STC.UNM v. Intel Corporation
MOTION for Reconsideration STC.UNM'S RULE 19 MOTION TO CORRECT STANDING AND REQUEST FOR RECONSIDERATION by STC. UNM. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F)(Vogt, Keith)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW MEXICO
Civil No. 10-CV-01077-RB-WDS
STC.UNM’S RULE 19 MOTION TO CORRECT STANDING AND
REQUEST FOR RECONSIDERATION
Fed. R. Civ. P. 19 authorizes the Court to remedy the prudential standing issue under
either Section (a) or Section (b). Rule 19(a) permits joinder of Sandia Corporation (“Sandia”) as
an involuntary plaintiff as a result of an agreement between STC and Sandia that makes STC the
exclusive licensee of the jointly owned USP 6,042,998 (“the ‘998 patent”). Rule 19(b) empowers
the Court, using its equitable powers, to proceed without adding Sandia as a party. As will be
seen, this approach is the preferred one given Sandia’s novel circumstances.
As set forth in Doc. 206, the dispute concerns technology arising out of the inventive
contributions of four individual inventors, Brueck, Zaidi and Chu of UNM, and a Sandia
inventor, Draper. Their contributions were combined in UNM docket number UNM-322 and
Sandia docket number SD-5308. (Exhibit A). After the disclosure, STC began the patenting
process by filing U.S. Patent Application Serial Number 08/123,543 (“SN/543”). While SN/543
was eventually abandoned, its content found its way into the later filed USP 5,705,321 (“the ‘321
patent”) and the ‘998 patent.
With the patenting process, Sandia and UNM also started the process of obtaining title to
the inventions from the DOE, which automatically obtained title pursuant to 42 USC § 5908.
(Exhibit B; Bieg Declaration at ¶ 8). DOE granted UNM’s title request for an “undivided
interest” in the “invention”, and, also, retained an “undivided joint ownership”. (Exhibit C).
Sandia then notified UNM it was requesting a “waiver of title”, i.e. transfer of DOE’s “undivided
interest”. Sandia also notified UNM that after obtaining title it would “enter into an agreement
with UNM to allow UNM to be the exclusive licensing agent for the invention.” (Exhibit D).
A Memorandum of Understanding (“MOU”) was subsequently entered “regarding
patenting, licensing, and royalty sharing of certain inventions and works of authorship that are
jointly owned by Sandia and UNM.” (Exhibit E, p. 1). The MOU provides for the designation of
a Responsible Party that is to have the exclusive right to license, patent and protect a Subject
Invention. The MOU calls for the designation to be memorialized in a Commercialization
Agreement. (Exhibit E at ¶ 3). For UNM-322/SD-5308, a Commercialization Agreement (“CA”)
was executed designating STC as the party with the exclusive right to license and protect the
intellectual property defined in the agreement. (Exhibit F).
The Federal Circuit has stated, inter alia, that Rule 19(a) cannot be used to add an
involuntary patent owner to an action unless the party seeking to avail itself of Rule 19(a) has
been granted an exclusive license from the patent owner. DDB Techs., L.L.C. v. MLB Advanced
Media, L.P., 517 F.3d 1284, 1289 (Fed. Cir. 2008)(noting that “an exclusive licensee may join the
patent owner as an involuntary plaintiff in an infringement suit” pursuant to Rule 19(a)). Thus,
Rule 19(a) permits the joinder of Sandia if it is found that the MOU/CA make STC the exclusive
licensee of the ‘998 patent. The Federal Circuit has also held that an infringement action may
proceed without adding a patent owner under the equitable considerations of Rule 19(b), the
resolution of which is governed by the law of the regional circuit, here the Tenth Circuit. A123
Sys. v. Hydro-Quebec, 626 F.3d 1213, 1220 (Fed. Cir. 2010).
Sandia may be joined to this case under either section (a) or (b) of Rule 19. However,
STC urges this Court to first consider allowing the action to proceed without Sandia pursuant
Rule 19(b) given the unique nature of Sandia, which is for all practical purposes a quasigovernmental entity. For example, although Sandia is a private corporation, it acts more like a
federal agency. The DOE funds it. The DOE controls it. The DOE even allows Sandia to use
DOE’s Sandia National Laboratories trademark as a DBA to create the impression that Sandia is
a federal agency. Thus, to the extent possible, this Court should consider applying Rule 19(b) in
the first instance given that adding Sandia in this manner, if permitted, avoids creating the public
impression that the government is not neutral in this matter. In fact, Sandia has repeatedly told
STC that it wants to remain neutral in this matter and it currently cannot do so. If it voluntarily
joins the action, it creates the impression of favoring STC over Intel. If it refuses to join, it
creates an impression of favoring Intel over STC. Finding that Rule 19(b) applies gives Sandia
the neutrality it wants, allows the action to be resolved on the merits, and without the need to
determine whether STC obtained an exclusive license to the ‘998 patent as a result of the MOU
Rule 19(a) Allows Sandia to be Joined as an Involuntary Plaintiff
Rule 19(a) empowers the Court to join Sandia as an involuntary plaintiff as a result of the
CA it entered into that makes STC the exclusive licensee of the '998 patent. DDB Techs., L.L.C.
v. MLB Advanced Media, L.P., 517 F.3d 1284, 1289 (Fed. Cir. 2008). The CA designates STC as
both the PATENTNG LEAD and LICENSING PARTY for the INTELLECTUAL PROPERTY.
