District Judge Colleen McMahon granted defendants HTC’s, Motorola Mobility’s, and Blackberry’s joint motion to dismiss the action for lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1) because plaintiff Advanced Video Technologies lacked standing to bring suit.

The court determined that plaintiff did not hold title to the patent-in-suit because there had been a break in a long chain of transfers of title. Plaintiff’s theory was premised on the argument that when one company acquired 100% of the stock of a predecessor-in-interest of the patent, the acquirer also took ownership of the target’s assets, including the patent, by virtue of the stock acquisition. Plaintiff alternatively argued that the acquirer automatically obtained the patent at the time the subsidiary dissolved. The court noted that these arguments were legally incorrect under the laws of both Delaware (the state in which the target was incorporated) and California (the state in which the acquirer was incorporated). The court instructed that an acquisition of 100% of a company’s stock merely creates a parent-subsidiary relationship, and does not result in the transfer of assets from the subsidiary to the parent. Further, with respect to the dissolution, the court found that absent evidence of an affirmative distribution of assets from the subsidiary to the parent pursuant to a plan of distribution, the parent had not acquired title to the patent prior to its purported subsequent assignment of the patent. Plaintiff, in turn, did not hold valid title to the patent-in-suit, and therefore lacked standing to bring suit.

Since the actual standing issue was dispositive, the court did not reach defendant’s alternative argument that plaintiff lacks prudential standing due to its failure to join a one-third owner of the patent in the action. The court noted, however, that under recent Supreme Court precedent (citing Lexmark Int’l, Inc. v. Static Control Components, Inc., __ U.S. __, 134 S. Ct. 1377, 1388 n. 4 (2014) (analyzing the Lanham Act)), prudential standing is not really “standing” at all. Thus, no motion to dismiss for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1) lies where the alleged “lack of standing” is merely prudential.

Case: Advanced Video Techs. LLC v. HTC Corp., Nos. 11-CV-06604 (CM), 11-CV-08908, 12-CV-00918 (CM) (S.D.N.Y. Apr. 28, 2015)