Barnes & Noble Inc. v. LSI Corporation et al.

Filing 61

ORDER by Judge Edward M. Chen Denying 21 45 Defendants' Motions to Dismiss. (emcsec, COURT STAFF) (Filed on 10/18/2011)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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BARNES & NOBLE, INC., et al.,

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Plaintiffs,
ORDER DENYING DEFENDANTS’
MOTIONS TO DISMISS PLAINTIFFS’
COMPLAINT AND FIRST AMENDED
COMPLAINT

v.

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For the Northern District of California

United States District Court

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No. C-11-2709 EMC

LSI CORPORATION, et al.,

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Defendants.
___________________________________/

(Docket Nos. 21, 45)

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I.

INTRODUCTION

Plaintiffs Barnes & Noble (“BN”) and Barnesandnoble.com (“BN.com”) have filed a

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declaratory judgment suit for non-infringement of eleven patents against Defendants Agere

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Systems, Inc. (“Agere”) and LSI Corp. (“LSI”). Defendants’ motions to dismiss Plaintiffs’

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complaint (“Compl.”) and first amended complaint (“FAC”), Docket Nos. 21, 45, came on for

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hearing on October 7, 2011. Having considered the parties’ submissions and oral argument, the

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Court enters the following order.

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II.

FACTUAL & PROCEDURAL BACKGROUND

Plaintiffs BN and BN.com are manufacturers and sellers of the Nook e-reader. On June 29,

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2010, BN received a letter from LSI informing them that LSI believed the Nook’s 3G, WiFi, and

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audio technology was infringing on some of LSI’s patents. Snow Decl., Docket No. 29, Exh. 1.

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Thereafter, the parties engaged in negotiations, including meetings and exchanged emails and

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documents, regarding LSI’s contention that the Nook infringed its patents. Opp. 1 at 3-8; Snow

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Decl. Before their fourth meeting which both parties characterized (at the hearing) as unproductive,

2011. Docket No. 1. The complaint alleged that LSI held the rights to all of the patents-in-suit.

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Compl. ¶ 11. On July 27, 2011, LSI and Agere filed suit against both BN and BN.com in the Eastern

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District of Pennsylvania alleging infringement of the same patents plus one additional patent (the

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‘633 patent). Tyz Decl., Docket No. 23, Exh. 1. In that complaint, Defendants allege that LSI only

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controls one of the patents-in-suit in this action, and Agere controls the rest. Id. ¶¶ 4-5. On the

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same day, LSI filed its first motion to dismiss in this action, Docket No. 21, for lack of subject

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matter jurisdiction, nonjoinder, and under the first-to-file rule, as well as an alternative motion to

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transfer on the basis of forum shopping and the convenience of the parties. Plaintiffs amended their

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complaint as of right on August 10, 2011. Docket No. 25. The FAC adds two parties, BN.com as a

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For the Northern District of California

BN filed this declaratory judgment action for non-infringement of ten patents against LSI on June 6,

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United States District Court

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plaintiff and Agere as a defendant. FAC ¶¶ 6, 8. The FAC also adds a non-infringement claim for

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declaratory relief against the ‘633 patent, see FAC ¶¶ 73-77, and invalidity claims as to all patents.

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Defendants filed a second motion to dismiss on August 29, 2011, Docket No. 45, alleging the same

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bases for dismissal or transfer. Both motions remain pending before the Court.1

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III.
A.

DISCUSSION

Motion to Dismiss under 12(b)(1)
Defendants first move to dismiss on the grounds of lack of subject matter jurisdiction for

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failure to present a justiciable case or controversy. Mot. 1 at 9. Though they present their motion as

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a 12(b)(6) motion, it is more properly characterized as a 12(b)(1) motion since they challenge the

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Court’s subject matter jurisdiction under Article III.

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Declaratory judgment actions must present an actual controversy between parties in order for

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the Court to exercise jurisdiction. “[W]hether a case or controversy exists for a lawsuit seeking a

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declaratory judgment of patent noninfringement and/or invalidity is governed by the law of the

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Federal Circuit.” See MedImmune, Inc. v. Centocor, Inc., 409 F.3d 1376, 1378 (Fed. Cir. 2005). As

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the Supreme Court has explained, in a declaratory judgment action, a plaintiff must show “a

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For ease of reference, the Court refers to the parties’ moving papers with respect to the first
motion to dismiss as “Mot. 1,” “Opp. 1,” and “Reply 1,” and the papers with respect to the second
motion to dismiss as “Mot. 2,” “Opp. 2,” and “Reply 2.”

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substantial controversy, between parties having adverse legal interests, of sufficient immediacy and

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reality to warrant the issuance of a declaratory judgment.” MedImmune, Inc. v. Genentech, Inc., 549

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U.S. 118, 126 (2007).

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“In the area of patent infringement, in order for the court to exercise subject matter

standing to adjudicate their rights under the patent.” Newmatic Sound Sys., Inc. v. Magnacoustics,

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Inc., NO. C10-0129 JSW, 2010 WL 1691862, at *2 (N.D. Cal. Apr. 23, 2010) (citing 35 U.S.C. §

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281). “In a case brought as a declaratory relief claim, a district court must dismiss the complaint

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where the party sued is neither the patent owner or the exclusive licensee of the patent owner.” Id.

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(citing Enzo APA & Son, Inc. v. Geapag A.G., 134 F.3d 1090, 1091 (Fed. Cir. 1998)); see also Top

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For the Northern District of California

jurisdiction over any controversy, only the patentee (and those holding exclusive licenses) have

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United States District Court

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Victory Electronics v. Hitachi Ltd., No. C 10-01579 CRB, 2010 WL 4722482, at *2 (N.D. Cal. Nov.

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15, 2010) (“In order for a plaintiff to have standing in a declaratory action involving allegations of

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patent infringement, the defendant must have a legal right in the patent at issue that would allow the

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defendant to bring suit for infringement.”) (citing Fina Research, S.A. v. Baroid Ltd., 141 F.3d 1479,

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1481 (Fed.Cir.1998)). The burden is on the plaintiff “to establish that jurisdiction over its

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declaratory judgment action existed at, and has continued since, the time the [complaint] was filed.”

