Powertech Technology Inc v. Tessera, Inc.

Filing 447

ORDER by Judge Claudia Wilken ON ([352-2], 407 ) CROSS MOTIONS FOR SUMMARY JUDGMENT. (ndr, COURT STAFF) (Filed on 1/15/2014)

1

IN THE UNITED STATES DISTRICT COURT

2

FOR THE NORTHERN DISTRICT OF CALIFORNIA

3
4

POWERTECH TECHNOLOGY, INC.,

5

Plaintiff,

6
7

No. C 11-6121 CW
ORDER ON CROSS
MOTIONS FOR
SUMMARY JUDGMENT
(Docket Nos.
352-2, 407)

v.
TESSERA, INC.,

8

Defendant.
________________________________/

10
United States District Court
For the Northern District of California

9

AND ALL RELATED CLAIMS AND
COUNTERCLAIMS
________________________________/

11
12

Plaintiff Powertech Technology, Inc. (PTI) sued Defendant

13

Tessera, Inc. for breach of contract and other contract-related

14

claims.

15

and Counterclaim Defendant Macrotech Technology Inc. (MTI).

16

Before the Court are the parties’ cross motions for summary

17

judgment.

18

their affirmative claims as well as their opponent’s claims.

19

Court held oral argument on December 12, 2013.

20

the papers and arguments of counsel, the Court GRANTS Tessera’s

21

motion and GRANTS PTI’s motion in part.

Tessera countersued, asserting similar claims against PTI

Both sides urge the Court to grant summary judgment on

22
23
24

The

Having considered

BACKGROUND
I.

TCC License Agreement
On October 20, 2003, PTI and Tessera entered into the Tessera

25

Compliant Chip License Agreement (TCC License).

26

Appendix A.

27

patents to assemble integrated circuit packages and use or sell

28

Docket No. 1,

The TCC License Agreement allows PTI to use Tessera’s

1

them world-wide.

2

make certain royalty payments to Tessera.

3

TCC License §§ I.A., II.A.

In return, PTI must

See TCC License § III.

The TCC License contains a “Governing Law” provision, which
provides that the contract is governed by California law, and “any

5

disputes, controversies, claims or difference which may arise

6

from, under, out of or in connection with this Agreement” shall be

7

adjudicated in the state or federal courts of California.

8

§ XIV.A.

9

provision herein, after the sixty-day notice of termination and

10
United States District Court
For the Northern District of California

4

cure period set forth in Section VIII.B, “either party may bring

11

an action in the U.S. International Trade Commission (ITC).”

12

Id.

The same provision states that notwithstanding any

Id.

The scope of PTI’s rights as a licensee are summarized in

13

Section II of the License.

14

an “Exclusion from License” (EFL) provision, which states that the

15

licensee is “licensed only for TCC Licensed Products for which it

16

pays royalties hereunder.”

17

notify the licensee that it believes a product made, used, sold,

18

imported, or offered for sale by the licensee is a Licensed

19

Product under the TCC License.

20

whether the licensee’s product is a Licensed Product, the parties

21

may commence litigation after a sixty-day period.

22

See id. § II.

Id. § II.D.

Id.

This section contains

Tessera may, however,

If the parties cannot agree

Id.

The TCC License also contains an “Indemnification Clause,”

23

which provides that the licensee “agrees to defend, indemnify and

24

hold Tessera harmless from and against any and all damages,

25

liabilities, costs and expenses (including reasonable attorney’s

26

fees and expenses) arising out of or related to Licensee’s use of

27

Tessera Patents.”

The Indemnification Clause does not apply to

28
2

1

any “obligation or expense of defending the validity of any

2

Tessera patent.”

3

II.

4

ITC Investigation
In December 2007, Tessera initiated ITC Investigation No.

5

337-TA-630 (the 630 Investigation), accusing PSC, ProMos, Nanya,

6

Elpida, and fourteen other companies of infringing a number of

7

Tessera’s patents, including the 5,663,106 patent (the ’106

8

patent), through the importation and sale of wBGA and uBGA

9

products.

Mills Decl., Ex. Q, 630 Investigation Compl.

PTI was

United States District Court
For the Northern District of California

10

not named as a respondent in the ITC action.

11

Investigation Complaint explicitly excluded any properly-licensed

12

products manufactured by respondents.

13

See id.

The 630

Id. at ¶ 9.

On December 28, 2007, Elpida sent PTI a letter about the 630

14

Investigation.

15

and asked PTI for Tessera licensing information as well as

16

indemnification from the suit pursuant to their manufacturing

17

agreement.

18

representing that PTI had a license with Tessera for all products

19

packaged for Elpida.

20

it would “legally honor [its] indemnity obligations and defend

21

Elpida.”

22

Id.

Mills Decl., Ex. U.

Elpida attached the complaint

On January 2, 2008, PTI responded to Elpida,

Mills Decl., Ex. T.

PTI further stated that

Id.

In May 2008, PTI and Elpida entered into a common interest

23

agreement to facilitate discussions about the 630 Investigation.

24

See Mills Decl., Ex. K, Lin Depo. at 56:1-4, 60:18-25.

25

Elpida discussed “whether Elpida was liable to Tessera based on

26

any products supplied by PTI.”

27

60:18-61:25.

28

during the 630 Investigation, with PTI sending Elpida evidence of

PTI and

Lin Depo. at 56:1-4, 57:7-58:13,

PTI and Elpida remained in close communication

3

1

its royalty payments to Tessera.

2

AC, AD, AE, AF.

3

See Mills Decl., Exs. Z, AA, AB,

In June and November 2008, PTI made two catch-up royalty

4

payments to Tessera.

5

email that it had discovered through an internal audit that it was

6

delinquent on royalty payments dating back to 2005.

7

Mills Decl., Exs. AG, AI.

PTI stated in an

See id.

In August 2009, the Administrative Law Judge (ALJ) in the 630

8

Investigation issued an initial determination.

9

Tessera failed to demonstrate that the accused wBGA and uBGA

The ALJ held that

United States District Court
For the Northern District of California

10

products infringed the ‘106 patent.

11

Comm'n, 646 F.3d 1357, 1363 (Fed. Cir. 2011) cert. denied, 132 S.

12

Ct. 2707 (2012) (summarizing the ALJ’s conclusions).

13

additionally found that “Tessera’s patent rights are exhausted as

14

to those accused products purchased from Tessera’s licensees,”

15

precluding any liability based on those products.

16

4, 2010, the ITC issued its final determination in the 630

17

Investigation, reversing the ALJ’s finding that uBGA products did

18

not infringe, but affirming the ALJ’s finding of patent

19

exhaustion, and affirming the ALJ’s finding that wBGA products did

20

not infringe.

21

Tessera, Inc. v. Int'l Trade

The ALJ

Id.

