Rockstar Consortium US LP et al v. Google Inc

Filing 49

NOTICE by Google Inc Notice of Supplemental Authority (Attachments: # 1 Exhibit A)(Perlson, David)

EXHIBIT A

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page1 of 28

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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GOOGLE INC.,

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United States District Court
For the Northern District of California

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No. C 13-5933 CW

Plaintiff,
v.
ROCKSTAR CONSORTIUM U.S. LP,
MOBILESTAR TECHNOLOGIES, LLC,
Defendants.

ORDER DENYING
MOTION TO DISMISS
OR, IN THE
ALTERNATIVE, TO
TRANSFER
(Docket No. 20)

________________________________/

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Google Inc. filed this declaratory judgment action for noninfringement of seven patents owned by Defendants Rockstar
Consortium U.S. LP (Rockstar) and MobileStar Technologies, LLC
(MobileStar).

Defendants now move to dismiss or, in the

alternative, to transfer the action to the Eastern District of
Texas, where the action could be consolidated with several other
actions filed by Defendants against Google’s customers.

opposes the motion or, in the alternative, requests jurisdictional
discovery.

The Court held oral argument on March 13, 2014.

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After

considering the papers and the arguments of counsel, the Court
DENIES the motion to dismiss or transfer.
BACKGROUND

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Google

Google is a corporation located in Mountain View, California.
Docket No. 1 ¶ 2.

Google produces the Android mobile platform, an

open-source operating system that is used by many original
equipment manufacturers around the world.

Id. at ¶¶ 1-2.

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page2 of 28

Nortel Networks was a prominent Canadian telecommunications

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provider headquartered in Ottawa, Canada.

See Madigan Decl., Exs.

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1-2.

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one in Santa Clara, California.

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2009, Nortel filed for bankruptcy.

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court ordered an auction of Nortel’s patent licensing operations,

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including a portfolio of over 6,000 patents “spanning wireless,

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wireless 4G, data networking, optical, voice, internet, service

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provider, semiconductors” and many other aspects of

Nortel had offices throughout the United States, including
See id., Ex. 2.

On January 14,

Id., Exs. 3-4.

The bankruptcy

United States District Court
For the Northern District of California

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telecommunications and Internet search.

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the same time, five of the world’s largest technology companies --

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Apple, Microsoft, Research in Motion, Sony, and Ericsson --

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jointly created and funded an entity called “Rockstar Bidco LP,” a

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Delaware limited liability partnership.

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contributed approximately $2.6 million to Rockstar Bidco.

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Ex. 9 at 34.

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patent licensing operation at the June 2011 auction, but Rockstar

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Bidco ultimately prevailed with a bid of $4.5 billion.

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Ex. 7.

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Id., Exs. 4-6.

Around

See id., Exs. 7-8.

Apple
Id.,

Both Google and Rockstar Bidco bid on the Nortel

Id.,

Rockstar Bidco transferred around 2,000 patents to its

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owners, with at least 1,147 going to Apple.

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Rockstar Bidco then reorganized itself into Rockstar, a Delaware

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limited partnership which claims a principal place of business in

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Id., Exs. 7, 14.

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page3 of 28

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Plano, Texas.

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and current Rockstar CEO John Veschi, Nortel's patent portfolio

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and licensing team of about forty employees immediately moved to

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Rockstar.

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executives at Nortel.

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in Nortel's old headquarters in Ottawa, Canada.

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According to its own website, Rockstar produces no products, but

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operates a "patent licensing business that owns and manages a

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portfolio of more than 4,000 patents developed by" Nortel.

United States District Court
For the Northern District of California

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Id., Exs. 7, 15.1

Id., Exs. 10-12.
Id.

Led by former Nortel executive

Rockstar’s CFO and CTO had also been
Veschi and the rest of his team remain
Id., Ex. 12.

Id.,

Ex. 13.

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Rockstar has worked with Mark Wilson, an independent

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contractor in California who provides Rockstar with “licensing

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consulting services.”

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charts appearing in a news article to which Rockstar contributed

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and which it featured on its own website, Wilson was named as a

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“licensing executive” in senior management.

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12-13.

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deleted from the website and Wilson has removed “Rockstar

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Consortium” from his professional profile.

Dean Decl. ¶ 34.

In Rockstar organization

Madigan Decl., Exs.

This suggestion of an employee relationship has now been

See id., Exs. 12-13,

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Although Defendants assert that they both have principal
places of business in Texas, they have not named any executives or
employees who reside or work there. Rockstar’s website and the
declaration of Afzal Dean, Rockstar Vice President and President
of MobileStar, identifies officers and board members who represent
both Defendants and who are almost all based in Canada, except one
in Colorado. See, generally, Dean Decl; see also Madigan Decl.,
Exs. 10, 19, 23. Rockstar’s “nerve center,” or the place where
its “officers direct, control, and coordinate the corporation’s
activities,” thus appears to be in Ottawa, Canada. Hertz Corp. v.
Friend, 559 U.S. 77, 92-93 (2010).
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37.

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not encompass enforcement of the patents-in-suit.

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Defendants assert that Wilson’s patent licensing duties do

On October 30, 2013, Rockstar created MobileStar, a wholly-

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owned subsidiary and Delaware limited liability corporation

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claiming a principal place of business in Plano, Texas.

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Decl. ¶ 5.

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suit in the Eastern District of Texas against ASUS, HTC, Huawei,

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LG, Pantech, Samsung, and ZTE, alleging each company infringes

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seven patents: U.S. Patent Nos. 6,037,937 (the ‘937 patent),

Dean

A day later, on October 31, 2013, Defendants filed

United States District Court
For the Northern District of California

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6,463,131 (the ‘131 patent), 6,765,591 (the ‘591 patent),

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5,838,551 (the ‘551 patent), 6,128,298 (the ‘298 patent),

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6,333,973 (the ‘973 patent), and 6,937,572 (the ‘572 patent). (the

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Halloween actions).

