alg Doc 1331 Filed 06/06/12 Entered 06/06/12 15:56:08 Main Document Pg 1 of 16

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1 Pg 1 of 16 PEPPER HAMILTON LLP Suite Town Center Southfield, Michigan Deborah Kovsky-Apap (DK 6147) Telephone: Facsimile: kovskyd@pepperlaw.com PEPPER HAMILTON LLP 19 th Floor, High Street Tower 125 High Street Boston, MA William D. Belanger belangew@pepperlaw.com Telephone: Todd A. Feinsmith Telephone: feinsmith@pepperlaw.com Lana A. Gladstein Telephone: gladsteinl@pepperlaw.com Counsel for FlashPoint Technology, Inc. IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK In re: ) Chapter 11 ) Eastman Kodak Company, et al., ) Case No (ALG) ) Debtors. ) Jointly Administered ) OBJECTION OF FLASHPOINT TECHNOLOGY INC. AND JOINDER WITH APPLE INC. S OBJECTION TO DEBTORS MOTION FOR AN ORDER IN AID OF AN ASSET SALE PURSUANT TO SECTION 363 OF THE BANKRUPTCY CODE FlashPoint Technology, Inc. ( FlashPoint ) joins in Apple Inc. s ( Apple ) Objection to Debtors Request For An Order In Aid Of An Asset Sale Pursuant to Section 363 Of The Bankruptcy Code [Docket No. 1312] ( Apple s Objection ) 1 and sets forth additional 1 FlashPoint has incorporated and adopted the arguments made by Apple solely for the sake of economy and convenience. As explained more particularly in this Objection, FlashPoint, has both ownership and financial

2 Pg 2 of 16 reasons why Debtors Motion For An Order In Aid Of An Asset Sale Pursuant to Section 363 Of The Bankruptcy Code ( Kodak s Motion) should be denied. 2 FlashPoint was formed as spinoff of the digital camera business of Apple. As part of this spinoff, FlashPoint was assigned rights in Apple s digital camera technology, including certain patent rights. The rights assigned by Apple to FlashPoint include all rights in the technology covered by U.S. Patent Nos. 5,493,335, 5,828,406, 6,147,703, 6,292,218, 6,441,854, 6,879,342, 7,210,161, 7,453,605, 7,742,084, 7,936,391 ( Disputed Patents ), the patents alleged by Debtor Eastman Kodak Company ( Kodak ) to be part of its patent portfolio. These patents are properly owned by FlashPoint. FlashPoint, therefore, has both ownership and economic interests in the Disputed Patents to bring a cause of action for correction of inventorship under 35 U.S.C As such, FlashPoint has a right to a jury trial, which FlashPoint does not consent to waive. Furthermore, FlashPoint s correction of inventorship claims are not time barred because Section 256 imposes no statute of limitations to correct inventorship due to public policy reasons for preserving property rights from avoidable forfeiture. And, for the reasons articulated in Apple s Objection, FlashPoint s inventorship and ownership claims also are not barred under any equitable doctrine. Accordingly, for these additional reasons, Kodak s Motion should be denied. interests in the Disputed Patents and, therefore, has a cause of action for correction of inventorship of the Disputed Patent under 35 U.S.C. 256, among others. The adoption of Apple s arguments does not constitute, and should not be construed as, a concession or agreement in regard to Apple s alleged ownership claim with respect to the Disputed Patents. 2 FlashPoint expressly incorporates by reference the arguments made in its Joinder in Apple Inc. s Motion to Withdraw the Reference, filed with this Court on June 6,

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5 Pg 5 of , Apple filed a complaint in the state court of California against Kodak, alleging various state law claims including breach of contract. Apple Inc. v. Eastman Kodak Company, 1-10-CV , (Sup. Ct. Cal., filed Aug. 26, 2010) ( the California Action ). In August 2010, Kodak reached out to FlashPoint, as a third-party, with a request to assist it against Apple s ownership claims concerning U.S. Patent No. 6,292,218 ( the 218 Patent ) in a litigation between Apple and Kodak pending in California (captioned Apple, Inc. v. Eastman Kodak Company, 110-cv , Superior Court of the State of California, County of Santa Clara, filed Aug. 26, 2010 ( the California Action ). After Kodak contacted FlashPoint, on September 21, 2010, Kodak, Apple and FlashPoint entered into a standstill agreement. On September 21, 2010, Kodak also removed the California Action to federal court in California based on diversity. (1-10-CV , Sup. Ct. Cal., Doc. No. 6). Thereafter, -5-