On January

Id.

On May 23, 2011, the Federal Circuit affirmed in part the

22

ITC’s final determination in the 630 Investigation and reversed it

23

in part.

24

the wBGA products did not infringe the ‘106 patent.

25

1366-67.

26

exhaustion with respect to the infringement accusations against

27

the uBGA products, stating that because “Tessera’s licensees were

28

authorized to sell the accused products” at the time of sale

Id.

The Federal Circuit affirmed the ITC’s finding that
Id. at

The Federal Circuit also upheld the finding of patent

4

1

without reservation, Tessera could not subsequently assert its

2

patent rights against the licensees’ customers.

3

In so holding, the court rejected Tessera’s argument that its

4

licensees’ sales to their customers were initially unauthorized

5

until the time that the licensee remitted the related royalty

6

payment to Tessera which, under the licensing agreements’ payment

7

schedules, may not have happened for months after the products

8

were sold.

9

denied Tessera’s petition for rehearing en banc.

United States District Court
For the Northern District of California

10
11

Id. at 1370.

Id. at 1369-71.

On August 30, 2011, the Federal Circuit

III. PTI Shifts Elpida Business to MTI and Sends Letter
Terminating TCC License
In May 2011, Elpida wrote a letter to PTI suggesting using

12
“MPTI(?) to avoid a royalty.”

Mills Decl., Ex. AK at 2.

MTI is

13
PTI’s wholly-owned subsidiary.

PTI responded saying it would

14
“build wBGA in MTI.”

Id. at 1.

Over the next several months, PTI

15
and Elpida continued to communicate about transferring Elpida
16
business to MTI.

See, e.g., Mills Decl., Exs. AM, AK.

In

17
September 2011, MTI voted not to be bound by the TCC License.

See

18
Guy Decl., Ex. 10.

On September 22, 2011, Elpida began placing

19
orders directly with MTI.

Mills Decl., Ex. V.

20
On October 6, 2011, PTI sent a letter notifying Tessera that
21
PTI considered the 630 Investigation a breach of the TCC License
22
Governing Law provision.

Guy Decl., Ex. 80.

PTI also informed

23
Tessera that, pursuant to the terms of the TCC License, it
24
intended to terminate the contract unless Tessera “cured” the
25
breach within sixty days by reimbursing PTI for all royalties paid
26
since December 7, 2007.

Id.

Because Tessera did not do so, PTI

27
28
5

1

considered the TCC License terminated as of June 30, 2012.

2

See id.

3

IV.

4

PTI 1
On March 5, 2010, several months after the ITC issued its

5

final determination in the 630 Investigation, PTI filed an action

6

for declaratory relief in this Court.

7

Inc. v. Tessera Inc., C 10-00945-CW (N.D. Cal.) (PTI 1), Docket

8

No. 1.

9

and invalidity of the ’106 patent and maintained that it faced an

See Powertech Technology,

In that case, PTI sought declarations of non-infringement

United States District Court
For the Northern District of California

10

imminent threat of injury because Tessera had accused PTI’s

11

customers of infringement based on PTI-packaged products.

12

April 1, 2010, Tessera moved to dismiss the case for lack of

13

subject matter jurisdiction because “PTI is a licensee in good

14

standing and it and its customers therefore enjoy protection

15

against any suit accusing its licensed products of infringement of

16

the ’106 patent or any other licensed patent.”

17

14 at 6.

18

of subject matter jurisdiction, finding that there was no Article

19

III case or controversy between the parties because Tessera had

20

explicitly excluded licensed products from its enforcement

21

actions.

22

Dist. Lexis 53621, at *7-8 (N.D. Cal.).

23

MedImmune distinguishable because, under the TCC License, PTI’s

24

obligation to pay royalties was not based on a finding of

25

infringement.

26

that PTI need not be in breach of the TCC License in order to

27

bring a declaratory judgment to define the terms of the contract.

On

PTI 1, Docket No.

In June 2010, this Court dismissed the action for lack

Powertech Technology, Inc. v. Tessera, Inc., 2010 U.S.

Id. at *4.

Further, the Court found

The Federal Circuit reversed, holding

28
6

1

Powertech Tech. Inc. v. Tessera, Inc., 660 F.3d 1301, 1308 (Fed.

2

Cir. 2011).

3

On March 31, 2013, the Court granted Tessera’s motion for

4

summary judgment and dismissed the case for lack of subject matter

5

jurisdiction.

6

decision on Tessera’s unconditional covenant not to sue PTI for

7

infringement of the ‘106 patent, which Tessera filed in October

8

2012.

9

and the instant case, however, the Court delayed entry of judgment

Id.

PTI 1, Docket No. 233 at 45.

The Court based its

Because of the close relationship between that case

United States District Court
For the Northern District of California

10

until judgment could be entered in both cases simultaneously.

11

at 47.

12

V.

13

Id.

PTI 2
On December 6, 2011, PTI brought the present suit against

14

Tessera.

15

claims for: (1) declaratory judgment that PTI may terminate the

16

TCC License; (2) breach of contract; and (3) breach of the implied

17

covenant of good faith and fair dealing.

18

with leave from the Court, PTI filed the operative Fourth Amended

19

Complaint, adding: (4) fraud and deceit; (5) declaratory judgment

20

for patent misuse; (6) declaratory judgment interpreting the TCC

21

License as requiring patent infringement before royalties are due.

22

See Docket No. 176 ¶¶ 108-14.

23

Docket No. 1.

In the original complaint, PTI asserted

On October 11, 2012,

Tessera asserted counterclaims for (1) breach of contract

24

against PTI, (2) breach of the implied covenant of good faith and

25

fair dealing against PTI, (3) fraud and deceit against PTI,

26

(4) fraudulent transfer against PTI, (5) negligent

27

misrepresentation against PTI, (6) intentional interference with

28

prospective economic advantage against PTI and MTI, (7) negligent
7

1

interference with prospective economic advantage against PTI and

2

MTI, (8) declaratory judgment of indemnification against PTI,

3

(9) declaratory judgment regarding termination of the contract

4

against PTI, (10) inducing breach of contract against MTI,

5

(11) constructive trust against MTI.

6

See Docket No. 253-1.

LEGAL STANDARD

7

Summary judgment is appropriate only where the moving party

8

demonstrates there is no genuine dispute as to any material fact

9

such that the moving party is entitled to judgment as a matter of

United States District Court
For the Northern District of California

10

law.

11

317, 323 (1986).

12

outcome of the case, as defined by the framework of the underlying

13

substantive law.

14

248 (1986).

15

reasonable jury could return a verdict for either party.

16

Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S.
Material facts are those that might affect the

Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

A dispute is genuine if the evidence is such that a
Id.

