JESSE M. FURMAN, District Judge.
Plaintiff MPEG LA, L.L.C. ("MPEG") filed this case in New York Supreme Court, asserting breach of contract and unjust enrichment claims against Toshiba America Information Systems, Inc. ("TAIS") and Toshiba America Consumer Products, L.L.C ("TACP"), subsidiaries of the electronics manufacturer Toshiba Corporation. MPEG is the administrator of "patent pools," arrangements through which companies can pay royalties in exchange for licenses to use a large number of patents rather than having to obtain separate licenses from each individual patent holder. MPEG alleges that TACP breached their patent pool licensing contract by failing to pay royalties, and that TAIS — which later merged with TACP — was unjustly enriched by manufacturing products using the patents in the pool without compensating MPEG. TAIS removed the case to this Court, and MPEG now moves to remand it back to state court. In addition, TAIS moves to dismiss all claims against TACP on the ground that it is a non-existent entity lacking the capacity to be sued. For the reasons that follow, MPEG's motion to remand is DENIED and TAIS's motion to dismiss the claims against TACP is GRANTED.
The following facts are taken from the Complaint and assumed to be true for the purposes of this motion. See, e.g., LaFaro v. N.Y. Cardiothoracic Grp., PLLC, 570 F.3d 471, 475 (2d Cir. 2009); Kernan v. Kurz-Hastings, Inc., 175 F.3d 236, 240 (2d Cir. 1999); Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990).
MPEG, a limited liability company based in Colorado, "administers license agreements for pools of patents essential to the manufacture of products incorporating certain standards and technologies." (Notice of Removal (Docket No. 1), Ex. A ("Compl.") ¶¶ 2, 6; Mem. L. Supp. Pl.'s Mot. To Remand (Docket No. 14) ("Pl.'s Mem.") 2-3). Through a pool, MPEG receives nonexclusive, worldwide licenses from patent holders and, in turn, sublicenses the patents to others. (Compl. ¶ 10). The Complaint explains the arrangements as follows:
(Id. ¶ 6). The pool relevant to this case, for standards and technologies related to the manufacturing of televisions, is memorialized in the Advanced Television Systems Committee Patent Portfolio License (the "ATSC Contract"). (Id. ¶ 8). On November 6, 2008, MPEG and TACP entered into the ATSC Contract, through which TACP agreed to pay royalties in exchange for a worldwide, nonexclusive sublicense to make and sell any "ATSC Receiver Product," defined as "a product, device, converter or thing or portion thereof in whatever form capable of demodulating and decoding an over-the-air, R[adio] F[requency] terrestrial broadcast signal in compliance with" certain standards. (Id. ¶¶ 8, 11-18).
The Complaint alleges that TACP submitted royalty statements and paid royalties to MPEG through the end of 2010, but "underreported and underpaid . . . millions in royalties" for television units manufactured and sold in Mexico. (Id. ¶¶ 26-29). TAIS submitted the last royalty statement to MPEG, for the final quarter of 2010, in February 2011. (Id. ¶¶ 27, 30). That same month, TACP "merged with and into" TAIS, leaving TAIS as the sole "surviving entity." (Id. ¶ 4; see id. ¶¶ 23-25). "Pursuant to the Merger Agreement and by operation of law," the Complaint alleges, "TAIS succeeded to the debts, liabilities, and duties of TACP under the ATSC Contract. Section 13 of the Merger Agreement expressly provides that `all debts, liabilities, and duties of [TACP AND TAIS] shall [after the effective date] attach to TAIS. . . ." (Id. ¶ 24 (alterations in original)). Since the merger, neither TAIS nor TACP has submitted royalty statements or made royalty payments to MPEG pursuant to the ATSC Contract. (Id. ¶¶ 30-31). TAIS, however, "continued and continues" to manufacture and sell "substantial quantities" of products falling under the ATSC Contract, "for which millions in royalties are owed to MPEG LA under the ATSC Contract." (Id. ¶ 31).
