Powertech Technology Inc v. Tessera, Inc.

Filing 124

ORDER by Judge Claudia Wilken GRANTING IN PART, AND DENYING IN PART, TESSERAS 107 MOTION TO DISMISS AND STRIKE AND GRANTING 111 MOTION AND 112 STIPULATION TO FILE UNDER SEAL. (ndr, COURT STAFF) (Filed on 8/10/2012)

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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 5 POWERTECH TECHNOLOGY, INC., a Taiwanese corporation, 8 v. TESSERA, INC., a Delaware corporation, 9 United States District Court For the Northern District of California 10 11 ORDER GRANTING IN PART, AND DENYING IN PART, TESSERA’S MOTION TO DISMISS AND STRIKE (Docket No. 107) AND GRANTING MOTION AND STIPULATION TO FILE UNDER SEAL (Docket Nos. 111 and 112) Plaintiff, 6 7 No. C 11-6121 CW Defendant. ________________________________/ Defendant Tessera, Inc. moves to dismiss the fifth claim for 12 patent misuse asserted against it by Powertech Technology, Inc. 13 (PTI) and to strike portions of PTI’s fourth claim for fraud. 14 Tessera asks that PTI not be allowed to amend the complaint to 15 remedy the problems it raises. 16 part and asserts that it can file amended claims as a matter of 17 right. 18 claims. 19 amended complaint (2AC). 20 submission on the papers. 21 the parties, the Court GRANTS Tessera’s motion in part and DENIES 22 it in part. 23 file under seal. 24 25 PTI opposes Tessera’s motion in Alternatively, PTI seeks leave of the Court to amend the The parties also seek to seal PTI’s proposed second The Court took Tessera’s motion under Having considered the papers filed by The Court also GRANTS the motion and stipulation to BACKGROUND On October 20, 2003, PTI and Tessera entered into a contract 26 called Tessera Compliant Chip License Agreement (TCC License). 27 Compl., Appendix A (TCC License). 28 use Tessera’s patents to make integrated circuit packages and to The TCC License allows PTI to 1 use or sell these products world-wide. 2 ¶ II.A. 3 payments to Tessera. 4 Compl. ¶ 1; TCC License In return, PTI is obliged to make certain royalty See TCC License § III. In December 2007, Tessera initiated ITC Investigation No. 5 337-TA-630 (the 630 Investigation), accusing certain companies of 6 infringing certain Tessera patents, including its 5,663,106 patent 7 (’106 patent), through the importation and sale of particular wBGA 8 and uBGA products. 9 a civil action in the Eastern District of Texas, in which it Compl. ¶ 5. Tessera also simultaneously filed United States District Court For the Northern District of California 10 asserted the same patents against the same defendants for the same 11 products as in the ITC action. 12 Tech. Co., No. 07–534 (E.D. Tex. Dec. 7, 2007), Docket No. 1.1 Complaint, Tessera, Inc. v. A–DATA 13 PTI was not named as a respondent in the ITC action or as a 14 defendant in the Texas action, but Powerchip Semiconductor Corp. 15 (PSC), ProMos Technologies Corp., and Elpida Memory Inc. were. 16 related litigation, PTI has since asserted that these companies 17 were among PTI’s customers for the accused products. 18 Mot. to Dismiss, Powertech Technology, Inc. v. Tessera, Inc. (PTI 19 945 case), Case No. 10-945 (N.D. Cal.), Docket No. 33; Powertech 20 Technology, Inc. v. Tessera, Inc., 660 F.3d 1301, 1304 (Fed. Cir. 21 2011). 22 In See Opp. to In August 2009, the Administrative Law Judge (ALJ) in the 630 23 Investigation issued an initial determination, finding, among 24 other things, that for uBGA products, “Tessera’s patent rights are 25 26 27 28 1 The Texas action was subsequently stayed pending the final resolution of the 630 Investigation. Order, Tessera, Inc. v. A– DATA Tech. Co., No. 07–534 (E.D. Tex. Feb. 28, 2008), Docket No. 48. 2 1 exhausted as to those accused products purchased from Tessera’s 2 licensees,” precluding any liability based on these products. 3 Tessera v. ITC, 646 F.3d 1357, 1363 (Fed. Cir. 2011) (summarizing 4 the ALJ’s conclusions). 5 final determination in the 630 Investigation, affirming the ALJ’s 6 finding of patent exhaustion. 7 holding). 8 9 On January 4, 2010, the ITC issued its Id. (summarizing the ITC’s On March 5, 2010, several months after the ITC issued its final determination in the 630 Investigation, PTI filed an action United States District Court For the Northern District of California 10 for declaratory relief in this Court. 11 Docket No. 1. 