 (D. Del. Apr. 13, 2011) ........................................ 5
Cmty. Credit Union Servs., Inc. v. Fed. Express Servs. Corp.,
534 A.2d 331 (D.C. 1987) ................................................................................................. 6, 8
Coastal Shutters and Insulation, Inc. v. Derr,
809 S.W.2d 916 (Tex. App.—Houston [14th Dist] 1991) ...................................................... 9
Corporate Dissolution of Ocean Shores Park, Inc. v. Rawson-Sweet,
134 P.3d 1188 (Wash. Ct. App. 2006) ................................................................................... 8
Evans v. Comm’r of Internal Revenue,
557 F.2d 1095 (5th Cir. 1977) ............................................................................................. 10
Framingham Sav. Bank v. Szabo,
617 F.2d 897 (1st Cir. 1980) ............................................................................................ 7, 10
Gross v. U.S.,
No. 96-S-392, 1996 WL 469082 (D. Colo. June 25, 1996)..................................................... 8
Heartland, L.L.C. v. McIntosh Racing Stable, L.L.C.,
632 S.E.2d 296 (W. Va. 2006) ........................................................................................... 6, 8
Heritage Nat’l Assocs. Ltd. P’Ship v. 21st Investment Group L.L.C.,
No. 05-99-00317-cv, 2000 WL 426437 (Tex. App.—Dallas Apr. 19, 2000) ........................ 10
John Davis & Co. v. Cedar Glen No. Four, Inc.
450 P.2d 166 (Wash. 1969) ............................................................................................... 6-9
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Joyner v. Alban Group, Inc.,
541 S.W.2d 292 (Tex. Civ. App. 1976).................................................................................. 7
Lancaster Gin & Compress Co. v. Murray Ginning-System Co.,
47 S.W. 387 (Tex. 1898) ..................................................................................................9-10
Land Title Co. of Dallas, Inc. v. F.M. Stigler, Inc.,
609 S.W.2d 754 (Tex. 1980)................................................................................................ 10
Lester Assocs. v. Commonwealth,
816 A.2d 394 (Pa. Commw. Ct. 2003) ................................................................................... 8
Lighthouse Church of Cloverleaf v. Texas Bank,
889 S.W.2d 595 (Tex. App.—Houston [14th Dist] 1994) .................................................. 7-9
Luna v. Brownell,
110 Cal. Rptr. 3d 573 (Cal. Ct. App. 2010) ........................................................................ 6, 8
Mars, Inc. v. JCM Am. Corp.,
364 Fed. Appx. 648 (Fed. Cir. 2010) ................................................................................... 11
Mars, Inc. v. JCM Am. Corp.,
Civ. No. 05-3165, 2008 WL 5401604 (D.N.J. Dec. 23, 2008) .............................................. 11
Moffat v. U.S.,
112 U.S. 24 (1884) ................................................................................................................ 8
Moore v. Dallas Post Card Co.,
215 S.W.2d 398 (Tex. Civ. App. Dallas 1948) ....................................................................... 9
Park B. Smith, Inc. v. CHF Industries Inc.,
No. 06 Civ. 869, 2011 WL 2714205 (S.D.N.Y. July 12, 2011) .......................................12-13
Speedplay, Inc. v. Bebop, Inc.,
211 F.3d 1245 (Fed. Cir. 2000).............................................................................................. 5
W. Secs. Corp. v. Eternal Techs. Group, Inc.,
303 Fed. Appx. 173 (5th Cir. 2008) ..................................................................................... 10
Wetzel v. Sullivan, King & Sabom, P.C.,
745 S.W.2d 78 (Tex. App.—Houston [1st Dist] 1988) ........................................................... 9
Wilson v. Dearing, Inc.,
415 S.W.2d 475 (Tex. Civ. App.—Eastland 1967) ................................................................ 8
STATUTES
35 U.S.C. § 100(d) (2006) ........................................................................................................... 5

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35 U.S.C. § 261 (2006) ............................................................................................................... 5
35 U.S.C. § 281 (2006) ............................................................................................................... 5
TEX. BUS. ORGS. CODE § 3.001(c) ............................................................................................... 6
OTHER AUTHORITIES
FED. R. CIV. P. 15 ...................................................................................................................... 11
FED. R. CIV. P. 17 ............................................................................................................. 2, 11-12
CHARLES ALAN WRIGHT, ARTHUR R MILLER, MARY KAY KANE, & RICHARD L. MARCUS,
FEDERAL PRACTICE AND PROCEDURE § 1555 (3d ed. 2011) .................................................. 11