On or about April 20, 2015, MPEG filed this case in New York Supreme Court, alleging breach of the ATSC Contract and unjust enrichment. (Id. ¶¶ 34-45). On May 26, 2015, TAIS removed the case to this Court, contending that the Court has federal question and patent jurisdiction over MPEG's unjust enrichment claim, pursuant to Title 28, United States Code, Sections 1331 and 1338, and supplemental jurisdiction over MPEG's contract claim, pursuant to Title 28, United States Code, Section 1367. (Notice of Removal ¶¶ 5-11). (In its Notice of Removal, TAIS also suggested that there "may" be diversity jurisdiction (id. ¶¶ 12-13), but it has since abandoned that suggestion as the parties are apparently not diverse. (Mem. L. Supp. Def.'s Mot. To Dismiss Toshiba America Consumer Products, L.L.C., Prejudice ("Def.'s Mem.") (Docket No. 25) 1, 4).) As noted, MPEG moves to remand the case back to state court; it also seeks fees and costs, contending that TAIS had no colorable basis to remove the case to federal court. (Pl.'s Mem. 13-14). TAIS moves to dismiss all claims against TACP, on ground that TACP is a non-existent entity and thus lacks the legal capacity to be sued. (Def.'s Mem. 2-3).
The Court begins, as it must, with MPEG's motion to remand, which turns on whether any claims in the case "arise[] under the Constitution, laws, or treaties of the United States," 28 U.S.C. § 1331, or, more particularly, "under any Act of Congress relating to patents," id. § 1338(a).
Pursuant to the substantial federal-question doctrine, "federal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress." Gunn, 133 S. Ct. at 1065. In Grable, the leading modern case on the doctrine, the Supreme Court found federal jurisdiction proper in part because the federal issue in dispute — whether a plaintiff in a quiet title action had received proper notice from the Internal Revenue Service of the sale of his seized property — "appear[ed] to be the only legal or factual issue contested in the case." 545 U.S. at 315. Further, and importantly, the Court found that "jurisdiction over actions like Grable's would not materially affect, or threaten to affect, the normal currents of litigation" because "it is the rare state quiet title action that involves contested issues of federal law." Id. at 319. Since Grable, the Supreme Court has emphasized that the doctrine confers federal jurisdiction in only a "special and small category" of cases, Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699 (2006), and that if the federal issue presented is not "a nearly pure issue of law," but rather "is fact-bound and situation-specific," federal jurisdiction is not appropriate, id. at 700-01 (internal quotation marks omitted).
Applying those standards here, the Court concludes that MPEG's unjust enrichment claim raises a substantial federal question and, thus, that TAIS's removal was proper. Under New York law (which the parties agree applies, see Pl.'s Mem. 8; Def.'s Resp. 5), a claim for unjust enrichment requires a showing "that (1) defendant was enriched, (2) at plaintiff's expense, and (3) equity and good conscience militate against permitting defendant to retain what plaintiff is seeking to recover." Briarpatch Ltd., L.P. v. Phoenix Pictures, Inc., 373 F.3d 296, 306 (2d Cir. 2004); see also, e.g., Georgia Malone & Co. v. Rieder, 19 N.Y.3d 511, 516 (2012). Here, MPEG alleges that TAIS "benefited by acting as if it had a patent pool license with MPEG LA, i.e., that it was `under the umbrella of the protection of the ATSC Contract'" and "it [did] so at the expense of MPEG LA which had nonetheless provided this umbrella of protection but was not adequately compensated for doing so." (Pl.'s Mem. 8 (citing Compl. ¶¶ 41-44)). Despite MPEG's assertions to the contrary, to prevail on that claim, it must necessarily prove infringement of one or more of the patents in the patent pool; after all, the value or resource MPEG contends that TAIS has exploited is nothing more than the collection of the relevant patents. (See Compl. ¶¶ 1, 40-45). That is, the only way MPEG can prove that TAIS benefited at its expense is by showing that it used (and therefore infringed) a patent in the pool.