12 non-infringement and invalidity of the ’106 patent and maintained 13 that it faced an imminent threat of injury because Tessera had 14 accused PTI’s customers of infringement based on PTI-packaged 15 products. 16 lack of subject matter jurisdiction, stating that, to its 17 knowledge, “PTI is a licensee in good standing and it and its 18 customers therefore enjoy protection against any suit accusing its 19 licensed products of infringement of the ’106 patent or any other 20 licensed patent.” 21 6. 22 and its customers.” 23 the action for lack of subject matter jurisdiction, finding that 24 there was no Article III case or controversy between the parties, 25 because Tessera had explicitly excluded licensed products from its 26 enforcement actions. 27 2010 U.S. Dist. Lexis 53621, at *7-8 (N.D. Cal.). See Compl., PTI 945 case, In that case, PTI sought declarations of On April 1, 2010, Tessera moved to dismiss the case for Mot. to Dismiss, PTI 945 case, Docket No. 14, Tessera also asserted that its license with PTI “protects PTI Id. at 3. In June 2010, this Court dismissed Powertech Technology, Inc. v. Tessera, Inc., 28 3 1 On May 23, 2011, the Federal Circuit affirmed in part the 2 ITC’s final determination in the 630 Investigation and reversed it 3 in part.2 4 of patent exhaustion with respect to the infringement accusations 5 against the uBGA products, and stated that because “Tessera’s 6 licensees were authorized to sell the accused products” at the 7 time of sale without reservation, Tessera could not subsequently 8 assert its patent rights against the licensees’ customers. 9 Tessera v. ITC, 646 F.3d at 1369-71. In particular, the Federal Circuit upheld the finding In so holding, the court United States District Court For the Northern District of California 10 rejected Tessera’s argument that its licensees’ sales to their 11 customers were initially unauthorized until the time that the 12 licensee remitted the related royalty payment to Tessera which, 13 under its licensing agreements, may not have happened for months 14 after the products were sold. 15 Id. at 1370. Several months later, on September 30, 2011, the Federal 16 Circuit reversed this Court’s dismissal in the PTI 945 case, 17 finding that a controversy did exist between the parties. 18 Powertech Technology, Inc. v. Tessera, Inc., 660 F.3d 1301, 1307- 19 10 (Fed. Cir. 2011). 20 had not accused PTI’s products, and that “PTI has paid all the 21 royalties due. . . . PTI and its customers therefore enjoy 22 protection against suit on PTI’s licensed products on any of the 23 hundreds of licensed patents, of which the ’106 patent is but 24 one.” 25 Tessera, Inc. 4, Powertech, Case No. 10-1489 (Fed. Cir. Jan. 18, On appeal, Tessera had again argued that it Corrected Non-Confidential Brief of Defendant-Appellee 26 2 27 28 The Federal Circuit also affirmed the ITC’s determination that the wBGA products did not infringe the ’106 patent. Tessera v. ITC, 646 F.3d at 1366-67. 4 1 2011). 2 position that it had not accused PTI’s products as inconsistent 3 with the position that Tessera had argued before it in the ITC 4 action, that the products were initially unauthorized until the 5 royalty payments were subsequently made and that some licensees, 6 including PTI, had underpaid their royalties or paid them late, so 7 exhaustion was not triggered. 8 9 United States District Court For the Northern District of California 10 11 12 13 14 In its decision, the Federal Circuit rejected Tessera’s The court specifically noted that we have no doubt that PTI’s customers and products were specifically targeted in [the ITC and Texas actions]. For example, witnesses for Elpida testified that the accused products in the ITC and Texas actions were licensed from several licensees, including PTI. Indeed, Tessera’s infringement expert in the ITC action focused part of his analysis on an Elpida wBGA chip that was clearly packaged by PTI and identified with a PTI model number. Powertech, 660 F.3d at 1308 n.4. A week later, on October 6, 2011, PTI notified Tessera by 15 letter that PTI believed that Tessera was in breach under the TCC 16 License. 17 Compl. ¶ 20. PTI initiated the current case on December 6, 2011. Docket 18 No. 1. 19 (1) declaratory judgment that PTI may terminate the TCC License; 20 (2) breach of contract; and (3) breach of the implied covenant of 21 good faith and fair dealing. In the original complaint, PTI asserted claims for: 22 On May 21, 2012, the Court denied Tessera’s motion to dismiss 23 PTI’s complaint and to strike it under California’s anti-Strategic 24 Lawsuit Against Public Participation (anti-SLAPP) statute, Cal. 25 Code Civ. Proc. § 425.16(b). 