Lam Research Corporation v. Flamm

Filing 120

ORDER SUA SPONTE SEVERING DEFENDANT AND THIRD-PARTY PLAINTIFF DANIEL L. FLAMMS CLAIMS AGAINST THIRD-PARTY DEFENDANTS. Signed by Judge Beth Labson Freeman on 3/30/2016. (blflc3S, COURT STAFF) (Filed on 3/30/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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LAM RESEARCH CORPORATION,

Case No. 15-cv-01277-BLF

United States District Court
Northern District of California

Plaintiff,
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v.
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DANIEL L. FLAMM, et al.,
Defendants.

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ORDER SUA SPONTE SEVERING
DEFENDANT AND THIRD-PARTY
PLAINTIFF DANIEL L. FLAMM’S
CLAIMS AGAINST THIRD-PARTY
DEFENDANTS

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This declaratory judgment action seeking non-infringement of U.S. Patent Nos. 5,711,849,

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6,017,221, and RE 40,264 started as an action between a seller of tools used to manufacture

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semiconductors and a patent owner. It has since grown to include third-party claims against four

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of the manufacturer’s customers, and generated two amended complaints, two answers, one

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amended third-party complaints, four answers to the amended third-party complaint, each with

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counterclaims, and four answers to the counterclaims. In light of the complexity of this case,

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severing the claims against the manufacturer’s customers will serve the ends of justice and further

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the prompt and efficient disposition of this litigation. Accordingly, for the reasons stated at the

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case management conference on March 24, 2016 and herein, the Court SEVERS Third-Party

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Plaintiff Dr. Flamm’s claims against each of the Third-Party Defendants.

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I.

BACKGROUND
Dr. Daniel Flamm is the owner and inventor of U.S. Patent Nos. 5,711,849, 6,017,221, and

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RE 40,264, which claim methods used in manufacturing semiconductors. Exhs. A-C to SAC, ECF

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52-4-52-6. Lam Research Corporation designs, manufactures, and sells semiconductor processing

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tools that are used to fabricate semiconductors. SAC ¶ 2, ECF 52-8; Ans. to SAC ¶ 2, ECF 66.
Around September 2014, Dr. Flamm’s attorneys sent letters to some of Lam’s

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customers accusing them of infringing the patents-in-suit. SAC ¶¶ 29-30, Ans. to SAC ¶¶ 29-

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30. Lam, alleging that it may be required to indemnify its customers, SAC ¶ 47, filed this action

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seeking declaratory judgment of non-infringement by itself and its customers of the patents-in-

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suit. Dr. Flamm responded by filing a Third-Party Complaint against Lam’s customers

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GLOBALFOUNDRIES U.S. Inc., Intel Corporation, Maxim Integrated Products, Inc., and Micron

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Technology, Inc (collectively, “Third-Party Defendants”). Third-Party Complaint, ECF 50-4. Dr.

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United States District Court
Northern District of California

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Flamm also filed a complaint in the Western District of Texas against Lam’s customer Samsung

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Electronics, Co., Ltd. Case No. 1:15-cv-00613 (W.D. Tx.) at ECF 1. Each of the Third-Party

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Defendants has filed an answer and counterclaim to the Amended Third-Party Complaint seeking

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a declaration of non-infringement and invalidity. ECF 72, 74, 79, and 84. Dr. Flamm answered

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each of the counterclaims. ECF 93-96.

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In the midst of the foregoing, in August 2015, Lam filed five petitions for inter partes

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review directed to all claims of the ’221 and ’264 patents. The PTAB has instituted IPR on two

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petitions that are directed at some of the claims of the ’264 patent and instituted IPR on one

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petition that is directed to five of the seven challenged claims of the ’221 patent. In January 2016,

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Lam filed four additional IPR petitions that are directed towards the ’849 and ’264 patents.

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Meanwhile, Dr. Flamm filed a motion to stay this action pending the resolution of the

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Dr. Flamm’s lawsuit in the Western District of Texas. ECF 51. Lam opposes the stay, Third

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Party Defendants GLOBALFOUNDRIES and Maxim do not oppose a stay, Micron does not

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oppose a stay but believes the Western District of Texas action should be stayed pending the IPR

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proceedings, and Intel does not oppose a stay of the entire case but opposes any partial stay. ECF

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73, 76, 77, 88. Dr. Flamm also filed a motion to dismiss all but one claim of Lam’s Second

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Amended Complaint for lack of subject matter jurisdiction. ECF 64.

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Finally, in the Western District of Texas, Samsung filed a motion to transfer that action to
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this Court. Case No. 1:15-cv-00613 (W.D. Tx.) at ECF 37. Dr. Flamm opposes the motion. Id. at

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ECF 38, 41. That motion is pending.
The parties in this action appeared before the Court on March 24, 2016 for a hearing on

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Dr. Flamm’s motion to stay and for an initial case management conference. ECF 112, 113. The

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Court will issue a separate order on Dr. Flamm’s motion to stay.