The moving party bears the initial burden of informing the

17

district court of the basis for its motion and identifying those

18

portions of the pleadings, discovery, and affidavits that

19

demonstrate the absence of a disputed issue of material fact.

20

Celotex, 477 U.S. at 323.

21

party may not rely merely on allegations or denials of its

22

pleadings, but must set forth “specific facts showing that there

23

is a genuine issue for trial.”

24

Fed. R. Civ. P. 56(e)).

25

In opposing the motion, the non-moving

Anderson, 477 U.S. at 248 (citing

The court must construe the evidence in the light most

26

favorable to the non-moving party, making all reasonable

27

inferences that can be drawn.

28

v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Intel Corp. v.

Matsushita Elec. Indus. Co., Ltd.

8

1

Hartford Accident & Indem. Co., 952 F.2d 1551, 1558 (9th Cir.

2

1991); Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1289 (9th

3

Cir. 1987).

4

DISCUSSION

5

The parties’ cross-motions for summary judgment contain many

6

overlapping arguments targeting both their own claims and their

7

opponent’s claims.

8

according to the claims in each party’s complaint in turn.

9

I.

United States District Court
For the Northern District of California

10

PTI’s Complaint
A.

11
12

The Court addresses the parties’ motions

PTI’s Claim for Declaratory Judgment that PTI Has the
Right to Terminate the Contract

PTI brings a claim for declaratory judgment stating that PTI

13

had a contractual right to terminate the TCC License as of

14

December 7, 2011, when Tessera brought the 630 Investigation, or

15

alternatively June 30, 2012, after Tessera took action against

16

PTI-packaged products in the 630 Investigation.

17

Tessera seek summary judgment on this claim.

18

Both PTI and

The TCC License has an express termination clause.

If a

19

contract has a termination clause, the clause controls and a party

20

to the contract may only terminate in accordance with the terms

21

specified.

22

368 (1970); Mad River Lumber Sales, Inc. v. Willburn, 205 Cal.

23

App. 2d 321, 324 (1962).

24
25
26
27
28

See Kuffel v. Seaside Oil Co., 11 Cal. App. 3d 354,

The termination clause reads:

Termination for Breach. Either party may terminate this
Agreement due to the other party’s breach of this Agreement,
such as failure to perform its duties, obligations, or
responsibilities herein (including, without limitation,
failure to pay royalties and provide reports as set forth
herein). The parties agree that such breach will cause
substantial damages to the party not in breach. Therefore,
the parties agree to work together to mitigate the effect of
9

1
2
3
4
5
6
7

any such breach; however, the non-breaching party may
terminate this Agreement if such breach is not cured or
sufficiently mitigated (to the non-breaching party’s
satisfaction) within sixty (60) days of notice thereof.
TCC License § VIII.B.
PTI’s theory is that Tessera breached the TCC License’s
Governing Law provision by bringing the 630 Investigation, giving
PTI the right to terminate.

As noted previously, the Governing

Law provision requires in relevant part:

8
9

United States District Court
For the Northern District of California

10
11
12

. . . Both parties shall use reasonable efforts to resolve by
mutual agreement any disputes, controversies, claims or
differences which may arise from, under, out of or in
connection with this Agreement . . . Notwithstanding any
provision herein, after the sixty (60) day cure period set
forth in Paragraph VIII.B and notice of termination of this
Agreement by one of the parties, either party may bring an
action in the U.S. International Trade Commission.

13

TCC License § XIV.A.

14

clause, before either party brings an ITC action regarding a

15

dispute or controversy arising from, under, out of or in

16

connection with the Agreement, it must first terminate the

17

contract.

18

According to the plain language of this

PTI argues that although Tessera did not explicitly name PTI

19

as a respondent in the 630 Investigation, Tessera sought to

20

exclude PTI-packaged products by targeting PTI’s customers.

21

presents two pieces of evidence in support of its contention.

22

First, PTI cites Tessera’s briefing in the 630 Investigation,

23

where Tessera requested the ITC grant a General Exclusion Order

24

(GEO) against all infringing and unlicensed articles, regardless

25

of source.

26

it had been granted, the GEO would have affected PTI-packaged

See generally Guy Decl., Ex. 11.

27
28
10

PTI

PTI argues that if

1

products.

2

whether PTI-packaged products infringed Tessera’s patents.1

3

Second, PTI submits that Tessera experts opined on

But even if PTI is correct that Tessera breached by bringing

4

the 630 Investigation, that in and of itself does not give PTI the

5

right to terminate the contract.

6

terminate the TCC License.

7

termination clause is broad -- “Either party may terminate this

8

Agreement due to the other party’s breach” -- the language of the

9

clause as a whole makes clear that only a non-breaching party may

Only a non-breaching party may

Although the first sentence of the

United States District Court
For the Northern District of California

10

terminate.

11

1010, 1027 (2011) (contracts must be interpreted in light of the

12

entirety).

13

and a “non-breaching party” in every sentence after the first:

14

“The parties agree that such breach will cause substantial damages

15

to the party not in breach . . . the non-breaching party may

16

terminate this Agreement if such breach is not cured . . . to the

17

non-breaching party’s satisfaction [].”

18

first sentence out of context, the clause requires the party

19

seeking to terminate for the other party’s purported breach to be

20

substantially in compliance with its own obligations first.

See id.; Zalkind v. Ceradyne, Inc., 194 Cal. App. 4th

The termination clause refers to a “breaching party”

Id.

Without reading the

21
1

22
23
24
25
26
27
28

The Federal Circuit, considering the same two points,
remarked in a footnote in the related case PTI 1:
“[W]e have no doubt that PTI’s customers and products were
specifically targeted in [the 630 Investigation.] For example,
witnesses for Elpida testified that the accused products in the
ITC . . . were licensed from several licensees, including PTI.
Indeed, Tessera’s infringement expert in the ITC action focused
part of his analysis on an Elpida wBGA chip that was clearly
packaged by PTI and identified with a PTI model number.”
Powertech Tech., Inc. v. Tessera Inc., 660 F.3d at 1307.
11

1

It is undisputed that PTI was not a “non-breaching party”

2

when Tessera purportedly breached, when PTI attempted to

3

terminate, or even now.

4

License terms at the time that Tessera brought the 630

5

Investigation.

6

payments, making millions of dollars of catch-up payments a few

7

months after the 630 Investigation began.

8

AI.

9

royalty payments, PTI began withholding royalties again.

PTI was not in compliance with the TCC

PTI admits that it had been delinquent on royalty

Mills Decl., Exs. AG,

Although the catch-up payments put PTI current with its
When PTI

United States District Court
For the Northern District of California

10

sent its notice of termination of the TCC License on October 6,

11

2011, and ultimately terminated in June 2012, PTI also was not in

12

compliance with its royalty obligations.

