Property, intangible

a blog about ownership of intellectual property rights and its licensing

It’s Alive! Or On Life Support, at Least

Candy company Mars has a convoluted ownership saga for some patents related to currency acceptors in vending machines. In a classic case of the left hand not being introduced to the right, Mars, Inc. had assigned patents to another member of the corporate family, Mars Electronic International, Inc. (MEI),* during ongoing patent litigation. This created unending problems for Mars when it tried to enforce the patents and collect damages for the infringement. The first case, Mars, Inc. v. Coin Acceptors, Inc., is blogged here and the second, Mars, Inc. v. JCM American Corp., blogged here.

In Mars v. JCM, MEI moved under Fed. R. Civ. P. 25(c) that it be substituted for Mars in the suit. The court initially joined MEI, but later held that the Mars didn’t have standing when suit was filed because MEI, not Mars, owned the patents at that point in time. Therefore, MEI had no shoes to step into and the case was dismissed.

MEI, Inc. v JCM American Corp. is the do-over. MEI, Inc. filed a suit against JCM in its own name. JCM tried to duck the suit again, claiming this time that MEI’s claim was a compulsory one in the first lawsuit, so it shouldn’t be allowed now.

Score one for MEI (finally). JCM had never claimed against MEI in the first suit, so MEI was under no duty to bring any counterclaim. Under Fed. R. Civ. P. 13(a)(1), “A pleading must state as a counterclaim any claim that — at the time of its service — the pleader has against an opposing party’s claim if the claim (A) arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim[.]” In the original suit, JCM never counterclaimed against any independent cause of action that MEI had, only against Mars’ claims. Therefore, MEI wasn’t obliged to counterclaim.

MEI could not have brought its independent counterclaims in the original suit even if it wanted to. A party joined under Rule 25 cannot assert its own substantive rights, only those of the original party. Therefore, even if JCM had counterclaimed against MEI, MEI would not have been allowed to file a substantive counterclaim.

But, the case is stayed pending appeal of the original Mars case. Claim construction is one issue on appeal, so the court isn’t going to waste its time on this case until it knows the Federal Circuit is done tinkering with the claim construction of the patents in suit.

MEI, Inc. v. JCM American Corp., No. 09-351 (RBK/JS), 2009 WL 3335866 (D.N.J. Oct. 15, 2009).

*The assignment history of the patents looks even more complicated. The first suit discussed an assignment of the patents to “Mars Electronic International, Inc.,” but the plaintiff in the instant case is “MEI, Inc.” The assignment history is not particularly helpful.

© 2009 Pamela Chestek

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