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NATURE AND STAGE OF PROCEEDINGS
On July 16, 2009, Personalized User Model L.L.P. (“PUM”) filed a Complaint
against Google, Inc. (“Google”) alleging that Google had infringed, and was continuing to
infringe, PUM’s U.S. Patent No. 6,981,040 (the “’040 Patent”) and U.S. Patent No. 7,320,031.
Several months later, on April 13, 2010, PUM amended its Complaint to add a claim that Google
also infringes PUM’s U.S. Patent No. 7,685,276 (the “’276 Patent”). Now, more than two years
after this lawsuit was filed, and on the heels of the Court’s denial of Google’s request to file an
early motion for summary judgment based on its alleged purchase of rights to the patents-in-suit,
Google again attempts to avoid having this case heard on its merits based on the issue of PUM’s
standing. This is PUM’s opposition to that motion.
SUMMARY OF ARGUMENT
The cornerstone of Google’s hypertechnical argument is that the assignment of
the patents-in-suit to PUM by the Cyprus corporation Levino Ltd. (“Levino”) did not grant PUM
legal title to the patents because PUM had not yet filed its Certificate of Formation with the
Texas Secretary of State. Based on this alleged lack-of-legal-title, Google argues that PUM
lacked standing at the time this lawsuit was filed and, as a result, Google should have a free ride
on its infringement of the patents-in-suit because any title deficiency cannot be fixed. Google’s
arguments are legally wrong and its motion to dismiss should be denied.
First, the Patent and Intellectual Property Assignment Agreement between Levino
and PUM (“the Assignment”) did transfer legal title to PUM no later than the date on which
PUM’s Certification of Formation was filed—nearly two years before this lawsuit was brought.
Under well-established legal principles, including under controlling Texas law, a transfer of
property rights to an entity that is not yet officially formed passes legal title upon the entity’s
formation.

Thus, once the ministerial act of filing PUM’s Certificate of Formation was
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completed, all of the rights contained in the earlier and uncontested Assignment became lawfully
vested in PUM.
Second, under equally-well-established legal principles, both PUM and its general
partner Levino have ratified the Assignment by recording it with the United States Patent and
Trademark Office (“PTO”) and by numerous other post-assignment actions. The Assignment is
valid for this reason as well.
Finally, if the Court were to find that the incorrect plaintiff was named in this
action because legal title to the patents was not transferred to PUM (which the Court should not
do), that outcome can and should be cured by substituting Levino, the assignor and a general
partner of PUM, as a party plaintiff. Therefore, PUM has filed an alternative cross-motion under
FED. R. CIV. P. 17(a)(3) to have Levino substituted as a party plaintiff should the Court find that
PUM lacks standing.
STATEMENT OF FACTS
The facts detailing the timeline of the ownership of the patents-in-suit and the
formation of PUM are as follows:
REDACTED



REDACTED

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1

REDACTED

2

REDACTED

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

REDACTED

Levino and PUM share a
significantly overlapping ownership.

5



REDACTED



REDACTED

REDACTED

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3

4
5

REDACTED
REDACTED
REDACTED

Levino is a general partner of PUM.

6

REDACTED

7

REDACTED

8
9
10

REDACTED
REDACTED
REDACTED

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REDACTED





REDACTED

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12

Approximately five months later, on January 8, 2008, PUM recorded
the Assignment in the PTO.14 Also on January 8, 2008, PUM filed
U.S. Patent Application No. 12/008,148 as a continuation of the
application that became the ’040 Patent.15 This application eventually
issued as the ’276 Patent.



11

On August 14, 2007, the Texas Secretary of State issued a Certificate
of Filing, effective August 14, 2007, formally recognizing PUM as a
limited partnership.13

On July 16, 2009 - one and one-half years after the Assignment was
recorded and almost two years after PUM was formally recognized as
a limited partnership, PUM filed this lawsuit.17 Now, some two years
later, Google files the present motion to dismiss.

