Apple Inc. v. WI-LAN Inc., et al

Filing 53

ORDER by Judge Claudia Wilken GRANTING IN PART DEFENDANTS' ( 25 , 26 ) MOTIONS TO SEVER, TRANSFER, AND DISMISS. (ndr, COURT STAFF) (Filed on 9/11/2014)

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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 APPLE INC., 5 6 7 8 Plaintiff, ORDER GRANTING IN PART DEFENDANTS' MOTIONS TO SEVER, TRANSFER, AND DISMISS (Docket Nos. 25, 26) v. WI-LAN INC.; and OPEN NETWORK SOLUTIONS, INC., Defendants. 9 10 No. C 14-2838 CW ________________________________/ United States District Court For the Northern District of California Plaintiff Apple Inc. brought this action against Defendants 11 Wi-LAN Inc. and Open Network Solutions, Inc. (ONS), seeking 12 declaratory judgment of non-infringement, invalidity, and 13 unenforceability of seven patents.1 Each Defendant moves to sever 14 its case from that of the other Defendant, to transfer, and to 15 dismiss certain claims. Plaintiff opposes the motions. After 16 considering the parties' submissions and oral argument, the Court 17 GRANTS Wi-LAN's motion (Docket No. 25) to sever and transfer and 18 to dismiss one count with leave to amend; and GRANTS ONS's motion 19 (Docket No. 26) to sever and to dismiss one count with leave to 20 amend, and denies its motion to transfer. 21 BACKGROUND 22 23 24 The following facts are alleged in the amended complaint. Apple is a corporation located in Cupertino, California, which 25 26 27 28 1 At issue are United States Patent Nos. 8,457,145; 8,462,723; 8,462,761; 8,615,020; and 8,537,757 (collectively, the Wi-LAN patents-in-suit); and United States Patent Nos. 6,745,259 and 6,907,476 (collectively, the ONS patents-in-suit). 1 manufactures computers, mobile phones, tablets, portable digital 2 media players, and other consumer electronics products. 3 Wi-LAN is a Canadian corporation with its principal place of 4 business in Ottawa, Ontario, Canada. 5 subsidiary of Wi-LAN, incorporated in Delaware just five months 6 ago.2 7 acquiring and asserting patents. 8 9 ONS is a wholly-owned Both Wi-LAN and ONS are primarily in the business of Before Apple initiated this case, Wi-LAN had sued Apple four times: Wi-LAN Inc. v. Acer, Inc., et al., Case No. 2:07-cv-473 United States District Court For the Northern District of California 10 (E.D. Texas); Wi-LAN Inc. v. Apple Inc., Case No. 6:11-cv-453 11 (E.D. Texas); Wi-LAN Inc. v. Apple Inc., Case No. 6:12-cv-920 12 (E.D. Texas); and Wi-LAN USA, Inc. v. Apple Inc., Case No. 1:12- 13 cv-24318 (S.D. Fla.). 14 District of Florida has since been transferred on Apple's motion 15 to the Southern District of California,3 where it has been 16 assigned the case number 13-cv-798-DMS(BLM) (the 2013 CASD case). 17 The case initially brought in the Southern On June 13, 2014, ONS sent a letter to Apple alleging that 18 several Apple products, including Apple TV, the iPhone, the iPad, 19 and the iPod Touch, "fall with[in] the scope of the claims" of the 20 ONS patents-in-suit, and asking Apple to respond by June 27, 2014. 21 Am. Compl. ¶ 18; Decl. Scarsi Ex. D (Docket No. 35-4) (ONS Notice 22 Letter). On June 16, 2014, Wi-LAN sent an email to Apple alleging 23 24 25 2 ONS represents that its corporate headquarters are in Costa Mesa, California. 26 3 27 28 Wi-LAN USA, Inc. v. Apple Inc., 2013 U.S. Dist. LEXIS 47509 (S.D. Fla.) (ordering transfer to Southern District of California). 2 1 that various Apple products infringed the Wi-LAN patents-in-suit. 2 Am. Compl. ¶ 15; Decl. Scarsi Ex. I (Docket No. 35-9). 3 Apple initiated this case on June 19, 2014, by filing its 4 complaint against Wi-LAN; later that same day, Apple filed its 5 amended complaint asserting claims against both Wi-LAN and ONS. 6 On June 23, 2014, Wi-LAN sued Apple in the United States District 7 Court for the Southern District of California, alleging 8 infringement of the same five Wi-LAN patents that are at issue in 9 this case. United States District Court For the Northern District of California 10 Wi-LAN, Inc. v. Apple Inc., No. 14-cv-1507-DMS(BLM) (S.D. Cal.) (the 2014 CASD case).4 11 Wi-LAN moves (1) to sever Apple's claims against it from 12 Apple's claims against ONS; (2) to transfer Apple's claims against 13 it to the Southern District of California; and (3) to dismiss 14 Apple's claim for unenforceability due to unclean hands for 15 failure to state a claim upon which relief can be granted. 