UnifiedOnline Inc fka UOIP

[long uoip]

apparently Judge Andrews is well informed re: Deidre Leane

https://www.ded.uscourts.gov/sites/ded/files/opinions/15-842_4.pdf

On September 2, 2020, Defendants received an email from Ms. Leane’s counsel,
informing them of a dispute between Ms. Leane and ChanBond. (D.I. 525-1, Exh. E at 125 of
355). The email stated, “As we read Section 8.3 of the ISA, Ms. Leane’s written consent is
required given that a license is a transfer of an interest in the patents-in-suit, which in turn are
material assets of ChanBond.” (Id.). The email warned, “[color=blue][P]lease take notice that to the extent
that you enter into any settlement with ChanBond that includes a transfer of any interest in the
patents-in-suit, without Ms. Leane’s written approval of the settlement terms, you do so at your
own risk.[/color]” (Id.). This letter spurred Defendants to file the instant motion.
Ms. Leane’s dispute with ChanBond and UnifiedOnline is currently playing out in two
other courts. Ms. Leane and her consulting company IPNav are suing ChanBond and
UnifiedOnline in the Northern District of Texas. (D.I. 536-1, Exh. N at 2 of 111). Ms. Leane also
sued Mishcon de Reya LLP, Mishcon de Reya New York LLP, King & Wood Mallesons LLP,
Robert Whitman and Mark Raskin (Plaintiff’s attorneys in this litigation) in the Supreme Court
of New York. (Id., Exh. Q at 38 of 111).
B. Defendants’ Motion to Reopen Discovery for Limited Investigation of
Standing Issues
Defendants argue that good cause exists to reopen discovery for the limited purpose of
investigating standing. (D.I. 525 at 5). Defendants contend that the September 2020 email from
Ms. Leane’s counsel raises questions about whether Plaintiff has standing to proceed to trial.
(Id.). Defendants argue that they could not have reasonably obtained discovery on the issues
raised in the September 2020 email, as the email came after the close of fact discovery and the
email reflects a change in Ms. Leane’s understanding of her rights under the ISA. (Id.).
Defendants also assert that they acted diligently during discovery and after receipt of the
September 2020 email. (Id. at 6). Defendants state that they sought discovery on ownership of the asserted patents from ChanBond, as well as from third parties UnifiedOnline and Ms. Leane.
(Id.). Further, Defendants argue that upon receipt of the September 2020 email, they promptly
reached out to ChanBond to discuss their concerns, but such concerns were dismissed. (Id. at 7).
The essence of Defendants’ argument is that good cause exists to reopen discovery as they
diligently sought information pertaining to ownership of the patents during discovery and that
they now seek new information which they could not have sought during discovery. (Id. at 6-8).
Lastly, Defendants argue that reopening discovery will not prejudice Plaintiff as it will be a
limited and inexpensive delay that will help Plaintiff determine its own rights in the dispute. (Id.
at 10-11).
Plaintiff argues that Defendants have not shown good cause to reopen discovery because
the information Defendants now seek could and should have been sought during discovery. (D.I.
529 at 8-9). Plaintiff contends that it produced the ISA to Defendants almost four years ago and
that Defendants had a full and fair opportunity to seek discovery concerning the agreement. (Id.
at 8). Plaintiff states that Defendants sought discovery regarding the ISA and deposed Ms.
Leane, UnifiedOnline, ChanBond, and William Carter (ChanBond’s manager and
UnifiedOnline’s CEO) regarding the ISA. (Id. at 8-9).
Plaintiff further argues that even if Defendants could show good cause, their motion
should still be denied as the discovery sought is not relevant or likely to lead to the discovery of
relevant information. (Id. at 11). Plaintiff contends that there is no unambiguous language in the
ISA’s Limitations on Assignment Section; thus, the extrinsic evidence that Defendants seek in
discovery is irrelevant. (Id.). Plaintiff asserts that the plain and unambiguous meaning of Section
8.3 is that Ms. Leane’s consent is not necessary for a license to one of the patents-in-suit because
such a license is not a transfer or sale of a material asset. (Id. at 13). Lastly, Plaintiff argues that even if Ms. Leane had the right to veto ChanBond’s grant of a license, that still would not affect
ChanBond’s standing as such a veto does not deprive the patent owner of standing to sue in its
own name. (Id. at 14-15).
