Powertech Technology Inc v. Tessera, Inc.

Filing 93

ORDER by Judge Claudia Wilken DENYING DEFENDANTS 20 MOTION TO DISMISS AND TO STRIKE. (ndr, COURT STAFF) (Filed on 5/21/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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POWERTECH TECHNOLOGY, INC.,

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Plaintiff,

United States District Court
For the Northern District of California

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ORDER DENYING
DEFENDANT’S MOTION
TO DISMISS AND TO
STRIKE
(Docket No. 20)

v.
TESSERA, INC.,

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No. C 11-6121 CW

Defendant.
________________________________/
Defendant Tessera, Inc. moves to dismiss and to strike the

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claims brought against it by Plaintiff Powertech Technology, Inc.

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(PTI).

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filed by the parties and their oral arguments at the hearing, the

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Court DENIES Tessera’s motion.

PTI opposes the motion.

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Having considered the papers

BACKGROUND
On October 20, 2003, PTI and Tessera entered into a contract

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called Tessera Compliant Chip License Agreement (TCC License).

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Compl., Appendix A (TCC License).

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use Tessera’s patents to make integrated circuit packages and to

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use or sell these products world-wide.

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¶ II.A.

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payments to Tessera.

The TCC License allows PTI to

Compl. ¶ 1; TCC License

In return, PTI is obliged to make certain royalty
See TCC License § III.

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The TCC License states in part,

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License Grant. Subject to . . . Licensee’s payment of
the fees and royalties stated herein . . ., Tessera
hereby grants Licensee a world-wide, non-exclusive, nontransferable, non-sublicensable, limited license to the
Tessera Patents to assemble ICs into TCC Licensed
Products and use or sell such TCC License Products.

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. . .

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United States District Court
For the Northern District of California

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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 other responsibilities 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
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.
. . .
Governing Law. . . . 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. If such disputes, controversies, claims or
differences cannot be settled between the parties, any
dispute resolution proceedings shall take place in the
United States, but if either party files a claim in
state or federal court, such claim shall be filed in the
state or federal courts of California. Nothing herein
shall alter or affect any other rights either party may
have to redress any breach or act of the other party.
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.
No waiver. Any waiver, express or implied, by either of
the parties hereto of any right hereunder or default by
the other party, shall not constitute or be deemed a
continuing waiver or a waiver of any other right or
default. No failure or delay on the part of either
party in the exercise of any right or privilege
hereunder shall operate as waiver thereof, nor shall any
single or partial exercise of such right or privilege
preclude other or further exercise thereof or of any
other right or privilege. . . .
TCC License ¶¶ II.A, VIII.B, XIV.A, XIV.B.
PTI has performed its obligations under the TCC License,
including paying its ongoing royalties to Tessera.

Compl. ¶ 22.

In December 2007, Tessera initiated ITC Investigation No.

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337-TA-630 (the 630 Investigation), accusing certain companies of

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infringing certain Tessera patents, including its 5,663,106 patent

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(’106 patent), through the importation and sale of particular wBGA
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and uBGA products.

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a civil action in the Eastern District of Texas, in which it

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asserted the same patents against the same defendants for the same

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products as in the ITC action.

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Tech. Co., No. 07–534 (E.D. Tex. Dec. 7, 2007), Docket No. 1.1

Compl. ¶ 5.

Tessera also simultaneously filed

Complaint, Tessera, Inc. v. A–DATA

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PTI was not named as a respondent in the ITC action or

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defendant in the Texas action, but Powerchip Semiconductor Corp.

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(PSC), ProMos Technologies Corp., and Elpida Memory Inc. were.

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related litigation, PTI has since asserted that these companies

In

United States District Court
For the Northern District of California

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were among PTI’s customers for the accused products.

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Mot. to Dismiss, Powertech Technology, Inc. v. Tessera, Inc. (PTI

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I), Case No. 10-945 (N.D. Cal.), Docket No. 33; Powertech

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Technology, Inc. v. Tessera, Inc., 660 F.3d 1301, 1304 (Fed. Cir.

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2011).

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See Opp. to

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

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Investigation issued an initial determination, finding, among

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other things, that for uBGA products, “Tessera’s patent rights are

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exhausted as to those accused products purchased from Tessera’s

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licensees,” precluding any liability based on these products.

