Vantage Point Technology, Inc. v. Amazon.com Inc.
Filing
200
MEMORANDUM OPINION AND ORDER -. Signed by Judge Rodney Gilstrap on 1/6/2015. (ch, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
VANTAGE POINT TECHNOLOGY, INC.,
Plaintiff,
v.
CASE NO. 2:13-cv-909-JRG
AMAZON.COM, INC.,
LEAD CASE
Defendant.
VANTAGE POINT TECHNOLOGY, INC.,
Plaintiff,
CASE NO. 2:13-cv-917-JRG
v.
MEMBER CASE
KYOCERA COMMUNICATIONS INC.,
Defendant.
VANTAGE POINT TECHNOLOGY, INC.,
Plaintiff,
CASE NO. 2:13-cv-992-JRG
v.
MEMBER CASE
PANASONIC CORPORATION OF
NORTH AMERICA,
Defendant.
VANTAGE POINT TECHNOLOGY, INC.,
Plaintiff,
v.
CASE NO. 2:13-cv-923-JRG
MEMBER CASE
NEC CORPORATION OF AMERICA,
Defendant.
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VANTAGE POINT TECHNOLOGY, INC.,
Plaintiff,
CASE NO. 2:13-cv-916-JRG
v.
MEMBER CASE
HUAWEI DEVICE USA INC. and
FUTUREWEI TECHNOLOGIES, INC.,
Defendants.
VANTAGE POINT TECHNOLOGY, INC.,
Plaintiff,
CASE NO. 2:13-cv-920-JRG
v.
MEMBER CASE
LG ELECTRONICS USA, INC.,
Defendant.
VANTAGE POINT TECHNOLOGY, INC.,
Plaintiff,
CASE NO. 2:13-cv-993-JRG
v.
MEMBER CASE
SHARP ELECTRONICS CORP.,
Defendant.
MEMORANDUM OPINION AND ORDER
Before the Court are Defendants Kyocera Communications, Inc.’s (“Kyocera”) Motion to
Stay (Dkt. No. 181), which is joined by Defendants Panasonic Corporation of North America
(“Panasonic”) (Dkt. No. 183), Amazon.com, Inc. (“Amazon”) (Dkt. No. 186), Huawei Device
USA Inc. and Futurewei Technologies, Inc. (“Huawei entities”) (Dkt. No. 188), Sharp
Electronics Corporation (“Sharp”) (Dkt. No. 189), and LG Electronics USA, Inc. (Dkt. No 190),
in addition to NEC Corporation of America’s (“NEC”) Motion to Stay (Dkt. No. 185)
(collectively, “Moving Defendants”). Plaintiff Vantage Point Technology, Inc. (“Vantage Point”
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or “Plaintiff”) responded to all motions in a single response (Dkt. No. 194). The Court sets forth
its opinion concerning all requests for relief in this Order. For the reasons set forth below, the
Court ORDERS that all claims against Defendants NEC Corporation of America (Case No.
2:13-cv-923), Kyocera Communications, Inc. (Case No. 2:13-cv-917), and Huawei Device USA
Inc. and Futurewei Technologies Inc. (Case No. 2:13-cv-916) be transferred to the Northern
District of California, ORDERS that some but not all of the claims (set forth in more detail
below) against LG and Panasonic be transferred to the Northern District of California, and
otherwise DENIES all Moving Defendants’ requests for a stay (Dkt. Nos. 181 & 185).
BACKGROUND
The Plaintiff Vantage Point filed a number of lawsuits in the Eastern District of Texas
against two types of defendants: (1) companies that design and manufacture chipsets (“chipset
makers”), and; (2) companies that utilize chipsets in their products (“chipset consumers”).
Vantage Point has alleged infringement of U.S. Patent No. 5,463,750 (“the ’750 patent”) and
U.S. Patent No. 6,374,329 (“the ’329 patent”).
The Court finds it relevant that Vantage Point filed suit against chipset makers
Qualcomm Inc. (“Qualcomm”) (Case No. 2:13-cv-926), NVIDIA Corporation (“NVIDIA”)
(Case No. 2:13-cv-924), Marvell Semiconductor, Inc. (“Marvell”) (Case No. 2:13-cv-992),
Texas
Instruments,
Inc.
(“Texas
Instruments”)
(Case
No.
2:13-cv-929),
Freescale
Semiconductor, Inc. (“Freescale”) (Case No. 2:13-cv-913), and MediaTek USA, Inc.
(“MediaTek”) (Case No. 2:13-cv-991) (collectively, the “chipset makers”). Vantage Point has
alleged that these chipset makers directly infringe at least one claim of the ’750 patent.