REDACTED
REDACTED

13

14
15
16
17

REDACTED
REDACTED
PTO Filing Receipt, Needham Decl., Exhibit 4.
REDACTED
Complaint for Patent Infringement, D.I. 1.

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ARGUMENT
I.

THIS COURT HAS SUBJECT MATTER JURISDICTION
BECAUSE THE ASSIGNMENT VALIDLY TRANSFERRED
LEGAL TITLE TO THE PATENTS-IN-SUIT TO PUM,
GIVING PUM STANDING AS OF THE DATE THIS SUIT
WAS FILED.
This Court has subject matter jurisdiction over PUM’s patent infringement claims.

Carl Zeiss Meditec, Inc. v. Optovue, Inc., No. 10-084-GMS, 2011 WL 1419714, at *3 (D. Del.
Apr. 13, 2011) (“Any federal district court possesses subject matter jurisdiction over federal
patent law claims”) (citing 28 U.S.C. §§ 1331 and 1338). Google challenges subject matter
jurisdiction solely by alleging that PUM lacks standing because PUM and Levino executed the
Assignment before PUM’s Certificate of Formation was filed with the Texas Secretary of State.
See Google Brief, D.I. 302, at 6. Contrary to Google’s assertions, however, the Assignment
validly transferred all right, title, and interest to the patents-in-suit to PUM no later than the date
that PUM was officially formed, well before the filing of this suit.
It is fundamental that a party who owns a patent by issuance or assignment has
standing to file a patent infringement lawsuit. Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245,
1249-50 (Fed. Cir. 2000); see also 35 U.S.C. § 281 (2006) (“A patentee shall have remedy by
civil action for infringement of his patent”); 35 U.S.C. § 100(d) (2006) (“The word ‘patentee’
includes not only the patentee to whom the patent was issued but also the successors in title to
the patentee.”). Patents are personal property and are “assignable in law by an instrument in
writing.” 35 U.S.C. § 261 (2006). Because the Assignment effectively transferred legal title to
the rights to the ’040 and ’276 Patents to PUM on August 14, 2007 – nearly two years before the
filing of this lawsuit – PUM had and has standing to maintain its patent infringement claims.

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A.

The Assignment from Levino to PUM Transferred
Valid, Legal Title to PUM.

The cornerstone of Google’s challenge is its unsupportable argument that the
Assignment from Levino to PUM could not transfer legal title to the patent because at the time of
the Assignment PUM had yet to complete the ministerial act of filing its Certificate of
Formation. Google maintains that under such circumstances the assignment should be treated as
an assignment to a “fictitious person.” See D.I. 302, at 5. Even assuming the facts as Google
alleges them, Google is wrong legally.
PUM is not (and never was) a fictitious entity. Rather, PUM became a legal
entity no later than August 14, 2007 – the date it filed its Certificate of Formation in Texas.
TEX. BUS. ORGS. CODE § 3.001(c).

