02-1555
MEDIA
TECHNOLOGIES LICENSING, LLC,
Plaintiff-Appellant,
v.
THE
UPPER DECK COMPANY and THE UPPER DECK COMPANY, LLC,
Defendants/Cross
Claimants-Appellees,
and
COLLECTOR’S
EDGE OF TENNESSEE, INC.,
IN
THE GAME, INC., and PLAYOFF CORPORATION,
Defendants-Appellees,
and
TOPPS
COMPANY, INC.,
Defendant-Appellee,
and
PACIFIC
TRADING CARDS, INC.,
Defendant-Appellee,
and
RACING
CHAMPIONS, INC. and RACING CHAMPIONS SOUTH, INC.
(formerly known as Wheels Sports Group, Inc.),
Defendants-Appellees,
and
FLEER/SKYBOX
INTERNATIONAL LP,
Defendant-Appellee,
v.
ADRIAN
GLUCK,
Cross
Defendant.
Gregory S. Dovel,
Dovel & Luner, LLP, of
Steven J. Rocci,
Woodcock Washburn LLP, of
Appealed from:
Judge Alicemarie H. Stotler
UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT
02-1555
MEDIA TECHNOLOGIES LICENSING, LLC,
Plaintiff-Appellant,
v.
THE UPPER DECK COMPANY and THE UPPER DECK COMPANY, LLC,
Defendants/Cross Claimants-Appellees,
and
COLLECTOR’S EDGE OF TENNESSEE, INC.,
IN THE GAME, INC., and PLAYOFF CORPORATION,
Defendants-Appellees,
and
TOPPS COMPANY, INC.,
Defendant-Appellee,
and
PACIFIC TRADING CARDS, INC.,
Defendant-Appellee,
and
RACING CHAMPIONS, INC. and RACING CHAMPIONS SOUTH, INC.
(formerly known as Wheels Sports Group, Inc.),
Defendants-Appellees,
and
FLEER/SKYBOX INTERNATIONAL LP,
Defendant-Appellee,
v.
ADRIAN GLUCK,
Cross Defendant.
__________________________
DECIDED:
__________________________
Before MAYER, Chief
Judge, MICHEL and DYK, Circuit Judges.
MAYER, Chief
Judge.
Media Technologies
Licensing, LLC, appeals the judgment of the United States District Court for
the Central District of California granting The Upper Deck Co.’s, The Upper
Deck Co., LLC’s, Collector’s Edge of Tennessee, Inc.’s, In the Game, Inc.’s,
Playoff Corp.’s, Topps Co., Inc.’s, Pacific Trading Cards, Inc.’s, Racing
Champions, Inc.’s and Racing Champions South, Inc.’s fka Wheels Sports Group,
Inc., and Fleer/Skybox International LP’s (collectively “Upper Deck”) joint
motion for summary judgment that its suit asserting infringement of United
States Patent No. 5,803,501 (“’501 patent”) was barred by res judicata (claim
preclusion). Media
Techs. Licensing, LLC v. The Upper Deck
Co., No. SA CV 01-1198 AHS (C.D.
Adrian Gluck is
the named inventor of the ’501 patent, which is directed to memorabilia cards
that include an action image of a famous figure. With Gluck acting as its principal,
Telepresence Technologies, LLC, filed suit against several of its competitors
in the memorabilia card industry alleging infringement. The district court determined that
Telepresence held no enforceable rights in the ’501 patent at the time it filed
suit because the assignment of the ’501 patent from Gluck to LNCJ, Ltd.,
licensor of the ’501 patent to Telepresence, was ineffective. Therefore it lacked the cognizable injury
necessary to assert standing under Article III of the Constitution. Accordingly, the court dismissed
Telepresence’s infringement action, and it did not appeal the dismissal. Shortly thereafter, Gluck filed articles of
organization in
On
On
Upper Deck moved for summary judgment asserting that Media’s suit was barred by claim preclusion. The district court granted the motion, concluding that Media was barred from prosecuting the case under claim preclusion because it was in privity with Telepresence, an entity whose case involving the ’501 patent was dismissed with prejudice for lack of Article III standing. Media timely appealed, and we have jurisdiction under 28 U.S.C. § 1295(a)(1).
