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Picture Patents, LLC v. Aeropostale

April 18, 2011


The opinion of the court was delivered by: John G. Koeltl, District Judge:


This Order concerns the ownership of United States Patents No. 6,278,455 ("the '455 Patent"), No. 5,715,416 ("the '416 Patent"), and No. 6,002,401 ("the '401 Patent"; collectively, "the '455 Patent Family" or "the Patents"). The plaintiff, Picture Patents, LLC ("Picture Patents"), sued Aeropostale, Inc., Dick's Sporting Goods, Inc., Charlotte Russe, Inc., GSI Commerce Solutions, Inc., the National Basketball Association, NBA Properties, Inc., NBA Media Ventures, LLC, Major League Baseball Properties, Inc., and MLB Advanced Media, L.P. (collectively, "the Infringement Defendants"), along with other parties not relevant to this Order, for patent infringement. The Infringement Defendants moved to dismiss Picture Patents' claims for lack of standing, arguing principally that the patents were owned by International Business Machines Corp. ("IBM") rather than Picture Patents. Picture Patents then filed the Fourth Amended Complaint ("FAC"), which added IBM as a defendant and sought declaratory judgment that Picture Patents owned the '455 Patent. IBM responded by bringing seven counterclaims against Picture Patents, including requests for declaratory judgment that IBM owns each of the patents in the '455 Patent Family. IBM subsequently brought in Intellinet, Inc. ("Intellinet") as a counterclaim defendant on the declaratory judgment claims. Picture Patents and IBM cross-moved for partial summary judgment on the claims for declaratory judgment.


The following facts are undisputed, unless otherwise noted.


Michelle Baker is the founder, managing member, and only voting member of Picture Patents. (Pl.'s Rule 56.1 Stmt. ¶ 9; IBM's Rule 56.1 Stmt. ¶¶ 199-200.) She is also the founder, president, and only officer of Intellinet, Inc. ("Intellinet"). (Pl.'s Rule 56.1 Stmt. ¶ 8; IBM's Rule 56.1 Stmt. ¶¶ 196-97.)

On November 7, 1990, while a doctoral student at Columbia University, Baker began work as a part-time employee at IBM. (Pl.'s Rule 56.1 Stmt. ¶¶ 11-13; IBM's Rule 56.1 Stmt. ¶ 1.) Baker worked in IBM's Software Performance Analysis Group, which "evaluated existing software code to improve code performance." (Pl.'s Rule 56.1 Stmt. ¶ 18.) The day she began working at IBM, Baker signed an "Agreement Regarding Confidential Information and Intellectual Property" ("the IP Agreement"). (Pl.'s Rule 56.1 Stmt. ¶ 14; IBM's Rule 56.1 Stmt. ¶ 2; Corrected Decl. of Calvin Wingfield ("Wingfield Decl.") Ex. 10.) Paragraph 4 of the IP Agreement stated, in pertinent part:

4. I hereby assign to IBM my entire right, title and interest in any idea, invention, design of a useful article (whether the design is ornamental or otherwise), computer program and related documentation, and other work of authorship (all hereinafter called "Developments"), hereafter made or conceived solely or jointly by me, or created wholly or in part by me, whether or not such Developments are patentable, copyrightable or susceptible to other forms of protection, and [sic] the Developments: (a) relate to the actual or anticipated business or research or development of IBM or its subsidiaries, or

(b) are suggested by or result from any task assigned to me or work performed by me for or on behalf of IBM or its subsidiaries. . . .

The above provisions concerning assignment of Developments apply only while I am employed by IBM in an executive, managerial, product or technical planning, technical, research, programming or engineering capacity . . . . (Wingfield Decl. Ex. 10.) Baker understood that the IP Agreement applied regardless of where or when - whether at work or after hours - she created the intellectual property. (Id. Ex. 96 ("Baker Dep.") at 369:10-24.)*fn1

The IP Agreement allowed Baker to designate inventions that were excluded from the scope of the assignment in two ways. First, it provided that Paragraph 4 "[e]xcluded . . . any Developments that [Baker] cannot assign to IBM because of prior agreement with ___ which is effective until ___." (Id. Ex. 10) In these blanks, Baker entered "Columbia University" and "graduation," respectively. (Id.) The IP Agreement also allowed Baker to identify any "Developments not assigned by Paragraph 4 in which [she has] any right, title or interest, and which were previously made or conceived solely or jointly by [her], or written wholly or in part by [her], but neither published nor filed in any patent office." (Id.) Baker wrote in "none." (Id.)

In the summer of 1990, prior to receiving an offer to work at IBM, Baker had "considered the problem of how to make computer systems more accessible by using pictures." (Pl.'s Rule 56.1 Stmt. ¶ 11.) She "devised a solution to this problem" "[w]hile driving to her father's home in South Carolina for the Thanksgiving holiday in 1991." (Id. ¶ 12.) Specifically, Baker conceived "a novel pictorial user interface that utilized data structures to link files to pictures and regions within pictures." (Id.) According to Baker, she "completed conception of the invention" during the Thanksgiving holiday break. (Id. at 6.)

