On December 5, 2018, United States Magistrate Judge Steven M. Gold (E.D.N.Y.) recommended denying a motion for summary judgment by defendant Mastercard International Inc. (“Mastercard”), as well as plaintiff Alexsam, Inc.’s (“Alexsam”) motion to dismiss Mastercard’s counterclaims alleging invalidity and noninfringement of two of Alexsam’s patents.
Alexsam sued Mastercard in May 2015, alleging that Mastercard failed to pay royalties owed under a 2005 licensing agreement that granted Mastercard a license to conduct transactions covered by Alexsam’s patents—U.S. Patent Nos. 6,000,608 and 6,189,787 (together, the “Licensed Patents”). Mastercard counterclaimed, seeking determinations that the Licensed Patents were invalid and/or not infringed.
In addition to asserting counterclaims, Mastercard petitioned the Patent Trial and Appeal Board (the “PTAB”) for covered business method review (“CBM review”) of the Licensed Patents. The PTAB denied Mastercard’s petition, however, finding that because the licensing agreement contained Alexsam’s “covenant not to sue,” there was no imminent possibility that Alexsam could bring an infringement action against Mastercard, and therefore Mastercard did not have standing to petition for CBM review of the Licensed Patents.
Following the PTAB’s determination, Mastercard moved for summary judgment, arguing that Alexsam was judicially estopped from prosecuting the breach of contract action because it successfully argued before the PTAB that the covenant not to sue precluded it from bringing suit. Judge Gold rejected Mastercard’s argument, finding that Alexsam had argued (and the PTAB held) only that the covenant precluded a suit alleging infringement of the Licensed Patents, not that the covenant precluded its breach of contract claim. Reasoning that Alexsam’s positions before the PTAB and in this suit were not inconsistent, Judge Gold recommended that Mastercard’s summary judgment motion be denied.
For its part, Alexsam renewed a previously denied motion to dismiss Mastercard’s counterclaims and affirmative defenses, arguing that “because it asserts only a breach of contract claim and not one for infringement, there is no case or controversy with respect to the validity of its patents or whether Mastercard has infringed them.” Judge Gold found that there had been no change in the law to warrant revisiting the court’s earlier ruling, reasoning that the cases cited by Alexsam were inapplicable and that the PTAB’s determination (even if applicable) was not controlling. Judge Gold thus recommended that Alexsam’s renewed motion to dismiss be denied as precluded by the law of the case.
Case: Alexsam, Inc. v. Mastercard Int’l Inc., 15-CV-2799 (ILG) (SMG), Dkt. No. 204 (E.D.N.Y. Dec. 05, 2018).
