MLC Intellectual Property, LLC v. Micron Technology, Inc. et al

Filing 82

ORDER by Judge Edward M. Chen Granting in Part and Denying in Part 33 38 39 Micron, Micron Semiconductor, and Micron Consumer's Motions to Dismiss; and Finding 64 IM Flash's Motion to Dismiss Moot. (emcsec, COURT STAFF) (Filed on 10/8/2019)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MLC INTELLECTUAL PROPERTY, LLC, Plaintiff, 8 v. 9 MICRON TECHNOLOGY, INC., et al., 11 United States District Court Northern District of California 10 Defendants. Case No. 19-cv-03345-EMC ORDER GRANTING IN PART AND DENYING IN PART MICRON, MICRON SEMICONDUCTOR, AND MICRON CONSUMER’S MOTIONS TO DISMISS; AND FINDING IM FLASH’S MOTION TO DISMISS MOOT Docket Nos. 33, 38, 39, 64s 12 13 14 The instant case is a patent infringement action. The plaintiff is MLC Intellectual 15 Property, LLC (“MLC”). MLC has sued Micron Technology, Inc. (“Micron”) and nine affiliated 16 entities, the bulk of which appear to be wholly-owned subsidiaries: 17 (1) Micron Consumer Products Group, Inc. (“Micron Consumer”). 18 (2) Micron Semiconductor Products, Inc. (“Micron Semiconductor”). 19 (3) IM Flash Technologies (“IM Flash”).1 20 (4) Lexar Media, Inc. (“Lexar”). 21 (5) Micron Semiconductor Asia Pte. Ltd. (“Micron Singapore”). 22 (6) Micron Europe, Ltd. (“Micron Europe”). 23 (7) Micron Japan, Ltd. (“Micron Japan”). 24 (8) Micron Memory Taiwan Co., Ltd. (“Micron Taiwan”). 25 26 27 28 1 IM Flash does not appear to be a wholly-owned subsidiary. See FAC ¶ 6 (alleging that IM Flash “is a joint venture formed in 2006 with Intel Technologies . . . to manufacture NAND Flash memory products pursuant to which [Micron] owned 51% of [IM Flash]”). (9) Micron Semiconductor (Xi’an) Co., Ltd. (“Micron China”).2 1 2 The first four subsidiaries are based in the United States. The remaining five subsidiaries are 3 foreign companies. Micron and all subsidiaries shall hereinafter be referred to as the “Micron 4 Defendants.” According to MLC, the Micron Defendants infringe, directly and/or indirectly, the 5 ‘571 patent. Currently pending before the Court are three motions to dismiss. The motions have been 6 7 filed by: (1) Micron; (2) Micron Semiconductor; and (3) Micron Consumer. These three 8 defendants shall hereinafter be referred to as the “Moving Defendants.” Micron Semiconductor 9 and Micron Consumer shall hereinafter be collectively referred to as the “Micron Subs.” Having considered the parties’ briefs and accompanying submissions, as well as the oral 10 United States District Court Northern District of California 11 argument of counsel, the Court hereby GRANTS in part and DENIES in part the motions to 12 dismiss. I. 13 FACTUAL & PROCEDURAL BACKGROUND As alleged in the operative first amended complaint (“FAC”), MLC is the owner of the 14 15 ‘571 patent. The patent is titled “Electronically alterable non-volatile memo with N-Bits per cell.” 16 The invention claimed in the ‘571 patent 17 generally relates to a multi-level electrically alterable non-volatile memory device that includes memory cells with more than two predetermined memory states. The device can be programmed, in accordance with input information, to one of a predetermined number of memory states. Each memory state has associated with it a reference voltage. A reference voltage can be selected based upon the input information (i.e., desired memory state), and the reference voltage can be compared to a voltage of the memory cell. A control signal is generated that indicates whether the cell has been programmed to the desired memory state. A programming signal can be controlled by the status of the control signal. Controlling the application of the programming signal is based upon the selected reference signal. 18 19 20 21 22 23 24 FAC ¶ 22. MLC has sued both Micron and a number of affiliated entities for infringement of the ‘571 25 26 27 28 It is not clear from the operative first amended complaint (“FAC”) whether MLC also intended to sue one additional subsidiary, namely, Micron Semiconductor B.V. The company is named in the caption but is not otherwise mentioned in the pleading. 2 2 1 patent. 2 Prior to filing the instant action, MLC filed a suit for infringement of the same ‘571 patent 3 against Micron only. This action – hereinafter referred to as MLC I – is still pending before Judge 4 Illston. See generally MLC I, No. C-14-3567 SI (N.D. Cal.). MLC I has been heavily litigated. 5 Judge Illston has conducted several claim construction hearings as well as hearings on several 6 summary judgment motions. During MLC I, MLC tried to expand the scope of the litigation in at 7 least two ways: (1) to add nine Micron subsidiaries as defendants and (2) to add new accused 8 products based on Design IDs beyond the 13 that were undisputedly at issue in MLC I. Judge 9 Illston rejected both of MLC’s attempts. In particular, Judge Illston made the following rulings that are relevant to the instant case. 11 United States District Court Northern District of California 10 (1) Order on MLC’s motion to amend. In November 2018, shortly before the close 12 of fact discovery, MLC moved for leave to file a first amended complaint. MLC wanted to add 13 Micron’s subsidiaries to MLC I. See Docket No. 233 (motion). All of the subsidiaries were the 14 same as those in the instant case, except MLC did not mention Micron Taiwan and instead 15 referenced Micron Semiconductor B.V. See MLC I (Docket No. 233) (motion). As noted above, 16 it is not clear whether MLC intended to implicate Micron Semiconductor B.V. in the instant 17 action. See note 2, supra. 18 In January 2019, Judge Illston denied MLC’s motion to add Micron’s subsidiaries to MLC 19 I. She held that MLC’s proposed “amendment is not appropriate because [it] would cause Micron 20 undue prejudice and would create undue delay in this case”; in particular, “[t]he Court would have 21 to reopen fact discovery and set an entirely new pretrial schedule” if it were to permit the 22 amendment, plus the new defendants “would almost certainly file motions challenging the 23 pleadings and jurisdiction and venue, particularly since five of the proposed defendants are foreign 24 entities” and further “would likely seek to revisit claim construction and file additional summary 25 judgment motions.” MLC I (Docket No. 288) (Order at 2). Judge Illston added that, “[i]f MLC 26 wishes to pursue claims against the subsidiaries (which MLC has previously asserted was 27 unnecessary because MLC contends that Micron is liable for all allegedly infringing sales), MLC 28 may do so in a separate lawsuit or lawsuits.” MLC I (Docket No. 288) (Order at 2-3). 3 (2) 1 Order on MLC’s motion to compel discovery. In December 2018, after the close 2 of fact discovery, MLC filed a motion to compel discovery in MLC I. The motion was related to 3 Design IDs. Although MLC had claimed infringement based on specific Micron products, it 4 learned through discovery that Micron essentially “categorized” its products by Design ID. Thus, 5 a given Design ID would cover multiple products. In its motion to compel, MLC asked Judge Illston to compel Micron to provide 6 7 information for “all Design IDs for MLC/TLC NAND Flash devices.” MLC I (Docket No. 258) 8 (Mot. at 1) (emphasis in original). According to MLC, the accused products in the case “were – 9 and always have been – all of Micron’s MLC and TLC NAND Flash products.” MLC I (Docket No. 258) (Mot. at 3) (emphasis in original), and, although Micron had previously identified 13 11 United States District Court Northern District of California 10 Design IDs to cover the accused products, it now appeared that there were some additional Design 12 IDs. 13 Micron opposed the motion to compel, arguing that MLC had not, in fact, accused “all 14 MLC/TLC NAND Flash products” and that the only relevant products were those specifically 15 identified in MLC’s infringement contentions, all of which were covered by the 13 Design IDs. 16 MLC I (Docket No. 274-3) (Opp’n at 1) (arguing that “MLC’s repeated attempt to use motions 17 practice to obtain discovery on unaccused products (especially after the close of fact discovery) is 18 a waste of the Court’s and the parties’ resources[;] [n]ow is not the time to relitigate this case anew 19 based on new discovery requested by MLC for products it did not accuse of infringement”). 20 Micron also argued that MLC had not acted diligently to identify or accuse additional Micron 21 products. See MLC I (Docket No. 274-3) (Opp’n at 14). 