• QPRC

Memorandum Opinion and Order Denying Amazon's Motion for Protective Order and Granting-In-Part Semcon's Motion to Compel.


Before the Court is Defendant Amazon.com, Inc.’s (“Amazon”) Motion for Protective Order (the “Motion for Protective Order”) (Dkt. No. 70) and Plaintiff Semcon IP, Inc.’s (“Semcon”) Motion to Compel Amazon.com, Inc. to Provide Discovery (the “Motion to Compel”) (Dkt. No. 71). Having considered the parties’ arguments and relevant authorities, the Court hereby DENIES Amazon’s Motion for Protective Order, GRANTS-IN-PART Semcon’s Motion to Compel, with the remainder of Semcon’s Motion to Compel CARRIED, all for the reasons stated herein.


I. Discovery Regarding Accused Products


Semcon sued Amazon for patent infringement on May 9, 2018. (Dkt. No. 1.) The Patents-in-Suit are U.S. Patent Nos. 7,100,061; 7,596,708; 8,566,627; and 8,806,247, and generally cover methods and apparatuses for conserving power and resources used by a computer. (Id. ¶ 14.) Semcon alleges that certain non-parties, such as Qualcomm Inc., Texas Instruments Inc., and Amlogic, Inc., sell products which embody System-on-a-Chips (“SoCs”), “which . . . perform [a type of power management technique called] Dynamic Voltage and Frequency Scaling or ‘DVFS,’ (sometimes alternatively referred to as Dynamic Clock and Voltage Scaling and ‘DCVS’).” (Id. ¶ 15.) According to Semcon, certain Amazon products infringe the Patents-in-Suit because they “utilize SoCs and associated software that perform[] DCVS or DVFS for power management.” (Id. ¶ 16.)


Pursuant to those allegations, Semcon served discovery on Amazon seeking information about “Amazon Products,” which it defined as, inter alia, “all products that include or utilize adaptive power control and/or dynamic voltage frequency scaling (‘DVFS’).” (Dkt. No. 82-2 at 2; see, e.g., id. at 9 (Interrogatory No. 1, Semcon’s First Set of Interrogatories, November 20, 2018).) Amazon provided Semcon with a “chart listing [only] the Amazon devices identified in Semcon’s Infringement Contentions.” (Dkt. No. 70 at 6.) Consistent with its initial request, Semcon asked Amazon to supplement its response to include all products that perform DVFS. (Dkt. No. 71-2 (February 5, 2019 Letter from Semcon to Amazon).) Amazon explained that “it could not perform searches for products that perform DVFS,” but that it would investigate any products that Semcon believes does perform such power saving techniques. (Dkt. No. 70 at 6; see also Dkt. No. 71-3 (March 7, 2019 Email from Semcon to Amazon).) The parties continued to meet-and-confer on the issue, with Amazon ultimately not producing any of the requested information. (Dkt. No. 70-2 (April 11, 2019 Letter from Semcon to Amazon).)


On June 13, 2019, Semcon deposed Pushkar Gejji, an Amazon Rule 30(b)(6) witness. (Dkt. No. 71-4 (Rough Deposition Transcript of Mr. Gejji deposition).) Mr. Gejji testified that certain Amazon products, such as Amazon Kindle e-readers, use NXP/Freescale SoCs that perform DVFS, and that he was not aware of any public documents that would uncover the same. (Id.) Semcon argues that this testimony shows that “Amazon’s representation—that it would be impossible to search for Amazon Products that include or utilize adaptive power control and/orDVFS—[is] false” and now seeks an order compelling Amazon to produce discovery about any products that use DVFS. (Dkt. No. 71 at 3.) Specifically, Semcon seeks an order compelling Amazon to “(1) inquire of NXP regarding whether each of the Amazon Products containing NXP/Freescale SoCs include or use adaptive power control and/or DVFS [collectively, the “DVFS Products”]; (2) supplement its responses to Interrogatory Numbers 1 through 4, and 9 to include [information about the DVFS Products];” (3) supplement its document production to include [information about the DVFS Products];” and (4) produce a Rule 30(b)(6) witness to testify regarding Topic Numbers 1 through 13 as they relate to NXP/Freescale SoCs.” (Dkt. No. 71 at 3–4.)


