Personalized User Model LLP v. Google Inc.

Filing 396

MEMORANDUM ORDER re 301 MOTION to Dismiss for Lack of Subject Matter Jurisdiction filed by Google Inc. is DENIED; 309 Cross MOTION for Leave to Substitute Levino Ltd. as Plaintiff filed by Personalized User Model LLP is DENIED AS MOOT. Signed by Judge Leonard P. Stark on 9/13/12. (ntl)

IN THE UNITED STATES :piSTRICT COURT
FOR THE DISTRICT dF DELAWARE

PERSONALIZED USER MODEL, L.L.P.
Plaintiff,

C.A. No. 09-525-LPS

V.

GOOGLE, INC.
Defendant.
MEMORANDUM ORDER

Pending before the Court are Defendant Google, Inc.'s ("Google") motion to dismiss for
lack of subject matter jurisdiction (D.I. 301) and

Plai~tiffPersonalized

User Model, L.L.P.'s

("PUM") cross-motion for leave to substitute Levino iLtd. ("Levino") as Plaintiff (D.I. 309). For
the reasons set forth below, the Court will DENY Gopgle's motion to dismiss and DENY AS
MOOT PUM's motion to substitute plaintiff.
1.

PUM filed this patent infringement lawsuit on July 16, 2009. (D.I. 1)
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2.

PUM asserts that Google infringes claims in U.S. Patent Nos. 6,981,040 and

7,685,276 (the "patents-in-suit"). (/d.)
3.

On June 15, 2000, the inventors of the patents-in-suit assigned their rights to

Utopy, Inc. Utopy, Inc. assigned its rights to Levino on March 2, 2006. Levino assigned its
rights to PUM on May 23,2007. On January 8, 20081, PUM recorded the assignment with the
United States Patent & Trademark Office.
4.

On July 26, 2011, Google moved to dismiss based on PUM's purported lack of

standing. In Google's view, the assignment from Levino to PUM in May 2007 was ineffective

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because, as of the date of the assignment, PUM did n~t yet exist.
5.

The parties agree that the legal effect qf the assignment agreement is governed by

Texas law. (D.I. 302, 310)
6.

Having reviewed Texas law, including the cases cited by the parties, the Court

concludes that legal title to the patents-in-suit passed 'to PUM on August 14, 2007, by virtue of
the May 23,2007 assignment from Levino and the A¥gust 14,2007 Texas Secretary of State's
issuance of a Certificate of Filing, recognizing PUM j:ls a limited partnership.
7.

Title passed to PUM on the date the Trxas Secretary of State recognized PUM as

a legal entity. See Lighthouse Church ofCloverleafv. Texas Bank, 889 S.W.2d 595, 602 (Tex.
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App. 1994) (adopting holding of John Davis & Co. v.: Cedar Glen# Four, Inc., 450 P.2d 166,
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170 (Wash. 1969), that legal title passes when corpor~tion becomes legal entity); see also 19
CORPUS JURIS SECUNDUM, CORPORATIONS§ 741 (20!12) ("[A]ccording to some authority, a deed
to a corporation made prior to its organization is

vali~

between the parties, and the corporation is

deemed to have acquired valid legal title on the date when the corporation is legally
incorporated."); 26A CORPUS JURIS SECUNDUM, DEEbS § 17 (2012) ("When a deed is made to a
corporation before its organization, title passes whenrthe corporation is legally incorporated.");

Luna v. Brownell, 110 Cal. Rptr. 3d 573, 578 (Cal. Ct. App. 2010) (holding that deed oftrust was
not void between grantor and grantee because trust d~d not exist; instead, deed became valid on
date trust was created).
8.

Under Texas law, the assignment to PtJM was subsequently ratified by virtue of

recording the assignment with the United States

Pate~t

& Trademark Office after PUM's formal

recognition as a limited partnership. See Wetzel v. Sullivan, King & Sabom, P. C., 745 S. W.2d

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78, 81 (Tex. App. 1988) (stating that ratification occtlrs when party affirmatively acknowledges
contract). Though recording is merely a ministerial abt, it serves to provide legal notice to the
public of the assignment. See MPEP 301 (8th ed. Jul~ 2010).
9.

The Court finds in the authorities cite4 by the parties no basis for limiting the
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effectiveness of the assignment agreement and subsequent ratification only to disputes between
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the parties to the assignment, as Defendant asserts.

h is true that in Lighthouse the Texas court

stated, "under principles of equity, ... a void deed is ~alid between the grantor and grantee, but
void when asserted against third parties." 889 S.W.2~ at 602. However, once a corporation is
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formally incorporated, it becomes a legal entity and V:alid title passes without reliance on
principles of equity. See John Davis, 450 P.2d at 170 ("Title passes when the corporation is
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legally incorporated. This is particularly true as agai*st one who does not hold superior title
when the corporation goes into possession under the deed.").
10.

Defendant is correct that equitable titlt does not give one standing to bring a

patent litigation suit. See Arachnid, Inc. v. Merit Ind~s., Inc., 939 F.2d 1574, 1579-80 (Fed. Cir.
1991 ). But the Court finds nothing in the cited authorities that renders the title that passed to

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PUM under Texas law merely equitable title, as oppdsed to legal title. Although PUM may have
had only equitable title (that could have been asserteq only against Levino) prior to its
incorporation, upon its recognition by the Texas

Secr~tary

obtained legal title.

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of State (on August 14, 2007) PUM

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11.

Because PUM had legal title to the pa~ents-in-suit on the date it filed suit in 2009,

it has standing. Accordingly, this Court has subject qtatter jurisdiction. IT IS HEREBY
ORDERED that Defendant Google's motion to dism~ss (D.I. 301) is DENIED.

Dated: September 13, 2012
Wilmington, Delaware

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UNITED TATES DISTRICT COURT

PUM's cross-motion seeks to substitute Lev~o for PUMas plaintiff, but only in the
event the Court were to grant Google's motion to dis~iss. (D.I. 309) As the Court has denied
Google's motion to dismiss, IT IS HEREBY ORDERED that PUM's cross-motion (D.I. 309) is
DENIED AS MOOT.
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