Haddad v. United States

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Consl. Nos. 15-l139C, l5-1140C

Filed: July 14,2016 FILED

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:1. JUL I rr 2ii6

U.S. COURT OF

MICHAEL HADDAD, FEDERAL CLAIMS

Plaintiff, pro se,

Patent Infringement;

THE UNITED STATES, Rule 12(b)(1) of the Rules of the United

States Court of Federal Clarms

Defendant, (Subject Matter Jurisdiction).

and

BAE SYSTEMS INFORMATION *

SOLUTIONS, INC., TRANS DIGITAL

'(

TECHNOLOGIES LLC and MORPHOTRUST *

USA, LLC, andNCRGOVERNMENT *

SYSTEMS, LLC,

Third-Party Defendants.

*

't

* **,t ******,i************,t***:f **,r ** * **,r i<

Michaef Haddad, Gaithersburg, Maryland, pro se.

David A. Foley, Jr., United States Deparlment of Justice, civil Division, washington, D.c.,

Counsel for the Govemment.

scott A. Felder, wiley Rein, LLP, washington, D.c., counsel for Third-party Defendant, BAE

Systems Infbrmation Solutions, Inc.

Richard L. Brophy, Armstrong Teasdale, LLp, st. Louis, Missouri, counsel for Third-party

Defendants, Trans Digital Technologies, LLC and MorphoTrust US A,LLC.

christina E, Fahmy, Kilpatrick rownsend & Stockton, LLp, washington, D.c., counsel for

Third-Party Defendant, NCR Govemment Systems. LLC.

MEMORANDUM OPINION AND ORDER DENYING THE GOVERNMENT'S

MOTION TO DISMISS AND ORDERING PLAINTIFF TO SHOW CAUSE WHY THE

COURT SHOULD NOT DISMISS THE OCTOBER 6,2015 COMPLAINTS

BRADEN, Jzdge.

I. RELEVANTFACTUALBACKGROUND.I

On August 21 , 2007 , Mr. Michael Haddad filed a patent application for an ..Airport

vehicular Gate Entry Access system" at the united states patent and rrademark office

C'USPTO'). 1 I 39 Compl. !J 9; 1 139 Compl. Ex. 2; see also I 140 Compl. fl 9; 1 140 Compl. Ex. 2.

The patent application was granted on December 29,2009 and assigned United States Pitent No.

7'639'844 ("844'). 1139 compl. g 10; 1140 compl. !l 10. Mr. Haddad was the only inventor

listed on the '844 patent. 1139 Compl. Ex.2; ll40 Compl. Ex. 2.

In June 2009, the Transportation Security Administration ("TSA") issued a Solicitation for

a credential Authentication Technology-Boarding pass Scanning system ("cAT/Bpss'). 1139

c,ompl !J 13; I140 compl. fl 13. Mr. Haddad's company, Astornet Technologies, Inc.

("Astomet"), submitted a proposal in response, and was selected for the initial testine -stase and

advanced to the nexl srage of rhe process. ll39 Compl.

!l l3: I 140 Compl.,fl 13.

On September 30, 2011, BAE System Information Solutions, Inc. (,.BAE',), NCR

Govemment systems, LLC ('NCR'), and rrans Digital rechnologies, Inc. were awarded

Indefinite Delivery Indefinite Quality ("lDIe') conrracrs HSTS04-11-D-cr2l l l, HSTS04-l l-D-

cr2l13, and HSTS04-11-D-cr2114; each was awarded a $79 million contract. 1139 comol. fl

l5; ll40 Compl. fl 15.

rn20l3, because theIDIQ contracts were scheduled to expire on September 30, 2014, TSA

issued a new solicitation seeking proposals for a slightly revised bet/BpSS system

that were due

on January 21'2014. 1139 compl. fl 17; 1140 compl. 17. Mr. Haddad, rhrough Scrence,

fl

Engineering, and rechnologies Inrernational corporation

C.sENTSIC'), submitted a iroposal for

TSA's new solicitation. I139 compl. fl l7; I140 compl. 17. SENTSIC was not awarded the

tf

contract. 1 I 39 Compl. !l 1 8-19; 1 140 Compt. !l 1 S_19.