26 Docket No. 93. On June 1, 2012, the parties stipulated to allow PTI to file 27 a first amended complaint (1AC), adding claims for fraud, patent 28 misuse and declaratory judgment interpreting the TCC License. 5 1 Docket No. 99. 2 102. 3 Docket No. 103. 4 PTI filed the 1AC on June 3, 2012. Docket No. The Court granted the parties’ stipulation on June 4, 2012. On June 19, 2012, Tessera filed the instant motion. Docket 5 No. 107. 6 patent misuse and to strike portions of its claim for fraud. 7 In the motion, Tessera seeks to dismiss PTI’s claim for On July 3, 2012, PTI filed its opposition to Tessera’s 8 motion. 9 parties stipulated, to file under seal an unredacted version of Docket No. 109. At the same time, PTI moved, and the United States District Court For the Northern District of California 10 PTI’s proposed 2AC. 11 of the 2AC with the Court. 12 that PTI can file the unredacted 2AC under seal as an exhibit to 13 PTI’s opposition to the instant motion. 14 its reply in support of the current motion, Tessera states that 15 PTI’s motion to file under seal should be denied, because leave to 16 file the 2AC at all should not be granted, but averred that, if 17 leave to file the 2AC is granted, then certain portions should be 18 filed under seal. Docket Nos. 111, 112. In the stipulation, the parties agree Docket No. 112, 1. In Reply at 8 n.6. 19 20 PTI also lodged a copy DISCUSSION Tessera moves to dismiss PTI’s claim for patent misuse for 21 failure to state a claim. 22 of PTI’s claim for fraud on the basis that it accuses Tessera of 23 conduct that is protected by California’s litigation privilege. 24 Finally, Tessera seeks to strike the phrase “including but not 25 limited to” from the fraud claim on the basis that this phrase 26 violates the particularity requirement of Rule 9(b). Tessera also seeks to strike portions 27 PTI responds that the phrase “including but not limited to” 28 does not diminish its specific allegations that meet Rule 9(b)’s 6 1 particularity requirement. 2 2AC as a matter of right and thereby cure the possible defects in 3 the 1AC or, alternatively, that the Court should grant it leave to 4 amend. 5 I. 6 PTI also contends that it can file the Amendment as a Matter of Right PTI asserts that it does not need leave of the Court to amend 7 its claims and that it may do so as a matter of right. 8 15(a)(1) provides, 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Rule A party may amend its pleading once as a matter of course within: . . . if the pleading is one to which a responsive pleading is required, 21 days after service of a responsive pleading or 21 days after service of a motion under Rule 12(b), (e), or (f), whichever is earlier. Federal Rule of Civil Procedure 15(a)(1)(B). Tessera replies that the 2AC is not an amended pleading, regardless of how PTI labeled it, and is instead a supplemental pleading, because it “included allegations regarding events that happened after” the 1AC was filed. See Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1337 (Fed. Cir. 2008) (citing Federal Rule of Civil Procedure 15(d)). Tessera is correct that, in addition to changing other allegations related to conduct prior to the date on which the 1AC was filed, the proposed 2AC also contains five paragraphs with new allegations related to PTI’s termination of the TCC License on June 30, 2012 and Tessera’s reactions thereto. See 2AC ¶¶ 74-77, 110. In its opposition to the instant motion, PTI relies in part on these new paragraphs to argue that it has “pled facts that establish a substantial controversy between the Parties,” because Tessera “has stated publicly that it will defend the license in court” and so PTI “has 7 1 a reasonable apprehension that Tessera will attempt to enforce a 2 purported requirement that PTI continue to pay royalties on wBGA 3 products.” 4 Opp. at 8. Because the proposed 2AC is a supplemental pleading as well 5 as an amended pleading, it is governed by Rule 15(d) and not Rule 6 15(a). 7 court may permit a party to serve a supplemental pleading “[o]n 8 motion and reasonable notice” and “on just terms.” 