Baker discussed the pictorial user interface ("the PUI" or "the Invention") with various IBM employees over the next year and a half. (Id. ¶¶ 20-23, 27-38; IBM's Rule 56.1 Stmt. ¶¶ 75, 94-108, 119-31, 133-39, 147-48.) She refined the PUI during work hours, using IBM's office equipment, as well as resources including IBM's research library, databases, and confidential documents. (Baker Dep. 218:20-219:21, 227:5-16, 593:12-594:19, 603:20-604:20; Wingfield Decl. Ex. 40, 49, 51-53.) According to Baker, her communications with IBM employees and use of IBM resources were part of an attempt "to negotiate a deal with IBM whereby IBM would assist her in patenting and commercializing her invention." The plaintiff contends that none of the IBM employees with whom she discussed the PUI "contributed to the conception of the invention or its reduction to practice" and that "Ms. Baker's only use of IBM resources relating to her invention was limited to preparing materials for use in presenting and working out a deal with IBM." (Pl.'s Rule 56.1 Stmt. ¶ 20, 28.)

Baker's employment with IBM ended in June 1993. (Pl.'s Rule 56.1 Stmt. ¶ 49.)*fn2 Baker claims that she communicated to IBM that she believed that she owned the Invention, and that she intended to file a patent application for it. (Id. ¶¶ 50-51.) IBM denies that Baker informed IBM that she intended to file a patent application regarding the Invention. (IBM's Resp. to Pl.'s Rule 56.1 Stmt. ¶ 50.) On June 23, 1993, Baker's manager at IBM wrote a memo, with copies to Baker and others, that stated:

Baker stated that she assumes IBM is not interested in her invention of "Pictorial User Interface", and is relinquishing all claims on said invention. This memo is to document that her assumptions are wrong and that IBM has not relinquished any claims to said invention or any other inventions and/or copyrightable works made or conceived by her during her employment with IBM. (Pl.'s Rule 56.1 Stmt. ¶ 52; Decl. of Srilakshmi Ravi ("Ravi Decl.") Ex. 47.)


After she left IBM, Baker continued to develop the PUI and caused three patent applications to be filed between 1994 and 1999. (Pl.'s Rule 56.1 Stmt. ¶¶ 1, 58; Ravi Decl. Ex. 1, 3, 5.) These patent applications resulted in the issuance of the '455 Patent Family. (Pl.'s Rule 56.1 Stmt. ¶ 1; Ravi Decl. Ex. 2, 4, 6.) At some point, Baker also filed foreign and international patent applications based on the Invention. (IBM's Rule 56.1 Stmt. ¶ 6; Baker Dep. 171:23-176:16.)

On December 4, 2003, Baker signed a document ("the Intellinet Assignment") assigning "the entire right, title and interest" in the Patents to Intellinet. (Ravi Decl. Ex. 10.)

On May 9, 2006, Baker signed another document ("the Picture Patents Assignment") identifying Baker as the assignor and purporting to transfer "the entire right, title and interest" in the Patents to Picture Patents. (Id. Ex. 12.) Intellinet is not mentioned in any way in the Picture Patents Assignment. The Picture Patents Assignment was accompanied by an Assumption of Debt Agreement ("the Debt Agreement") entered into jointly by Picture Patents, Intellinet, and Baker, in which Picture Patents assumed over $50,000 in debt that Baker owed to Intellinet in exchange for her agreement "to assign her interest in [the Inventions] to [Picture Patents] pursuant to the Assignment Agreement dated May 9, 2006." (Id.) The Debt Agreement stated that Intellinet "consents to the assignment of the PROMISSORY NOTES by [Baker] to [Picture Patents] and acknowledges that [Baker] is hereby released from any and all obligations under the PROMISSORY NOTES." (Id.)


Picture Patents filed a patent infringement action against the Infringement Defendants on June 11, 2007, alleging that each had infringed the '455 Patent. The Infringement Defendants moved to dismiss the complaint for lack of standing on the ground that the '455 Patent was owned by IBM, rather than Picture Patents.

Picture Patents then filed the FAC, which added a claim for declaratory judgment against IBM as to the ownership of the '455 Patent and as to Baker's sole inventorship of the '455 Patent. IBM responded to the declaratory judgment claim by arguing, among other things, that Picture Patents had failed to state a claim upon which relief could be granted and that it had failed to provide adequate evidence of ownership. IBM also filed seven counterclaims, seeking declaratory judgment that it owned all three of the patents in the '455 Patent Family and any foreign patents and patent applications corresponding to the Patents or the patent applications that led to their issuance, as well as bringing claims for conversion, unjust enrichment, and breach of contract. IBM subsequently amended its counterclaims to add Intellinet as a defendant on the claims for declaratory judgment.

Picture Patents and IBM cross-moved for summary judgment on their claims for declaratory judgment. Additionally, the Infringement Defendants renewed their motion to dismiss for lack of standing, arguing that either IBM owned the Patents, by virtue of the IP Agreement, or that Intellinet owned them, by virtue of the Intellinet Assignment.*fn3


The motions at issue in this Order concern two sets of questions. The first set comprises two contractual matters: First, did IBM obtain ownership of the Patents by operation of the IP Agreement, or was the Invention outside its scope and thus retained by Baker? Second, assuming that Baker validly owned the Patents that she assigned to Intellinet, did the Picture Patents Assignment effectively assign Intellinet's rights to Picture Patents?

If either of these questions is decided against Picture Patents, then Picture Patents lacks standing to sue the Infringement Defendants, as Picture Patents conceded at argument. (Hr'g Tr. Dec. 2, 2010 ("Hr'g Tr.") at 7.) "In general . . . only the owner of a patent has standing to sue for infringement of the patent." Imatec, Ltd.v. Apple Computer, Inc., 81 F. Supp. 2d 471, 481 (S.D.N.Y. 2000); see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992) ("The party invoking federal jurisdiction bears the burden of ...

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