I The relevant facts herein

were derived from: Mr. Michael Haddad,s october 6, 2015

complaints in Haddad v. (Inited,s/,r/es, No. l5-l l39c (,,1139 compl.") and attached Exhibits

('1 139 Compl. Exs. l-7"), and Hadtrad v. United slares, No. l5-r i40c (,,1140

compl.',) and

attached Exhibits ("1 140 compl. Exs. l-7"); and the Government's April 27,

2016 Mltlon To

Dismiss ("Gov't Mot;'). see Moyer v. [Jnited states, 190 F.3d 13 14, I 3 I i (Fed.

cir. r 999) (.,Fact-

finding is proper when considering a motion to dismiss where the jurisdictional facis

in the

complaint. . . are challenged.").

On January 27 , 2014, Astomet filed a lawsuit for infringement of the '844 patent against

BAE, NCR, and MorphoTrust USA, LLCz in the United States District Court lor the District of

Maryland ("Maryland District Court"), without joining Mr. Haddad. Gov't Mot. at 2 (citing

Complaint,lsto rnet Techs., Inc. v. BAE Sys.,1nc,, No. 8:14-245 (D. Md. Jan. 27,2014), ECF No.

1). The January 27,2014 Complaint alleged that Astomet was "the sole exclusive licensee of, and

own[ed] all right[s], title[s], and interest[s] to litigate [in matters conceming] U.S. pat. No.

7,639,844[.] Gov't Mot. at 2 (quoting Complaint, Astorner Techs., Inc. v. BAE Sys., Inc., No.

8:14-245 (D. Md. Jan. 27 ,2014), ECF No. I ).

II. PROCEDURALHISTORY.

On October 6,2015, Mr. Michael Haddad ("Plaintiff') filed two Complaints For Patent

Infringement ("1139 Compl." and "i 140 Compl.") in the United States Court of Federal Claims,

alleging that TSA infringed the '844 patent. on that same day, one case was assigned to the

Honorable Judge Nancy Firestone, and one to the Honorable Judge Marian Blank Hom for

Altemate Dispute Resolution proceedings. on october 14,2015, both cases were reassisned to

the undersigned j udge.

on November 16, 2015, the Govemment filed an unopposed Motion For Notices To Third

Parties ("Third-Party Notices") to BAE, NCR, and MorphoTrust, pursuant to Rule 14(b) of the

Rules of the United States Cow of Federal Claims (..RCFC").

on January 15, 2016, Third-party Defendant BAE filed an Answer and a RCFC 7.1

Disclosure. on that same day, the Government filed a Motion To consolidate with Related

Action, requesting that the court consolidate Haddad v. united.states, No. 15-1l3gc and

Haddad v. united states, No. l5-l140c. on Janua ry 21,2016, Third-party Defendant NCR filed

an Answer and a RCFC 7.1 Disclosure. on January 22,2016, Third-parly Defendant MorphoTrust

filed an Answer and a RCFC 7.1 Disclosure.

on February 5, 2016, Mr. Haddad filed an opposition To Motion To consolidate, claiming

the-Govemment's January 15,2016 Motion To coniolidate was an effort to save on e*penses

in

both^ cases. on that same day, Mr. Haddad filed a Brief In Reply To

BAE Answer.3 on February

8, 2016, the Govemment frled Answers in Hacldad v. united stites,No. l5-l l39c

and Haddad v.

united states, No. l5-1140c. on February g,20l6,the Government filed a Reply In Support

Its Motion To consolidate with Related Action. on that same day, the

of

grunt.d th"

Govemment's January 15,2016 Motion To Consolidate. "orrt

2

Through a series oftransactions, Trans Digital rechnologies, Inc. and MorphoTrust

uSA,

Inc. are now associated and referred to, hereinafte;, as MorphoTrust. Third-party Notices,

ECF

No. 8. at 1 n. l.

