Wistron Corp. v. Phillip M. Adams & Assocs., LLC

• Decision Date: 28 April 2011
• Docket Number: No. C-10-4458 EMC,C-10-4458 EMC
• Court: U.S. District Court — Northern District of California
• Parties: WISTRON CORPORATION, et al., Plaintiffs, v. PHILLIP M. ADAMS & ASSOCIATES, LLC, et al., Defendants.

WISTRON CORPORATION, et al., Plaintiffs, v. PHILLIP M. ADAMS & ASSOCIATES, LLC, et al., Defendants.

No. C-10-4458 EMC

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

April 28, 2011

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS

(Docket No. 12)

Plaintiffs Wistron Corporation, Wistron Infocomm Corporation, Wistron Infocomm Technology, AOpen Incorporated, and AOpen America Incorporated (collectively "Plaintiffs") initiated this lawsuit against Defendants Phillip M. Adams & Associates, LLC ("PMAA"), AFTG-TG LLC ("AFTG"), and Phillip M. Adams (collectively referred to as "Defendants") seeking: (1) a declaratory judgment that Plaintiffs are not infringing patents¹ invented by Dr. Adams and owned by PMAA ("the PMAA patents") (First Amended Complaint ("FAC") at 12:1-2), (2) a declaratory judgment that they are not infringing the patents² ("the AFTG patents") invented by Dr. Adams and now owned by ATFG (FAC at 12:1-2), and (3) a declaratory judgment that these patents-in-suit are invalid and unenforceable, and (4) an injunction to restrain Defendants from suing or threatening suit against Plaintiffs for infringement. FAC at 12:12-16.

Pending before the Court is Defendants' motion to dismiss the First Amended Complaint or in the alternative to transfer this case to the District of Wyoming. Having considered the parties' briefs and accompanying submissions, as well as the oral arguments of counsel, the Court hereby GRANTS IN PART and DENIES IN PART the motion to dismiss or transfer.

I. FACTUAL & PROCEDURAL BACKGROUND

Plaintiff Wistron Corporation ("Wistron Corp.") is a Taiwan corporation "in the business of designing, developing and manufacturing computer products such as notebook computers . . . under their own brand name," and selling these products throughout the United States. FAC ¶ 2. Plaintiff Wistron Infocomm (Texas) Corporation is a Texas corporation, a wholly-owned subsidiary of Wistron Corp., and provides "after-sales repair and servicing of products for which Wistron Corp. was the original manufacturer." FAC ¶ 3. Plaintiff Wistron Infocomm Technology (America) Corporation is also a Texas corporation, a wholly-owned subsidiary of Wistron Corp., and provides sales support to customers in North America. FAC ¶ 4.

AOpen Incorporated is a Taiwan corporation that sells and manufactures computer products throughout the United States. FAC ¶ 5. Plaintiff AOpen America Incorporated ("AOpen America") is a California corporation and wholly-owned subsidiary of AOpen Inc. FAC ¶ 6. AOpen America manufactures ultra small-form-factor (uSFF) computer components and customizable platforms, and provides a digital signage solution. Id.

Defendant Dr. Phillip Adams, a Wyoming resident, is the owner and head of the defendant companies PMAA and AFTG, which function only as patent holding companies for him. FAC ¶¶ 7-9. Dr. Adams assigned ownership of the patents-in-issue to either PMMA or AFTG. Id. at ¶¶ 10-11.

In their First Amended Complaint, Plaintiffs allege as follows. On June 22, 2010, Defendants sent letters to Wistron and AOpen³ stating that Defendants would embark on a patent infringement lawsuit. FAC ¶ 18; see also Mot. to Dismiss at 11. The purpose of these letters, Plaintiffs aver, was to disrupt the sales of Wistron and AOpen products, such as notebookcomputers. Id. Defendants demanded that Wistron and AOpen enter into royalty-bearing licenses for the PMAA and AFTG patents. Id. If the Plaintiffs did not, Defendants threatened that they would be subjected to substantial liabilities. Id. at ¶ 19. On or around August 20, 2010, Defendants sent letters to Wistron and AOpen alleging that both companies manufactured infringing products, and that Wistron and AOpen were independently liable for the infringement of the PMAA and AFTG patents. Id. at 21.

On October 1, 2010, Plaintiffs filed the Complaint herein seeking a declaratory judgment of non-infringement. See Compl. (Docket No. 1); FAC ¶ 22. Shortly thereafter, on October 18, 2010, AFTG and PMAA filed Complaints for Patent Infringement against thirty-five defendants, including all of the Wistron and AOpen plaintiffs herein, in the United States District Court for the District of Wyoming ("the Wyoming Action"). See Ratinoff Decl., Exhs. 1, 34-37. In that action, Defendants alleged that the Wistron and AOpen defendants, among others, infringed each of the patents-in-suit "through, among other activities, the manufacture, use, importation, sale and/or offer for sale of computer chips, motherboards, computers and other products, as well as using infringing methods including but not limited to testing of Defendants' products as a part of the manufacturing process." FAC, Exh. A ¶ 52 ("Complaint for Patent Infringement"); Ratinoff Decl., Exh. 1 ¶ 52 (same).

