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November 13, 2000


The opinion of the court was delivered by: McMAHON, District Judge.


Before me are several motions relating to the viability of plaintiffs claims for infringement of U.S. Patent No. 5,212,773 ("the '773 patent"), relating to a store-and-forward system for transmitting messages from input to output circuits within a massively parallel processor. For the reasons stated below, I conclude that (1) IBM's motion for summary judgment dismissing the case on the ground that plaintiff does not have title to the patent, and thus cannot maintain this proceeding, should be granted; and (2) assuming there is standing, IBM is entitled to summary judgment dismissing TM's infringement claims. While the '773 patent is enforceable, IBM's products do not infringe the patent's claims as interpreted by this Court.

Prior Proceedings

1. On November 8, 1999, this Court entered an order following a so-called Markman hearing, see Markman v. Westview Instruments, Inc., 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996), 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577, in which I construed the claims in suit under the '773 patent. A supplemental Markman opinion was issued on December 17, 1999. Familiarity with that decision is assumed. See TM Patents, L.P. v. International Bus. Machs., 72 F. Supp.2d 370 (S.D.N.Y. 1999).

2. On July 28, 2000, this Court entered an order disposing of a number of pending motions with regard to both the '773 patent and the other patent in suit. However, the Court ordered a hearing in connection with TM's motion for a declaration that the '773 patent was in fact enforceable and the parties' cross-motions for summary judgment on the issue of infringement of the '773 patent. That hearing was held on September 21, 2000.

3. On September 12, 2000, IBM filed with the Court a suggestion that TM had never obtained valid title to the '773 patent. I indicated that IBM's submission should be treated as a motion to dismiss for lack for subject matter jurisdiction and directed TM to respond. It filed papers in opposition on September 20. IBM filed a supplemental brief on October 6, addressing issues that were the subject of questions at the September 21 hearing. TM, at the Court's invitation, filed a reply to that brief on October 6. Thereafter, the parties filed written responses to questions propounded by the Court.*fn1



Statement of Facts

IBM contends that this Court lacks subject matter jurisdiction because TM procured the '773 patent through assignment from someone who never held valid title to the patent. While the parties have not presented me with extensive affidavit testimony or with live witnesses, they have assembled a plethora of ancient memoranda in order to reconstruct the history of this patent's ownership. The pertinent facts (which for the most part are undisputed, though the conclusions that follow from them are not) are as follows:

The invention under the '773 patent, entitled Wormhole Communications Arrangement for Massively Parallel Processor, was the brainchild of W. Daniel Hillis. At the time of the invention, Hillis was a graduate student at Massachusetts Institute of Technology. His attendance at M.I.T. was funded by the Hertz Foundation, a private foundation. He was not the direct recipient of federal government funding.

On April 28, 1983, Thomas Engellenner of M.I.T. wrote to the Office of Patent Counsel at the Naval Underwater Systems Center in Newport, Rhode Island, and enclosed two patent applications — Hillis' application for what eventually became the '773 patent (entitled "Parallel Processor"), and an application for a second invention entitled "Processor/Memory Circuit." In his letter, Engellenner disclosed to the Navy that M.I.T. was electing to treat the two patents as having arisen under Advanced Research Projects Agency ("ARPA") Contract N-00014-80-C-0505, and was further electing not to apply for the patents itself "because of budgetary constraints and the limited commercial potential perceived in the short term." (IBM 9/12/00 Submission at Ex. 2.) IBM has not supplied the Court with a copy of this contract, and given its extensive efforts (via document requests and Freedom of Information Act inquiries) to locate one from any and every possible source, I am constrained to conclude that no copy exists. However, IBM has located a March 1982 document that appears to be a modification or extension of this contract. (IBM's Oct. 17 Submission at Ex. 4.)

The wording of Engellenner's letter is curious, in that M.I.T. does not assert that work on either invention was actually funded by the Department of the Navy. Indeed, what MIT said was almost deliberately opaque:

The inventors herein are primarily a group of graduate students at M.I.T. but from time to time a number of these inventors have been employed by M.I.T. as research associates funded by ARPA.

(Id.) Engellenner did not identify how many inventors were involved in creating the two inventions and also did not state which (or how many) of those inventors fell within the ambit of "a number of inventors" who had been "employed by M.I.T. as research associates funded by ARPA." In particular, M.I.T. did not specifically identify Hillis as one of those Governmentfunded graduate students, or the invention for which Hillis alone was responsible as having been ARPA-funded.