3

Although Mr. Haddad titles his February 5, 2016 filing as a .,Brief In Reply To BAE

Motion," the court construes this document to be a Reply to BAE;s January 15, 2016Answer.

On February 17,2016, Mr. Haddad filed a Reply To NCR's January 21,2016 Answer and

a Reply To MorphoTrust's January 22,2016 Answer.a On March 4,2016, MorphoTrust filed a

Response To Plaintiff s February 17,2016 Reply, arguing that the October 6, 2015 Complaints do

not provide a basis for disallowing MorphoTrust's lanuary 22,2016 Answer. On April 12,2016,

the court convened a telephone status conference at which the Govemment was ordered to file a

Motion To Dismiss by Apr1l27,2016.

On April 27 , 2016, the Govemment filed a Motion To Dismiss For Lack Of Jurisdiction

("Gov't Mot."), arguing that Mr. lladdad does not have standing in light ofthe prior transfer ofall

substantial rights in the '844 patent to Astomet. on May 12,2016,Mr. Haddad filed an opposition

To Motion To Dismiss ("P1. Resp."), arguing that the Government's April 27,2016 Motion To

Dismiss contradicts the free economy upon which the united States is based, i.e., the owner of an

asset is free and clear to enter into business transactions and exit those transaction at

will. On May

19, 2016, the Govemment filed a Reply In Support Of Motion To Dismiss For Lack Of Jurisdiction

("Gov't Reply"), arguing that Mr. Haddad's attempts to avoid the results of a contract that

transferred all his substantial rights in the'844 patent to Astornet are "ineffective."

III. DISCUSSION.

A. Jurisdiction.

The United States Court ofFederal Claims has jurisdiction to adjudicate claims that allege

"an invention described in and covered by a patent of the United States is used or manufbctured

by or for the United States without license of the owner thereof or lawful rieht to use or

manufacture the same, . . . [seeking] recovery of. . . reasonable and entire aornp"n.-ution fbr such

use and manufacture." 28 U.S.C. $ 1498(a).

As a threshold matter, the court must consider jurisdiction before reaching the substantive

merits of a case. see Gonzalezv.Thaler,l32s.ct.64l,64g (2012) (..when a riquirement goes

to subject-matter jurisdiction, courts are obligated to consider sua sponte issues that the parties

have disclaimed or have not presented."). when considering u

-otion to dismiss for lack of

subject-matter jurisdiction, the court must take the facts alleged in the complaint as true. .see

Erickson v. Pardus,551 u.s. 89,93-94 (2007). The court may consider .u-id"nc" beyond

the

pleadings, however, when the motion to dismiss challenges the jurisdictional facts

allegld in the

complaint' See Moyer, 190 F.3d at 1318. If the court determines that it does not have subiect-

matter jurisdiction, the court must dismiss the complaint. See RCFC l2(hX3).

B, Standing.

Federal trial coufis have been advised to "decide standing questions at the outset

ofa case.

That order ofdecision (firstjurisdiction then the merits) helps beuei to restrict the

use ofthe f'ederal

courts to those adversarial disputes that Article III defines as the federal judiciary's business."

steelCo.v. Citizens.for a Better Env't,523 u.s. g3, I l I ( l99g) (Breyer, J., concuningl. The pany

. Although Mr. Haddad titled his February

17, 2016 filings as Replies to the third-party

defendants' "Motions," the court will construe them to be Replies to the January 21,2016

and

J anuary 22, 20 I 6 third-party defendants' Answers.

invoking federal jurisdiction has the burden ofproofto satisfy the constitutional requirements of

Article III standing. See FWPBS, Inc. v. Dallas,493 U.S. 215, 231 (1990) (holding that the

burden is on the party seeking to exercise jurisdiction to clearly allege facts sufficient to establish

jurisdiction).

