Iceberg Assocs. LLP v. Dynamic Data Techs.
| Docket Number | 3:22-cv-01084-RBM-DDL |
| Decision Date | 07 June 2023 |
| Parties | ICEBERG ASSOCIATES LLP, Plaintiff, v. DYNAMIC DATA TECHNOLOGIES, LLC AND MAXLINEAR, INC., Defendants. |
| Court | U.S. District Court — Southern District of California |
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT DYNAMIC DATA TECHNOLOGIES, LLC'S MOTION TO DISMISS PLAINTIFF'S CLAIMS AGAINST DYNAMIC DATA TECHNOLOGIES, LLC [DOC. 14]
On July 25, 2022, Plaintiff Iceberg Associates LLP (“Plaintiff”) filed the instant action (“Complaint”) against Defendants Dynamic Data Technologies, LLC (“Dynamic Data”) and MaxLinear Inc. (“MaxLinear”) (collectively, the “Defendants”). (Doc. 1.) On September 23, 2022 Dynamic Data filed a Motion to Dismiss Plaintiff's Claims against Dynamic Data pursuant to Federal Rule of Civil Procedure 12(b)(6) (“Motion”). (Doc. 14.) Plaintiff filed a response in opposition on October 10, 2022 (Doc. 22), and Dynamic Data filed a reply on November 14 2022 (Doc. 29). For the reasons discussed below, Dynamic Data's Motion is GRANTED IN PART and DENIED IN PART.
Plaintiff is a limited liability partnership specializing in patent brokerage. (Doc. 1 at 2-3.) Dynamic Data is a limited liability company and is in the business of purchasing patents for purposes of “threatening or filing enforcement proceedings” for revenue, rather than marketing or using the inventions covered by the patents. (Id. at 2.) MaxLinear is a publicly traded corporation that “builds and sells networking and communications technology.” (Id.)
The facts alleged in the Complaint are as follows. On November 30, 2016, Plaintiff and MaxLinear entered into a written agreement titled Transaction Representation Agreement (“TRA”) in which Plaintiff agreed to act “as MaxLinear's exclusive worldwide representative to facilitate and promote the sale, assignment and/or licensing” of specific patents (the “Patents”) that MaxLinear wanted to sell or license. (Id. at 3-4.) In exchange for Plaintiff's services, MaxLinear agreed to pay Plaintiff a designated amount[1]immediately upon executing the TRA and a percentage of any amount obtained by or due to MaxLinear “resulting from any license, assignment or any other transfer of the Patents.” (Id. at 4.) Plaintiff and MaxLinear “extended the TRA's initial six-month term on May 11, 2017 for another six months to November 30, 2017.” (Id.) The TRA included a provision that stated MaxLinear would be required to pay Plaintiff its full commission for any patent transaction Plaintiff was retained to promote so long as it was completed within twelve months after the expiration of the term. (Id.) Thus, “if MaxLinear was able to sell or license its specific Patents listed in the TRA [any time] before November 2018, or if it continued to receive commissions from the sale or licensing of Patents thereafter, MaxLinear was still obligated to pay [Plaintiff] its commission.” (Id.) After executing the TRA, Plaintiff contends it spent “significant time and resources performing its duties marketing and ultimately selling MaxLinear's Patents.” (Id.)
On April 18, 2018, MaxLinear entered into a written Patent Purchase Agreement (“PPA”) with Dynamic Data in which Dynamic Data agreed to purchase patents from MaxLinear. (Id. at 5.) Under the PPA, Dynamic Data agreed to pay MaxLinear and Plaintiff an increasing proportion of the revenue Dynamic Data was able to generate from the patents (“Buyer Proceeds”). (Id.) The percentage Dynamic Data was obligated to pay MaxLinear and [Plaintiff] under the PPA “increased as the amount of Buyer Proceeds increased” with defined limits. (Id.) The Complaint alleges that “[f]or each increased step, [Dynamic Data] was always obligated to pay [Plaintiff]” a specific percentage of what it paid to MaxLinear. (Id.) Therefore, Plaintiff contends that pursuant to the terms of the TRA and PPA, Plaintiff is “entitled to be paid from MaxLinear” a percentage of the commission of any money MaxLinear receives from Dynamic Data, and separately receive from Dynamic Data a percentage of the proceeds Dynamic Data paid to MaxLinear. (Id.)