Plaintiffs thereafter filed their First Amended Complaint, alleging, inter alia, that the PMAA and AFTG patents are either invalid or unenforceable. FAC ¶ 28 (Docket No. 6). Plaintiffs further claim that PMAA and AFTG filed the Wyoming Action not only as a retaliation of Plaintiffs' instant suit, but also as a "means of improper forum shopping and to wrongfully divest this Court of jurisdiction to hear the complete case and controversy between the parties." FAC ¶ 29. On February 23, 2011, Judge Freudenthal, presiding over the Wyoming Action, ordered that Defendants' claims against Plaintiffs be dismissed without prejudice for lack of personal jurisdiction because "there is no evidence or allegation that the infringing technologies or products actually reached Wyoming." Pls.' Statement of Recent Decision, Exh. A (Docket No. 24). The Wyoming Action was proceeded by another suit alleging infringement of some of the patents-in-suit against a number of defendants, some of whom were located in California (the "Winbond" action). SeeRatinoff Decl., Exh 1. (complaint in Wyoming Action referencing the Winbond action); Ratinoff Decl., Exhs. 26 (describing lawsuits including Winbond litigation); 16-24 (website excerpts indicating that companies sued are California corporations)).

On April 6, 2011 this Court held a hearing on the pending motion to dismiss or transfer this action.

II. DISCUSSION

In their motion to dismiss, Defendants allege that this Court lacks personal jurisdiction over them, such that the suit must be dismissed pursuant to Rule 12(b)(2).⁴ Second, Defendants argue that the suit should be dismissed for failure to state a claim upon which relief can be granted under Rule 12(b)(6) because Plaintiffs' Complaint "tenders only naked assertions completely devoid of further factual enhancement." Mot. to Dismiss at 18. Finally, Defendants seek dismissal for failure to join a required party under Rule 19(a). Each of these arguments is addressed herein.

A. Motion to Dismiss for Lack of Personal Jurisdiction

Defendants move to dismiss the First Amended Complaint based on a lack of personal jurisdiction. See Fed. R. Civ. P. 12(b)(2). Plaintiff bears the burden of making a prima facie showing of general or specific jurisdiction over each and every defendant it has sued. See Calder v. Jones, 465 U.S. 783, 790 (1984); Data Disc, Inc. v. Sys. Tech. Associates, Inc., 557 F. 2d 1280, 1285 (9th Cir. 1977) ("[T]he party seeking to invoke the jurisdiction of the federal court has the burden of establishing that jurisdiction exists. . . . [Absent a material dispute as to jurisdictional facts,] "aplaintiff must make only a prima facie showing of jurisdictional facts through submitted materials in order to avoid [dismissal]."). Where "a plaintiff's proof is limited to written materials, it is necessary only for these materials to demonstrate facts which support a finding of jurisdiction in order to avoid a motion to dismiss." Data Disc, 557 F. 2d at 1285 (citations omitted); Electronics for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1349 (Fed. Cir. 2003).⁵ In determining whether Plaintiffs have made a prima facie showing of personal jurisdiction, the Court construes the pleadings and affidavit in the light most favorable to Plaintiff. Graphic Controls Corp. v. Utah Med. Prods., Inc., 149 F.3d 1382, 1383 n.1 (Fed. Cir. 1998).

In deciding whether the Court has jurisdiction over an out-of-state defendant, the Court looks to Federal Circuit precedent. See Breckenridge Pharms., Inc. v. Metabolife Labs., Inc., 444 F.3d 1356, 1363 (Fed. Cir. 2006) (citing Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1201 (Fed. Cir. 2003)); Deprenyl Animal Health, Inc. v. Univ. of Toronto Innovations Foundation, 297 F.3d 1343, 1348 (Fed. Cir. 2002) ("Federal Circuit law governs the issue of personal jurisdiction in patent-related cases."); Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1358 (Fed. Cir. 1998). The analysis set forth in Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-77 (1985) is at the heart of the personal jurisdiction analysis applied in both the Ninth Circuit and the Federal Circuit, and both Circuits apply the same three-part test when applying the minimum contacts standard set forth by the Supreme Court. See, e.g., Akro Corp. v. Luker, 45 F.3d 1541, 1545-46 (Fed.Cir.1995). As such, district courts have cited both Ninth Circuit and Federal Circuit precedent with respect to personal jurisdiction. See, e.g., McKenzie v. Hero Indus., 2009 U.S. Dist. LEXIS 67932, 7-8 (D. Ariz. July 29, 2009) (citing Bancroft & Masters, Inc. v. Augusta Nat'l Inc.,223 F.3d 1082, 1087 (9th Cir. 2000)). Nonetheless, the Court relies primarily on Federal Circuit precedent herein.

In analyzing personal jurisdiction, the court engages in a two-step inquiry: (1) whether the state's long-arm statute extends to this defendant; and (2) whether the assertion of personal jurisdiction would violate due process. Deprenyl Animal Health, 297 F.3d at 1348; Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1359 (Fed. Cir. 2001). "Because California's long-arm jurisdictional statute is coextensive with the limits of due process, the two...