Wi-Lan Inc. v. LG Elecs., Inc.

• Decision Date: 12 April 2019
• Docket Number: Case No.: 18-cv-01577-H-BGS
• Citation: 382 F.Supp.3d 1012
• Parties: WI-LAN INC.; Wi-LAN USA, Inc. ; and Wi-LAN Labs, Inc., Plaintiffs, v. LG ELECTRONICS, INC.; LG Electronics U.S.A., Inc.; and LG Electronics Mobilecomm U.S.A., Inc., Defendants.
• Court: U.S. District Court — Southern District of California

382 F.Supp.3d 1012

WI-LAN INC.; Wi-LAN USA, Inc. ; and Wi-LAN Labs, Inc., Plaintiffs,

v.LG ELECTRONICS, INC.; LG Electronics U.S.A., Inc.; and LG Electronics Mobilecomm U.S.A., Inc., Defendants.

Case No.: 18-cv-01577-H-BGS

United States District Court, S.D. California.

Signed April 12, 2019

Alden Harris, Pro Hac Vice, Christopher M. First, Pro Hac Vice, Eric J. Enger, Pro Hac Vice, Leslie V. Payne, Pro Hac Vice, Heim, Payne & Chorush LLP, Houston, TX, Victor M. Felix, Procopio Cory Hargreaves and Savitch LLP, San Diego, CA, for Plaintiffs.

Benjamin Gilford, Pro Hac Vice, Gary Robert Jarosik, Pro Hac Vice, James J. Lukas, Jr., Pro Hac Vice, Matthew J. Levinstein, Pro Hac Vice, Richard Daniel Harris, Pro Hac Vice, Callie J. Sand, Pro Hac Vice, Greenberg Traurig, Chicago, IL, Joseph S. Leventhal, Dinsmore & Shohl, LLP, San Diego, CA, for Defendants.

ORDER:

(1) DENYING PLAINTIFFS' RULE 12(c) MOTION TO DISMISS DEFENDANTS' ANTITRUST AND UNFAIR COMPETITION COUNTERCLAIMS; AND

[Doc. No. 56.]

(2) GRANTING PLAINTIFFS' RULE 12(c) MOTION TO DISMISS DEFENDANTS' UNENFORCEABILITY COUNTERCLAIM

[Doc. No. 61.]

MARILYN L. HUFF, District Judge

On February 1, 2019, Plaintiffs Wi-LAN Inc., Wi-LAN USA, Inc., and Wi-LAN Labs, Inc. filed a motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) to dismiss Defendants LG Electronics, Inc., LG Electronics U.S.A., Inc., and LG Electronics Mobilecomm U.S.A., Inc.'s antitrust and unfair competition counterclaims. (Doc. No. 56.) On February 22, 2019, LG filed its response in opposition to Wi-LAN's motion related to its antitrust and unfair competition counterclaims. (Doc. No. 60.) On March 1, 2019, Wi-LAN filed its reply. (Doc. No. 62.)

On February 27, 2019, Plaintiffs filed a motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) to dismiss LG's infectious unenforceability counterclaim. (Doc. No. 61.) On March 25, 2019, LG filed its response in opposition to Wi-LAN's motion related to its infectious unenforceability counterclaim. (Doc. No. 74.) On April 1, 2019, Wi-LAN filed its reply. (Doc. No. 75.)

On April 3, 2019, the Court took Wi-LAN's motion to dismiss LG's antitrust and unfair competition counterclaims under submission. (Doc. No. 76.) On April 8, 2019, the Court held a hearing on Wi-LAN's motion to dismiss LG's infectious unenforceability counterclaim. Victor M. Felix and Christopher M. First appeared for Wi-LAN. Richard D. Harris appeared for LG. For the reasons below, the Court denies Wi-LAN's motion to dismiss LG's antitrust and unfair competition counterclaims, and the Court grants Wi-LAN's motion to dismiss LG's infectious unenforceability counterclaim.

Background

On July 11, 2018, Wi-LAN filed a complaint for patent infringement against LG, alleging infringement of U.S. Patent Nos. 8,787,924, 8,867,351, 9,226,320, and 9,497,743. (Doc. No. 1.) Specifically, Wi-LAN alleges that LG's wireless communication products that are compliant with the 3rd Generation Partnership Project 4G LTE standard directly infringe the patents-in-suit. (Id. ¶¶ 37, 40, 53, 66, 79.)

