Hybrid Audio, LLC v. ASUS Computer International, Inc. et al

Filing 141

ORDER RE SUMMARY JUDGMENT. Signed by Judge James Donato on 7/7/2022. (jdlc3, COURT STAFF) (Filed on 7/7/2022)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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HYBRID AUDIO, LLC,

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Plaintiff,

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ORDER RE SUMMARY JUDGMENT

v.

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United States District Court
Northern District of California

Case No. 3:17-cv-05947-JD

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ASUS COMPUTER INTERNATIONAL
INC, et al.,

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Defendants.

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Defendant Asus Computer International, Inc. (Asus) asks for summary judgment against

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Hybrid Audio, LLC (Hybrid) on the ground that Asus had a sublicense to U.S. Reissue Patent No.

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RE40,281 (the ’281) patent. Dkt. No. 129 (redacted motion); Dkt. No. 104-3 (unredacted

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motion)1; Dkt. No. 1-2 (patent).

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Asus presents the license defense as a straightforward matter of contract interpretation, but

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the question is more complicated than that. The parties agree that an exceptions clause in the

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license states that Asus is not deemed to be a licensee if Hybrid alleges infringement claims based

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solely on the Android operating system. See Dkt. No. 104-3 at 8 (Asus brief and exhibits); Dkt.

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No. 1093-3 at ECF 15 (Hybrid brief). As a result, there isn’t much in the way of contract

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interpretation for the Court to do.

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The real issue is whether the exception applies in light of Asus’s product implementations.

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Hybrid says it is suing solely for infringement of the Android operating system. See Dkt. No. 109-

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3 at ECF 12-13. Asus says that because its use of the Android software necessarily entails

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Although the Court wholeheartedly embraces the principle that the business of the federal courts
is presumptively conducted in the open, see In re Google Play Store Antitrust Litig., 556 F. Supp.
3d 1106, 1107 (N.D. Cal. 2021), it granted sealing motions for the briefs because of the highly
sensitive contracts. Dkt. No. 123. The citations throughout are to the sealed briefs.

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implementation on hardware, it is not possible for Hybrid to allege an infringement claim without

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implicating the hardware. Dkt. No. 104-3 at ECF 23.

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These are questions well outside the interpretation of a contract. Claim construction and

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other factual proceedings will be needed to determine whether an Android-only claim is viable,

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and if so, whether Asus may be entitled to a license defense. Consequently, summary judgment

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on the license defense is denied, without prejudice to renewal as developments permit.

United States District Court
Northern District of California

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To set the stage for further consideration of the issue as the record may warrant, here are

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the salient and undisputed facts about the contract. Hybrid licensed the ’281 patent, among others,

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to RPX Corp. on May 17, 2017. See Dkt. No. 104-3 at ECF 46. Section 1.2(a) of the license gave

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RPX the right to grant sublicenses. Id. at ECF 36-37. The license also granted RPX the right to

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release sublicensees “from all claims for damages for past, present and future infringement of the

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Patents.” Id. at ECF 37. The license is governed by California law.

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A “Licensed Product and Service” is defined in the license as “any past, present or future

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product, service, software, technology, or material . . . made, have made, used, purchased,

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provided, hosted, sold, leased, licensed, distributed, transmitted, exported, imported, or offered for

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sale, lease, or import by or on behalf of an RPX Licensee or an RPX Affiliate . . . of which

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product, service, software, technology, or material alone or in combination with other products,

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software, technology, materials and services would result in infringement (direct, indirect, or

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otherwise) of one or more Patents . . . . Licensed Product and Service will include any Combined

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Licensed Product and Service.” Id. at ECF 34. “Combined Licensed Product and Service” is

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defined as “any past, present, or future combination or use, whether by an RPX Licensee, or a

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third party, of a Licensed Product and Service with any other product, service, technology, or

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material, only if a portion of such Licensed Product and Service provided by or on behalf of an

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RPX Licensee or an RPX Licensee Affiliate satisfies, in whole, or in part, a material element or

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step of a claim in any Patent.” Id.