That fact distinguishes MPEG's claim from breach of contract cases found not to raise federal patent questions because the claims turned on interpretation or application of a term in the contract, and infringement or non-infringement was not the determining factor. See, e.g., Nanomedicon, LLC v. Research Found. of N.Y., 784 F.Supp.2d 153, 158 (E.D.N.Y. 2011) (remanding where resolution of the breach of contract and tortious interference claims did "not require a court to determine any issue of patent construction or validity," but only the scope of the parties' agreement); Discovision Assocs. v. Fuji Photo Film Co., No. 07-CV-6348 (PAC), 2007 WL 5161825, at *5-6 (S.D.N.Y. Oct. 29, 2007) (remanding where one possible construction of the parties' contract meant that a breach had occurred when the defendant produced certain products, whether or not that implicated the relevant patents); Design Sci. Toys, Inc. v. McCann, 931 F.Supp. 282, 283 (S.D.N.Y. 1996) (remanding where a patent was the property in dispute but determination of the plaintiff's claims turned on contract law rather than infringement). As one court put it in similar circumstances, if TAIS benefited unjustly from sale of the relevant products, "it is because that enrichment infringed one of [MPEG's] rights, and such a right could derive only from the contract — in which case the unjust enrichment claim cannot stand — or from the patent laws — in which case the unjust enrichment claim is really just a patent infringement claim." Crye Precision LLC v. Duro Textiles, LLC, No. 15-CV-1681 (DLC), ___ F. Supp. 3d ___, 2015 WL 3751658, at *8 (S.D.N.Y. June 16, 2015) (citation omitted). Indeed, if it were otherwise, "plaintiffs bringing patent infringement claims could simply style them as claims for unjust enrichment to avoid" federal jurisdiction. Id.
Thus, MPEG's unjust enrichment claim "necessarily raise[s]" a question of patent law. Gunn, 133 S. Ct. at 1065; see, e.g., Deats, 619 F. Supp. at 981-82 ("Since the unjust enrichment question would have to be answered in the context of a federal patent law claim . . . this claim must be viewed as arising under federal law."); cf. Briarpatch, 373 F.3d at 306 ("Under plaintiffs' theory of the case, the act that allegedly satisfies the second and third elements of unjust enrichment is the act of turning Jones' novel and Malick's screenplay into a motion picture. This act would, in and of itself, infringe the adaptation rights protected by [federal copyright law] (assuming these rights belong to plaintiffs)."). In addition, the question appears to be "actually disputed," as TAIS denies that it has manufactured and sold products (that is, infringed patents) within the scope of the ATSC Contract, (compare Compl. ¶¶ 31, 42-43, with Def.'s Ans. Compl. Affirmative Defenses (Docket No. 21) ("Ans.") ¶¶ 31, 42-43), and "substantial," as it is the gravamen of MPEG's unjust enrichment claim. Gunn, 133 S. Ct. at 1065. Finally, there is no reason to believe that resolution of the unjust enrichment claim would disturb the congressionally approved balance between federal and state courts. In fact, ensuring that patent claims masquerading as unjust enrichment claims are litigated in federal court would be consistent with, rather than undermine, Congress's jurisdictional design. See 28 U.S.C. § 1338. And it would be the rare bona fide unjust enrichment claim that would, like MPEG's claim here, turn on a determination of infringement, as the plaintiff would have to be able to show its standing to sue independent of patent ownership. See Grable, 545 U.S. at 315.
On the subject of standing, and despite MPEG's argument to the contrary (see Pl.'s Mem. 1, 9), the fact that it would not have standing to bring a pure patent infringement claim as a purportedly non-exclusive licensee, see Propat Int'l Corp. v. Rpost, Inc., 473 F.3d 1187, 1193 (Fed. Cir. 2007); Princeton Dig. Image Corp. v. Hewlett-Packard, No 12-CV-6973 (RJS), 2013 WL 1454945, at *5 (S.D.N.Y. Mar. 21, 2013), does not call for a different result. To be sure, MPEG's standing (which is undisputed) derives not from the Patent Act directly, but from its administration of the patent pool — a service that provides value to patent holders and manufacturers alike by reducing the transaction costs associated with the use of multiple patents and for which the administrator deserves to be compensated. Cf. Minden Pictures, Inc. v. John Wiley & Sons, Inc., 795 F.3d 997 (9th Cir. 2015) (holding that an exclusive licensing agent for distribution of copyrighted material — a position much like a patent pool administrator — had standing to bring claims of direct infringement under the Copyright Act). But the mere fact that MPEG's standing is derived from something other than the Patent Act does not mean that it could prove its unjust enrichment claim without "necessarily" proving patent infringement.