Legions of courts throughout the country hold that a

conveyance made to an entity before its legal formation effectively passes title upon that entity’s
formation. E.g., Luna v. Brownell, 110 Cal. Rptr. 3d 573, 577 (Cal. Ct. App. 2010) (holding that
a deed of trust to convey property to a trust that did not yet exist was valid and was deemed
legally delivered on the day that the trust was created); Heartland, L.L.C. v. McIntosh Racing
Stable, L.L.C., 632 S.E.2d 296, 303 (W. Va. 2006) (“[T]his Court holds that a deed drawn and
executed in anticipation of the creation of the grantee . . . legal entity . . . is not invalidated
because the grantee entity had not been established as required by law at the time of such
execution, if the entity is in fact created thereafter in compliance with the requirements of law”);
Cmty. Credit Union Servs., Inc. v. Fed. Express Servs. Corp., 534 A.2d 331, 334 (D.C. 1987)
(“A deed conveying property to an incipient ‘corporation’ that has not yet been incorporated
passes title to the corporation as of the time of incorporation, i.e., when the corporation becomes
a legal entity.”); John Davis & Co. v. Cedar Glen No. Four, Inc., 450 P.2d 166, 170 (Wash.
1969) (holding that a “deed to a corporation made prior to its organization, is valid between the
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parties. Title passes when the corporation is legally incorporated.”); see also Framingham Sav.
Bank v. Szabo, 617 F.2d 897, 899 (1st Cir. 1980) (holding that a pre-incorporation agreement
constitutes a continuing offer that the corporation may accept upon formation); see also Joyner v.
Alban Group, Inc., 541 S.W.2d 292, 293 (Tex. Civ. App. 1976) (holding that Alban Group, Inc.,
could sue on a cause of action that accrued before it was incorporated).
Texas courts follow this well-established principle. Indeed, in Lighthouse Church
of Cloverleaf v. Texas Bank, 889 S.W.2d 595 (Tex. App.—Houston [14th Dist] 1994), a case that
Google cites, a Texas court adopted this very reasoning. There, Lighthouse Church (“Church” as
used in the opinion) and Texas Bank executed a deed while the Church was defunct for failing to
pay corporate franchise taxes. Id. at 598. Texas Bank argued that it owned legal title to the
property because the deed was void for lack of a grantee. Id. at 600. The court disagreed,
holding that the Church had legal title, because a deed to a defunct corporation is valid. Id. at
601. Relying on the Washington Supreme Court’s reasoning in John Davis & Co. v. Cedar Glen
No. Four, Inc., supra, the Lighthouse court explained:
[t]here is really very little difference between a corporation not yet
fully incorporated and one which has had its corporate charter
revoked for failing to pay franchise taxes, and which can get that
charter reinstated at any time by simply paying taxes. Id.
The John Davis case is analogous to the instant case. There, real property was
transferred by deed to Cedar Glen No. 4 (“Cedar Glen”) four days before Cedar Glen legally
became a corporation. John Davis, 450 P.2d at 169-70.18 Appellants contended that the deed
was void because the grantee Cedar Glen was not a legal entity at the time of the conveyance.

18

The articles of incorporation for Cedar Glen were executed on December 3, 1962, but
were not filed until January 7, 1963. Id. at 168-169. In the interim, on January 3, 1963,
real property was deeded to Cedar Glen. Id. at 170.

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Id. at 220. The Washington Supreme Court flatly rejected appellants’ position: “A deed to a
corporation made prior to its organization is valid between the parties. Title passes when the
corporation is legally incorporated.” Id. at 170. The corporation, Cedar Glen, became a legal
entity on January 7, 1963 (the date its articles of incorporation were filed), and thus was deemed
to have acquired valid legal title on that date. Id. at 169-70.19 In Lighthouse Church, the Texas
court embraced this principle.
The cases that Google cites are not inconsistent with Lighthouse Church and John
Davis. Rather, Google’s cited cases stand for the unremarkable proposition that conveyances to
entities that never formed (i.e., “fictitious entities”) are not effective. Google Brief, D.I. 302,
at 5.20 Google also relies on Wilson v. Dearing, Inc., 415 S.W.2d 475, 477 (Tex. Civ. App.—
Eastland 1967). But a close reading of Wilson reveals that it supports PUM’s position. The
grantor in Wilson deeded property to a deceased person, but intended to deed to the property to
the deceased person’s heir. Id. at 478. The court held that the deed effectively transferred legal
title to the heir, because the law will not “deprive the grantee of his rights where it was the
grantor’s intention to invest him with title.” Id. at 479 (quoting Taylor v. Sanford, 193 S.W. 661
(Tex. 1917)). Wilson is thus consistent with the principle articulated in Lighthouse Church and
John Davis giving effect to the parties’ intent to transfer property even if the entity was laterformed, or in the case of Wilson, not alive at the time of transfer. Id. at 477. None of Google’s
19

The John Davis decision has been cited favorably by numerous courts. See, e.g., Luna,
110 Cal. Rptr. 3d at 577 (California); Heartland, 632 S.E.2d at 303 (West Virginia);
Cmty. Credit Union Servs., 534 A.2d at 334 (District of Columbia); Corporate
Dissolution of Ocean Shores Park, Inc. v. Rawson-Sweet, 134 P.3d 1188, 1194 (Wash.
Ct. App. 2006).

20

Moffat v. U.S., 112 U.S. 24, 24 (1884) (sham land patent to fictitious person to defraud
U.S. government); Gross v. U.S., No. 96-S-392, 1996 WL 469082, at *2 (D. Colo.
June 25, 1996) (deed to entity that never existed); Lester Assocs. v. Commonwealth,
816 A.2d 394, 396 (Pa. Commw. Ct. 2003) (deed to entity that never existed).

