Korea Advanced Inst. of Sci. & Tech. v. KIP Co.
| Decision Date | 07 October 2022 |
| Docket Number | 22-CV-317 |
| Parties | KOREA ADVANCED INSTITUTE OF SCIENCE AND TECHNOLOGY, Plaintiff, v. KIP CO., LTD., P&IB CO., LTD., IN GYOO KANG, KIPB LLC, PAULINA FUNDINGCO, LLC, AND U.S. BANK NATIONAL ASSOCIATION, Defendants. |
| Court | U.S. District Court — Eastern District of Wisconsin |
DECISION AND ORDER
Plaintiff Korea Advanced Institute of Science and Technology (KAIST) originally filed this lawsuit in Wisconsin state court against defendants KIP Co., Ltd. (KIP), P&IB Co., Ltd. (P&IB), P&IB's Chief Executive Officer, In Gyoo Kang (Kang), KIPB LLC (KIPB), Paulina FundingCo, LLC (Paulina), and U.S. Bank National Association (U.S. Bank). (ECF No. 1-1.) Defendant Paulina removed the action to this court (ECF No. 1) and, shortly thereafter, Paulina and U.S Bank filed a joint motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) (ECF No. 26). On the same day defendants KIP, P&IB, Kang, and KIPB (collectively, “KIP defendants” or “KIP”) filed their own joint motion to dismiss under the doctrine of forum non conveniens and Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (ECF No. 28.)
KAIST responded to the defendants' motions to dismiss by filing an Amended Complaint. (ECF No. 30.) The next day this court dismissed the defendants' motions to dismiss as moot. (ECF No. 31.) Approximately two months later the defendants filed motions to dismiss KAIST's Amended Complaint. (ECF Nos. 34, 36, 38.) This time around, Paulina and U.S. Bank filed separate motions to dismiss (ECF Nos. 34, 36), and the KIP defendants again filed a joint motion to dismiss (ECF No. 38). Those motions are fully briefed and ready for resolution. All parties have consented to the jurisdiction of a magistrate judge. (ECF Nos. 9, 12, 14, 18.)
Because this matter is before the court on the defendants' motions to dismiss, much of the information in this section comes directly from KAIST's Amended Complaint, the allegations in which the court accepts as true. Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995). Because several claims in KAIST's Amended Complaint center on the terms of three Korean-language contracts between the parties, some of the information comes from the parties' translations of those agreements. See Mueller v. Apple Leisure Corp., 880 F.3d 890, 895 (7th Cir. 2018) .
KAIST is a national research university whose campus and principal place of business is in the Republic of Korea. (ECF No. 30 at 2, ¶ 5.) KAIST owns a Korean patent for a fin field-effect transistor (FinFET), a piece of technology relied on by large tech companies for manufacturing their consumer electronic products. (ECF No. 30 at 4, ¶¶ 16-17.) In 2012 Defendant P&IB, a Korean corporation, and KAIST formed KIP, also a Korean corporation, with the intention of generating revenue through KAIST's intellectual property. (ECF No. 30 at 4-5; ¶¶ 19-20.) Defendant In Gyoo Kang is the Chief Executive Officer of P&IB. (ECF No. 30 at 3, ¶ 8.) He also resides in the Republic of Korea. (ECF No. 30 at 3, ¶ 8.)
Between July 2012 and October 2019 KAIST entered into three Korean-language agreements with various of the KIP defendants in relation to KAIST's intellectual property. (ECF No. 30 at 5, 6, 7; ¶¶ 20, 30-31, 37.) The KIP defendants filed and served copies of the agreements along with certified translations as exhibits A, B, and C to their brief in support of their motion to dismiss. (ECF Nos. 39-1, 39-2, 39-3.) KAIST obtained its own certified translations prior to filing this lawsuit and included those translations as attachments to its brief opposing the KIP defendants' motion to dismiss. (ECF Nos. 421, 42-2, 42-3.)
KAIST and KIP both relied on KIP's translations of the arbitration provisions at issue, and KAIST suggests that the parties' translations of the arbitration provisions are “substantially similar.” (ECF No. 42 at 10.) The parties have not pointed to any material differences in their respective translations of the other provisions, nor have they argued for use of one translation over the other. As such, where KAIST's Amended Complaint uses KAIST's translations of certain provisions, the court also uses KAIST's translations; where the parties' briefs rely on KIP's translations of certain provisions, the court relies on KIP's translations.
On July 2, 2012, KAIST and KIP entered into a Business Agreement under which KIP was to “actively utilize the grant of exclusive license or assignment of rights from KAIST to focus the efforts on generating the maximum revenue possible” from KAIST's intellectual property. (ECF Nos. 30 at 5, ¶ 20.) Article 6 of the Business Agreement required KIP to “perform in good faith on each task[] defined in this agreement, and focus the efforts on completing the tasks as quickly as possible.” (ECF Nos. 30 at 5, ¶ 21.) Under Article 9 KIP and KAIST agreed that “[m]atters not stated in this agreement shall be discussed mutually by KAIST and [KIP] under the intention of accomplishing the purpose of this agreement to find the solution.” (ECF Nos. 30 at 5, ¶ 22.) And Article 14 states: “In the event of a dispute over the contents of this Agreement, it shall be finally resolved by arbitration in accordance with the arbitration rules of the Korea Commercial Arbitration Board.” (ECF No. 39-1 at 6, art. 14.)