16 ONS moves (1) to dismiss Apple's claims against it for lack 17 of declaratory judgment jurisdiction; (2) to dismiss Apple's claim 18 for unenforceability due to unclean hands for failure to state a 19 claim upon which relief may be granted; (3) to sever Apple's 20 claims against it from Apple's claims against Wi-LAN; and (4) to 21 transfer Apple's claims against it to the District of Delaware. 22 23 24 25 26 27 28 4 In the Southern District of California, that case was reassigned to the Hon. Dana M. Sabraw as related to the 2013 CASD case. Wi-LAN, Inc., No. 14-cv-1507-DMS(BLM), Report of Clerk and Order (Docket No. 7). Apple has moved to dismiss the 2014 CASD case on the basis that its lawsuit in this Court was the firstfiled action. Id., Mot. Dismiss (Docket No. 18). That motion is set for decision without oral argument, and the parties have been instructed to advise that court of this Court's ruling on the present motions. Id., Order (Docket No. 23). 3 1 2 DISCUSION I. 3 ONS's Motion to Dismiss for Lack of Declaratory Judgment Jurisdiction 4 ONS argues that, because it gave Apple until June 27, 2014, 5 to respond to the ONS Notice Letter, there was no "substantial 6 conflict" of "sufficient immediacy and reality" to create an 7 actual controversy when Apple filed suit on June 19, 2014, and 8 therefore, the Court lacks declaratory judgment jurisdiction. 9 The Declaratory Judgment Act provides, "In a case of actual United States District Court For the Northern District of California 10 controversy within its jurisdiction, any court of the United 11 States . . . may declare the rights and other legal relations of 12 any interested party seeking such declaration, whether or not 13 further relief is or could be sought." 14 "actual controversy" requirement of the Declaratory Judgment Act 15 is the same as the "case or controversy" requirement of Article 16 III of the United States Constitution. 17 Novartis Pharm. Corp., 482 F.3d 1330, 1337 (Fed. Cir. 2007). 18 declaratory judgment plaintiff must establish that the "facts 19 alleged under all the circumstances show that there is a 20 substantial controversy between parties having adverse legal 21 interests of sufficient immediacy and reality to warrant the 22 issuance of declaratory judgment." 23 Techs., Inc., 518 F.3d 897, 901 (Fed. Cir. 2008) (citing 24 MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007)). 25 a patent case, "whether there has been potentially infringing 26 activity or meaningful preparation to conduct potentially 27 infringing activity[] 'remains an important element in the 28 totality of circumstances which must be considered in determining 4 28 U.S.C. § 2201. The Teva Pharm. USA, Inc. v. The Micron Tech., Inc. v. Mosaid In 1 whether a declaratory judgment is appropriate.'" 2 Medicis Pharm. Corp., 537 F.3d 1329, 1336 n.4 (Fed. Cir. 2008) 3 (quoting Cat Tech LLC v. TubeMaster, Inc., 528 F.3d 871, 880 (Fed. 4 Cir. 2008)). 5 Prasco, LLC v. Here, the totality of the circumstances--specifically, ONS's 6 history of recent litigation asserting infringement of the ONS 7 patents-in-suit and the content of the ONS Notice Letter-- 8 demonstrates that there was an actual controversy when Apple filed 9 this suit. United States District Court For the Northern District of California 10 First, the ONS Notice Letter names several specific Apple 11 products that it alleges "fall within the scope of the claims of 12 the '476 and '259 patents," ONS Notice Letter at 1, and there is 13 no dispute that Apple has engaged in potentially infringing 14 activity. 15 In addition, "the Federal Circuit and several other courts 16 have held that a patentee's history of litigation with other 17 parties is an appropriate factor for courts to consider in 18 determining whether subject matter jurisdiction exists under the 19 Declaratory Judgment Act." 20 U.S. Dist. LEXIS 11661, at *19 (D.N.J.) (citing, inter alia, 21 Prasco, 537 F.3d at 1341)). 