Nonetheless, M.I.T. included Hillis' invention in the ambit of its ARPA disclosure. (Id.) And even though his fellowship was privately funded, Hillis, in contemporaneously published articles, admitted that he was working on an invention at MIT's Artificial Intelligence Laboratory, funded in part by Contract N-00014-80-C-0505 (IBM 10/6/00 Submission at Ex. 9, 10.) — the very contract under which Engellenner claimed Government sponsorship for both inventions disclosed in his letter to the Navy. This "connection machine," as he called it, was the invention eventually embodied in the '773 patent can be seen by reading a 1982 article in the International Journal of Theoretical Physics, where Hillis described the proposed architecture of the connection machine as "a locally connected array of processing-memory cells." (IBM 10/6/00 Submission at Ex. 10.)

In addition, documents provided to IBM by M.I.T. include a copy of Hillis' original patent application (Ser. No. 499, 474), filed on May 31, 1983. It contains a handwritten notation "3803" in the corner; "3803" is the case number assigned to Hillis' invention by M.I.T. (Id. at Ex. 6.)

On the same day that Engellenner wrote to the Navy, he also wrote a memorandum to Hillis, summarizing discussions they had held during the preceding weeks (IBM 9/12/00 Submission at Ex. 3.) It appears from the memorandum that Hillis and his patent attorney had approached the M.I.T. Patent, Copyright & Licensing Office on a relatively urgent basis in order to clarify his own ownership rights — and perhaps to induce M.I.T. to accept reassignment of the inventions — so that he could enter into an arrangement with IBM to manufacture prototype chips employing the invention. The first of these discussions apparently took place on March 23, 1983, according to a memorandum that Engellenner wrote to Arthur A. Smith, Jr., the head of M.I.T.'s patent office, on that very day. (TM 9/20/00 Submission at Ex. C.)

Engellenner's memorandum to Smith, if taken at face value, discloses that even Hillis conceded that some portion of his work could be considered Governmentfunded:

I explained to Hillis M.I.T.'s basic policy on inventions, that being, that if an invention is conceived or reduced to practice at M.I.T. with the use of sponsored research funds or significant amounts of M.I.T. funding or facilities, agreements signed by all employees and visiting scientists require that the invention be assigned to M.I.T. Hillis and his attorney felt that there were probably more than one invention here and that at least some aspect of the patent application being prepared by [the patent attorney] would belong to M.I.T. because of ARPA sponsorship. [sic]

(Id. at p. 1.) (emphasis added). Of course, the highlighted language is hearsay within hearsay,*fn2 and I have some difficulty concluding that it would be admissible, even under the liberal standard of Fed.R.Evid. 807 — both because Hillis himself later created documents suggesting that neither patent was created under Government sponsorship or belonged to M.I.T. (IBM 9/12/00 Submission at Ex. 5), and because the memo contains certain representations that appear to be inconsistent with the record. For example, Engellenner's memorandum states that Hillis claimed "a routing circuit" as belonging to him, while acknowledging that "a processing element (which was purportedly developed with ARPA sponsorship)" probably did not. (TM 9/20/00 Submission at Ex. C at 2.) However, M.I.T. Case No. 3802, which was assigned to a "Processor/Memory Circuit" (emphasis added), is listed in the relevant documentation as having been invented by Hillis and seven other graduate students (Id. at Ex. D.), while Hillis' singular invention was assigned M.I.T. case number 3803 and entitled "Parallel Processor." (Id.)*fn3

Nonetheless, no one disputes that M.I.T. lacked interest in owning and exploiting the inventions itself and was more than happy to waive its rights in the invention. However, in its letter to the Navy disclosing the patents (IBM 9/12/00 Submission at Ex. 2.), M.I.T. conceded nothing in terms of Hillis' sole ownership of any patents. Indeed, in his memorandum to Hillis, Engellenner identified Hillis (and another student) as having "from time to time been employed as research assistants funded by ARPA." (Id. at Ex. 3 at p. 1.) Thus, it seems that M.I.T. took the position that any and all patent rights associated with both inventions belonged to it in the first instance, whether Hillis thought so or not. And while the university volunteered to waive its rights in Hillis' invention, M.I.T. also specifically advised Hillis that he would need to file papers with the Department of the Navy in order to protect his title to the invention. (Id. at Ex. 2.)