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cases apply here because PUM was duly formed and exists as a limited partnership, an entity
capable of receiving legal title.
Here, Levino plainly demonstrated its intent to transfer the rights of the patentsin-suit to PUM by executing the Assignment. PUM acquired legal title to the patents no later
than August 14, 2007 – the date the Texas Secretary of State issued a Certificate of Filing. See
Lighthouse Church, 889 S.W.2d at 603, John Davis, 450 P.2d at 170. PUM, therefore, had legal
title and thus standing well before this lawsuit was filed in 2009.
B.

PUM’s Ratification of the Assignment Also Effected
Transfer of Legal Title to the Patents to PUM.

Even if the Assignment did not grant legal title on PUM’s formation (which it
did), the parties’ ratification of the Assignment accomplished the transfer of legal title to PUM.
Under Texas law, a party ratifies a contract by performing under it or affirmatively
acknowledging it. Wetzel v. Sullivan, King & Sabom, P.C., 745 S.W.2d 78, 81 (Tex. App.—
Houston [1st Dist] 1988). Once ratified, a contract is given legal effect and binds the contracting
parties. Broussard v. San Juan Prods., 273 S.W.3d 400, 406 (Tex. App.—Beaumont 2008).
It is well-established under Texas law that a business organization may ratify preorganization contracts made on its behalf, and will be bound by those contracts. E.g., Coastal
Shutters and Insulation, Inc. v. Derr, 809 S.W.2d 916, 920 (Tex. App.—Houston [14th Dist]
1991) (“In Texas an entity not yet incorporated will still be held liable for pre-incorporation acts
that are ratified or from which the entity derives benefit.”); Moore v. Dallas Post Card Co.,
215 S.W.2d 398, 401 (Tex. Civ. App. Dallas 1948) (holding that the act of bringing a lawsuit
based on pre-formation contractual rights ratifies the contract); Lancaster Gin & Compress Co.
v. Murray Ginning-System Co., 47 S.W. 387, 389 (Tex. 1898) (holding that a corporation’s
acceptance of the benefits of a pre-incorporation contract ratifies the contract, making the
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contract the corporation’s contract).21

This principle has also been followed by courts

throughout the country. 22
Ratification may either be express or implied from conduct. Barker v. Roelke,
105 S.W.3d 75, 84 (Tex. App.—Eastland 2003).

A party impliedly ratifies a contract by

accepting the benefits of the contract with full knowledge of the agreement. Land Title Co. of
Dallas, Inc. v. F.M. Stigler, Inc., 609 S.W.2d 754, 756 (Tex. 1980). Any act inconsistent with
the intent to avoid the contract has the effect of ratifying the contract. Barker, 105 S.W.2d at 85.
Here, PUM (and its general partner, Levino) expressly ratified the Assignment by
recording the document in the PTO on January 8, 2009. PUM has also taken several actions
demonstrating its intent to accept the benefits of the patent rights under the Assignment.
REDACTED
PUM also ratified the Assignment by filing a
continuation patent application based upon the ’040 Patent and, finally, by filing this lawsuit
asserting ownership of the patents. Neither Levino nor PUM have engaged in any conduct that
would lead any person or entity to believe that the Assignment did not transfer the patents to

21

See also W. Secs. Corp. v. Eternal Techs. Group, Inc., 303 Fed. Appx. 173, 173 (5th Cir.
2008) (“Texas courts regularly allow plaintiffs to invoke the doctrine of ratification in
contract actions.”); Evans v. Comm’r of Internal Revenue, 557 F.2d 1095, 1100 n.6 (5th
Cir. 1977) (“Texas recognizes the corporate adoption of preincorporation contracts”).

22

E.g., 02 Dev., LLC v. 607 S. Park, LLC, 71 Cal. Rptr. 3d 608 (Cal. Ct. App. 2008) (“It is
hornbook law that a corporation can enforce preincorporation contracts made in its
behalf, as long as the corporation ‘has adopted the contract or otherwise succeeded to it,”
and applying it to an LLC’s purchase of a hotel); Framingham Savings Bank v. Szabo,
617 F.2d 897, 898 (1st Cir. 1980) (“Most states hold that a corporation can be bound to a
pre-incorporation agreement by some signal of knowing ratification or adoption of the
contract”); see also Heritage Nat’l Assocs. Ltd. P’Ship v. 21st Investment Group L.L.C.,
No. 05-99-00317-cv, 2000 WL 426437 (Tex. App.—Dallas Apr. 19, 2000) (holding that
an L.L.C. was bound by a pre-formation real estate contract under Oklahoma law) (not
designated for publication).