In 2016 KIP organized subsidiary KIPB, a Texas LLC, which KIP wholly owns. (ECF No. 30 at 3, ¶ 9; 5, ¶ 24.) The owner of the U.S. FinFET patent,[1] Jong-Ho Lee, assigned his rights to the U.S. FinFET patent to KIPB. (ECF No. 30 at 5, ¶ 24.) On July 29, 2016, KIPB and Paulina executed a “Purchase Agreement” pursuant to which Paulina would provide up to $6,000,000 in funding for “Patent Litigation” and receive a 350% return on the investment ($21 million) if the Patent Litigation was successful. (ECF No. 30 at 9, ¶¶ 43-44.) KIPB proceeded to sue several Samsung corporate entities, Global Foundries U.S. Inc., and Qualcomm Inc. in the U.S. District Court for the Eastern District of Texas for infringement of the U.S. patent held by KIPB (the “Infringement Lawsuit”). (ECF No. 30 at 5, ¶ 25.) After a jury trial and post-judgment motions, the court entered a $203,003,416 judgment for KIPB on February 19, 2020. (ECF No. 30 at 6, ¶¶ 26-28.)
While the U.S. FinFET patent litigation was still pending, KAIST, KIP, and P&IB formalized how they would share revenue from the use of FinFET technology through two separate agreements, which were both executed on October 2, 2019. (ECF No. 30 at 6, ¶¶ 29, 30.) First, P&IB and KAIST entered into a “Basic Management Agreement for Management of KIP Co., Ltd.” (the “Management Agreement”), which required that KIP consult KAIST before sharing revenue related to KAIST's intellectual property. (ECF No. 30 at 6, ¶¶ 31, 32.) The agreement also specified that KIP was to share revenue generated by KAIST's intellectual property as soon as profits were realized. (ECF No. 30 at 7, ¶ 34.)
Under Article 6 of the Management Agreement, KIP was to obtain, without being prompted or requested to do so, KAIST's informed consent and approval before proceeding with any revenue generating activity. (ECF No. 30 at 7, ¶ 35.) Article 11 of the Management Agreement contains the following provision:
In the event that any dispute arises between the parties to the agreement related to the performance of the duties stipulated under this agreement, violation of this agreement, and so on, the parties shall try to resolve such a dispute smoothly based on mutual agreement first, and any issues that still remain to be resolved shall be resolved based on the arbitration of Korea Commercial Arbitration Board.
(ECF No. 39-2 at 10, art. 11.) Article 10 of the Management Agreement provided that a separate revenue sharing agreement concerning the current U.S. FinFET patent litigation would be prepared by the parties. (ECF Nos. 30 at 7-8; ¶¶ 36-38.)
The same day, KAIST, KIP, and KIPB executed a “Revenue Sharing Agreement,” which required KIP and KIPB (referred to collectively in the Revenue Sharing Agreement as “KIP”) to “deposit in cash on (sic) the amount for revenue sharing to KAIST through the KAIST bank account ... within thirty (30) days from receiving the revenue amount from the licensee.” (ECF Nos. 30 at 8, ¶ 39.) The Revenue Sharing Agreement contains no clause addressing arbitration, jurisdiction, or venue. (ECF No. 39-3.)
In late 2020 KAIST learned that KIP, through KIPB, had signed the Purchase Agreement with Paulina without consulting KAIST. (ECF No. 30 at 9, ¶¶ 43-44.) KAIST further learned that KIP had already paid Paulina millions of dollars under the Purchase Agreement without consulting KAIST (ECF No. 30 at 10, ¶¶ 48-50), and that Paulina had filed an arbitration demand against KIP, KIPB, Jong-Ho Lee, and P&IB with the International Centre for Dispute Resolution, claiming KIP breached the Purchase Agreement (the “Paulina Arbitration”) (ECF No. 30 at 9, ¶ 45). The Paulina Arbitration is still pending. (ECF No. 30 at 10, ¶ 51.)
On September 8, 2020, an emergency arbitrator ordered that KIP place proceeds from the Infringement Lawsuit in a trust account pending the end of the Paulina Arbitration. (ECF No 30 at 9, ¶ 47.) The parties to the arbitration chose a Milwaukee branch of U.S. Bank to create and manage the Trust Account. (ECF No. 30 at 10, ¶ 48.) At the time KAIST filed its Amended Complaint, more than 20 million dollars from the Infringement Lawsuit were in the Trust Account. (ECF No. 30 at...
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