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and MobileStar alleged infringement by “certain mobile

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communication devices having a version (or adaptation thereof) of

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Android operating system,” which is developed by Google.

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Decl., Exs. A-H.

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and transferred the remaining five patents to MobileStar shortly

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before filing litigation, but retained an exclusive license to

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those patents.

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In each of the Halloween actions, Rockstar

See Dean

Rockstar owns two of the seven patents-in-suit

See Dean Decl. ¶¶ 5, 15, 24.

On December 23, 2013, Google filed the present action in the

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Northern District of California.

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declaration that its Android platform and products (the Nexus 5,

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Nexus 7, and Nexus 10) do not infringe the seven patents held by

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Defendants that were asserted in the Halloween actions.

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Docket No. 1.

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In this action, Google seeks a

See

On December 31, 2013, Defendants responded with a New Year’s
Eve amendment to one of the Halloween actions to include
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allegations that Google infringes three of the asserted patents at

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issue in this case: the ‘937, ‘131, and ‘591 patents.

Rockstar v.

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Samsung, Case No. 13-0900 (E.D. Tex.), Docket No. 19.

Defendants

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did not, however, assert that Google infringed the four additional

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patents at issue in the Halloween actions and in this case: the

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‘551, ‘298, ‘973, and ‘572 patents.

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Defendants moved to amend their complaint in the Texas case to

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allege that Google infringed these four additional patents.

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No. 13-0900, Docket Nos. 45-46.

United States District Court
For the Northern District of California

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On March 10, 2014,

Case

LEGAL STANDARDS

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See id.

Under Rule 12(b)(2) of the Federal Rules of Civil Procedure,
a defendant may move to dismiss for lack of personal jurisdiction.

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In a declaratory action for non-infringement, because the

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jurisdictional issue is intimately connected with substance of

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patent laws, Federal Circuit law applies.

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Corp. v. Aten Int’l Co., Ltd., 552 F.3d 1324, 1328 (Fed. Cir.

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2008).

Avocent Huntsville

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Where the court decides the personal jurisdiction question

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based on affidavits and other written materials, and without an

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evidentiary hearing, a plaintiff need only make a prima facie

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showing that a defendant is subject to personal jurisdiction.

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Nuance Commc'ns, Inc. v. Abbyy Software House, 626 F.3d 1222, 1231

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(Fed. Cir. 2010); Electronics For Imaging, Inc. v. Coyle, 340 F.3d

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1344, 1349 (Fed. Cir. 2003).

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complaint must be taken as true.

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the defendant submit admissible evidence, conflicts in the

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evidence must be resolved in the plaintiff’s favor.

Uncontroverted allegations in the
Id.

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If both the plaintiff and

Trintec

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Indus., Inc. v. Pedre Promotional Products, Inc., 395 F.3d 1275,

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1282 (Fed. Cir. 2005).

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There are two independent limitations on a court’s power to

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exercise personal jurisdiction over a non-resident defendant: the

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applicable state personal jurisdiction rule and constitutional

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principles of due process.

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F.3d at 1349.

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extensive with federal due process requirements, jurisdictional

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inquiries under state law and federal due process standards merge

United States District Court
For the Northern District of California

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Electronics For Imaging, Inc., 340

Because California’s jurisdictional statute is co-

into one analysis.

Id.

The “constitutional touchstone” for the exercise of personal

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jurisdiction “remains whether the defendant purposefully

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established minimum contacts” in the forum state such that

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“maintenance of the suit does not offend traditional notions of

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fair play and substantial justice.”

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Rudzewicz, 471 U.S. 462, 474 (1985); Int’l Shoe Co. v. Washington,

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326 U.S. 310, 316 (1945).

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doctrine has evolved to keep pace with the increasingly national

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and international nature of modern business affairs, the Supreme

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Court has repeatedly stressed that there must always be “some act

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by which the defendant purposefully avails itself of the privilege

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of conducting activities within the forum state, thus invoking the

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benefits and protections of its laws.”

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552 F.3d at 1329 (quoting Hanson v. Denckla, 357 U.S. 235, 253

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(1958)).

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defendant will not be haled into a jurisdiction solely as a result

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of random, fortuitous, or attenuated contacts, or of the

Burger King Corp. v.

Although the application of this

Avocent Huntsville Corp.,

“This purposeful availment requirement ensures that a

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unilateral activity of another party or a third person.”

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Id.

(quoting Burger King Corp., 471 U.S. at 475).
Personal jurisdiction may be either general or specific.

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General jurisdiction exists when the defendant maintains

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“continuous and systematic” contacts with the forum state, even if

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the cause of action is unrelated to those contacts.

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Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-16 (1984).

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Specific jurisdiction is satisfied where the defendant has

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“purposefully directed his activities at residents of the forum,

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United States District Court
For the Northern District of California

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and the litigation results from alleged injuries that ‘arise out

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of or relate to’ those activities.”

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at 472.

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I.

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Helicopteros

Burger King Corp., 471 U.S.

Personal Jurisdiction over Rockstar through MobileStar
As a preliminary matter, Defendants argue that jurisdiction

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over Rockstar and MobileStar should be assessed independently

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because they are separate corporate entities.

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contending that Rockstar’s contacts should be imputed to

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MobileStar.

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Google disagrees,

The Court must begin from “the general rule that the

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corporate entity should be recognized and upheld, unless specific,

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unusual circumstances call for an exception.”