22 In January 2019, Judge Illston denied MLC’s motion to compel discovery. She noted that 23 the gist of MLC’s argument was that Micron had “violated its discovery obligations by 24 withholding discovery regarding MLC/TLC products that correspond to other Design IDs aside 25 from the 13 Design IDs already produced.” MLC I (Docket No. 291) (Order at 2). She also took 26 note of Micron’s argument in response, i.e., that “MLC [was] improperly seeking discovery on 27 products that it did not accuse in the complaint or in its infringement contentions.” MLC I 28 (Docket No. 291) (Order at 2). Judge Illston ultimately agreed with Micron, holding that Micron 4 1 had “complied with its discovery obligations by producing discovery relevant to the Accused 2 Devices.” MLC I (Docket No. 291) (“Order at 3-4). She noted, inter alia, that MLC’s complaint 3 and infringement contentions never accused “‘all’ of Micron’s MLC/TLC NAND flash products” 4 of infringement; also, MLC was aware that the accused products were only part of a “larger 5 universe of Micron’s MLC and TLC NAND flash products,” especially as Micron had repeatedly 6 objected that MLC was asking for discovery about products not accused of infringement. MLC I 7 (Docket No. 291) (Order at 3). Thus, Judge Illston effectively held that the scope of the litigation 8 would, at most, relate to Micron products covered by the 13 Design IDs. (She deferred on ruling 9 whether MLC could seek damages for Micron products not specifically identified in MLC’s infringement contentions but still covered by the 13 Design IDs. See MLC I (Docket No. 291) 11 United States District Court Northern District of California 10 (Order at 3) (“The Court leaves for another day whether MLC may seek damages for the broader 12 group of products covered by the 13 Design IDs.”).) 13 (3) Order on Micron’s motion in limine. In April 2019, Micron filed a motion in 14 limine. In the motion, Micron asked Judge Illston “to preclude MLC from proffering [evidence or 15 argument] regarding the non-party [Micron] subsidiaries and affiliates, their extraterritorial sales 16 [and from] contest[ing] Micron’s determination of what constitutes a foreign sale.” MLC I 17 (Docket No. 445) (Mot. at 1). Micron took note that, previously, Judge Illston had denied MLC’s 18 motion to add the Micron subsidiaries as defendants to the lawsuit: “After denial of its motion for 19 leave to amend, however, MLC apparently chose not to file a separate case, but rather to back door 20 its damages claims against non-party subs into this case without meeting the legal requirements to 21 justify doing so.” MLC I (Docket No. 445) (Mot. at 2). According to Micron, “MLC has neither 22 pleaded nor provided any contentions that it is entitled to damages based on Micron’s vicarious 23 liability for the Non-Parties.” MLC I (Docket No. 445) (Mot. at 4). 24 In June 2019, Judge Illston granted Micron’s motion in limine. She noted, inter alia, that 25 “MLC has not demonstrated a legal or factual basis for seeking to hold Micron liable for non-party 26 sales.” MLC I (Docket No. 596) (Order at 2). “In order to hold Micron liable for the sales of non- 27 parties, MLC needs to piece the corporate veil,” but “MLC’s evidence of alter ego largely consists 28 of Micron’s SEC filings in which Micron reports consolidated financials and states, inter alia, that 5 1 it guarantees certain debts of its subsidiaries. The Court finds that as a matter of law . . . this 2 evidence, on its own, is insufficient to raise a triable issue of fact as to alter ego.” MLC I (Docket 3 No. 596) (Order at 3). II. 4 5 A. DISCUSSION Claim Splitting The Moving Defendants argue first for dismissal based on the doctrine of claim splitting. 7 Claim splitting is, in effect, a “sub-species” of res judicata. Icon-IP PTY Ltd. v. Specialized Bike 8 Components, Inc., No. 13-cv-03677-JST, 2013 U.S. Dist. LEXIS 189290, at *6 (N.D. Cal. Oct. 9 22, 2013). The doctrine provides that a party may not split a cause of action into separate grounds 10 of recovery and raise the separate grounds in successive lawsuits. In re PersonalWeb Techs., LLC, 11 United States District Court Northern District of California 6 2019 U.S. Dist. LEXIS 56804, at *49 (N.D. Cal. Mar. 13, 2019). In other words, “[p]laintiffs 12 generally have no right to maintain two separate actions involving the same subject matter at the 13 same time in the same court and against the same defendant.” Adams v. Cal. Dep’t of Health 14 Servs., 487 F.3d 684, 688 (9th Cir. 2007) (internal quotation marks omitted). Claim splitting 15 differs from res judicata in that, unlike res judicata, it does not require that there be a final 16 judgment. See id. at 689 (noting that, in considering whether a second action is duplicative for 17 purposes of claim splitting, a court borrows from the test for res judicata and analyzes “whether, 18 assuming that the first suit were already final, the second suit could be precluded pursuant to claim 19 preclusion”) (emphasis added); see also Rivera v. Am. Fed'n of State, 2017 U.S. Dist. LEXIS 20 110743, at *8-9 (N.D. Cal. July 17, 2017) (noting that a final judgment is not required for claim 21 splitting). “‘A main purpose behind the rule preventing claim splitting is to protect the defendant 22 from being harassed by repetitive actions based on the same claim.’” In re PersonalWeb Techs., 23 2019 U.S. Dist. LEXIS 56804, at *49. 24 According to the Moving Defendants, MLC has engaged in claim splitting because the 25 instant case is essentially duplicative of MLC I. In addressing the Moving Defendants’ argument, 26 the Court addresses first whether there has been claim splitting with respect to Micron and then 27 whether there has been claim splitting with respect to the Micron Subs. 28 6 1 1. Micron 2 As noted above, to determine whether there has been impermissible claim splitting, a court 3 considers “whether the causes of action and relief sought, as well as the parties or privies to the 4 action, are the same.” Adams, 487 F.3d at 689. 5 a. Same Party 6 The same party requirement is easily met with respect to Micron. Micron was the only 7 defendant sued in MLC I and it is a named defendant in the instant case (MLC II) as well. The 8 critical question, therefore, is whether MLC I and II involve the same cause of action (i.e., with 9 respect to Micron). 10 United States District Court Northern District of California 11 b. Same Cause of Action There is no dispute that both MLC I and II concern alleged infringement by Micron of the 12 same ‘571 patent. MLC argues, however, that MLC II is not duplicative of MLC I because the 13 accused products in each case are different: In MLC I, MLC is accusing Micron of infringement 14 based on products covered by 13 specific Design IDs; in contrast, here (MLC II), MLC is asserting 15 that Micron infringes based on a completely different Design ID, i.e., the L94. 16 As the Court stated at the hearing, there are factual disputes related to the L94 products 17 that bar resolution of the claim-splitting issue at this early stage of the litigation. First, according 18 to MLC, the L94 Design ID did not even exist at the at the time it filed its complaint in MLC I 19 back in August 2014, and thus MLC could not have claimed patent infringement based on the L94 20 when it initiated MLC I. MLC asserts that, even though the L94 was released during the pendency 21 of MLC I, it was not thereby obligated to include the L94 as part of MLC I. In support of its 22 position, MLC relies primarily on Aspex Eyewear, Inc. v. Marchon Eyewear, Inc. 672 F.3d 1335, 23 1345 (Fed. Cir. 2012). There, in discussing the related doctrine of res judicata, the Federal Circuit 24 acknowledged that claims that could have been brought are precluded, but added that “claims that 25 could have been brought are claims in existence at the time the original complaint is filed”; 26 “[w]hile a party may seek to pursue claims that accrue during the pendency of a lawsuit, the party 27 is not required to do so, and res judicata will not be applied to such accruing claims if the party 28 elects not to have them included in the action.” Id. at 1345 (internal quotation marks omitted; 7 1 emphasis added). In response, Micron argues that MLC is factually wrong that the L94 did not 2 exist at the time of the complaint. The problem for Micron is that this factual dispute cannot be 3 resolved at the 12(b)(6) phase of proceedings. 