VLSI Technology LLC v. Intel Corporation, No. 5:2017cv05671 - Document 908 (N.D. Cal. 2024)
Court Description: ORDER GRANTING 868 PLAINTIFF'S MOTION TO DISMISS DEFENDANT'S COUNTERCLAIM (public version of 903 sealed order). Signed by Judge Beth Labson Freeman on 3/29/2024. (blflc3, COURT STAFF) (Filed on 4/4/2024)
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VLSI Technology LLC v. Intel Corporation Doc. 908 1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 VLSI TECHNOLOGY LLC, Plaintiff, 8 v. 9 United States District Court Northern District of California Case No. 17-cv-05671-BLF 10 INTEL CORPORATION, 11 Defendant. ORDER GRANTING PLAINTIFF’S MOTION TO DISMISS DEFENDANT’S COUNTERCLAIM [Re: ECF No. 868] 12 Litigation over Intel Corporation’s (“Intel”) claimed license covering VLSI Technology 13 14 LLC’s (“VLSI”) patent portfolio has been hotly pursued in three jurisdictions, including two 15 separate trips to the Federal Circuit. Before this Court is the third motion in as many months 16 regarding Intel’s various pleadings claiming that it is licensed to use VLSI’s patent portfolio. In 17 January, Intel sought to bring to trial as a standalone defense its two-year-old license defense 18 despite VLSI voluntarily dismissing all unadjudicated patent infringement claims. Finding the 19 remaining claims moot, the Court denied Intel’s request. ECF No. 807. Intel then sought leave to 20 amend its answer to replead the affirmative defense as a counterclaim, which the Court granted. 21 ECF No. 841. Now, VLSI moves to dismiss the license counterclaim on the grounds that the license’s 22 23 forum selection clause requires that as pled it may only be heard in Delaware, that the Court lacks 24 jurisdiction, that the first-filed rule bars this Court from hearing the claim, and that Intel’s 25 counterclaim fails to state a claim. ECF No. 868 (“Mot.”); ECF No. 888 (“Reply”). Intel 26 opposes. ECF No. 876 (“Opp.”). This matter is suitable for determination without oral argument. 27 See Civ. L.R. 7-1(b). For the following reasons, the motion to dismiss is GRANTED. 28 \\ Dockets.Justia.com 1 United States District Court Northern District of California 2 I. BACKGROUND On October 2, 2017, VLSI brought this action, asserting that Intel products infringe eight 3 of its patents. ECF No. 1. In its “Amended Answer, Defenses, and Counterclaims,” filed on 4 December 21, 2021, Intel alleged as its seventh affirmative defense that “Intel is not liable for 5 infringement because it possesses a license and full release of liability with respect to all patents 6 asserted in VLSI’s Complaint.” ECF No. 334 ¶ 145. Intel additionally brought sixteen 7 counterclaims, two each for the eight originally asserted patents, claiming 1) non-infringement of 8 each patent, and 2) invalidity of each patent. See id. ¶¶ 6–85. 9 VLSI also filed infringement actions against Intel in China, Texas, and Delaware. The 10 Delaware infringement actions have since been dismissed. See VLSI Technology LLC v. Intel 11 Corp., No. 1:18-cv-00966, ECF No. 998 (D. Del.); VLSI Technology LLC v. Intel Corp., No. 1:19- 12 cv-00426, ECF No. 15 (D. Del.). Intel filed a complaint in the Delaware Chancery Court in which 13 it sought resolution of the license issues, but the Chancery Court declined jurisdiction and wrote 14 that Intel could present its license defense in this Court or in Delaware District Court, where one 15 action had not yet been dismissed. Intel Corp. v. Fortress Investment Group, LLC, C.A. No. 16 2021-0021-MTZ, 2021 WL 4470091, at *9 (Del. Ch. Ct. Sept. 30, 2021) . 17 The parties proceeded through IPR and later full discovery in this action, after which four 18 patents remained at summary judgment: U.S. Patent No. 8,566,836 (“’836 Patent”), U.S. Patent 19 No. 8,004,922 (“’922 Patent”), U.S. Patent No. 7,675,806 (“’806 Patent”), and U.S. Patent No. 20 8,268,672 (“’672 Patent”). On December 7, 2023, the Court granted summary judgment that Intel 21 does not infringe the asserted claims of the ’836 and ’922 Patents and that the ’922 Patent is 22 invalid, but denied Intel’s motion for summary judgment that Intel does not infringe the asserted 23 claims of the ’806 and ’672 Patents. ECF No. 772 at 55. In a supplemental order issued after the 24 Federal Circuit’s ruling in VLSI Tech. LLC