Sonus Networks, Inc. v. Inventergy, Inc. et al

Filing 69

ORDER by Judge Edward M. Chen Denying Defendants' Motion to Dismiss and Anti-SLAPP Motion to Strike 57 58 59 . (emcsec, COURT STAFF) (Filed on 7/27/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SONUS NETWORKS, INC.,

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Plaintiff,
v.

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For the Northern District of California

United States District Court

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No. C-15-0322 EMC

INVENTERGY, INC., et al.,

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ORDER DENYING DEFENDANTS’
MOTION TO DISMISS AND ANTISLAPP MOTION TO STRIKE

Defendants.
___________________________________/

(Docket Nos. 57-59)
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Pending before the Court are two motions brought by Defendants Inventergy. In their first

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motion, Inventergy seeks dismissal of Counts One through Seven (Non-Infringement Declaratory

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Judgment Claims) of the operative complaint under Rule 12(b)(1) on the ground that the Court lacks

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subject matter jurisdiction over these claims because no “actual controversy” existed at the time

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Sonus filed this action. See Docket No. 57-4 at 1. Inventergy also seeks dismissal of Counts Eight

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and Nine (UCL and Civil Rico) under the Noerr-Pennington doctrine, and, alternatively, for failure

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to state a claim. Id. at 15-29. Finally, Defendants ask the Court to dismiss Count Ten (Breach of

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Contract) for failure to state a claim. Alternatively, Inventergy requests that this Court transfer these

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claims to the District of Massachusetts, where Defendants later filed an infringement action against

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Sonus. Id. at 32. In a separate motion, Inventergy asks this Court to strike Sonus’s UCL claim

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pursuant to California’s anti-SLAPP statute, and seeks an award of attorneys’ fees for prosecuting its

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anti-SLAPP motion. See Docket No. 58. For the reasons stated on the hearing on this matter, and

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further for the reasons summarized and explained below, the Court DENIES Inventergy’s motions

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in their entirety.

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All that a declaratory judgment plaintiff must do to show an “actual controversy” (and

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thereby, subject matter jurisdiction) is prove that the facts alleged, “‘under all the circumstances,

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show that there is a substantial controversy, between parties having adverse legal interests, of

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sufficient immediacy and reality to warrant the issuance of a declaratory judgment.’” MedImmune,

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Inc. v. Genentech, 549 U.S. 118, 127 (2007); see also ActiveVideo Networks, Inc. v. Trans Video

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Electronics, Ltd., 975 F. Supp. 2d 1083, 1087 (N.D. Cal. 2013) (listing thirteen factors for the Court

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to consider in evaluating declaratory judgment jurisdiction). Nearly all thirteen ActiveVideo factors

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demonstrate that there was an “actual controversy” between the parties in this case on the day this

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suit was filed. Most importantly, the first factor tilts heavily in favor of Sonus because Inventergy
repeatedly accused with specificity Sonus of patent infringement. See, e.g., Snider Decl., Ex. 2

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For the Northern District of California

United States District Court

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(providing a detailed “summary,” broken out patent-by-patent, to Sonus’s General Counsel

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“regarding the Sonus products’ infringement of the Inventergy intellectual property”).1 There is

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voluminous correspondence between the parties related to Inventergy’s claims of infringement and

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Inventergy’s ultimate attempts to impose a time frame for resolution. Shortly after the instant suit

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seeking declaratory relief was filed, Inventergy sued Sonus claiming patent infringement.

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Inventergy’s Rule 12(b)(1) motion is denied. Inventergy’s request in the alternative to

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transfer this case to the District of Massachusetts is also denied. This is the first-filed action,

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Defendants were sued in their home district, and the 28 U.S.C. § 1404(a) factors do not favor

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transfer. See Barnes & Noble, Inc. v. LSI Corp., 823 F. Supp. 2d 980, 986 (N.D. Cal. 2011).