Amazon opposes Semcon’s request and separately moves for a protective order precluding discovery on its Kindle e-readers. (Dkt. No. 70.) Amazon argues that Semcon did not specifically identify Kindle e-readers with NXP/Freescale SoCs in its contentions and that “Semcon’s accusations against different Amazon products, that use different SoCs from different suppliers, do not provide notice that Kindle e-readers with NXP/Freescale SoCs are accused.” (Id. at 3.) Amazon also argues that Semcon failed to diligently pursue the discovery it now seeks to compel. (Id. at 3–7.) Amazon points to various websites that allegedly show that “the existence of Amazon’s Kindle e-readers, their relevant source code, and the fact that they used NXP/Freescale SoCs, was all publicly [available].” (Id. at 4.) Finally, Amazon contends that permitting the requested discovery would be “highly prejudicial.” (Id. at 7.) Since the accused SoCs are provided by third-parties, Amazon would have to independently investigate how those chips work to adequately prepare a defense. Amazon would not have sufficient time to do such given that fact discovery closes on June 28, 2019. (Id.)


Considering the above arguments and the parties’ briefing, the Court finds that Semcon is entitled to discovery regarding Amazon products that utilize DVFS, including Amazon’s Kindle e-reader with NXP/Freescale SoC. Discovery is not limited to only those products specifically identified in the plaintiff’s initial infringement contentions. FED. R. CIV. P. 26(b)(1) (“Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense . . .”); GeoTag, Inc. v. Frontier Commc’ns Corp., No. 2:10-cv-00265-JRG, 2013 WL 12141427, at *2 (E.D. Tex. June 26, 2013) (allowing discovery into products that were “reasonably similar” to those identified in the parties’ contentions). A plaintiff may also seek discovery concerning products that are “reasonably similar” to the accused products in the case if (1) the infringement contentions gave notice of a specific theory of infringement, and (2) the products it seeks discovery of operate in a manner reasonably similar to that theory. GeoTag, 2013 WL 12141427, at *2. Amazon does not contest that Semcon’s theory of infringement for the Kindle e-reader with NXP/Freescale SoCs would be reasonably similar to the theory disclosed in Semcon’s contentions for the other accused products. (Dkt. No. 70 at 3 (“Setting aside the first two hurdles Semcon would have to clear, Semcon cannot demonstrate the requisite diligence . . .”).)1


Also, the Court is not persuaded that Semcon failed to diligently pursue such discovery. Semcon notified Amazon about any alleged deficiencies in discovery as early as February 5, 2019—well in advance of the June discovery deadline—and both parties continually met and conferred in an effort to resolve the issues. (Dkt. No. 71-2 (February 5, 2019 Letter from Semcon to Amazon); Dkt. No. 71-3 (March 7, 2019 Email from Semcon to Amazon); Dkt. No. 70-2 (April 11, 2019 Letter from Semcon to Amazon); Dkt. No. 71-5 (June 14, 2019 Email from Semcon to Amazon).) Responding to Semcon’s discovery requests, Amazon stated that it could not search for any products that use DVFS, but that it would investigate any such products that Semcon believed did use DVFS. (Dkt. No. 70 at 6.) The Court finds that it was reasonable for Semcon to rely on those representations as Amazon, and not Semcon, would be in the best position to determine whether Amazon possessed any products that use DVFS. However, after learning in the deposition of Mr. Gejji that Amazon does potentially make such products (e.g., the Amazon Kindle e-reader), Semcon promptly sought additional discovery. Semcon has not been dilatory or laid behind the log.


Accordingly, the Court finds that Amazon’s Motion for Protective Order should be denied and Semcon is entitled to pursue discovery regarding Amazon products that perform DVFS, including Amazon’s Kindle e-reader with NXP/Freescale SoCs.