v. Intel Corp., 87 F.4th 1332 (Fed. Cir. 2023), the 25 Court denied Intel and VLSI’s cross motions for summary judgment on Intel’s license defense and 26 determined that the defense was legally valid but that disputed factual issues should be decided at 27 trial based on the narrow question of whether VLSI and certain Finjan entities are under common 28 control of Fortress Investment Group. ECF No. 781 (“Supp. SJ Order”) at 16–17. At a hearing on 2 1 January 4, 2024, previously scheduled for argument on the parties’ Daubert motions pertaining to 2 the ’806 and ’672 Patents, VLSI advised the Court that it would not be proceeding on its claims 3 regarding the remaining patents and shortly thereafter, VLSI granted Intel an “unconditional 4 covenant not to sue as to the ’806 and ’672 Patents” and dismissed all claims relating to those two 5 patents. ECF No. 798-2 at 2; ECF No. 801. At the January 4, 2024 hearing, the Court questioned 6 whether trial could go forward on the license defense for the ’836 and ’922 Patents, for which the 7 Court found no infringement, and requested further briefing. ECF No. 797 at 27:22–25. After 8 briefing, the Court found it lacked jurisdiction to proceed to trial on the affirmative defenses, 9 ruling that “Intel cannot proceed to trial on its affirmative defense that it is licensed to use the ’836 10 and ’922 Patents” because no live claims remained before the Court. ECF No. 807 at 8. Two days later, Intel filed a motion to amend its answer to add a counterclaim that it is United States District Court Northern District of California 11 12 licensed to use VLSI’s patents, which this Court granted upon a finding of good cause. ECF No. 13 854. While the Court found that amendment was not futile, it noted that “VLSI ha[d] briefed 14 several possible deficiencies with Intel’s proposed counterclaim that may need to be explored 15 further in subsequent briefing such as a motion to dismiss[.]” Id. VLSI took up the Court’s offer 16 with the instant motion to dismiss, and the Court vacated the trial date and all corresponding 17 pretrial deadlines pending the outcome of the instant motion, noting that “[i]f this case proceeds, 18 the Court will reset trial on an expedited basis.” ECF No. 860. 19 VLSI next filed a Petition for a Writ of Mandamus in the Federal Circuit challenging the 20 Court’s order granting Intel’s motion to amend. In re: VLSI Technology LLC, No. 24-116, (Fed. 21 Cir.); ECF Nos. 850, 851, 855. The Federal Circuit issued a brief order dismissing the petition, 22 holding that VLSI has “not shown the district court abused its discretion in finding good cause for 23 Intel to amend its answer to add a counterclaim.” In re: VLSI Technology LLC, No. 24-116, 2024 24 WL 1152537, at *2 (Fed. Cir. Mar. 18, 2024). The Federal Circuit declined to address subject 25 matter jurisdiction, leaving this Court to address it “in the first instance” and advising that VLSI, if 26 unsuccessful, can “meaningfully raise these challenges on appeal after final judgment.” Id. 27 \\ 28 \\ 3 1 United States District Court Northern District of California 2 II. LEGAL STANDARD “A motion to dismiss for lack of subject matter jurisdiction may either attack the 3 allegations of the complaint or may be made as a ‘speaking motion’ attacking the existence of 4 subject matter jurisdiction in fact.” Thornhill Pub. Co. v. Gen. Tel. & Elecs. Corp., 594 F.2d 730, 5 733 (9th Cir. 1979). “Where the jurisdictional issue is separable from the merits of the case, the 6 judge may consider the evidence presented with respect to the jurisdictional issue and rule on that 7 issue, resolving factual disputes if necessary.” Id.; Safe Air for Everyone v. Meyer, 373 F.3d 1035, 8 1039 (9th Cir. 2004). The party asserting subject matter jurisdiction “bears the burden of proving 9 by a preponderance of the evidence that each of the requirements for subject-matter jurisdiction 10 has been met.” San Diego Cnty. Credit Union v. Citizens Equity First Credit Union, 65 F.4th 11 1012, 1029 (9th Cir.), cert. denied, 144 S. Ct. 190 (2023). 