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Intellectual Prop. Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333, 1340 (Fed. Cir. 2001)

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(quotations omitted).

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Defendants argue that because Plaintiffs failed to sue the true owner of nine of the ten

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patents in the initial complaint, the Court lacks subject matter jurisdiction over those claims because

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there is no case or controversy between BN and LSI with respect to those patents and LSI has no

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standing to assert any rights with respect to those patents. See Mot. 1 at 13. In response, Plaintiffs

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state that they were misled by Defendants through the parties’ negotiations – in which LSI claimed

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to own the rights to all the patents – and that in light of this new information, they have already

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amended their complaint as of right to add Agere as a proper defendant for those patents. See Opp.

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1 at 12.

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While the Court might have been compelled to dismiss those nine causes of action in which
Plaintiffs named the wrong defendant, Plaintiffs have amended their complaint as of right under Fed.

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[Plaintiffs] named [the proper defendant] in their Amended Complaint and not in their original

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pleading does not require dismissal of the [] action for lack of subject matter jurisdiction.” eBay Inc.

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v. PartsRiver, Inc., No. C 10-4947 CW, 2011 WL 1522389, at *3 (N.D. Cal. Apr. 21, 2011) (citing

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Rockwell Int’l Corp. v. United States, 549 U.S. 457, 473 (2007)). As the Supreme Court has

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explained, when “a plaintiff files a complaint in federal court and then voluntarily amends the

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complaint, courts look to the amended complaint to determine jurisdiction.” Rockwell, 549 U.S. at

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473. That is because “[t]he state of things and the originally alleged state of things are not

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synonymous.” eBay, 2011 WL 1522389 at *3 (quoting Rockwell, 549 U.S. at 473). Rather, “while

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‘[l]ater events may not create jurisdiction where none existed at the time of filing,’ the proper focus

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For the Northern District of California

R. Civ. P. 15 to name the correct defendant – Agere – with respect to those nine patents. “[T]hat

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United States District Court

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in determining jurisdiction are ‘the facts existing at the time the complaint under consideration was

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filed.’” Prasco, LLC v. Medicis Pharmaceutical Corp., 537 F.3d 1329, 1337 (Fed. Cir. 2008)

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(emphasis in original) (quoting GAF Bldg. Materials Corp. v. Elk Corp., 90 F.3d 479, 483 (Fed. Cir.

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1996)) (additional citations omitted); see also Williams Adv. Materials, Inc. v. Target Tech. Co., No.

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03-CV-00276(A)(M), 2009 WL 3644357, at *6 (W.D.N.Y. Oct. 28, 2009) (“The critical date for

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determining whether Target’s has standing to sue for patent infringement is June 8, 2009, the date of

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its most recently filed pleadings asserting infringement claims . . . since ‘it is well established that an

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amended [pleading] ordinarily supercedes the original, and renders it of no legal effect.’”) (quoting

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Dluhos v. Floating & Abandoned Vessel, Known as “New York”, 162 F.3d 63, 68 (2d Cir. 1998)).

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Accordingly, in the instant case, a controversy exists between BN and Agere with respect to

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the complaint under consideration – i.e., the Amended Complaint. See eBay, 2011 WL 1522389 at

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*3 (“Neither PartsRiver nor Kelora dispute that eBay and Microsoft had an actual controversy with

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Kelora at the time the 4947 action was filed. Thus, that eBay and Microsoft named Kelora in their

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Amended Complaint and not in their original pleading does not require dismissal of the 4947 action

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for lack of subject matter jurisdiction.”) (citing Rockwell, 549 U.S. at 473).

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Cases cited by Defendants, do not mandate a different result. In Schreiber Foods, Inc. v.

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Beatrice Cheese, Inc., 402 F.3d 1198, 1203 (Fed. Cir. 2005), the Federal Circuit articulated the

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general rule that lack of standing cannot be cured by adding a party with standing. However, the

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Court faced a much different scenario than the instant case. Schreiber considered the impact of a

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temporary loss of standing on the court’s jurisdiction over the action. The court concluded that it

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maintained jurisdiction where the patentee had standing when suit was initiated, lost it briefly by

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transferring rights to the patent, but regained those rights before the entry of judgment. Id. at 1203-

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04. Similarly, the court in Enzo APA & Son, Inc. v. Geapag A.G., 134 F.3d 1090, 1093 (Fed. Cir.

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1998) found a party to be without standing to assert rights to a patent where it did not actually obtain

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license to the patents in writing until after the suit had commenced. Thus, in Enzo, the plaintiff had

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no actual or alleged standing at the time it filed suit and the holder of the title was never joined to

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the action.
Neither Schreiber nor Enzo considered a situation where there was a timely amendment filed

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For the Northern District of California

United States District Court

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as of right, as opposed to a party’s request for leave to amend after its one-time amendment rights

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had expired. Thus, neither court confronted the scenario the Federal Circuit and Supreme Court

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later considered in Prasco and Rockwell, where the complaint under consideration was the amended

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complaint, which the court used to determine jurisdiction. See also ConnectU LLC v. Zuckerberg,

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522 F.3d 82, 96 (1st Cir. 2008) (“[W]here, as here, a plaintiff amends its complaint as of right, the

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Civil Rules operate mechanically, and the judge’s authority over the case is not brought to bear.”).

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More significantly, there is no dispute that this Court had federal jurisdiction over the

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original complaint herein since LSI was the owner of one of the patents at issue (the ‘901 patent).

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Thus, this is not a case where the district court had no jurisdiction at the time the amended complaint

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was filed. Since Plaintiffs had standing to assert at least one cause of action, Defendants fail to

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explain why Plaintiffs could not timely amend their complaint as a matter of right under Rule 15(a).

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Indeed, at oral argument, Defendants admitted that had BN only presented one declaratory judgment

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claim for the LSI patent-in-suit correctly naming LSI as the defendant, nothing would have

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prevented BN from amending the complaint as of right and adding the remaining Agere patents –

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plus Agere as a new defendant – in its amended complaint. Since at least one of the patents – the

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‘091 patent – was owned by LSI, see Mot. 1 at 7; Tyz Decl., Exh. 1, ¶ 5, the Court had subject

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matter jurisdiction over the action since its inception, and the amendment merely added certain

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claims and parties and deleted certain claims, as Plaintiffs were permitted to do under Rule 15(a).