9 provision for supplementation as a matter of right. See Prasco, 537 F.3d at 1337 n.5. Under Rule 15(d), a There is no Accordingly, United States District Court For the Northern District of California 10 the Court rejects PTI’s argument that it is allowed to file the 11 2AC as a matter of right. 12 The Court nonetheless has discretion to allow the 13 supplemental pleading “upon reasonable notice and upon such terms 14 as are just.” 15 response as a motion to supplement its pleadings to include the 16 allegations related to its termination of the TCC License on June 17 30, 2012 and Tessera’s reactions thereto. 18 opportunity to address these supplemental allegations in its reply 19 and has identified no reason why inclusion of these allegations 20 would be unjust. 21 to allow PTI to add these supplemental allegations to its 22 pleading. 23 II. 24 25 Id. (citing Rule 15(d)). The Court construes PTI’s Tessera has had an Accordingly, the Court exercises its discretion Motion to Dismiss A. Legal Standard A complaint must contain a “short and plain statement of the 26 claim showing that the pleader is entitled to relief.” 27 Civ. P. 8(a). 28 state a claim, dismissal is appropriate only when the complaint Fed. R. On a motion under Rule 12(b)(6) for failure to 8 1 does not give the defendant fair notice of a legally cognizable 2 claim and the grounds on which it rests. 3 Twombly, 550 U.S. 544, 555 (2007). 4 complaint is sufficient to state a claim, the court will take all 5 material allegations as true and construe them in the light most 6 favorable to the plaintiff. 7 896, 898 (9th Cir. 1986). 8 to legal conclusions; “threadbare recitals of the elements of a 9 cause of action, supported by mere conclusory statements,” are not In considering whether the NL Indus., Inc. v. Kaplan, 792 F.2d However, this principle is inapplicable 10 United States District Court For the Northern District of California Bell Atl. Corp. v. taken as true. 11 (citing Twombly, 550 U.S. at 555). Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 12 When granting a motion to dismiss, the court is generally 13 required to grant the plaintiff leave to amend, even if no request 14 to amend the pleading was made, unless amendment would be futile. 15 Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 16 F.2d 242, 246-47 (9th Cir. 1990). 17 amendment would be futile, the court examines whether the 18 complaint could be amended to cure the defect requiring dismissal 19 “without contradicting any of the allegations of [the] original 20 complaint.” 21 Cir. 1990). 22 In determining whether Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th B. Discussion 23 Tessera seeks to dismiss PTI’s claim for patent misuse, 24 arguing that patent misuse is an affirmative defense and cannot be 25 asserted as an independent actionable tort. 26 the patent misuse claim, but instead seeks leave to amend to 27 assert a declaratory relief claim for patent misuse. 28 replies that the proposed declaratory relief claim as alleged in 9 PTI does not defend Tessera 1 the proposed 2AC is improperly plead, because it seeks relief that 2 cannot be granted for such a claim and because it does not name 3 particular patents that it believes could be the subject of an 4 enforcement action. 5 first time in the reply, PTI has not had an opportunity to respond 6 to it. Since the latter argument was raised for the 7 Both parties agree that courts have permitted parties to 8 raise patent misuse through an action for declaratory relief. 9 Mot. at 4; Opp. at 6. See B. Braun Medical, Inc. v. Abbott United States District Court For the Northern District of California 10 Laboratories, 124 F.3d 1419, 1428 (Fed. Cir. 1997) (noting that 11 the district court could enter a declaratory judgment that the 12 patent was unenforceable due to misuse); Inamed Corp. v. Kuzmak, 13 275 F. Supp. 2d 1100, 1124 (C.D. Cal. 2002). 14 argues, the relief that may be sought for such a claim is very 15 limited. 16 However, as Tessera “Patent misuse arose, as an equitable defense available to 17 the accused infringer, from the desire ‘to restrain practices that 18 did not in themselves violate any law, but that drew 19 anticompetitive strength from the patent right, and thus were 20 deemed to be contrary to public policy.’” 21 1427 (quoting Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700, 22 704 (Fed. Cir. 1992)). 23 results in rendering the patent unenforceable until the misuse is 24 purged.” 