12 “A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a 13 claim upon which relief can be granted ‘tests the legal sufficiency of a claim.’” Conservation 14 Force v. Salazar, 646 F.3d 1240, 1241–42 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d 15 729, 732 (9th Cir. 2001)). When determining whether a claim has been stated, the Court accepts 16 as true all well-pled factual allegations and construes them in the light most favorable to the 17 plaintiff. Reese v. BP Expl. (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011). However, the Court 18 need not “accept as true allegations that contradict matters properly subject to judicial notice” or 19 “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable 20 inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (citation omitted). 21 While a complaint need not contain detailed factual allegations, it “must contain sufficient factual 22 matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 23 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A 24 claim is facially plausible when it “allows the court to draw the reasonable inference that the 25 defendant is liable for the misconduct alleged.” Id. On a motion to dismiss, the Court’s review is 26 limited to the face of the complaint and matters judicially noticeable. MGIC Indem. Corp. v. 27 Weisman, 803 F.2d 500, 504 (9th Cir. 1986); N. Star Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 28 581 (9th Cir. 1983). 4 1 DISCUSSION 2 VLSI’s motion to dismiss consists of four arguments: 1) the Finjan License Agreement 3 bars Intel from asserting it as a counterclaim, Mot. at 5–12; 2) the Court does not have subject 4 matter jurisdiction, id. at 12–18; 3) Intel fails to state a claim, id. at 18; and 4) the first-filed rule 5 compels the claim to be transferred to Texas, id. at 18–25. The Court addresses the arguments in 6 the order presented by VLSI. 7 8 9 United States District Court Northern District of California III. A. Forum Selection Clause The Court begins with VLSI’s first argument, that the Finjan License Agreement’s forum selection clause compels dismissal. The parties do not dispute that section 9.1 allows Intel to 10 plead the Finjan License Agreement as an affirmative defense. Rather, the parties’ key 11 disagreement is about whether Intel may plead the Finjan License Agreement as a standalone 12 counterclaim under section 9.1 outside of Delaware and remain in conformance with of the forum 13 selection clause in section 11.4. VLSI argues that the forum selection clause unambiguously bars 14 Intel from bringing a standalone claim outside of Delaware, Mot. at 7–10, and that the 15 counterclaim should therefore be dismissed for forum non conveniens, id. at 10–12. Intel responds 16 that section 9.1 allows the standalone counterclaim to be pled here, and alternatively that if the 17 Court finds that the counterclaim cannot be pled here, that this action should be transferred to 18 Delaware, not dismissed. The Court addresses the two issues in turn. 19 20 1. The Finjan License Agreement In 2012, Intel entered into an agreement with certain Finjan entities, whereby Intel 21 received a “perpetual, irrevocable license” to “Finjan’s Patents[.]” ECF No. 579-17 (“Finjan 22 License Agreement”) § 3.1; id. § 1.10 (defining Finjan’s Patents). Relevant, to this motion, the 23 Finjan License Agreement contains the following forum selection clause: 24 25 26 27 28 11.4 Governing Law. This Agreement shall be interpreted in accordance with and governed by federal law or, where applicable, the laws of the State of Delaware, without giving effect to the choiceof-law rules of Delaware. All disputes and litigation regarding this Agreement and matters connected with its performance shall be subject to the exclusive jurisdiction of the Court of Chancery of the State of Delaware pursuant to 10 Del. C. Section 346 or the United States District Court for the District of Delaware. 5 1 Id. § 11.4 (emphasis in original). The Finjan License Agreement also contains a clause addressing 2 how the license may be pled, used, or otherwise enforced: 3 4 5 6 7 Id. § 9.1 (emphasis in original). The agreement further defines “Claim” as: 8 9 10 United States District Court Northern District of California 11 12 13 Id. § 1.5 (emphasis in original). 