Power Integrations, Inc. v. On Semiconductor Corporation et al

REPLY

N.D. Cal.September 21, 2017

POWER INTEGRATIONS’ REPLY ISO MOT TO DISMISS Case Nos. 16-cv-06371-BLF and 17-cv-03189 BLF 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Frank E. Scherkenbach (CA #142549/scherkenbach@fr.com) FISH & RICHARDSON P.C. One Marina Park Drive Boston, Massachusetts 02210-1878 Telephone: (617) 542-5070 Facsimile: (617) 542-8906 Howard G. Pollack (CA #162897/pollack@fr.com) Michael R. Headley (CA #220834/headley@fr.com) FISH & RICHARDSON P.C. 500 Arguello Street, Suite 500 Redwood City, California 94063 Telephone: (650) 839-5070 Facsimile: (650) 839-5071 Attorneys for Plaintiff Power Integrations, Inc. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA (SAN JOSE DIVISION) Power Integrations, Inc., Plaintiff, v. ON Semiconductor Corp. And Semiconductor Components Industries, LLC, Defendants. Case No. 16-cv-06371 BLF REPLY IN SUPPORT OF POWER INTEGRATIONS’ MOTION TO DISMISS DEFENDANTS’ CLAIMS RE ’876, ’272, AND ’601 PATENTS FOR FAILURE TO STATE A CLAIM DATE: January 11, 2018 TIME: 9:00 a.m. JUDGE: Honorable Beth Labson Freeman ON Semiconductor Corporation; and Semiconductor Components Industries, LLC, Plaintiffs, v. Power Integrations, Inc., Defendant. Case No. 3:17-cv-03189 BLF Case 5:16-cv-06371-BLF Document 65 Filed 09/21/17 Page 1 of 8 1 POWER INTEGRATIONS’ REPLY ISO MOT TO DISMISS Case Nos. 16-cv-06371-BLF and 17-cv-03189 BLF 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. INTRODUCTION Defendants’ Second Amended Complaint (Dkt. No. 50) needlessly complicates an already complicated case, and is legally deficient. None of the arguments in Defendants’ opposition alter this conclusion. II. ARGUMENT A. Defendants Fail to State a Noninfringement Claim for the ’876 Patent (Count Nine) Defendants make no effort to dispute that their perfunctory pleading alleging noninfringement of the ’876 patent is deficient under the applicable pleading standards. For the reasons explained in PI’s motion, Defendants’ pleading plainly fails. Instead, Defendants argue that PI’s motion is waived because PI did not raise this issue in its motion to transfer the case from Arizona. Defendants are mistaken. PI’s prior motion properly focused on personal jurisdiction and venue – which was clearly improper – rather than the merits of any individual asserted claim. Now that the case has been transferred and consolidated, it is appropriate to take up these merits – or lack thereof. Defendants also misread Rule 12. Unlike motions related to personal jurisdiction and venue, motions for failure to state a claim are not waived by omission. Fed. R. Civ. Proc. 12(h)(1) makes an exception for motions under Rule 12(b)(6). Moreover, under Rule 12(h)(2), failure to state a claim can be raised in the pleadings, in a post-pleading Rule 12(c) motion, or even as late as trial. See Billing v. CSA-Credit Solutions of America, Inc., Case No. 10-cv-0108 BEN (NLS), 2010 WL 2542275, 2010 WL 2542275, at *6 (S.D. Cal. 2010) (“This exception allows for a motion to dismiss for failure to state a claim to be filed at any time, even after a previous motion to dismiss has been filed.”); Mir v. Kirchmeyer, Case No. 12-cv-2340-GPC-DHB, 2014 WL 12029269, *5 (S.D. Cal. 2014) (“a party does not waive a ground for moving to dismiss for failure to state a claim by not including that ground in an earlier motion to dismiss”). Though a case cited by Defendants states that subsequent motions to dismiss for failure to state a claim should technically be brought under Rule 12(c) rather than Rule 12(b)(6), that case simultaneously acknowledges that this is a distinction without a difference. In re Apple iPhone Case 5:16-cv-06371-BLF Document 65 Filed 09/21/17 Page 2 of 8 2 POWER INTEGRATIONS’ REPLY ISO MOT TO DISMISS Case Nos. 16-cv-06371-BLF and 17-cv-03189 BLF 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Antitrust Litig., 846 F.3d 313, 318-19 (9th Cir. 2017) (“Denying late-filed Rule 12(b)(6) motions and relegating defendants to the three procedural avenues specified in Rule 12(h)(2) can produce unnecessary and costly delays, contrary to the direction of Rule 1. . . . Rule 12(b)(6) motions may be considered where they have not been filed for the purpose of delay, where entertaining the motion would expedite the case, and where the motion would narrow the issues involved.”). Here, PI’s motion has not been brought