13

it stopped paying royalties for some licensed uBGA and wBGA

14

products in 2010.

15

paying royalties altogether in 2012, PTI does not have the right

16

to terminate even now.

17

PTI does not deny that

See Mills Decl., Ex. BG.

Because PTI ceased

PTI argues that it substantially complied with the TCC

18

License because it paid “millions of dollars to Tessera in

19

royalties” between 2008 and 2012.

20

“What constitutes substantial performance is a question of fact,

21

but it is essential that there be no wilful departure from the

22

terms of the contract, and that the defects be such as may be

23

easily remedied or compensated, so that the promisee may get

24

practically what the contract calls for.”

25

Marx, Inc., 56 Cal. 2d 169, 187 (1961).

26

millions of dollars in royalties does not take away from the fact

27

that it owed Tessera many millions more.

28

Chung Liao, admitted he intentionally withheld a substantial
12

See Docket No. 352-2, at 15.

Posner v. Grunwald-

The fact that PTI paid

PTI’s president, Ping

1

percentage of royalty payments.

2

Depo. 170:15-21, 171:1-23.

3

of the contract,” this withholding of royalty payments cannot

4

constitute substantial performance.

5

See Mills Decl., Ex. E, Liao

As a “willful departure from the terms

Posner, 56 Cal. 2d at 187.

Because it is undisputed that PTI was not a “non-breaching

6

party” under the terms of the TCC License, PTI cannot prove that

7

it had a right to terminate the TCC License.

8

Court DENIES PTI’s motion for summary judgment and GRANTS

9

Tessera’s motion for summary judgment on this claim.

Accordingly, the

United States District Court
For the Northern District of California

10

B.

11

PTI also brings a breach of contract claim against Tessera,

Breach of Contract

12

alleging that Tessera breached the TCC License by bringing the 630

13

Investigation.

14

this claim.

15

claim are “(1) the contract, (2) plaintiff’s performance or excuse

16

for nonperformance, (3) defendant’s breach, and (4) the resulting

17

damages to plaintiff.”

18

822, 830 (1968).

19

performed its obligations under the TCC License, which is also an

20

essential element of PTI’s breach of contract claim, the Court

21

could end its inquiry there and enter summary judgment in favor of

22

Tessera.

23

of contract claim fails for the additional, independent reason

24

that PTI has not provided any evidence that it suffered damages as

25

a result of Tessera’s alleged breach.

26

Maldonado, 158 Cal. App. 4th 1226, 1239 (2008).

Both PTI and Tessera move for summary judgment on

The “essential elements” of a breach of contract

Reichert v. General Ins. Co., 68 Cal. 2d

Having found that PTI cannot prove that it

Nevertheless, it is important to note that PTI’s breach

CDF Firefighters v.

27

PTI does not point to any expenses that it was forced to pay

28

due to Tessera bringing the 630 Investigation, such as lost sales
13

1

or the costs of indemnifying Elpida.

2

somewhat indirect theory that, had PTI known about Tessera’s

3

breach, PTI would have terminated the contract and ceased paying

4

royalties immediately.

5

royalty payments made after Tessera’s breach.

6

argument, PTI’s counsel could identify no other theory of damages.

7

The undisputed evidence negates PTI’s assertion that it would

Instead, PTI presents a

PTI’s claimed damages are the unnecessary
When asked at oral

8

have terminated the TCC License immediately had it known about

9

Tessera’s breach.

PTI knew that its products were targeted in the

United States District Court
For the Northern District of California

10

630 Investigation much earlier than October 6, 2011, but did not

11

try to terminate the TCC License until then.

12

Elpida sent PTI a letter informing PTI that PTI-packaged products

13

were at issue in the 630 Investigation and attaching the

14

complaint.

15

products that PTI packaged.

Mills Decl., Ex. F, Liao Depo. at

16

224:15-225:2, 228:16-229:8.

On April 22, 2010, about eighteen

17

months before PTI purported to terminate, PTI’s chairman and CEO,

18

D.K. Tsai, submitted a declaration in PTI 1 stating that he knew

19

that PTI-packaged products were implicated by the 630

20

Investigation:

21

In December 2007,

PTI knew that its indemnity obligation applied only to

23

[T]he assertion of the claims of the ‘106 patent in the 630
Investigation and the Texas action implicates PTI because PTI
performs the chip encapsulation step in the manufacturing
process for some of the companies named as alleged infringers
of the ‘106 patent.

24

. . .

25
26

Hundreds of millions of units of PTI products per year are
potentially at stake in the 630 Investigation and the Texas
Action.

27

. . .

22

28
14

1
2
3
4
5
6
7
8
9

United States District Court
For the Northern District of California

10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Sales of accused products to Elpida, PSC, ProMos and Kingston
represent over 80% of PTI’s annual volume. Upon information
and belief, a majority of these products are ultimately
destined for the United States market . . . and thus could be
subject to exclusion in the 630 Investigation.
Mills Decl., Ex. BV ¶¶ 3, 6.

Despite demonstrating knowledge of

Tessera’s purported breach, PTI did nothing until much later.

PTI

therefore cannot show that Tessera’s purported breach caused it to
suffer additional royalty payments.

PTI’s motion on its breach of

contract claim is DENIED and Tessera’s motion on the same claim is
GRANTED.
C.

Fraud

PTI has two main bases of its fraud allegations.

The first

is that Tessera falsely reassured PTI that it was not targeting
PTI-packaged products in the 630 Investigation.
this claim as time-barred.

Tessera attacks

Under California law, fraud has a

three year statute of limitations.

Cal. Civ. Code § 338(d).

The

statute of limitations begins to run from the date a party had
actual or constructive notice of the facts constituting the
alleged fraud.

Robuck v. Dean Witter & Co., 649 F.2d 641, 644

(9th Cir. 1980).

Constructive notice occurs when a reasonably

prudent person would be suspicious of fraud.

Id.

Because PTI

first filed its fraud claim on June 1, 2012, the cutoff date for
notice of any fraud claim would be June 1, 2009.

In other words,

if PTI received actual or constructive notice of the basis of any
of its fraud claims before June 1, 2009, then PTI’s claim is timebarred.
Tessera argues that PTI knew or had constructive notice of
the facts underlying its fraud claim by at least July 2008.

In

December 2007, Elpida sent PTI a letter informing PTI that PTI15

1

packaged products were at issue in the 630 Investigation and

2

attaching the complaint.

3

to honor its indemnity obligations to Elpida.

4

PTI’s response indicated that PTI was on notice that PTI-packaged

5

products might be implicated, giving PTI every reason to track the

6

630 Investigation.

7

communication about the 630 Investigation demonstrates that PTI

8

did so.

