STC.UNM v. Intel Corporation

Filing 239

MOTION for Leave to File Surreply by Sandia Corporation. (Attachments: # 1 Exhibit A (proposed surreply))(Dawes, Jaime)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW MEXICO

STC.UNM,
Plaintiff,
vs.

No. 10-CV-01077-RB-WDS

INTEL CORPORATION,
Defendant.
SANDIA CORPORATION’S SURREPLY TO STC.UNM’S REPLY IN SUPPORT OF
RULE 19 MOTION TO CORRECT STANDING AND REQUEST FOR
RECONSIDERATION
COMES NOW Sandia Corporation (Sandia) by and through its attorneys, Stelzner,
Winter, Warburton, Flores, Sanchez & Dawes, P.A., and for its Surreply to STC.UNM (STC)’s
Reply in Support of Rule 19 Motion to Correct Standing and Request for Reconsideration states:
I.

INTRODUCTION

STC asserts in this action that Intel Corporation (Intel) has infringed patent rights it holds
under U. S. Patent No. 6,042,998 (“the ‘998 patent”). STC encountered a standing problem
when the Court held that Sandia acquired joint ownership of the ‘998 patent through a December
1, 2011 assignment from STC—a co-owner generally lacks standing in the absence of all coowners. STC then moved to join Sandia under Federal Rule of Civil Procedure 19(a), and in the
alternative, asked the Court to proceed without Sandia under Rule 19(b).
Sandia responded to STC’s Rule 19 Motion, expressing its interest in not being joined in this
matter. Sandia submits this surreply for the limited purpose of correcting two misstatements
made in STC’s Reply.

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II.

THE DEPARTMENT OF ENERGY HAS NOT INSTRUCTED SANDIA TO
TAKE NO ACTION IN THIS MATTER.

STC asserts on page 7 of its Reply that “Sandia has even informed STC that the DOE has
instructed it to take no action and to remain neutral.” Reply, Doc. No. 235, at 7. In support of
this statement, STC cites a declaration of Dr. Julia E. Fulghum. See id. In her declaration, Dr.
Fulghum states that Dr. J. Stephen Rottler, Vice President Science and Technology, and Chief
Technical Officer for Sandia, informed her “that the DOE preferred outcome was for Sandia to
take no further action with respect to license agreements or assignments.” Exhibit A to Doc. No.
235, ¶ 3.
The DOE has not instructed Sandia to take no action. More importantly, however, Dr.
Fulghum’s declaration, even if assumed to be accurate, does not support the statement made in
STC’s Reply. In particular, Dr. Fulghum’s statement that the DOE preferred Sandia to take no
further action concerning license agreements or assignments is far different than STC’s assertion
that “the DOE has instructed it to take no action and to remain neutral.” See Reply, Doc. No.
235 at 7. This is especially true since the implication of STC’s statement is that the DOE has
instructed Sandia not to join this action or to pursue a subsequent action. Dr. Fulghum’s
declaration does not address joinder in this proceeding or a possible separate proceeding at all.
Accordingly, while Sandia continues to take no position on the Rule 19(b) argument to which
STC’s statement relates, Sandia asks the Court to disregard the inaccurate and unsupported
statement regarding the DOE’s supposed instruction. No authoritative information has been
provided to the Court concerning the DOE’s position, and that position should have no bearing
on STC’s Rule 19 Motion.

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III.

SANDIA HAS NOT FRUSTRATED A BARGAIN IT MADE WITH STC.

STC also makes incorrect statements on page 6 of its Reply. In particular, STC asserts:
This is the inequality that has arisen here. STC provided consideration to
Sandia in exchange for STC receiving the exclusive right to license the
INTELLECTUAL PROPERTY, at its own expense and effort – a point Sandia
does not dispute. The consideration was that Sandia received a portion of any
LICENSING INCOME (Doc 281-6 at 2).
This includes the right to bring enforcement actions and to grant nonexclusive licenses; again a right that Sandia concedes STC possesses as the
LICENSING PARTY. Yet, Sandia now seeks to frustrate the bargain it made
even though STC has done exactly what the parties contemplated when the
Commercialization Agreement was executed.
Reply, Doc. No. 235, at 6.

This argument is not supported by the language of the Commercialization Agreement.
As discussed in more detail in Sandia’s Response to STC’s Rule 19 Motion, the
Commercialization Agreement merely states that Sandia will refrain from exercising its right as a
joint owner to license U.S. Patent No. 5,705,321 (“the ‘321 patent”). See Commercialization
Agreement, Responsible Party, ¶ 3. It does not cover the ‘998 patent. Further, it does not say
anything about enforcement actions, does not permit STC alone to bring enforcement actions,
and certainly does not obligate Sandia to join an enforcement action. Furthermore, contrary to
STC’s unsupported representation, Sandia has not conceded that STC possesses a right to bring
enforcement actions.
In arguing that the consideration Sandia received was a portion of the licensing income,
STC fails to mention that the amount of consideration received by Sandia is in no way consistent
with STC’s argument that the ‘998 patent is covered by the Commercialization Agreement. The
section of the Commercialization Agreement entitled “Division of Commercialization Proceeds”
states:
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 STC

shall distribute to SANDIA the proceeds of LICENSING INCOME derived
from licenses issued and administered by STC after patent cost reimbursement as
follows:
STC: 77.5%
SANDIA: 22.5%.

Commercialization Agreement, ¶ 3; see also id. ¶ 1. But interestingly, Sandia has
received only about 0.4% of licensing income received by STC from the settlements with
Toshiba and others for licensing of the ‘321 patent in those settlements pursuant to the
Commercialization Agreement. Sandia clearly has not received any consideration for
licensing of the ‘998 patent in those settlements and, therefore, STC does not consider the
‘998 patent to be covered by the Commercialization Agreement.
Sandia has done nothing to “frustrate the bargain it made” when the
Commercialization Agreement was executed.
IV.

CONCLUSION

For the foregoing reasons, Sandia respectfully asks the Court to disregard STC’s statement
concerning the alleged instruction by the DOE, and STC’s arguments regarding Sandia’s alleged
frustration of the bargain it made through the Commercialization Agreement.

Dated: August 15, 2012

Respectfully submitted,
STELZNER, WINTER, WARBURTON,
FLORES, SANCHEZ & DAWES, P.A.

/s/ Jaime L. Dawes___________
Luis G. Stelzner
Jaime L. Dawes
P.O. Box 528
Albuquerque, NM 87103
[phone]
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Attorneys for Sandia Corporation

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CERTIFICATE OF SERVICE
The undersigned hereby certifies that on August 15, 2012, the foregoing document was
electronically filed with the Clerk of the Court using the CM/ECF system, which will
automatically send notification of such filing to all counsel who have entered an appearance in
this action.
/s/ Jaime L. Dawes____
Luis G. Stelzner
Jaime L. Dawes

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