II. Discovery Regarding Pre-Suit Notice of Infringement


Semcon also moves for an order compelling Amazon to provide discovery on “Amazon’s knowledge of the patents-in-suit and notice of its infringement.” (Dkt. No. 71 at 1.) While Amazon states that it first became aware of the Patents-in-Suit when the instant suit was filed, “Semcon contends that Amazon may have been put on notice [much earlier] through communications with Intellectual Ventures and/or through receipt of a subpoena in Semcon IP Inc. v. Huawei Device USA Inc., et al., No. 2:16-cv-00437-JRG-RSP (E.D. Tex.).” (Id. at 4.) Semcon explains that Amazon’s Rule 30(b)(6) witness, Mr. Scott Hayden, testified that (1) “Amazon did not search for or investigate whether Amazon communicated with Intellectual Ventures regarding any of the patents-in-suit” and (2) “that he was informed internally about a June 17, 2017 subpoena to Amazon concerning the same patents-in-suit in the Semcon v. Huawei case,” but that Amazon did not investigate whether it became aware of the Patents-in-Suit at that time. (Id. at 5.) Semcon argues that “Amazon’s position evinces willfulness blindness” and thus discovery about its communications with Intellectual Ventures and response to the Huawei subpoena are relevant to this case. (Id.)


Amazon argues that Semcon’s Motion violates Local Rule CV-7(h). The local rules provide that parties must meet-and-confer in good faith and conclude that such discussions have ended in an impasse before filing an opposed discovery motion. LR. CV-7(h). Amazon explains that “[w]hen Semcon filed its Motion, the parties were not at an impasse on th[e] issue [of notice.]” (Dkt. No. 84 at 5.) According to Amazon, at the parties’ June 28, 2019 meet-and-confer, “Amazon agreed to investigate and follow-up regarding its first awareness of the patents-in-suit,” and “Semcon gave no indication it was filing a motion to compel.” (Id.) The next day, Semcon emailed Amazon, stating that it believed the parties had reached an impasse and filed the instant Motion. (Dkt. No. 84-9 (June 19, 2019 Email from Semcon to Amazon).) Amazon subsequently responded that (1) it understood that the parties had not yet reached an impasse; (2) it had “agreed [during the meet-and-confer to] go back and confirm [its prior statement that it first learned of the Patents-in-Suit at the time suit was filed]; and [3] [that it] is currently looking into this topic further.” (Id. (June 20, 2019 Email from Amazon to Semcon).) Amazon contends that this correspondence shows that the parties have not reached an impasse, and as such, it was improper for Semcon to file the instant Motion.


Having reviewed the parties’ briefing and correspondence attached thereto, the Court concludes that it does not have all of the requisite information before it to make a final determination at this time. Accordingly, the Court hereby CARRIES this portion of Semcon’s Motion to Compel pending the hearing set on July 22, 2019. Both parties are directed to use their continuing best efforts to resolve this issue prior to the hearing date through their continuing meet-and-confer efforts.


III. Conclusion


Based on the foregoing, the Court hereby DENIES Amazon’s Motion for Protective Order (Dkt. No. 70), and GRANTS-IN-PART Semcon’s Motion to Compel Amazon.com, Inc. to Provide Discovery (Dkt. No. 71). It is ORDERED that Amazon shall (1) inquire of NXP regarding whether each of the Amazon Products containing NXP/Freescale System-on-a-Chips include or use adaptive power control and/or Dynamic Voltage and Frequency Scaling; (2) supplement its responses to Semcon’s Interrogatory Numbers 1 through 4, and 9 to include Amazon Products containing NXP/Freescale System-on-a-Chips that include or use adaptive power control and/or Dynamic Voltage and Frequency Scaling; (3) supplement its document production to include Amazon Products containing NXP/Freescale System-on-a-Chips that include or use adaptive power control and/or Dynamic Voltage and Frequency Scaling; and (4) produce a Federal Rule of Civil Procedure 30(b)(6) witness to testify regarding Semcon’s Topic Numbers 1 through 13 as they relate to NXP/Freescale System-on-a-Chips.