25 damages to the accused infringer.” 26 patent misuse may not be converted to an affirmative claim for 27 damages simply by restyling it as a declaratory judgment 28 counterclaim.” Id. B. Braun, 124 F.3d at “When used successfully, this defense “It does not, however, result in an award of Id. at 1428. 10 Id. Thus, “the defense of 1 Such a declaratory relief claim may be used “solely to enjoin 2 defendant from asserting a patent infringement claim against 3 plaintiff” but any such injunction “must limit its effect to 4 rendering the patent unenforceable only until the misuse is 5 purged.” 6 2005 U.S. Dist. LEXIS 37504, at *23-24 (N.D. Ill.) (citing B. 7 Braun, 124 F.3d at 1427). 8 awarded ‘under a declaratory judgment counterclaim based on patent 9 misuse,’ because patent misuse simply renders the patent Rosenthal Collins Group, LLC v. Trading Tech. Int’l, While “monetary damages may not be United States District Court For the Northern District of California 10 unenforceable,” after such a finding, the court may consider 11 whether the plaintiff has stated another “substantive claim upon 12 which it is entitled to recover damages,” such as through an 13 antitrust or breach of contract theory. 14 1428 & n.5. 15 B. Braun, 124 F.3d at PTI’s original patent claim sought “recovery of all royalties 16 paid on wBGA products since at least September 24, 2010.” 17 ¶ 108. 18 patents are unenforceable until Tessera has purged its patent 19 misuse and an injunction preventing Tessera from enforcing them 20 and the TCC License against PTI until such time, PTI also seeks 21 “termination of the TCC License at least as early as September 24, 22 2010” and “restitution of all royalties paid on wBGA products 23 since at least September 24, 2010 or the date when the Court 24 determines that the patent misuse began.” 25 PTI also requests an accounting. 26 the PTI is seeking termination of the license, restitution and an 27 injunction against the TCC License rather than certain patents, 28 such relief is not available through this claim. 1AC In the proposed 2AC, in addition to a declaration that the 2AC ¶¶ 115-120 & p.27. Id. at 27. 11 To the extent that 1 Tessera also contends that the claim is overly broad, because 2 PTI seeks as relief a declaration that all Tessera patents 3 identified in the TCC License are unenforceable, but only 4 identifies purportedly improper actions regarding three particular 5 patents. 6 and prove that defendant impermissibly broadened the ‘physical or 7 temporal scope’ of the patent grant with anticompetitive effect.” 8 Rosenthal Collins Group, 2005 U.S. Dist. LEXIS 37504, at *24. 9 the 2AC, PTI alleges the following in support of this claim: United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 19 20 21 “In order to show patent misuse, plaintiff must plead In 111. PTI’s wBGA products were found not to infringe Tessera’s ’106 patent . . . Tessera’s ‘627 Patent and ‘977 Patent expired September 24, 2010. Tessera has not asserted that PTI’s wBGA products infringe upon any valid claim of any unexpired Tessera Patent. . . . 112. Tessera asserts and interprets the TCC License to require payment of royalties on PTI’s wBGA products even if PTI’s wBGA products no longer infringe any valid and unexpired Tessera Patent. 113. Tessera asserts and interprets the TCC License to require payment of royalties for an indefinite period of time beyond 2027 through a scheme of adding an “everexpanding” group of patents to the licensed Tessera Patents and thereby extending the expiration date of the TCC License unilaterally and possibly indefinitely. 114. [If] Tessera’s assertions and interpretations are taken as true, then the TCC License represents misuse of the underlying U.S. patents which were initially licensed as well as any U.S. patent that Tessera has added . . . 22 2AC ¶¶ 111-14. 23 misinterpreted the TCC License, not that it has misused all of the 24 underlying patents other than the ’106, ’627 and ’977 patents, 25 even though PTI makes a conclusory statement that 26 misinterpretation of the TCC License constitutes misuse of the 27 underlying patents. PTI appears to allege that Tessera has PTI, however, has not had an opportunity to 28 12 1 defend the allegations in the proposed 2AC, and it may be that PTI 2 could make more specific allegations about particular patents. 3 Accordingly, the Court GRANTS Tessera’s motion to dismiss 4 PTI’s claim for patent misuse. 