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See Matthews Metals Prods., Inc. v. RBM Precision Metal Prods., Inc., 186 F.R.D. 581, 583 (N.D.

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Cal. 1999) (“[L]eave of court is not required for an amendment adding a party prior to the filing of a

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responsive pleading.”); De Malherbe v. International Union of Elevator Constructors, 438 F. Supp.

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1121, 1127-28 (N.D. Cal. 1977) (same); City Bank v. Glenn Const. Corp., 68 F.R.D. 511, 513 (D.

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Haw. 1975) (plaintiff had right to amend complaint to drop non-diverse party so as to secure

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diversity jurisdiction); Galustian v. Peter, 591 F.3d 724, 730 (4th Cir. 2010) (“[T]he doctrine of

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futility only applies when the plaintiff seeks leave of court to amend and does not have a right to

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amend. The plaintiff’s right to amend once is absolute.”); U.S. ex rel. Precision Co. v. Koch

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Industries, Inc., 31 F.3d 1015, 1018 (10th Cir. 1994) (plaintiffs could amend once as of right to add
new plaintiffs).

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For the Northern District of California

United States District Court

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Accordingly, the Court DENIES the motion to dismiss for lack of jurisdiction.
B.

Motion to Dismiss under 12(b)(7)
Defendants also move to dismiss under Rule 12(b)(7) for failure to join a necessary party

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pursuant to Rule 19. They argue that both Agere and BN.com are necessary and indispensable

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parties, and that their absence mandates dismissal of this action. Mot. 1 at 14.

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Rule 19(a) requires joinder of persons whose absence would preclude the grant of complete

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relief, or whose absence would impede their ability to protect their interests, or would subject any of

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the parties to the danger of inconsistent obligations. See Fed. R. Civ. P. 19(a).

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A necessary party is one “having an interest in the controversy, and
who ought to be made [a] party, in order that the court may act on that
rule which requires it to decide and finally determine the entire
controversy, and do complete justice, by adjusting all the rights
involved in it.” This standard is met when failure to join will lead to
separate and redundant actions.

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IBC Aviation Servs. v. Compania Mexicana De Aviacion, S.A. de C.V., 125 F. Supp. 2d 1008, 1011

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(N.D. Cal. 2000). “If a person who is required to be joined if feasible cannot be joined, the court

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must determine whether, in equity and good conscience, the action should proceed among the

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existing parties or should be dismissed.” Fed. R. Civ. P. 19(b). If the party is indispensable yet

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cannot be joined, then the action must be dismissed. See E.E.O.C. v. Peabody Western Coal Co.,

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400 F.3d 774, 779-80 (9th Cir. 2005).

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Regardless of whether BN.com and/or Agere are necessary parties, Defendants’ motion fails

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because it makes no attempt in either motion or reply to explain how these parties cannot be joined

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to the current action as Plaintiffs have already done in their FAC. See Mot. 1 at 14 (“Given that

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Agere and BN.com are necessary and indispensable parties and cannot be joined as a matter of

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course, BN’s complaint . . . is fatally flawed . . . .”); Cf. A123 Systems, Inc. v. Hydro-Quebec, 626

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F.3d 1213, 1219-20 (Fed. Cir. 2010) (finding that the absent party could not be joined because it was

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immune from suit in that jurisdiction). In fact, their only argument (raised in reply) is that these

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parties cannot be joined because Plaintiffs’ first complaint failed to establish subject matter

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jurisdiction. See Reply 1 at 12. However, as discussed above, the Court did have jurisdiction over
the action, though certain allegations may have been defective as to some claims. In addition,

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For the Northern District of California

United States District Court

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Plaintiffs had the right under Rule 15 to amend their complaint once to add new claims and parties.

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Accordingly, the motion to dismiss for nonjoinder be DENIED.
C.

First-to-File Rule
Defendants next argue that this Court should dismiss this action because the Pennsylvania

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case is the de facto first-filed action. See Mot. 1 at 15. “When two actions involving nearly

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identical parties and closely related patent infringement questions are filed in separate districts,

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which happens with some frequency in contemporary litigation, the general rule is that the case first

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filed takes priority, and the subsequently filed suit should be dismissed or transferred or stayed.”

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14D Wright, A. Miller & M. Kane, Fed. Prac. & Proc. Juris. § 3823 (3d ed. 2011). In patent

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litigation, “[t]he first-filed action is preferred, even if it is declaratory, ‘unless considerations of

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judicial and litigant economy, and the just and effective disposition of disputes, require otherwise.’”

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Serco Services Co., L.P. v. Kelley Co., Inc., 51 F.3d 1037, 1039 (Fed. Cir. 1995) (quoting

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Genentech, 998 F.2d 931, 937 (Fed. Cir. 1993), abrogated on other grounds by Wilton v. Seven

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Falls Co., 515 U.S. 277 (1995)).

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The rule, however, is discretionary. “The most basic aspect of the first-to-file rule is that it is

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discretionary; ‘an ample degree of discretion, appropriate for disciplined and experienced judges,

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must be left to the lower courts.’” Alltrade, Inc. v. Uniweld Products, Inc., 946 F.2d 622, 628 (9th

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Cir. 1991) (quoting Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 183-84

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(1952)); see also Pacesetter Systems, Inc. v. Medtronic, Inc., 678 F.2d 93, 95 (9th Cir. 1982). Thus,

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“the trial court’s discretion tempers the preference for the first-filed suit, when such preference

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should yield to the forum in which all interests are best served.” Genentech, 998 F.2d at 938 (citing

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Kerotest, 342 U.S. at 184). A court’s decision to depart from this general rule must present a “sound

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reason that would make it unjust or inefficient to continue the first-filed action.” Id.