The Court CARRIES the remaining portion of Semcon’s Motion to Compel regarding discovery on Amazon’s knowledge of the patents-in-suit and notice of its infringement pending the hearing set on July 22, 2019.

Case No. 2:18-cv-00192

  • QPRC

CLAIM CONSTRUCTION MEMORANDUM AND ORDER


Before the Court is the opening claim construction brief of Semcon IP Inc. (“Plaintiff”) (Dkt. No. 58, filed on May 8, 2019),1 the response of Capri Holdings Ltd., Michael Kors (USA), Inc., Michael Kors Retail, Inc., and ASUSTeK Computer Inc. (collectively “Defendants”) (Dkt. No. 61, filed on May 21, 2019), and Plaintiff’s reply (Dkt. No. 63, filed on May 29, 2019). The Court held a hearing on claim construction on June 20, 2019. Having considered the arguments and evidence presented by the parties at the hearing and in their briefing, the Court issues this Order.




Analysis

The issue in dispute distills to whether the patentee rescinded its prosecution-history disclaimer of an operating system. It did.


This is substantially the same issue before the Court in Huawei. 2017 U.S. Dist. LEXIS 108040, at *17–26. The Court reiterates the Huawei ruling and reasoning and rejects Defendants’ proposed construction. It is meaningful that the examiner stated that “the claim language does not require the processor determining to be performed without regards to the operating system, i.e. via processor hardware only” and the patentee did not amend the claims to address the examiner’s statement but rather added an entirely different limitation. ’061 Patent File Wrapper April 27, 2004 Office Action at 2, Dkt. No. 58-9 at 4; ’061 Patent File Wrapper July 16, 2004 Interview Summary, Dkt. No. 58-14 at 3; Huawei, 2017 U.S. Dist. LEXIS 108040, at *25–26. As there was nothing for the examiner to revisit, the patentee’s acquiescence was necessarily “sufficiently clear to inform the examiner that the previous disclaimer, and the prior art that it was made to avoid, may need to be re-visited.” Hakim v. Cannon Avent Grp., 479 F.3d 1313, 1318 (Fed. Cir. 2007).


Acquiescence to an examiner’s position does not require a formal and express statement, as Defendants contend. Springs Window Fashions LP v. Novo Indus., L.P. distinguishes a patentee’s retraction of statements it made from acquiescence to an examiner’s position that is contrary to the patentee’s position. 323 F.3d 989, 995 (Fed. Cir. 2003) (finding no rescission of disclaimer when the patentee “never retracted any of his statements distinguishing [the prior art] nor did he acquiesce in the examiner’s comments regarding the overlapping scope of [the prior art]”). Consistent with the ordinary meanings of “retract”9 and “acquiesce,”10 the Federal Circuit’s distinction suggests retraction of a position would require the expression suggested by Defendants whereas acquiescence to a contrary position may be signaled by acceptance without protest. The patentee in Springs Window did not comply with the examiner’s position without protest, but rather expressly protested, stating in addition to other patentability grounds, it “maintains the arguments set forth in the prior Amendment concerning distinguishing of [the prior art] from the claims previously presented, on the merits.” Id. at 994. That is, the Springs Window patentee did not acquiesce; instead, it protested. The patentee here reacted to the examiner’s position in a significantly different fashion. Instead of protesting the examiner’s position, it amended the claims to distinguish them from the Horden reference on other grounds. See, e.g., ’061 Patent File Wrapper July 16, 2004 Interview Summary, Dkt. No. 58-14 at 3; Huawei, 2017 U.S. Dist. LEXIS 108040, at *25–26.


