Opinion
Case No.: 12-CV-01195 YGR
06-27-2012
KYOCERA COMMUNICATIONS, INC., Plaintiff, v. ESS TECHNOLOGIES INTERNATIONAL, INC. and IMPERIUM (IP) HOLDINGS, INC., Defendants.
ORDER GRANTING MOTIONS TO DISMISS
WITHOUT LEAVE TO AMEND
Plaintiff Kyocera Communications, Inc. ("Kyocera") brings this declaratory judgment action against Defendants ESS Technologies International, Inc. ("ESS Technolo gies ") and Imperium (IP) Holdings, Inc. ("Imperium"), seeking a judgment of patent ownership, invalidity and noninfringement. Plaintiff seeks seven declaratory judgments: a declaratory judgment regarding the ownership of three patents (Count I); a judgment of non-infringement as to each of the three patents-in-suit (Counts II, IV, and VI); and a judgment of invalidity as to each of the three patents-in-suit (Counts III, V, and VII).
ESS Technology International, Inc. ("ESS Technolo gy") and Imperium have filed motions to dismiss the lawsuit on the grounds that Kyocera does not have standing to bring a claim for a declaratory judgment about their patent ownership, and because there is not a controversy of sufficient immediacy and reality to warrant the issuance of a declaratory judgment concerning whether Kyocera has infringed on Imperium's, ESS Technolo gy 's, or ESS Technolo gies ' patents.
Having carefully considered the papers submitted and the pleadings in this action, and for the reasons set forth below, the Court hereby GRANTS both motions WITHOUT LEAVE TO AMEND.
Pursuant to Federal Rule of Civil Procedure 78(b) and Civil Local Rule 7-1(b), the Court finds that this motion, which has been noticed for hearing on July 3, 2012, is appropriate for decision without oral argument. Accordingly, the Court V ACATES the hearing set for July 3, 2012.
I. BACKGROUND
On March 30, 2011, the Declaratory Defendant Imperium instituted a patent infringement action against the Declaratory Plaintiff Kyocera and others in the Eastern District of Texas. That lawsuit, entitled Imperium (IP) Holdings, Inc. v. Apple Inc. et al., Case No. 4:11-CV-00163-MHS-ALM (E.D. Tex.) ("Texas Lawsuit"), accuses Kyocera of infringing U.S. Patent Nos. 6,271,884, 6,838,651, and 6,838,715 (the "patents-in-suit"). Kyocera answered and counterclaimed, seeking declaratory judgments of non-infringement and invalidity. Neither ESS Technolo gies nor ESS Technolo gy is a party to the Texas Lawsuit.
Kyocera claims that Imperium never secured an assignment of the patents-in-suit from ESS Technolo gies . It bases this assertion on a scrivener's error in the assignment from Pictos Technologies, Inc. ("Pictos"), a non-party to this action, to the intended assignee, ESS Technolo gy International. On June 25, 2004, when Pictos assigned the patents-in-suit, the name used in the assignment contained the plural "Technolo gies " instead of the singular "Technolo gy." As a result, the patents-in-suit were assigned from Pictos to "ESS Technolo gies International, Inc." Subsequently, on July 11, 2008, "ESS Technolo gy, Inc." assigned the patents-in-suit to Imperium. Kyocera alleges that the assignment from ESS Technolo gy to Imperium was invalid and ineffective because ESS Technolo gy never had any patent rights to assign.
On March 6, 2011, approximately two-weeks prior to initiating the Texas Lawsuit, ESS Technolo gy International, Inc. assigned the patents-in-suit to its parent company, ESS Technolo gy, Inc., retroactive to May 31, 2008.
On March 9, 2012, Kyocera filed this declaratory judgment action against ESS Technolo gies and Imperium in the Northern District of California, the judicial district in which Kyocera alleges ESS Technolo gies resides, to have the Court decide ownership of the patents-in-suit. This case concerns the same patents asserted in the Texas Lawsuit. Kyocera contends that Imperium does not own the patents-in-suit, and that ESS Technolo gies is the owner of the patents-in-suit.
On March 30, 2012, Kyocera filed a motion to dismiss for lack of standing in the Texas Lawsuit on the grounds that Imperium does not own the patents-in-suit. On June 4, 2012, Judge Mazzant, the assigned Magistrate Judge in the Texas Lawsuit, issued a report recommending that the motion be denied. See Dkt. No. 42, "Statement of Recent Decision." Kyocera filed Objections to the Report and Recommendation on June 18, 2012. Imperium's Response to the Objections is due on or about July 2, 2012.