As such, STC was given the exclusive right to license, patent and protect the intellectual property
covered by the CA. (Exhibit F).
The “Intellectual Property” covered by the CA not only includes the ‘321 patent but also
the technology originally disclosed by the inventors as well in UNM-322/SD-5308:
Technology was disclosed to STC on September 20, 1993 in SD5308 (Sandia) /UNM-332 (STC)
U.S. Issued Patent No. 5,705,321 issued on January 6, 1998
Title: “Method for Manufacture of Quantum Sized Periodic
Structures in Si Materials”
Inventors: Steven R.J. Brueck, Saleem H. Zaidi, An-Shyang Chu,
and Bruce L. Draper
If the CA were intended to be limited to the ‘321 patent alone, there would have been no
need to include the technology disclosed in UNM-322/SD-5308. The presence of this openended term clearly indicates that it was intended to act as catch-all that sweeps all patents
originating from the “technology,” into the CA, including the ‘998.
Confirming this point is the pattern of using open-ended terms referencing the intellectual
property throughout the CA rather than the specific ‘321 patent. For example, the stated purpose
of the CA is to define “each PARTY’s responsibilities for commercializing the INTELLECTUAL
PROPERTY (defined herein);” not for commercializing the ‘321 patent. The other major sections
also use the term INTELLECTUAL PROPERTY instead of the ‘321 patent. In fact, there is only
a single reference to the ‘321 patent in the CA and twelve references to INTELLECTUAL
PROPERTY. (Exhibit F).
Nor is there any dispute that the ‘998 patent originates from the intellectual property
disclosed in the technology of UNM-322/SD-5308. As acknowledged by the Court, the PTO
determined that the content found in the ‘998 patent is from the ‘321 patent which, in turn,
originates from SN/543, which was born on the content disclosed in UNM-322/SD-5308. (Doc.
206, p. 14). As a result of a heritage all the way back to the technology disclosed in UNM322/SD-5308, the ‘998 patent is covered by the CA.
The responsibility given to STC as the “PATENTING LEAD” confirms that the parties
intended the CA to capture any patents issuing from the intellectual property by providing STC
with the following authority with respect to the intellectual property covered:
The terms “patenting,” “prosecution” and “other protection” all describe future actions
that may result in changes to the “INTELLECTUAL PROPERTY.” For example, patenting is
the act of obtaining a patent. Prosecution is a broader term that includes any activity before a
patent office. Protection is broader yet, and includes, among other things, obtaining rights as well
as preventing the loss of rights.
The CA even calls for STC to be reimbursed for obtaining additional patents concerning
the INTELLECTUAL PROPERTY:
If the CA were limited to the ‘321 patent, there would be no need to include these
forward-looking terms in the CA. Nor would there be a need to reimburse STC for any patents
added to the CA. The inclusion of these terms, in combination with the catch-all, evidences an
intent to imbue the CA with the flexibility to cover future, even unanticipated, additions to the
Thus, when Sandia was made a joint owner of the ‘998 patent, STC was indeed acting
within the scope of the CA. STC was protecting one of the inventions originating from the
technology of UNM-322/SD-5308. That doing so added the ‘998 patent to the CA, while
unexpected, is certainly within the intent of the CA to cover later added patents.
Lastly, that Draper is not an inventor on the ‘998 patent does not exclude it. STC and
Sandia understood that the Intellectual Property covered by the CA was a combination of
intellectual property each considered to be entirely their own:
Finally, determining that CA covers the ‘998 patent is consistent with the intent of the
parties as expressed by Sandia in its 1994 letter to UNM promising to make UNM the exclusive
licensee of all of the inventions created:
The CA is not limited to the ‘321 patent. It covers all patents originating from the
inventions created by all four inventors, whether made individually, or together. That no one
other than the Patent Office, until recently, recognized that the ‘998 patent was part of the
inventions disclosed in UNM-322/SD-5308, and thus within the scope of the CA, does not
foreclose the issue. The CA is imbued with the flexibility to cover unexpected changes that result
in later additions to the intellectual property. Thus, for the reasons set forth above, STC
respectfully requests that it be allowed to proceed with its claims against Intel by adding Sandia
as an involuntary plaintiff as a result of the CA making STC the exclusive licensee of the jointly
owned ‘998 patent.