M.I.T. advised Hillis, at the time it offered to waive its rights in the invention that became the '773 patent, that it did so "subject only to the following conditions:"

first, your patent application should be amended to recite that "the government has rights in this invention pursuant to a contract with the Advanced Research Projects Agency No. N-00014-80-C0505" and any licenses issued to commercial concerns under these inventions should acknowledge the government's royalty-free license to these inventions. . . . [other conditions omitted]

(Id. at Ex. 3 at pp. 1-2.) Engellenner then stated, "If these terms are agreeable to you, I will be happy to present your case to the patent committee." (Id.) There is no evidence in the record to indicate whether Hillis did or did not consent to M.I.T.'s conditions, although, as will be seen below, the 1991 patent application that resulted in the issuance of the '773 patent did not contain any of the language demanded by the M.I.T. as a condition of its waiver. (Id. at Ex. 11.)

I surmise that the '773 patent application did not contain MIT's suggested language because Hillis took the position that at least one of the inventions he discussed with Engellenner was his invention and his alone. Indeed, Hillis represented to the Department of the Navy, in a letter he wrote on November 14, 1984, that both inventions were his. Nonetheless, in that letter, Hillis very deferentially asks the Navy to authorize his rights in both inventions:

P.C. Lall, Esquire

Office of Patent Counsel

Naval Underwater Systems Center

Department of the Navy

Building 142

Newport, Rhode Island 02840

SUBJECT: Invention Disclosure under ARPA Contract


MIT Case 3802 "Processor/Memory Circuit"

MIT Case 3803 "Parallel Processor"

Dear Mr. Lall:

I am writing to request authorization to retain the patent rights on the inventions cited above.
Because these inventions were developed when I was a student at MIT supported by a fellowship from the private Hertz Foundation and not through any government grants, it is my understanding that I retain the rights to patents that may be issued. I further understand that without addressing the question of ownership of the patent rights, MIT has elected not to seek patent protection for these inventions and suggested that retention of rights by the inventors is in the best interest of the public, as letters from MIT to your office indicate.
Through my affiliation with Thinking Machines Corporation, I am actively involved in continuing and expanding development of the inventions. We are integrating computer architecture and software innovations that promise important improvements in addressing urgent and very large scale Department of Defense problems. We are also exploring the application of my inventions to solving data processing concerns of other Federal agencies, and are both convinced of and dedicated to realizing the potential for comparable gains for non-Defense computational problems. Further, related to my deep appreciation of the value of the technology transfer to the civilian economy, we are aggressively designing applications software for responding to classes of problems of direct interest to society at large.
I close by repeating my request for your consideration in authorizing my retention of patent rights on the referenced inventions.
Your kind attention to this matter is very much appreciated.

W. Daniel Hillis

(Id. at Ex. 5.) (emphasis added)

It is not true, as TM now asserts (See TM 9/20/00 Submission at n. 4.), that the Navy "dropped the matter" after receiving the above-quoted letter containing Hillis' rather veiled claim of right to the patents. What is true is that the Government was perfectly willing to authorize Hillis to retain ownership of the patents. Indeed, the Navy forwarded the necessary forms on at least two occasions: once to M.I.T. in November 1984, together with a request to provide the forms to those inventors who wanted to retain rights in the ARPA contract inventions (IBM 9/12/00 Submission at Ex. 4.), and once directly to Hillis in April 1986 (IBM 9/12/00 Submission at Ex. 7.). However, the Navy, having been notified by M.I.T. that it elected to treat the patents as having arisen under Government sponsorship, took the position that Hillis' rights in the invention were subject to the same conditions as M.I.T.'s rights. These, of course, included a royalty-free license to the Government.

I can only speculate about why Hillis, having asked the Navy for permission to keep his inventions, did not sign the forms that were sent to him by both M.I.T. and the Navy. The record is devoid of evidence on the subject; it contains no affidavit from Hillis, and his deposition testimony demonstrates a total lack of recall about the forms. There is no dispute, however, that he did not sign them. M.I.T. sent a set of confirmatory instruments (possibly those sent to M.I.T. by the Navy in November 1984) to Dr. Hillis at least as early as May 3, 1985. That they had not been signed and returned some 11 months later is evidenced by his receipt of a letter from M.I.T. dated April 3, 1986, warning Hillis that he was endangering his title by failing to return them:

We have recently been called by Ms. Ina Griffith of the Office of Naval Research who told us that you have not yet returned the instruments to ONT. Ms. Griffin asked us to contact you on this matter. We strongly advise you to complete these instruments, since the lack of them can endanger your title to the inventions.