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An exceptions clause in the license states that, “[n]otwithstanding anything to the contrary

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in this Agreement, the license rights granted under this Agreement shall not apply to the sale of

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any device (i) by an Entity that is not an RPX Licensee and (ii) that is sold solely under such
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Entity’s brand name, provided that Licensor does not allege that any Licensed Product and

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Service, other than the Android operating system, satisfies, in whole or in part, a material element

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or step of a claim in any Patent.” Id. at ECF 38.

United States District Court
Northern District of California

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Asus says that it is a beneficiary of the RPX license by virtue of its dealings with Google.

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Google uses the ’281 patent in its Android operating system pursuant to a sublicense from RPX

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that it obtained in February 2018. Id. at ECF 76, 84. Google provides Android to Asus, and many

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other companies, for use in desktops, laptops, tablets, and similar devices. Asus asserts that it is a

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customer of Google within Section 1.2(c) of the contract, evidenced by Goolge’s provision to

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Asus of a letter between RPX and Google about the RPX license, which authorized Google to

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share the letter with Google’s customers. Id. at ECF 77. Section 1.2(c) of the RPX license gives

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Google the right, as an RPX Licensee, to sublicense the ’281 patent to its customers. Id. at ECF

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38. All of the accused Asus products incorporate Android, and so, Hybrid says, practice the ’281

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patent. Dkt. No. 1 at ¶ 33.

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Under the plain language of the RPX license, three requirements must be met for Section

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1.2(d) to apply and preclude the grant of a sublicense for a given device: (1) the device is sold by

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an entity that is not an RPX Licensee, (2) the device is sold solely under that entity’s brand name,

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and (3) Hybrid alleges only that the Android operating system in the device, and no other

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components, satisfy a material element of the ’281 patent. Id. If Hybrid alleges that anything

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more than the Android operating system in a Licensed Product or Service infringes the patent,

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then Section 1.2(d) does not apply and Asus would have a valid license to the ’281 patent. Asus

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agrees that it is not an RPX Licensee, and that it sells the accused products solely under its own

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brand name. Dkt. No. 104-3 at ECF 22-23.

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Consequently, the parties’ dispute is whether Hybrid alleges that a licensed product, other

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than just the Android operating system, infringes the ’281 patent. Asus contends that all of its

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products are Combined License Products and Services as defined in the license. Dkt. No. 104-3 at

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ECF 13. In addition, because the definition of Licensed Product and Service states that “Licensed

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Product and Service will include any Combined Licensed Product and Service,” Id. at ECF 38,

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Asus says its devices are also Licensed Products and Services. Id. at ECF 13. Asus adds that its
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devices consist of hardware combined with Android software, and so Hybrid is necessarily

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accusing it of infringement beyond use of Android.
Hybrid says not so, and that it has sued Asus only for use of Android itself, irrespective of

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hardware. Dkt. No. 109-3 at ECF 12-13. Section 1.2(d) applies if Hybrid accuses solely the

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Android operating system of infringement. Dkt. No. 104-3. at ECF 38. Because Hybrid says that

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it alleges only Android in the Asus products infringes the ’281 patent, Hybrid contends that no

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license exists for Asus’s products.
That is the stopping point for the summary judgment motion. From this point on, the

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United States District Court
Northern District of California

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question is one of facts and evidence about Asus’s implementation of Android. It bears noting

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Asus did not present in its motion any evidence indicating that Hybrid’s infringement claims are

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directed at anything other than the use of Android. Asus itself cited a letter from Hybrid, which

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states that “Hybrid Audio is not alleging that anything other than the Android operating system

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satisfies a material element or step in the asserted claims of the ’281 patent.” Dkt. No. 104-3. at

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ECF 84. If Asus would like the Court to consider the license defense down the line, it should be

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prepared to present evidence supporting its hardware implementation claim. For its part, Hybrid is

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now bound by the representation that it accuses only the use of Android as infringing the ’281

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patent.

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IT IS SO ORDERED.
Dated: July 7, 2022

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JAMES DONATO
United States District Judge

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