Single Chip Systems Corp. v. Intermec Ip Corp.

• Decision Date: 21 May 2007
• Docket Number: No. 07CV0256JAHCAB.,No. 04CV1517JAHCAB.,04CV1517JAHCAB.,07CV0256JAHCAB.
• Citation: 495 F.Supp.2d 1052
• Parties: SINGLE CHIP SYSTEMS CORP. and Neology, S. de R.L. de C.V., Plaintiffs, v. INTERMEC IP CORP., TransCore LP and TransCore Holdings, Inc. Defendants. TransCore LP and Intermec IP Corp., Plaintiffs, v. Neology, Inc., Defendant.
• Court: U.S. District Court — Southern District of California

495 F.Supp.2d 1052

SINGLE CHIP SYSTEMS CORP. and Neology, S. de R.L. de C.V., Plaintiffs, v. INTERMEC IP CORP., TransCore LP and TransCore Holdings, Inc. Defendants.

TransCore LP and Intermec IP Corp., Plaintiffs, v. Neology, Inc., Defendant.

No. 04CV1517JAHCAB.

No. 07CV0256JAHCAB.

United States District Court, S.D. California.

May 21, 2007.

COPYRIGHT MATERIAL OMITTED

William Robinson, Stephen Lobbin, Grant Kinsel of Foley and Lardner, Los Angeles, CA, for Plaintiffs (TransCore).

Howard N. Wisnia, Cynthia Freeland, James Conley, James Pak of Baker & McKenzie, San Diego, CA, for Defendant (Neology, Inc).

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS; DENYING DEFENDANT'S MOTION TO STAY AND DENYING PLAINTIFFS' MOTION TO CONSOLIDATE

HOUSTON, District Judge.

INTRODUCTION

Now pending before this Court are Counter-claimants and Plaintiffs TransCore LP and TransCore Holdings, Inc., (collectively "TransCore") motion to consolidate, filed in case numbers 04CV1517 and 07CV0256, and Defendant Neology, Inc. ("Neology") motions to dismiss, or in the alternative to stay, in case number 07CV0256. Oral argument was heard on April 26, 2007, with appearances by William J. Robinson for TransCore, and Howard Wisnia and Cindy Freeland for Neology, Inc., This Court, after hearing the oral argument of counsel, took the matter under submission. Now, after a careful consideration of the pleadings, relevant exhibits, the oral argument of counsel at the hearing, and for the reasons set forth below, this Court GRANTS Neology's motion to dismiss, DENIES Neology's motion to stay and DENIES TransCore's motion to consolidate.

BACKGROUND

I. Factual Background — U.S. Patent No. 5,030,807

These cases concern the alleged infringement of U.S. Patent Number 5,030,807 ("the '807 Patent"), entitled "System for Reading and Writing Data from and into Remote Tags." Jeremy A. Landt and Alfred R. Koelle are the named inventors on the '807 Patent. The '807 patent was filed on January 16, 1990, and subsequently issued on July 9, 1991. The '807 Patent's assignee is Defendant Intermec IP Corporation ("Intermec"). Defendants TransCore, L.P. and TransCore Holdings, Inc., licensed the '807 Patent from Defendant Intermec. See Cplt. at 4.

The '807 Patent discloses systems and devices for identifying, reading, relaying and writing information into moveable objects. Moveable objects employing these systems and devices include the tracking of retail items, electronic automated tollbooths, inventory control during shipment and container tracking. The system employs an interrogator which sends a radio frequency ("RF") signal to a moveable object. The moveable object is capable of relaying information stored in the object by backscatter modulating information stored in the moveable object onto the RF signal. The moveable object transmits this information back to the interrogator, which can store the information, as well as write information into the object. The interrogator is capable of writing information into a moveable object only if it recognizes the moveable object, and has information to write into the moveable object.

II. Procedural History¹

On July 27, 2004, Plaintiffs Single Chip Systems, Inc. and Neology, S. de R.L. de C.V. (collectively "Plaintiff's") filed a complaint with this Court (case number 04CV1517 ("2004 case or suit")), and requested a declaratory judgement for noninfringement of three patents, including the '807 Patent. TransCore filed an answer and counterclaim for patent infringement against Plaintiffs on December 29, 2004. Doe. No. 8.

On April 8, 2005, Defendant Intermec IP Corporation filed a motion to dismiss claims two and three of the complaint. Doc. No. 37. Plaintiffs and Defendant TransCore filed their respective oppositions to Defendant Intermec's motion to dismiss. On June 8, 2005, this Court granted Defendant Intermec's motion to dismiss claims two and three of Plaintiffs complaint, leaving only the '807 patent at issue. Doc. No. 61.

On June 27, 2005, Plaintiffs filed a motion to amend the complaint with two additional causes of action for malicious prosecution and unfair competition. Doc. No. 64. Defendant TransCore filed a motion for sanctions on July 20, 2005, and an opposition to Plaintiffs' motion on August 11, 2005. Doc. Nos. 67 and 69. On November 8, 2005, this Court granted Plaintiffs' motion to amend and denied TransCore's motion for sanctions. Doc. No. 105. Plaintiffs filed its First Amended Complaint on November 17, 2005. Doc. No. 110.