(IBM 9/12/00 Submission at Ex. 6.) (emphasis added) In spite of this, Hillis did not return the forms, as reflected in M.I.T.'s June 24, 1987 "Report of Inventions and Subcontracts (Final)" for Contract No. N-00014-80-C-0505, which indicated that confirmatory instruments for Case No. 3803 had not been forwarded to the Navy as Contracting Officer. (IBM 10/6/00 Submission at Ex. 4.)

Ultimately, the '773 patent application, under the title "Wormhole Communications Arrangement for Massively Parallel Processor," was filed on Feb. 22, 1991. Hillis listed himself as the sole inventor. He did not disclose any governmental interest in the patent, including any compulsory license. The application for the '773 patent explicitly relates back to the May 31, 1983 application, Ser. No. 499,474 ("Parallel Processor") ("the great grandfather application"), which the parties agree is M.I.T. Case No. 3803, the original Hillis invention. As discussed below, the '773 patent is the result of successive applications that could not, as a matter of law, contain additional information or a different invention than that described in the original application.*fn4

In view of the foregoing, IBM contends that Hillis lacked title to assign to Thinking Machines, because he failed to file the paperwork required by 35 U.S.C. § 201(d). Of course, if Hillis did not have valid title, then he could not convey good title to Thinking Machines, which in turn could not convey good title to plaintiffs — or so IBM argues. Since only a patent owner has standing to sue for infringement (except in a few discrete instances that are not relevant here), such a finding would be the end of the matter where the '773 patent is concerned.

Plaintiffs do not dispute that Hillis never sent in the forms that would have perfected his title as against the Government. They read the documents to suggest that Hillis never agreed with M.I.T. about Government sponsorship of the invention that became the 773 patent, and argue that Hillis needed no waiver by the Government because the invention was not Government-sponsored. Plaintiffs do admit, however, that there was never any formal adjudication of this controverted issue. As happens all too often in these situations, both Hillis and his assignor, Thinking Machines, were content to leave the situation murky. IBM, which has a lot riding on being able to knock out TM's claims under '773 patent, is not.

Plaintiffs do not suggest that this Court embark on the time-consuming task of resolving whether '773's wormhole routing message network was invented with ARPA sponsorship back in the early 1980s — at least, not at this juncture. Rather, they make a number of purely legal arguments about why this Court has jurisdiction over the '773 infringement claims.

First, TM argues that it has sufficiently pled jurisdiction and standing, and that the resolution of any factual disputes must abide the trial of this action.

Second, plaintiffs contend that IBM is estopped to challenge TM Creditors' title, because it has repeatedly admitted TM's title in documents previously filed in this action — indeed, as recently as last summer.

Third, plaintiffs assert that the Bankruptcy Court's award of title to the '773 patent to TM Creditors during Thinking Machines' bankruptcy proceeding — a proceeding to which both IBM and the Government were parties, and in which TM contends the issue of defective title could and should have been raised — is res judicata on the question.

Fourth, TM claims that its title to the patent was secured by virtue of its recording of same following the bankruptcy proceeding, citing the patent recording statute, 35 U.S.C. § 261.

Fifth, if all else fails, TM asserts that IBM has the burden to offer sufficient competent evidence to warrant a finding that it lacks ownership of the patent, and that it has failed to do so. At a minimum, TM asserts that there is a disputed issue of fact on the question.


A. The Issue of Standing is Jurisdictional and Must Be Determined by the Court at the Outset

Before a federal court can consider the merits of a legal claim, the person seeking to invoke the jurisdiction of the court must establish the requisite standing to sue. See Whitmore v. Arkansas, 495 U.S. 149, 154, 110 S.Ct. 1717, 109 L.Ed.2d 135 (1990). "Whether a claimant has standing is the threshold question in every federal case, determining the power of the court to entertain the suit." In re Gucci, 126 F.3d 380, 387-88 (2d Cir. 1997), (quoting Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975)). It remains open to review at all stages of the litigation. See National Org. for Women v. Scheidler, 510 U.S. 249, 255, 114 S.Ct. 798, 802, 127 L.Ed.2d 99 (1994).

