Termination of Patentee's Status as Business Entity does not Eliminate Capacity to Assert Patent Infringement in Federal Court

The magistrate judge recommended denying defendants' motion to dismiss plaintiff's infringement claims for lack of subject matter jurisdiction on the basis that plaintiff's "status as a limited partnership [had been] terminated by the Texas Secretary of State." "It is true that both capacity to sue and legal existence are prerequisite to a party’s ability to bring and maintain a lawsuit. But contrary to the Defendants’ argument, [plaintiff] has not been stripped of its legal existence by the Involuntary Termination or by Texas statute. The Involuntary Termination only notices the forfeiture of [plaintiff’s] right to transact business in Texas and terminates its certificate of formation. . . . Nowhere does Texas law strip legal existence from a limited partnership that has forfeited its right to transact business within the state. In fact, Texas law provides that '[t]he forfeiture of the right to transact business in [Texas] does not . . . prevent the limited partnership from defending an action, suit, or proceeding' . . . [B]ecause [plaintiff] is permitted to be sued and defend itself, it must have legal existence. Because [plaintiff] has legal existence under Texas law and capacity to sue under Federal Rule of Civil Procedure 17(b)(3)(A), it may maintain this lawsuit for patent infringement in the District Court."

NorthPoint Technology, LTD. v. DIRECTV, Inc., et al., 1-09-cv-00506 (TXWD October 25, 2010, Report & Recommendations) (Pitman, M.J.).