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In this case, now that Plaintiffs have amended their complaint, the two actions are now

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essentially, if not literally, identical. Chronologically, the instant case was filed first. However, the

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Pennsylvania action was filed before Plaintiffs amended their complaint in this action. Defendants

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thus argue that the FAC does not relate back to the original complaint, such that the Pennsylvania
action should be considered the first-filed action relative to the FAC in the instant case. See Mot. 1

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For the Northern District of California

United States District Court

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at 15. Moreover, even if this action is still technically the first-filed, Defendants argue that

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exceptions such as forum shopping and convenience apply here such that the Court should defer to

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the Pennsylvania action. The Court addresses their contentions in turn.

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1.

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A number of courts have held that the filing of a complaint triggers the first-filed rule,

First Filed Regardless of Amendment

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regardless of whether the plaintiff later amends the complaint. See, e.g., Mattel, Inc. v. Louis Marx

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& Co., 353 F.2d 421, 424 (2d Cir. 1965) (“The fact that these issues were not all spelled out in the

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New Jersey action until Marx had amended its complaint is immaterial. Marx amended its complaint

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as of right as allowed by Rule 15 . . . . Thus, the New Jersey suit was the first suit which made

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possible the presentation of all the issues and which, by amendment of the complaint did raise all the

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substantial issues between the parties.”); Schering Corp. v. Amgen Inc., 969 F. Supp. 258, 267 (D.

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Del. 1997) (“A ‘relation-back’ inquiry is unnecessary; the point of inquiry is the original complaint,

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not the amended complaint.”); Advanta Corp. v. Visa U.S.A., Inc., 1997 U.S. Dist. LEXIS 2007,

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1997 WL 88906, at *3 (E.D. Pa. Feb. 19, 1997) (“Advanta cannot avoid application of the first-filed

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rule simply by asserting that it was not initially a party to the earlier filed action. The first-filed rule

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turns on which court first obtains possession of the subject of the dispute, not the parties of the

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dispute.”) (citing EEOC v. Univ. of Penn., 850 F.2d 969, 971 (3d Cir. Pa. 1988) (“In all cases of

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federal concurrent jurisdiction, the court which first has possession of the subject must decide it.”));

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U. S. v. Northern Paiute Nation, 393 F.2d 786, 790 & n.* (Ct. Cl. 1968) (in relation back inquiry,

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“By the ‘original pleading’ to be looked to, we do not mean only the first petition filed, but mean to

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include within the quoted phrase all timely petitions, original or amended.”); see also Pacesetter

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Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 96 & n.3 (9th Cir. 1982) (noting that the first-to-file rule

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applies to the filing of the complaint, not to the service of process or other events).

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These cases are persuasive because they comport with the general liberality of Rule 15. See

pleading is a game of skill in which one misstep by counsel may be decisive to the outcome and

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accept the principle that the purpose of pleading is to facilitate a proper decision on the merits.”),

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abrogated on other grounds by Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).; Eminence

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For the Northern District of California

generally Conley v. Gibson, 355 U.S. 41, 48 (1957) (“The Federal Rules reject the approach that

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United States District Court

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Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051-52 (9th Cir. 2003) (“In exercising its discretion, a

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court must be guided by the underlying purpose of Rule 15-to facilitate decision on the merits, rather

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than on the pleadings or technicalities”). Such an interpretation of the first-to-file rule would also

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comport with the Supreme Court’s analysis in Rockwell, as discussed above, that it is a complaint’s

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allegations as amended that the court addresses. Rockwell, 549 U.S. at 473.

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2.

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Other courts have applied the relation back doctrine to determine which case is filed first.

Relation Back

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See Halo Electronics, Inc. v. Bel Fuse Inc., No. C-07-06222 RMW, 2008 WL 1991094, at *2 (N.D.

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Cal. May 5, 2008). “An action is considered to have been the first filed, even if it was not

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chronologically first, if the claims relate back to an original complaint that was chronologically filed

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first” (citing Mann Design, Ltd. P’ship v. Bounce, Inc., 138 F. Supp. 2d 1174, 1178 (D. Minn.

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2001)). See, e.g., National Foam v. Williams Fire & Hazard Control, 1997 U.S. Dist. LEXIS

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16734, at *13-15 (E.D. Pa. Oct. 28, 1997) (finding that plaintiff who had mistakenly sued company

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instead of its licensee could amend complaint and amendment would relate back); Hooker

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Chemicals & Plastics Corp. v. Diamond Shamrock Corp., 87 F.R.D. 398, 403 (W.D.N.Y. 1980)

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(finding relation back where amendment added a subsequently-issued patent); Cf. Halo, 2008 WL

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1991094 at *2 (denying relation back where the first complaint alleged completely different patent

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and product than amendment which had already been asserted in another action, and where the

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plaintiff was not amending as of right under Rule 15); Mallinckrodt Medical Inc. v. Nycomed

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Imaging AS, 49 U.S.P.Q. 2d 1474 (E.D. Mo. 1998) (declining to relate amended complaint back for

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first-to-file purposes where the only defendant in first complaint was dismissed entirely for lack of

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personal jurisdiction and where the “undisputed facts suggest that Mallinckrodt did not make a

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mistake within the meaning of Rule 15(c) but proceeded as it did as a strategic act”).

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Rule 15(c) provides that an amendment adding a new defendant will relate back to the

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original complaint if it “asserts a claim or defense that arose out of the conduct, transaction, or

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occurrence set out-or attempted to be set out-in the original pleading,” and if, within 120 days of the

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initial complaint, the party to be added “received such notice of the action that it will not be
prejudiced in defending on the merits” and “knew or should have known that the action would have

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For the Northern District of California

United States District Court

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been brought against it, but for a mistake concerning the proper party’s identity.” Rule 15(c)(1)(C).

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The purpose of relation back is “to balance the interests of the defendant protected by the statute of

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limitations with the preference expressed in the Federal Rules of Civil Procedure in general, and

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Rule 15 in particular, for resolving disputes on their merits.” Krupski v. Costa Crociere S. p. A.,130

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S. Ct. 2485, 2494 (2010).

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The relation back doctrine is designed for circumstances in which the timeliness of an

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amendment is at issue, for example, with respect to the statute of limitations. See Fed. R. Civ. P.