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Tessera v. ITC, 646 F.3d 1357, 1363 (Fed. Cir. 2011) (summarizing

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the ALJ’s conclusions).

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final determination in the 630 Investigation, affirming the ALJ’s

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finding of patent exhaustion.

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holding).

On January 4, 2010, the ITC issued its

Id.

(summarizing the ITC’s

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The Texas action was subsequently stayed pending the final
resolution of the 630 Investigation. Order, Tessera, Inc. v. A–
DATA Tech. Co., No. 07–534 (E.D. Tex. Feb. 28, 2008), Docket No.
48.
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On March 5, 2010, several months after the ITC issued its
final determination in the 630 Investigation, PTI filed an action

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for declaratory relief in this Court.

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No. 1.

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

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imminent threat of injury because Tessera had accused PTI’s

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customers of infringement based on PTI-packaged products.

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

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subject matter jurisdiction, stating that, to its knowledge, “PTI

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United States District Court
For the Northern District of California

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is a licensee in good standing and it and its customers therefore

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enjoy protection against any suit accusing its licensed products

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of infringement of the ’106 patent or any other licensed patent.”

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Mot. to Dismiss, PTI I, Docket No. 14, 6.

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that its license with PTI “protects PTI and its customers.”

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at 3.

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subject matter jurisdiction, finding that there was no Article III

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case or controversy between the parties, because Tessera had

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explicitly excluded licensed products from its enforcement

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actions.

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

See Compl., PTI I, Docket

In that case, PTI sought declarations of non-infringement

On

Tessera also asserted
Id.

In June 2010, this Court dismissed the action for lack of

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

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

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

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in part.2

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of patent exhaustion for the infringement accusations against the

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uBGA products, and stated that because “Tessera’s licensees were

In particular, the Federal Circuit upheld the finding

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The Federal Circuit also affirmed the ITC’s determination
that the wBGA products did not infringe the ’106 patent. Tessera
v. ITC, 646 F.3d at 1366-67.
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authorized to sell the accused products” at the time of sale

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without reservation, Tessera could not subsequently assert its

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patent rights against the licensees’ customers.

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646 F.3d at 1369-71.

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argument that its licensees’ sales to their customers were

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initially unauthorized until the time that the licensee remitted

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the related royalty payment to Tessera which, under its licensing

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agreements, may not happen for months after the products were

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sold.

United States District Court
For the Northern District of California

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Tessera v. ITC,

In so holding, the court rejected Tessera’s

Id. at 1370.
Several months later, on September 30, 2011, the Federal

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Circuit reversed this Court’s dismissal in PTI I, finding that a

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controversy did exist between the parties.

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Inc. v. Tessera, Inc., 660 F.3d 1301, 1307-10 (Fed. Cir. 2011).

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On appeal, Tessera had again argued that it had not accused PTI’s

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products, and that “PTI has paid all the royalties due. . . . PTI

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and its customers therefore enjoy protection against suit on PTI’s

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licensed products on any of the hundreds of licensed patents, of

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which the ’106 patent is but one.”

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Brief of Defendant-Appellee Tessera, Inc. 4, Powertech, Case No.

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10-1489 (Fed. Cir. Jan. 18, 2011).

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Circuit rejected Tessera’s position that it had not accused PTI’s

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products as inconsistent with the position that Tessera had argued

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before it in the ITC action, that the products were initially

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unauthorized until the royalty payments were subsequently made and

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that some licensees, including PTI, had underpaid their royalties

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or paid them late, so exhaustion was not triggered.

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specifically noted that

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Powertech Technology,

Corrected Non-Confidential

In its decision, the Federal

The court

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we have no doubt that PTI’s customers and products were
specifically targeted in [the ITC and Texas actions].
For example, witnesses for Elpida testified that the
accused products in the ITC and Texas actions 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, 660 F.3d at 1308 n.4.

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A week later, on October 6, 2011, PTI notified Tessera by
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letter that PTI believed that Tessera was in breach under the TCC
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License.

Compl. ¶ 20.

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PTI initiated the current case on December 6, 2011.

Docket

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United States District Court
For the Northern District of California

No. 1.