9

PTI acknowledged the letter by promising
This letter and

The fact that Elpida and PTI kept in

PTI counters that Tessera obscured its position by reassuring

United States District Court
For the Northern District of California

10

PTI that the 630 Investigation only targeted “unlicensed

11

subcontractors.”

12

argue that PTI relied upon Tessera’s statement when PTI admitted

13

that it had been secretly and willfully withholding royalties

14

since 2005, and later made catch-up payments to Tessera to make up

15

the difference.

16

targeting PTI because Tessera kept many 630 Investigation files

17

under seal.

18

Investigation had filed several public documents discussing

19

Tessera’s previous position that if no royalty had been paid, a

20

product was not licensed and might be infringing.

21

Ex. BX and attachments (several public 630 Investigation filings,

22

including an Elpida filing stating that “Tessera, however, also

23

contends that no products are licensed until the royalties are

24

paid”).

25

Guy Decl., Ex. 4.

But PTI cannot in good faith

PTI also argues it did not know Tessera was

By July 2008, however, parties to the 630

Mills Decl.,

In sum, the undisputed facts show that PTI received at least

26

constructive notice by at least July 2008.

27

reassurances that PTI was not targeted in the 630 Investigation, a

28

reasonable person in PTI’s position would have been put on notice
16

Despite Tessera’s

1

by Elpida’s letter and the public filings and would have been

2

suspicious that Tessera’s reassurances were false.

3

constitutes evidence of constructive notice of the bulk of PTI’s

4

fraud claims.

5

c., and e. centered around Tessera representations that PTI-

6

packaged products were not at issue in the 630 Investigation).

7

PTI’s allegations that it received no actual notice, i.e., it did

8

not actually discover Tessera’s 630 Investigation arguments until

9

discovery in the present case, are irrelevant.

This

See Docket No. 176 ¶ 109 (fraud allegations a., b.,

United States District Court
For the Northern District of California

10

PTI’s second basis for its fraud claim is that Tessera

11

misrepresented that PTI received a “somewhat lower” royalty rate

12

than other DRAM manufactures.

13

claim is untenable because it is a “generalized, vague and

14

unspecific assertion[], constituting mere ‘puffery’ upon which a

15

reasonable consumer could not rely.”

16

Tektronix Inc., 343 F.3d 1000, 1015 (9th Cir. 2003).

17

respond directly to this point at all, focusing on bolstering the

18

specificity of the facts of its fraud claim, when Tessera has

19

actually attacked the specificity of Tessera’s statement itself.

20

The Court need not decide whether the “somewhat lower”

Tessera argues that this fraud

Glen Holly Entm’t, Inc. v.
PTI does not

21

statement is unactionable as a matter of law, however, because PTI

22

failed to produce any evidence that it suffered legally cognizable

23

damages in relying on the “somewhat lower” royalty rate statement.

24

Fraud is only actionable when the plaintiff demonstrates that the

25

defendant’s misrepresentation put the plaintiff in a different or

26

worse position.

27

160 (1996).

28

statement was made after the contract was already in effect.

Conrad v. Bank of America, 45 Cal. App. 4th 133,

PTI’s counsel confirmed at oral argument that the

17

D.K.

1

Tsai, Chairman and CEO of PTI, stated that PTI believed the

2

statement and “continued paying royalties” to Tessera.

3

Supplemental Guy Decl., Ex. 107, Tsai Decl. ¶ 9.

4

constitute a legally cognizable theory of damages because

5

Tessera’s alleged statement, even if misleading, did not change

6

PTI’s duty to pay royalties under the TCC License.

7

Wells Fargo Bank, N.A., 2011 WL 30759, at *1-2 (N.D. Cal.).

8

does not -- and cannot -- argue that the statement, which if made

9

was made after the contract was signed, altered its apparent

This does not

Cf. Reyes v.
PTI

United States District Court
For the Northern District of California

10

assent to be bound by the TCC License.

11

Indep. Brokerage, Inc., 16 F. App'x 741, 743 (9th Cir. 2001)

12

(“plaintiffs must show their apparent assent to the contracts

13

. . . is negated by fraud”).

14

disparity, PTI would have no justification for terminating the TCC

15

License.

16

relying on the lack of a royalty rate disparity).

17

claim that Tessera’s allegedly fraudulent statement caused it to

18

overpay royalty payments that it otherwise would have avoided.

19

Wildman v. Pac. Coast

Upon discovering the royalty rate

See, generally, TCC License (no terms or conditions
PTI thus cannot

Because the first basis of PTI’s fraud claim is time-barred,

20

and its second basis fails substantively, the Court GRANTS

21

Tessera’s motion for summary judgment on PTI’s fraud claim.

22
23
24
25
26
27

D.

Patent Misuse and Declaratory Judgment that Royalty
Obligations are Limited to TCC Licensed Products that
Infringe an Unexpired, Licensed Patent

PTI’s fifth and sixth claims essentially seek a declaration
that Tessera’s use of the TCC License to require PTI to pay
royalties on TCC Licensed Products until the expiration of the
last licensed patent is patent misuse and that PTI is only obliged

28
18

1

to continue paying for Licensed Products that infringe a currently

2

effective patent.

3

judgment in favor of Tessera on those same issues in PTI 1.

4

PTI 1, Docket No. 233.

5

On March 31, 2013, the Court granted summary
See

In its decision, this Court reasoned, “Courts have approved

6

of contract provisions such as these when an agreement was entered

7

into voluntarily, and PTI has offered no evidence that it was

8

coerced into entering the license agreements or that Tessera had

9

refused to enter into an agreement with it unless it agreed to pay

United States District Court
For the Northern District of California

10

royalties on products that did not practice the patented

11

technology.”

12

Technical Dev. Corp., 433 F.2d 55, 61 (7th Cir. 1970)).

13

convenience of the parties rather than patent power dictates the

14

total-sales royalty provision, there is no misuse of the patents.”

15

Zenith Radio Corp v. Hazeltine Research, 395 U.S. 100, 138 (1969).

16

Because this case involves the same parties’ use of the same TCC

17

License, the same reasoning applies here.

18

reason to depart from its ruling in PTI 1.

19

new legal authority or evidence indicating that it entered into

20

the TCC License because of some coercive behavior on Tessera’s

21

part.

22

Accordingly, Tessera’s summary judgment motion on these causes of

23

action is GRANTED.

24

II. Tessera’s Claims

See id. (citing Beckman Instruments Inc. v.
“If

The Court finds no
PTI has presented no

See Docket No. 413-3 at 19; Mills Decl., Ex. EL.

25

A.

26

With respect to its first counterclaim, Tessera argues that

Breach of Contract

27

PTI breached the TCC License by (1) failing to pay royalties on

28

products covered by the contract, and (2) purporting to terminate
19

1

the contract.

2

breach of contract claims.