One wrinkle remains: whether the owners of the underlying patents are necessary parties under the terms of Rule 19 of the Federal Rules of Civil Procedure.
The Court turns, then, to TAIS's motion, pursuant to Rules 12(b)(2) and 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss all claims against TACP on the ground that it no longer exists and lacks the capacity to be sued. Pursuant to Rule 17(b)(3), a limited liability company's capacity to sue or to be sued is governed by the law of the forum state — here, New York. There is some question as to whether Rule 17(b) incorporates choice of law rules, see Museum Boutique Intercontinental, Ltd. v. Picasso, 886 F.Supp. 1155, 1161 (S.D.N.Y. 1995) (citing cases), in which case the law of New Jersey, where TACP was organized and based (Compl. ¶ 4), might apply. But the Court need not decide that question, as the law of New York and New Jersey with respect to the effects of a merger on a limited liability company are identical. Compare N.Y. Ltd. Liab. Co. Law § 1004(a), with N.J. Stat. Ann. § 42:2B-20(g).
Here, there can be no dispute that TACP merged into TAIS on or about February 14, 2011, and thus ceased to exist as an entity that could sue or be sued. Indeed, the Complaint itself alleges that TACP "was a limited liability company" until that date, when it "merged with and into TAIS with TAIS as the surviving entity." (Compl. ¶ 4 (emphasis added); see also id. ¶¶ 23-25; Ans. ¶ 4). Inexplicably, MPEG all but denies those allegations in its memoranda of law. (See, e.g., Pl.'s Reply 12-13 (arguing that TAIS presented no proof of the merger or the terms, conditions, and effects of the merger and that "nowhere" does the Complaint "allege that TACP ceased to exist")). A plaintiff, however, may not amend its complaint "by asserting new facts or theories for the first time in opposition to Defendants' motion to dismiss." See, e.g., K.D. ex rel. Duncan v. White Plains Sch. Dist., 921 F.Supp.2d 197, 209 n. 8 (S.D.N.Y. 2013). Moreover, and in any event, TAIS has provided printouts from the public records of both New Jersey and New York — of which this Court may take judicial notice — indicating that TACP is a merged, defunct company. See, e.g., Vasquez v. City of N.Y., No. 99-CV-4606 (DC), 2000 WL 869492, at *1 n. 1 (S.D.N.Y. June 29, 2000) (stating that, in deciding a motion to dismiss, courts may take judicial notice of matters of public record); see also, e.g., Williams v. City of N.Y., No. 07-CV-3764 (RJS), 2008 WL 3247813, at *2 n. 3 (S.D.N.Y. Aug. 7, 2008) (taking judicial notice of the plaintiff's incarceration based on the inmate lookup website of the New York State Department of Corrections and Community Supervision). Accordingly, MPEG's claims against TACP must be and are dismissed on the ground that TACP is not an entity that can be sued.
The Court has considered MPEG's remaining arguments, both in favor of remand and in opposition to dismissal of its claims against TACP, and finds them to be without merit. Accordingly, and for the reasons stated above, MPEG's motion to remand is DENIED, and TAIS's motion to dismiss all claims against TACP is GRANTED. Further, in accordance with the directions set forth above, MPEG is ordered to show cause why its complaint should not be dismissed for failure to join a necessary party or parties — namely, the underlying patent owner or owners.
The Clerk of Court is directed to terminate TACP as a party and to terminate Docket Nos. 11 and 24.
SO ORDERED.