On November 22, 2005, Defendant TransCore filed a motion to dismiss Plaintiffs' claim for malicious prosecution, or in the alternative, to bifurcate and stay the proceedings. Doc. No. 115. Plaintiffs filed an opposition on January 26, 2006. Doc. No. 163. On February 15, 2006, TransCore filed a reply. Doc. No. 176. This Court subsequently denied TransCore's motion to dismiss, and granted its motion to bifurcate and stay discovery for the malicious prosecution and unfair competition causes of action on March 8, 2006. Doc. No. 191. After its ex parte application regarding its answer to the first amended complaint was denied by this Court, TransCore filed an answer to the Plaintiffs Amended Complaint and an Amended Counterclaim, on April 25, 2006. Doc. Nos. 198 and 209. The amended counterclaim added Neology, Inc. as a party to the action and alleged patent infringement under 35 U.S.C. § 271(f).

On May 8, 2006, Plaintiffs filed a motion to strike TransCore's amended counterclaim and addition of Neology, Inc. as a new party. Doc. No. 236. Counter-defendant Neology, Inc. filed its own motion to dismiss TransCore's first amended counterclaim and addition of new party. Doc. No. 242. TransCore filed a combined opposition to Plaintiffs and Neology, Inc's motions to dismiss on June 12, 2006. Doc. No. 284. Plaintiffs and Neology, Inc. filed respective replies to TransCore's opposition on June 15, 2006. Doc. Nos. 293 and 295. On August 4, 2006, this Court granted Plaintiffs' motion to strike TransCore's amended counterclaim, striking the first amended counterclaim from the docket. Doc. No. 343.

On August 11, 2006, TransCore filed a motion for leave to file a first amended counterclaim. Doc. No. 345. Plaintiffs filed an opposition on September 5, 2006. Doc. No. 364. On TransCore filed a reply on September 7, 2006. Doc. No. 359. This Court subsequently took the matter under submission without oral argument pursuant to Civ.LR 7.1(d.1). Doc. No. 360. On January 24, 2007, this Court issued an order denying TransCore's motion for leave to file an amended counterclaim.

TransCore filed a new action (case number 07CV0256 ("2007 case or suit")), with this Court on February 8, 2007, bringing a cause of action under 35 U.S.C. §§ 271(a), (b), (c) and (f), and naming Neology, Inc. as the sole defendant. See 2007 Cplt. After the filing of a notice of related case by TransCore, the case was reassigned from the Honorable William Q. Hayes to the Honorable John A. Houston pursuant to this Court's low number rule. See 2007 suit, Doc. No. 5.

On February 20, 2007, TransCore filed the instant motions to consolidate in the 2004 and 2007 cases. See Doc. No. 382 in 2004 suit, Doc. No. 6 in 2007 suit. Neology filed an opposition on April 2, 2007 in the 2007 suit. Doc. No. 23. Plaintiffs Single Chip Systems and Neology S. de R.L. de C.V. filed an opposition in the 2004 case on April 2, 2007. Doc. No. 395. On April 6, 2007, TransCore filed replies in both cases. Doc. No. 397 in 2004 case; Doc. No. 26 in 2007 case.

On March 1, 2007, Neology filed a motion to dismiss, or in the alternative a motion to stay, in the 2007 suit. Doc. No. 13. TransCore filed an opposition on March 30, 2007. Doc. No. 22. Neology filed a reply on April 6, 2007. Doc. No. 25. On April 13, 2007, this Court issued an Order directing the parties to submit supplemental briefing on the issue of whether the two suits arose of out of the same transactional nucleus of facts. Doc. No. 27. On April 20, 2007, the parties filed respective supplemental briefing in response to this Court's Order. Doc. Nos. 28 and 29. An oral hearing on the motions to dismiss, stay and consolidate was entertained on April 26, 2007. This Court, after hearing the argument of counsel, took the matter under submission under Civ.LR 71.(d.1). The Court also allowed the parties to file supplemental briefing on a recently published Ninth Circuit case, Adams v. State of California Dept. of Health, ___ F.3d ___ (9th Cir.2007).² Doc. No. 34. Neology filed a supplemental document on May 1, 2007. Doc. No. 35. TransCore also filed a supplemental brief under seal on May 1, 2007.

DISCUSSION

I. Legal Standard

A. Motion to Dismiss

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001). Dismissal of a claim under this Rule is appropriate only where "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Navarro, 250 F.3d at 732. Dismissal is also warranted under Rule 12(b)(6) where the complaint lacks a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir.1984); see Neitzke v. Williams, 490 U.S. 319, 326, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989) ("Rule 12(b)(6) authorizes a court to dismiss a claim on the basis of a dispositive issue of law."). Alternatively, a complaint may be dismissed where it presents a cognizable legal theory yet fails to plead essential facts under that theory. Robertson, 749 F.2d at 534.

In reviewing a motion to dismiss under Rule 12(b)(6), the court must assume the truth of all factual allegations and must construe all inferences from them in the light most favorable to the nonmoving party. Thompson v. Dark 295 F.3d 890, 895 (9th Cir.2002); Cahill v. Liberty Mut. Ins. Co., 80...