PTI alleges that Tessera breached the TCC License by

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initiating an investigation in the ITC accusing PTI’s products,
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without first providing sixty days’ notice to PTI, terminating the
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license and providing notice of the termination, as required in
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Paragraph XIV.A of the TCC License.

Compl. ¶¶ 3-8.

PTI contends

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that Tessera breached the License Grant provision of the TCC
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License by targeting PTI’s products and customers, even though PTI
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had fully complied with the TCC License and paid royalties,
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without first terminating the TCC License.

Compl. ¶¶ 9-10.

PTI

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further argues that Tessera breached this provision by accusing
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the products even though its patent rights with respect to them
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were exhausted.

Compl. ¶¶ 11-12.

PTI asserts claims for: (1)

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declaratory judgment that PTI may terminate the TCC License; (2)
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breach of contract; and (3) breach of the implied covenant of good
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faith and fair dealing.
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DISCUSSION
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Tessera moves to dismiss PTI’s complaint pursuant to Federal
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Rule of Civil Procedure 12(b)(6).

Tessera alternatively seeks to

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strike PTI’s complaint under California’s anti-Strategic Lawsuit

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Against Public Participation (anti-SLAPP) statute, Cal. Code Civ.

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Proc. § 425.16(b).

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I.

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Motion to Dismiss
A. Legal Standard
A complaint must contain a “short and plain statement of the

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claim showing that the pleader is entitled to relief.”

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Rule of Civil Procedure 8(a).

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failure to state a claim, dismissal is appropriate only when the

Federal

On a motion under Rule 12(b)(6) for

United States District Court
For the Northern District of California

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complaint does not give the defendant fair notice of a legally

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cognizable claim and the grounds on which it rests.

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Corp. v. Twombly, 550 U.S. 544, 555 (2007).

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whether the complaint is sufficient to state a claim, the court

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will take all material allegations as true and construe them in

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the light most favorable to the plaintiff.

NL Indus., Inc. v.

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Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).

However, this

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principle is inapplicable to legal conclusions; “threadbare

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recitals of the elements of a cause of action, supported by mere

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conclusory statements,” are not taken as true.

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129 S. Ct. 1937, 1949-50 (2009) (citing Twombly, 550 U.S. at 555).

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When granting a motion to dismiss, the court is generally

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required to grant the plaintiff leave to amend, even if no request

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to amend the pleading was made, unless amendment would be futile.

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Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911

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F.2d 242, 246-47 (9th Cir. 1990).

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amendment would be futile, the court examines whether the

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complaint could be amended to cure the defect requiring dismissal

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“without contradicting any of the allegations of [the] original

Bell Atl.

In considering

Ashcroft v. Iqbal,

In determining whether

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complaint.”

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Cir. 1990).

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Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th

Although the court is generally confined to consideration of

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the allegations in the pleadings, when the complaint is

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accompanied by attached documents, such documents are deemed part

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of the complaint and may be considered in evaluating the merits of

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a Rule 12(b)(6) motion.

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1265, 1267 (9th Cir. 1987).

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Durning v. First Boston Corp., 815 F.2d

B. Discussion

United States District Court
For the Northern District of California

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Tessera argues that PTI’s claims against it are barred under

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the Noerr-Pennington doctrine, which provides that a defendant is

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immune from liability for claims based on its exercise of its

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First Amendment right to petition the government for redress of

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grievances.

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U.S. 657, 669 (1965); Eastern Railroad Presidents Conference v.

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Noerr Motor Freight, Inc., 365 U.S. 127 (1961); Sosa v. DIRECTV,

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Inc., 437 F.3d 923, 929 (9th Cir. 2006).

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amend. 1 (“Congress shall make no law . . . abridging . . . the

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right of the people . . . to petition the Government for a redress

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of grievances.”).

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Tessera are not based on Tessera’s petitioning activity and that

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the Noerr-Pennington doctrine does not apply to claims based on

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the breach of a private contractual obligation.

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United Mine Workers of America v. Pennington, 381

See also U.S. Const.

In response, PTI argues that its claims against

“The Noerr-Pennington doctrine derives from the Petition

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Clause of the First Amendment and provides that ‘those who

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petition any department of the government for redress are

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generally immune from statutory liability for their petitioning

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conduct.’”

