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)

1

IN THE UNITED STATES DISTRICT COURT

2

FOR THE NORTHERN DISTRICT OF CALIFORNIA

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4

APPLE INC.,

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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

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23
24

The following facts are alleged in the amended complaint.
Apple is a corporation located in Cupertino, California, which

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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

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business in Ottawa, Ontario, Canada.

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subsidiary of Wi-LAN, incorporated in Delaware just five months

6

ago.2

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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

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assigned the case number 13-cv-798-DMS(BLM) (the 2013 CASD case).

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The case initially brought in the Southern

On June 13, 2014, ONS sent a letter to Apple alleging that

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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.

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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

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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

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complaint against Wi-LAN; later that same day, Apple filed its

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amended complaint asserting claims against both Wi-LAN and ONS.

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On June 23, 2014, Wi-LAN sued Apple in the United States District

7

Court for the Southern District of California, alleging

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infringement of the same five Wi-LAN patents that are at issue in

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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

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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

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it to the Southern District of California; and (3) to dismiss

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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.

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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

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ONS argues that, because it gave Apple until June 27, 2014,

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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

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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

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any interested party seeking such declaration, whether or not

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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

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provided a date by which the defendant expected the plaintiff to

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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.

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II.

Motions to Sever

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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

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alternative with respect to arising out of the same transaction,

22

occurrence, or series of transactions or occurrences; and (B) any

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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."

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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

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26
27
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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
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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.

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Dated:

9/11/2014

CLAUDIA WILKEN
United States District Judge

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