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Aarotech Labs., Inc., 160 F.3d 1373, 1380 (Fed. Cir. 1998).

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exception is where the parent and subsidiary are not really

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separate entities and are alter egos of each other.

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Corp., 248 F.3d 915, 926 (9th Cir. 2001); see also Danjaq, S.A. v.

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Pathe Commc'ns Corp., 979 F.2d 772, 775 (9th Cir. 1992) (finding

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that many courts have discussed whether a parent's citizenship can

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be imputed to the subsidiary and recognized that it can where the
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3D Sys., Inc. v.
One

Doe v. Unocal

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page8 of 28

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subsidiary is the alter ego of the parent).

Courts have invoked

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this exception where the plaintiff makes a prima facie case that

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(1) there is a unity of interest and ownership such that the

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separate personalities of the two entities no longer exist and

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(2) failure to disregard the separate identities “would result in

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fraud or injustice.”

Doe, 248 F.3d at 926.

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In a similar situation, the Federal Circuit found that the

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parent-subsidiary relationship between a parent company and its

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wholly-owned subsidiary holding company justified imputing the

United States District Court
For the Northern District of California

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parent company’s California contacts to the subsidiary.

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Screen Mfg. Co., Ltd. v. CFMT, Inc., 142 F.3d 1266, 1271 (Fed.

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Cir. 1998).

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Dainippon

The court observed:

Stripped to its essentials, CFM contends that a parent
company can incorporate a holding company in another state,
transfer its patents to the holding company, arrange to have
those patents licensed back to itself by virtue of its
complete control over the holding company, and threaten its
competitors with infringement without fear of being a
declaratory judgment defendant, save perhaps in the state of
incorporation of the holding company. This argument
qualifies for one of our “chutzpah” awards. See Refac Int'l,
Ltd. v. Lotus Dev. Corp., 81 F.3d 1576, 1584, 38 USPQ2d 1665,
1671 (Fed. Cir. 1996); Checkpoint Sys., Inc. v. United States
Int'l Trade Comm'n, 54 F.3d 756, 763 n. 7, 35 USPQ2d 1042,
1048 n.7 (Fed. Cir. 1995) (noting that “chutzpah” describes
“the behavior of a person who kills his parents and pleads
for the court's mercy on the ground of being an orphan”).
Id. (reversing district court’s finding that it lacked personal
jurisdiction because of CFMT, the newly-formed subsidiary).

With

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these observations in mind, the Federal Circuit determined that it
would be “reasonable and fair” to find jurisdiction over both CFM

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and CFMT because of their parent-subsidiary relationship.

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The court reasoned that, while a “patent holding subsidiary is a
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Id.

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legitimate creature . . . , it cannot fairly be used to insulate

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patent owners from defending declaratory judgment actions in those

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fora where its parent company operates under the patent and

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engages in activities sufficient to create personal jurisdiction

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and declaratory judgment jurisdiction.”

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Id.2

The facts in this case are at least as strong as those in

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Dainippon.

As in Dainippon, MobileStar here had some contact with

the forum state: it met with Google in California to attempt to

United States District Court
For the Northern District of California

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negotiate a license.

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negotiation a sublicense with Dainippon in California further

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strengthen CFMT’s contacts with that state.”).

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fundamentally, as in Dainippon, the circumstances here strongly

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See id. (“Moreover, CFMT’s attempts to

More

suggest that Rockstar formed MobileStar as a sham entity for the

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sole purpose of avoiding jurisdiction in all other fora except
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MobileStar’s state of incorporation (Delaware) and claimed

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principal place of business (Texas).

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initiated litigation against Google’s customers, Rockstar freshly

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minted MobileStar, with no California contacts, and assigned the

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A mere day before it

Defendants initially attempted to argue that Dainippon’s
holding was based “first and foremost” on its determination “that
the subsidiary itself had minimum contacts with the forum, and
those contacts (not the parent’s contacts) justified the
imposition of personal jurisdiction,” insinuating the rest was
dicta. Defendants’ Reply at 3 (internal quotation marks and
italics omitted). However, Defendants later conceded that
Dainippon stood for the proposition that one valid ground for
setting aside corporate formalities for purposes of assessing the
interests of fair play and substantial justice was if the
defendants engaged in “a deliberate attempt to manipulate
jurisdiction.” Id. at 4.
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asserted patents to that subsidiary.

Dean Decl. ¶ 15.

Other

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evidence suggesting MobileStar maintains no independent identity

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is the fact that all MobileStar employees also work for Rockstar.

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MobileStar has three officers (President Afzal Dean, Vice

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President Chad Hilyard, and Corporate Secretary Mike Dunleavy) and

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7

one board member (Director of the Board John Veschi); all serve on
Rockstar’s board as well.

Dean Decl. ¶ 10.

MobileStar

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purportedly operates out of the same office suite listed for

United States District Court
For the Northern District of California

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Rockstar.

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“there is no hint whatsoever of any manipulation” and that

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“MobileStar was created for legitimate reasons having nothing to

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do with personal jurisdiction,” Rockstar does not actually provide

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any evidence supporting this point.

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Dean Decl. ¶¶ 5, 15.

Although Rockstar asserts that

Defendants’ Reply at 4.

Because the evidence presented supports Google’s allegation that

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Rockstar created MobileStar solely to dodge jurisdiction, the
traditional notions of fair play and justice would not be offended

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if the Court considers the two entities jointly for purposes of

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jurisdiction and imputes Rockstar’s contacts to the forum state to

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MobileStar.3

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Cf. In re Microsoft, 630 F.3d 1361, 1364-65 (Fed. Cir.
2011) (for purposes of a motion to transfer, ignoring the impact
of litigation-driven incorporation under the laws of Texas, which
occurred sixteen days before filing suit); In re Zimmer Holdings,
Inc., 609 F.3d at 1381 (rejecting connections to Texas as “recent,
ephemeral, and an artifact of litigation”).
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II.