Kearney v. Foley & Lardner, LLP, 590 F.3d 638, 643-44
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(9th Cir. 2009) (quoting Sosa, 437 F.3d at 929).

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emerged in the antitrust context.”

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omitted).

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part on “the principle that [it] would not ‘lightly impute to

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Congress an intent to invade . . . freedoms’ protected by the Bill

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of Rights, such as the right to petition.”

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NLRB, 536 U.S. 516, 525 (2002) (quoting Noerr, 365 U.S. at 138).

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“Recognizing that the ‘right to petition extends to all

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departments of the government’ and includes access to courts, the

“It initially

Id. at 644 (citations

The Supreme Court based the creation of the doctrine in

BE & K Constr. Co. v.

United States District Court
For the Northern District of California

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Supreme Court extended the doctrine to provide immunity for the

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use of ‘the channels and procedures’ of state and federal courts

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to advocate causes.”

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Id.

(quoting Sosa, 437 F.3d at 929-30).

Because “Noerr-Pennington is a label for a form of First

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Amendment protection,” the Ninth Circuit has stated that “to say

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that one does not have Noerr-Pennington immunity is to conclude

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that one’s petitioning activity is unprotected by the First

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Amendment.”

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(declining to consider that whether the doctrine “provides greater

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protection than the First Amendment”).

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Kidney Ctrs., 146 F.3d 1056, 1059 (9th Cir. 1998) (“the doctrine

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is a direct application of the Petition Clause”).

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antitrust context, the Ninth Circuit has stated, “Because the

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Noerr-Pennington doctrine grows out of the Petition Clause, its

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reach extends only so far as necessary to steer the Sherman Act

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clear of violating the First Amendment.”

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Cohler, 410 F.3d 1180, 1184 (9th Cir. 2005).

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White v. Lee, 227 F.3d 1214, 1231 (9th Cir. 2000)

See also Kottle v. N.W.

In the

Freeman v. Lasky, Haas &

“The Supreme Court has since held that Noerr-Pennington
principles ‘apply with full force in other statutory contexts’
9

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outside antitrust.”

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F.3d at 930).

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applies to state law tort claims.

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Am. Mktg. FSI, 546 F.3d 991, 1006-1007 (9th Cir. 2008)

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(considering a claim for tortious interference with prospective

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economic advantage under California law); see also Video Int’l

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Prod., Inc. v. Warner-Amex Cable Commc’ns, Inc., 858 F.2d 1075

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(5th Cir. 1988)) (applying doctrine to state law claim for

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tortious interference with contracts).

United States District Court
For the Northern District of California

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Kearney, 590 F.3d at 644 (quoting Sosa, 437

In 2008, the Ninth Circuit found that the doctrine
Theme Promotions, Inc. v. News

While the Noerr-Pennington doctrine protects “those who

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petition the government for redress . . . from antitrust,

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statutory, or tort liability,” Luxpro Corp. v. Apple Inc., 2011

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U.S. Dist. LEXIS 35008 (N.D. Cal.), Tessera provides no compelling

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authority that the doctrine immunizes against breach of contract

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claims.

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address the doctrine’s applicability to contract claims.

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Gunderson v. Univ. of Alaska, 902 P.2d 323, 326-27 & n.4 (Alaska

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1995), the Alaska Supreme Court discussed the Noerr-Pennington

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doctrine in relation to common law tort claims for interference

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with contractual relations and interference with prospective

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advantage, not claims for breach of contract.

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Western Ry. v. Terminal R.R. Ass’n of St. Louis, 1998 U.S. Dist.

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LEXIS 4614 (S.D. Ill.), the court does not make clear what causes

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of action were asserted in the case, it observed that “courts have

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extended the protections of the Noerr-Pennington doctrine to

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insulate parties from claims alleging intentional interference

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with a contract right or other economic expectation,” thus finding

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the claims in the case barred because “the courts view the First

None of the cases upon which Tessera relies directly

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In

While in Gateway

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Amendment right to petition the government for redress to be

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superior to contract rights as well” as to antitrust claims.

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at *7 (citing Village of Lake Barrington v. Hogan, 272 Ill. App.

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3d 225, 233 (1995) (addressing tortious interference with contract

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and economic advantage in relation to Illinois state privileges)).