3

Both parties move for summary judgment on Tessera’s

As discussed previously, a breach of contract claim requires

4

the plaintiff to prove “(1) the contract, (2) plaintiff’s

5

performance or excuse for nonperformance, (3) defendant’s breach,

6

and (4) the resulting damages to plaintiff.”

7

at 830.

8
9

Reichert, 68 Cal. 2d

Regarding the first ground for Tessera’s breach of contract
claim, beginning in 2010 PTI stopped paying royalties for certain

United States District Court
For the Northern District of California

10

wBGA and uBGA products.

11

position is that PTI must pay for any products described as

12

“Licensed Products” under the TCC License Definitions for the

13

duration of the contract.

14

contends that products are authorized by the contract before

15

royalties are paid by the grant clause, which states: “Tessera

16

hereby grants Licensee a world-wide, non-exclusive, non-

17

transferable, non-sublicensable, limited license to the Tessera

18

Patents to assemble ICs into TCC Licensed Products and use or sell

19

such License Products.”

20

See Mills Decl., Ex. BG.

TCC License § I.A.

Tessera’s

Tessera further

TCC License § II.A.

PTI disagrees, arguing that the EFL provision mandates that,

21

as the licensee, it can choose which products to license by making

22

royalty payments for them.

23

licensed only for TCC Licensed Products for which it pays

24

royalties hereunder.”

25

means that the licensee can unilaterally decide which products to

26

license by paying a royalty payment.

27

decide unilaterally to stop licensing a product simply by not

28

making any more royalty payments.

The EFL provision states: “Licensee is

Id. § II.D.

20

PTI contends the EFL provision

As the licensee, PTI can

See Docket No. 352-2 at 17.

1

The Federal Circuit expressly rejected this interpretation of

2

the EFL provision in its decision on the 630 Investigation.

3

Considering the same license agreement between the same parties,

4

the Federal Circuit rejected an argument that sales are only

5

authorized once royalty payments have been made.

6

F.3d at 1370.

7

products to be sold even before royalty payments are made on a

8

periodic basis.

9

payments “does not convert a once authorized sale into a non-

Tessera, 646

The TCC License’s grant clause authorizes licensed

Id.

That some licensees fall behind in their

United States District Court
For the Northern District of California

10

authorized sale.”

11

result –- one would never be able to determine whether a

12

particular product was authorized or not, clouding each product

13

sale with uncertainty.

14

contract clauses in a way that would result in an “absurdity.”

15

Wright v. Coberly-W. Co., 250 Cal. App. 2d 31, 36 (1967); Cal.

16

Civ. Code § 1638.

17

Id.

Holding otherwise would lead to an absurd

See id.

The Court will not interpret

Aside from urging the Court to adopt its view of the plain

18

meaning of the EFL provision, PTI also argues that the Court

19

should hold Tessera to the arguments it made before the ITC in the

20

630 Investigation.

21

licensed until they are paid for.

22

position because it is inconsistent with the Federal Circuit

23

decision.

24

against Tessera here.

25

Cal. App. 4th 778, 790 (2007), which is inapposite because it

Tessera’s argument was that products are not
Tessera can no longer take this

The doctrine of judicial estoppel is inapplicable
PTI cites Bailey v. Outdoor Media Grp., 155

26
27
28
21

1

refers to equitable estoppel, not judicial estoppel.2

2

estoppel prevents a party, who assumed a certain position in a

3

legal proceeding and prevailed, from later assuming a

4

contradictory position in a later proceeding just because its

5

interests have changed.

6

(2001).3

7

factors can inform a court’s decision to invoke judicial estoppel:

8

(1) whether the party’s later position is “clearly inconsistent”

9

with its earlier position, (2) whether the party succeeded in

Judicial

New Hampshire v. Maine, 532 U.S. 742, 749

Although the doctrine is not strictly formulaic, several

United States District Court
For the Northern District of California

10

persuading the court to accept the party’s earlier position such

11

that there would be a danger of inconsistent results, and (3)

12

whether the party seeking to assert the inconsistent position

13

would derive an unfair advantage or impose an unfair detriment on

14

the opposing party if not estopped.

15

Tessera did not succeed in persuading the ITC or the Federal

16
17
18
19
20
21
22
23
24
25
26
27
28

Id. at 750-51.

Because

2

Equitable estoppel focuses on the relationship between the
parties and requires the elements of privity, reliance, and
prejudice. Swahn Grp., Inc. v. Segal, 183 Cal. App. 4th 831, 841
(2010). Judicial estoppel is focused on the relationship between
the litigant and the judicial system and does not require the
above elements. Id.
PTI has not explained why equitable estoppel is appropriate
here and how the elements are satisfied. The elements are “(1) a
representation or concealment of material facts (2) made with
knowledge, actual or virtual, of the facts, (3) to a party
ignorant, actually and permissibly, of the truth, (4) with the
intent, actual or virtual, that the latter act upon it, and
(5) the party must have been induced to act upon it.” Bailey, 155
Cal. App. 4th at 790.
3

Federal law governs judicial estoppel in federal court,
even in diversity actions, because the forum court has the
greatest interest in protecting itself from manipulation.
Rissetto v. Plumbers & Steamfitters Local 343, 94 F.3d 597, 603
(9th Cir. 1996).
22

1

Circuit of its argument that products are not licensed until they

2

are paid for under the EFL provision, and because Tessera will

3

gain no unfair advantage in taking its current position, the Court

4

will not invoke the judicial estoppel doctrine against Tessera.

5

The second ground for Tessera’s breach of contract claim

6

concerns PTI’s attempt to terminate the TCC License because

7

Tessera brought the 630 Investigation.

8

regards to PTI’s composite breach of contract claim, PTI had no

9

right to terminate the contract because PTI itself was in breach.

As already discussed in

United States District Court
For the Northern District of California

10

Accordingly, PTI’s attempt to terminate the contract and cease

11

paying royalties in June 2012 was a breach of the TCC License.

12

The Court therefore DENIES PTI’s motion and GRANTS Tessera’s

13

motion for summary judgment on Tessera’s breach of contract claim,

14

and holds that PTI breached both by failing to pay royalties and

15

attempting to terminate the contract without good cause.

16

Tessera acknowledged during oral argument, the exact amount of

17

damages in unpaid royalties must still be proved.

As

18

B.

19

PTI argues that the Court should grant summary judgment as to

20

Tessera’s claims against MTI because Tessera cannot prove that MTI

21

is an alter ego of PTI.

22

of liability against MTI do not rely upon a claim that MTI was

23

PTI’s alter ego.

24

acted together in violation of the law to transfer to MTI PTI’s

25

long-term business relationship with Elpida.

26

seek to hold MTI liable solely for PTI’s actions, or vice versa,

27

so an alter ego theory is inapplicable.