4 Second, MLC argues that, even if the L94 Design ID did exist at the time it filed its 5 original complaint in MLC I, it was not required to include the Design ID – or rather products 6 covered by the Design ID – as a part of MLC I because the L94 products are materially different 7 from the products covered by the 13 Design IDs at issue in MLC I. See FAC ¶ 69 (“This suit 8 involves new Micron products that infringe the ‘571 Patent in a new way than those products 9 accused of infringement in [MLC I].”). According to MLC, because the L94 products are materially different from the products at issue in MLC I, the instant case does not involve the same 11 United States District Court Northern District of California 10 cause of action as that pled in MLC I – and thus there is no claim splitting. See, e.g., Icon-IP, 12 2013 U.S. Dist. LEXIS 189290, at *7 (stating that, in the context of patent infringement, there is 13 the same cause of action (for claim splitting purposes) where “‘the accused device in the action 14 before the court is “essentially the same” as the accused device in a prior action between the 15 parties’”); cf. Acumed LLC v. Stryker Corp., 525 F.3d 1319, 1324 (Fed. Cir. 2008) (in addressing 16 res judicata, stating that “[a]ccused devices are ‘essentially the same’ where the differences 17 between them are merely ‘colorable’ or ‘unrelated to the limitations in the claim of the patent’”). 18 Similar to above, Micron challenges MLC’s assertion that the L94 products are materially 19 different. The Court, at this juncture, cannot resolve that factual dispute. Cf., e.g., SV Int'l, Inc. v. 20 Fu Jian Quanyu Indus. Co., 820 F. Supp. 2d 677, 691 (M.D.N.C. 2011) (in discussing res judicata, 21 stating that “whether a particular product is the same or essentially the same as [other products] is 22 a question of fact that cannot be determined at the motion to dismiss phase”). 23 Micron protests that MLC cannot try to bring the L94 into the instant case because, if MLC 24 had acted with diligence, it could have litigated the L94 in MLC I. See Cell Therapeutics, Inc. v. 25 Lash Grp., Inc., 586 F.3d 1204, 1212 (9th Cir. 2010) (“Claim preclusion, often referred to as res 26 judicata, bars any subsequent suit on claims that were raised or could have been raised in a prior 27 action.”); see also Doe v. Allied-Signal, Inc., 985 F.2d 908, 914 (7th Cir. 1993) (“If the plaintiff is 28 unaware of facts when filing a complaint, res judicata will not bar subsequent litigation. However, 8 1 a plaintiff will be precluded from raising these facts later if, by exercising due diligence, he or she 2 could have discovered the relevant information before filing the initial suit.”); Dixon v. United 3 States Postal Serv., No. C 10-4220 DMR, 2011 U.S. Dist. LEXIS 76052, at *13 (N.D. Cal. July 4 14, 2011) (“Res judicata includes claims that ‘should have been raised in earlier litigation.’ The 5 party's actual knowledge of the claims is not required. Rather, what matters is if the party could 6 have determined the issue through ‘diligent discovery.’ A party's own ignorance will only ‘avoid 7 the bar of res judicata’ when that ignorance was caused by the ‘misrepresentation or concealment 8 of the opposing party.’”). Micron contends that MLC could have litigated the L94 in MLC I 9 because, with reasonable diligence, MLC would have learned about products covered by the L94 and thus could have included the products in MLC I (e.g., at the time of its infringement 11 United States District Court Northern District of California 10 contentions). But as noted above, Aspex Eyewear suggests res judicata (and hence claim splitting) 12 13 applies to claims in existence at the time the complaint is filed. Even if the diligence requirement 14 encompasses claims that could have been added at the time of its infringement contentions,3 there 15 are factual disputes as to when the L94 products were first released and whether the L94 products 16 are materially different, or essentially the same, as the products at issue in MLC I. There may also 17 be a factual dispute as to whether MLC would have learned about the L94 in the exercise of 18 reasonable diligence (assuming that the L94 existed as of the time the MLC I complaint was filed). 19 See, e.g., Micron Mot. at 12 (arguing that “information about the L94 MLC NAND flash products 20 was sitting on the Internet for years while MLC litigated the MLC I case” but not providing any 21 evidence in support). Micron also contends that MLC’s lack of diligence is problematic also because MLC was 22 23 24 25 26 27 28 3 Judge Tigar has suggested that, if the patent holder knew about an allegedly infringing product at the time it served its infringement contentions (which are supposed to define the relevant universe of infringing products), but failed to include that product in its infringement contentions, that would establish a lack of diligence on the part of the patent holder and would further indicate no prejudice from application of the claim-splitting rule. See Adobe Sys. v. Wowza Media Sys., LLC, 72 F. Supp. 3d 989, 994 (N.D. Cal. 2014) (Tigar, J.) (noting, that in a prior case, Icon-IP, 2013 U.S. Dist. LEXIS 189290, the court deemed that the plaintiff “had not been diligent in seeking to amend its infringement contentions, as it had been on notice of the additional [allegedly infringing] models from the beginning of the litigation”; because of the lack of diligence, the patent holder “would not be prejudiced by the application of claim [splitting]”). 9 put on notice of the L94 in January 2019 (i.e., when, in MLC I, Micron filed its opposition to 2 MLC’s motion to compel discovery on all Design IDs), but MLC still made no attempt to add the 3 L94 to MLC I when it thereafter moved for leave to amend its infringement contentions. See 4 Micron Mot. at 12; see also MLC I (Docket No. 307) (motion for leave to file first amended 5 infringement contentions). However, by the time MLC moved to amend its infringement 6 contentions (in February 2019), Judge Illston had ruled on MLC’s motion to compel discovery (in 7 January 2019) and made clear that, at most, MLC I would cover the 13 Design IDs that had always 8 been at issue but nothing more. This was confirmed when Judge Illston ruled on the motion to 9 amend infringement contentions, where she allowed MLC to add in more products to the lawsuit 10 because they were all covered by the 13 Design IDs. See Docket No. 344 (Order at 8) (“MLC has 11 United States District Court Northern District of California 1 shown good cause to accuse the additional products that are covered by the 12/13 Design IDs.”). c. 12 13 Summary For the foregoing reasons, the Court must deny Micro’s Rule 12(b)(6) motion as to 14 whether MLC has engaged in improper claim splitting by suing Micron in the instant case for 15 infringement based on the L94 products. 16 2. Micron Subs 17 The Court now turns to MLC’s claim-splitting argument with respect to the Micron Subs. 18 Again, to determine whether there has been impermissible claim splitting, a court considers 19 “whether the causes of action and relief sought, as well as the parties or privies to the action, are 20 the same.” Adams, 487 F.3d at 689. 21 22 a. L94 Design ID In the case at bar (MLC II), MLC has sued the Micron Subs for infringement based on the 23 L94 Design ID and based on the 13 Design IDs at issue in MLC I. To the extent MLC has sued 24 for infringement in MLC II based on the L94 only, there are, as noted above, factual disputes that 25 cannot be resolved at this stage of the proceedings. That alone is a basis to reject the Micron 26 Subs’ claim splitting argument as to the L94, at least at this juncture of the litigation. 27 28 b. 13 Design IDs at Issue in MLC I To the extent MLC has sued for infringement in MLC II based on the 13 Design IDs at 10 1 issue in MLC, there is clearly the same cause of action: The products are not just “essentially the 2 same” – they are exactly the same. The critical question is whether the Micron Subs constitute 3 one of the same parties as in MLC I. Cf. Headwaters Inc. v. United States Forest Serv., 382 F.3d 4 1025, 1030 (9th Cir. 2004) (in discussing res judicata, noting that “‘[p]rivity between parties exists 5 when a party is so identified in interest with a party to former litigation that he represents precisely 6 the same right in respect to the subject matter involved’ [;] ‘[e]ven when the parties are not 7 identical, privity may exist if there is substantial identity between parties, that is, a sufficient 8 commonality of interest”). 