Vantage Point also filed suit against various chipset consumers, some of which design
and/or manufacture their own chipsets but all of which purchase chipsets from at least one of the
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above chipset makers.
The chipset consumers relevant to this Order include the Moving
Defendants and Apple, Inc. (“Apple”) (Case No. 2:13-cv-989). Vantage Point has alleged that
these chipset consumers also directly infringe at least one claim of the ’750 patent.
In September of 2014, the Court transferred Apple to the Northern District of California.
Dkt. No. 24 in case 2:13-cv-989. Vantage Point then acquiesced in allowing certain other
defendants to be transferred to the Northern District of California by way of an unopposed
motion. That transfer included chipset makers Qualcomm, NVIDIA, and Marvell. However,
chipset makers Texas Instruments, Freescale, and MediaTek are still active defendants before
this Court, along with all of the Moving Defendants.
All Moving Defendants have requested a stay based on the consumer-suit exception to
the traditional “first-to-file” rule. Each Moving Defendant alleges that it is merely a consumer of
a chipset maker and that, as a result, each Moving Defendant’s case should be stayed pending the
resolution of its respective chipset maker’s case. The following table summarizes the Moving
Defendants’ alleged chipset makers and the location of those chipset makers’ currently pending
cases:
EDTX Defendant/
Chipset Consumer
Chipset Maker(s)
(1) Texas Instruments
Location of Chipset Maker’s
Currently Pending Case
(1) Eastern District of Texas
(2) Freescale
(2) Eastern District of Texas
Sharp
MediaTek
Eastern District of Texas
NEC
Qualcomm
Northern District of California
Kyocera
Qualcomm
Northern District of California
Huawei entities
Qualcomm
Northern District of California
Amazon
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(1) Qualcomm
(2) NVIDIA
Panasonic
(2) Northern District of California
(3) Texas Instruments
LG
(1) Northern District of California
(3) Eastern District of Texas
(1) Marvell
(1) Northern District of California
(2) Texas Instruments
(2) Eastern District of Texas
As the above table shows, Amazon and Sharp both use chipset makers that have current
cases against Vantage Point pending in the Eastern District of Texas. NEC, Kyocera, and the
Huawei entities, on the other hand, all use one chipset maker (Qualcomm) that has a current case
against Vantage Point pending in the Northern District of California. Finally, LG and Panasonic
each use two or more chipset makers, some of which have pending cases in the Northern District
of California and some of which have pending cases in the Eastern District of Texas.
The Court held a hearing concerning the pending motions to stay on December 18, 2014.
Freescale, MediaTek, NEC, the Huawei entities, Kyocera, Samsung, Panasonic, Amazon, and
LG, along with the Plaintiff, were present and represented at the hearing.
APPLICABLE LAW
Each of the Moving Defendants requests a stay under the consumer-suit exception to the
first-to-file rule. “The customer suit exception is an exception to the general rule that favors the
forum of the first-filed action.” Tegic Commc'ns Corp. v. Bd. of Regents of Univ. of Tex. Sys.,
458 F.3d 1335, 1343 (Fed. Cir. 2006) (citing Kerotest Mfg. Co. v. C–O–Two Fire Equip. Co.,
342 U.S. 180, 185 (1952)). The “primary question” under this exception “is whether the issues
and parties are such that the disposition of one case would be dispositive of the other.” Katz v.
Lear Siegler, Inc., 909 F.2d 1459, 1463 (Fed. Cir. 1990). Although in certain circumstances the
consumer-suit exception may still apply if “additional issues” are left unresolved by the secondfiled action, the key is whether “resolution of the major issues before [the] court, including
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patent infringement [and] patent validity . . . will resolve these issues as to [the] customers.” Id.
at 1464.
The Federal Circuit suggests that the following three factors are probative of whether or
not it would be more efficient to proceed with the second-filed action before the first-filed
action: (1) whether the consumers in the first-filed action are mere resellers of products
manufactured by the party in the second-filed action; (2) whether the consumers in the first-filed
action have agreed to be bound by any decision in the second-filed action, and; (3) whether the
manufacturers in the second-filed action are the only source of the allegedly infringing activity or
product. Tegic Commc’ns Corp., 458 F.3d at 1333. However, the Court does not apply the
factors in a “mechanical” or “precise” manner and instead adopts a “flexible approach” in order
to assess whether judicial resources will be saved. In re Google, No. 14-147, at 7 (Fed. Cir.
2014) (nonprecedential opinion).
