Luxpro Corp. v. Apple Inc. F/k/a Apple Computer Inc

• Decision Date: 24 March 2011
• Docket Number: No. C 10-03058 JSW,C 10-03058 JSW
• Parties: LUXPRO CORPORATION, a Taiwanese corporation Plaintiff, v. APPLE INC. f/k/a Apple Computer, Inc., Defendant.
• Court: U.S. District Court — Northern District of California

LUXPRO CORPORATION, a Taiwanese corporation Plaintiff,

v.APPLE INC. f/k/a Apple Computer, Inc., Defendant.

No. C 10-03058 JSW

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

Dated: March 24, 2011

NOT FOR PUBLICATION

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS THE SECOND AMENDED COMPLAINT

INTRODUCTION

Now before the Court for consideration is the motion to dismiss filed by Defendant Apple Inc. ("Apple"). The motion is fully briefed and ripe for decision. Having considered the parties' papers, the relevant legal authority, and the record in this case, the Court GRANTS IN PART AND DENIES IN PART Apple's motion to dismiss and GRANTS Luxpro leave to amend the Second Amended Complaint ("SAC").

BACKGROUND

A. Factual Background.

Plaintiff Luxpro Corporation ("Luxpro") and Apple both manufacture and sell MP3 players. (SAC ¶¶ 1-2, 10, 27.) From 2003 to 2006, Luxpro entered into a number of distribution agreements with, and received orders from, distributors, suppliers, and retailers for its MP3 products. (SAC ¶¶ 30-33.) Venture capital firms and outside investors were interested in investing in Luxpro. (SAC ¶ 34.) Due to Luxpro's growth in business, Luxpro prepared itsstock to be publicly traded on the Gre-Tai Securities Market, a Taiwanese public stock exchange. (SAC ¶ 35.)

In February 2005, Luxpro developed a prototype MP3 player called the "Super Shuffle" that was intended to compete with Apple's MP3 player, the "iPod Shuffle." (SAC ¶ 37.) Following the introduction of the Super Shuffle at a trade show in Germany in March 2005, Apple sought and received an injunction against Luxpro in Germany, and Luxpro was ordered to abandon use of the word "shuffle" in its product name. (Id.) Luxpro complied and changed its product name to the "Super Tangent." (Id.) In August 2005, Apple sought and received a preliminary injunction in Taiwan based on allegations that Luxpro's MP3 players too closely resembled Apple's iPod Shuffle. (SAC ¶ 39.) The Taiwanese court prohibited Luxpro from manufacturing, distributing, or marketing three of its MP3 players in the "Tangent" line. (Id.) Luxpro successfully appealed, and the Taiwanese court reversed the injunction for all of Luxpro's products, except the one product that previously contained the term "shuffle." (SAC ¶ 41.) Apple unsuccessfully appealed the reversal of the injunction. (SAC ¶¶ 42, 45.) Apple also filed a complaint with the Taiwanese Fair Trade Commission, alleging that Luxpro violated Taiwan's Fair Trade Act by selling products that were confusingly similar to Apple's products, but the Taiwanese Fair Trade Commission ruled against Apple. (SAC ¶ 46.)

Luxpro alleges that after Apple received the preliminary injunction in Tawian, and while Apple's appeals were pending with the Taiwanese court and the Taiwanese Fair Trade Commission, Apple "continued to threaten Luxpro's distributors and retailers to the point where they could not afford to do business with Luxpro any longer." (SAC ¶ 48.) Luxpro alleges that Apple threatened Luxpro's commercial partners with the same type of litigation that Apple filed against Luxpro, and alleges that Apple threatened to deny access to Apple products if Luxpro's distributors continued to do business with Luxpro. (SAC ¶ 40.) Luxpro alleges that Apple made misrepresentations and disparaging statements about Luxpro's products, causing Luxpro's customers, retailers, and distributors to stop doing business with Luxpro. (SAC ¶ 49.) Luxpro also alleges that Apple "spread the word throughout the industry that Luxpro was selling cheap 'knock-offs' and cheap and illegal copies of Apple's iPod products." (SAC ¶ 40.)

