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Court Grants Motion to Dismiss for Lack of Standing Where Plaintiff Merely Alleged That It Had All Substantial Rights to Patent

Verify Smart Corp. (“Verify”) filed a patent infringement action against Bank of America, N.A. (“BoA”), alleging infringement of United States Patent No. 8,285,648 (“the ‘648 Patent”). As part of its complaint, Verify claimed to have all substantial rights through an exclusive license. BoA filed a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1), contending that Verify lacked standing.

As explained by the district court, BoA challenged Verify’s standing on the basis that it has not alleged facts sufficient to show that it owns the ‘648 Patent or that it possesses an exclusive license with all substantial rights. BofA asserts that Verify’s description of the transactions through which it claims to have been assigned the ‘648 Patent do not demonstrate that it received all substantial rights in it such that it can bring a suit for patent infringement in its own name. “Standing is jurisdictional; a court is without subject matter jurisdiction when a plaintiff lacks standing. Ballentine v. United States, 486 F.3d 806, 810 (3d Cir. 2007). If BoA is successful on its standing challenge, the Court is precluded from addressing its arguments regarding the sufficiency of Verify’s allegations.”

The district court found that “Verify merely claims that its assignment from Assured grants it all substantial rights in the ‘648 Patent thereby permitting it to sue in its own name. Importantly, the parties’ characterization of the assignment or license is irrelevant. Rather, the actual rights transferred to the assignee or licensee are determinative of standing. Intellectual Prop Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333, 1344 (Fed. Cir. 2001). A court must glean the scope of the rights transferred from the writing evidencing the assignment, which the Patent Act requires ‘for a party to have standing to sue in its own name.’ Aspex Eyewear, 288 F App’x at 705.”

The district court then concluded that “Verify makes the bare assertion that it is an assignee with all substantial rights in the ‘648 Patent. It has not recited or annexed the required writing memorializing the assignment of substantial rights in the ‘648 Patent in order to have standing to ‘sue in [its] own name alone.’ Aspex Eyewear, 388 F. App’x at 705. It does not allege that it received an exclusive license, and even if it did, there would remain the requirement to add the patent owner as a co-plaintiff.”

As a result, the district court dismissed the case for lack of standing, but did so without prejudice.

Verify Smart Corp. v. Bank of America, N.A., Case No. 14-5117 (KSH) (CLW) (D. NJ. June 30, 2015)

The authors of are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or