General Jurisdiction

General, or “all-purpose” personal jurisdiction, subjects a

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defendant to suit in a forum only where a defendant’s contacts

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with that forum “are so continuous and systematic as to render

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them essentially at home in the forum State.”

6

Bauman, 134 S. Ct. 746, 754 (2014) (quoting Goodyear Dunlop Tires

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Daimler AG v.

Operations, S.A. v. Brown, 131 S. Ct. 2846, 2851 (2011)).

The

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“paradigm bases for general jurisdiction” for a corporation are
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United States District Court
For the Northern District of California

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12

its place of incorporation and principal place of business.
at 760.

Both Rockstar and MobileStar are incorporated in Delaware and

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claim to have principal places of business in Plano, Texas.

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Decl. ¶ 5, 15.

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16

Id.

Dean

Neither Defendant is licensed to do business in

California, nor do they own real or personal property, pay taxes,
maintain offices, or file lawsuits in California.

Dean Decl.

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¶¶ 6-9, 16, 22-24, 29-33.
Google nevertheless contends that Rockstar has stepped in the

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shoes of its predecessor, Nortel, and assumed its jurisdictional

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position.4

Although Nortel was a Canadian company, it maintained

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26
27
28

See Doe, 248 F.3d at 926 (explaining requirements for alter
ego theory and agency theory for imputing contacts of one
corporation to another). See also Katzir's Floor & Home Design,
Inc. v. M-MLS.com, 394 F.3d 1143, 1150 (9th Cir. 2004) (“The
general rule of successor liability is that a corporation that
purchases all of the assets of another corporation is not liable
for the former corporation's liabilities unless, among other
theories, the purchasing corporation is a mere continuation of the
selling corporation.”).
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its primary United States campus in Santa Clara and designated a

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registered agent for service of process in California.

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Madigan Decl., Exs. 3, 27.

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defended them in California.

5

Nortel Networks Corp., Case No. 06-00532 (N.D. Cal.) and Nortel

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7

See

Nortel routinely brought suits and
See, e.g., Times Networks, Inc. v.

Networks Inc. v. State Bd. of Equalization, 191 Cal. App. 4th 1259
(2011).

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9

Google does not allege that Rockstar maintained Nortel’s

United States District Court
For the Northern District of California

10

Santa Clara presence in California.

11

although the bulk of Rockstar’s employees operate out of Canada,

12

Rockstar nevertheless pursues a significant patent licensing

13

business aimed at the technology industry in the Silicon Valley,

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in California.

15

Google contends instead that,

As Rockstar has stated on many occasions to the

press and others, Rockstar is exclusively “a patent licensing

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business” and operates by reverse-engineering products on the
market and proposing that the companies which offer those products

19

purchase licenses.

20

Rockstar does not currently sell any products; commercialization

21

of its significant patent portfolio is its only business.

22

the Silicon Valley technology industry is Rockstar’s main target,

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24

Madigan Decl., Ex. 7, 13; Dean Decl. ¶¶ 18-21.

Because

as acknowledged by Rockstar’s CEO, Rockstar naturally would have
to come into constant contact with the forum state.

Madigan

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26

Decl., Exs. 16, 35.

Rockstar confirmed that, as of May 2012, it

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had “started negotiations with as many as 100 potential licensees”

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and has since approached many more.
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Id., Exs. 7, 17.

At least a

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page13 of 28

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couple of these meetings were in California.

See Dean Decl. ¶ 18.

2

Rockstar has one employee or independent contractor in California,

3

Wilson, who contacts potential licensees in California.

4

Madigan Decl. Ex. 17.

5
6
7

See

Google’s showing is insufficient to render Defendants
“essentially at home” in California.

Even if it is true that

Defendants engage in “continuous and systematic” business in the

8
9

forum state, that does not mean that Defendants’ presence in the

United States District Court
For the Northern District of California

10

forum state is so substantial that it should fairly be subject to

11

suit “on causes of action arising from dealings entirely distinct

12

from those activities.”

13

II.

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15
16

Daimler AG, 134 S. Ct. at 761.

Specific Jurisdiction

Specific jurisdiction exists where the cause of action arises
out of the defendant’s contacts with the forum state, even if
those contacts are isolated and sporadic.

Red Wing Shoe Co., Inc.

17
18
19

v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1359 (Fed. Cir.
1998) (citing Burger King Corp., 471 U.S. at 471-77).

Even a

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single act may support a finding of personal jurisdiction so long

21

as it creates a “substantial connection with the forum, as opposed

22

to an attenuated affiliation.”

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developed a three-factor test to determine whether specific

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Id.

The Federal Circuit has

jurisdiction exists: “whether (1) the defendant purposefully

25
directed its activities at residents of the forum state, (2) the
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27
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claim arises out of or relates to the defendant's activities with
the forum state, and (3) assertion of personal jurisdiction is
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2
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reasonable and fair.”

Electronics For Imaging, Inc., 340 F.3d at

1350.
Here, Defendants sued seven Google customers, alleging that

4

they infringed by making and selling “certain mobile communication

5

devices having a version (or adaptation thereof) of Android

6
7

operating system” which is developed by Google.
Exs. A-H.

See Dean Decl.,

Both Defendants met with Google in California to

8
9

discuss licensing of the patents-in-suit.

Rockstar also met in

United States District Court
For the Northern District of California

10

California with a few of the Google customers sued in the

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Halloween actions to discuss licensing of the patents-in-suit.