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15(c), 1966 advisory committee notes (“Relation back is intimately connected with the policy of the

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statute of limitations.”); 6A Wright & Miller, Fed. Prac. & Proc. Civ. § 1498 (3d ed. 2011)

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(describing Rule 15(c) as “alter[ing] the generally accepted rule that new parties, either plaintiffs or

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defendants, cannot be added to an action by amendment after the applicable limitations period has

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expired”). Nonetheless, as noted, some courts have applied relation back analysis to the first-filed

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rule.

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If Plaintiffs were required to show relation back, Plaintiffs’ FAC would relate back in the

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instant case. As the Supreme Court recently affirmed, the relation back doctrine under Rule 15(c) is

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appropriate in a case of mistaken identity. In Krupski, an injured plaintiff had originally sued Costa

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Cruise Lines as the owner and operator of the cruise ship on which she was injured, but she later

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discovered that the ship was actually owned by Costa Crociere S. p. A. Krupski, 130 S. Ct. at 2494.

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have known during the Rule 4(m) period [120 days], not what the plaintiff knew or should have

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known at the time of filing her original complaint.” Id. at 2493. If the proposed defendant knew or

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should have known that its exclusion from the lawsuit was “only because of [Plaintiff’s]

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misunderstanding,” then it may properly be added. Id. at 2497. Thus, under the Supreme Court’s

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test for relation back, the proposed defendants must have notice that they would have been named in

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the complaint but for the fact that Plaintiff made an error. See Krupski, 130 S. Ct. at 2496.

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However, the Court cautioned that “making a deliberate choice to sue one party instead of another

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while fully understanding the factual and legal differences between the two parties is the antithesis

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of making a mistake concerning the proper party’s identity.” Id. at 2494; cf. Nelson v. Adams, 529

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For the Northern District of California

The operative question, according to the Court, is “what the prospective defendant knew or should

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United States District Court

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U.S. 460, 467-68 (2000) (noting that Rule 15(c) did not apply because Respondent “knew of

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Nelson’s role and existence and, until it moved to amend its pleading, chose to assert its claim for

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costs and fees only against OCP”); In re Network Assoc., Inc. II Securities Litig., 2003 WL

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24051280, at *8 (N.D. Cal. Mar. 25, 2003) (“Relation back is only allowed for a mistake in identity,

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not liability.”).

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Here, though Defendants argue to the contrary, the Court finds BN’s failure to name Agere

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in the original complaint was not deliberate. Plaintiffs persuasively argue and provide

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documentation to support their claim, that they believed they were suing the owners of the patents.

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See Opp. 1 at 208; Compl. ¶ 11 (“Barnes & Noble is informed and believes . . . that LSI is the

20

assignee of the LSI Patents.”). Though Defendants contend it would have been obvious that Agere

21

owned the patents, the evidence they cite provides far less certainty than they claim. See, e.g., Reply

22

1 at 2-3 (showing slide with Agere named as original assignee of only four of the patents at the time

23

the patents were registered); id. at 3 (noting that a presentation stated LSI included its wholly-owned

24

subsidiary Agere); id. at 3-4 (noting that Agere was the assignee of one of the patents at issue during

25

prior litigation). As Plaintiffs point out, none of these small clues indicate that Agere owned rights

26

to the patents at the relevant time for this litigation, especially in the face of LSI’s affirmative

27

representations that it owned the patents. See, e.g., Snow Decl. ¶ 12 & Exh. 9 (nondisclosure

28

agreement stating, “LSI is the owner or assignee of certain patents . . . the ‘LSI Patents.’”).

11

1

Furthermore, BN gained no tactical advantage in not naming Agere, and thus BN had no reason not

2

to name Agere other than inadvertence. Significantly, Defendants were clearly on notice that Agere

3

was a proper defendant since it had the rights to nine of the patents.

4
5

Accordingly, under Krupski, Plaintiffs’ amendment adding Agere as a defendant relates back
to the original complaint.

6

Defendants also argue that relation back can never apply to amendments adding plaintiffs

7

such as BN.com. See Reply 1 at 9-10. However, despite the advisory committee’s notes indicate

8

that “the attitude taken in revised Rule 15(c) toward change of defendants extends by analogy to

9

amendments changing plaintiffs.” See Fed. R. Civ. P. 15(c), 1966 advisory committee notes. In
their second reply, Defendants argue that there would be no relation back with respect to the

11
For the Northern District of California

United States District Court

10

addition of BN.com because the original complaint failed to give Defendants notice of BN.com’s

12

claims. See Reply 2 at 2-3. This argument is not persuasive given that a central reason for

13

Defendants’ motion to dismiss was for nonjoinder of a necessary party, BN.com. See Mot. 1 at 14

14

(“BN.com is also a necessary and indispensible party. Given that BN.com sells the same Nook

15

devices that form the basis of Agere’s claims against BN, and that it uses the accused WiFi and 3G

16

functionalities in these devices to supply digital content to its customers, BN.com is also liable for

17

infringement of the patents at issue.”); see also Immigrant Assistance Project of Los Angeles County

18

Fed’n of Labor (AFL-CIO) v. I.N.S., 306 F.3d 842, 857 (9th Cir. 2002) (“An amendment adding a

19

party plaintiff relates back to the date of the original pleading only when: 1) the original complaint

20

gave the defendant adequate notice of the claims of the newly proposed plaintiff; 2) the relation back

21

does not unfairly prejudice the defendant; and 3) there is an identity of interests between the original

22

and newly proposed plaintiff.”) (quotations omitted). Defendants had notice of BN.com’s role, and

23

adding BN.com as an additional plaintiff via a timely filed amended complaint caused no unfair

24

prejudice to them.