9 According to the Micron Subs, because they are in privity with Micron – and Micron was clearly a defendant in MLC I – the same party requirement for claim splitting is satisfied. In 11 United States District Court Northern District of California 10 response, MLC does not dispute that, ordinarily, a wholly-owned subsidiary is deemed in privity 12 with its parent for claim splitting (or at least res judicata) purposes. Cf., e.g., In re Imperial Corp. 13 of Am., 92 F.3d 1503, 1507 (9th Cir. 1996) (in discussing res judicata, rejecting FDIC’s argument 14 that “‘the fact that one entity is a wholly owned subsidiary of another entity is insufficient to 15 establish privity between the two entities for purposes of the defense of claim preclusion’”); 16 Robinson v. Volkswagenwerk AG, 56 F.3d 1268, 1275 (10th Cir. 1995) (in discussing res judicata, 17 noting allegation that parent had “controlling relationship” with subsidiary and stating that “this 18 ‘near alter ego’ relationship would be sufficient to establish ‘privity’ between the two 19 corporations”); see also Sparks Nugget, Inc. v. CIR, 458 F.2d 631, 639 (9th Cir. 1972) (in 20 discussing collateral estoppel, citing approvingly Moore’s Federal Practice for the proposition that 21 “‘the public policy underlying the doctrine of res judicata, as a bar to repetitious litigation, would 22 support a finding of privity between a close corporation and its sole or controlling stockholder’”). 23 Instead, MLC argues that the Micron Subs are judicially estopped from claiming that they are 24 privies with Micron – in particular, because, in MLC I, Micron argued to Judge Illston that the 25 Micron Subs are not alter egos of Micron. 26 MLC’s argument is not convincing. “[The] equitable doctrine is intended to prevent 27 litigants from playing fast and loose with the judicial system by successfully obtaining an 28 advantage in court on one theory, and then switching to an inconsistent theory to gain another 11 1 advantage.” Arvin Kam Constr. Co. v. Envtl. Chem. Corp., No. 16-cv-02643-JD, 2019 U.S. Dist. 2 LEXIS 64282, at *14 (N.D. Cal. Apr. 15, 2019). A court 3 8 generally consider[s] three factors when determining whether to apply the doctrine of judicial estoppel. First, we determine whether "a party's later position [is] 'clearly inconsistent' with its earlier position." New Hampshire v. Maine, 532 U.S. 742, 750 (citations omitted). Second, we inquire whether the party achieved success in the prior proceeding, since "judicial acceptance of an inconsistent position in a later proceeding would create 'the perception that either the first or the second court was misled.'" Id. (citation omitted). Finally, we consider whether the party asserting an inconsistent position would achieve an unfair advantage if not estopped. Id. at 751. 9 USW v. Ret. Income Plan for Hourly-Rated Emples. of ASARCO, Inc., 512 F.3d 555, 563 (9th Cir. 4 5 6 7 10 United States District Court Northern District of California 11 2008). MLC’s judicial estoppel argument founders on the first factor above. Alter ego and privity 12 are two distinct concepts – they are not synonymous. While it may be that an alter ego 13 relationship necessarily establishes privity, see IMP Int'l v. Zibo Zhongshi Green Biotech Co., No. 14 EDCV 14-1339 JGB (DTBx), 2015 U.S. Dist. LEXIS 190451, at *12-13 (C.D. Cal. Mar. 20, 15 2015) (indicating that an alter ego relationship establishes privity for purposes of res judicata); cf. 16 Bates v. Jones, 902 F. Supp. 1080, 1089 (N.D. Cal. 1995) (in discussing res judicata under 17 California law, noting that the doctrine “has been applied against a corporation which was a mere 18 alter ego of an individual party in the first action”), the converse is not necessarily true – i.e., a 19 privity relationship does not always equal an alter ego relationship. See, e.g., Harris Rutsky & Co. 20 Ins. Servs. v. Bell & Clements Ltd., 328 F.3d 1122, 1135 (9th Cir. 2003) (stating that “we know 21 that B&C-London wholly owns B&C, but 100% control through stock ownership does not by 22 itself make a subsidiary the alter ego of the parent”). To pierce the corporate veil under the alter 23 ego doctrine, more must be shown as further discussed below. 24 With respect to any contention that MLC failed to exercise diligence, it is noteworthy that 25 MLC did try to sue the Micron Subs in MLC I, but Judge Illston denied MLC’s motion to add the 26 Micron Subs as defendants – and even indicated that MLC should sue the Micron Subs in a 27 different lawsuit. See MLC I (Docket No. 288) (Order at 2-3). This fact would seem to weigh 28 against application of the claim-splitting doctrine. 12 The Micron Subs protest, however, that Judge Illston might have ruled differently had 1 2 MLC with diligence tried to bring the Micron Subs into MLC I earlier in the litigation (rather than 3 near the close of fact discovery). In response, MLC does not dispute that it generally knew about 4 the Micron Subs and their relationship with Micron during the pendency of MLC I. MLC argues, 5 however, it was not on notice (until late in the litigation in MLC I) that Micron disavowed 6 responsibility for a significant portion of claimed damages on the basis that any damages would be 7 attributable to the Micron Subs rather than Micron itself. Thus, it had no substantial reason to join 8 the Micron Subs. Similar to above, these circumstances present a factual dispute (i.e., regarding Micron’s 9 diligence) that cannot be resolved at the 12(b)(6) phase of proceedings. Resolution may depend in 11 United States District Court Northern District of California 10 part on, e.g., when MLC began to seek discovery on Micron’s financial information and sales data 12 and whether Micron was evasive in responding or otherwise concealed information from MLC. 13 Cf. Doe, 985 F.2d at 914 (7th Cir. 1993) (stating that, “[i]f the plaintiff is unaware of facts when 14 filing a complaint, res judicata will not bar subsequent litigation” but “a plaintiff will be precluded 15 from raising these facts later if, by exercising due diligence, he or she could have discovered the 16 relevant information before filing the initial suit”); Dixon, 2011 U.S. Dist. LEXIS 76052, at *13 17 (N.D. Cal. July 14, 2011) (noting that “[r]es judicata includes claims that ‘should have been raised 18 in earlier litigation’” and “what matters is if the party could have determined the issue through 19 ‘diligent discovery’[;] [a] party's own ignorance will only ‘avoid the bar of res judicata’ when that 20 ignorance was caused by the ‘misrepresentation or concealment of the opposing party’”). c. 21 Summary 22 For the foregoing reasons, the Court must deny the Moving Defendants’ Rule 12(b)(6) 23 motion as to whether MLC has engaged in improper claim splitting by suing the Micron Subs, 24 either for infringement based on the L94 or based on the 13 Design IDs at issue in MLC I. 25 B. 26 Collateral Attack The Moving Defendants argue that, even if the Court cannot decide the claim splitting 27 issue now, they are still entitled to a dismissal because MLC’s lawsuit here represents a collateral 28 attack on two orders issued by Judge Illston in MLC I: (1) the order holding that MLC had failed 13 1 to make a showing that Micron could be held liable for the sales of the Micron Subs, i.e., based on 2 an alter ego theory, see MLC I (Docket No. 596) (order), and (2) the order limiting the scope of the 3 accused products to those products based on the 13 Design IDs (and not other Design IDs, which 4 would implicitly include the L94). See MLC I (Docket No. 291) (order). The argument is without merit. A collateral attack is a concern only where there has been 5 a final judgment in the first lawsuit. See, e.g., Snell v. Cleveland, Inc., 316 F.3d 822, 827 (9th Cir. 7 2002) (stating that “‘[t]he social interest in expedition and finality in litigation’ weighs strongly 8 against collateral attacks on final judgments”); Rein v. Providian Fin. Corp., 270 F.3d 895, 902 9 (9th Cir. 2001) (stating that “[t]he collateral attack doctrine precludes litigants from collaterally 10 attacking the judgments of other courts”). Here, there is no dispute that MLC I is still a pending 11 United States District Court Northern District of California 6 case without any final judgment. Therefore, the Moving Defendants cannot invoke any collateral 12 attack doctrine as a basis for dismissal. 13 C. Damages 14 The Moving Defendants argue that, even if the Court does not dismiss the claims against 15 them based on the claim-splitting and/or collateral attack doctrines, dismissal is still appropriate 16 pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim for relief under the 17 Patent Act. Ashcroft v. Iqbal, 556 U.S. 662 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544 18 (2007). 