2. The Forum Selection Clause Unambiguously Bars Intel’s Counterclaim 14 15 The parties’ forum selection clause arguments center around the tension between section 16 9.1 and section 11.4. VLSI argues that section 9.1 allows the license defense to be used in any 17 forum as an affirmative defense, but that allowing the Finjan License Agreement to be pled as a 18 standalone claim outside of Delaware would make section 9.1 an exception that would swallow 19 the forum selection clause whole. Mot. at 8. Intel responds that section 9.1 “only makes sense if 20 it encompasses declaratory judgment counterclaims because that is the only way to plead a defense 21 to a claim 22 Opp. at 10 (quoting Finjan License Agreement § 9.1). The parties do not dispute that Delaware law governs the Finjan License Agreement. See 23 Supp. SJ Order at 2. “Delaware adheres to the ‘objective’ theory of contracts, i.e. a contract’s 24 construction should be that which would be understood by an objective, reasonable third party.” 25 Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010). Courts must “interpret 26 contracts ‘as a whole and … give each provision and term effect, so as not to render any part of 27 the contract mere surplusage,’” and “not read a contract to render a provision or term meaningless 28 or illusory.” In re Shorenstein Hays-Nederlander Theatres LLC Appeals, 213 A.3d 39, 56 (Del. 6 1 2019) (quoting Osborn, 991 A.2d at 1159). “When the contract is clear and unambiguous,” courts 2 “will give effect to the plain-meaning of the contract’s terms and provisions.” Id. at 56–57 3 (quoting Osborn, 991 A.2d at 1159–60). 4 5 this Agreement and matters connected with its performance shall be subject to the exclusive 6 jurisdiction of the Court of Chancery of the State of Delaware . . . or the United States District 7 Court for the District of Delaware.” Finjan License Agreement § 11.4 (emphasis in original). On 8 its own, this is a standard forum selection clause that clearly and unambiguously states that the 9 Finjan License Agreement must be litigated in one of two Delaware forums. 10 11 United States District Court Northern District of California Here, the Finjan License Agreement requires that “[a]ll disputes and litigation regarding The question then is the extent to which section 9.1 limits the forum selection clause. Section 9.1 states, 12 13 Id. § 9.1. The parties do not dispute that section creates a limited carveout to the 14 forum selection clause that Intel may plead the license as an affirmative defense in an 15 infringement action, regardless of the forum the action is brought in. Mot. at 7–8; Opp. at 7. 16 Intel’s argument focuses instead on “prospective claims,” which the Court interprets to 17 mean infringement claims that have not yet been brought. Specifically, Intel argues that section 18 9.1 creates an “exception” to the forum selection clause that permits a “declaratory judgment 19 counterclaim” against “prospective claims that 20 agrees with Intel; section 9.1 allows Intel to plead a claim or counterclaim against “prospective 21 claims.” But the next step in Intel’s argument, that the “Finjan License [Agreement] does not 22 place any limits as to how a defense can be pleaded” for prospective claims, id., is incorrect. 23 Section 9.1 might not place any limit on how or where to plead a standalone license claim to ward 24 off prospective but threatened infringement suits, but the forum selection clause in section 11.4 25 does place limits on venue for affirmative claims not asserted in defense against other claims, and 26 section 9.1 does not create an exception to the forum selection clause. Nor does section 9.1 27 implicitly remove venue restrictions for pleadings that are a defense to “prospective claims.” 28 Rather, such a reading would allow Intel to bring a declaratory judgment action in any forum .” Opp. at 7. On this, the Court 7 United States District Court Northern District of California 1 against “prospective claims,” thus eviscerating the forum selection clause for a substantial subset 2 of possible causes of action. Intel further argues that “the only way to plead a ‘defense to any 3 Claims that 4 Intel is asserting here.” Opp. at 7. Intel is at least somewhat correct. It can bring a separate 5 declaratory relief action. And contrary to Intel’s interpretation of the Delaware Chancery Court’s 6 ruling, that court only declined jurisdiction over Intel’s declaratory judgment claim that Intel is 7 licensed to use VLSI’s patents based on jurisdictional rules unique to the