25
26
27
28

Accordingly, the Court finds that the amendment adding BN.com relates back to the original
complaint.
Finally, Defendants contend that Plaintiffs’ amendment adding new claims of invalidity and
non-infringement cannot relate back. See Reply 1 at 10; Mot. 2 at 4. Rule 15(c)(1)(B) provides that

12

the conduct, transaction, or occurrence set out—or attempted to be set out—in the original

3

pleading.” Plaintiffs contend that their new claims of invalidity relate to the same accused products,

4

the same accused functionality, and the same patents that were in the original complaint. Opp. 2 at

5

4. The cases on which Defendants rely do not negate that contention. For example, while the

6

Tenneco court noted that infringement is a “distinct and separate issue” from validity, it did not

7

address relation back but rather whether the plaintiff should be granted leave to amend after a five-

8

year delay. Tenneco Resins, Inc. v. Reeves Bros., Inc., 752 F.2d 630 (Fed. Cir. 1985). Thus, the

9

crux of its analysis focused on delay and prejudice; indeed, it noted that these patent issues are “are

10

normally addressed together,” and therefore that Tenneco’s multi-year delay in seeking to amend his

11
For the Northern District of California

a new claim or defense relates back if “the amendment asserts a claim or defense that arose out of

2

United States District Court

1

complaint could easily be read by the opposing party as an indication that validity would not be an

12

issue in the case. See Tenneco, 752 F.2d at 635 & n.4.

13

Similarly, Plaintiffs point out that their new infringement claim (adding the ‘633 patent)

14

relates back because it is “part and parcel” of the same controversy regarding the same accused

15

product and the same WiFi technology. See Opp. 2 at 4 (citing Halo, 2008 WL 1991094 at *2 (“[A]

16

claim for infringement of one patent is the same ‘conduct or occurrence’ as a claim for infringement

17

of another patent only where the second patent was ‘part and parcel’ of the controversy surrounding

18

the earlier patent.”). Indeed, Defendants’ own complaint in the Eastern District of Pennsylvania

19

describes the ‘633 as similar to the ‘867, ‘182, ‘732, ‘958, and ‘582 patents in that all involve the

20

“Institute of Electrical and Electronics Engineers (“IEEE”) 802.11 wireless standards.” See Tyz

21

Decl., Docket No. 23, Exh. 1 ¶¶ 59-60, 71-72, 83-84, 95-96, 107-08. In addition, the ‘633 and ‘091

22

patents both relate to the specific portions of the Nook devices which contain “audio decoders

23

capable of producing keyboard sound effects.” Id. ¶¶ 119, 129-30. Such a similarity between

24

claims is sufficient for relation back. Cf. Halo, 2008 WL 1991094 at *2 (finding no relation back

25

where new patents “involve different technologies and products” than those asserted in first-filed

26

action); Foreign Candy Co., 2011 WL 1706511, at *3 (W.D. Pa. May 4, 2011) (finding first-filed

27

rule inapplicable where “[t]he only similarity between the two cases is the identity of the parties,” as

28

they each “involve different marks that would require different evidence”).

13

1
2

Accordingly, to the extent Plaintiffs must demonstrate relation back, the Court finds that the
amended complaint relates back for purposes of the first-filed rule.

3

3.

4

Even if this action is the first-filed, Defendants contend that the Court should exercise its

Exceptions to the First-Filed Rule

to the first-to-file rule typically will be made include bad faith, anticipatory suit, and forum

7

shopping.” Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d 622, 628 (9th Cir. 1991); see also

8

Alibaba.com v. Litecubes, Inc., No. C 03-5574 MHP, 2004 U.S. Dist. LEXIS 3492, at *5 n.3 (N.D.

9

Cal. Mar. 8, 2004) (stating that the first-to-file rule may be relaxed if the first-filed suit is “plainly

10

anticipatory” or the party has engaged in “transparent forum shopping”). Other circumstances may

11
For the Northern District of California

discretion to find an exception to the first-filed rule. “The circumstances under which an exception

6

United States District Court

5

also warrant a rejection of the first-to-file rule–e.g., balance of convenience or sound judicial

12

administration. See, e.g., Z-Line Designs, Inc. v. Bell’O Internat’l, LLC, 218 F.R.D. 663, 665 (N.D.

13

Cal. 2003) (noting that court may refuse to apply first-to-file rule if balance of convenience weighs

14

in favor of later-filed action); Capitol Records, Inc. v. Optical Recording Corp., 810 F. Supp. 1350,

15

1354 (S.D.N.Y. 1992) (stating that, even though there was no forum shopping by plaintiff, wise

16

judicial administration favored the Delaware forum rather than the New York forum; the Delaware

17

court had previously tried litigation involving the same patent).

18

In the instant case, Defendants have provided little evidence of bad faith, anticipatory suit, or

19

forum shopping that would distinguish this case from virtually any declaratory judgment action in

20

which a party could show a reasonable threat of suit so as to satisfy the case or controversy

21

requirement. For example, Defendants provide evidence that the parties had been engaged in good

22

faith negotiations and that rather than attend their next-scheduled meeting, BN filed suit. See Mot. 1

23

at 5, 15-16. However, without more, there is little to suggest that BN acted in bad faith simply by

24

declining to continue with the negotiations. As mentioned above, both the parties agreed that the

25

last meeting between the parties prior to the filing of this suit was unproductive.

26

In addition, improper anticipatory suits typically involve a more direct threat of suit than is

27

present in the instant case. Compare Snow Decl., Docket No. 29, Exh. 1 (letter from LSI to BN

28

stating that LSI believes the Nook infringes some of its patents and inviting BN to meetings to

14

1

“initiate discussion on the licenses available at this time.”); Bryant v. Oxxford Express, Inc., 181 F.

2

Supp. 2d 1045, 1047-48 (C.D. Cal. 2000) (holding that there was no anticipatory filing; letter from

3

Oxxford suggested it was considering filing suit against Bryant but did not give any indication to

4

Bryant that lawsuit was imminent or that Oxxford was doing anything more than “blowing smoke”

5

about potential lawsuit – even though letter from Oxxford to Bryant said that it would suffer

6

damages for which it would seek indemnification if Bryant did not honor contract and Oxxford

7

asked Bryant to respond by next business day whether he intended to comply with contract); with

8

Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215, 217-19 (2d Cir. 1978) (finding that lower court did

9

not abuse its discretion in concluding that a declaratory judgment action “was filed in apparent
anticipation of Factors’ New York suit” where Pro Arts had received a letter “warning Pro Arts that

11
For the Northern District of California

United States District Court

10

if it did not discontinue sale of the [allegedly infringing] poster, it would be subject to a lawsuit for

12

injunctive relief, damages and an accounting”); Inherent.com v. Martindale-Hubbell, 420 F. Supp.