19 20 21 22 23 24 25 26 The Patent Act contains the following provision related to damages. Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them . . . may give notice to the public that the same is patented, either by fixing thereon the word “patent” or the abbreviation “pat.”, together with the number of the patent . . . , or when, from the character of the article, this can not be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice. In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice. 27 35 U.S.C. § 287(a). In essence, “[s]ection 287(a) provides that absent marking, a patentee may not 28 recover damages without proof that ‘the infringer was notified of the infringement.’” Amsted 14 1 Indus. v. Buckeye Steel Castings Co., 24 F.3d 178, 186 (Fed. Cir. 1994); see also Gart v. Logitech, 2 Inc., 254 F.3d 1334, 1345 (Fed. Cir. 2001) (noting that marking essentially constitutes 3 constructive notice). 4 In the case at bar, there appears to be no dispute that the ‘571 patent expired back on June 5 9, 2015. See Micron Reply at 11 (identifying patent expiration date). Thus, in order for MLC to 6 obtain damages, it must show that there was either (1) marking prior to June 9, 2015, or (2) notice 7 of infringement prior to June 9, 2015. According to the Moving Defendants, MLC has failed to 8 adequately allege either marking or notice, and therefore, the claims for damages must be 9 dismissed. 1. 11 United States District Court Northern District of California 10 Marking According to MLC, the marking requirement in § 287 was never triggered because, as 12 alleged in the FAC, MLC itself never “made or sold products covered by the ‘571 Patent.” FAC ¶ 13 68. MLC also alleges that it “is unaware of any evidence that any licensee has sold products after 14 the date of their respective licenses that required marking during the damages period [i.e., prior to 15 June 9, 2015].” FAC ¶ 68. 16 The moving defendants do not challenge MLC’s allegation that MLC itself never made or 17 sold products covered by the ‘571 patent. Instead, they contend that MLC’s claim that its 18 licensees never made or sold products requiring marking during the damages period cannot be 19 given any credit – even at the 12(b)(6) phase of proceeding. If MLC’s licensees sold products that 20 would have infringed (absent the license) the ‘571 Patent during the damage period, it must be 21 marked. 22 As discussed at the hearing on the motions to dismiss, there is a factual dispute as to 23 whether MLC’s licensees, such as Hynix or Toshiba, sold products that should have been marked. 24 While there seems to be no dispute that Hynix or Toshiba entered into license agreements with 25 MLC, those license agreements apparently covered a portfolio of patents, not just the patent at 26 issue (i.e., the ‘571 patent); thus, there is a factual question whether Hynix or Toshiba made 27 products that would have infringed the ‘571 patent specifically absent the licenses. 28 At the hearing, the Moving Defendants asserted that MLC should be judicially estopped 15 1 from asserting that its licensees were not required to mark, because in MLC I, MLC took the 2 position that its licensees’ products did infringe. See also Micron Reply at 11 (arguing that MLC 3 was taking a position here “flatly inconsistent with its representations made to the Court and to the 4 parties” in MLC I). But the Court declines to address the judicial estoppel argument – at least at 5 this particular juncture – given that the Moving Defendants did not clearly and unequivocally 6 make the argument in their papers.4 Moreover, at the hearing, they did not address all of the 7 elements of judicial estoppel. See, e.g., Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 8 783 (9th Cir. 2001) (“This court has restricted the application of judicial estoppel to cases where 9 the court relied on, or ‘accepted,’ the party's previous inconsistent position.”); Interstate Fire & Cas. Co. v. Underwriters at Lloyd's, London, 139 F.3d 1234, 1239 (9th Cir. 1998) (“Judicial 11 United States District Court Northern District of California 10 estoppel precludes a party from taking inconsistent positions in the same litigation. A majority of 12 courts apply judicial estoppel only if the court has relied on the party's previously inconsistent 13 statement, and we have recently adopted that rule.”). The Court notes with concern that its expert 14 did make a damages calculation in MLC I assuming that the licensees’ products did infringe. The 15 Court admonishes MLC it must have a Rule 11, good-faith basis for its belief that its licensees did 16 not need to mark their products. 17 2. Notice of Infringement 18 According to MLC, even if MLC or its licensees did not mark (either because they were 19 not required to or because they were required to but failed to do so), that still is not a bar to 20 damages because MLC gave notice of infringement to both Micron and the Micron Subs and they 21 continued to infringe thereafter. The Court addresses notice to Micron and to the Micron Subs 22 separately. a. 23 Notice to Micron 24 With respect to Micron, MLC has alleged infringement of the ‘571 patent based on 25 products covered by the L94 Design ID only. In its papers, Micron notes that, per the FAC, MLC 26 did not even learn of the L94 until after discovery had closed in MLC I. See FAC ¶ 70 (“The New 27 28 4 The Moving Defendants addressed judicial estoppel only in the context of the claim-splitting doctrine; they never addressed judicial estoppel in the context of the marking issue. 16 1 Micron Products were discovered after the close of discovery in [MLC I] . . . .”). “Fact discovery 2 closed on December 14, 2018.” MLC I (Docket No. 288) (Order at 2). Given this timing, Micron 3 contends that it is impossible for MLC to have given notice to Micron that the L94 infringed 4 before the ‘571 patent expired on June 9, 2015. In response, MLC argues that when it learned about the L94 is not dispositive. According 5 to MLC, where a patentee gives notice to a defendant that a particular product or products 7 infringe, the defendant is deemed to have been given notice that other similar products also 8 infringe. See Funai Elec. Co., Ltd. v. Daewoo Electronics Corp., 616 F.3d 1357, 1373 (Fed. Cir. 9 2010) (stating that, “[t]o serve as actual notice, . . . [a] letter must communicate a charge of 10 infringement of specific patents by a specific product or group of products,” but, “when the 11 United States District Court Northern District of California 6 threshold specificity is met, the ensuing discovery of other models and related products may bring 12 those products within the scope of the notice”); see also K-Tec, Inc. v. Vita-Mix Corp., 696 F.3d 13 1364, 1379 (Fed. Cir. 2012) (noting that plaintiff gave notice that MP container infringed and that 14 defendant “treated the XP and MP containers as related products” – e.g., “both products will use 15 the same item numbers and . . . most of [defendant’s] customers ‘will never even notice the 16 change’ from the MP to the XP”). MLC maintains: “The FAC adequately pleads that [Micron] 17 was put on notice of a group of infringing products which necessarily includes subsequently 18 released products, such as L94.” Micron Opp’n at 22. Based on this theory, MLC asserts that 19 Micron had notice of infringement “starting in late 2006” when Micron’s predecessor in interest 20 first contacted Micron about the products at issue in MLC I.5 Micron Consumer Opp’n at 22; see 21 also FAC ¶ 61 (alleging first communication). Alternatively, MLC contends that, at the latest, 22 Micron had notice of infringement when MLC filed MLC I in August 2014. See Micron Opp’n at 23 21. Micron does not dispute the Federal Circuit’s holding in Funai but protests that MLC 24 25 26 27 28 5 The Court does not have before it the actual notice that was given in late 2006. The FAC contains the following allegation regarding the notice: “The 2006 letter identified, inter alia, the ‘571 Patent and specific claims to the ‘571 Patent, [Micron’s] multi-level cell NAND Flash memory devices as products affected by the ‘571 Patent, and stating that [Micron] should study the ‘571 Patent.” FAC ¶ 61. 17 1 cannot claim that the L94 products are similar to the products at issue in MLC I for notice 2 purposes when it has staked out the position that the L94 products are different from the products 3 at issue in MLC I in arguing against claim splitting. See FAC ¶ 69 (alleging that “[t]his suit 4 involves new Micron products that infringe the ‘571 Patent in a new way than those products 5 accused of infringement in [MLC I]”). The Court is not unsympathetic to Micron’s argument. 