"A patentee shall have remedy by civil action for infringement of his patent.,, 35

U.S.C. $ 281; see a/so 35 U.S.C. $ 100(d) ("The word 'patentee' includes not only the patentee to

whom the patent was issued but also the successors in title to the patentee."); Paradise Creations,

Inc. v. uv sales, lnc.,315 F.3d 1304, 1308 (Fed. cir. 2003) ("trlhis courr has determined that in

order to assert standing lor patent infringement, the plaintiff must demonstrate that it held

enforceable title to the patent at he inception of the lawsuit.") (emphasis in original). The standard

set forth by the united States Supreme court over a century ago in ll'atermai v. MacKenzie,l3g

U.5.252 (1891) srill govems:

There can be no doubt that he is "the party interested, either as patentee, assignee,

or grantee," and as such entitled to maintain an action at law to recover damases

for an infringement; and it cannot have been the intention of [c]ongress that a suit

in equity against an infringer to obtain an injunction and an account ofprofits, in

which the court is authorized to award damages, when necessary to fully

compensate the plaintiff, and has the same power to treble the damages as in an

action at law, should not be broughl by the same person.

Id. at 26041 (intemal citations omitted).

The october 6, 2015 complaints acknowledge that all "right[s], title[s], and interest[s] to

litigate [in matters conceming] U.S. pat. No. 7,639,944- were given to sole exclusive licensee

l:!oT"t: Gov't Mot. at 2 (quoting Complaint, lslornet Techs., Inc. v. BAE Sys.. 1nc., No. g:14_

245 (D. Md. Jan. 27 , 2014), ECF No. l ). These complaints do not allege that nrr. Fiaddad had

any substantial rights to the'844 patent at the time of filing this lawsuit. Therefore, Mr. Haddad

does not have standing.

c. whether The court Has Jurisdiction To Adjudicate The craims A[eged In

The October 6, 2015 Complaints.

l. The Goyernment's Argument.

.becauseTh9 Govemment argues that Mr. Haddad does not have standing to sue for the '844 parenr,

Mr. Haddad transferred all substantial rights in the '844 pateni to sole exclusive lcensee

Astornet' Gov't Mot. at 3 Where sufficient rights were transferred to an exclusive licensee to

create standing for licensee to sue on its own, the licensee may sue, but the licensor

may not.

Gov't

}{gt: a1 3-4 (citing Alfred E. Mann Found. For sci. Researih v. Cochrear Corp

,604 F.3d 1354,

1359-60 (Fed. Cir.20l0). Mr. Haddad acknowledged in an earlier patent infringement

action that

Astomet was "the sole exclusive licensee of, and own[ed] all right[s], title[s],-and interest[s]

to

litigate [in matters concerning] U.S. pat. No. i,639,944[.f Govit Moi. at 2 (iuoting

compraint,

Astornet Techs., Inc. v. BAE sys., /zrc., No. B:r4-245 (D. Md. Jan.27,2or4), Eci'No.

addition, in the prior patent infringement action, Astornet sued BAE, NCR, and MomhoTrust

t;. tn

fbr

the infringement of the '844 patent, without joining Mr. Haddad, suggesting that Astomet was the

owner of all the substantial rights in the '844 patent, not Mr. Haddad. Gov't Mot. at 2-3.

2. Plaintiff s Response,

Mr. Haddad responds that as the owner of the '844 patent, he is free to enter and exit

business transactions involving the '844 patent as he seesfit. Pl. Resp. at 2. Likewise, as the sole

owner ofthe '844 patent, Mr. Haddad has the right to "allow and disallow any action" related to

the'844 patent. Pl. Resp. at 3. This is evidenced by Mr. Haddad's signed statement allowing

Astomet to pursue legal action. Pl. Resp. at 3-4. In addition, Astornet is no longer in business,

rendering Astomet's rights to the'844 patent canceled by default. pl.Resp.at2. Moreover, there

are no entries in the assignment record of the '844 patent certificate granted by the USpTo. pl.

Resp. at 2. Therefore, Mr. Haddad has standing to bring this patent infringement lawsuit against

the Govemment.

3. The Government's Reply.

The Government replies that Mr. Haddad failed to overcome the defects raised in the April

-

27'20\6 Motion To Dismiss. For Mr. Haddad to have standing as an exclusive licensee to pursue

a patent infringement lawsuit, Mr. Haddad would need to establish all substantive rishts in the

'844 patent. Gov't Reply at 2.