22 May 16, 2014, and June 19, 2014, the date on which Apple initiated 23 this case, ONS filed sixteen suits in the District of Delaware 24 alleging infringement of the ONS patents-in-suit.5 Pharmanet, Inc. v. DataSci LLC, 2009 Here, ONS acknowledges that between 25 26 27 28 5 In addition, same day that Apple the following week, infringement of the ONS filed a seventeenth suit in Delaware the filed this suit, as well as two more suits in for a total of nineteen suits alleging ONS patents-in-suit. 5 1 District courts have found that notice letters similar to the 2 ONS Notice Letter were sufficient to create an actual controversy. 3 For example, in Pharmanet, the defendant's attorney sent the 4 plaintiffs a letter that identified a patent that the defendant 5 owned, offered to license that patent to the plaintiff, and 6 provided a date by which the defendant expected the plaintiff to 7 respond. 8 responding, the plaintiff filed suit seeking declaratory judgment 9 of non-infringement and invalidity. 2009 U.S. Dist. LEXIS 11661, at *5-6. Id. at 6-7. Rather than Notwithstanding United States District Court For the Northern District of California 10 the fact that the deadline in the defendant's notice letter had 11 not passed when the lawsuit was filed, the district court found 12 that it was "objectively reasonable for a reader to perceive that 13 failure to respond by that date would result in the filing of an 14 infringement suit against them." 15 Pharmanet court held that the defendant's notice letter, combined 16 with the defendant's prior litigation involving the patent at 17 issue and other factors, was "sufficient to establish an Article 18 III case or controversy between the parties." 19 Id. at *27-28. Ultimately, the Id. at *28-29. Similarly, in Crutchfield New Media, LLC v. Charles E. Hill & 20 Assocs., Inc., 2007 U.S. Dist. LEXIS 33264 (S.D. Ind.), the 21 defendant sent a letter to the plaintiff that (1) provided 22 information about certain patents that it owned and litigation it 23 had pursued concerning those patents, and (2) provided a deadline 24 for the plaintiff to take a license under those patents. 25 *2. 26 "indicate to any reasonable reader that a substantial controversy 27 exists between parties with adverse legal interests and it is of Id. at The district court found that the contents of that letter 28 6 1 sufficient immediacy and reality to warrant the issuance of a 2 declaratory judgment." 3 Id. at *6. The ONS Notice Letter is substantially similar to the notice 4 letters at issue in Pharmanet and Crutchfield: it (1) advised 5 Apple that ONS has retained counsel, (2) identified specific 6 patents and alleged that various Apple products "fall within the 7 scope of the claims" of those patents, (3) offered an opportunity 8 to "discuss" those patents, and (4) provided a deadline by which 9 ONS expected a response. Therefore, the Court finds that the ONS United States District Court For the Northern District of California 10 Notice Letter, considered in the context of ONS's recent Delaware 11 litigation asserting infringement of the ONS patents-in-suit, 12 created an actual controversy sufficient to establish declaratory 13 judgment jurisdiction, and ONS's motion to dismiss Apple's 14 declaratory judgment claims is DENIED. 15 II. Motions to Sever 16 Each Defendant argues that Apple's claims against it are 17 improperly joined with claims against the other Defendant and 18 should be severed. 19 Parties may be joined as defendants only if "(A) any right to 20 relief is asserted against them jointly, severally, or in the 21 alternative with respect to arising out of the same transaction, 22 occurrence, or series of transactions or occurrences; and (B) any 23 question of law or fact common to all defendants will arise in the 24 action." 25 means that claims involving different parties cannot be joined 26 together in one complaint if the facts giving rise to the claims 27 are not factually related in some way--that is, if there is not 28 "similarity in the factual background." Fed. R. Civ. P. 20(a)(2). 7 As a practical matter, this Coughlin v. Rogers, 130 1 F.3d 1348, 1350 (9th Cir. 1997). 2 sufficient to support similarity when the specifics are different. 3 Id. 4 General allegations are not Federal Rule of Civil Procedure 21 provides, "On motion or on 5 its own, the court may at any time, on just terms, add or drop a 6 party. 7 court, in its discretion, may sever parties, "so long as no 8 substantial right will be prejudiced by the severance." 