6 Nevertheless, at this early juncture in the litigation, the Court cannot conclude as a matter of law 7 that, just because (as alleged in the FAC) the L94 products have a different design from the 8 products at issue in MLC I, that automatically means the L94 products are not sufficiently similar 9 for purposes of notice. Ultimately, as noted above, whether the L94 products are sufficiently similar for notice purposes is a question of fact for the jury to decide. See Novo Nordisk A/S v. 11 United States District Court Northern District of California 10 Becton Dickinson, 96 F. Supp. 2d 309, 320 (S.D.N.Y. 2000) (“[T]he notice requirement under § 12 287 is treated flexibly – as a question of fact for the jury.”); cf. Iron Oak Techs., LLC v. Fujitsu 13 Am., Inc., No. 3:18-md-2835-M, 2018 U.S. Dist. LEXIS 210938, at *13-14 (N.D. Tex. Dec. 14, 14 2018) (“In Funai and K-TEC, the Federal Circuit made clear that a notice letter is not required to 15 specifically identify every allegedly infringing product, and that notice may be found for 16 unidentified products if the scope of the alleged infringement described by the patent holder is 17 sufficient to cover the unidentified products. Thus, the inquiry is not whether an accused product 18 is identified by name, but rather whether notice to the alleged infringer provided information 19 sufficient to apprise the infringer of the patent(s) in issue and the nature of the alleged 20 infringement of it.”). 21 22 23 b. Notice to Micron Subs For the Micron Subs, MLC claims infringement based on the L94 products and on the products at issue in MLC I. 24 The Micron Subs contend that, even if there is a factual dispute regarding the L94 25 products, there is still a problem with notice (both as to the L94 products and the products at issue 26 in MLC I) because notice of infringement was given to Micron only, and not to them specifically. 27 In response, MLC makes two arguments: (1) notice to Micron can constitute notice to the Micron 28 Subs because the companies are alter egos (as alleged in the FAC) and (2) even in the absence of 18 1 an alter-ego relationship, Micron and the Micron Subs “share the same offices [and] the same 2 counsel and legal department” (as alleged in the FAC) such that it can plausibly inferred that 3 “notice sent to [Micron’s] legal department also necessarily placed [the Micron Subs] on actual 4 notice.” Micron Consumer Opp’n at 21. 5 The problem with MLC’s second argument is that (as alleged in the FAC) notice was given 6 that Micron infringed – not that the Micron Subs or even any entity affiliated with Micron, 7 infringed. See 35 U.S.C. § 287 (“In the event of failure so to mark, no damages shall be recovered 8 by the patentee in any action for infringement, except on proof that the infringer was notified of 9 the infringement and continued to infringe thereafter . . . .”) (emphasis added); Amsted, 24 F.3d at 187 (“Amsted . . . did not give Buckeye notice for purposes of section 287 until its 1989 letter, 11 United States District Court Northern District of California 10 which specifically charged Buckeye with infringement and specified an infringing device.”) 12 (emphasis added); cf id. at 187 (stating that “[i]t is irrelevant . . . whether the defendant knew of 13 the patent or knew of his own infringement[;] [t]he correct approach to determining notice under 14 section 287 must focus on the action of the patentee, not the knowledge or understanding of the 15 infringer”). That being the case, notice to the Micron Subs turns on whether MLC has alleged 16 enough to support alter ego liability. In other words, given the allegations in the operative 17 complaint, is it plausible that the Micron Subs are alter egos of Micron? 18 19 i. Law on Alter Ego Where two companies are affiliated – e.g., a parent and a subsidiary – liability of one is not 20 automatically imputed to the other. See Ranza v. Nike, 793 F.3d 1059, 1070 (stating that, “[a]s a 21 general principle, corporate separateness insulates a parents corporation from liability created by 22 its subsidiary, notwithstanding the parent’s ownership of the subsidiary”). “However, in certain 23 limited circumstances” – e.g., where there is an alter ego relationship – “the veil separating 24 affiliated entities may be pierced to impute liability from one entity to the other.” Id. at 1071. 25 26 27 28 To satisfy the alter ego test, a plaintiff "must make out a prima facie case '(1) that there is such unity of interest and ownership that the separate personalities [of the two entities] no longer exist and (2) that failure to disregard [their separate identities] would result in fraud or injustice.'" [In the parent-subsidiary context,] [t]he "unity of interest and ownership" prong of this test requires "a showing that the parent controls the subsidiary to such a degree as to render the 19 latter the mere instrumentality of the former." This test envisions pervasive control over the subsidiary, such as when a parent corporation "dictates every facet of the subsidiary's business – from broad policy decisions to routine matters of day-to-day operation." Total ownership and shared management personnel are alone insufficient to establish the requisite level of control. 1 2 3 4 5 Id. at 1073. ii. “Lumping” of Defendants 6 As an initial matter, the Micron Subs argue that MLC has failed to adequately allege that 7 they have an alter ego relationship with Micron because MLC has simply lumped together all of 8 Micron’s subsidiaries or affiliated entities and made no effort to explain how each one, on its own 9 terms, is an alter ego of Micron. The Micron Subs’ “lumping” argument is not without merit. As indicated above, whether a parent and subsidiary (or affiliated entity) have an alter ego 11 United States District Court Northern District of California 10 relationship turns on the specific level of control the former exercises over the latter. That being 12 the case, it is problematic for a plaintiff to lump together multiple defendants in asserting alter ego. 13 On the other hand, the Court is reluctant to hold that lumping is always improper in the alter ego 14 context – i.e., it is possible that, in certain factual situations, lumping may be warranted. Cf. In re 15 Chrysler-Dodge-Jeep EcoDiesel Mktg., Sales Practices & Prods. Liab. Litig., 295 F. Supp. 3d 16 927, 989-90 (N.D. Cal. 2018) (where defendant-companies argued that plaintiffs failed to 17 “pinpoint what each company’s alleged misconduct was,” acknowledging that, “in general, 18 ‘lumping’ of defendants is not permissible,” but noting that “Plaintiffs have made allegations 19 explaining why it is appropriate in the instant case, at least at this stage of the proceedings” – i.e., 20 “Plaintiffs have essentially been forced to lump the Bosch companies because the Bosch 21 Defendants have chosen to operate a specific way”). 22 For purposes of the instant case, the Court need not definitively rule on the “lumping” 23 problem because there are other deficiencies in the FAC with respect to the issue of alter ego. 24 25 iii. Unity of Interest As noted above, the first prong of the alter ego test is unity of interest – i.e., “‘(1) that there 26 is such unity of interest and ownership that the separate personalities [of the two entities] no 27 longer exist.’” Ranza, 793 F.3d at 1073. As noted above, in the parent-subsidiary context, the 28 unity-of-interest prong “envisions pervasive control over the subsidiary.” Id. The unity-of20 1 interest prong is not met where a plaintiff simply shows “‘an active parent corporation involved 2 directly in decision-making about its subsidiaries’ holdings,’ but each entity ‘observe[s] all of the 3 corporate formalities necessary to maintain corporate separateness.’” Id. 4 5 6 In the instant case, MLC claims that there is an alter ego relationship between Micron and its subsidiaries because, e.g.: • under the “Micron” brand name, see FAC ¶ 41; 7 8 Micron and the subsidiaries present themselves to the public as a single entity • Micron submits to the SEC consolidated filings that cover both itself and its 9 subsidiaries and refers to itself and its subsidiaries as, e.g., “we,” see FAC ¶ 24, see 10 also FAC ¶ 35 (referring to consolidated financial information in the SEC filings); United States District Court Northern District of California 11 • Micron and the subsidiaries have “a single set of executive officers and directors,” see FAC ¶ 33; 12 13 • Micron and the subsidiaries have some