13

2d 1093, 1099-1100 (N.D. Cal. 2006) (finding a suit anticipatory where a letter stated that suit

14

would be filed within 5 days if not settlement was reached). No such immediate suit was threatened

15

by LSI.

16

In the instant case, BN’s conduct can be reasonably interpreted as BN’s effort to “cut to the

17

chase” and resolve the conflict as soon as possible once it reasonably believed it was not infringing

18

the subject patents. The declarations submitted by the parties also indicate that BN had experienced

19

certain delays in obtaining requested documents from LSI in the course of their negotiations. See,

20

e.g., Snow Decl., Exhs. 3, 8 at 2. As there was no indication that LSI had immediate plans to file

21

suit, BN could have reasonably believed that a declaratory judgment action was its best option to

22

expedite a resolution. Indeed, the point of the Declaratory Judgment Act is to “afford[] a measure of

23

relief to the potential infringer who is under the shadow of threatened infringement litigation.”

24

Serco Services Co., L.P. v. Kelley Co., Inc., 51 F.3d 1037, 1038 (Fed. Cir. 1995). Given this

25

purpose, the mere potential of future litigation would not render a declaratory judgment suit

26
27
28

15

1
2

“anticipatory” so as to vitiate the first-filed rule.2
Finally, while Defendants allege forum shopping, the only evidence to which they point

Defendants’ chosen forum. For example, Defendants make no showing of different substantive law

5

between this District and the Eastern District of Pennsylvania that would motivate forum-shopping.

6

Cf. Mission Ins. Co. v. Puritan Fashions Corp., 706 F.2d 599, 602 (5th Cir. 1983) (“Mission states

7

that the burden of proof in regard to the loss may differ in California and Texas, an important fact in

8

this case since even proving that the thefts occurred may require resort to complicated accounting

9

analyses.”). Unlike in National Foam, cited by Defendants, here there is no indication that Plaintiffs

10

rushed to the courthouse, as the parties engaged in negotiations for months before they filed suit. Cf.

11
For the Northern District of California

besides the fact that Plaintiffs filed suit first is that they filed suit in their chosen forum over

4

United States District Court

3

National Foam v. Williams Fire & Hazard Control, No. 97-3105, 1997 U.S. Dist. LEXIS 16734, at

12

*25 (E.D. Pa. Oct. 28, 1997) (“The day after Williams’ counsel denied the allegations made against

13

its customer by National Foam, National Foam filed the instant law suit.”). Nor did BN choose a

14

forum with no relevance to the parties, so as to suggest the possibility of forum-shopping; instead,

15

BN filed suit in the district in which it makes the accused products and in which LSI is

16

headquartered. Gilbert Decl., Docket No. 28, ¶¶ 3, 4, 7; Anderson Decl., Docket No. 33, Exh. 1.

17

Thus, the Court finds no evidence of forum shopping.

18

As for convenience factors, the Court employs the same analysis with respect to the first-to-

19

file rule as for a motion to transfer under 28 U.S.C. § 1404. Heartland Payment Systems, Inc. v.

20

Verifone Israel Ltd., No. C 10-0654 MHP, 2010 WL 1662478, at *4 (N.D. Cal. Apr. 22, 2010).

21

Section 1404(a) provides, “For the convenience of parties and witnesses, in the interest of justice, a

22

district court may transfer any civil action to any other district or division where it might have been

23

brought.” A court has discretion in deciding whether to transfer pursuant to § 1404(a). See Steward

24

Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (stating that the statute is “intended to

25
2

26
27
28

Indeed, the Federal Circuit in Serco placed special emphasis on the fact that the district
court had considered the anticipatory suit as only one factor along with the convenience of the
parties and witnesses, as the Court noted that “[t]here is some merit to Serco’s suggestion that
dismissing its suit as anticipatory is inconsistent with Genentech’s repudiation of the [rule favoring
infringement actions] in patent cases,” but that it was not an abuse of discretion to consider such
anticipatory action as one factor in the analysis. Serco, 51 F.3d at 1039-40.

16

1

place discretion in the district court to adjudicate motions for transfer according to an

2

‘individualized, case-by-case consideration of convenience and fairness’”); see also Ventress v.

3

Japan Airlines, 486 F.3d 1111, 1118 (9th Cir. 2007) (stating that a “district court’s decision to

4

change venue is reviewed for abuse of discretion”; adding that “‘[w]eighing of the factors for and

5

against transfer involves subtle considerations and is best left to the discretion of the trial judge’”).

6

The Ninth Circuit has noted that, in making the decision, a court may consider factors such as:

7
8
9

11
For the Northern District of California

United States District Court

10

(1) the location where the relevant agreements were negotiated and
executed, (2) the state that is most familiar with the governing law, (3)
the plaintiff’s choice of forum, (4) the respective parties’ contacts with
the forum, (5) the contacts relating to the plaintiff’s cause of action in
the chosen forum, (6) the differences in the costs of litigation in the
two forums, (7) the availability of compulsory process to compel
attendance of unwilling non-party witnesses, and (8) the ease of access
to sources of proof. Additionally, the presence of a forum selection
clause is a “significant factor” . . . .

12
Jones v. GNC Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir. 2000); see also Decker Coal Co. v.
13
Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986) (discussing private and public factors
14
affecting the convenience of a forum).
15
Consistent with the above, courts in this District have commonly articulated the relevant
16
factors as follows:
17
18
19

(1) plaintiff’s choice of forum, (2) convenience of the parties, (3)
convenience of the witnesses, (4) ease of access to the evidence, (5)
familiarity of each forum with the applicable law, (6) feasibility of
consolidation of other claims, (7) any local interest in the controversy,
and (8) the relative court congestion and time of trial in each forum.