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In Bethany Bldg., Inc. v. Dungan Civic Ass’n, 2003 Phila. Ct. Com.

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Pl. LEXIS 20 (2003), the court examined the conduct complained of

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in the complaint as a whole and found that the case, which

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included nine separate charges, was barred by the Noerr-Pennington

Id.

United States District Court
For the Northern District of California

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doctrine, without any separate analysis of the applicability of

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the doctrine to the breach of contract claim.

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However, the court separately held that the breach of contract

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claim failed as a matter of law, because the plaintiffs had not

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alleged the existence of an enforceable contract between them and

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any defendant.

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Test & Assembly Ctr., Case No. RG08410327 (Cal. Sup. Ct. 2009),

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the Alameda County Superior Court held, without elaboration or

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discussion, that claims of breach of contract, breach of the

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covenant of good faith and fair dealing and violation of the UCL

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were barred by the state law litigation privilege and the Noerr-

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Pennington doctrine, without separating the two privileges or the

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various causes of action.

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Id. at *9.

Id. at *4-9.

Similarly, in Tessera, Inc. v. United

Even if the Noerr-Pennington doctrine could apply in the

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context of claims for breach of contract and of the implied

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covenant of good faith and fair dealing, it would not bar PTI’s

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claims in this matter.

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test to determine whether the defendant’s conduct is immunized:

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(1) identify whether the lawsuit imposes a burden on petitioning

In BE & K, “the Court adopted a three-part

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rights, (2) decide whether the alleged activities constitute

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protected petitioning activity, and (3) analyze whether the

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statutes at issue may be construed to preclude that burden on the

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protected petitioning activity.”

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BE & K, 536 U.S. at 530-33, 535-37).

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Kearney, 590 F.3d at 644 (citing

PTI’s lawsuit does not impose a burden on Tessera’s

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petitioning rights.

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right to petition the government for redress, by among other

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things, bringing an ITC investigation,” Opp. at 11, to the extent

While, as PTI acknowledges, “Tessera has the

United States District Court
For the Northern District of California

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that Tessera has waived these rights through contract, the

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Noerr-Pennington doctrine does not shield Tessera from liability

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for failing to comply with that contract.

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accuses Tessera of breaching the contract between the parties by

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failing to comply with the requirements of the agreement,

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including to provide notice and to terminate the TCC License prior

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to bringing the ITC Investigation, not simply by instituting that

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proceeding.

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asserting these claims.

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II.

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A.

In this case, PTI

Thus, Noerr-Pennington does not prevent PTI from

Motion to Strike under California’s Anti-SLAPP Statute
Legal Standard

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California’s anti-SLAPP statute provides,

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A cause of action against a person arising from any act
of that person in furtherance of the person’s right of
petition or free speech under the United States
Constitution or the California Constitution in
connection with a public issue shall be subject to a
special motion to strike, unless the court determines
that the plaintiff has established that there is a
probability that the plaintiff will prevail on the
claim.

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24
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Cal. Civ. Proc. Code § 425.16(b)(1).

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motions to strike are available to litigants proceeding in federal
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California anti-SLAPP

1

court.

2

Cir. 2005).

3

Thomas v. Fry’s Elecs., Inc., 400 F.3d 1206, 1206 (9th

Courts analyze these motions in two steps.

“First, the

4

defendant must make a prima facie showing that the plaintiff's

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suit arises from an act in furtherance of the defendant’s rights

6

of petition or free speech.”

7

F.3d 590, 595 (9th Cir. 2010) (citation and internal quotation

8

marks omitted).

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facie showing, the burden shifts to the plaintiff to demonstrate a

United States District Court
For the Northern District of California

10
11

Mindys Cosmetics, Inc. v. Dakar, 611

“Second, once the defendant has made a prima

probability of prevailing on the challenged claims.”

Id.

“At [the] second step of the anti-SLAPP inquiry, the required

12

probability that [a party] will prevail need not be high.”

13

v. Hallmark Cards, 580 F.3d 874, 888-89 (9th Cir. 2009).

14

plaintiff must show “only a ‘minimum level of legal sufficiency

15

and triability.’”

16

Thrifty Oil Co., 23 Cal. 4th 429, 438 n.5 (2000)).

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need only “state and substantiate a legally sufficient claim.”

