ALJ Shaw Denies Motion To Amend Complaint And Grants Motion To Terminate Investigation Based On Lack Of Standing In Certain Devices With Secure Communication Capabilities (337-TA-818)
On April 9, 2013, ALJ David P. Shaw issued the public versions of Orders No. 14 and 15 (both dated July 18, 2012) in Certain Devices with Secure Communication Capabilities, Components Thereof, and Products Containing the Same (Inv. No. 337-TA-818).
According to Order No. 14, Complainant VirnetX, Inc. (“VirnetX”) filed a “Renewed Motion for Leave to Amend the Complaint and Notice of Investigation to Add Science Applications International Corporation (“SAIC”) As a Complainant” in response to Order No. 9, denying VirnetX’s original motion for leave to amend the complaint and notice of investigation. VirnetX argued that it had corrected the deficiencies in good cause cited in Order No. 9 by filing an amended complainant that includes the license, assignment, and security agreements between VirnetX and SAIC. VirnetX further argued that it did not believe that SAIC had ownership rights in the asserted patent. ALJ Shaw held that VirnetX failed to show good cause to amend the complaint and notice of investigation because VirnetX failed to provide any justification for its failure to include the assignment agreements in its original complaint. Accordingly, ALJ Shaw denied VirnetX’s motion.
According to Order No. 15, ALJ Shaw granted respondent Apple Inc.’s (“Apple”) “Motion to Terminate the Investigation Based on VirnetX’s Lack of Standing.” Apple argued that VirnetX lacked standing to bring an infringement action without joining SAIC as a complainant. ALJ Shaw held that VirnetX lacked prudential standing because it did not possess all substantial rights in the asserted patent. Specifically, ALJ Shaw determined that VirnetX did not possess all substantial rights in the asserted patent because: (1) SAIC retained the right to review and object to any license, assignment or settlement involving the asserted patent, (2) SAIC retained an equity interest in any proceeds from licensing the asserted patent or related litigation, and (3) the agreements between VirnetX and SAIC required VirnetX to use commercially reasonable efforts to enforce the assigned patent. Therefore, ALJ Shaw terminated the investigation based on VirnetX’s lack of standing.