5 assert a declaratory relief claim for patent misuse, provided that 6 it is able to remedy the deficiencies in its proposed 2AC 7 identified above. 8 III. Motion to Strike 9 A. Legal Standard United States District Court For the Northern District of California 10 PTI is granted leave to amend to Pursuant to Federal Rule of Civil Procedure 12(f), the court 11 may strike from a pleading “any redundant, immaterial, impertinent 12 or scandalous matter.” 13 avoid spending time and money litigating spurious issues. 14 Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), 15 rev’d on other grounds, 510 U.S. 517 (1994). 16 if it has no essential or important relationship to the claim for 17 relief plead. 18 and is not necessary to the issues in question in the case. 19 “Superfluous historical allegations are a proper subject of a 20 motion to strike.” 21 they are often used as delaying tactics and because of the limited 22 importance of pleadings in federal practice. 23 922 F. Supp. 1450, 1478 (C.D. Cal. 1996). 24 granted unless it is clear that the matter to be stricken could 25 have no possible bearing on the subject matter of the litigation. 26 Colaprico v. Sun Microsystems, Inc., 758 F. Supp. 1335, 1339 (N.D. 27 Cal. 1991). Id. The purpose of a Rule 12(f) motion is to Matter is immaterial Matter is impertinent if it does not pertain Id. Id. Motions to strike are disfavored because 28 13 Bureerong v. Uvawas, They should not be 1 B. Litigation privilege 2 Tessera contends that PTI’s fraud claim in the 1AC is barred 3 by the state law litigation privilege, because it is based on 4 statements and positions taken during legal proceedings in the 5 ITC, this Court and the Federal Circuit. 6 proposed 2AC, it has cured “any possible defect by clarifying that 7 PTI’s claim for fraud is based on Tessera’s misrepresentation to 8 PTI,” and that the allegations of Tessera’s litigation activity 9 are “evidence that Tessera intended PTI to rely” on the out-of- PTI states that, in its United States District Court For the Northern District of California 10 court misrepresentations and that PTI’s reliance thereon was 11 reasonable. 12 still bases the “fraud claim on Tessera’s statements in legal 13 proceedings.” 14 that the statements that it made to PTI outside of these 15 proceedings are not protected by the privilege. 16 Opp. at 9. Tessera replies that the proposed 2AC Reply at 6. Tessera does not appear to dispute California Civil Code section 47(b) provides that 17 communications made in or related to judicial proceedings are 18 absolutely immune from tort liability. 19 Court explains that the purpose of the privilege is “to afford 20 litigants . . . the utmost freedom of access to the courts without 21 fear of being harassed subsequently by derivative tort actions.” 22 Silberg v. Anderson, 50 Cal. 3d 205, 213 (1990). 23 privilege applies to any communications (1) made in a judicial 24 proceeding; (2) by litigants or other participants authorized by 25 law; (3) to achieve the objects of the litigation; (4) that have 26 some connection or logical relation to the action.” 27 Corp. v. Target Corp., 425 F. Supp. 2d 1056, 1077 (N.D. Cal. 2006) 28 (citing Silberg, 50 Cal. 3d at 212). 14 The California Supreme “The litigation Sharper Image The privilege also applies 1 to “prelitigation communication” that “relates to litigation that 2 is contemplated in good faith and under serious consideration.” 3 Action Apartment Ass’n Inc. v. City of Santa Monica, 41 Cal. 4th 4 1232, 1251 (2007). 5 of “conduct prior to the litigation . . . may be privileged if 6 reasonably related to the action”). 7 met, section 47(b) operates as an absolute privilege. 8 Cal. 3d at 216. 9 resolved in favor of applying it.” United States District Court For the Northern District of California 10 11 See also Kearney, 590 F.3d at 650 (allegations Once these requirements are Silberg, 50 “Any doubt about whether the privilege applies is Kashian v. Harriman, 98 Cal. App. 4th 892, 913 (2002). Here, in the proposed 2AC, PTI alleges that Tessera made 12 false and misleading out-of-court statements to PTI, including 13 that it would not attack licensed PTI-packaged products in the 630 14 Investigation. 15 fact accuse such products. 16 Tessera represented to this Court and to the Federal Circuit that 17 it did not accuse these products, which evidences that Tessera 18 intended to induce PTI to rely on the out-of-court statements, and 19 that PTI’s reliance thereon was reasonable. 