18

Mindys, 611 F.3d at 598 (citation and internal quotation marks

19

omitted).

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the credibility or comparative probative strength of competing

21

evidence,’ but ‘should grant the motion if, as a matter of law,

22

the defendant’s evidence supporting the motion defeats the

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plaintiff’s attempt to establish evidentiary support for the

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claim.’”

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Chidester, 28 Cal. 4th 811, 821 (2002)).

Hilton

A

Mindys, 611 F.3d at 598 (quoting Linder v.
The plaintiff

In conducting its analysis, the “court ‘does not weigh

Id. at 599 (quoting Wilson v. Parker, Covert &

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B.

Discussion

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1.

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The parties do not dispute that Tessera’s filing and pursuit

Arising from

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of the ITC action constitute protected activities within the

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meaning of the anti-SLAPP statute.

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the instant complaint “arises from” those activities, including

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whether the anti-SLAPP statute can apply to claims of breach of

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contract and of the implied covenant.

Instead, they dispute whether

For this determination, “the critical consideration is

10
United States District Court
For the Northern District of California

9

whether the cause of action is based on the defendant’s protected

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free speech or petitioning activity.”

12

Cal. 4th 82, 89 (2002) (emphasis in original).

13

California Supreme Court held that a breach of contract claim may

14

fall within the scope of the anti-SLAPP statute, because

15

“[n]othing in the statute itself categorically excludes any

16

particular type of action from its operation.”

17

Instead of focusing on “the form of the plaintiff’s cause of

18

action,” the statute focuses on “the defendant’s activity that

19

gives rise to his or her asserted liability.”

20

Cotati, 29 Cal. 4th at 78 (“the defendant’s act underlying the

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plaintiff’s cause of action must itself have been an act in

22

furtherance of the right of petition or free speech.”).

23

case, the court found that the breach of contract and other claims

24

arose out of protected litigation activity because, “but for the

25

federal lawsuit and [defendant’s] alleged actions taken in

26

connection with that litigation, plaintiffs’ present claims would

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have no basis.”

Navellier v. Sletten, 29

Navellier, 29 Cal. 4th at 90.

28
14

In Navellier, the

Id. at 92.

Id.; see also

In that

1

When, as here “a pleading contains allegations regarding both

2

protected and unprotected activity, ‘it is the principal thrust or

3

gravamen of the plaintiff’s cause of action that determines

4

whether the anti-SLAPP statute applies.’”

5

Simpson Thacher & Bartlett LLP, 179 Cal. App. 4th 1204, 1219-20

6

(2009) (quoting Martinez v. Metabolife Internat., Inc., 113 Cal.

7

App. 4th 181, 188 (2003)).

8

protected activity do not ‘subject the cause of action to the

9

anti-SLAPP statute.’”

PrediWave Corp. v.

“Incidental allegations regarding

Id. at 1220 (quoting Martinez, 113 Cal.

United States District Court
For the Northern District of California

10

App. 4th at 188.

11

the legislative intent” that the anti-SLAPP statute “be broadly

12

interpreted,” because a plaintiff cannot “deprive a defendant of

13

anti-SLAPP protection by bringing a complaint based upon both

14

protected and unprotected conduct.”

15

Election v. Sierra Club, 45 Cal. 4th 309, 319 (2008).

16

“The ‘principal thrust or gravamen’ test serves

Club Members for an Honest

Here, PTI accuses Tessera of breach of contract and breach of

17

the implied covenant of good faith and fair dealing for

18

petitioning the ITC without first giving notice and terminating

19

the TCC License, as agreed in that contract.

20

filing and prosecution of the ITC action, PTI would have no basis

21

for the claims against Tessera alleged here.

22

of PTI’s complaint implicates Tessera’s protected activity,

23

because, without the allegations regarding Tessera’s protected

24

activity, PTI would be unable to state a claim against Tessera.

25

Thus, PTI’s complaint arises from Tessera’s protected activity for

26

the purposes of the anti-SLAPP statute.

27
28

But for Tessera’s

The central thrust

As noted by the California Supreme Court in Navallier, such a
finding does not mean that Tessera cannot be sued for breaching
15

1

the TCC License because its alleged breach was related to

2

petitioning activity.