“Standing must be present at the time the suit is brought.” Simcom Sys., Ltd. v. Agilent
Techs., Inc., 427 F.3d 971, 975-76 (Fed. Cir. 2005). A patent is “a bundle of rights which may be
divided and assigned, or retained in whole or part.” Vaupel Textilmaschinen KG v. Meccanica
Euro Italia SPA, 944 F.2d 870, 875 (Fed. Cir. 1991). When “a sufficiently large portion of this
bundle of rights is held by one individual, we refer to that individual as the owner of the patent
and that individual is permitted to sue for infringement in his own name.” Alfred E. Mann
Found. For Sci. Research v. Cochlear Corp., 604 F.3d 1354, 1360 (Fed. Cir. 2010).
ChanBond acquired the patents-in-suit in a Patent Purchase Agreement on April 9, 2015.
(D.I. 525-1, Exh. C at 34 of 355). This agreement dictated, “Seller [CBV, Inc.] shall sell, assign,
transfer and convey to Purchaser [ChanBond] its right, title and interest in and to the Assigned
Patent Rights.” (Id. at 37 of 355). Thus, as of April 2015, ChanBond owned the “right, title and
interest in and to” the patents-in-suit. (Id. at 34, 37-38 of 355). ChanBond filed suit in September
2015. (See, e.g., D.I. 1 (complaint against Atlantic Broadband Group)). It is clear, and
undisputed, that ChanBond owned the asserted patents at the time that it filed suit.
As ChanBond owned the “right, title and interest in and to” the patents-in-suit at the time
of filing, and still owns such rights, it has standing to bring this suit. It holds “a sufficiently large
portion of this bundle of rights” and is thus “permitted to sue for infringement in its own name.”
Alfred E. Mann Found., 604 F.3d at 1360. Disputes over ChanBond’s ownership or whether Ms.
Leane’s consent is required to license the patents does not impact ChanBond’s standing to sue in
its own name. Regardless of the outcome of these suits, ChanBond will be the entity that wins or loses. Any dispute about ChanBond’s ownership is outside the scope of the issues in these cases
and will not impact the overall outcome. As ChanBond’s standing is not impacted by Ms.
Leane’s allegations regarding ChanBond’s ownership, Defendants have not shown good cause to
reopen discovery.
Even if the ISA were determined to require Ms. Leane’s permission to license the
asserted patents2
, it would not prevent ChanBond from having standing to sue for infringement
in its own name. ChanBond would still hold “a sufficiently large portion of this bundle of
rights.” Alfred E. Mann Found., 604 F.3d at 1360.
Via the September 2, 2020 email, Ms. Leane is now asserting that her written consent is
required to grant a license to the patents-in-suit. (D.I. 525-1, Exh. E at 125 of 355). A consent
requirement would be a licensing veto, analogous to a “sub-licensing veto,” which the Federal
Circuit has found does not prevent standing. Vaupel Textilmaschinen, 944 F.2d at 874-75. In that
case, the patentee entered into an agreement that gave plaintiffs the exclusive right to make, sell,
and use the patented product in the United States. Id. at 875. The agreement provided that the
plaintiffs could only grant sublicenses to others with the prior written consent of the patentee. Id.
at 874. The Federal Circuit concluded that this “sub-licensing veto” was a “minor derogation
from the grant of [patent] rights.” Id. at 874-75. The Federal Circuit determined that such a veto
“did not substantially interfere with the full use by [plaintiffs] of the exclusive rights under the
patent” and held that the plaintiffs had standing to sue for infringement. Id. at 875-76.
Under this precedent, even if Ms. Leane’s written consent was required to grant a license,
ChanBond still has standing. Ms. Leane’s purported licensing veto is at most a “minor
derogation from the grant of rights” that does not “substantially interfere with the full use by
[ChanBond] of the exclusive rights under the patent.” Id. at 875.
For these reasons, Defendants’ motion to reopen discovery to investigate standing issues
is denied.
C. Defendants’ Other Arguments to Reopen Discovery
In their reply brief, Defendants expand their request. They seek to reopen discovery to
obtain “improperly withheld documents from ChanBond, Leane, and UOL, as they impact issues
including standing, and a license to a vendor of accused equipment (Technicolor).” (D.I. 535 at
2). Defendants argue, based on Ms. Leane’s allegations in her pending suits, that Plaintiff
withheld documents in the litigation before me and they are entitled to obtain those documents.
(Id. at 5-7). Specifically, Defendants assert that the Advisory Services Agreement (“ASA”)
between ChanBond and IPNav, and other additional documents pertaining to Ms. Leane’s rights
in the asserted patents, were withheld. (Id. at 2-5). Defendants contend that they have shown
good cause to reopen discovery as they acted with diligence and could not reasonably have been
expected to obtain the documents as “ChanBond purposely withheld” them. (Id. at 6).