Chancery Court. The 8 Chancery Court ruled that Intel could litigate the license in district court as a defense to already 9 pending patent infringement claims, and thus there was no need to invoke the jurisdiction of the 10 Chancery Court. Intel v. Fortress, 2021 WL 4470091, at *9 & n.77. This conclusion does not 11 deprive Intel of a forum to adjudicate the license claim. As an affirmative defense, it remains 12 active in the Texas case, and if that case concludes without resolving the license issue, then Intel 13 could file its claim in Delaware. is by bringing a declaratory judgment counterclaim like the one 14 Accordingly, the Court finds that the forum selection clause requires that a standalone 15 claim or counterclaim that the Finjan License Agreement grants Intel a license to use VLSI’s 16 patents must be brought in Delaware Chancery Court or Delaware District Court. Intel cannot 17 plead its standalone counterclaim here. 18 19 3. Dismissal Under Rule 12(b)(6) for Forum Non Conveniens is Appropriate Having found that the forum selection clause requires Intel’s standalone counterclaim be 20 litigated in Delaware, the Court turns to the parties’ dispute about whether the Court should 21 dismiss or transfer the action. VLSI contends that the Court should dismiss Intel’s affirmative 22 claim under Rule 12(b)(6) for forum non conveniens. Mot. at 2. Intel responds that “forum non 23 conveniens does not apply, and that the proper remedy instead is transfer to the federal forum” 24 governed by 28 U.S.C. § 1404, which in this case is the District of Delaware. Opp. at 11. 25 In Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, the Supreme Court held 26 that 28 U.S.C. § 1404(a) is the proper “mechanism for enforcement of forum-selection clauses that 27 point to a particular federal district,” and expressly declined to consider “whether defendant in a 28 breach-of-contract action should be able to obtain dismissal under Rule 12(b)(6) if the plaintiff 8 United States District Court Northern District of California 1 files suit in a district other than the one specified in a valid forum-selection clause.” 571 U.S. 49, 2 61 (2013). In the Ninth Circuit, whether a Rule 12(b)(6) motion is a proper mechanism for 3 enforcing a forum selection clause is an unsettled question. See RJ v. Cigna Health & Life Ins. 4 Co., 625 F. Supp. 3d 951, 968 (N.D. Cal. 2022). But since Atl. Marine, a few out-of-circuit courts 5 have permitted parties to assert a forum selection clause in a Rule 12(b)(6) motion. See Claudio- 6 De Leon v. Sistema Universitario Ana G. Mendez, 775 F.3d 41, 46 (1st Cir. 2014) (“Absent a clear 7 statement from the Supreme Court to the contrary, the use of Rule 12(b)(6) to evaluate forum 8 selection clauses is still permissible in this Circuit.”); Smith v. Aegon Cos. Pension Plan, 769 F.3d 9 922, 934 (6th Cir. 2014) (affirming Rule 12(b)(6) dismissal predicated on enforcing a forum 10 selection clause); Podesta v. Hanzel, 684 F. App’x 213, 216 (3d Cir. 2017) (finding Rule 12(b)(6) 11 is an acceptable means of enforcing a forum selection clause). And other district courts within the 12 Ninth Circuit have come to the same conclusion. See Cigna Health, 625 F. Supp. 3d at 968; 13 Verifone, Inc. v. A CAB, LLC, No. 15-157 GMN, 2016 WL 4480686, at *2 (D. Nev. Aug. 24, 14 2016) Mix v. Neeb, No. 14-1594 KJM, 2014 WL 6469130, at *2 (E.D. Cal. Nov. 17, 2014). 15 While transfer under section 1404 and dismissal under Rule 12(b)(6) are both within the 16 Court’s discretion, dismissal under Rule 12(b)(6) is far more appropriate in this instance. Other 17 than the new counterclaim, all other claims have been adjudicated or Intel has advised that it will 18 not proceed on those claims and thus they are subject to dismissal. The adjudicated claims on the 19 ’836 and ’922 Patents are ready for appellate review once the Court enters final judgment. Intel 20 argues that Court should transfer “the case in its current posture,” Opp. at 14, which the Court 21 interprets to mean including all other claims and counterclaims before the Court. But if the entire 22 case is transferred to Delaware and the Federal Circuit reverses any part of the Court’s summary 23 judgment ruling, a Delaware court would be saddled with a six-year-old case including numerous 24 rulings not its own. The Court elects not to risk placing such a burden on another court. 