for the purpose of delay, and granting it would both expedite the case and narrow the issues involved. As previously briefed, adding Defendants’ declaratory judgment claim for the ’876 patent would needlessly complicate an already complicated case. And, by the time of the hearing on this motion, PI will have affirmatively asserted the ’876 patent in another matter where related frequency jitter technology will be litigated, in a District Court that has already presided over two previous cases involving the ’876 patent. There is no need to litigate the ’876 patent in this case. B. Defendants Fail to State a Claim for Infringement of the ’272 and ’601 Patents (Count Seven and Eight) 1. Defendants Fail to State a Claim for Direct Infringement Defendants do not contest PI’s demonstration that their allegation of infringement includes no factual allegations and instead merely quotes or paraphrases the asserted patent claim. Instead, Defendants argue that mere identification of a patent claim and an accused product is sufficient. This is clearly wrong, even under the cases cited by Defendants, all of which require that the plaintiff plead facts sufficient for an inference of infringement to be drawn. For example, the main case relied upon by Defendants, Avago Techs. Gen. IP (Singapore) PTE Ltd. v. Asustek Comput., Inc., Nos. 15-cv-0425-EMC, 16-cv-00451-EMC, 2016 WL 1623920 (N.D. Cal. 2016), was distinguished by this Court in Comcast on this very ground: First, while Avago rejected the notion that “a patent infringement complaint that largely tracks the language of the claims to allege infringement is insufficient per se” (emphasis added), it did not endorse the very different proposition—suggested by Comcast here— that a patent infringement (or non-infringement) complaint that only tracks the language of the asserted claims is sufficient per se. Second, and as Judge Chen noted, the operative complaint in Avago contained more than conclusory allegations that merely tracked the language of the asserted claims. Comcast’s amended complaint here, by contrast, does not. Case 5:16-cv-06371-BLF Document 65 Filed 09/21/17 Page 3 of 8 3 POWER INTEGRATIONS’ REPLY ISO MOT TO DISMISS Case Nos. 16-cv-06371-BLF and 17-cv-03189 BLF 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Comcast Cable Communications, LLC v. OpenTV, Inc., 319 F.R.D. 269, 275 (N.D. Cal. 2017). Again, the complaint at issue here contains no facts, a point that Defendants do not challenge. Moreover, while Comcast appears to be the leading reported case on this topic in this District, it is by no means the only Northern District case dismissing patent infringement complaints that fail to plead facts from which an inference of infringement can be drawn. E.g., e.Digital Corporation v. iBaby Labs, Case No. 15-cv-05790-JST, 2016 WL 4427209 (N.D. Cal. 2016) (granting motion to dismiss); Novitaz, Inc. v. inMarket Media LLC, Case No. 16-cv-06795- EJD, 2017 WL 2311407 (N.D. Cal. 2017) (same). The Federal Circuit’s recent holding in Lifetime Indus. v. Trim-Lok, ___ F.3d ___, Case No. 2017-1096, 2017 WL 3908174 (Fed. Cir. 2017) is also not to the contrary. The Federal Circuit merely notes that a plaintiff is not required to “prove its case at the pleading stage.” Id. at *5. However, the Federal Circuit also reaffirms that a plaintiff must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at *3. In Lifetime, the plaintiff met this burden because it alleged that its patent claimed the combination of a two-part seal on a recreational vehicle and that the defendant began marketing this distinctive feature shortly after two employees left the plaintiff for jobs at the defendant. Id. at *5. Unlike this case, there was no challenge to the technical sufficiency of the plaintiff’s complaint, and the Federal Circuit expressly noted “We need not, and do not, express any other opinion relating to the level of detail contained in Lifetime's SAC.” Id. at *6. Nor is the Federal Circuit’s holding in In re Bill of Lading Transmission and Processing Sys. Patent Litig., 681 F.3d 1323 (Fed. Cir. 2012) helpful to Defendants. In the first place, the Bill of Lading case was decided based on Form 18, before it was abrogated. Id. at 1334-35. But even so, the Federal Circuit still confirms that “what is necessary [under Twombly and Iqbal] is that [the pleaded] facts, when considered in their entirety and in context, lead to the common