Cray Inc. v. Raytheon Co.

• Decision Date: 05 April 2016
• Docket Number: CASE NO. C15-1127JLR
• Citation: 179 F.Supp.3d 977
• Court: U.S. District Court — Western District of Washington
• Parties: Cray Inc., Plaintiff, v. Raytheon Company, Defendant.

179 F.Supp.3d 977

Cray Inc., Plaintiff,

v.Raytheon Company, Defendant.

CASE NO. C15-1127JLR

United States District Court, W.D. Washington, at Seattle.

Signed April 5, 2016

Bryan A. Kohm, Fenwick & West, San Francisco, CA, Scott Tolchinsky, Fenwick & West, Mountain View, CA, Jonathan T. McMichael, David K. Tellekson, Fenwick & West, Seattle, WA, for Plaintiff.

Brian Fahrenbach, Steptoe & Johnson LLP, Chicago, WA, Daniel S. Stringfield, Thomas J. Filarski, Steptoe & Johnson LLP, Chicago, IL, David B. Edwards, Steven W. Fogg, Corr Cronin Michelson Baumgardner Fogg & Moore LLP, Seattle, WA, Sanjeet Dutta, Steptoe & Johnson LLP, Palo Alto, CA, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

JAMES L. ROBART

, United States District Judge

I. INTRODUCTION

Before the court is Defendant Raytheon Company's motion to dismiss Plaintiff Cray Inc.'s amended complaint for lack of personal jurisdiction. (Mot. (Dkt. # 37); see also Am. Compl. (Dkt. # 29).) In its amended complaint, Cray alleges that Raytheon misappropriated Cray's high performance computing (“HPC”) technology, used that technology to apply for several patents, failed to disclose Cray's technology to the Patent Office as relevant prior art, failed to inform the Patent Office that Cray was an inventor of the HPC technology, and having received several patents based on Cray's technology, has accused Cray of infringing those patents. (See Am. Compl. ¶¶ 9-11, 17-30.) Cray brings claims for (1) a declaratory judgment that Cray does not infringe four of Raytheon's patents (“the Patents-in-Suit”),¹ (2) a declaratory judgment that two of the Patents-in-Suit are unenforceable for inequitable conduct, (3) a declaratory judgment that the same two patents are unenforceable for unclean hands, (4) correction of inventorship related to the same two patents,² (5) breach of contract, (6) unjust enrichment, and (7) conversion. (See id. ¶¶ 31-123.)

Raytheon moves to dismiss this case on the ground that this court does not have personal jurisdiction over Raytheon for any of the claims in Cray's amended complaint. (See Mot. at 6-8.) The court has considered the motion, all submissions filed in support thereof and opposition thereto, the balance of the record, and the applicable law. Being fully advised,³ the court GRANTS in part and DENIES in part Raytheon's motion for the reasons set forth below.

II. BACKGROUND

A. Factual Background

Cray is a Washington corporation that has its principal place of business in Seattle, Washington, and “is a worldwide leader in advanced supercomputing.” (Am. Compl. ¶ 1.) Raytheon is Delaware corporation that has its principal place of business in Waltham, Massachusetts, and “is a technology and innovation leader specializing in defense, civil government and cybersecurity markets throughout the world.” (Mot. at 9-10; Am. Compl. ¶ 2.) In addition, Raytheon “has been a leader in the HPC field” and has been awarded “numerous” patents for its HPC innovations, including the Patents-in-Suit. (Mot. at 10.) “No longer actively engaged in the HPC market,” Raytheon now licenses its HPC technology to HPC manufacturers such as Cray. (Id. at 10-11; see id. ; Resp. (Dkt. # 41) at 7.)

Cray alleges that in 2002 it entered into a contract with Sandia National Laboratories (“Sandia”) related to the development of an HPC system known as “Red Storm.” (Am. Compl. ¶ 18.) As part of the pre-contract bidding process and post-contract development of Red Storm, Cray submitted to Sandia representatives confidential and propriety information regarding the design and operation of Red Storm, including information on Cray's “SeaStar interconnect chip.” (Id. ¶ 19.) Among the Sandia representatives to which Cray submitted this information was an oversight committee that was responsible for validating and challenging Cray's design of Red Storm. (Id. ) Former Raytheon employee James Ballew was an external member of the oversight committee. (Id. ¶¶ 20, 23 (alleging that emails “sent and received by Mr. Ballew in his role as a member of oversight committee [sic] used a ‘raytheon.com’ email address”); see also Mot. at 7, 25.)

Cray alleges that as part of Mr. Ballew's participation on the oversight committee, Mr. Ballew “worked and interacted with Cray employees residing in its Seattle, Washington office” (Am. Compl. ¶ 22), and that Cray “disclosed to Mr. Ballew confidential and proprietary details concerning its design of the Red Storm system. Such information included technical details concerning the interconnect of the Red Storm system...” (id. ¶ 20; see also id. ¶ 21). According to Cray, Mr. Ballew had an obligation to “hold Cray's confidential and proprietary information in confidence.” (Id. ¶ 24.)