On October 10, 2018, LG filed an answer to Wi-LAN's complaint along with counterclaims for: (1) declaratory judgments of non-infringement and invalidity of the patents-in-suit; (2) declaratory judgment of unenforceability for failure to disclose to standard setting organizations; (3) declaratory judgment of unenforceability of the '351 patent ; (4) declaratory judgment that LG is entitled to license the patents-in-suit on FRAND/RAND terms and conditions; (5) breach of contract; (6) monopolization and attempted monopolization in violation of section 2 of the Sherman Act; and (7) unfair business practices under California Business and Profession Code § 17200 et seq. (Doc. No. 17.) On November 13, 2018, the Court issued a scheduling order in the action. (Doc. No. 36.) By the present motions, Wi-LAN moves pursuant to Federal Rule of Civil Procedure 12(c) for judgment on the pleadings to dismiss: (1) LG's counterclaim for monopolization in violation of section 2 of the Sherman Act; (2) LG's counterclaim for attempted monopolization in violation of section 2 of the Sherman Act; (3) LG's counterclaim for unfair business practices under California Business and Profession Code § 17200 et seq. ; and (4) LG's counterclaim for unenforceability of the '351 patent. (Doc. Nos. 56-1, 61-1.)

Discussion

I. Legal Standards for a Rule 12(c) Motion for Judgment on the Pleadings

In patent cases, a motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) is governed by the "the procedural law of the regional circuit." Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1293 (Fed. Cir. 2016). Under Federal Rule of Civil Procedure 12(c), "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." " ‘Judgment on the pleadings is properly granted when[, accepting all factual allegations in the complaint as true,] there is no issue of material fact in dispute, and the moving party is entitled to judgment as a matter of law.’ " Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir. 2012). The Ninth Circuit has explained that the standard for deciding a Rule 12(c) motion "is ‘functionally identical’ " to the standard for deciding a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 n.4 (9th Cir. 2011) (quoting Dworkin v. Hustler Magazine Inc., 867 F.2d 1188, 1192 (9th Cir. 1989) ); accord Chavez, 683 F.3d at 1108.

A complaint will survive a Rule 12(b)(6) motion to dismiss if it contains "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "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, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). "A pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’ " Id. (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955 ). "Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’ " Id. (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955 ). Accordingly, dismissal for failure to state a claim is proper where the claim "lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008).

In reviewing a Rule 12(b)(6) motion to dismiss, a district court must accept as true all facts alleged in the complaint, and draw all reasonable inferences in favor of the plaintiff. See Retail Prop. Trust v. United Bhd. of Carpenters & Joiners of Am., 768 F.3d 938, 945 (9th Cir. 2014). But, a court need not accept "legal conclusions" as true. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). In addition, "[a]lthough the complaint's factual allegations generally must be treated as true in evaluating a motion for judgment on the pleading, courts may consider documents incorporated into the complaint by reference, and matters properly subject to judicial notice." Lee v. City of San Diego, No. 18CV0159 W (BLM), 2019 WL 117775, at *3 (S.D. Cal. Jan. 7, 2019) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007) ); see Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 998 (9th Cir. 2018) ; Coto Settlement v. Eisenberg, 593 F.3d 1031, 1038 (9th Cir. 2010).

II. Analysis of LG's Counterclaims

A. LG's Counterclaim for Monopolization under Section 2 of the Sherman Act

In its answer and counterclaims, LG alleges a counterclaim for monopolization in violation of Section 2 of the Sherman Act. (Doc. No. 17, Counterclaims ¶¶ 284-339.) Wi-LAN argues that this counterclaim should be dismissed because LG has failed to adequately allege a claim for monopolization. (Doc. No. 56-1 at 4-14.)

Section 2 of the Sherman Act provides: "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other persons, to monopolize any part of the trade or commerce ... shall be deemed guilty of a felony." 15 U.S.C. § 2. To state a claim for monopolization in violation of Section 2 of the Sherman Act, a plaintiff must allege that the defendant: "(1) possessed monopoly power in the relevant market, (2) willfully acquired or maintained that power through exclusionary conduct and (3) caused antitrust injury." MetroNet Services Corp. v. Qwest Corp., 383 F.3d 1124, 1130 (9th Cir. 2004) ; accord Somers v. Apple, Inc., 729 F.3d 953, 963 (9th Cir. 2013). The Court addresses each of these elements in turn below.

i. Monopoly Power

Wi-LAN argues that LG has failed to plausibly plead that Wi-LAN has monopoly power. (Doc. No. 56-1 at 4-5.) "In order to state a valid claim under the Sherman Act, a plaintiff must allege that the defendant has market power within a ‘relevant market.’ " Newcal Indus., Inc. v. Ikon Office Sol., 513 F.3d 1038, 1044 (9th Cir. 2008). "That is, the plaintiff must allege both that a ‘relevant market’ exists and that the defendant has power within that market." Id. "Because the validity of the ‘relevant market’ is typically a factual element rather than a legal element, alleged markets may survive scrutiny under Rule 12(b)(6)." Apple Inc. v. Samsung Elecs. Co., No. 11-CV-01846, 2012 WL 1672493, at *4 (N.D. Cal. May 14, 2012) (citing Newcal, 513 F.3d at 1045 ). "Thus, an antitrust complaint survives a Rule 12(b)(6) motion that attacks the definition of the relevant market unless it is apparent from the face of the complaint that the alleged market suffers a fatal legal defect." Id. (citing Newcal, 513 F.3d at 1045 ).

In its counterclaims,...