Godo Kaisha Ip Bridge 1 v. TCL Commc'n Tech. Holdings Ltd.
| Decision Date | 27 February 2017 |
| Docket Number | Civil Action No. 15-634-SLR-SRF |
| Parties | GODO KAISHA IP BRIDGE 1, Plaintiff, v. TCL COMMUNICATION TECHNOLOGY HOLDINGS LIMITED, a Chinese Corporation, TCT MOBILE LIMITED, a Hong Kong Corporation, TCT MOBILE (US), INC., a Delaware Corporation, and TCT MOBILE, INC., a Delaware Corporation, Defendants. |
| Court | U.S. District Court — District of Delaware |
Presently before the court in this patent infringement action is plaintiff Godo Kaisha IP Bridge 1's ("IP Bridge") motion to dismiss the counterclaims of defendants TCT Mobile (US), Inc. and TCT Mobile, Inc. (D.I. 74) For the following reasons, I recommend that the court grant the motion to dismiss without prejudice, and afford TCT the opportunity to amend its counterclaims.
IP Bridge filed this action on July 24, 2015 against TCL Communication Technology Holdings Limited ("TCL Holdings"), TCT Mobile Limited ("TCT Mobile"), and TCT Mobile (US), Inc. (collectively, together with TCT Mobile, Inc., "defendants"), asserting causes of action for the alleged infringement of three of its patents owned by assignment.1 (D.I. 1) The patents-in-suit are directed to technology declared essential to the global 2G, 3G, and 4G telecommunications standards established by the European Telecommunications Standards Institute ("ETSI"). (D.I. 68 at 9, ¶ 4) On December 11, 2015, TCT Mobile (US), Inc. answered the complaint (D.I. 16), and TCT Mobile and TCL Holdings filed a motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2) (D.I. 17). While the motion to dismiss for lack of personal jurisdiction was pending, IP Bridge filed an amended complaint on July 14, 2016, adding TCT Mobile, Inc. as a defendant. (D.I. 63) The parties stipulated that this amendment would have no bearing on the substance of the Rule 12(b)(2) motion to dismiss. (D.I. 62) The amended complaint alleges that defendants infringed the patents-in-suit by designing, manufacturing, using, marketing, importing, offering for sale, and selling mobile phones and tablets under the brands "Alcatel OneTouch" and "TCL" (the "Accused Products"). (D.I. 63 at ¶ 7) TCT Mobile (US), Inc. and TCT Mobile, Inc. filed an answer to the amended complaint on August 3, 2016, adding counterclaims for breach of contract, violations of the Sherman Act, and patent misuse. (D.I. 68)
On August 17, 2016, this court issued a Report and Recommendation, which recommended denial of the motion to dismiss. (D.I. 72) The court entered a Memorandum Order adopting the Report and Recommendation on September 29, 2016. (D.I. 103) IP Bridge filed the instant motion to dismiss the counterclaims asserted by TCT Mobile (US), Inc. and TCT Mobile, Inc. (together, "TCT") on August 22, 2016. (D.I. 74)
IP Bridge's predecessor-in-interest, Panasonic Corporation ("Panasonic"), committed to licensing the patents-in-suit on "fair, reasonable and non-discriminatory terms" ("FRAND") as essential patents to the global 2G, 3G, and 4G cellular telecommunications standards. (D.I. 68 at ¶ 4) Panasonic made this commitment to ETSI in return for inclusion of the patents on ETSI's roster of "standard essential patents" ("SEPs"). (Id. at ¶¶ 11-13)
Prior to filing the original complaint, IP Bridge attempted to engage in licensing negotiations with TCL Holdings. (D.I. 63 at ¶¶ 18-26) According to IP Bridge, defendants failed to respond to IP Bridge's repeated attempts to license its patent portfolio on FRAND terms. (Id.) TCT contends that Panasonic's contractual commitments with ETSI to license the technology on FRAND terms were binding on IP Bridge as successor-in-interest. (D.I. 68 at ¶¶ 19-20) TCT pleads that IP Bridge has breached its obligations by attempting to license its entire patent portfolio for more than a FRAND royalty. (Id. at ¶¶ 6-9)
Federal Rule of Civil Procedure 12(b)(1) authorizes dismissal of a complaint for lack of jurisdiction over the subject matter, or if the plaintiff lacks standing to bring its claim. Motions brought under Rule 12(b)(1) may present either a facial or factual challenge to the court's subject matter jurisdiction. See Lincoln Ben. Life Co. v. AEI Life, LLC, 800 F.3d 99, 105 (3d Cir. 2015) (quoting Common Cause of Pa. v. Pennsylvania, 558 F.3d 249, 257 (3d Cir. 2009)). In reviewing a facial challenge under Rule 12(b)(1), the standards relevant to Rule 12(b)(6) apply. In this regard, the court must accept all factual allegations in the complaint as true, and the court may only consider the complaint and documents referenced in or attached to the complaint. SeeChurch of Universal Bhd. v. Farmington Twp. Supervisors, 296 F. App'x 285, 288 (3d Cir. 2008); Gould Elec., Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). In reviewing a factual challenge to the court's subject matter jurisdiction, the court is not confined to the allegations in the complaint. See Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). Instead, the court may consider evidence outside the pleadings, including affidavits, depositions and testimony, to resolve any factual issues bearing on jurisdiction. See Gotha v. United States, 115 F.3d 176, 179 (3d Cir. 1997). Once the court's subject matter jurisdiction over a complaint is challenged, the plaintiff bears the burden of proving that jurisdiction exists. See Lincoln, 800 F.3d at 105; Mortensen, 549 F.2d at 891.