12

These contacts with Google and its customers in California created

13

a cloud of patent infringement charges over Google’s Android

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platform.

15

Google’s causes of action for declaratory judgment of

non-infringement, which are intended to “clear the air of

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17
18

infringement charges” targeting Google’s Android platform, “arise
out of or relate to” Defendants’ contacts with the forum.

See Red

19

Wing Shoe Co., Inc., 148 F.3d at 1360 (holding that “cease-and-

20

desist letters are the cause of the entanglement and at least

21

partially give rise to the plaintiff’s action”).

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24

Defendants argue that imposing jurisdiction based on the act
of sending cease-and-desist letters alone violates the principles
of fair play and substantial justice.

Id.

The Federal Circuit

25
26

has explained that exercising personal jurisdiction over a

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patentee based solely on the sending of cease-and-desist letters

28

would be unfair under the second prong of the traditional due
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Case4:13-cv-05933-CW Document58 Filed04/17/14 Page15 of 28

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process inquiry: “whether the maintenance of personal jurisdiction

2

would comport with fair play and substantial justice.”

3

1361 (quotation marks omitted).

4

“afford[s] the patentee sufficient latitude to inform others of

5

its patent rights without subjecting itself to jurisdiction in a

6
7

foreign forum.”

Id.

Id. at

This is because due process

An offer to license may sometimes be “more

closely akin to an offer for settlement of a disputed claim rather

8
9

than an arms-length negotiation in anticipation of a long-term

United States District Court
For the Northern District of California

10

continuing business relationship,” and, if so, by itself may be

11

insufficient to justify exercising specific jurisdiction.

12

Accordingly, to find specific jurisdiction, the Federal Circuit

13

has required that a showing that a defendant engaged in “other

14

activities” in the forum state related to the action at hand.

15

Id.; Avocent Huntsville Corp., 552 F.3d at 1334.

Id.

These activities

16
17
18
19
20

need not be limited to those directed at Google itself, but must
be related in some way to the patents-in-suit.

Avocent Huntsville

Corp, 552 F.3d at 1334.
Courts have held that such “other activities” may include

21

forming obligations with forum residents that relate to

22

enforcement of the asserted patents.

23
24

Some examples of “other

activities” that courts have recognized include “initiating
judicial or extra-judicial patent enforcement within the forum, or

25
26
27

entering into an exclusive license agreement or other undertaking
which imposes enforcement obligations with a party residing or

28
15

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page16 of 28

1

regularly doing business in the forum.”

Id.5

A review of Federal

2

Circuit case law reveals that the relationship must extend beyond

3

the mere payment of royalties or cross-licensing payments, “such

4

as granting both parties the right to litigate infringement cases

5
6

or granting the licensor the right to exercise control over the
licensee's sales or marketing activities.”

Breckenridge Pharm.,

7
8
9

Inc. v. Metabolite Labs., Inc., 444 F.3d 1356, 1366 (Fed. Cir.
2006).

The defendants must create “continuing obligations between

United States District Court
For the Northern District of California

10

themselves and residents of the forum,” forming a “substantial

11

connection” that proximately results from the defendants’ own

12

actions such that it would not be “unreasonable to require

13

defendants to submit to the burdens of litigation in that forum as

14

well.”

Electronics For Imaging, Inc., 340 F.3d at 1350.

15
16
17
18
19
20
21
22
23
24
25
26
27
28

See Campbell Pet Co. v. Miale, 542 F.3d 879, 886 (Fed. Cir.
2008) (finding jurisdiction over a patentee who conducted extrajudicial patent enforcement by enlisting a third party in the
forum to remove defendant’s products from a trade show); Genetic
Implant Sys., Inc. v. Core-Vent Corp., 123 F.3d 1455, 1458 (Fed.
Cir. 1997) (holding that specific jurisdiction existed over
patentee because it had appointed an in-state distributor to sell
a product covered by the asserted patent, which was a business
relationship “analogous to a grant of a patent license” and
created obligations to sue third-party infringers); Akro Corp. v.
Luker, 45 F.3d 1541, 1548-49 (Fed. Cir. 1995) (because defendant
had entered into an exclusive licensing agreement with one of the
alleged infringer’s competitors, which meant that defendant had
“obligations . . . to defend and pursue any infringement” against
the patent, specific jurisdiction was proper); SRAM Corp. v.
Sunrace Roots Enter. Co., Ltd., 390 F. Supp. 2d 781, 787 (N.D.
Ill. 2005) (specific jurisdiction was proper where defendant had
“purposefully directed its activities” at residents of the forum
by marketing a product that directly competed with the alleged
infringer).
5

16

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page17 of 28

1

Google contends that Defendants have accepted substantial

2

obligations to Apple, a forum resident, which require Defendants

3

“to defend and pursue any infringement against” their patents.

4

Akro Corp., 45 F.3d at 1543.

5

majority shareholder of Defendants and exerts substantial control

6
7

Google alleges that Apple is a

over them, and as a result Defendants are obliged to act on
Apple’s behalf in a campaign to attack Google’s Android platform.6

8
9

In support of this allegation, Google submits strong evidence

United States District Court
For the Northern District of California

10

that Apple is indeed the majority shareholder of Defendants based

11

on Apple’s majority investment in Rockstar’s predecessor entity,

12

Rockstar Bidco.7

13
14

Currently, Rockstar is a Delaware limited

partnership which lists “Rockstar Consortium LLC” located in New
York as general partner.

Id., Exs. 32-33; Dean Decl. ¶ 15.

But

15
16
17
18

Apple contributed $2.6 billion, or fifty-eight percent of the $4.5
billion total investment in Rockstar Bidco.
at 34.