9 130 F.3d at 1350. The court may also sever any claim against a party." Coughlin, The court may sever the claims against a party 10 United States District Court For the Northern District of California A in the interest of fairness and judicial economy and to avoid 11 prejudice, delay or expense. 12 1271, 1296-97 (9th Cir. 2000). 13 Coleman v. Quaker Oats Co., 232 F.3d Apple argues that its non-infringement and invalidity claims 14 "will raise common issues of law and fact" because certain Apple 15 products are alleged to infringe both Wi-LAN patents-in-suit and 16 ONS patents-in-suit. 17 claim against both Defendants arises out of the same transaction 18 or occurrences. 19 ONS, see Part IV, infra, so it does not serve as a basis to 20 warrant joinder of Apple's non-infringement and invalidity claims 21 against Wi-LAN and ONS. 22 It further argues that its unclean hands However, the Court dismisses that claim against Defendants' motions to sever are GRANTED, and Apple's claims 23 against ONS are hereby SEVERED from this action. 24 III. Motions to Transfer 25 26 27 28 A. Wi-LAN's Motion to Transfer to the Southern District of California Wi-LAN argues (1) that the first-to-file rule requires transfer of Apple's case against it to the Southern District of 8 1 California; and, in the alternative, (2) that transfer is 2 appropriate under 28 U.S.C. § 1404(a). 3 4 1. The First-to-File Rule "There is a generally recognized doctrine of federal comity 5 which permits a district court to decline jurisdiction over an 6 action when a complaint involving the same parties and issues has 7 already been filed in another district." 8 Medtronic, Inc., 678 F.2d 93, 94-95 (9th Cir. 1982). 9 doctrine, known as the first-to-file rule, "gives priority, for Pacesetter Sys., Inc. v. This United States District Court For the Northern District of California 10 purposes of choosing among possible venues when parallel 11 litigation has been instituted in separate courts, to the party 12 who first establishes jurisdiction." 13 Am. Airlines, Inc., 989 F.2d 1002, 1006 (8th Cir. 1993). 14 applying the first-to-file rule, a court looks to three threshold 15 factors: "(1) the chronology of the two actions; (2) the 16 similarity of the parties; and (3) the similarity of the issues." 17 Z-Line Designs, Inc. v. Bell'O Int'l LLC, 218 F.R.D. 663, 665 18 (N.D. Cal. 2003). 19 Northwest Airlines, Inc. v. In When cases between the same parties raising the same issues 20 are pending in two or more federal districts, the general rule is 21 to favor the forum of the first-filed action, regardless of 22 whether it is a declaratory judgment action. 23 F.3d at 904. 24 on motions to dismiss or transfer based on exceptions to the 25 first-to-file rule or on the convenience factors. 26 the parties dispute which is the first-filed action. 27 that the first-filed action is the present suit, which was filed 28 before Wi-LAN filed the 2014 CASD case. Micron Tech, 518 The court of the actual first-filed case should rule 9 See id. Here, Apple argues Wi-LAN argues that the 1 2014 CASD case is the first-filed action because it is related to 2 the 2013 CASD case, which predates the present suit (and which was 3 initially filed in 2012 in the Southern District of Florida). 4 Although the earlier 2013 CASD case involves the same 5 parties6 and similar patents, that does not render the 2014 CASD 6 case first-filed over this case. 7 two, and this Court will proceed to determine whether it should 8 nonetheless be transferred to the Southern District of California 9 based on an exception to the rule or based on the convenience This case was filed first of the United States District Court For the Northern District of California 10 factors under 28 U.S.C. § 1404(a). 11 the purpose of promoting efficiency well and should not be 12 disregarded lightly." 13 Dep't of Army, 611 F.2d 738, 750 (9th Cir. 1979). 14 the forum of the first-filed case "unless consideration of 15 judicial and litigant economy, and the just and effective 16 disposition of disputes, requires otherwise." 17 Inc. v. Coyle, 394 F.3d 1341, 1347 (Fed. Cir. 2005). 