25 Nor is it appropriate to sever the counterclaim from the rest of the case. It is not clear that 26 a Delaware District Court has jurisdiction over a standalone license counterclaim. See Mot. at 11; 27 ECF No. 869-9 (where Intel argued in its September 11, 2020 motion to stay the District of 28 Delaware case that a Delaware District Court would not have jurisdiction because Intel and VLSI 9 1 are not diverse). Even if a Delaware District Court has jurisdiction, there is still no guarantee it 2 has the time and resources to quickly put on a trial to “efficiently bring the license issues to a 3 close[.]” Opp. at 14. And even if a Delaware District Court has both jurisdiction and the 4 resources to timely put on a trial, that court would not be barred from reconsidering any of this 5 Court’s previous orders. Intel promises simplicity, but it is far more likely that transfer would 6 create more problems than it would solve. Accordingly, the Court grants VLSI’s motion to dismiss Intel’s counterclaim that it is United States District Court Northern District of California 7 8 licensed to use VLSI’s patents. Dismissal is without prejudice. Intel is free to argue this defense 9 in its ongoing Texas litigation, before any Delaware District Court or Chancery Court with 10 jurisdiction, or any court (including this Court) as an affirmative defense to live infringement 11 claims. 12 This decision delays (perhaps significantly) Intel’s chance at swift resolution of its 13 litigation against VLSI, and starting over in Texas is hardly an efficient use of the judiciary’s and 14 parties’ resources given the two-plus years spent litigating the license before this Court. But Intel 15 bargained for and agreed to the Finjan License Agreement, and the agreement’s forum selection 16 clause is clear: venue for a standalone license counterclaim is not proper in this forum. 17 18 B. Subject Matter Jurisdiction The Court now addresses VLSI’s second argument, whether the Court has jurisdiction to 19 hear the counterclaim. The Supreme Court has repeatedly held that an “actual controversy” must 20 exist through all stages of the litigation. “A case becomes moot—and therefore no longer a ‘Case’ 21 or ‘Controversy’ for purposes of Article III—when the issues presented are no longer ‘live’ or the 22 parties lack a legally cognizable interest in the outcome.” Already, LLC v. Nike, Inc., 568 U.S. 85, 23 91 (2013) (internal quotations omitted). Such cases are “outside the jurisdiction of the federal 24 courts.” United States v. Sanchez-Gomez, 584 U.S. 381, 385–86 (2018). 25 VLSI argues that the Court “should have proceeded to final judgment” after it found that 26 Intel’s affirmative defenses were moot, and that that the Declaratory Judgment Act does not confer 27 subject matter jurisdiction for Intel’s counterclaim. Mot. at 12–14. Intel responds that “the Court 28 retained jurisdiction over the action before entering final judgment” and that the litigation here, in 10 1 Texas, and in China, plus the remaining patents that would be subject to the license demonstrate 2 the existence of a substantial controversy that satisfies the case-or-controversy requirement. Opp. 3 at 14–15, 18. United States District Court Northern District of California 4 A court has jurisdiction over a claim for declaratory relief if “the facts alleged, under all 5 the circumstances, show that there is a substantial controversy, between parties having adverse 6 legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory 7 judgment.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). “Related litigation 8 involving the same technology and the same parties is relevant in determining whether a 9 justiciable declaratory judgment controversy exists on other related patents.” Arkema Inc. v. 10 Honeywell Int'l, Inc., 706 F.3d 1351, 1358 (Fed. Cir. 2013) (quoting Teva Pharms. USA, Inc. v. 11 Novartis Pharms. Corp., 482 F.3d 1330, 1344–45 (Fed. Cir. 2007)). 