Madigan Decl., Ex. 9

Although Rockstar Bidco reorganized itself to become

19
20
21
22
23
24
25
26
27
28

Defendants contend that Google has not proven that alter
ego or agency theories apply, and thus Apple’s contacts with the
forum cannot be imputed to Defendants. See Defendants’ Reply
at 11. Defendants misunderstand Google’s argument. Google does
not seek to impute to Defendants Apple’s contacts with the forum
state, but instead argues that Defendants have undertaken a
substantial obligation to Apple related to the asserted patents
that makes it reasonable to impose specific jurisdiction.
6

As previously noted, Rockstar wholly owns MobileStar and
the Court considers the two entities jointly for purposes of
jurisdiction because it is likely that MobileStar was created
solely for litigation purposes.
7

17

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page18 of 28

1
2
3

Rockstar, it does not appear that any ownership interests changed,
nor do Defendants assert otherwise.
Even if Apple is a majority shareholder of Rockstar, if

4

Defendants were able to demonstrate that Apple is a mere passive

5

shareholder and takes no part in patent assertion strategy, then

6
7

the relationship between Apple and Defendants might not be
sufficient to uphold specific jurisdiction.

Cf. Breckenridge

8
9

Pharm., Inc., 444 F.3d at 1366.

Google alleges that Apple’s role

United States District Court
For the Northern District of California

10

extends beyond the mere receipt of profits.

11

stated that he does not talk to its shareholders about potential

12

licensing partners or infringement suits, but admitted that he has

13

to show them “progress and that real work is being done.”

14

Decl., Ex. 12 at 4-5.

15

Rockstar’s CEO Veschi

Madigan

Veschi holds periodic calls and meetings

with the owners, primarily with their intellectual property

16
17
18

departments, and Veschi acknowledges that they “work well
together.”

Id. at 5.

Although Veschi states they avoid talking

19

about details, it does appear at least telling that Veschi speaks

20

directly and periodically with the owners’ intellectual property

21

departments to demonstrate that “work is being done.”

22
23
24

Id. at 4-5.

Google demonstrates a direct link between Apple’s unique
business interests, separate and apart from mere profitmaking, and
Defendants’ actions against Google and its customers.

25
26
27
28
18

Google and

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page19 of 28

1

Apple’s rivalry in the smartphone industry is well-documented.8

2

Apple’s founder stated that he viewed Android as a “rip off” of

3

iPhone features and intended to “destroy” Android by launching a

4

“thermonuclear war.”

5
6

Id., Ex. 31.

Defendants’ litigation

strategy of suing Google’s customers in the Halloween actions is
consistent with Apple’s particular business interests.

In suing

7
8
9

the Halloween action defendants, Defendants here limited their
infringement claims to Android-operating devices only, even where

United States District Court
For the Northern District of California

10

they asserted a hardware-based patent.

11

Ex. A and the ‘551 patent.

12

tactic advances Apple’s interest in interfering with Google’s

13

Android business.

14

See, e.g., Dean Decl.,

This “scare the customer and run”

See Campbell, 542 F.3d at 887 (finding

jurisdiction where the patentee “took steps to interfere with the

15
plaintiff’s business”).
16
17

In sum, with conflicts in the allegations and evidence

18

resolved in its favor, Google has shown that it is likely that

19

Defendants have created continuing obligations with a forum

20

resident to marshal the asserted patents such that it would not be

21

unreasonable to require Defendants to submit to the burdens of

22
23
24
25
26
27
28

See, e.g., Madigan Decl., Ex. 24 (Rockstar’s “stockpile was
finally used for what pretty much everyone suspected it would be
used for -- launching an all-out patent attack on Google and
Android”); Ex. 25 (“This is an all out assault on Google and the
Android smartphone ecosystem and it would be fair to say that most
experts expected those patents would rear their ugly head sometime
in the future”); Ex. 26 (new attention focused on Rockstar
“largely because it gives the appearance that three leading
competitors to Android are teaming up against it”); Ex. 27
(further detailing Apple’s anti-Android litigation campaign).
8

19

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page20 of 28

1

litigation in this forum.

Electronics For Imaging, Inc., 340 F.3d

2

at 1350.

3

residents of this forum in a way which relates materially to the

4

enforcement or defense of the patent, which is sufficient to

5

establish specific jurisdiction.

6

Defendants have purposefully directed activities to

Avocent Huntsville Corp., 552

F.3d at 1338.9

7
8
9

III. Jurisdiction under Declaratory Judgment Act
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

28 U.S.C. § 2201.

The

declaratory judgment plaintiff must establish that the “facts

15
alleged under all the circumstances show that there is a
16
17

substantial controversy between parties having adverse legal

18

interests of sufficient immediacy and reality to warrant the

19

issuance of a declaratory judgment.”

20

Technologies, Inc., 518 F.3d 897, 901 (Fed. Cir. 2008) (citing

21

MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 126 (2007)

22

(holding that there was a real and substantial controversy based

23

Micron Tech., Inc. v. Mosaid

on threatening letters and public statements showing an “intent to

24
25
26
27
28

continue an aggressive litigation strategy”)).
Because the Court finds personal jurisdiction over
Defendants is proper, venue is also proper. Trintech Indus., 395
F.3d at 1280 (“Venue in a patent action against a corporate
defendant exists wherever there is personal jurisdiction”).
9

20

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page21 of 28

1

Even when declaratory judgment jurisdiction is present,

2

courts have some discretion to decline to exercise that

3

jurisdiction.

4

(1995).

5

the Declaratory Judgment Act, the court “must determine whether

6
7

Wilton v. Seven Falls Co., 515 U.S. 277, 289-90

In order to decide whether to exercise jurisdiction under

hearing the case would serve the objectives for which the
Declaratory Judgment Act was created.”

