Google Inc. v. Rockstar Consortium US LP et al

Filing 69

STATEMENT OF RECENT DECISION pursuant to Civil Local Rule 7-3.d filed byMobileStar Technologies LLC, Rockstar Consortium US LP. (Attachments: # 1 Exhibit A)(Related document(s) 67 ) (Budwin, Joshua) (Filed on 5/15/2014)

EXHIBIT A

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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
§
ROCKSTAR CONSORTIUM US LP, INC., §
AND MOBILESTAR TECHOLOGIES,
§
LLC,
§
§
Plaintiff,
§
§
v.
§
§
SAMSUNG ELECTRONICS CO., LTD., et §
al.,
§
§
Defendants.
§

CASE NO. 2:13-CV-00894-JRG
LEAD CASE
CASE NO. 2:13-CV-00900-JRG
MEMBER CASE

MEMORANDUM OPINION AND ORDER
Before the Court is Defendants Samsung Electronics Co., Ltd.’s, Samsung Electronics
America, Inc.’s, and Samsung Telecommunications America, LLC’s (collectively, “Samsung”)
Motion to Dismiss Plaintiffs’ First Amended Complaint Pursuant to Federal Rules of Civil
Procedure 12(b)(6) and 12(b)(1) (Dkt. No. 26), filed February 10, 2014. Samsung argues, first,
that the Court should dismiss one of Plaintiffs’ patent infringement claims on the basis that the
subject matter of the claim is unpatentable. Next, Samsung argues that Plaintiff Mobilestar
Technologies lacks standing to sue in this Court because it failed to register as a foreign
corporation doing business in Texas, and that Plaintiffs’ entire claim must therefore be
dismissed. For the reasons set forth below, the Court is of the opinion that the Motion should be
DENIED.

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I.

FACTUAL BACKGROUND

This is a suit for patent infringement under 35 U.S.C. § 271. Plaintiffs allege that
Defendants infringe seven of its patents with mobile devices using Defendant Google, Inc.’s
Android operating system. Among other claims, Plaintiff alleges violation of U.S. Patent No.
6,463,131 (“the ‘131 Patent”). Claim 5 of the ‘131 Patent recites:
A method of notifying a user of an incoming communication event, comprising:
determining a characteristic of the communication event;
selecting a notification based on the characteristic;
sending the user the selected notification;
receiving a selection from the user indicating a format for delivery of
further notification information regarding the communication event; and
allowing the further notification information regarding the communication
event to be sent to the user in the selected format.
‘131 Patent at 10:4-14.
Plaintiff Mobilestar Technologies, LLC (“Mobilestar”) is a wholly owned subsidiary of
Plaintiff Rockstar Consortium, LP, Inc. (“Rockstar”) and was formed by its parent as a Delaware
limited liability corporation the day before Plaintiffs filed suit in this action. Texas law requires
foreign entities to register with its Secretary of State and to maintain its registration while
transacting business in the state. TEX. BUS. & ORGS. CODE § 9.001. Though this suit was filed in
the United States District Court for the Eastern District of Texas on October 31, 2013,
Mobilestar did not register with the Texas Secretary of State until December 2, 2013.
Texas law also states that:
A foreign filing entity or the entity's legal representative may not maintain an
action, suit, or proceeding in a court of this state, brought either directly by the
entity or in the form of a derivative action in the entity's name, on a cause of
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action that arises out of the transaction of business in this state unless the foreign
filing entity is registered in accordance with this chapter.
TEX. BUS. & ORGS. CODE § 9.051.
II.

STANDING
A. Legal Standards

A court must dismiss an action if it determines, at any time, that it lacks subject-matter
jurisdiction. Fed. R. Civ. P. 12(h)(3). Standing to sue is a constitutional requirement and a
threshold jurisdictional issue. Abraxis Bioscience, Inc. v. Navinta LLC, 625 F.3d 1359, 1363
(Fed. Cir. 2010).
To demonstrate standing under Article III, the plaintiff must satisfy three
elements. First, the plaintiff must allege that it has suffered an “‘injury in fact’—
an invasion of a legally protected interest.” Second, “there must be a causal
connection between the injury and the conduct complained of.” And third, “it
must be ‘likely,’ as opposed to merely ‘speculative,’ that the injury will be
‘redressed by a favorable decision.’”
Paradise Creations, Inc. v. UV Sales, Inc., 315 F.3d 1304, 1308 (Fed. Cir. 2003) (quoting Lujan
v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). Because the Patent Act provides that “A
patentee shall have remedy by civil action for infringement of his patent,” 35 U.S.C. § 281, a
plaintiff in a suit for patent infringement typically has standing as long as it demonstrates that it
“held enforceable title to the patent at the inception of the lawsuit.” Paradise Creations, 315 F.3d
at 1309.
In Federal Court, the capacity of a “corporation” to sue or be sued is determined by the
law under which the corporation was organized. Fed. R. Civ. P. 17(b). For all other parties,
capacity to sue is determined by the law of the state where the court is located, except that “a
partnership or other unincorporated association with no such capacity under that state’s law may