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Sonus has adequately pleaded viable RICO and UCL claims for the purposes of surviving

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Inventergy’s motion to dismiss. Inventergy’s argument that these claims are nevertheless barred by

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the Noerr-Pennington doctrine at this juncture is incorrect, because Sonus has sufficiently pleaded

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Inventergy has made a factual attack on jurisdiction, arguing that the allegations in Sonus’s
complaint regarding the course of licensing negotiations between the parties are inaccurate. “In
resolving a factual attack on jurisdiction, the district court may review evidence beyond the
complaint without converting the motion to dismiss into a motion for summary judgment.” Safe Air
for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). The “court need not presume the
truthfulness” of the allegations contained in the complaint. See id. (citation omitted). Here, the
Court has not presumed the truth of Sonus’s allegations for the purpose of the Rule 12(b)(1) motion,
and instead accepts Inventergy’s version of events as true. Even as Inventergy tells it, there was an
actual controversy between the parties at the time this case was filed.

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that Inventergy’s pre-suit infringement allegations were both objectively and subjectively meritless,

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and thus a “sham.” See, e.g., SAC at ¶ 141 (pleading that Inventergy “alleged infringement of

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certain of its patents without an objective basis”); see also SAC at ¶¶ 2, 4, 31, 132. The Ninth

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Circuit has held that “[w]hether something is a genuine effort to influence government action, or a

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mere sham [for Noerr-Pennington purposes], is a question of fact.” Clipper Exxpress v. Rocky

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Mountain Motor Tariff Bureau, Inc., 690 F.2d 1240, 1253 (9th Cir. 1982). Thus, courts rarely award

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Noerr-Pennington immunity at the motion to dismiss stage, where the Court must accept as true the

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non-moving party’s well-pleaded allegations. See, e.g., Netflix, Inc. v. Blockbuster, Inc., No. C06-

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02361 WHA, 2006 WL 2458717, at *7-8 (N.D. Cal. Aug. 22, 2006) (denying 12(b)(6) motion
brought pursuant to Noerr-Pennington because “[i]f the above allegations [about objective

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For the Northern District of California

United States District Court

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baselessness] are proven true, plaintiff may demonstrate the requisite abuse . . . to succeed on a

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sham-litigation claim”); see also Hoffman-La Roche Inc. v. Genpharm Inc., 50 F. Supp. 2d 367, 380

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(D.N.J. 1999). And because Inventergy’s entire anti-SLAPP motion is predicated on prevailing on

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the Noerr-Pennington issue, that motion must be denied as well. See Rusheen v. Cohen, 37 Cal. 4th

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1048, 1056 (2006).

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Finally, the Court concludes that Sonus has adequately pleaded breach of contract. Sonus

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has alleged all four necessary elements of a contract claim, see, e.g., Armstrong Petroleum Corp. v.

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Tri-Valley Oil and Gas Co., 116 Cal. App. 4th 1375, 1390 n.6 (2004), and further alleged facts

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which indicate that Sonus is a third-party beneficiary of the contracts allegedly breached. See SAC

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at ¶¶ 152-55. Sonus’s breach of contract allegations are not inconsistent with Sonus’s claims that

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Inventergy’s infringement allegations are a sham – according to Sonus, Inventergy breached its

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contracts by, among other things, not offering a license to its patents on RAND terms at the outset of

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negotiations. Whether Sonus actually infringes the patents, and thus would need to purchase a

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license (offered at any price) is a discrete separate matter. Sonus’s complaint adequately alleges that

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had Inventergy offered RAND licenses up front, as contractually required, Sonus may well have

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simply taken an (allegedly) unnecessary license to avoid the expense of further negotiations and

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eventual litigation.

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Inventergy’s motion to file under seal is also denied. Docket No. 57. The documents shall
be filed on the public docket within five (5) days of the date of this Order.
This order disposes of Docket Nos. 57, 58, and 59.

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IT IS SO ORDERED.

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Dated: July 27, 2015

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_________________________
EDWARD M. CHEN
United States District Judge

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For the Northern District of California

United States District Court

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