Moreover, Plaintiff explains that on or about Apil 20, 2018, Dynamic Data paid Plaintiff directly an Upfront Guaranteed Payment as set forth in the PPA. (Id.) However, Plaintiff believes that as of June 2019, Dynamic Data was able to generate a certain amount in Buyer Proceeds “monetizing and enforcing the Patents.” (Id. at 6.) Accordingly, [Dynamic Data's] receipt of such Buyer Proceeds resulted in [Dynamic Data] paying MaxLinear” a certain amount. (Id.) “However, despite that payment, and despite [Dynamic Data]'s obligation to pay [Plaintiff] its separate proportionate share of the same Buyer Proceeds, [Dynamic Data] has refused and failed to do so despite multiple demands.” (Id.) Moreover, Plaintiff contends that “[a]s a result of its receipt of its portion of Buyer Proceeds from [Dynamic Data], MaxLinear also became obligated to pay [Plaintiff]” a specific amount of separate commission under the TRA.” (Id.)
Thus, on July 25, 2022, Plaintiff filed the instant action against MaxLinear and Dynamic Data alleging the following causes of action: (1) breach of the TRA against MaxLinear, (2) breach of the PPA against Dynamic Data, and (3) an accounting claim against both Defendants. (See Doc. 1.) The Complaint also requests compensatory damages and attorneys' fees and costs. (Id. at 9.) On September 23, 2022, Dynamic Data filed the instant Motion arguing that Plaintiff's claims against Dynamic Data should be dismissed because they fail to allege “plausible breach of contract and accounting claims under controlling New York law.” (Doc. 14-1 at 8.) MaxLinear filed an answer to Plaintiff's Complaint on September 26, 2022. (Doc. 15.)
Pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6), an action may be dismissed for failure to allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations omitted). For purposes of ruling on a Rule 12(b)(6) motion, the Court “accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).
However, the Court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). Nor is the Court “required to accept as true allegations that contradict exhibits attached to the Complaint or matters properly subject to judicial notice, or allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” Daniels-Hall v. Nat l Educ. Ass 'n, 629 F.3d 992, 998 (9th Cir. 2010). “In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotation marks omitted). When a Rule 12(b)(6) motion is granted, “a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.” Cook, Perkiss & Liehe v. N. Cal. Collection Serv., 911 F.2d 242, 247 (9th Cir. 1990) (citations omitted).
A court generally cannot consider materials outside the pleadings on a motion to dismiss for failure to state a claim. FED. R. CIV. P. 12(d). A court may, however, consider materials subject to judicial notice without converting the motion to dismiss into one for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). Under Federal Rule of Evidence 201(b), a court may take judicial notice, either on its own accord or by a party's request, of facts that are not subject to reasonable dispute because they are (1) “generally known within the trial court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” FED. R. EVID. 201(b). A court may also take judicial notice of matters of public record. Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001) (internal citations omitted).
Here, Dynamic Data requests the Court take judicial notice of five exhibits: (1) United States Patent No. 7,316,622 (Ex. 1); (2) United States Patent No. 7,539,391 (Ex. 2); (3) United States Patent No. 7,933,411 (Ex. 3); (4) United States Patent No. 6,208,350 (Ex. 4); and (5) decision “Denying Institution of Inter Partes Review of United States Patent No. 8,135,073” in Unified Patents Inc. v. Dynamic Data Technologies, LLC, IPR2019-01085 (PTAB), which was filed on December 3, 2019 before the United States Patent and Trademark Office's Patent Trial and Appeal Board (Ex. 5). (Doc. 14-2 at 4.) Plaintiff filed an opposition to Dynamic Data's request for judicial notice and explains that “[w]hile the Court can take judicial notice of the patents themselves, doing so does not conclusively establish facts contained therein.” (Doc. 22-2. at 2.)
The Court takes judicial notice of United States Patent Nos 7,316,622, 7,539,391, 7,933,411, and 6,208,350 in Exhibits 1, 2, 3, and 4. ...
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