Ziptronix, Inc. v. Omnivision Techs., Inc.

• Decision Date: 21 October 2014
• Docket Number: Case No: C 10–05525 SBA
• Citation: 71 F.Supp.3d 1090
• Parties: Ziptronix, Inc., Plaintiff, v. Omnivision Technologies, Inc., Taiwan Semiconductor Manufacturing Company Ltd., and TSMC North America Corp., Defendants.
• Court: U.S. District Court — Northern District of California

71 F.Supp.3d 1090

Ziptronix, Inc., Plaintiff

v.Omnivision Technologies, Inc., Taiwan Semiconductor Manufacturing Company Ltd., and TSMC North America Corp., Defendants.

Case No: C 10–05525 SBA

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA Oakland Division

Signed October 21, 2014

Sean P. Debruine, Kilpatrick Townsend & Stockton LLP, Menlo Park, CA, David M. Alban, Blas P. Arroyo, Jitendra Malik, Joseph Michael Janusz, Richard M. McDermott, Travis James Iams, Alston & Bird LLP, Charlotte, NC, Xavier Mark Brandwajn, Alston & Bird LLP, East Palo Alto, CA, for Plaintiff.

David Lance Simson, Harry Frederick Doscher, Michael Francis Carr, Michael John Lyons, Solandra Jeanette Craig, Morgan Lewis & Bockus LLP, Palo Alto, CA, Brian L. Ferrall, Benjamin Berkowitz, Cody Shawn Harris, Jeffrey R. Chanin, Jo W. Golub, Leo L. Lam, Philip James Tassin, Quyen Le Ta, Stacy S. Chen, Steven A. Hirsch, Thomas Edward Gorman, Winston Liaw, Keker & Van Nest LLP, San Francisco, CA, for Defendants.

ORDER GRANTING MOTION FOR SUMMARY JUDGMENT

(REDACTED)

Docket 372

SAUNDRA BROWN ARMSTRONG, United States District Judge

Plaintiff Ziptronix, Inc. (“Ziptronix”) brings the instant patent infringement action against Defendants OmniVision Technologies, Inc. (“OmniVision”), Taiwan Semiconductor Manufacturing Company, Ltd. (“TSMC Ltd.”), and TSMC North America Corp. (“TSMC NA”) (collectively, “TSMC”), alleging infringement of nine patents¹ involving technology associated with the manufacture and structure of an image sensor found in devices with photo-capturing capabilities, e.g., tablets and smartphones. The parties are presently before the Court on TSMC's motion for summary judgment. Ziptronix opposes the motion. Having read and considered the papers filed in connection with this matter and being fully informed, the Court hereby GRANTS TSMC's motion, for the reasons stated below. The Court, in its discretion, finds this matter suitable for resolution without oral argument. See Fed.R.Civ.P. 78(b) ; N.D. Cal. Civ. L.R. 7–1(b).

I. BACKGROUND²

Ziptronix is a North Carolina company with its principal place of business in North Carolina. Ziptronix develops technologies concerning semiconductor integration processes, and is the owner of patents covering technologies related to advanced semiconductor processing. Specifically, Ziptronix owns patents directed to the bonding technology essential to the fabrication of the accused products in this action—OmniVision's backside-illuminated image sensors (“image sensors”).³ Ziptronix also owns patents directed to the structures of the image sensors themselves.

OmniVision is a Delaware corporation that is headquartered in Santa Clara, California. OmniVision designs image sensor chips that are used in a variety of electronic products, including tablets and smartphones. The image sensors are the “brains” behind the imaging technology in these products. OmniVision secures the production of the image sensors through several manufacturing partners in Asia, including TSMC Ltd.

TSMC Ltd. is a Taiwanese corporation that is headquartered in Hsinchu, Taiwan. TSMC Ltd. manufactures semiconductor wafers (“wafers”), a component of the accused image sensors. TSMC Ltd. serves as the “long-time foundry and process technology partner”⁴ of OmniVision. In this capacity, TSMC Ltd. manufactures wafers on behalf of OmniVision in Taiwan.

After the wafers are manufactured, they are delivered to OmniVision or one of its vendors in Taiwan. OmniVision or one of its customers then arranges for additional components to be added to the wafers by several manufacturing firms in Asia. After the manufacturing process is complete, the finished products (i.e., the accused image sensors) are delivered to third-party fabricators in Asia for inclusion into end-user applications such as tablets and smartphones. According to Ziptronix, the enduser applications are then imported into the United States by OmniVision's customers and sold in the United States.