Defendants also cite Desper Products, Inc. v. QSound Labs, Inc., 157 F.3d 1325 (Fed. Cir. 1998) as explicitly rejecting the efficacy of a tacit or passive rescission of a prosecution-history disclaimer, but Desper does not stand for the rule Defendants propose. Rather, Desper addressed a claim-scope argument that was explicitly accepted by the examiner. Id. at 1333–34. Specifically, in response to a rejection over a British patent, the Desper patentee amended the claims, argued the amended claims included a “limitation that the channel signals be maintained separate and apart,” and contended that “[i]n view of the amendments to the claims hereby, as well as the above arguments” the claims are “neither shown nor suggested in any of the cited references, alone or in combination.” Id. at 1334. The examiner agreed in an immediately subsequent examiner interview, indicating “that the amended claims ‘appear to distinguish over art of record in prior case (FR 1,512,059 & B 942,459).’” Id. The examiner also rejected the amended claims based on a new prior-art reference. Id. In a child application, and “after the parent application had been rejected in view of the British patent,” the Desper patentee amended the claims to include the “limitation that the channel signals be maintained separate and apart.” The related application was then rejected on a reference other than the British patent. Id. “Thus, in the file history of both patents, the limitation that the channel signals be maintained separate and apart was added to overcome the prior art rejection based on the British reference, and in both cases it succeeded.” Id. (emphasis added). That is, the examiner never took a position contrary to the Desper patentee’s position that the claims included a separate-and-apart limitation. Rather, the examiner indicated agreement with the patentee’s position. That the examiner “shifted to a different focus does not blunt the impact of those remarks made to overcome the prior rejection.” Id. at 1336.


Desper is distinguishable from the present circumstance in that the examiner here—rather than agreeing with patentee’s prosecution claim-scope arguments regarding the operating system—explicitly rejected those claim-scope arguments. In Desper, there was no contrary position to which the Desper patentee could acquiesce. Here, the patentee was presented with a direct and explicit rejection of its operating-system argument and chose to give up on that argument—it acquiesced to the examiner’s contrary position.


Ultimately, given the examiner’s statement that “the claim language does not require the processor determining to be performed without regards to the operating system, i.e. via processor hardware only,” the patentee’s failure to amend the claims to exclude the operating system, the patentee’s amendment of claims to add a different limitation, and the patentee’s failure to protest the examiner’s position on the scope of the claim language, it is sufficiently clear that the patentee acquiesced to the examiner’s position. A member of the public reading the prosecution history would see that the last statement on the operating-system argument was an explicit rejection of that argument by the agency tasked with examining the patent application. Thus, the public-notice function is served by giving effect to the patentee’s acquiescence to the examiner’s position that the claims do not exclude an operating system performing the processor determining functions.

Accordingly, the Court construes these terms as it did in Huawei and Amazon.com, as follows:

• “computer processor” means “CPU”;

• “processor” means “CPU”;

• “processing unit” means “computing portion of CPU”; and

• “processing device” means “computing portion of CPU.”


Analysis

The issue in dispute is whether the meanings of these terms are reasonably certain. They are.


This is substantially the same dispute that was before the Court in Huawei. 2017 U.S. Dist. LEXIS 108040, at *52–56. The Court reiterates the Huawei ruling and reasoning and rejects Defendants’ arguments that “reducing a magnitude of a difference” renders any claim indefinite. In the context of the claims, the terms mean that operating frequency is brought closer to the highest allowable frequency and that the voltage applied to the processing device is brought closer to the lowest allowable voltage level. That is, the reducing the “magnitude” of the difference requires raising the frequency or voltage when lower than the allowable frequency or voltage (which suggests a negative difference becomes less negative, even though making a negative number less negative is increasing the value of the number) and requires lowering the frequency or voltage when lower than the allowable frequency or voltage (which suggests a positive difference becomes less positive).


Accordingly, Defendants have not proven the “reducing a magnitude of a difference” or “reducing the magnitude of the difference” terms render any claim indefinite and construes the terms as follows.

• “reducing a magnitude of a difference” means “reducing the absolute value of the difference”; and

• “reducing the magnitude of the difference” means “reducing the absolute value of the difference.”