II. LEGAL STANDARD
The Declaratory Judgment Act provides that: "In a case of actual controversy within its jurisdiction . . . any court in the United States . . . may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). The phrase "a case of actual controversy" refers to the types of "cases" and "controversies" that are justiciable under Article III of the Constitution. 3M Co. v. Avery Dennison Corp., 673 F.3d 1372, 1376 (Fed. Cir. 2012). To present a "case or controversy," the dispute must be "real and substantial" and "definite and concrete, touching the legal relations of parties having adverse legal interests[.]" MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007); see Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1339 (Fed. Cir. 2008) (controversy "must be based on a real and immediate injury or threat of future injury that is caused by the defendants-an objective standard that cannot be met by a purely subjective or speculative fear of future harm.").
The test for determining subject matter jurisdiction over a declaratory judgment action is "whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." MedImmune, supra, 549 U.S. at 127. In patent cases, declaratory judgment jurisdiction exists "where a patentee asserts rights under a patent based on certain identified ongoing or planned activity of another party, and where that party contends that it has the right to engage in the accused activity without license." SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1381 (Fed. Cir. 2007). Thus, "the existence of a patent is not sufficient to establish declaratory judgment jurisdiction." Prasco, supra, 537 F.3d at 1338. Rather, the party invoking the Court's jurisdiction must point to "some affirmative act by the patentee" that forms the basis for an actual controversy between the parties. Id. at 1338-39.
III. DISCUSSION
A . DECLARATORY JUDGMENT REGARDING OWNERSHIP RIGHTS OF PATENTS-IN-SUIT
With respect to Count I, which seeks a declaratory judgment regarding patent ownership, Kyocera does not have standing to adjudicate the ownership rights to patents that Kyocera does not own or purport to own. Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009) (the critical question is whether "the plaintiff has 'alleged such a personal stake in the outcome of the controversy' as to warrant his invocation of federal-court jurisdiction.") (emphasis in original) (quoting Warth v. Seldin, 422 U.S. 490, 498 (1975)). Moreover, because this standing defect cannot be cured by amendment, this Count must be dismissed with prejudice.
Based on the foregoing analysis, the Court DISMISSES WITH PREJUDICE Count I of the Complaint, which seeks a declaratory judgment of other companies' ownership rights of patents.
B. DECLARATORY JUDGMENT OF NON-INFRINGEMENT AND INVALIDITY AGAINST IMPERIUM
Imperium sued Kyocera in the Texas Lawsuit for infringement of the patents-in-suit, and thus, there is "a case of actual controversy" over infringement of valid patents. This action is duplicative of the Texas Lawsuit, as Kyocera's counterclaim in that proceeding seeks the same declaratory judgments of non-infringement and invalidity against Imperium that Kyocera seeks in this action. Permitting multiple lawsuits to adjudicate the same issues would serve no purpose of judicial administration and would risk inconsistent rulings on the patents' validity, enforceability, and ownership. The goal of judicial efficiency will not be served by adjudicating this declaratory judgment action. Therefore, the Court will exercise its discretion under both the first-to-file rule and the declaratory judgment act and decline to exercise jurisdiction over the claims.
Based on the foregoing analysis, the Court DISMISSES Counts II through VII against Imperium.
C. DECLARATORY JUDGMENT OF NON-INFRINGEMENT AND INVALIDITY AGAINST ESS TECHNOLO GIES
Next, the Court will address whether there is "a case of actual controversy" concerning Kyocera's infringement of patents owned by ESS Technolo gies . Although Kyocera alleges that it fears that ESS Technolo gies may sue it for patent infringement, the Complaint does not identify a single affirmative act by ESS Technolo gies that would create an objective fear of suit; Imperium's assertion of patent rights, which Kyocera claims belong to ESS Technolo gies , does not constitute an affirmative act by ESS Technolo gies .