Capo, Inc. v. Dioptics

8
9

Med. Products, Inc., 387 F.3d 1352, 1355 (Fed. Cir. 2004).

When

United States District Court
For the Northern District of California

10

the objectives of the Declaratory Judgment Act are served by the

11

action, dismissal is rarely proper.

12

founded reasons for declining to entertain a declaratory judgment

13

action.”

14
15

Id.

“There must be well-

Id.

The present suit serves the purposes of the Declaratory
Judgment Act, which “in patent cases is to provide the allegedly

16
17
18

infringing party relief from uncertainty and delay regarding its
legal rights.”

Micron Tech., Inc., 518 F.3d at 902.

A real and

19

substantial controversy existed when Google filed suit.

20

Defendants had sued a number of Google’s customers, based in part

21
22
23
24
25
26
27
28
21

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page22 of 28

1

on their use of the Android platform developed by Google.10

2

Defendants did not, however, name Google as a defendant.

3

tactic of targeting the customers instead of the manufacturer

4

“infects the competitive environment of the business community

5
6

with uncertainty and insecurity.”

This

Electronics for Imaging, Inc.

v. Coyle, 394 F.3d 1341, 1346 (Fed. Cir. 2005).

In response to

7
8
9

the uncertainty caused by Defendants’ actions, Google filed this
declaratory judgment action to “clear the air of infringement

United States District Court
For the Northern District of California

10

charges.”

11

uncertainty still exists in part because, although Defendants

12

later amended one of the Halloween actions to implicate Google

13

directly, they accused Google of infringing only three of the

14

Avocent Huntsville Corp., 552 F.3d at 1329.

seven of the patents at issue here.

That

Case No. 13-0900, Docket

15
No. 19.

Although Defendants recently sought to include the final

16
17
18
19
20
21
22
23
24
25
26
27
28

four other patents in the Texas case, leave to amend has not yet
Defendants filed a Statement of Recent Decision calling the
Court’s attention to Microsoft Corp. v. DataTern, Inc., 2013-1184,
2014 WL 1327923 (Fed. Cir. Apr. 4, 2014). The Federal Circuit
noted that, although suits against customers do not “automatically
give rise to a case or controversy regarding induced
infringement,” there is a case or controversy if “there is a
controversy between the patentee and the supplier as to the
supplier’s liability for induced or contributory infringement
based on the alleged acts of direct infringement by its
customers.” Id. at *2-3. The vast majority of the claims brought
in the Halloween actions appear to be targeted specifically at
Android features; the exception is the ‘551 patent, with which it
is not clear if Android is specifically involved. It is also not
clear if Defendants approached Google to license the ‘551 patent.
See id. at *2. Because the DataTern court had the benefit of
claim charts to discern the details of the patentee’s infringement
theories, the Court may revisit the inclusion of the ‘551 patent
at a later date.
10

22

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page23 of 28

1

been granted.

Case No. 13-0900, Docket Nos. 45-46.

Because the

2

patent owners failed to “grasp the nettle and sue,” Google was

3

justified in bringing the present action.

4

Imaging, Inc., 394 F.3d at 1346.

5

IV.

6
7
8

Electronics for

Motion to Transfer
A.

First-to-File Rule

When cases between the same parties raising the same issues
are pending in two or more federal districts, the general rule is

9

United States District Court
For the Northern District of California

10
11

to favor the forum of the first-filed action, regardless of
whether it is a declaratory judgment action.

Micron Tech., Inc.,

12

518 F.3d at 904.

13

rule on motions to dismiss or transfer based on exceptions to the

14

first-to-file rule or on the convenience factors.

15

parties dispute which is the first-filed action.

16
17

The court of the actual first-filed case should

See id.

The

Google argues

that the first-filed action is the present suit, which was filed
before Google faced charges in the Eastern District of Texas due

18
19

to Defendants’ New Year’s Eve amendment.

Defendants argue that

20

the Halloween actions themselves constituted the first-filed

21

suits.

22

Halloween actions did not name Google specifically, Defendants

23

contend that they should be considered first-filed suits against

24

Google because they involved “substantially the same” parties as

25

Defendants’ Motion to Dismiss at 5, 19-24.

those implicated here.

Although the

Id. (citing Futurewei Techs., Inc. v.

26
27
28

Acacia Research Corp, 737 F.3d 704, 706 (Fed. Cir. 2013)).
However, the present situation is not equivalent to the
23

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page24 of 28

1

“substantially similar” parties that were implicated in Futurewei,

2

which were a patent owner, its exclusive licensee, and the

3

licensee’s wholly-owned subsidiary/assignee.

4

contrast, the relationship between Google and the Halloween

5

defendants is one of manufacturer and customer.

6
7

Halloween defendants are not in privity.

Id. at 705-06.

By

Google and the

Cf. Microchip Tech, Inc.

v. United Module Corp., 2011 WL 2669627, at *3 (N.D. Cal.)

8
9

United States District Court
For the Northern District of California

10

(“similar” parties were parent and its wholly-owned subsidiary).
Even if the parties were substantially similar in the

11

Halloween actions and this one, the customer-suit exception to the

12

first-to-file rule would apply.

13

553 F.2d 735, 737 (1st Cir. 1977) (“an exception to the first-

14

filed rule has developed in patent litigation where the earlier

15

Codex Corp v. Milgo Elec. Corp,

action is an infringement suit against a mere customer and the

16
17
18

later suit is a declaratory judgment action brought by the
manufacturer of the accused devices”).

Because the determination

19

of the infringement issues here would likely be dispositive of the

20

other cases, and the manufacturer presumably has a greater

21

interest in defending against charges of patent infringement than

22

the customers, the present suit takes precedence.