20
Vu v. Ortho-Mcneil Pharm., Inc., 602 F. Supp. 2d 1151, 1156 (N.D. Cal. 2009) (Illston, J.); Williams
21
v. Bowman, 157 F. Supp. 2d 1103, 1106 (N.D. Cal. 2001) (Walker, J.). “The burden of showing that
22
transfer is appropriate is on the moving party . . . .” Id. As a general matter, a plaintiff’s choice of
23
forum should be afforded deference. See Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d
24
834, 843 (9th Cir. 1986). Thus, “[i]n order to upset a plaintiff’s choice of forum, a defendant must
25
make a ‘strong showing of inconvenience.’” Ellis v. Costco Wholesale Corp., 372 F. Supp. 2d 530,
26
536 (N.D. Cal. 2005) (quoting Decker, 805 F.2d at 843); see also In re Genentech, Inc., 566 F.3d
27
1338, 1342 (Fed. Cir. 2009) (“A motion to transfer venue should be granted upon a showing that the
28

17

1

transferee venue is clearly more convenient than the venue chosen by the plaintiff.”) (internal

2

quotations omitted).

3

In the instant case, neither forum provides a clear advantage with respect to the factors listed

benefits as well as hardships to parties and witnesses. The first factor weighs in Plaintiffs’ favor as

6

this is their chosen forum, and the forum is connected to this action because the employees

7

responsible for designing and developing the accused Nook product work in BN’s Palo Alto offices.

8

Gilbert Decl. ¶¶ 1-2; Cf. Morris v. Safeco Ins. Co., No. C 07-2890 PJH, 2008 WL 5273719, at *4

9

(N.D. Cal. Dec. 19, 2008) (“[T]he deference given to plaintiff’s choice of forum is slight, if any,

10

when . . . the plaintiff’s chosen forum lacks a significant connection to the events that gave rise to

11
For the Northern District of California

above. Rather, each party simply prefers its chosen forum, and each forum would offer some

5

United States District Court

4

the complaint.”). LSI is also headquartered in this district. Terrano Decl., Docket No. 22, ¶ 2.

12

The second and third factors – convenience of the parties and witnesses – do not counsel in

13

favor of transfer. Defendants point out that Agere employees and documents as well as some patent

14

inventors and other third-party witnesses reside on the East Coast within a 100-mile radius of the

15

Eastern District of Pennsylvania (and hence within its subpoena power), see Terrano Decl. ¶ 25

16

(explaining that LSI and Agere employees most knowledgeable about the patents-in-suit are located

17

in Pennsylvania); Tyz Decl., Docket No. 23, ¶¶ 14-16 (listing six patent inventors and fourteen

18

prosecuting attorneys located near Pennsylvania). However, Plaintiffs similarly note that BN’s

19

Nook offices are located in this district along with other patent inventors and third-party witnesses

20

related to its chip-suppliers, see Gilbert Decl., Docket No. 28 (explaining that most BN employees

21

with information and documents related to the Nook are located in the Palo Alto office, and that

22

many relevant employees of the third-parties that supply the chipsets employing the accused

23

functionality are located in the district); Tyz Decl. ¶ 14 (listing five patent inventors located in

24

California). Thus, either forum would offer some conveniences and inconveniences to both the

25

parties and witnesses. “[I]t is not appropriate to transfer a case on convenience grounds when the

26

effect would be simply to shift the inconvenience from one party to another, especially when the

27

plaintiff’s choice of forum has been made in good faith rather than as a matter of forum shopping.”

28

Plascencia v. Lending 1st Mortg., No. C 07-4485 CW, 2008 WL 1902698, at *9 (N.D. Cal. Apr. 28,

18

1

2008) (citing STX, Inc. v. Trik Stik, Inc., 708 F. Supp. 1551, 1556 (N.D. Cal.1988); Decker Coal,

2

805 F.2d at 843); see also Van Dusen v. Barrack, 376 U.S. 612, 646 (1964) (“Section 1404(a)

3

provides for transfer to a more convenient forum, not to a forum likely to prove equally convenient

4

or inconvenient.”). In addition, “[i]n patent infringement cases, the bulk of the relevant evidence

5

usually comes from the accused infringer,” in this case Plaintiffs. Genentech, 566 F.3d 1338 at

6

1345. Plaintiffs’ Nook-related documents are largely located here. Gilbert Decl. ¶ 4.

7

Beyond the location of witnesses and evidence, there is no indication of any difference

22-23 (conceding these factors are neutral). Despite Defendants’ claims to the contrary, there is no

10

difference in the ability of each forum to consolidate claims.3 Moreover, both fora arguably have an

11
For the Northern District of California

between the forums with respect to familiarity with the law or degree of congestion. See Mot. 1 at

9

United States District Court

8

interest in this suit, as parties are located within both districts. Thus, the Section 1404 factors do not

12

clearly weigh in favor of rejecting Plaintiffs’ choice of forum.

13

Accordingly, the Court determines that application of the first-to-file rule is appropriate in

14

this instance, and because this action is the first-filed, the Court DENIES Defendants’ motion to

15

dismiss. Because the considerations that illuminate a motion to transfer analysis are the same as

16

those that factor into the Court’s discretion with respect to convenience under the first-filed rule, see

17

Heartland Payment Systems, 2010 WL 1662478 at *4, the Court also DENIES Defendants’ motion

18

to transfer.

19

///

20

///

21

///

22

///

23

///

24

///

25
3

26
27
28

Defendants cite Pacesetter for the proposition that the first-filed rule need not be heeded
where that suit does not include the “major contestants” that are present in the second suit. See
Reply 1 at 8; Pacesetter, 678 F.2d at 96. However, here, Plaintiffs’ amended complaint includes all
relevant parties and claims. In addition, in Kerotest, the parties included in the second action could
not be joined in the first-filed action. See Kerotest Manufacturing Co. v. C-O-Two Fire Equipment
Co., 342 U.S. 180, 185-86 (1952). That is not the case here.

19

1

For the foregoing reasons, the Court DENIES Defendants’ motions to dismiss or transfer.

2

The Court also DENIES as moot Defendants’ motion for leave to file a supplemental

3
4

declaration. Docket No. 60.
This order disposes of Docket Nos. 21, 45, and 60.

5
6

IT IS SO ORDERED.

7
8

Dated: October 18, 2011

9

_________________________
EDWARD M. CHEN
United States District Judge

11
For the Northern District of California

United States District Court

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