Counterclaims against MTI –- Alter Ego Theory

PTI misses the mark.

Tessera’s theories

Rather, Tessera merely claims that PTI and MTI

28
23

Tessera does not

1

C.

2

Tessera claims PTI violated the implied covenant by

3

transferring the Elpida packaging business to its wholly-owned

4

subsidiary, MTI, to avoid paying royalties to Tessera.

5

challenges the viability of this claim.

6

Implied Covenant of Good Faith and Fair Dealing

PTI now

PTI challenges that Tessera’s implied covenant theory

7

attempts to vary the terms of the TCC License.

8

that the implied covenant of good faith and fair dealing applies

9

only to the parties to a contract and additionally cannot be used

PTI is correct

United States District Court
For the Northern District of California

10

to vary the express terms of the agreement.

11

Inc. v. Marathon Dev. California, Inc., 2 Cal. 4th 342, 374

12

(1992).

13

so by definition is not a “License Affiliate” under the contract.

14

See TCC License § I.H (stating that a “License Affiliate” is one

15

who has more than fifty percent of its stock controlled by

16

Licensee and agrees to be bound by the terms of the contract).

17

PTI contends that because the TCC License impliedly allows for

18

subsidiaries that are not “License Affiliates,” Tessera is

19

attempting to alter the contract by holding PTI liable for

20

funneling business through MTI.

21

See Carma Developers,

MTI did not agree to be bound under the TCC License, and

But Tessera’s theory that PTI breached the implied covenant

22

does not seek to contradict any express terms.

23

theory seeks the benefit of its express right under the contract

24

to receive royalty payments.

25

the implied covenant, which requires that a party refrain from

26

doing anything that would deprive the other party of the benefits

27

of the contract.

April Enter., Inc. v. KTTV, 147 Cal. App. 3d

28

805, 816 (1983).

In cases where one party has a discretionary

Instead, Tessera’s

This falls squarely under the law of

24

1

right under a contract, the implied covenant applies with

2

particular force and requires that the party exercise its

3

discretionary right in good faith.

4

4th at 372.

5

does not necessarily violate an express term of the TCC License,

6

it could be a violation of the implied covenant if it was done

7

with the intent to deprive the other party of the benefits of the

8

contract.

9

United States District Court
For the Northern District of California

10

D.

Carma Developers, Inc., 2 Cal.

While the act of redirecting business to a subsidiary

PTI’s motion on this issue is DENIED.
Fraudulent Transfer

Another of Tessera’s claims is that PTI fraudulently

11

transferred the Elpida business to MTI.

12

Fraudulent Transfer Act, “a transfer is fraudulent, both as to

13

present and future creditors, if it is made ‘[w]ith actual intent

14

to hinder, delay, or defraud any creditor of the debtor.’”

15

v. Reed, 31 Cal. 4th 657, 664 (2003) (quoting Cal. Civ. Code

16

§ 3439.04(a)).

17

Under California’s

Mejia

PTI argues that its business relationship with Elpida cannot

18

be property because the relationship was not guaranteed by

19

contract, meaning Elpida could terminate at any time and go

20

elsewhere.

21

“property of a debtor,” and property means “anything that may be

22

the subject of ownership.”

23

For purposes of fraudulent transfer, an “asset” is

Cal. Civ. Code § 3439.01(a) and (h).

The Ninth Circuit has specifically stated that bankruptcy

24

case law may be persuasive in considering California statutes that

25

are substantially similar, including California’s fraudulent

26

transfer statute.

27

(9th Cir. 2008).

28

ruling that intangibles not guaranteed by contract can be

See In re AFI Holding, Inc., 525 F.3d 700, 703
Tessera cites a number of bankruptcy cases

25

fraudulently transferred assets, such as a “book of business,”

2

corporate goodwill, or ongoing business concerns.

3

Bellingham Insurance Agency, Inc., 702 F.3d 553, 571 (9th Cir.

4

2012) (holding that the “transfer of an ongoing business concern”

5

in the form of the insurance firm’s biggest client constituted a

6

fraudulent transfer).

7

Cir. 2002) (“There is substantial support in bankruptcy case law

8

for the proposition that such intangible assets as goodwill and

9

overall going concern are valuable”); Hunt v. Phinney, 177 Cal.

10
United States District Court
For the Northern District of California

1

App. 2d 212, 216 (1960) (“It has been repeatedly held that the

11

goodwill of a business is property and as such will be protected

12

by the courts.”).

13

similar to a book of business or a large client; even though

14

Elpida could go elsewhere at any time, having that relationship is

15

undoubtedly an asset to PTI’s business.

16

Insurance Agency, Inc., 702 F.3d at 571.

17

cases cited by Tessera, a substantial portion of the debtor’s

18

customer base or industry was transferred, there is evidence that

19

the Elpida relationship represented a large percentage of PTI’s

20

business.

21

fraudulent transfer claim.

22
23
24

E.

See In re

See also In re Watman, 301 F.3d 3, 12 (1st

PTI’s recurring business relationship is

See In re Bellingham
Although in many of the

Accordingly, the Court DENIES PTI’s motion on Tessera’s

Intentional and Negligent Interference with Prospective
Economic Advantage

PTI argues that Tessera’s interference claims must fail

25

because the relationship with Elpida was not an “economic

26

advantage” and Tessera cannot prove that PTI engaged in a wrongful

27

act other than the act of interference itself.

28
26

1

PTI argues without citation to legal authority that contract

2

negotiations cannot constitute an economic relationship for

3

purposes of Tessera’s claims for intentional and negligent

4

interference with prospective economic advantage.

5

points out, however, Elpida and Tessera were in licensing

6

negotiations while PTI was collaborating with Elpida.

7

Decl., Ex. CD, Tsai Depo. at 128:7-20; Ex. DH, Kota Takemura Depo.

8

at 22:25-23:16, 33:12-34:8, 93:7-15.

9

the “possibility of an economic relationship,” with the

As Tessera

Mills

Courts have recognized that

United States District Court
For the Northern District of California

10

“probability of economic benefit,” or “business discussions” with

11

a prospective customer, can form grounds for an interference

12

claim.

13

2d 1003, 1005, 1013 (N.D. Cal. 1999); Silicon Labs Integration,

14

Inc. v. Melman, 2010 WL 890140, at *2 (N.D. Cal.); Impreva Labs,

15

Inc. v. Sys. Planning Corp., 2012 WL 3647716, at *6 (N.D. Cal.).

16

It is also well-established that as part of an interference

Centigram Argentina, S.A. v. Centigram Inc., 60 F. Supp.

17

claim, the plaintiff must prove the defendant’s conduct was

18

“wrongful by some legal measure other than the fact of

19

interference itself.”