18 exception to the first-to-file rule is found here. 19 20 2. The first-to-file rule "serves Church of Scientology of Calif. v. U.S. The rule favors Elecs. for Imaging, No such Transfer Pursuant to 28 U.S.C. § 1404(a) Title 28 U.S.C. § 1404(a) provides, "For the convenience of 21 the parties and witnesses, in the interest of justice, a district 22 court may transfer any civil action to any other district or 23 division where it might have been brought." 24 broad discretion to adjudicate motions for transfer on a case-by- A district court has 25 26 27 28 6 Both Wi-LAN, Inc. (Defendant in the present case) and WiLAN USA, Inc. are plaintiffs in the 2014 CASD case; however, neither party alleges that this distinction constitutes a material difference in the makeup of the parties in these actions. 10 1 case basis, considering factors of convenience and fairness. 2 Stewart Org. Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988); Sparling 3 v. Hoffman Constr. Co., 864 F.2d 635, 639 (9th Cir. 1988). 4 § 1404(a), the district court may consider: (1) the location where 5 the relevant events occurred, (2) the forum that is most familiar 6 with the governing law, (3) the plaintiff's choice of forum, 7 (4) the respective parties' contacts with the forum, (5) the 8 contacts relating to the plaintiff's cause of action in the chosen 9 forum, (6) the differences in the costs of litigation in the two See Under United States District Court For the Northern District of California 10 fora, (7) the availability of compulsory process to compel 11 attendance of unwilling non-party witnesses, and (8) the ease of 12 access to sources of proof. 13 F.3d 495, 498 (9th Cir. 2000). 14 the burden of proof and generally "must make a strong showing of 15 inconvenience to warrant upsetting the plaintiff's choice of 16 forum." 17 (9th Cir. 1986). 18 Jones v. GNC Franchising, Inc., 211 The party seeking transfer bears Decker Coal v. Commonwealth Edison Co., 805 F.2d 834, 843 Where transfer under § 1404(a) would promote judicial 19 economy, such transfer may be "in the interest of justice." 20 London & Hull Mar. Ltd. v. Eagle Pac. Ins. Co., 1996 U.S. Dist. 21 LEXIS 22893, *12-13 (N.D. Cal.). 22 judicial economy and the interests of justice, as well as the 23 second, seventh, and eighth GNC Franchising factors, favor 24 transfer to the Southern District of California. 25 Here, the Court finds that The second GNC Franchising factor, which forum is more 26 familiar with the governing law, strongly favors transfer. 27 Although both the Northern District of California and the Southern 28 District of California are familiar with patent law, the Southern 11 1 District is much more familiar with the law as applied to the 2 patents at issue. 3 continuation of one of the patents in the 2013 CASD case, and 4 three others are continuations in part of that same patent. 5 four of the five Wi-LAN patents-in-suit in the present case share 6 the same or substantially the same patent specifications and 7 drawings with one of the 2013 CASD case patents, and involve 8 overlapping claims. 9 Patents-In-Suit are included in the same patent family as one of Of the five Wi-LAN patents-in-suit, one is a Thus, Apple acknowledges that "[m]ost of the Wi-LAN United States District Court For the Northern District of California 10 the patents at issue in" the 2013 CASD case. 11 presiding over the 2013 CASD case, Judge Sabraw has developed a 12 familiarity with the technical issues and has issued a Markman 13 ruling. 14 issues in this case makes the Southern District a more efficient 15 venue for judicial economy. 16 Am. Compl. ¶ 15. In The Southern District's familiarity with the technical In addition, the seventh and eighth GNC Franchising factors, 17 the availability of compulsory process and the ease of access to 18 sources of proof, strongly favor transfer. 19 when it sought transfer of the 2013 CASD case from Florida, many 20 of the inventors and other witnesses reside in the Southern 21 District of California--the same inventors and other witnesses 22 that Apple now proposes to bring to the Northern District of 23 California. 24 given significant consideration because they may be compelled to 25 testify unwillingly." 