employees who overlap, see FAC ¶ 42; 14 • Micron and the subsidiaries have consolidated financial statements, see FAC ¶ 34; 15 • Micron provides financial support, credit, and capital to the subsidiaries, see FAC ¶ 36; 16 17 • Micron guarantees loans and debt obligations for the subsidiaries, see FAC ¶ 36; 18 • Micron provides legal support for the subsidiaries, see FAC ¶ 39; and 19 • Micron and the subsidiaries rely on one another to develop, make, and sell MLC 20 21 NAND Flash memory devices. See FAC ¶¶ 25-26, 28-29. But nothing about the above suggests that Micron, as the parent, is exercising pervasive 22 control over the subsidiaries; the above is consistent with an ordinary parent-subsidiary 23 relationship. Cf. Doe v. Unocal Corp., 248 F.3d 915, 926 (9th Cir. 2001) (noting that “a parent 24 corporation may be directly involved in the activities of its subsidiaries without incurring liability 25 so long as that involvement is ‘consistent with the parent's investor status’”; adding that an alter 26 ego relationship “is typified by parental control of the subsidiary’s internal affairs or daily 27 operations”). In Ranza, the Ninth Circuit found no pervasive control even though the parent 28 company there was “heavily involved in [the subsidiary’s] operations” – e.g., exercising control 21 1 over the subsidiary’s overall budget, establishing general human resource policies for both the 2 parent and the subsidiary, being involved in some hiring decisions of the subsidiary, operating 3 information tracking systems that all subsidiaries used, ensuring consistent marketing of the Nike 4 brand, and requiring some subsidiary employees to report to parent supervisors. See also Calvert 5 v. Huckins, 875 F. Supp. 674, 678-79 (E.D. Cal. 1995) (rejecting alter ego relationship even 6 though two companies had ownership interests in a third, there were “some interlocking directors 7 and officers,” one company incorporated another’s figures into its financial reports, one company 8 guaranteed at least one promissory note issued by another, and the companies had the same legal 9 counsel). 10 The Court acknowledges that MLC has tried to supplement the above allegations with United States District Court Northern District of California 11 allegations that Micron “directs and controls the activities and operations of [its] Subsidiaries,” 12 FAC ¶ 32, and that the subsidiaries “are inadequately capitalized absent the financial support of 13 [Micron],” FAC ¶ 32, and “would be insolvent but for the financial support and guarantees from 14 [Micron].” FAC ¶ 37. But tellingly, these latter allegations are conclusory in nature. See 15 Sandoval v. Ali, 34 F. Supp. 3d 1031, 1040 (N.D. Cal. 2014) (stating that “[c]onclusory allegations 16 of alter ego status are insufficient to state a claim[;] [r]ather, a plaintiff must allege specifically 17 both of the elements of alter ego liability, as well as facts supporting each”) (internal quotation 18 marks omitted). 19 The most specific allegation that MLC makes is that Micron has provided large guarantees 20 for its subsidiaries. See, e.g., FAC ¶ 38 (alleging that Micron “has guaranteed over $600 million 21 of debt obligations of its subsidiaries as of August 28, 2014” and further “had guaranteed credit 22 facilities for its subsidiaries that provide over $400 million in financing”). But MLC appears to 23 have aggregated guarantees made for all subsidiaries collectively; thus, it is not surprising that the 24 size of the guarantees collectively is large. More fundamentally, MLC has failed to explain how 25 this fact demonstrates the subsidiaries were undercapitalized or insolvent. Compare, e.g., Slottow 26 v. American Cas. Co. of Reading, Pennsylvania, 10 F.3d 1355, 1360 (9th Cir. 1993) (indicating 27 that capitalization of a company was inadequate where its initial capitalization was $500,000, 28 which was “woefully inadequate for a corporation that handled trust agreements of the magnitude 22 1 involved here”); Nilsson, Robbins, Dalgarn, Berliner, Carson & Wurst v. Louisiana Hydrolec, 854 2 F.2d 1538, 1543 (9th Cir.1988) (where the plaintiff argued that “Ethridge [an individual] was the 3 alter ego of Aqualec and could be held individually liable for Aqualec’s debts,” noting that 4 Aqualec was undercapitalized as it had “no assets and most of its capitalization came from 5 Ethridge”); see also Unocal, 248 F.3d at 927 (rejecting alter ego in spite of parent providing 6 “loans and other types of financing to subsidiaries”; taking note of a Delaware case where the 7 following was found insufficient to establish alter ego: “blurring corporate separateness in 8 language of annual report, overlap of boards of directors, parental approval of large capital 9 expenditures, and parental guaranty of third-party loans to subsidiary”). In sum, the specific factors needed to establish alter ego have not been sufficiently and 10 United States District Court Northern District of California 11 specifically alleged. 12 3. Summary 13 With respect to Micron, the Court denies the 12(b)(6) motion for failure to state a claim for 14 damages. There are questions of fact as to whether MLC’s licensees were required to mark. 15 There are also questions of fact as to whether Micron was given notice of infringement with 16 respect to the L94 products. However, with respect to the Micron Subs, the Court grants the 12(b)(6) motion for failure 17 18 to state a claim for damages. MLC has failed to allege that it gave notice to the Micron Subs 19 specifically (as opposed to Micron). In addition, MLC has failed to make sufficient allegations 20 that Micron and the Micron Subs are alter egos such that notice to the former may be imputed to 21 the latter. The Court thus dismisses the Micron Subs, but gives MLC leave to amend if it can, in 22 good faith, make additional factual allegations in support of alter ego liability. 23 D. 24 Personal Jurisdiction and Venue Although the Court is dismissing the Micron Subs based on a failure to state a claim for 25 damages under the Patent Act, it still addresses the Micron Subs’ arguments on personal 26 jurisdiction and venue, as they provide an independent ground for dismissal. 27 1. Personal Jurisdiction 28 Only Micron Semiconductor moves for dismissal based on lack of personal jurisdiction. 23 1 There is no dispute that Micron Semiconductor is an Idaho corporation with a principal place of 2 business in Idaho. See FAC ¶ 5. 3 In its papers, Micron Semiconductor argues that there are insufficient allegations of 4 personal jurisdiction in the FAC because MLC has essentially lumped together all Micron 5 Defendants in the case (not just the three Moving Defendants). Micron Semiconductor argues that 6 this is improper – i.e., MLC must address each defendant’s contacts with California on an 7 individual basis. See, e.g., Skurkis v. Montelongo, No. 16-cv-0972 YGR, 2016 U.S. Dist. LEXIS 8 122474, at *13 (N.D. Cal. Sep. 9, 2016) (stating that “the Court must determine whether plaintiffs 9 have made a prima facie case of personal jurisdiction as to each defendant based on each defendant's own contacts with California” and that “[t]his inquiry requires an analysis of each 11 United States District Court Northern District of California 10 defendant's contacts in light of plaintiffs’ claims”). 12 13 14 15 16 17 18 19 Micron Semiconductor’s argument has merit. In ¶ 14 of the FAC, MLC alleges as follows: This Court has personal jurisdiction over the [Micron] Defendants. The [Micron] Defendants, and each of them, have conducted, and do conduct business within the State of California. The MTI Defendants, and each of them, directly or indirectly through intermediaries (including distributors, retailers, and others), ship, distribute, offer for sale, sell, and advertise products in . . . the Northern District of California. The [Micron] Defendants, and each of them, purposefully and voluntarily sold one or more of their infringing products with the expectation that they will be purchased by consumers in the Northern District of California. These infringing products have been and continue to be purchased by consumers in the Northern District of California. 20 FAC ¶ 14; see also FAC ¶ 15 (making similar allegations). Clearly, MLC has lumped and made 21 no attempt to differentiate among any of the Micron Defendants. 22 MLC argues still that the Court should not be concerned about the “lumping” above for 23 two reasons. First, it argues that the Court can take judicial notice of Micron’s 10-K filing with 24 the SEC which indicates that Micron Semiconductor also does business as Micron Consumer and 25 Crucial Technology. See Opp’n at 23; Marino Decl., Exs. A-B (excerpts from Micron’s 10-K). 