20 2AC ¶ 103. PTI also contends that Tessera did in Id. at ¶ 48. It further alleges that Id. at ¶¶ 45-47. Tessera is correct that PTI may not assert a fraud claim 21 based on Tessera’s in-court statements. 22 fraud claim on Tessera’s out-of-court statements and use Tessera’s 23 in-court statements as evidence to support certain elements 24 thereof. 25 However, PTI may base a “The privileges of Civil Code section 47, unlike evidentiary 26 privileges which function by the exclusion of evidence, . . . 27 operate as limitations upon liability.” 28 v. Greenberg, Bernhard, Weiss & Karma, Inc., 42 Cal. 3d 1157, 1168 15 Oren Royal Oaks Venture 1 (1986). 2 clear that section 47(2) has never been thought to bar the 3 evidentiary use of every ‘statement or publication’ made in the 4 course of a judicial proceeding” and that “while section 47(2) 5 bars certain tort causes of action which are predicated on a 6 judicial statement or publication itself, the section does not 7 create an evidentiary privilege for such statements.” 8 as an example, those statements can be used for evidentiary 9 purposes to determine a person’s intent.” The California Supreme Court has stated that it is “quite Id. “Thus, Stacy & Witbeck v. City United States District Court For the Northern District of California 10 and Cnty. of San Francisco, 36 Cal. App. 4th 1074, 1091 (1995). 11 See also Ambat v. City & Cnty. of San Francisco, 693 F. Supp. 2d 12 1130, 1145 (N.D. Cal. 2010) (“Section 47 prohibits the use of such 13 statements as a basis for civil liability for certain torts, 14 including defamation, but does not impose any limitation on 15 evidentiary use of such statements, much less prohibit adverse 16 employment actions based on such statements.”). 17 Thus, the litigation privilege does not prevent PTI from 18 using Tessera’s in-court statements, for example, to help 19 establish the falsity of Tessera’s out-of-court statements, 20 Tessera’s intent to induce reliance on the out-of-court statements 21 and the reasonableness of PTI’s reliance thereon, as long as PTI 22 does not base its fraud claim on the in-court statements 23 themselves. 24 Accordingly, the Court GRANTS Tessera’s motion to strike the 25 fraud claim as plead in the 1AC, and GRANTS PTI leave to amend its 26 fraud claim as proposed in the 2AC. 27 28 16 1 C. “including but not limited to” 2 In the 1AC and proposed 2AC, PTI states that “Tessera 3 knowingly made false and misleading statements to PTI including 4 but not limited to:” five specific misrepresentations. 5 2AC ¶ 103. 6 1AC ¶ 95; Tessera argues that the phrase “including but not limited to” 7 should be stricken. 8 phrase violates the specificity requirement of Rule 9(b) and is 9 therefore “immaterial.” United States District Court For the Northern District of California 10 Tessera contends that the inclusion of this The Court finds Tessera’s argument unpersuasive. Tessera 11 does not dispute that PTI has specifically plead in its fraud 12 claim the “who, what, when, where and how” of the purported 13 misrepresentations. 14 particularity requirement to plead every fact that it may possibly 15 discover or use to support its claims. 16 PTI is not required to go beyond Rule 9(b)’s Accordingly, the Court DENIES Tessera’s motion to strike the 17 phrase “including but not limited to.” 18 IV. 19 Motion and stipulation to seal PTI seeks leave to file under seal its unredacted proposed 20 2AC, as well as Appendices A and G through Q. 21 These items are attached as Exhibit 1 to the Declaration of Jacob 22 M. Heath in support of its opposition to Tessera’s instant motion 23 to dismiss and to strike. 24 stipulation agreeing that these items should be filed under seal. 25 Docket No. 112. 26 Docket No. 111. The parties have also filed a The parties seek to seal court records that are closely 27 related to the merits of its case. 28 documents are sealable, the party who has designated them as 17 To establish that the 1 confidential “must overcome a strong presumption of access by 2 showing that ‘compelling reasons supported by specific factual 3 findings . . . outweigh the general history of access and the 4 public policies favoring disclosure.’” 5 Ass’n, 605 F.3d 665, 679 (9th Cir. 2010) (citation omitted). 