3

bar any suit that possesses “minimal merit.”

29 Cal. 4th at 93.

The statute does not
Id.

4

2.

5

The “essential elements” of a breach of contract claim are

Probability of prevailing

6

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

7

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

8

damages to plaintiff.”

9

822, 830 (1968).

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

Tessera does not dispute that there is an

United States District Court
For the Northern District of California

10

enforceable contract between the parties or that PTI has fully

11

performed its obligations thereunder.

12

that PTI has failed to meet its burden of establishing a

13

probability of prevailing on its claims, because its claims are

14

barred by the Noerr-Pennington doctrine, Tessera has not breached

15

the TCC License, PTI has not established that it was damaged, and

16

PTI’s claims are barred by waiver, forfeiture, laches and

17

estoppel.

18

Instead, Tessera argues

The Court has already addressed, and rejected, Tessera’s

19

contentions related to the Noerr-Pennington doctrine.

20

further notes that, in addressing the second prong of the anti-

21

SLAPP inquiry, the California Supreme Court has recognized that “a

22

defendant who in fact has validly contracted not to speak or

23

petition has in effect ‘waived’ the right to the anti-SLAPP

24

statute’s protection in the event he or she later breaches that

25

contract.”

26

Tessera’s remaining arguments unavailing for the reasons discussed

27

below and declines to strike PTI’s complaint.

Navellier, 29 Cal. 4th at 94.

28
16

The Court

The Court also finds

1

a. Breach

2

Tessera does not dispute that it did failed to give notice to

3

PTI or terminate the TCC License before instituting the ITC action

4

or before arguing in the ITC that PTI’s products were unlicensed

5

for the period of time before PTI paid royalties.

6

Tessera argues that it did not breach the TCC License for three

7

reasons.

8
9

Instead,

First, Tessera argues that the forum selection clause relates
to disputes between the parties only and it did not name PTI in

United States District Court
For the Northern District of California

10

the ITC action.

11

has previously taken the position that the license agreement

12

precludes any suit against PTI or against PTI’s customers in which

13

PTI’s products are accused, and thus PTI has offered at least some

14

evidence that would demonstrate that the contract’s ambiguous

15

terms may be interpreted to encompass suits in which PTI’s

16

products are accused.

PTI has submitted evidence that Tessera itself

17

Tessera also argues that it did not breach the agreement,

18

because PTI had encouraged it to file the action against PTI’s

19

customers, and there was thus no dispute or disagreement between

20

the parties that would have triggered the forum selection clause’s

21

requirements of notice and termination.

22

this alleged encouragement in support of its affirmative defenses

23

of waiver and equitable estoppel.

24

correspondence between the parties on which Tessera relies does

25

not support its position.

26

points relate to a separate ITC Investigation, No. 337-TA-605,

27

which is not at issue here.

28

relate to the 630 Investigation, PTI encouraged Tessera to proceed

Tessera also relies on

However, the email

Several of the emails to which Tessera

In some of the other emails, which do

17

1

against several companies that were getting at least some of their

2

products from unlicensed sources and to tell another company to

3

use only licensed sources.

4

encouraged Tessera to accuse the PTI-packaged products as well.

5

In other emails, rather than encouraging Tessera to bring an ITC

6

action, PTI appears to have been defending itself against

7

Tessera’s characterization of the ITC action as something that

8

Tessera was bringing to help PTI, by arguing that Tessera brought

9

the suit to benefit itself primarily, in order to make sure that

United States District Court
For the Northern District of California

10
11

This does not establish that PTI

companies like PTI continue to pay royalties.
Finally, Tessera argues that it had tried to exclude PTI’s

12

licensed products from the 630 Investigation consistently

13

throughout the ITC process.

14

Federal Circuit has already rejected this characterization of its

15

arguments.

However, as discussed above, the

16

Accordingly, Tessera’s arguments do not defeat PTI’s showing

17

of a minimum level of the legal sufficiency and triability of its

18

claim that Tessera breached the TCC License.

19

established that it is likely to succeed on its affirmative

20

defenses of waiver and equitable estoppel.

21
22

Tessera has also not

b. Damages
Tessera argues that PTI has not meet its anti-SLAPP burden as

23

to its second and third causes of action, for breach of contract

24

and breach of the implied covenant, because PTI cannot establish

25

that it was damaged by Tessera’s alleged breach.