Analysis

As the parties have expressly adopted and rested on the arguments made in the claim-construction proceeding in the Amazon.com case, the Court adopts and reiterates the Amazon.com ruling and reasoning. Amazon.com, 2019 U.S. Dist. LEXIS 79846, at *21–52


Accordingly, the Court construes these voltage-change terms by construing “executing instructions” and variants in those terms in the claims at issue as follows:

• “executing … instructions” means “executing … instructions using the core clock”;

• “execution of … instructions” means “execution of … instructions using the core clock”;

• “execute instructions” means “execute instructions using the core clock”; and

• “executes … instructions” means “executes … instructions using the core clock.”


V. CONCLUSION


The Court adopts the constructions above for the disputed and agreed terms of the Asserted Patents. Furthermore, the parties should ensure that all testimony that relates to the terms addressed in this Order is constrained by the Court’s reasoning. However, in the presence of the jury the parties should not expressly or implicitly refer to each other’s claim construction positions and should not expressly refer to any portion of this Order that is not an actual construction adopted by the Court. The references to the claim construction process should be limited to informing the jury of the constructions adopted by the Court.


Case No. 2:18-cv-00193 (Lead Case)

MEMORANDUM OPINION AND ORDER re MOTION to Dismiss for Lack of Jurisdiction filed by TCT Mobile International Limited


MEMORANDUM OPINION AND ORDER


Before the Court is Defendant TCT Mobile International Limited’s (“TCT International”) Rule 12(b)(2) Motion to Dismiss (the “Motion”). (Dkt. No. 14.) By its Motion, TCT International, a Hong Kong company, asserts that this Court lacks personal jurisdiction over it because it does not manufacture the products made the subject of this suit nor does it import them into the United States or offer to sell or or sell them in the United States. (See id. at 1–3.) Having considered the briefing and evidence proffered by the parties, and for the reasons set forth herein, the Court is of the opinion that the Motion should be and hereby is DENIED.


I. Background


Semcon IP Inc. (“Semcon”) accuses TCT International of infringing U.S. Patent Nos. 7,100,061; 7,596,708; 8,566,627; and 8,806,247 “by making, using, selling, offering to sell, and/or importing, and by actively inducing others to make, use, sell, offer to sell and/or importing, products,” such as smartphones, that embody these patents (the “Accused Products”). (Dkt. No. 1 ¶¶ 16.) TCT International asserts that it does not manufacture the Accused Products but instead purchases them from Huizhou TCL Mobile Communication Co. Ltd. (“TCL Huizhou”). (Dkt. No. 29-2, at 1.) TCT International in turn sells the Accused Products to TCT Mobile (US) Inc. (“TCT US”), who then sells the products to retailers in the United States. (Id.) TCT International asserts that the sale of the Accused Products to TCT US occurs in Hong Kong, China and that it has no control over TCT US’s subsequent importation or sale of these products into the United States and into Texas. (Dkt. No. 33, at 5.) Therefore, TCT International contends that this Court lacks personal jurisdiction over it. (Dkt. No. 14, at 5.)


II. Legal Standard


Federal Circuit law governs personal jurisdiction where “a patent question exists.” See Celgard, LLC v. SK Innovation Co., 792 F.3d 1373, 1377 (Fed. Cir. 2015). “[W]hether a defendant is subject to specific personal jurisdiction in the forum state involves two inquiries: first, whether the forum state’s long-arm statute permits service of process and, second, whether the assertion of jurisdiction is consistent with due process.” Id. “Because the Texas long-arm statute extends to the limits of federal due process, the two-step inquiry collapses into one federal due process analysis.” Johnston v. Multidata Sys. Int’l Corp., 523 F.3d 602, 609 (5th Cir. 2008); accord Grober v. Mako Prod., Inc., 686 F.3d 1335, 1345 (Fed. Cir. 2012) (“California and federal due process limitations are coextensive, and thus the inquiry collapses into whether jurisdiction comports with due process.”).