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sue or be sued in its common name to enforce a substantive right existing under the United States
Constitution or laws.” Id.
B. Analysis
Samsung argues that, at the time of the filing of this suit, Mobilestar lacked the capacity
under Texas law to sue in the United States District Court for the Eastern District of Texas, and
that the Court should therefore dismiss this case for lack of subject matter jurisdiction.
As an initial matter, the Court notes that it is not at all clear, from the plain language of
the Texas Business and Organizations Code, that Texas does require foreign entities to register
before pursuing a federal cause of action in federal court. Section 9.051 provides that an
unregistered foreign entity may not sue “in a court of this state . . . on a cause of action that arises
out of the transaction of business in this state.” The most natural reading of this statute is that the
registration requirement is limited to state causes of action. Though a federal court may be “a
court of this state” when sitting in diversity jurisdiction or otherwise applying state law, see
Radio WHKW, Inc. v. Yarber, 838 F.2d 1439, 1443 (5th Cir. 1988) (dictum), it is hard to see how
a federal court adjudicating an action arising out of federal law can be considered a Court “of”
the State of Texas. Samsung’s proffered interpretation is cast into further doubt in light of Texas
Business and Organizations Code § 9.251(9), which distinguishes “transacting business in
interstate commerce” from transacting business “in this state,” suggesting that the state law
requirements are generally respectful of the autonomy of federal jurisdiction.
Notwithstanding the above, the Court does not by this opinion undertake an interpretation
of the Texas statute, since doing so is unnecessary here. Even if Texas law does purport to
prohibit Mobilestar from suing in federal court, Mobilestar nonetheless has standing to sue for
patent infringement and this Court has subject matter jurisdiction over the case.
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Plaintiffs rest their argument on the Supremacy Clause of the Constitution and the broad
axiom that “[t]he laws of a state cannot enlarge or restrict the jurisdiction of the federal courts.”
Weems v. McCloud, 619 F.2d 1081, 1087 (5th Cir. 1980) (quoting Markham v. City of Newport
News, 292 F.2d 711, 716 (4th Cir. 1961). This is true on its face, of course. Plaintiffs’ argument
in this context, however, is an oversimplification to some extent. Though state law may not
restrict federal jurisdiction, federal jurisdiction may nonetheless depend on state law. For
instance, if state law limits the available recovery in a state cause of action to $50,000, a federal
court will not have diversity jurisdiction over a single count of such a claim.
Seen in the best light, then, Samsung’s argument is that Mobilestar must have authority to
sue under Texas law before the Court even arrives at the question of whether Plaintiffs’ cause of
action arises under federal law. Though framed as a question of standing, the issue is really
Mobilestar’s capacity to sue—whether it is an entity properly able to suffer an injury and obtain
a remedy in federal court.
An entity’s capacity to sue in federal court is governed by Federal Rule of Civil
Procedure 17(b). Under this Rule, a corporation’s capacity to sue or be sued is determined by the
law under which the corporation was organized; for all other entities, such capacity is determined
by the law of the state where the court is located, except that “a partnership or other
unincorporated association with no such capacity under that state’s law may sue or be sued in its
common name to enforce a substantive right existing under the United States Constitution or
laws.” Fed. R. Civ. P. 17(b).
The Court need not determine whether a limited liability company organized in Delaware
is treated as a “corporation” for Rule 17(b) purposes or as an “unincorporated association.”
Under Delaware law, an LLC may sue and be sued in its own name, regardless of the cause of
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action. See DEL. CODE ANN. tit. 6 § 18-106 (2010). If the court must treat an LLC as an
unincorporated association, then it has capacity to sue “in its common name to enforce a
substantive right existing under the United States Constitution or laws” even if Texas law would
otherwise deny the association’s capacity to sue. Fed. R. Civ. P. 17(b). In either case, Mobilestar
has the capacity to sue for patent infringement in this Court.
III.