Standing requirements drawn from the Constitution look to whether the plaintiff has made out a `case or controversy' between himself and the defendant within the meaning of Article III. See Warth v. Seldin, 422 U.S. 490, 498-499, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975). The plaintiff can do this by showing he has an "injury in fact," or a "distinct and palpable injury." Association of Data Processing Serv. Orgs. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970); Valley Forge Christian College v. Americans United for Separation of Church and State, 454 U.S. 464, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982). If TM is not the true owner of the patent, it suffers no injury in fact as a result of any alleged infringement. To bring suit for patent infringement, a plaintiff must have legal title to or be the exclusive licensee of the patent in suit. See Enzo APA & Son, Inc. v. Geapag A.G., 134 F.3d 1090, 1093 (Fed. Cir. 1998); Abbott Lab. v. Diamedix Corp., 47 F.3d 1128, 1130 (Fed. Cir. 1995); Arachnid, Inc. v. Merit Indus., Inc., 939 F.2d 1574, 1578-79 (Fed. Cir. 1991). Thus, patent ownership is a prerequisite for application of the infringement statute, and also confers standing.

There is some confusion as to whether the question of patent ownership should properly be characterized as a challenge to TM's standing to bring suit, or to the court's subject matter jurisdiction. Two other courts in this district have dismissed infringement claims when the plaintiff did not own title to the patent, on the basis that plaintiff "lacked standing to invoke the subject matter jurisdiction of the court." RAD Data Communications, Inc. v. Patton Elecs. Co., 882 F. Supp. 351, 352 (S.D.N.Y. 1995); Imatec, Ltd. v. Apple Computer, Inc., 81 F. Supp.2d 471 (S.D.N.Y. 2000); see also GAIA Techs., Inc. v. Reconversion Techs., Inc., 93 F.3d 774, 780 (Fed. Cir. 1996) (calling the standing question "jurisdictional" and dismissing plaintiffs infringement claims on standing grounds). These holdings may have improperly conflated the issue of standing with subject matter jurisdiction. Cf. DaSilva v. Kinsho Int'l Corp., 229 F.3d 358 (2d Cir. 2000)*fn5; However, I need not delve into this theoretical problem at the present time. It does not matter whether this Court should properly treat the defendant's challenge to ownership as a motion for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1), or for failure to state a claim due to lack of standing under 12(b)(6), or even as a motion for summary judgement on the merits of the question of ownership. As will be seen below, TM has failed to make the necessary showing of ownership under any theory.

B. Judicial Estoppel Does Not Bar IBM From Raising the Issue of Standing

IBM has consistently admitted during the course of this litigation that TM Creditors LLC has title to the '773 patent. (See Defs Answer to the First Am. Compl., filed March 6, 1998, ¶ 15; Defs Am. Answer to the First Am. Compl., filed August 28, 2000, ¶ 15.) IBM also moved to add TM Creditors, which was not originally a party to this action, as a party plaintiff, asserting in connection with its motion that title to the '773 patent belonged to TM Creditors. (See Def.'s Mem. in Supp. of Def.'s Mot. To Dismiss, filed May 1, 1997, at p. 2, 12.) While it is arguable that the first answer, and even the joinder of TM Creditors, predates IBM's awareness of the Hillis issue, it is quite clear that IBM's amended answer, filed August 28, 2000, came long after defendant became aware of a possible cloud on TM's title. Indeed, IBM first raised the jurisdictional issue with counsel for TM by letter dated April 4, 2000. (IBM 9/12/00 Submission at Ex. 10.) Nonetheless, it admitted TM Creditors' ownership of the '773 patent almost five months later — and a mere two weeks before it filed the suggestion of lack of jurisdiction with the Court. As far as TM is concerned, that should end the matter.

TM argues that these admissions should prevent IBM from challenging TM's ownership of the patent under the theory of judicial estoppel. An admission made during the course of the litigation, however, is not the same as judicial estoppel, which "prevents a party from asserting a factual position in a legal proceeding that is contrary to a position previously taken by [the party] in a prior legal proceeding." Bates v. Long Island R. Co., 997 F.2d 1028, 1037 (2d Cir. 1993); see also 18 Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Fed. Pract. & Proc. ยง 4477 (1981). The theory may be invoked where, (1) the party against whom the estoppel is asserted took an inconsistent position in a prior proceeding, and (2) that position was adopted by the first ...

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