6 id. at 678 (explaining that a less stringent “good cause” standard 7 is required to seal discovery documents related to non-dispositive 8 motions). 9 showing that the document is subject to a protective order or by Pintos v. Pac. Creditors Cf. Compelling reasons cannot be established simply by United States District Court For the Northern District of California 10 stating in general terms that the material is considered to be 11 confidential, but rather must be supported by a sworn declaration 12 demonstrating with particularity the need to file each document 13 under seal. 14 Civil Local Rule 79-5(a). PTI states that it seeks to file under seal Appendix A to its 15 proposed 2AC, which contains the Tessera Compliant Chip License 16 Agreement (TCC License), because it contains “proprietary and 17 confidential information, including provisions regarding the 18 calculation, payment, and amount of royalties PTI pays to Tessera 19 on licensed products,” and that its disclosure would harm PTI by 20 giving its competitors this proprietary information. 21 ¶ 16. 22 the TCC License under seal. 23 also previously granted permission to file under seal Appendices G 24 through O, which contain confidential and proprietary information 25 regarding the licensing relationship between the parties. 26 PTI represents that Appendices P and Q are presentation slides and 27 handwritten notes taken during a November 3, 2009 meeting between 28 the parties in which they discussed the terms of the TCC License Heath Decl. The Court has previously granted the parties leave to file See Docket Nos. 26, 96. 18 The Court Id. 1 and royalty payments. 2 documents, the Court concludes that the parties have established 3 that Appendices A and G through Q are sealable. 4 Heath Decl. ¶¶ 14-16. Having reviewed the PTI also seeks to file its proposed 2AC under seal. PTI 5 represents that the proposed 2AC “references and discusses” the 6 information contained in Appendices A and G through Q. 7 Seal at 3. 8 statements from the May 2012 depositions of Brian Marcucci in his 9 personal capacity and as the Rule 30(b)(6) designee for Tessera, Mot. to PTI also states that the proposed 2AC discusses United States District Court For the Northern District of California 10 in which he discussed the business and licensing relationship 11 between the parties. 12 disclosure of this testimony, which contains information similar 13 to that in Appendices A and G through Q, could cause harm similar 14 to that which would be caused by disclosure of those appendices. 15 Id. 16 indicated in the copy provided to the Court the portions of the 17 proposed 2AC that refer to the confidential material and that it 18 seeks to redact in the public version. 19 the parties have established compelling reasons to seal the 20 unredacted proposed 2AC and to file the redacted version in the 21 public record. Health Decl. ¶ 3. PTI states that public See also Hely Decl., Docket No. 98, ¶¶ 2-9. PTI has Thus, the Court finds that 22 CONCLUSION 23 For the reasons set forth above, the Court GRANTS in part 24 Tessera’s motion to dismiss and to strike and DENIES it in part 25 (Docket No. 107). 26 supplemental complaint as allowed above within fourteen days of 27 the date of this Order. 28 file an unredacted version of its amended and supplemental PTI is granted leave to file an amended and If it does so, PTI is granted leave to 19 1 complaint and Appendices A and G through Q under seal, and shall 2 file a redacted version in the public record, as set forth above. 3 If PTI files an amended and supplemental complaint, Tessera 4 shall respond to it within fourteen days after it is filed. 5 Tessera moves to dismiss PTI’s amended and supplemental complaint, 6 it shall not renew the arguments that the Court rejected herein. 7 Any motion to dismiss will be decided on the papers. 8 9 If PTI’s motion and the parties’ stipulation to file documents under seal are GRANTED (Docket No. 111 and 112). Within three United States District Court For the Northern District of California 10 days of the date of this Order, PTI shall electronically file 11 under seal the redacted version of Exhibit 1 to the Heath 12 declaration in support of its opposition and shall file an 13 unredacted version in the public docket. 14 IT IS SO ORDERED. 15 16 17 Dated: 8/10/2012 CLAUDIA WILKEN United States District Judge 18 19 20 21 22 23 24 25 26 27 28 20

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