The Equities Favor Applying Rule 19(b)
While Sandia may be joined under Rule 19(a), STC urges this Court to consider allowing
the action to proceed without Sandia pursuant Rule 19(b) given the unique nature of Sandia
which acts and functions more like a federal agency than a private independent corporation as set
forth above. Finding that Rule 19(b) applies gives Sandia the neutrality it wants, allows the
action to be resolved on the merits, and without the need to determine whether STC obtained an
exclusive license to the ‘998 patent from Sandia, all of which satisfy the four factors that are
weighed when considering Rule 19(b):
As this Court has noted, if a necessary party cannot be joined, the inquiry turns to
the second step under Rule 19(b), which provides: "the court shall determine
whether in equity and good conscience the action should proceed among the
parties before it, or should be dismissed, the absent person being thus regarded as
indispensable." FED. R. CIV. P. 19(b). Whether this test is satisfied depends on a
weighing of four factors. Id. First, does the plaintiff have an alternative route by
which to pursue its claim? Id. If not, that factor weighs against deeming the absent
entity indispensable. Second, will the defendant be subject to multiple liability or
other serious inconvenience? Id. If so, that factor weighs in favor of deeming the
absent entity indispensable. Third, is there a serious danger that the absent entity
will be harmed by the judgment rendered in its absence? Id. If so, that
factor weighs in favor of deeming it indispensable. Fourth, what disposition will
further the interest of the court and the public in consistent, expeditious, and
efficient resolution of legal controversies? See FED. R. CIV. P. 19(b).
Picuris Pueblo v. Oglebay Norton Co., 2005 U.S. Dist. LEXIS 8495, 5-6 (D.N.M. Apr. 4, 2005).
Here, the unique facts of this case make application of Rule 19(b) particularly
compelling. First factor: does STC have an alternate route to pursue the infringement claim -No. This factor weighs in STC’s favor. Second Factor: will Intel be subjected to multiple
lawsuits -- No. Sandia has made it clear it has no intention to pursue an action against Intel as
confirmed by its statements to STC and by its refusal to join this action. Again, this factor weighs
in STC’s favor. Third factor: will Sandia be harmed by its absence from the suit -- No. Sandia’s
refusal to join in the suit clearly indicates that it has no interest in defending the validity of the
patent or any interest in the outcome of the infringement issue. Fourth factor: the public interest
favors STC. As noted by this Court, there is a strong public interest in having legal disputes
resolved on the merits. This is especially true here since the standing issue is far removed form
the merits of infringement and invalidity.
In fact, the issue was created by actions taken over a decade ago by those charged with
protecting the inventions and not by any actions taken by the inventors themselves or concerning
the quality of the inventions. Specifically, the attorney prosecuting the patents failed to recognize
that Draper did not work for UNM when he allowed UNM to enter into the terminal disclaimer.
If all inventors had the same employer, the pitfall STC now faces would not even be an issue.
Moreover, as noted above, using Rule 19(b) as the means to allow this matter to go forward,
allows Sandia to remain neutral – the very thing it wants. Thus, all four factors favor allowing
the action to proceed without Sandia.
The Court Should Reconsider Its Ruling Concerning the Ownership of the ‘998
The Court should reconsider its decision that Sandia has not been the owner of the ‘998
patent since at least as earlier as December, 2008, if not earlier, as a result of the new evidence
contained in the June 6, 2012 Declaration of Kevin Bieg. (Exhibit B). The declaration, which
was filed in response to the Court’s request to answer the questions as to the ownership of the
‘321 patent, establishes that the Department of Energy (“DOE”) automatically took title to all of
the inventions created by the inventors under the automatic vesting provisions of the Atomic
Energy Act. The DOE subsequently granted title to both Sandia and UNM/STC, thus establishing
joint ownership to an undivided interest to all of the inventions. That both the ‘998 and ‘321
patent originate from the inventions results in there being joint ownership between Sandia and
STC in both patents from the start. Whatever rights Draper had or did not have to assign to STC
in 1996, do not matter. As a matter of law, the Atomic Energy Act trumped.
Dated: June 13, 2012
Deron B. Knoner
KELEHER & MCLEOD, P.A
201 Third Street NW, 12th Floor
PO Box AA
Albuquerque, New Mexico 87103
/s/ Keith A. Vogt
Rolf O. Stadheim
Joseph A. Grear
George C. Summerfield
Keith A. Vogt
Steven R. Pedersen
STADHEIM & GREAR, LTD.
400 N. Michigan Avenue, Suite 2200
Chicago, Illinois 60611
Raúl A. Carrillo Jr.
CARILLO LAW FIRM, P.C.
937 East Lohman
Las Cruces, New Mexico 88001
Attorneys for Plaintiff STC.UNM
Certificate of Service: I hereby certify that on June 13, 2012, I caused the foregoing to be
electronically filed with the Clerk of the Court using the CM/ECF system which will send
notification of such filing via electronic mail to all counsel of record.
In addition, I have caused a courtesy copy to be sent to the following parties via Email & First
Kevin W. Bieg, Senior Attorney
Sandia National Laboratories
Org. 11500, MS0161
P.O. Box 5800
Albuquerque, NM 87185-0161
Luis G. Stelzner
Stelzner, Winter, Warburton,
Flores, Sanchez & Dawes, P.A.
302 8th Street NW, Suite 200
Albuquerque, New Mexico 87102
/s/ Keith A. Vogt
Keith A. Vogt
STADHEIM & GREAR, LTD.
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