26 LEXIS 79660, at *8 (N.D. Cal.) (citing Strigliabotti v. Franklin 27 Res., Inc., 2004 U.S. Dist. LEXIS 31965, at *17 (N.D. Cal.)). As Apple acknowledged "The convenience of non-party witnesses should be Ambriz v. Matheson Tri-Gas, 2014 U.S. Dist. 28 12 1 Although Plaintiff's choice of forum is given weight, the 2 Court finds that these factors outweigh Plaintiff's choice in this 3 case. 4 the claims against ONS, Apple's claims against Wi-LAN will be 5 TRANSFERRED to the Southern District of California. Wi-LAN's motion to transfer is GRANTED. After severance of 6 B. 7 ONS argues that transfer of the claims against it to the ONS's Motion to Transfer to the District of Delaware 8 District of Delaware is appropriate under 28 U.S.C. § 1404(a) and 9 would promote efficiency by allowing Apple's non-infringement and United States District Court For the Northern District of California 10 invalidity claims to be consolidated with ONS's various 11 infringement lawsuits against other defendants, all of which 12 concern the same ONS patents-in-suit. 13 Although transfer to a court familiar with the patents-in- 14 suit may promote efficiency, that alone is not dispositive. 15 Micron Tech, 518 F.3d at 905; see also MedImmune, LLC v. PDL 16 BioPharma, Inc., 2009 U.S. Dist. LEXIS 36765, at *9 (N.D. Cal.) 17 (same); ICU Med., Inc. v. Rymed Techs., Inc., 2008 U.S. Dist. 18 LEXIS 4983, at *13 (D. Del.) (same). 19 this District denied a motion to transfer to the District of 20 Delaware, where a case involving some of the same patents (but 21 brought by PDL BioPharma against a different defendant) remained 22 in its early stages. 23 ONS's motion to transfer is similar to that in MedImmune, where 24 the potential transferee court may be familiar with the patents at 25 issue but not with all of the parties. 26 transfer differs, because the Southern District of California 27 already is familiar with both the patents and the parties. In MedImmune, a court in 2009 U.S. Dist. LEXIS 36765, at *10. 28 13 Here, Wi-LAN's motion to 1 Although, as ONS argues, transfer of Apple's claims against 2 ONS to the District of Delaware might avoid conflicting claim 3 constructions, should that court complete its claim constructions 4 first this Court would "accord deference to the prior claim 5 construction ruling as persuasive authority." 6 Mendenhall v. Cedarapids, Inc., 5 F.3d 1557, 1570 (Fed. Cir. 7 1993)). 8 district would be more convenient for both the parties and the 9 witnesses than litigation in two widely separated districts. Id. at *10 (citing In addition, ONS argues that litigation in a single United States District Court For the Northern District of California 10 However, both Apple and ONS have their headquarters in California, 11 and Apple represents that many of its potential witnesses are in 12 California. 13 Ultimately, whatever marginal convenience might be achieved 14 by transfer of this case to the District of Delaware is not 15 sufficient to overcome the presumption in favor of a plaintiff's 16 choice of forum, and the motion to transfer Apple's claims against 17 ONS to Delaware is DENIED. 18 IV. 19 Motions to Dismiss Apple's Count XV (Unenforceability due to Unclean Hands) Pursuant to Rule 12(b)(6) 20 Wi-LAN and ONS both argue that Apple has failed to allege 21 facts sufficient to state a claim for unenforceability due to 22 unclean hands. 23 A complaint must contain a "short and plain statement of the 24 claim showing that the pleader is entitled to relief." Fed. R. 25 Civ. P. 8(a). 26 state a claim, dismissal is appropriate only when the complaint 27 does not give the defendant fair notice of a legally cognizable 28 claim and the grounds on which it rests. On a motion under Rule 12(b)(6) for failure to 14 Bell Atl. Corp. v. 1 Twombly, 550 U.S. 544, 555 (2007). 2 complaint is sufficient to state a claim, the court will take all 3 material allegations as true and construe them in the light most 4 favorable to the plaintiff. 5 896, 898 (9th Cir. 1986). 6 to legal conclusions; "threadbare recitals of the elements of a 7 cause of action, supported by mere conclusory statements," are not 8 taken as true. 9 (citing Twombly, 550 U.S. at 555). United States District Court For the Northern District of California 10 In considering whether the NL Indus., Inc. v. Kaplan, 792 F.2d However, this principle is inapplicable Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) When granting a motion to dismiss, the court is generally 11 required to grant the plaintiff leave to amend, even if no request 12 to amend the pleading was made, unless amendment would be futile. 