In addition, it is impossible to determine the effect ofthe contract that allesedlv transfened

to Astomet all the substantial rights to the'844 patent, because Mr. Haddad has-not provided the

Govemment with a copy of that contract. Gov't Reply at 2. Moreover, Astomet's February l,

2016 dissolution and April 28,2016letter terminating its ability to pursue legal actions in the ,844

patent, do not cure Mr. Haddad's standing problem, because these events took place

after Mr.

Haddad filed the october 6, 2015 complaints in this court. Gov't Reply at 2-3; see schreiber

Foods, Inc. v. Beatrice Cheese, lnc.,402 F.3d 1198, 1203 (Fed. cir. zooS;

i.l"rlurisdictional defect

cannot be cured by the addition ofa party with standing, nor by subsequent purchases ofan

rnterest

in the patent[.]").

4. The Court's Resolution.

. In the January 27 ,2014 lawsuit filed in the Maryland District Court, Astomet alleged that

it was "the sole exclusive licensee of, and own[ed] all right[s], title[s], and interest[s] to litigate

[in

matters concemingl tJ.S. pat. No. '7,639,944[)" Gov'r Mor. at (quoting comiLrnt,

i Astornet

Techs.' Inc. v. BAE svs.,1nc., No. 8:14-245 (D. Md. Jan. 27,2014),icF lio.

t;.'sln"" Astomet

was allegedly the sole exclusive licensee of, and owned all rights, titles, and

interests to litigate

the '844 patent, Mr. Haddad relinquished his right to sue. see Enzo ApA & sons, Inc. ,. Geapag

A'G 134 F.3d 1090, 1093 (Fed. Cir. 1998) (holding that a virtual assignment exists

'

substantial rights under the patent have been transferred in the form ofan exclusive

"where all

license',); see

also Alfred E, Mann Found. For sci. Research,604 F.3d at 1359-61 (..[w]here an exclusive

license transf'ers less than 'all substantial rights' in the patents to the exclusive licensee,

the

exclusive licensee may still be permitted to bring lawsuit against infringers, but the patenr

owner

. i

is an indispensable party who must be joined. . . when sufficientlf large portion

of [patent]

rights [are] held by one individual, . . . thar individual is permitted to sue for infrinsement

in his

own name. . . . [T]he nature and scope ofthe licensor's retained dght to sue accused infringers is

the most important factor in determining whether an exclusive license transfers sulficient rights to

render the licensee the owner ofthe patent.").

Assuming Mr. Haddad made a valid assignment of the '844 patent to Astornet, Mr. Haddad

does not have standing to sue for the '844 patenl without proof of a subsequent transfer of

substantial rights back to Mr. Haddad. See Alfred E. Mqnn Found. For Sci. Research, 604 F .3d at

1360 (lf the "license agreement transferred sufficient rights to the exclusive licensee to make the

licensee the owner of the patents in question . . . the licensee may sue but the licensor may not.,').

Astomet's alleged dissolution on February l,2016, and Astomet's letter, dated April 2g,

201 6, that allegedly terminated for cause Astomet's ability to pursue legal action in the '84 patent,

do not cure the problem ofstanding, because these events took place subsequent to the October 6,

2015 complaints. see Arrowhead Indus. water, Inc. v. Ecolochem, Inc., 846 F.2d 731.734 n.2

(Fed Cir. 1988) ("The presence or absence ofjurisdiction must be determined on the facts existine

at the time the complaint under consideration was filed.',).

IV. CONCLUSION.

For the reasons discussed herein, the Govemment's ApriI27,2016 Motion To Dismiss is

denied. Mr. Haddad is ordered, within forty-five days of this Memorandum opinion Ard order,

to show cause why this case should not be dismissed, unless he can provide a legal document to

establish that substantial rights to the patent reverted back to him, either by -agreement with

Astornet or otherwise under relevant State law-by the time the October 6, 2015 Complaints were

filed.

IT IS SO ORDERED.

SUS