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II.

DISCUSSION
Fed. R. Civ. P. 21 provides that “[o]n motion or on its own, the court may at any time, on

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just terms, add or drop a party. The court may also sever any claim against a party.” Severed

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claims and parties become independent actions that have separate judgments. Khanna v. State Bar
of Cal., Case No. 07-cv-2587-EMC, 2007 WL 2288116, at *2 (N.D. Cal. Aug. 7, 2007). The

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United States District Court
Northern District of California

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Court has broad discretion to sever issues and may do so sua sponte. Id.; see also 7 Charles Alan

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Wright & Arthur R. Miller, Federal Practice and Procedure § 1689 (3d ed. 2015). In determining

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whether severance is appropriate, the Court considers factors such as whether there is a

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complexity of legal theories and factual proof, whether the jury may be confused by the existence

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of claims, cross-claims, and third party claims in the same trial, and whether severance will “serve

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the ends of justice and further the prompt and efficient disposition of litigation.” Khanna, 2007

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WL 2288116, at *2 (quoting CVI/Beta Ventures v. Custom Optical Frames, 896 F. Supp. 505, 505

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(D. Md. 1995)); see also 4-21 Moore’s Fed. Prac. Civ. § 21.05 (“The trial court thus has great

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discretion to restructure an action to promote the efficient administration of justice.”).

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Here, the joinder of Third-Party Defendants GLOBALFOUNDRIES, Intel, Maxim, and

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Micron will not promote judicial efficiency and will instead, create significant case manageability

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issues. Each Third-Party Defendant could raise different factual and legal defenses of non-

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infringement and invalidity creating logistical headaches. Moreover, each Third-Party Defendant

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could file different motions, including dispositive motions, each raising unique factual and legal

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issues that will have to be analyzed separately. See, e.g. Hard Drive Productions, Inc. v. Does 1-

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1-188, 809 F. Supp. 2d 1150, 1164 (N.D. Cal. 2011). The Court would face “scores of mini-trials

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involving different evidence and testimony.” Id. The Court’s concerns have already come to

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fruition as the Dr. Flamm’s motion to stay has generated five different filings, advocating four
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different positions. See ECF 51, 73, 76, 77, 88.
Furthermore, there would be significant issues with discovery and at trial. As Dr. Flamm

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recognizes in his motion to stay, the Third-Party Defendants are competitors “who fiercely

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safeguard their manufacturing processes from one another and the world.” Mot. to Stay at 5-6,

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ECF 51. “[I]f this action proceeds with all of them…they will be required to divulge their trade

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secrets to one another in discovery and trial.” Id. at 6. Allowing this case to proceed in such a

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manner would violate the “principles of fundamental fairness” and prejudice the Third-Party

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Defendants. Coleman v. Quaker Oats Co., 232 F.3d 1271, 1296 (9th Cir. 2000). While, as Dr.

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Flamm also recognizes, the Court could reduce the risk that trade secrets would be disclosed to
competitors through protective orders and bifurcating this matter for separate trials, Mot. to Stay at

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United States District Court
Northern District of California

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6, ECF 51, the Court finds severance would eliminate the risk of disclosing trade secrets while

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allowing this matter to go forward in an orderly fashion.
Accordingly, it is more efficient to have a separate case for each Third-Party Defendant

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with separate motion hearings and discovery proceedings. Given these considerations, the Court

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finds that all of the claims against the Third-Party Defendants shall be severed from this

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proceeding.

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IV.

ORDER
For the foregoing reasons, IT IS HEREBY ORDERED that:

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1. Third-Party Plaintiff Dr. Flamm’s claims against each of the Third-Party Defendants are

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SEVERED but remain pending in this Court. The clerk of the court SHALL assign to a

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new case number for each of the following actions:

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a. Dr. Flamm’s claims against GLOBALFOUNDRIES U.S. Inc.

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b. Dr. Flamm’s claims against Intel Corporation.

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c. Dr. Flamm’s claims against Maxim Integrated Products, Inc.

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d. Dr. Flamm’s claims against Micron Technology, Inc.

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The Court finds that Third-Party Plaintiff Dr. Flamm’s claims against each Third-Party

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Defendant are related to this action. Therefore, the new case numbers shall end in “BLF.”

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2. Dr. Flamm is shall pay the filing fee for each action against GLOBALFOUNDRIES, Intel,
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Maxim, and Micron.

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3. Dr. Flamm is ORDERED to file new complaints in the severed cases by April 22, 2016.

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4. The claims between Lam and Dr. Flamm remain pending in this case.

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IT IS SO ORDERED.
Dated: March 30, 2016
______________________________________
BETH LABSON FREEMAN
United States District Judge

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United States District Court
Northern District of California

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