For due process to be satisfied, the defendant must have “certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotations omitted). “A court must inquire whether the defendant has ‘purposefully directed his activities’ at the forum state and, if so, whether ‘the litigation results from alleged injuries that arise out of or relate to those activities.’” Breckenridge Pharm., Inc. v. Metabolite Labs., Inc., 444 F.3d 1356, 1361–62 (Fed. Cir. 2006) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)). The minimum contacts test is satisfied if a defendant “delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum state.” Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1566 (Fed. Cir. 1994) (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297–98 (1980)).


Upon a showing of purposeful minimum contacts, the defendant bears the burden to prove unreasonableness. Elecs. for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1351–52 (Fed. Cir. 2003). In rare circumstances, a defendant may defeat the exercise of personal jurisdiction by “present[ing] a compelling case that the presence of some other considerations would render jurisdiction unreasonable.” Burger King, 471 U.S. at 477.


“Where, as here, a district court’s disposition as to the personal jurisdictional question is based on affidavits and other written materials in the absence of an evidentiary hearing, a plaintiff need only to make a prima facie showing that defendants are subject to personal jurisdiction.” M-I Drilling Fluids UK Ltd. v. Dynamic Air Ltda., 890 F.3d 995, 999 (Fed. Cir. 2018). “[A] district court must accept the uncontroverted allegations in the plaintiff’s complaint as true and resolve any factual conflicts in the affidavits in the plaintiff’s favor.” Id.


III. Discussion


TCT International argues that Semcon’s (“Semcon”) stream of commerce argument is flawed because “Semcon’s reliance on the stream of commerce theory continues to neglect the Supreme Court’s 2017 Bristol-Myers Squibb decision, and in any event relies on TCT [International]’s mere knowledge rather than showing the required purposeful targeting.” (Dkt. No. 33, at 1.) The Court disagrees with TCT International on both points. The Court finds that jurisdiction over TCT International is appropriate under the stream of commerce theory. The Supreme Court’s recent Bristol-Meyers decision did not abrogate the stream of commerce theory. Moreover, while the Federal Circuit has not yet determined whether the stream of commerce theory requires “an action of the defendant purposefully directed toward the forum state” or “a mere act of placing a product in the stream of commerce with the expectation that it would be purchased in the forum state,” the Court finds that jurisdiction is proper in this case under either version of the stream of commerce theory. Nuance Commc’ns, Inc. v. Abbyy Software House, 626 F.3d 1222, 1233 (Fed. Cir. 2010) (quoting Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 112 (1987)).


A. Bristol-Myers did not Abrogate the Stream of Commerce Theory


TCT International argues that the stream of commerce theory was abrogated by the Supreme Court’s decision in Bristol-Myers Squibb Co. v. Superior Court of California. 137 S. Ct. 1773 (2017). The Court finds nothing in the Supreme Court’s opinion to indicate a shift in the Supreme Court’s stream of commerce jurisprudence. Neither the Supreme Court’s majority opinion nor Justice Sotomayor’s dissent even mention the stream of commerce theory. The Supreme Court does not purport to alter its overall jurisprudence regarding specific jurisdiction, noting instead that the Supreme Court’s “settled principles regarding specific jurisdiction control this case.” Id. at 1781.


In Bristol-Myers, the Supreme Court held that a California state court could not exercise personal jurisdiction over Bristol-Myers as to products liability claims related to Bristol-Myers’ prescription drug Plavix brought by nonresidents of California who “were not prescribed Plavix in California, did not purchase Plavix in California, did not ingest Plavix in California, and were not injured by Plavix in California.” [Foornote 1] Id. The Supreme Court rejected the argument that Bristol-Myer’s connection with a distributor in California was sufficient to establish personal jurisdiction in California as to injuries that occurred elsewhere, in part because “the nonresidents have adduced no evidence to show how or by whom the Plavix they took was distributed to the pharmacies that dispensed it to them.” Id. at 1783. In other words, the nonresident plaintiffs did not show that their injuries “arise out of or relate to” Bristol-Myers’ connection to California. Burger King Corp., 471 U.S. at 472. By contrast, in this case, the shipment of Accused Products to Texas directly relates to Semcon’s claims of patent infringement. See 35 U.S.C. § 271(a).