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PUM. Because PUM, as well as its general partner Levino, have ratified the Assignment, PUM
had legal title and, as a result, standing as of the filing of the lawsuit.
II.

IF THE COURT FINDS THAT PUM LACKED LEGAL
TITLE TO THE PATENTS, RULE 17(A)(3) REQUIRES
THAT THE COURT GRANT LEAVE TO FILE AN
AMENDED COMPLAINT SUBSTITUTING LEVINO AS
PLAINTIFF.
If the Court, nonetheless, is inclined to grant Google’s motion to dismiss, it

should grant PUM leave to substitute Levino as a party plaintiff in this action under Federal Rule
of Civil Procedure 17(a)(3).
Federal Rule of Civil Procedure 17(a)(3) states:
The court may not dismiss an action for failure to prosecute in the
name of the real party in interest until, after an objection, a
reasonable time has been allowed for the real party in interest to
ratify, join, or be substituted into the action. After ratification,
joinder, or substitution, the action proceeds as if it had been
originally commenced by the real party in interest.
FED. R. CIV. P. 17(a)(3) permits the substitution of a plaintiff when the suit was mistakenly filed
in the name of a person or entity who is not the real party in interest.23 6A CHARLES ALAN
WRIGHT, ARTHUR R MILLER, MARY KAY KANE, & RICHARD L. MARCUS, FEDERAL PRACTICE
AND

PROCEDURE § 1555 (3d ed. 2011). The provision is designed “to avoid forfeiture and

injustice when an understandable mistake has been made in selecting the party in whose name
the action should be brought.” Id. A party substituted or joined under FED. R. CIV. P. 17(a)(3)
relates back to the filing of the lawsuit, and permits the action to proceed as if the substituted
23

This case, therefore, is different from cases seeking to cure standing by amendment under
Rule 15 where the original patent holder filed suit after it had transferred title away to
another entity. E.g., Bhandari v. Cadence Design Sys., Inc., 485 F. Supp. 2d 747, 750
(E.D. Tex. 2007); Mars, Inc. v. JCM Am. Corp., Civ. No. 05-3165, 2008 WL 5401604, at
*3 (D.N.J. Dec. 23, 2008) (affirmed in Mars, Inc. v. JCM Am. Corp., 364 Fed. Appx. 648
(Fed. Cir. 2010)). They did not involve circumstances where – as here – suit was
brought by the party believed in good faith to be the assignee of the patent rights.

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plaintiff had originally filed the lawsuit. BCP Liquidating LLC v. Union Tank Car Co., No. 0352532, 2004 WL 632867, at *2 (D. Del. Bankr. Mar. 30, 2004).
Thus, if the Court concludes that PUM is not the real party in interest, leave
should be granted to substitute Levino as plaintiff in this action. If PUM lacks standing because
the Assignment was not effective, Levino, who would then own the patent rights, is the real party
in interest and must be accorded an opportunity to be substituted as plaintiff.
The U.S. District Court for Southern District of New York recently applied
FED. R. CIV. P. 17(a)(3) in a patent action, permitting the substitution of a plaintiff due to a
mistake made in naming the incorrect plaintiff at the time the action was filed. See Park B.
Smith, Inc. v. CHF Industries Inc., No. 06 Civ. 869, 2011 WL 2714205 (S.D.N.Y. July 12,
2011). There, PBS, Inc. filed a patent infringement suit, but later realized that PBS Ltd., not
PBS, Inc., owned the patents-in-suit. Id. at *3. In response to a motion to dismiss for a lack of
standing filed several years into the case, PBS, Inc., moved under Fed. R. Civ. P. 17(a)(3) to
substitute PBS, Ltd. for PBS, Inc. Id. The court noted that such substitutions are liberally
allowed when the ownership defect was caused by mistake and the substitution does not unfairly
prejudice defendants. Id. at *5. The court then held that substitution was warranted because
there was no evidence of bad faith or intent to deceive, nor was there any prejudice because the
subject matter of the claims remains identical. Id. at *5-6. The court also held this substitution
cured the standing defect. Id. at *4.
If the Court concludes that PUM does not hold title to the patents-in-suit and,
thus, lacks standing (which it should not), the Court should grant PUM leave to file and serve a
second Amended Complaint substituting Levino as the plaintiff under Rule 17(a)(3) and the
reasoning of Park B. Smith. If PUM does not have standing, then Levino does. As in Park B.