26 But this fact, in and of itself, does not amount to much. No matter what name Micron 27 Semiconductor might use, MLC still needs to show that Micron Semiconductor itself has contacts 28 with California. The Court acknowledges that Micron Consumer is also the name of one of the 24 1 defendants in this case (in fact, one of the Moving Defendants), and, per the FAC, that specific 2 defendant has its principal place of business in California. See FAC ¶ 4. However, that does not 3 necessarily mean that Micron Semiconductor, by using the Micron Consumer name, necessarily 4 does business in California. More specifics about the relationship must be alleged. 5 Second, MLC argues that there is clearly personal jurisdiction over Micron, which has its 6 principal place of business in California, see FAC ¶ 3, and, because Micron and Micron 7 Semiconductor are alter egos of one another, Micron’s California contacts can be imputed to 8 Micron Semiconductor. Here, MLC is correct that alter ego may be used as a basis for 9 establishing personal jurisdiction (and not just liability). See, e.g., Williams v. Yamaha Motor Co., 851 F.3d 1015, 1021 (9th Cir. 2017) (stating that the Supreme Court’s decision in Daimler 11 United States District Court Northern District of California 10 invalidated an agency test that the Ninth Circuit had used for general jurisdiction but not the alter 12 ego test; “‘the alter ego test may be used to extend personal jurisdiction to a foreign parent or 13 subsidiary when, in actuality, the foreign entity is not really separate from its domestic affiliate’”). 14 But, as discussed above, MLC has failed to adequately allege an alter ego relationship between 15 Micron Semiconductor and Micron. 16 The Court therefore grants Micron Semiconductor’s motion to dismiss based on lack of 17 personal jurisdiction. MLC, however, has leave to amend to correct the deficiencies in its 18 jurisdictional allegations if it can do so in good faith. 19 2. 20 Both Micron Subs (i.e., Micron Semiconductor and Micron Consumer) move for a 21 22 Venue dismissal on the basis that there are insufficient allegations to support venue in this District. In patent infringement cases, “[a]ny civil action for patent infringement may be brought in 23 the judicial district where the defendant resides, or where the defendant has committed acts of 24 infringement and has a regular and established place of business.” 28 U.S.C. § 1400(b). 25 In the instant case, there is no dispute that neither defendant resides in California. The 26 Supreme Court has held that “a domestic corporation ‘resides’ only in its State of incorporation for 27 purposes of the patent venue statute.” TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. 28 Ct. 1514, 1517 (2017). Micron Semiconductor is incorporated in Idaho, and Micron Consumer is 25 1 incorporated in Delaware, see FAC ¶¶ 4-5; thus, neither defendant resides in California. 2 The only question, therefore, is whether MLC has made sufficient allegations that the two 3 defendants (1) committed acts of infringement in the District and (2) have regular and established 4 places of business in the District. On this question, the Micron Subs make an argument similar to 5 that above – i.e., that there are insufficient allegations to support venue because MLC has lumped 6 all of the Micron Defendants (not just the Moving Defendants) together. 7 As above, the Court agrees that MLC has engaged in improper “lumping.” MLC has made no attempt to differentiate among the various Micron Defendants when it comes to venue. 9 Moreover, even if the Micron Subs contributed to Micron’s infringing activity in this District, that 10 would not be enough to establish venue under § 1400(b). First, as noted above, § 1400(b) requires 11 United States District Court Northern District of California 8 that a defendant commit an act of infringement in the District; thus, even if the theory was 12 contributory infringement, the contributory act would still have to occur in this District. Second, § 13 1400(b) also requires that a defendant have a regular and established business in this District. See 14 generally In re Cray Inc., 871 F.3d 1355, 1360 (Fed. Cir. 2017) (noting that there are “three 15 general requirements relevant to this inquiry: (1) there must be a physical place in the district; (2) 16 it must be a regular and established place of business; and (3) it must be the place of the 17 defendant”). Here, MLC has not made any attempt to make any nonconclusory allegations of a 18 regular and established business by either of the Micron Subs. See, e.g., FAC ¶ 15 (alleging, in 19 conclusory terms, that Micron and the two subsidiaries “have established places of business in this 20 District”). 21 The only possible saving grace for MLC is its alter ego theory – i.e., that the Micron and 22 the Micron Subs are alter egos of each other. Alter ego may be used as a basis for imputing 23 “contacts” for purposes of venue. See 3M v. Eco Chem, Inc., 757 F.2d 1256, 1265 (Fed. Cir. 24 1985) (stating that “piercing the corporate veil is appropriate in order to establish venue under the 25 patent venue statutes”); UCB, Inc. v. Mylan Techs., Inc., No. CV 17-322-LPS, 2017 U.S. Dist. 26 LEXIS 218883, at *9 (D. Del. Dec. 1, 2017) (stating that “[i]t does not appear that Cray disturbed 27 the prior holding of the Federal Circuit . . . that ‘venue in a patent infringement case [may be] 28 proper with regard to one corporation by virtue of the acts of another, intimately connected, 26 1 corporation’”). Nevertheless, as discussed above, MLC has failed to adequately allege an alter 2 ego relationship and therefore the Court finds that there are insufficient allegations to support 3 venue as to the Micron Subs. The motion to dismiss based on lack of venue is granted, but with leave to amend. 4 5 E. Alter Ego Liability 6 As reflected above, MLC’s allegations on alter ego are relevant to several issues – e.g., the 7 claim for damages against the Micron Subs, personal jurisdiction as to Micron Semiconductor, and 8 venue as to both Micron Subs. To the extent MLC takes any other position predicated on alter ego 9 (e.g., that the Micron Subs are liable for Micron’s actions vis-à-vis the L94 products), that position 10 is also lacking for the reasons discussed above. III. United States District Court Northern District of California 11 12 13 For the foregoing reasons, the motions to dismiss are granted in part and denied in part. More specifically: • 14 The motion to dismiss all Moving Defendants based on the claim-splitting doctrine is denied without prejudice. 15 • 16 The motion to dismiss all Moving Defendants based on a collateral attack is denied. 17 • 18 The motion to dismiss Micron based on a failure to state a claim for damages is denied without prejudice. 19 • 20 The motion to dismiss the Micron Subs based on a failure to state a claim for damages is granted, but with leave to amend. 21 • 22 The motion to dismiss Micron Semiconductor based on lack of personal jurisdiction is granted, but with leave to amend. 23 • 24 The motion to dismiss the Micron Subs based on improper venue is granted, but with leave to amend. 25 26 CONCLUSION Where the Court has given MLC leave to amend, i.e., to correct the deficiencies identified 27 above, MLC has until thirty (30) days from the date of this order to file a second amended 28 complaint. 27 1 Because the Court is giving MLC an opportunity to file a second amended complaint, it 2 finds IM Flash’s motion to dismiss the FAC moot. However, MLC shall bear in mind that many 3 of the arguments made in IM Flash’s motion are the same as those raised in the Moving 4 Defendants’ motions. That being the case, MLC is advised to enhance its allegations vis-à-vis IM 5 Flash consistent with the above. 6 Neither the Moving Defendants nor IM Flash is precluded from moving to dismiss the 7 second amended complaint once filed. Micros Europe, Ltd. Has moved to dismiss the FAC. All 8 other Micron Defendants shall have three weeks after the filing of the second amended complaint 9 to respond to the pleading. 10 This order disposes of Docket Nos. 33, 38, 39, and 64. United States District Court Northern District of California 11 12 IT IS SO ORDERED. 13 14 Dated: October 8, 2019 15 16 17 ______________________________________ EDWARD M. CHEN United States District Judge 18 19 20 21 22 23 24 25 26 27 28 28

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