26

contends that PTI cannot reclaim royalty payments that it has

27

already made.

28
18

Tessera also

1

PTI puts forward several theories of damages.

PTI asserts

2

that it was harmed because, if Tessera had complied with the terms

3

of the TCC License and had terminated the agreement, PTI would not

4

have had to continue to pay royalties, which totaled more than

5

$200 million.

6

relationship with its customers was damaged by Tessera’s breach,

7

because PTI had to charge a royalty to its customers while they

8

were being sued by Tessera.

At the hearing, PTI also argued that its

Tessera acknowledges that PTI made royalty payments after

10
United States District Court
For the Northern District of California

9

Tessera instituted the 630 Investigation without first terminating

11

the TCC License and providing the required notice.

12

Tessera, however, contends that PTI cannot recover these royalty

13

payments as a matter of law, because California law precludes

14

recovery of royalty payments made voluntarily with knowledge of

15

the facts.

16

Cal. App. 3d 1113, 1144 (1987); Western Gulf Oil Co. v. Title Ins.

17

& Tr. Co., 92 Cal. App. 2d 257, 266 (1949)).

18

Mot. at 21-22.

Id. (citing Pac. Gas & Elec. Co. v. Zuckerman, 189

Here, however, PTI did not have full knowledge of the facts

19

at the time of the payments.

20

understanding that its products and customers would be free from

21

suit.

22

to PTI and to this Court that it was not accusing PTI-packaged

23

products in those suits.

24

decision in Powertech Technology, Inc. v. Tessera, Inc., 660 F.3d

25

1301 (Fed. Cir. 2011), it became evident that Tessera was taking

26

inconsistent positions and was in fact accusing products that PTI

27

had sold to its customers.

PTI made these payments with the

During the ITC and Texas proceedings, Tessera represented

After the Federal Circuit issued its

28
19

1

Thus, PTI has met its burden to establish the minimum legal

2

sufficiency and factual triability of its damages claims.

3

does not mean that PTI will ultimately establish that it has been

4

harmed to the extent claimed.

5
6

This

c. Forfeiture and Laches
Tessera asserts several affirmative defenses based on PTI’s

7

purported failure to raise these claims in a timely manner,

8

arguing that PTI should have done so when Tessera first initiated

9

the ITC proceedings.

Tessera does not dispute that PTI brought

United States District Court
For the Northern District of California

10

this action within the limitations period.

11

maintained in the prior proceedings before this Court that it was

12

not accusing PTI-packaged products, and it was not until the

13

Federal Circuit issued its decision on September 30, 2011 that it

14

became clear that Tessera was actually doing so in the other

15

actions.

16

breach a week later, and filed suit sixty days after that.

17

these facts, it is not likely that Tessera will be able to prove

18

that PTI delayed in bringing these claims.

Further, Tessera

As noted above, PTI provided notice to Tessera of its
On

19

3. Fees and costs

20

Tessera and PTI both seek fees and costs for the anti-SLAPP

21

motion.

22

entitled to recover his or her attorneys’ fees and costs.”

23

Code Civ. Proc. § 425.16(c).

24

is entitled to fees and costs only if “the court finds that a

25

special motion to strike is frivolous or is solely intended to

26

cause unnecessary delay.”

27

completely without merit or (B) for the sole purpose of harassing

28

an opposing party.”

A party who prevails on an anti-SLAPP motion “shall be
Cal.

In contrast, a prevailing plaintiff

Id.

“‘Frivolous’ means (A) totally and

Cal. Code Civ. Proc. § 128.5(b)(2).
20

1

Because Tessera does not prevail on its motion to strike, the

2

Court does not award it fees and costs.

3

not find that Tessera’s motion was frivolous or only intended to

4

cause unnecessary delay, the Court also declines to award fees and

5

cost to PTI.

6

Because the Court does

CONCLUSION

7

For the reasons set forth above, the Court DENIES Tessera’s

8

motion to dismiss and to strike PTI’s complaint (Docket No. 20).

9

IT IS SO ORDERED.

United States District Court
For the Northern District of California

10
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12

Dated: 5/21/2012

CLAUDIA WILKEN
United States District Judge

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