B. Procedural History.

On October 14, 2008, Luxpro filed a complaint in the United States District Court for the Western District of Arkansas (the "Arkansas District Court"), and filed an amended complaint in that court on October 20, 2008. (Docket Nos. 1, 6.) On December 19, 2008, Apple moved to dismiss Luxpro's First Amended Complaint ("FAC"). (Docket No. 23.) On September 28, 2009, the Arkansas District Court entered an order granting in part and denying in part Apple's motion to dismiss, with leave to amend the FAC ("the September 28 Order"). Luxpro Corp. v. Apple, Inc., 658 F. Supp. 2d 921, 936 (W.D. Ark. 2009). Luxpro filed the SAC on December 29, 2009. (Docket No. 62). In the SAC, Luxpro asserts the following causes of action: (1) intentional interference with prospective economic advantage; (2) intentional interference with contractual relations; (3) violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (4) commercial disparagement; and (5) violation of California Business and Professions Code §§ 17200, et seq. (the "Section 17200 claim"). On July 7, 2010, the case was transferred to this Court. (Docket No. 83.) Apple now moves to dismiss the SAC. (Docket No. 141.)

ANALYSIS

A. Applicable Legal Standard.

A motion to dismiss is proper under Federal Rule of Civil Procedure 12(b)(6) where the pleadings fail to state a claim upon which relief can be granted. The complaint is construed in the light most favorable to the non-moving party and all material allegations in the complaint are taken to be true. Sanders v. Kennedy, 794 F.2d 478, 481 (9th Cir. 1986). However, even under the liberal pleading standard of Federal Rule of Civil Procedure 8(a)(2), "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)).

Pursuant to Twombly, a plaintiff must not merely allege conduct that is conceivable but must instead allege "enough facts to state a claim to relief that is plausible on its face." Id. at570. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, __U.S. _, 129 S. Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). "The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.... When a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Id. (quoting Twombly, 550 U.S. at 557) (internal quotation marks omitted). If the allegations are insufficient to state a claim, a court should grant leave to amend, unless amendment would be futile. See, e.g., Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990); Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 246-47 (9th Cir. 1990).

As a general rule, "a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion." Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994), overruled on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir. 2002) (citation omitted). However, documents subject to judicial notice may be considered on a motion to dismiss. In doing so, the Court does not convert a motion to dismiss to one for summary judgment. See Mack v. South Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir.1986), overruled on other grounds by Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104 (1991).

B. The Court Grants Apple's Request For Judicial Notice.

Apple filed a request for judicial notice in conjunction with its motion to dismiss, by which it seeks judicial notice of orders from the Taiwanese and German courts. Apple seeks judicial notice of the foreign court orders on the basis that Luxpro references the orders in the SAC. "Courts may only take judicial notice of adjudicative facts that are 'not subject to reasonable dispute.'" United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003) (quoting Fed. R. Evid. 201(b)). Under the "incorporation by reference" doctrine, courts may consider documents that are "referenced extensively in the complaint and [are] accepted by all parties as authentic." See Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir. 2002).Luxpro objects to the foreign court orders and argues that its asserted claims are not based on those rulings. However, Luxpro seeks relief for economic loss that occurred to Luxpro when Luxpro was "forced to stop all production, manufacturing, advertising and marketing" because of the injunctions. (SAC ¶ 41.) Therefore, many of Luxpro's claims rely on the fact that Apple successfully sought the foreign injunctions against Luxpro. Luxpro also argues that the orders are inaccurate because they are unauthenticated. However, the foreign court orders were submitted by translators who certified under penalty of perjury that they translated true and correct copies of the orders and that they have provided true and correct copies of their translations. (See Declaration of Michael Hofhine in Support of Apple's Motion to Dismiss ("Hofhine Decl.") at 1-2; Declaration of Meihua Shi in Support of Apple's Motion to Dismiss ("Shi Decl.") at 1-2.) This is sufficient to certify the documents' accuracy. See 28 U.S.C. § 1746; Commodity Futures Trading Com'n v. Topworth Intern., Ltd., 205 F.3d 1107, 1112 (9th Cir. 1999). Therefore, the Court GRANTS Apple's request for judicial notice.

C. The Noerr-Pennington Doctrine Does Not Completely Protect Apple's Conduct.

Apple moves to dismiss the SAC in its entirety on the basis that Apple is immune from liability because the Noerr-Pennington doctrine protects Apple's pursuit of the foreign injunctions against Luxpro as well as Apple's alleged threats to Luxpro's commercial partners. In response, Luxpro argues that the Noerr-Pennington doctrine does not protect any of Apple's alleged conduct. Under the Noerr-Pennington doctrine, those who...