In addition, Cray alleges that it entered into three non-disclosure agreements (“NDAs”) with Raytheon or a Raytheon agent between November 18, 2003, and February 20, 2004. (See id. ¶¶ 25-27.) All three NDAs specified that Cray is a Washington corporation and provided that Cray was to disclose confidential and proprietary information to Raytheon for Raytheon to evaluate the possibility of using Cray products. (See id. (noting that the third NDA provided for disclosure to Raytheon of confidential information regarding Red Storm).) Cray further alleges that “[d]uring the development of the Red Storm System, Cray disclosed extensive confidential and proprietary information to Raytheon, both to Mr. Ballew and others at Raytheon.” (Id. ¶ 28.)

According to Cray, on April 15, 2004, following Cray's “extensive disclosure of confidential and proprietary information concerning its Red Storm system, including the associated SeaStar interconnect chip,” Raytheon and Mr. Ballew filed United States Patent Application No. 10/824,874 (“the '874 Application”)

. (Id. ¶¶ 28-29.) This application “was the patent application leading to the '909 and '833 [P]atents,” both of which list Mr. Ballew as an inventor. (Id. ¶¶ 20, 28.) The '874

Application “contained technical information similar or identical to information disclosed to Mr. Ballew and Raytheon by Cray concerning the Red Storm system.” (Id. ¶ 29.) Furthermore, Cray maintains that “Mr. Ballew and others at Raytheon intentionally acquired a substantial portion of this information from Cray and its employees located in Washington.” (Id. ; see also id. ¶¶ 21 (“[T]he Cray personnel primarily responsible for the SeaStar interconnect design that was incorporated into the Red Storm system resided and worked in Washington.”), 54.) Cray also asserts that in prosecuting the '909 and '833 Patents, Raytheon failed to inform the Patent Office that Cray was an inventor of the subject technology and that Cray's Red Storm system and SeaStar interconnect were material prior art. (See, e.g., id. ¶¶ 54-68, 79-86.)

In early 2015, Raytheon engaged a Dallas-based patent-licensing firm, International Patent Licensing Co., LLC (“IPLC”), to offer Raytheon's HPC technology to Cray. (See Stringfield Decl. (Dkt. # 39) ¶ 2, Ex. 1 (“3/20/15 Letter”).) IPLC sent Cray a March 20, 2015, letter identifying four Raytheon patents and explaining how certain Cray products or services mapped onto those patents. (See id. ; Stringfield Decl. ¶ 3, Exs. 2-4.) According to Raytheon, the purpose of the letter was to negotiate a license agreement with Cray that would be fair and beneficial to both parties. (See Mot. at 11; 3/20/15 Letter at 2 (“Raytheon has authorized IPLC to represent Raytheon in negotiating a patent license agreement with Cray that will be fair to both parties and will enable Cray to derive important business benefits, including continued use of Raytheon's patented technology.”).) On May 12, 2015, IPLC sent a follow-up letter providing additional details and reiterating that Raytheon believed in the importance of a licensing discussion and a mutually beneficial agreement with Cray. (See Stringfield Decl. ¶¶ 4-5, Exs. 5-6.) Cray's associate general counsel, Michael Fleming, responded in a May 13, 2015, letter in which he accepted IPLC's “invitation to discuss and understand [Raytheon's] business proposals.” (Id. ¶ 6, Ex. 7.)

On June 18, 2015, representatives of Cray and Raytheon met at Cray's Seattle offices. (See id. ¶¶ 6-9, Exs. 7-16.) During the meeting, Raytheon gave slide presentations showing how Cray products or services map onto five Raytheon patents—four of which were the Patents-in-Suit—explaining the significance and value of Raytheon's patented HPC technology, and describing the development of Raytheon's HPC technology. (See id. ¶¶ 8-9, Exs. 9-16.) Each of the slide decks was marked with a legend: “Raytheon / Cray Patent License Settlement Discussions—Federal Rule 408 Applies” or “Raytheon / Cray Patent License Settlement Discussions—U.S. Federal Rule 408 Applies.” (Id. ¶ 9, Exs. 10-16.)

In the two weeks following the June 18, 2015, meeting, IPLC sent Cray two emails and one letter. (See id. ¶¶ 8, 10, 12, Exs. 9, 17, 21.) The first email included the slide decks from Raytheon's presentation. (See id. ¶¶ 8-9, Exs. 9-16.) The second email and the letter provided additional details regarding some of the patents discussed at the meeting. (See id. ¶¶ 10-13, Exs. 17-22.) IPLC phrased the second email and the letter as pertaining to the parties' licensing negotiations. (See id. ¶¶ 10, 12, Exs. 17, 21.)

B. Procedural Background

On July 15, 2015, Cray filed the instant lawsuit against Raytheon. (See Compl. (Dkt. # 1).) Cray's original complaint contained nine counts, each of which requested a declaratory judgment that Cray does not infringe one of Raytheon's patents.

(See id. at 4-9.) The original complaint contained no allegations of misappropriation, breach of an NDA, or misconduct before the Patent Office. (See id. at 1-10.) Instead, the original complaint alleged only that Raytheon had accused Cray of infringing Raytheon's patents and that a real controversy therefore existed regarding whether Cray indeed infringes. (S...