23
24

Kahn v. Gen.

Motors Corp., 889 F.2d 1078, 1081 (Fed. Cir. 1989); Cf.
ContentGuard Holdings, Inc. v. Google, Inc., Case No. 14-0061

25
26
27
28

(E.D. Tex.), Docket No. 37, at 6.
B.

Convenience Factors

The Court could make an exception to the general rule giving
24

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page25 of 28

1

preference the first-filed case if doing so would be “in the

2

interest of justice or expediency, as in any issue of choice of

3

forum.”

4

of “competing forum interests” between accused infringers and

5

patent holders, the court may consider the “convenience factors”

6
7

Micron Tech., Inc., 518 F.3d at 904.

To resolve disputes

under the transfer analysis of 28 U.S.C. § 1404(a), including: the
convenience and availability of witnesses, the absence of

8
9

jurisdiction over all necessary or desirable parties, the

United States District Court
For the Northern District of California

10

possibility of consolidation with related litigation, and

11

considerations relating to the interests of justice.

12

05.

13

WL 5568345, at *2 (N.D. Cal.) (listing additional transfer

14

factors).

See Reflex Packaging, Inc. v. Audio Video Color Corp., 2013

15
16

Id. at 902-

1.

Convenience and availability of witnesses

The convenience and availability of witnesses is “probably

17
18
19

the single most important factor” in the transfer analysis.
Genentech, Inc., 566 F.3d 1338, 1343 (Fed. Cir. 2009).

In re

This

20

factor favors California because Google’s Android products, the

21

target of this infringement action, were designed and created

22

here.

23

development of the accused Android platform’s features reside near

24

Many of the witnesses who can testify to the design and

Google’s headquarters in Mountain View, California.

Dubey Decl.

25
¶¶ 3-8.

Other witnesses, such as the inventors of the patents-in-

26
27
28

suit, are likely to be in Canada.

Defendants do not name any

witnesses in Texas essential to the suit.
25

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page26 of 28

2.

1
2
3

Jurisdiction over parties to this action and
possibility of consolidation with related
litigation

Defendants argue that this Court lacks jurisdiction over some

4

of the customer defendants to the Halloween actions in Texas.

5

Defendants contend those customers necessarily would be

6
7

indispensable parties to this litigation because their rights in
the patents-in-suit are at play.

However, those parties are not

8
9

essential to resolution of claims between Defendants and Google.

United States District Court
For the Northern District of California

10

It cannot be said that any customer who uses the technology at

11

issue is an indispensable party.

12
13
14

The Halloween actions might not and need not be transferred
here.11

They might be stayed in Texas and be reopened upon

completion of this suit, which likely will resolve some of the

15
infringement issues there.

If the Texas actions are transferred

16
17
18

here, they can be consolidated with this case at least for
pretrial purposes.
3.

19
20

Other factors

Other factors that may be considered include: the plaintiff’s

21

choice of forum, the convenience of the parties, the ease of

22

access to the evidence, the familiarity of each forum with the

23

applicable law, the local interest in the controversy, the

24
25
26
27
28

In each of the remaining Halloween actions, the defendant
has filed a motion to stay or, in the alternative, to transfer the
case to this district. See Docket Nos. 46, 48, 50-51, 55.
11

26

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page27 of 28

1
2
3

relative court congestion, and the interests of justice.

Reflex

Packaging, Inc., 2013 WL 5568345, at *2.
Defendants argue that they are the true plaintiffs and

4

accordingly, their choice of forum should take precedence.

5

Court finds this factor at best to favor Defendants only slightly

6
7

because each side accuses the other of forum shopping.

The

Indeed,

Defendants have not identified any witnesses residing in Texas,

8
9

their primary operations and headquarters are in Canada, and they

United States District Court
For the Northern District of California

10

admit that many of the inventors of the patents-in-suit were

11

listed at least years ago as being from Canada.

12

argument of their own convenience is similarly attenuated because,

13

again, their operations appear to be based in Canada, not Texas.

14
15

Defendants’

The Northern District of California has the greater interest
in this litigation because the claims here will “call into

16
17
18

question the work and reputation of several individuals residing
in or conducting business in this community.”

In re Hoffman-La

19

Roche, 587 F.3d 1333, 1336 (Fed. Cir. 2009).

20

Eastern District of Texas have recognized that the “Northern

21

District of California has an interest in protecting intellectual

22

property rights that stem from research and development in Silicon

23
24

Valley.”

Courts in the

Affinity Labs of Texas v. Samsung Elecs. Co., Ltd., 2013

WL 5508122, at *3 (E.D. Tex.).

Although Defendants claim to have

25
26
27

substantial ties to Texas, their headquarters appear to be in
Canada.

The interest of the Eastern District of Texas in this

28
27

Case4:13-cv-05933-CW Document58 Filed04/17/14 Page28 of 28

1
2

controversy is therefore outweighed by the compelling interests in
California.

3

The remaining factors are either neutral or favor Google.

4

Because Google, the accused infringer, resides in California, much

5

of the evidence is here.

6
7

Some of the evidence may be in Canada or

other states; however, that does not make Texas the more
convenient forum.

Each forum is familiar with patent law, and

8
9

United States District Court
For the Northern District of California

10
11
12

both have similar court congestion and time to trial.
cases are in early stages.

On balance, the factors do not weigh in favor of transferring
the action to the Eastern District of Texas.

13
14

All of the

CONCLUSION
The motion to dismiss or transfer is DENIED.

15
16

IT IS SO ORDERED.

17
18
19

Dated: 04/17/2014
CLAUDIA WILKEN
United States District Judge

20
21
22
23
24
25
26
27
28
28