Because this case
turns on general principles of claim preclusion, not on any rule of law having
special application to patent cases, we apply the law of the regional circuit in
which the district court sits--here, the Ninth Circuit. See
Media’s principal argument on appeal is that, in entering summary judgment on the basis of claim preclusion, the district court erred in concluding that the dismissal of Telepresence’s prior action was a final adjudication on the merits. It contends that a dismissal for lack of standing is equivalent to a dismissal for lack of subject matter jurisdiction, and that a court cannot reach the merits of a case if a plaintiff does not have standing to invoke the court’s jurisdiction over the matter. Upper Deck, on the other hand, places great weight on the district court’s conclusion that the dismissal of Telepresence’s action with prejudice for lack of standing was a final adjudication on the merits because a dismissal with prejudice creates not only the right to appeal, but also the obligation to succeed on appeal to preserve the cause of action. It also contends that Media’s appeal is an improper collateral attack on the judgment of the Telepresence action because Telepresence did not appeal the earlier judgment.
To be given
preclusive effect, a judgment must be a final adjudication of the rights of the
parties and must dispose of the litigation on the merits. See
18A C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure
§ 4427, at 4-5 (2d ed. 2002). The Ninth
Circuit, in common with other federal courts, recognizes that standing is a
threshold question that must be resolved before proceeding to the merits of a
case. L. A. County Bar Ass’n v. Eu,
979 F.2d 697, 700 (9th Cir. 1992); see also Warth v. Seldin, 422
Because standing is jurisdictional, lack of standing precludes a ruling on the merits. Thus, the district court erred in giving preclusive effect to the Telepresence judgment because its dismissal of Telepresence’s complaint for lack of standing was not a final adjudication of the merits. Scott v. Pasadena Unified Sch. Dist., 306 F.3d 646, 653-54 (9th Cir. 2002) (stating that “[w]e must establish jurisdiction before proceeding to the merits of the case”); Bird v. Lewis & Clark Coll., 303 F.3d 1015, 1019 (9th Cir. 2002) (recognizing that before reaching the merits of the case, the court must determine the threshold issue of standing); accord H.R. Techs. v. Astechnologies, Inc., 275 F.3d 1378, 1384 (Fed. Cir. 2002) (“Because lack of standing is not an issue that goes to the merits of the underlying patent issues, a dismissal of a complaint for lack of standing would not normally be expected to be made with prejudice.”).
There is a second alternative ground for rejecting the claim preclusion argument--lack of privity. Upper Deck argues that the court properly determined that Media was a privy of Telepresence for the purpose of claim preclusion because it was an instrumentality of Gluck, whom it asserts was virtually represented in the previous Telepresence action. It contends that Gluck, through Media, is attempting to circumvent the adverse judgment in the Telepresence action to enforce the ’501 patent.
Privity extends the conclusive effect of a judgment to
nonparties who, even if they are not identical, have sufficient commonality
between them, so that one may be bound by the prior decision if his interests
were virtually represented by the other party in that action. Tahoe Sierra Pres.
Council v. Tahoe Reg’l Planning, 322 F.3d 1064, 1081 (9th Cir. 2003). A finding of virtual representation may be
based on an express or implied legal relationship that makes a party to the
prior action accountable to a non-party.
United States v.
Geophysical Corp. of Alaska, 732 F.2d 693, 697 (9th Cir. 1984); United States v. ITT Rayonier, Inc., 627 F.2d 996, 1003 (9th Cir. 1980) (“Courts
have recognized that a non-party may be bound if a party is so closely aligned
with its interests as to be its ‘virtual representative.’”).
That said, however, Upper Deck’s privity arguments are gossamer. The first action was dismissed because of a deficient assignment between the inventor and Telepresence; this action was putatively dismissed because of a virtual representation relationship between Telepresence and Media in the prior action. But this is not possible because Media did not then exist. So Media is not the equivalent of Telepresence coming back for a second bite of the apple; it is the entity with all the interest in the ’501 patent that was lacking before. In light of our disposition, we need not address the remainder of the arguments submitted by the parties.
Accordingly, the judgment of the United States District Court for the Central District of California is reversed, and the case is remanded for further proceedings.
REVERSED
AND REMANDED