sense conclusion that a patented method is being practiced.” Id. at 1343. Again, there are no such facts in Defendants’ complaint. Case 5:16-cv-06371-BLF Document 65 Filed 09/21/17 Page 4 of 8 4 POWER INTEGRATIONS’ REPLY ISO MOT TO DISMISS Case Nos. 16-cv-06371-BLF and 17-cv-03189 BLF 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendants next argue that their barebones pleading should be accepted because it will be supplemented by infringement contentions. This Court expressly rejected that argument in Comcast: First, PLR 3–1 and 3–4 do not speak to pleading requirements, and in any case cannot supersede the Federal Rules of Civil Procedure. Second, neither defendants’ motion nor this order suggests that Comcast needs to disclose infringement contentions (and supporting documentation) as required by PLR 3–1, or invalidity contentions (and supporting documentation) as required by PLR 3–4, at the pleading stage where Comcast needs to plead only one plausible basis for declaratory judgment of non-infringement. 319 F.R.D. at 275. In addition, while Defendants say that they will have provided detailed infringement contentions by the time of the hearing on this motion, that remains to be seen. PI suspects that Defendants’ contentions will be as barebones as their pleading because there is no evidence to support Defendants’ infringement allegations. Finally, Defendants try to justify their pleading with reference to PI’s pleadings on other patents. PI disagrees that its own pleadings are deficient – because they contain other details not quoted in Defendants’ motion – but if Defendants disagree, their remedy is a motion to dismiss of their own. Defendants cite no authority that pleadings on a different patent can change the requirement that a complaint plead facts sufficient to infer infringement. The case cited by Defendants, Neonatal Prod. Grp., Inc. v. Shields, Case No. 13-CV-2601-DDC-KGS, 2014 WL 6685477, at *10 (D. Kan. 2014), merely relies on parity between a claim and counterclaim on the same patent. In short, no authority justifies Defendants’ utter failure to plead any facts from which an inference of infringement may be drawn. Their complaint for direct infringement of the ’272 and ’601 patents must be dismissed. 2. Defendants Fail to State a Claim for Indirect Infringement Defendants do not dispute that their claims for indirect infringement (contributory infringement and inducement) depend upon their claim for direct infringement, so that if their direct infringement claims are dismissed, their indirect infringement claims must be too. In addition, Defendants implicitly concede that they have not alleged any facts from which pre-suit knowledge or intent may be inferred. Instead, they rely exclusively upon the notice Case 5:16-cv-06371-BLF Document 65 Filed 09/21/17 Page 5 of 8 5 POWER INTEGRATIONS’ REPLY ISO MOT TO DISMISS Case Nos. 16-cv-06371-BLF and 17-cv-03189 BLF 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 allegedly provided by their complaint. That has two consequences. First, at a minimum, any damages for indirect infringement must be limited to the period after suit commenced. E.g., Windy City Innovations v. Microsoft Corp., 193 F.Supp.3d 1109, 1115 (N.D. Cal. 2016) (cited by Defendants) (“such claims are limited to post-suit actions because of plaintiff's failure to adequately allege pre-suit knowledge”). Second, since Defendants’ pleading fails to allege any facts from which infringement can be inferred, Defendants cannot plausibly allege that PI even now has the requisite knowledge and intent. See McRo, Inc. v. Rockstar Games, Inc., Civil Action Nos. 12-1513-LPS-CJB, 12-1517-LPS-CJB, 12-1519-LPS-CJB, 2014 WL 1051527, at *6 (without pleading specific facts “Plaintiff’s pleadings have failed to sufficiently allege Defendants’ post-suit knowledge of infringing conduct”), report and recommendation adopted, 2014 WL 1677366 (D. Del. 2014). Finally, beyond the mental state requirements, Defendants also plead no facts from which indirect infringement can be inferred. That is, Defendants plead no facts supporting their contention that use of the accused products necessarily infringes or that the accused products are not staple articles of commerce suitable for substantial non-infringing uses. The latter is fatal for Defendants’ contributory infringement case, and if the accused products have noninfringing uses, no inference of inducement can be drawn from PI’s product advertising and instructions. Certainly, the complaint contains no facts suggesting that PI specifically promotes infringing use. Thus, Defendants’ claims for indirect infringement of the ’272 and ’601 patents must be dismissed, not only because the underlying claims for direct infringement must be dismissed, but also because Defendants’ claims for indirect infringement fail to allege facts from which liability for indirect infringement can be inferred. 