DISCUSSION
The Court divides the Moving Defendants into three groups based on their factual
similarities. The Amazon and Sharp defendants are addressed first. NEC, Kyocera, and the
Huawei entities are addressed second. The LG and Panasonic defendants are addressed third.
I.
Amazon and Sharp Defendants
The Court begins by analyzing the claims of Amazon and Sharp, both of which are
alleged consumers with manufacturers that only have pending cases in the Eastern District of
Texas.
The factual scenario surrounding Amazon’s and Sharp’s requests for a stay are
substantially similar to each other for this reason.
Amazon and Sharp request a stay based on the consumer-suit exception even though the
facts of their respective cases do not fall under the classic consumer-suit exception for at least
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two reasons. First, there is no “second-filed” case in a different forum. Instead, both the
consumer and manufacturer have pending cases in the same forum, and those cases have been
consolidated for all pretrial matters.
Consolidating cases for pretrial matters furthers
convenience and economy in administration. See Fed. R. Civ. P. 42(a) (outlining procedures,
including consolidation, to avoid unnecessary cost or delay); see also Johnson v. Manhattan Ry.
Co., 289 U.S. 479, 496 (1933) (“[C]onsolidation is permitted as a matter of convenience and
economy in administration.”) Therefore the act of consolidation advances the very same goals
that the consumer-suit exception seeks to advance: judicial efficiency. Tegic Commc'ns Corp. v.
Bd. of Regents of Univ. of Tex. Sys., 458 F.3d 1335, 1343 (Fed. Cir. 2006).
At the hearing held on December 18, 2014, the Court expressed a willingness to allow the
chipset makers’ cases to go to trial before the chipset consumers’ cases. The Court believes that
consolidation of these cases plus a directive on the timing of trial dates applies a more “flexible
approach” that results in “substantial savings of litigation resources.” In re Google, No. 14-147,
at 7 (Fed. Cir. 2014). To the extent that issues are resolved by the chipset makers’ cases, the
parties’ resources will not be needlessly duplicated during the trial of the chipset consumers’
cases, and judicial efficiency is advanced.
Second, Amazon and Sharp have not agreed to be bound by the findings of the first trial.
See Dkt. No. 186 at 3. Instead, Amazon and Sharp have only agreed to be bound by findings
made “regarding the technical operation of the” chipsets. Id. This “agreement” does not, on its
face, suggest that a resolution of the case against the chipset makers constitutes a resolution of all
major issues against Amazon and Sharp, leaving only “additional issues” to be litigated in the
chipset consumer’s trial. For example, the Federal Circuit has explicitly stated that “major
issues” “include[] patent infringement [and] patent validity.” Katz v. Lear Siegler, Inc., 909 F.2d
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1459, 1464 (Fed. Cir. 1990). Amazon and Sharp, however, have not disclaimed their respective
rights to re-litigate issues of invalidity. In fact, when pressed at the December 18th hearing, no
party agreed to be bound by a finding of patent validity. As a result, the “primary question” of
“whether the issues and parties are such that the disposition of one case would be dispositive of
the other” has not been answered in the affirmative. Id. at 1463. As a result, the consumer-suit
exception to the first-to-file rule is not warranted for Amazon and Sharp.
With the Court’s announced directive that the chipset makers’ cases will proceed to trial
first, the Court DENIES Amazon’s and Sharp’s requests for a Motion to Stay (Dkt. No. 186 &
189).
II.
NEC, Kyocera, and Huawei Entities
Next, the Court examines the merits of NEC, Kyocera, and the Huawei entities’ motions.
These Defendants are similarly situated in that each uses Qualcomm as a chipset maker.
Vantage Point allowed Qualcomm’s case to be transferred to the Northern District of California
by way of an unopposed motion. According to NEC, Kyocera, and the Huawei entities, this
transfer means that “Kyocera [and the others] must now respond to allegations concerning a
device it does not design and does not fully understand, while the party that designed and
understands that device responds to the exact same allegations in a far-away court.” Dkt. No.
181 at 1.
Despite this contention, the Court also notes that the facts of these cases do not fall under
the traditional application of the consumer-suit exception. See Spread Spectrum Screening LLC
v. Eastman Kodak Co., 657 F.3d 1349, 1358 (Fed. Cir. 2011) (rejecting application of the
consumer-suit exception “[b]ecause [the manufacturer] did not file a separate declaratory
judgment action against [the Plaintiff]” in a different forum). Here, the manufacturer (chipset
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maker) did not file a separate declaratory judgment action. Instead, the chipset maker’s case was
merely transferred.