12 Here, Intel alleges that VLSI has pursued Intel for infringement of the NXP patent 13 portfolio in several forums including Texas, Delaware, China, and California, beginning with this 14 action in 2017. Amended Answer at 18–20 (¶¶ 158–160), 41–42 (¶¶ 93–101). Furthermore, Intel 15 alleges that the entire NXP patent portfolio at issue in its patent infringement litigation with VLSI 16 is subject to the Finjan License Agreement. See id. The sprawling and vast nature of VLSI’s 17 claims evince an aggressive and ongoing enforcement campaign against Intel, and the parties hotly 18 dispute whether Intel has a license to use the patents under the Finjan License Agreement. Thus, 19 the Court finds that a “substantial controversy” exists between VLSI and Intel that warrants the 20 issuance of a declaratory judgment. See Arkema, 706 F.3d at 1358 (litigation in related U.S. and 21 European litigation “create[d] a sufficient affirmative act on the part of the patentee for declaratory 22 judgment purposes”); Micron Tech., Inc. v. Mosaid Techs., Inc., 518 F.3d 897, 901 (Fed. Cir. 23 2008) (evidence of “intent to continue an aggressive litigation strategy . . . support[ed] a real and 24 substantial dispute between these parties.”). 25 VLSI divides up and individually attacks possible contributing factors, arguing that each 26 factor on its own does not create a substantial controversy. See, e.g., Reply at 7 (“prior suit 27 premised on other patents cannot alone create a real and immediate controversy”) (quoting Prasco, 28 LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1339, 1341 (Fed. Cir. 2008)). The Court, however, 11 1 does not look at only one factor in isolation, but considers them all together: the ongoing actions 2 in Texas and China, the existence of foreign counterparts of patents VLSI previously asserted 3 against Intel, see Arkema, 706 F.3d at 1358, and the existence of remaining patents in VLSI’s 4 portfolio that it could assert against Intel. Furthermore, because the Court finds that a substantial controversy exists without 5 6 considering facts relating only to the ’836 and ’922 Patents, the Court need not address VLSI’s 7 argument regarding cases that proceeded to trial on invalidity defenses after finding no 8 infringement. See Reply at 9 (collecting cases). Finally, VLSI argues that “once subject matter jurisdiction has been lost, a court may not United States District Court Northern District of California 9 10 cure that defect by allowing amendment of the pleadings.” Mot. at 13; see Nat’l Presto Indus., 11 Inc. v. Dazey Corp., 107 F.3d 1576, 1580 (Fed. Cir. 1997) (“A court without jurisdiction must 12 simply announce its lack of jurisdiction and dismiss the proceeding.”) (emphasis added); 13 Morongo Band of Mission Indians v. Cal. State Bd. of Equalization, 858 F.2d 1376, 1381 (9th Cir. 14 1988) (“If jurisdiction was lacking, then the court’s various orders, including that granting leave to 15 amend the complaint, were nullities.”). But in these cases, the trial court’s jurisdiction over the 16 entire case was defective from the get-go. Such is not the case here. If the Court’s jurisdiction 17 over the entire case was defective, it would be required to dismiss the proceeding and not enter 18 final judgment on the claims adjudicated at summary judgment, an untenable outcome not sought 19 by either party. See Mot. at 12; Opp. at 18. 20 Thus, the Court finds that Intel’s counterclaim alleges facts showing a substantial 21 controversy that warrants the issuance of a declaratory judgment. See MedImmune, 549 U.S. at 22 127; Micron Tech., 518 F.3d at 901. 23 24 C. Failure to State a Claim and First-Filed Rule VLSI makes two additional arguments: that Intel’s Amended Answer fails to state a claim, 25 and that even if this Court has jurisdiction, and even if the Forum Selection Clause does not 26 compel dismissal or transfer to Delaware, this Court must still transfer Intel’s counterclaim to the 27 Western District of Texas under the first-filed rule. The Court need not reach either issue, having 28 found that the case should be dismissed under Rule 12(b)(6) for forum non conveniens. 12 1 2 IV. ORDER For the foregoing reasons, IT IS HEREBY ORDERED that Intel’s counterclaim that it is 3 licensed to use VLSI’s patents is DISMISSED WITHOUT PREJUDICE to being pled in the 4 proper forum. 5 6 7 8 Dated: March 29, 2024 ______________________________________ BETH LABSON FREEMAN United States District Judge 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13
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