6 Pg 6 of 16 Kodak requested the action be stayed or transferred to the Western District Action. On February 1, 2011, the District Court in California stayed the case until April 1, In the meantime, Apple was allowed to file a counterclaim in the Western District Action on March 25, 2011, (6:10-cv W.D.N.Y., Doc. No. 23), and, at that time, the claims raised in the California Action became subject to the stay already in place in the Western District Action. See id. Now that Kodak has entered bankruptcy, the Western District Action is also subject to the automatic bankruptcy stay. 11 U.S.C Since the claims asserted in the California Action were (and still are) stayed, counsel for Kodak, Apple and FlashPoint verbally agreed to continue FlashPoint s standstill in view of the stay. On January 19, 2012, however, Kodak sought protection under Chapter 11 in this Court. Since that time, FlashPoint, Apple and Kodak have been engaged in negotiating another standstill agreement. Notably and surprisingly, Kodak neglected to tell the Court about both its request to FlashPoint to assist it against Apple s ownership claims and the Standstill Agreement it signed with FlashPoint. II. ARGUMENT The cause of action for judicial correction of inventorship arises under the patent laws and is itself created by 35 U.S.C. 256: The error of omitting inventors or naming persons who are not inventors shall not invalidate the patent in which such error occurred if it can be corrected as provided in this section. The court before which such matter is called in question may order correction of the patent on notice and hearing of all parties concerned and the Director shall issue a certificate accordingly. 35 U.S.C. 256 (2011); Larson v. Correct Craft, Inc., 569 F.3d 1319, (Fed. Cir. 2009); Chou v. Univ. of Chicago, 254 F.3d 1347, 1357 (Fed. Cir. 2001). Section 256 does not limit the time during which inventorship can be corrected because it serves the public policy of -6-

7 Pg 7 of 16 preserving property rights from avoidable forfeiture. See Advanced Cardiovascular Sys. v. Scimed Life Sys., Inc., 988 F.2d 1157, at (Fed. Cir. 1993); see also Henderson v. Carbondale Coal & Coke Co., 140 U.S. 25, 33 (1891) ( Forfeitures are never favored. Equity always leans against them, and only decrees in their favor when there is full, clear and strict proof of a legal right thereto. ). Thus, FlashPoint s claims to correct inventorship under Section 256 are not time barred. Furthermore, for the reasons stated in Apple s Objection at pp , neither FlashPoint s inventorship claims nor any state law based ownership claims are barred by laches. The Federal Circuit has held that a plaintiff seeking correction of inventorship under 256 can pursue that claim in federal court only if the requirements for constitutional standing namely injury, causation, and redressability are satisfied. Larson, 569 F.3d at 1326 (citing Chou v. Univ. of Chicago, 254 F.3d 1347 (Fed. Cir. 2001) and discussing the relationship between a suit under 256 and the elements of constitutional standing). A concrete financial interest in the patents is sufficient to satisfy the three requirements for Article III standing. Larson, 569 F.3d at 1326; see also Chou, 254 F.3d at In Chou, the plaintiff, a university research scientist who assigned her rights to the university, was found to have met each of the three elements of constitutional standing because, if identified as an inventor, she would be entitled to royalties, licensing revenue and equity in start-up companies pursuant to the university policy. Specifically, the Chou court found that: If Chou has indeed been deprived of an interest in proceeds from licensing the invention and in stock ownership by the conduct that she alleges, then she will have suffered an injury-in-fact, i.e., the loss of those benefits. That loss would be directly traceable to [defendant] Roizman's alleged conduct in naming himself as the sole inventor of discoveries that she at least partly made, and it would be redressable by an order from the district court to the Director of the PTO to issue a certificate naming Chou as an inventor, which would entitle her under the University's policy to a share of the -7-

8 Pg 8 of 16 licensing proceeds and stock already received by Roizman. We therefore determine that Chou is entitled to sue for correction of inventorship under 256. Id. at Consistent with the Federal Circuit s decision in Chou, as a party with a concrete financial interest in Disputed Patents, FlashPoint is both within the purview of 256 and satisfies constitutional standing requirements of injury, causation, and redressability. result of 1. FlashPoint has a concrete financial interest in the Disputed Patents FlashPoint has a concrete financial interest in the Disputed Patents as a direct FlashPoint contends that under 35 U.S.C. 116, Kodak should have named a former Apple employee, Eric Anderson (who is presently the Chief Technology Officer at FlashPoint), as a co-inventor on the 218 Patent because Mr. Anderson contributed to at least one claim in that patent. See 35 U.S.C 116 (statute governing joint inventorship); see also Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352 (Fed. Cir. 2004) (discussing joint inventorship as governed by 116, which sets no explicit limit on the quantum of inventive contribution required to qualify for joint inventorship); Ethicon, Inc. v. United States Surgical Corp., 135 F.3d 1456, 1460 (Fed. Cir. 2002) (holding that a co-inventor need not make a contribution to every claim of a patent. ). Kodak neither named Eric Anderson as a joint inventor nor assigned the 218 Patent to Apple. FlashPoint further contends that other Apple and FlashPoint employees -8-