However, the Court believes that the general theory supporting the
consumer-suit exception applies in this limited circumstance and to the facts of this particular
case. Accordingly, the Court will analyze whether the principles and factors that guide the Court
under the consumer-suit exception apply to the facts of this case. As shown below, the Court
finds they do not.
First, the Court determines whether NEC, Kyocera, and the Huawei entities are “mere
resellers” of an infringing product. These similarly situated defendants argue that they are
“reseller[s] because [their] phones include Qualcomm devices.” Dkt. No. 181 at 5. Reasoning
that their liability is “based entirely on Vantage Point’s allegations against Qualcomm,” these
defendants believe that they meet this first factor. Id. Vantage Point, on the other hand, argues
that NEC, Kyocera, and the Huawei entities are not mere resellers. Dkt. No. 194 at 3. Vantage
Point argues that although these defendants all incorporate chipsets made by Qualcomm, it is
NEC’s, Kyocera’s, and the Huawei entities’ use of its end products (e.g., phones and tablets) that
directly infringe the ’750 patent—not merely the chipset. Id.
The Court is persuaded that NEC, Kyocera, and the Huawei entities are not simply mere
resellers of the chipsets. As Vantage Point notes, it is these defendants’ alleged actions beyond
reselling—for example, the action of testing the chipsets—that allegedly infringes the method
claims of the ’750 patent. At the December 18th hearing, Kyocera agreed with the Court’s
assessment. When asked if a finding of infringement against Qualcomm would also constitute a
finding of infringement against Kyocera, Kyocera said it would not. Kyocera maintained that
Vantage Point would still need to prove additional elements, including (for example) whether
Kyocera tested the chipsets, to establish liability for infringement against Kyocera. This was true
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even if liability against Qualcomm was already established. In other words, Kyocera admitted
that—despite contrary statements in its motion—Kyocera’s liability is not “based entirely on
Vantage Point’s allegations against Qualcomm.”
Dkt. No. 181 at 5.
Accordingly, NEC,
Kyocera, and the Huawei entities are not mere resellers in the ordinary sense. See Katz v. Lear
Siegler, Inc., 909 F.2d 1459, 1464 (Fed. Cir. 1990) (holding that the resolution of patent
infringement in both cases is a major issue that should be required for the consumer-suit
exception to apply).
Second, the Court must determine whether NEC, Kyocera, and the Huawei entities
agreed to be bound by the outcome of the Qualcomm litigation. As with the Amazon and Sharp
defendants, the Court is wholly unpersuaded that NEC, Kyocera, and the Huawei entities agreed
to be bound by that outcome.
The “agreement” put forth in Kyocera’s motion to stay is
insufficient under the consumer-suit exception. Kyocera (as well as NEC and the Huawei
entities) state that they agree to be bound “regarding the technical operation of the” Qualcomm
chipsets. Dkt. No. 186 at 3. This statement is not an agreement to be bound by the outcome of
the litigation. The “major issues” to be resolved by a patent infringement suit must include
patent validity and infringement liability. Katz v. Lear Siegler, Inc., 909 F.2d 1459, 1464 (Fed.
Cir. 1990). As noted earlier, neither of these defendants have agreed to be bound by a finding of
validity nor a finding of infringement. When a party reserves the right to re-litigate two of the
most important issues in a patent litigation dispute, the “primary question” of “whether the issues
and parties are such that the disposition of one case would be dispositive of the other” has not
been answered affirmatively. Id. at 1463. This Court finds that the consumer-suit exception
does not apply as to NEC, Kyocera, and the Huawei entities.
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Having determined that neither the first nor second probative factor supports the
application of the consumer-suit exception, the Court notes that Vantage Point—not the current
defendants—put these parties in their current predicament by agreeing to transfer Qualcomm, the
chipset maker, out of the case. This is significant. By doing this, Vantage Point increased the
amount of judicial resources that will be necessary to resolve all its disputes against these
defendants.
In an effort to offset this likely increase in the use of judicial resources, the Court takes a
“flexible approach” and ORDERS that the entire case against NEC Corporation of America
(Case No. 2:13-cv-923), Kyocera Communications, Inc. (Case No. 2:13-cv-917), and Huawei
Device USA Inc. and Futurewei Technologies Inc. (Case No. 2:13-cv-916) be transferred to the
Northern District of California.