TSMC NA, a subsidiary of TSMC Ltd., is a corporation headquartered in San Jose, California. TSMC NA facilitates sales of TSMC Ltd.'s wafers between TSMC Ltd. and its customers in the United States, including OmniVision. TSMC NA also performs certain marketing, customer service, and administrative functions in the United States for TSMC Ltd.

Ziptronix accuses TSMC Ltd. and TSMC NA of engaging in acts of direct and indirect infringement. The acts of direct infringement include TSMC Ltd.'s and/or TSMC NA's sale of the image sensors and/or the wafers used in the image sensors within the United States. The acts of indirect infringement include TSMC Ltd.'s and/or TSMC NA's induced infringement in the form of actively and knowingly encouraging OmniVision to directly infringe the patents-in-suit.⁵ The acts of indirect infringement also include TSMC Ltd.'s induced infringement in the form of actively and knowingly encouraging TSMC NA to directly infringe the patents-in-suit.

II. LEGAL STANDARD

“A party may move for summary judgment, identifying each claim ... or the part of each claim ... on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Once the moving party has met its burden, the burden shifts to the nonmoving party to designate specific facts showing a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (“a party opposing a properly supported motion for summary judgment may not rest upon mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial.”). To carry its burden, the nonmoving party must show more than the mere existence of a scintilla of evidence, Anderson, 477 U.S. at 252, 106 S.Ct. 2505, and “do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In fact, the nonmoving party must come forward with affirmative evidence from which a jury could reasonably render a verdict in its favor. Anderson, 477 U.S. at 252, 257, 106 S.Ct. 2505. In determining whether a jury could reasonably render a verdict in the nonmoving party's favor, the evidence of the nonmoving party is to be believed, and all justifiable inferences are to be drawn in its favor. Id. at 255, 106 S.Ct. 2505.

III. DISCUSSION

The instant motion implicates the presumption against extraterritoriality, i.e., the presumption that United States patent law does not operate outside the United States to prohibit infringement abroad. TSMC contends that summary judgment is appropriate because neither TSMC Ltd. nor TSMC NA has committed or induced any infringing acts “within the United States.” Ziptronix disagrees, arguing that relevant acts of TSMC Ltd. and TSMC NA are “clearly” encompassed within the scope of United States patent law.

A. Direct Infringement

Because it is undisputed that neither TSMC Ltd. nor TSMC NA make, use, or import into the United States the accused image sensors or the wafers used in the image sensors, the question before the Court with respect to TSMC Ltd.'s and TSMC NA's direct infringement liability is whether the transactions between the TSMC entities and OmniVision constitute sales or offers to sell “within the United States.”

An act of direct patent infringement occurs when an entity “without authority ... offers to sell, or sells any patented invention, within the United States ...” 35 U.S.C. § 271(a). An act of direct infringement also occurs when an entity “without authority ... offers to sell, [or] sells ... within the United States a product which is made by a process patented in the United States ...” 35 U.S.C. § 271(g). “It is axiomatic that U.S. patent law does not operate extraterritorially to prohibit infringement abroad.” Power Integrations v. Fairchild Semiconductor Int'l, 711 F.3d 1348, 1371 (Fed.Cir.2013) (“foreign exploitation of a patented invention ... is not infringement at all”). The “general rule under United States patent law is that no infringement occurs when a patented product is made and sold in another country.” Microsoft Corp. v. AT & T Corp., 550 U.S. 437, 441, 127 S.Ct. 1746, 167 L.Ed.2d 737 (2007). “[F]oreign law alone, not United States law, currently governs the manufacture and sale of components of patented inventions in foreign countries.” Id. at 456, 127 S.Ct. 1746. “The presumption that United States law governs domestically but does not rule the world applies with particular force in patent law.” Id. at 454–455, 127 S.Ct. 1746.

It is well established that direct infringement liability is “limited to infringing activities that occur within the United States.” MEMC Elec. Materials, Inc. v. Mitsubishi Materials Silicon Corp., 420 F.3d 1369, 1375 (Fed.Cir.2005). “Mere knowledge that a product sold overseas will ultimately be imported into the United States is insufficient to establish liability under section 271(a).” Id. at 1377. Whether activities in the United States are sufficient to establish an “offer to sell” or “sale” within the meaning of § 271(a) may be resolved on summary judgment. Id. at 1375–1377 (affirming summary judgment of no direct infringement for product sales in Japan).

In determining the location of a “sale” under § 271(a), the location of negotiation and contracting does not control; courts may also consider “other factors such as the place of performance.” Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc., 617 F.3d 1296, 1310 (Fed.Cir.2010) ; see MEMC, 420 F.3d at 1377 (“[T]he criterion for determining the location of a “sale” under section 271(a) is not necessarily where legal title...