9 Pg 9 of 16 collaborating with Kodak at the time should have been named inventors on the other Disputed Patents, and that Kodak should have assigned those rights to Apple and FlashPoint. FlashPoint has an ownership interest in the Disputed Patents, including the 218 Patent, and has a cause of action to seek correction of inventorship of these patents under 35 U.S.C FlashPoint will suffer an injury-in-fact if it is deprived of its property interest in the Disputed Patents that is attributable to Kodak, and redressable by a district court FlashPoint has been deprived of its property interest in the Disputed Patents. As a result, FlashPoint has been deprived of a right to earn licensing revenue from its inventions claimed in these patents. Kodak has admitted that since 2003, Kodak has received more than $3 billion in licensing revenues from its digital imaging portfolio, which includes the 218 patent. See Debtors Motion For An Order Pursuant To Bankruptcy Rule 2004 Directing The Examination of Apple Inc. (Doc. 473). As a result of having been deprived of its right to generate revenue on the Disputed Patents, FlashPoint has suffered a concrete financial loss. See Chou, 254 F.3d at 1359 (finding that if plaintiff has indeed been deprived of an interest in proceeds from licensing the inventions then she will have suffered an injury-in-fact, i.e., the loss of those benefits. ). FlashPoint s injury is directly traceable to Kodak s actions. As explained above, Kodak should have named FlashPoint s Chief Technology Officer, Eric Anderson, as an inventor of the 218 Patent; and Kodak should have assigned the 218 Patent to Apple. Had Kodak -9-

10 Pg 10 of 16 conducted itself consistent with 35 U.S.C. 116, FlashPoint would have been a rightful owner of the 218 Patent and other Disputed Patents by virtue of their assignment from Apple to FlashPoint or by virtue of FlashPoint s own collaboration work with Kodak. Finally, FlashPoint s injury is directly redressable by an order from a United States District Court to Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, David Kappos, to issue a certificate correcting inventorship of the Disputed Patents, which would entitle FlashPoint to generate revenue from licensing these patents to others. See Chou, 254 F.3d at 1359 (finding financial injury attributable to a defendant for naming himself as a sole inventor and the injury being redressable by an order of a district to the US PTO to issue a certificate correcting inventorship on a patent). FlashPoint, therefore, has standing and a cause of action to sue for correction of inventorship under 256. Since the technology and intellectual property that forms the basis for Apple s ownership claims with respect to the Disputed Patents, including the 218 Patent, were assigned to FlashPoint under the 1996 Agreement, FlashPoint has both ownership and concrete economic interests in these patents and, therefore, has standing to correct inventorship under 35 U.S.C As such, FlashPoint is the real party in interest with respect to the issue of ownership of the Disputed Patents. Accordingly, FlashPoint has standing to enforce its property rights with respect to the Disputed Patents which requires that the Court deny Kodak s Motion. III. RESERVATION OF RIGHTS FlashPoint reserves all of its rights and nothing contained herein should be construed as consent by FlashPoint to the adjudication of its rights to the Disputed Patents in the Bankruptcy Court, assertion of proof of claim (both formal and informal), as a waiver of -10-

11 Pg 11 of 16 FlashPoint s right to a jury trial, or as a waiver of FlashPoint s request for withdrawal of the reference. IV. CONCLUSION For the foregoing reasons, FlashPoint respectfully requests that the Court deny the relief sought in Kodak s Motion. Dated: June 6, 2012 PEPPER HAMILTON LLP /s/ Deborah Kovsky-Apap Deborah Kovsky-Apap (DK6147) Suite Town Center Southfield, Michigan Telephone: Facsimile: kovskyd@pepperlaw.com and William D. Belanger Todd A. Feinsmith Lana A. Gladstein 19 th Floor, High Street Tower 125 High Street Boston, MA belangew@pepperlaw.com Telephone: weingerd@pepperlaw.com Telephone: feinsmitht@pepperlaw.com Telephone: Attorneys for FlashPoint Technology, Inc. -11-

12 Pg 12 of 16 Exhibit A [REDACTED] -12-

13 Pg 13 of 16 Exhibit B [REDACTED] -13-

14 Pg 14 of 16 Exhibit C [REDACTED] -14-

15 Pg 15 of 16 Exhibit D [REDACTED] -15-

16 Pg 16 of 16 Exhibit E [REDACTED] -16-