13 Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 14 F.2d 242, 246–47 (9th Cir. 1990). 15 amendment would be futile, the court examines whether the 16 complaint could be amended to cure the defect requiring dismissal 17 "without contradicting any of the allegations of [the] original 18 complaint." 19 Cir. 1990). In determining whether Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th 20 A. 21 A plaintiff alleging unenforceability for unclean hands in a Wi-LAN's Motion 22 patent action must allege facts demonstrating "bad faith and an 23 improper purpose." 24 Serv. LLC, 2007 U.S. Dist. LEXIS 37665, at *22 (N.D. Cal.) (citing 25 Glaverbel Societe Anonyme v. Northlake Mktg. & Supply, 45 F.3d 26 550, 1558 (Fed. Cir. 1995)). Reid-Ashman Mfg. v. Swanson Semiconducter 27 Apple alleges that "Wi-LAN has engaged in a pattern and 28 practice of improper activity to acquire, license, and assert its 15 1 patents in bad faith, including by making claims of patent 2 infringement with knowledge that the patents are not actually 3 infringed or are invalid." 4 amended complaint merely alleges that Wi-LAN has been unsuccessful 5 in two prior patent suits against Apple, and that four other suits 6 have not yet been decided. 7 alleged in the amended complaint that would suggest that any of 8 those suits were brought in bad faith or for an improper purpose. 9 Am. Compl. ¶ 84. Id. at ¶ 85. However, Apple's There are no facts Apple's mere recitation of the elements of an unclean hands United States District Court For the Northern District of California 10 claim, without any factual allegations whatsoever, is not 11 sufficient to state a claim against Wi-LAN. 12 motion to dismiss this claim is GRANTED. 13 granted leave to amend in order to plead sufficient facts to 14 support its claim that Wi-LAN engaged in conduct comprising 15 unclean hands, if it can truthfully do so. Therefore, Wi-LAN's However, Apple is 16 B. 17 In its amended complaint, Apple alleges no specific facts ONS's Motion 18 accusing ONS of acting in bad faith or with improper purpose. 19 Instead, Apple merely generally alleges that: 20 21 22 ONS, as a subsidiary, is subject to the direction and control of Wi-LAN. Wi-LAN's conduct comprising unclean hands (as described herein) is therefore attributable to ONS, rendering the ONS patents unenforceable in this action. 23 Am. Compl. ¶ 86. 24 Again, the mere recitation of the elements of an unclean 25 hands claim, without any factual allegations whatsoever, is not 26 sufficient to state a claim. ONS's motion to dismiss this claim 27 is GRANTED. However, Apple is granted leave to amend in order to 28 16 1 plead sufficient facts to support its claim that ONS engaged in 2 conduct comprising unclean hands, if it can truthfully do so. 3 CONCLUSION 4 For the reasons set forth above, Wi-LAN's motion to sever and 5 transfer, and to dismiss the unclean hands cause of action (Docket 6 No. 25), is GRANTED. 7 Apple shall file a second amended complaint in this case asserting 8 only its claims against Wi-LAN, and Apple is granted leave to 9 allege in that amended complaint specific facts showing that Wi- Within seven days of the date of this order, United States District Court For the Northern District of California 10 LAN engaged in conduct comprising unclean hands. 11 the second amended complaint, the Court will transfer it to the 12 Southern District of California. 13 Upon filing of In addition, ONS's motion to sever, transfer, and dismiss 14 (Docket No. 26) is GRANTED in part and DENIED in part. 15 to sever is granted; the motion to transfer is denied; and the 16 motion to dismiss the unclean hands claim is granted with leave to 17 amend. 18 within seven days of the date of this order, file a new complaint 19 (with a notice of related case referring to the present action); 20 Apple is granted leave to allege in that complaint specific facts 21 showing that ONS engaged in conduct comprising unclean hands. 22 The motion If Apple wishes to pursue claims against ONS, it shall, IT IS SO ORDERED. 23 24 25 Dated: 9/11/2014 CLAUDIA WILKEN United States District Judge 26 27 28 17

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