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Smith, there is no evidence that PUM’s filing of this lawsuit was in bad faith or with intent to
deceive. See id. at *5 (holding that the mistake prong is met absent evidence of bad faith or the
intent to deceive). As demonstrated in Section I, there are numerous reasons why PUM had a
good faith belief that it owned legal title to the patents-in-suit.
Also, this substitution would be “merely formal and in no way alter the [First
Amended] complaint’s factual allegations.” Id. If substituted, Levino would make precisely the
same patent infringement claims against Google.

Thus, Google would suffer no prejudice

because the claims against it would be identical. Moreover, there would no need for additional
discovery because Google has been aware that Levino was a general partner of PUM through
PUM’s limited partnership agreement, and Google has deposed Jack Banks, an officer of Levino.
The depositions Google took of witnesses such as inventors Roy Twersky, Yochai Konig, and
Michael Berthold, as well as the depositions of the various law firms involved with the
prosecution and other transfers of the patents-in-suit, are equally applicable regardless of
whether PUM or Levino is the plaintiff. As the Park B. Smith court reasoned, it is more efficient
to permit the substitution of parties than to create the unnecessary expense and delay of
dismissing the suit, only to have it be refiled the following day. Id. at *5.
To be clear, PUM’s position is that it has standing to maintain this action by
virtue of the Assignment. But should the Court find that it lacks standing, the Court should grant
leave to PUM to substitute Levino as plaintiff.
CONCLUSION
For the reasons stated above, Google’s Motion to Dismiss should be denied.
Alternatively, if the Court finds that PUM lacks standing, the Court should grant leave to
substitute Levino, Ltd. in place of PUM.

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MORRIS, NICHOLS, ARSHT & TUNNELL LLP

/s/ Karen Jacobs Louden

OF COUNSEL:
Marc S. Friedman
SNR Denton US LLP
1221 Avenue of the Americas
New York, NY 10020-1089
[phone]

Karen Jacobs Louden (#2881)
Jeremy A. Tigan (#5239)
1201 N. Market Street
P.O. Box 1347
Wilmington, DE 19899-1347
[phone]
[e-mail]
[e-mail]
Attorneys for Personalized User Model, L.L.P.
and Yochai Konig

Jimmy M. Shin
Jennifer D. Bennett
Matthew P. Larson
SNR Denton US LLP
1530 Page Mill Road, Suite 200
Palo Alto, CA 94304-1125
[phone]
Mark C. Nelson
Robert J. Needham
SNR Denton US LLP
2000 McKinney Avenue, Suite 1900
Dallas, TX 75201
[phone]
Christian E. Samay
SNR Denton US LLP
101 JFK Parkway, Suite 410
Short Hills, NJ 07078
[phone]
August 12, 2011
4430196.2

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CERTIFICATE OF SERVICE
I hereby certify that on August 18, 2011, I caused the foregoing to be
electronically filed with the Clerk of the Court using CM/ECF which will send electronic
notification of such filing to all registered participants.
Additionally, I hereby certify that true and correct copies of the foregoing were
caused to be served on August 18, 2011, upon the following individuals in the manner indicated:
BY E-MAIL

BY E-MAIL

Richard L. Horwitz
David E. Moore
POTTER ANDERSON & CORROON LLP
1313 N. Market St., 6th Floor
Wilmington, DE 19801

Brian C. Cannon
QUINN EMANUEL URQUHART
& SULLIVAN, LLP
555 Twin Dolphin Dr., 5th Floor
Redwood Shores, CA 94065
Charles K. Verhoeven
David A. Perlson
Antonio R. Sistos
Andrea Pallios Roberts
Joshua Lee Sohn
QUINN EMANUEL URQUHART
& SULLIVAN, LLP
50 California Street, 22nd Floor
San Francisco, CA 94111

/s/ Jeremy A. Tigan
______________________________________
Jeremy A. Tigan (#5239)