All courts must increasingly strive for greater judicial
efficiencies if the public’s rights are to be adjudicated promptly. The maxim that “justice
delayed is justice denied” is no less true today than when it was first uttered. As Chief Justice
Warren E. Burger pointed out in an address to the American Bar Association in 1970:
A sense of confidence in the courts is essential to maintain the fabric of ordered
liberty for a free people, and three things could destroy that confidence and do
incalculable damage to society: that people come to believe that inefficiency and
delay will drain even a just judgment of its value; that people who have long been
exploited in the smaller transactions of daily life come to believe that courts
cannot vindicate their legal rights from fraud and over-reaching; that people come
to believe the law—in the larger sense—cannot fulfill its primary function to
protect them and their families in their homes, at their work, and on the public
streets.
Warren E. Burger, “What’s Wrong with the Courts: The Chief Justice Speaks Out,” U.S. News &
World Report (Vol. 69, No. 8, Aug. 24, 1970) 68, 71 (address to American Bar Association
meeting, Aug. 10, 1970) (emphasis added).
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III.
LG and Panasonic Defendants
The Court now reaches the more vexing issue surrounding the LG and Panasonic
defendants.
Panasonic is accused of purchasing chipsets from two chipset makers: Texas
Instruments and Marvell. Texas Instrument’s case is still pending in the Eastern District of
Texas, while Marvell’s case was transferred to the Northern District of California.
LG is
accused of purchasing chipsets from three chipset makers: Qualcomm, whose case is in the
Northern District of California; NVIDIA, whose case is also in the Northern District of
California, and; Texas Instruments, whose case remains pending in the Eastern District of Texas.
The analysis of the probative factors discussed earlier does not change for either of these
two defendants. LG and Panasonic are not “mere resellers” for the same reasons that NEC,
Kyocera, and the Huawei entities were not “mere resellers,” and their agreement to be bound by
the technical operation is likewise insufficient. Dkt. No. 183 at 6. Nevertheless, the Court still
believes that considerations of judicial efficiency should govern the Court’s actions and that
greater efficiency can be gained by severing and transferring portions of these cases.
Panasonic contends that Vantage Point’s allegations hinge on the operation of two
chipsets incorporated into two of its tablets. One tablet, the ToughPad JT-B1, incorporates a
Texas Instrument chipset, while the other tablet, the ToughPad FZ-a1 uses a Marvell chipset.
The Court believes that such claims can be reasonably severed along these lines. Accordingly,
the Court again takes a flexible approach and ORDERS that Vantage Point’s claims against
Panasonic be severed into two distinct cases, one which alleges infringement of end products
utilizing the Marvell chipset and one which alleges infringement of end products utilizing the
Texas Instrument chipset.
The Court further ORDERS, post this severance, that the case
involving the products incorporating the Marvell chipset be transferred to the Northern District
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of California. The Clerk of this Court is directed to accomplish the severance and transfer as
ordered above. The severed disputes involving Panasonic’s end products utilizing the disputed
Texas Instruments chipsets shall be retained before this Court and any request for a stay as to
such claims is DENIED. The Court, consistent with its prior directives, advises the parties that
Vantage Point’s claims against Texas Instruments will be adjudicated before the claims against
Panasonic are put to trial.
LG is in a similar situation. Vantage Point alleges infringement of LG’s end products
that incorporate Qualcomm, NVIDIA, and Texas Instrument chipsets. Accordingly, the Court
ORDERS that Vantage Point’s claims against LG be severed into two distinct cases, one which
alleges infringement of end products utilizing chipsets produced by Qualcomm or NVIDIA and
another which alleges infringement of end products utilizing Texas Instrument chipsets. The
Court further ORDERS that LG’s case involving the Qualcomm and NVIDIA chipsets be
transferred to the Northern District of California. The Clerk of this Court is directed to
accomplish the severance and transfer as ordered above. The severed disputes involving LG’s
end products utilizing the disputed Texas Instruments chipsets shall be retained before this Court
and any request for a stay as to such claims is DENIED. The Court, consistent with its prior
directives, advises the parties that Vantage Point’s claims against Texas Instruments will be
adjudicated before the claims against LG are put to trial.
CONCLUSION
The Court finds that these cases fall outside the consumer-suit exception to the first-tofile rule. Accordingly, the relief sought in all parties’ motions and joinder in motions to stay is
uniformly DENIED, with the express directive that the chipset makers will proceed to trial first
in the Eastern District of Texas. The Court also finds that despite the inapplicability of the
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.
consumer-suit exception, judicial efficiency can nevertheless be increased by transferring parties
with common claims to the same court.
For this reason, some of the parties claims are
transferred as specified in more detail above.
SIGNED this 19th day of December, 2011.
So ORDERED and SIGNED this 6th day of January, 2015.
____________________________________
RODNEY GILSTRAP
UNITED STATES DISTRICT JUDGE
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