3. Defendants Fail to State a Claim for Willful Infringement Defendants concede that they have not pled a claim for willful infringement of the ’272 and ’601 patents. Case 5:16-cv-06371-BLF Document 65 Filed 09/21/17 Page 6 of 8 6 POWER INTEGRATIONS’ REPLY ISO MOT TO DISMISS Case Nos. 16-cv-06371-BLF and 17-cv-03189 BLF 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 C. Defendants Fail to State a Claim for Invalidity of the ’876 Patent (Count Ten) Because Defendants have stepped into the shoes of Fairchild, they are collaterally estopped from contesting the validity of the ’876 patent just as Fairchild would be, after having had a full trial and appeal on this issue. Defendants’ legal arguments to the contrary are mistaken. First, Defendants argue that they escape preclusion because different products are accused of infringement in this case as compared to the previous case. This confuses claim preclusion for infringement with claim preclusion for validity. The latter nearly always arises in subsequent litigation in which different products are accused. This was, for example, true in the case cited by PI, Roche Palo Alto LLC v. Apotex, Inc., 526 F. Supp. 2d 985, 990, 994 (N.D. Cal. 2007) (second case involved different accused products, but invalidity defense was still barred by claim preclusion). As previously briefed, patent invalidity is considered a single issue, and a party may assert invalidity of a patent in only a single litigation, regardless of whether it releases different products or thinks of different invalidity arguments. Second, Defendants argue that they should not be bound because they were not parties to the previous litigation. This misses the point of privity. Through merger, Defendants are Fairchild. If Fairchild had acquired Defendants and kept the name “Fairchild,” there would be no question that it could not resurrect its invalidity defense even if it began selling new infringing products acquired from Defendants. The result should be no different simply because Defendants have chosen to use the name ON Semiconductor rather than Fairchild for the combined entity. Third, Defendants misread the cited cases with regard to timing of the acquisition. In Brunswick Corp. v. Chrysler Corp., 408 F.2d 335 (7th Cir. 1969), which was cited with approval by the Federal Circuit in Kloster Speedsteel AB v. Crucible Inc., 793 F.2d 1565, 1583 (Fed. Cir. 1986), the acquiring company was precluded from challenging validity after it bought all the assets of another company that was estopped, even though the acquiring company was not itself involved in the earlier litigation. Brunswick, 408 F.2d at 338. Likewise, in Kloster itself, the Case 5:16-cv-06371-BLF Document 65 Filed 09/21/17 Page 7 of 8 7 POWER INTEGRATIONS’ REPLY ISO MOT TO DISMISS Case Nos. 16-cv-06371-BLF and 17-cv-03189 BLF 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 successor company was held bound even though it did not come into existence until after the earlier trial. Kloster, 793 F.2d at 1569.1 In short, Defendants are Fairchild, and the law does not permit them another bite at the apple. They may not burden the courts with another challenge to the validity of the ’876 patent. III. CONCLUSION Counts Seven, Eight, Nine, and Ten of Defendants’ Second Amended Complaint should be dismissed. Dated: September 21, 2017 FISH & RICHARDSON P.C. By: /s/ Howard G. Pollack Howard G. Pollack Attorneys for Plaintiff POWER INTEGRATIONS, INC. 1 In addition, ON announced its merger with Fairchild in November 2015, and the merger closed on September 19, 2016, during the pendency of the prior appeal and before the ’876 validity judgment became final on December 12, 2016. See Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 843 F.3d 1315 (Fed. Cir. 2016). Defendants thus did have an opportunity to participate in and control the prior case. Case 5:16-cv-06371-BLF Document 65 Filed 09/21/17 Page 8 of 8