20

29 Cal. 4th 1134, 1153 (2003).

21

points to its analysis in the fraudulent transfer section.

22

Docket No. 407 at 36.

23

the Court takes this to mean that the alleged independent,

24

wrongful act is that PTI fraudulently transferred business to MTI

25

in order to dodge TCC License obligations, giving it an unfair

26

advantage in competing with Tessera for a relationship with

27

Elpida.

Korea Supply Co. v. Lockheed Martin Corp.,
To satisfy this element, Tessera
See

Making all inferences in favor of Tessera,

This raises a disputed issue and the Court therefore

28
27

1

DENIES PTI’s motion for summary judgment on the interference

2

claims.

3

F.

4

PTI seeks summary judgment on Tessera’s claim that, under the

5

TCC License Indemnification Clause, PTI must reimburse Tessera for

6

litigation fees and costs expended in bringing the 630

7

Investigation.

8
9

United States District Court
For the Northern District of California

10
11
12
13
14
15

Indemnification Claim

The Indemnification Clause provides:

Licensee agrees to defend, indemnify, and hold Tessera
harmless from and against any and all damages, liabilities,
costs and expenses (including reasonable attorneys [sic] fees
and expenses) arising out of or related to Licensee’s use of
Tessera Patents. Notwithstanding, Licensee shall not bear
the obligation or expense of defending the validity of any
Tessera Patent. Tessera shall have sole control over and
bear the expense for so defending the validity of the Tessera
Patents.
TCC License § XIII.A.
First, Tessera cannot have it both ways.

Tessera argues in

16

regards to the parties’ breach of contract claims that the 630

17

Investigation did not implicate PTI-packaged products.

18

its indemnification claim, Tessera switches positions and asserts

19

the 630 Investigation “arises out of or relates to” PTI’s use of

20

the Tessera patents.

21

Now, in

This is patently inconsistent.

Second, the Indemnification Clause protects Tessera from

22

third-party claims generated by PTI’s use of Tessera’s patents.

23

This is evidenced by the clause’s use of the phrase, “Licensee

24

agrees to defend, indemnify, and hold Tessera harmless,” all of

25

which emphasizes defensive action.

26

suit initiated by Tessera itself to protect its own patent rights

27

and obtain royalty payments.

28

construction of indemnification claims, which refer to defending

It does not address a separate

This is in line with the typical

28

1

third-party actions.

2

Tech., Inc., 13 Cal. App. 4th 949, 962 (1993).

3

interpretation departs both from the plain language of the

4

contract and the courts’ interpretation of similar indemnification

5

clauses.

6

indemnification claim.

7

G.

8
9

See Myers Bldg. Indus., Ltd. v. Interface
Tessera’s

As such, the Court GRANTS PTI’s motion on Tessera’s

Declaratory Judgment that “Testing-Only” Products are
Subject to Royalty

Some products are packaged by MTI or others and then tested

United States District Court
For the Northern District of California

10

by PTI.

11

covered by the TCC License.

12

judgment claim on this issue, PTI asserts it is entitled to

13

judgment as a matter of law because only products which PTI

14

“assembles” are licensed.

15

PTI and Tessera disagree over whether these products are
Regarding Tessera’s declaratory

PTI argues that, according to its language, the TCC License

16

covers only the right “to assemble ICs into TCC Licensed Products

17

and use or sell such TCC Licensed Products.”

18

However, Tessera has raised in response at least a triable issue

19

of fact on the scope of the license grant.

20

that testing may fall within PTI’s broad usage of the TCC Licensed

21

Products, “whether sold, transferred or used internally.”

22

§ III.B.

23

“assembly” can be understood in the field to include “testing.”

24

Tessera presents evidence indicating that it does.

25

Decl., Ex. DM, Bravman Depo. at 157:21-158:3, Ex. DN, Gwinnell

26

Depo. at 245:20-25.

27

License’s scope and so PTI’s motion on this point must be DENIED.

TCC License § II.A.

Tessera first notes

Id.

Further, a factual dispute exists regarding whether

See Mills

There are triable issues regarding the TCC

28
29

1
2

CONCLUSION
Regarding PTI’s claim for declaratory judgment that it has

3

the right to terminate the contract, the Court GRANTS summary

4

judgment in favor of Tessera.

5

declaratory judgment action that PTI has no right to terminate the

6

contract, the Court also GRANTS summary judgment in favor of

7

Tessera.

8
9

United States District Court
For the Northern District of California

10
11
12

Regarding Tessera’s identical

The Court GRANTS summary judgment in favor of Tessera on
PTI’s breach of contract claim.
The Court GRANTS Tessera’s motion for summary judgment on
PTI’s fraud claim.
The Court GRANTS Tessera’s motion for summary judgment on

13

PTI’s claims for patent misuse and for declaratory judgment that

14

the TCC License requires infringement for royalty obligations to

15

accrue.

16

On Tessera’s breach of contract claim, the Court GRANTS

17

summary judgment in favor of Tessera.

18

amount of damages remains.

The issue of the exact

19

The Court DENIES PTI’s motion for summary judgment on

20

Tessera’s claim for breach of the implied covenant of good faith

21

and fair dealing.

22
23
24
25
26
27

The Court DENIES PTI’s motion for summary judgment on
Tessera’s claim for fraudulent transfer.
The Court DENIES PTI’s motion for summary judgment on
Tessera’s interference claims.
The Court GRANTS PTI’s motion for summary judgment on
Tessera’s claim for declaratory judgment of indemnification.

28
30

1
2
3
4
5

The Court DENIES PTI’s motion that testing-only products be
excluded from the breach of contract damages.
The Court DENIES PTI’s motion to preclude Tessera’s claims
based on lack of an alter ego theory.
No summary judgment motion was made on Tessera’s claim for

6

breach of the implied covenant of good faith and fair dealing and

7

PTI’s claims for fraud and negligent misrepresentation.

8
9

In sum, of PTI’s complaint, only its claim for breach of the
implied covenant of good faith and fair dealing remains.

Of

United States District Court
For the Northern District of California

10

Tessera’s complaint, its claims for breach of the implied covenant

11

of good faith and fair dealing, fraud, fraudulent transfer,

12

negligent misrepresentation, intentional and negligent

13

interference with prospective economic advantage, inducing breach

14

of contract, and constructive trust survive.

15

Tessera’s contract damages remains to be adjudicated.

16

The issue of

The parties shall attend a settlement conference with Judge

17

Grewal within sixty days of the issuance of this order.

18

parties are directed to contact Judge Grewal’s courtroom deputy to

19

schedule a date for the settlement conference.

The

20
21

IT IS SO ORDERED.

22
23

Dated:

1/15/2014

CLAUDIA WILKEN
United States District Judge

24
25
26

cc: MagRef; PSG

27
28
31