PATENTABLE SUBJECT MATTER
A. Legal Standards

To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain a “short
and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.
8(a). Detailed factual allegations are not required, but the facts pled must, when accepted as true,
state a claim for relief that is “plausible on its face,” i.e., the facts pled must allow the Court to
draw the reasonable inference that the defendant is liable for the misconduct alleged. Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). In deciding a motion under Rule 12(b)(6), the Court “accepts all well-pleaded facts
as true, viewing them in the light most favorable to the plaintiff.” In re Katrina Canal Breaches
Litigation, 495 F.3d 191, 205 (5th Cir. 2007) (quoting Martin K. Eby Constr. Co. v. Dallas Area
Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004)).
Whether a patent claims patent-eligible subject matter under 35 U.S.C. § 101 is a
question of law for the Court to decide. See Dealertrack, Inc. v. Huber, 674 F.3d 1315 (Fed. Cir.
2012). Thus, if “the only plausible reading of the patent [is] that there is clear and convincing
evidence of ineligibility,” the Court may invalidate the patent’s claims on a motion under Rule
12(b)(6). Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335, 1339 (Fed. Cir. 2013). If there are

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factual disputes about the patent’s claims, however, the question of patentable subject matter
should be reserved until claim construction. See id.
A patent is available under 35 U.S.C. § 101 for “any new and useful process, machine,
manufacture, or composition of matter, or any new and useful improvement thereof.” These
terms are to be given “wide scope,” but they exclude three categories of subject matter—“laws of
nature, physical phneomena, and abstract ideas.” Bilski v. Kappos, 130 S. Ct. 3218, 3225 (2010).
These three categories cover concepts that are “part of the storehouse of knowledge of all men . .
. free to all men and reserved exclusively to none.” Funk Bros. Seed Co. v. Kalo Inoculant Co.,
333 U.S. 127, 130 (1948). These exceptions, however, are to be construed narrowly, to avoid
excluding “unanticipated inventions” that might not be foreseen in the coverage language of §
101. Ultramercial, 722 F.3d at 1342.
Courts have long wrestled with the task of distinguishing patentable processes from
ineligible abstract ideas. The Federal Circuit has adopted a “machine or transformation” test that,
while “a useful and important clue . . . is not the sole test for deciding whether an invention is a
patent-eligible ‘process.’” Bilski, 130 S. Ct. at 3227. Rather, because “technology without
anchors in physical structures and mechanical steps simply defy easy classification,” a more
granular inquiry is often warranted to determine whether “the claim, as a whole, includes
meaningful limitations restricting it to an application, rather than a mere abstract idea.”
Ultramercial, 722 F.3d at 1343.
B. Analysis
In many cases it is difficult to distinguish between an abstract idea and its application.
This is not such a case, nor is any claim construction necessary before deciding the issue here.
Defendants argue that Claim 5 of the ‘131 Patent claims “the abstract idea of notifying a user of
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‘an incoming communication event.’” This is, on its face, a claim with “meaningful limitations.”
See Ultramercial, 722 F.3d at 1343. Moreover, even a casual reading of the claim reveals that its
claims a process more limited than simply “notifying a user.”
First, “[a] method of notifying a user of an incoming communication event,” is inherently
limited to the sphere of application rather than abstraction. “A method of notification” requires a
physical act in the world—delivery of some form of notification to a user. Moreover, the
limitation of the claim to “an incoming communication event” clearly articulates a bounded
universe of applications for the claimed process. Accordingly, even if the claim is as broad as
Defendants claim, it does not reach so far into abstraction as to be unpatentable.
Second, the claim itself is clearly narrower than Defendants suggest. Though the claimed
steps of “determining a characteristic of the communication event,” “selecting a notification
based on the characteristic,” and “sending the user the selected notification” might be said (in the
absence of interpretive context) to be inherent in the abstract idea of communication, the claimed
steps of “receiving a selection from the user indicating a format for delivery of further
notification information” and “allowing the further notification information . . . to be sent to the
user in the selected format” clearly articulate a process that is meaningfully limited relative to the
abstract idea of notification. Such requires particular input from a user relating to the format of
further notifications, followed by the availability of the selected format. This two-way
communicative process is hardly inherent in the abstract idea of notification.
Defendants are incorrect in arguing that Claim 5 of the ‘131 patent claims unpatentable
subject matter.

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.

IV.

CONCLUSION

For the reasons set forth above, the Court finds that Plaintiffs have standing and capacity
to bring the present suit, and that Claim 5 of the ‘131 patent does not claim unpatentable subject
matter under 35 U.S.C. § 101. Accordingly, Defendants’ Motion (Dkt. No. 26) should be and
hereby is DENIED in all respects.
SIGNED this 19th day of December, 2011.
So ORDERED and SIGNED this 15th day of May, 2014.

____________________________________
RODNEY GILSTRAP
UNITED STATES DISTRICT JUDGE

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