While it is apparent that there is no justiciable controversy between ESS Technolo gies and Kyocera concerning patent infringement, there does appear to be a controversy between ESS Technolo gy and Kyocera concerning whether ESS Technolo gy can challenge this lawsuit on behalf of ESS Technolo gies . ESS Technolo gy argues that Kyocera either seeks a declaration against a non-existent entity (ESS Technolo gies) , or against an entity that does not own the patents-in-suit (ESS Technolo gy). According to ESS Technolo gy, because ESS Technolo gies never existed, ESS Technolo gies never had and does not have any rights in the patents-in-suit. As such, ESS Technolo gy argues, a declaratory judgment action against ESS Technolo gies cannot be maintained. On the other hand, ESS Technolo gy argues that if ESS Technolo gy is considered the proper party in this declaratory judgment action, which Kyocera steadfastly disputes, then it also is not the owner of the patents-in-suit, having assigned all rights to the patents-in-suit to Imperium. See Dkt. No. 18 at ¶ 9, 10, 11 and Exs. A and B.
ESS Technolo gy also challenges the sufficiency of process. It argues that ESS Technolo gies does not exist and thus has not been served, and to the extent the Complaint is directed to ESS Technolo gy, the summons identifies the wrong entity, ESS Technolo gies . Kyocera argues that the form and content of the summons are correct because the summons was directed towards ESS Technolo gies , the named defendant in this action. Dkt. No. 25, at 7-8. Additionally, Kyocera argues that service on ESS Technolo gies was proper as evidenced by the Proof of Service on ESS Technolo gies , Dkt. No. 8; Kyocera contends this is prima facie proof of valid service that only may be rebutted by the entity allegedly served (and not by a third party). The Court disagrees that Kyocera has made a prima facie showing of valid service on ESS Technolo gies . Putting aside the issue of whether ESS Technolo gies actually exists, Kyocera has not introduced evidence that the individual served is authorized to accept service on behalf of ESS Technolo gies .
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Kyocera counters that because the only named Defendants are Imperium and ESS Technolo gies , that ESS Technolo gy 's "requested relief is nonsensical because . . . it was not named in the lawsuit." KCI's Opp'n to ESS 6. Kyocera argues that ESS Technolo gies has not entered an appearance in this case or filed a response to Kyocera's Complaint. Thus, Kyocera argues, because ESS Technolo gy is not a party to this case, ESS Technolo gy 's motion to dismiss cannot secure dismissal of ESS Technolo gies from this case.
The Court has the inherent power to dismiss the action on its own initiative. See Silverton v. Dep't of Treasury, 644 F.2d 1341, 1345 (9th Cir. 1981) ("A District Court may properly on its own motion dismiss an action as to defendants who have not moved to dismiss where such defendants are in a position similar to that of moving defendants or where claims against such defendants are integrally related."). The Ninth Circuit has upheld dismissal with prejudice in favor of a party that has not yet appeared on the basis of facts presented by other defendants that have appeared. Id. (cited in Columbia Steel Fabricators, Inc. v. Ahlstrom Recovery, 44 F.3d 800 (9th Cir. 1995). Here, either ESS Technolo gies exists and ESS Technolo gy has made arguments on its behalf, or ESS Technolo gies does not exist and it would be an exercise in futility to continue a lawsuit against it. Either way, the Court is satisfied that Kyocera has had an opportunity to contest the dismissal of its claims against ESS Technolo gies for lack of subject matter jurisdiction based on the arguments presented in ESS Technolo gy 's motion to dismiss. The Court will not elevate form over substance and ignore these arguments. Under all the circumstances, there is not a justiciable controversy between Kyocera and ESS Technolo gies that warrants the issuance of a declaratory judgment.
Based on the foregoing analysis, the Court DISMISSES WITH PREJUDICE all claims against ESS Technolo gies .
IV. CONCLUSION
The Motions to Dismiss are GRANTED WITHOUT LEAVE TO AMEND.
All claims against ESS Technologies International, Inc. are DISMISSED WITH PREJUDICE.
Count I, which seeks a declaratory judgment regarding patent ownership, is DISMISSED WITH PREJUDICE. The Court will exercise its discretion and DISMISS the remaining claims against Imperium (IP) Holdings, Inc. WITHOUT PREJUDICE to allow Kyocera Communications, Inc. to maintain a counterclaim in Imperium (IP) Holdings, Inc. v. Apple Inc. et al., Case No. 4:11-CV-00163-MHS-ALM (E.D. Tex.).
This Order Terminates Docket Numbers 16 & 23.
IT IS SO ORDERED.
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YVONNE GONZALEZ ROGERS
UNITED STATES DISTRICT COURT JUDGE