Rule 12(b)(6) permits a party to move to dismiss a complaint for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). When considering a Rule 12(b)(6) motion to dismiss, the court must accept as true all factual allegations in the complaint and view them in the light most favorable to the plaintiff. Umland v. Planco Fin. Servs., 542 F.3d 59, 64 (3d Cir. 2008). "[C]ourts use the same standard in ruling on a motion to dismiss a counterclaim under Rule 12(b)(6) as they do in assessing a claim in a complaint." Identix Pharms., Inc. v. Gilead Sciences, Inc., C.A. No. 13-1987-LPS-CJB, 2014 WL 4222902, at *5 (D. Del. Aug. 25, 2014) (citing Tyco Fire Prods. LP v. Victaulic Co., 777 F. Supp. 2d 893, 898-99 (E.D. Pa. 2011)).
To state a claim upon which relief can be granted pursuant to Rule 12(b)(6), a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Although detailed factual allegations are not required, the complaint must set forth sufficient factual matter, accepted as true, to "state a claim to relief thatis plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). A claim is facially plausible when the factual allegations allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Iqbal, 556 U.S. at 663; Twombly, 550 U.S. at 555-56.
When determining whether dismissal is appropriate, the court must take three steps.2 See Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010). First, the court must identify the elements of the claim. Iqbal, 556 U.S. at 675. Second, the court must identify and reject conclusory allegations. Id. at 678. Third, the court should assume the veracity of the well-pleaded factual allegations identified under the first prong of the analysis, and determine whether they are sufficiently alleged to state a claim for relief. Id.; see also Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011). The third prong presents a context-specific inquiry that "draw[s] on [the court's] experience and common sense." Id. at 663-64; see also Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). As the Supreme Court instructed in Iqbal, "where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not 'show[n]' - 'that the pleader is entitled to relief.'" Iqbal, 556 U.S. at 679 (quoting Fed. R. Civ. P. 8(a)(2)).
The court's determination is not whether the non-moving party "will ultimately prevail," but whether that party is "entitled to offer evidence to support the claims." United States ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295, 302 (3d Cir. 2011). This "does not impose a probability requirement at the pleading stage," but instead "simply calls for enough facts to raisea reasonable expectation that discovery will reveal evidence of [the necessary element]." Phillips, 515 F.3d at 234 (quoting Twombly, 550 U.S. at 556). The court's analysis is a context-specific task requiring the court "to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 663-64.
In support of the pending motion to dismiss, IP Bridge alleges that TCT's breach of contract counterclaim fails to allege any injury or damages, as required pursuant to Rules 12(b)(1) and (b)(6). (D.I. 75 at 7) In response, TCT contends that IP Bridge breached Panasonic's agreement by seeking a non-FRAND royalty. (D.I. 80 at 4) According to TCT, the damage from IP Bridge's breach is the difference between a FRAND royalty for the asserted patents and any higher royalty, or costs flowing from an injunction, if IP Bridge prevails. (Id. at 5)
I recommend that the court dismiss without prejudice TCT's counterclaim for breach of contract. To state a claim for breach of contract under Delaware law, a counterclaimant must plead: "(1) the existence of the contract, whether express or implied; (2) the breach of an obligation imposed by that contract; and (3) the resultant damage to the [counterclaimant]." Avaya Inc., RP v. Telecom Labs, Inc., 838 F.3d 354, 390 (3d Cir. 2016) (quoting VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003)). TCT's counterclaim alleges that IP Bridge breached its contractual commitments with ETSI, 3GPP, and...
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