With leave from the Court (D.I. 555), Plaintiff filed a sur-reply. (D.I. 556). Plaintiff
argues that none of Defendants’ new arguments support its motion. (Id. at 2). Specifically,
Plaintiff contends that Defendants now are basing their request to reopen discovery on the ASA
and allegations that Plaintiff improperly withheld it, which differs from their arguments in their
opening brief. (Id.). Plaintiff also argues that Defendants were aware of the ASA and did not
show reasonable diligence in trying to secure its production. (Id.). Further, Plaintiff asserts that Defendants’ request for discovery to investigate Technicolor’s hypothetical license to
Technicolor is irrelevant as the ASA was a consulting agreement that did not give Ms. Leane the
power to grant licenses. (Id. at 3). Lastly, Plaintiff contends that Defendants had the opportunity
to secure production of other documents, particularly in relationship to UnifiedOnline and its
agreements with third parties, but they did not do so. (Id.).
I agree with Plaintiff that Defendants had the opportunity during discovery to seek the
documents that they now want to get. At Ms. Leane’s deposition, Defendants questioned her
about IPNav’s relationship with ChanBond. (D.I. 529-3, Exh. C at 24-25 of 42). Ms. Leane
confirmed that “there is an advisory services agreement” between ChanBond and IPNav. (Id. at
25 of 42). After Ms. Leane confirmed this, Defendants’ counsel told Plaintiff’s counsel that he
did not think the agreement had been produced. (Id.). Plaintiff’s counsel replied that he would
“take a look” and Defendants’ counsel stated, “So we’re going to formally request production,
obviously.” (Id.). There is no evidence in the record, and Defendants do not argue, that they in
fact formally requested production of the ASA and that Plaintiff failed to provide it. Defendants
were on notice that the ASA existed and had the opportunity to obtain the document from
ChanBond. However, they failed to exercise reasonable diligence in doing so. For that reason,
there is no good cause to open discovery on this ground.
Defendants also had the opportunity to seek, during discovery, the other documents they
now argue are a basis for reopening discovery. One such document is an agreement between
UnifiedOnline and UO! of NC. (D.I. 535 at 5). As Plaintiff argues, this agreement did not
involve ChanBond (D.I. 556 at 3), and therefore it was not ChanBond’s to produce. Further,
Defendants had the opportunity to seek this document from UnifiedOnline, but they did not
pursue that request with diligence.
Defendants served a subpoena on UnifiedOnline requesting numerous documents. (D.I.
556, Exh. 9 at 22-25 of 100). Of these requests, the agreement between UnifiedOnline and UO!
of NC would likely only fit into request 12: “All documents concerning any agreement related to
any ChanBond Patent, Whitaker Patent, or any Related Patents.” (Id. at 24 of 100).
UnifiedOnline objected to this document request “as overly broad and unduly burdensome” and
offered “to meet and confer regarding the scope of this request.” (Id., Exh. E at 82-83 of 100).
Defendants followed up on some of their document requests (see id., Exh. F at 94-95 of 100), but
there is no evidence in the record that they followed up on document request 12 or made any
other efforts to obtain UnifiedOnline’s agreements with third parties. Had Defendants thought
such agreements were important, they had opportunity to show more diligence in obtaining the
documents from UnifiedOnline during discovery.
Based on Ms. Leane’s allegations, Defendants argue that certain documents were
purposefully withheld in this litigation. (D.I. 535 at 3-4). Specifically, Ms. Leane alleges that at
her deposition in this litigation, Plaintiff’s attorney informed her that Plaintiff had not produced
the ASA and that its failure to produce the ASA would cause problems in this litigation. (Id. at 4
(citing D.I. 536-1, Exh. P at 26 of 111)). Regardless of whether this conversation occurred,
Defendants were on notice that the ASA existed and they told Plaintiff that they would be
formally requesting it. (See D.I. 529-3, Exh. C at 25 of 42). Defendants did not formally request
it and Plaintiff therefore did not have the opportunity to formally respond. Defendants could
have obtained this document, but they did not do so. The record establishes that Defendants did
not pursue acquisition of the documents with reasonable diligence. Further, it does not appear
that either the ASA or the other agreements that Defendants seek are relevant, as ChanBond is
the owner of the patents (under the Patent Purchase Agreement) and has standing to sue for infringement in its own name, regardless of the provisions of the other agreements. Defendants’
motion to reopen fact discovery on document production grounds is denied.
IV. CONCLUSION
For the foregoing reasons, Defendants’ motion to reopen fact discovery (D.I. 524) is
denied. A corresponding order will issue.