Moreover, the Supreme Court did not hold that Bristol-Myers’ activities were insufficient to establish personal jurisdiction in the states where the plaintiffs’ injuries did occur. To the contrary, the Supreme Court specifically noted that their decision, a “straightforward application . . . of settled principles of personal jurisdiction,” did not prevent plaintiffs from pursuing their claims in their home states. Bristol Meyers, 137 S. Ct. at 1783. Personal jurisdiction in such states would likely rely on the stream of commerce theory. However, the stream of commerce theory could not establish jurisdiction in California where the plaintiffs did not show that the particular stream of commerce that caused their injury ran through California. [Footnote 2] Id.


While the Federal Circuit has not addressed the stream of commerce theory since the Supreme Court’s decision in Bristol-Myers, other Courts of Appeal have continued to apply the theory. See, e.g., Plixer Int’l, Inc. v. Scrutinizer GmbH, 905 F.3d 1, 8 (1st Cir. 2018); In re DePuy Orthopaedics, Inc., Pinnacle Hip Implant Prod. Litig., 888 F.3d 753, 778–81 (5th Cir. 2018); see also Shuker v. Smith & Nephew, PLC, 885 F.3d 760, 780 (3d Cir. 2018) (approving of Justice O’Connor’s purposeful availment stream of commerce theory). Absent a clear statement to the contrary from the Supreme Court or the Federal Circuit, this Court will continue to apply the existing stream of commerce jurisprudence.


B. Personal Jurisdiction is Appropriate Under the Stream of Commerce Theory


TCT International argues that application of the stream of commerce theory is inappropriate because it “is neither a manufacturer nor a distributor of the Accused Products in the US.” (Dkt. No. 33, at 6.) However, TCT International cites no authority for the proposition that the stream of commerce theory applies only to the entities that manufacture the products and that ultimately sell the products to a retailer, in other words, that it applies only at the beginning and the end of the stream. Instead, TCT International relies on the Beverly Hills Fan court’s holding that personal jurisdiction may be asserted “over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State.” (Id. at 7 (emphasis in original) (quoting Beverly Hills Fan, 21 F.3d at 1566).) Yet, TCT International admits that it purchases the Accused Products from TCL Huizhou and in turn sells them to TCT US. (Dkt. No. 29-2, at 1.) When TCT International accepts legal title to the Accused Products they become its products.


TCT International also argues that it does not make sales in Texas nor does it intentionally direct products at Texas. TCT International asserts that TCT US is solely responsible for sales in the United States and Texas. These arguments are similar to those rejected by the Federal Circuit in Polar Electro Oy v. Suunto Oy, 829 F.3d 1343 (Fed. Cir. 2016). In Polar, Suunto argued that personal jurisdiction over it was improper because its sister entity, ASWO, imported the Accused Products into the United States:

  • Suunto maintains that it entered into an arms-length agreement with ASWO, pursuant to which ASWO purchases products from Suunto, takes title in Finland, and pays for and directs shipments to the United States. Suunto also maintains that it does not control marketing, distribution, or sales in the United States, and has not visited Delaware to market the accused products.

829 F.3d at 1350. Nonetheless, the Federal Circuit found that Suunto had sufficient contacts with the forum state, Delaware, to sustain specific jurisdiction. Id. The Federal Circuit, noting that Suunto had shipped at least ninety-four accused products to Delaware, found that “Suunto did not simply place its products in the stream of commerce, with the products fortuitously reaching Delaware as a result of the unilateral effort of ASWO.” Id. at 1351. “Rather, ‘acting in consort’ with ASWO, Suunto deliberately and purposefully shipped the accused products to Delaware retailers.” Id. (quoting Beverly Hills Fan, 21 F.3d at 1566).


Similarly, in this case, Semcon has adduced evidence that TCT International regularly ships Accused Products ordered by TCT US to a warehouse in Fort Worth, Texas. (Dkt. No. 29-5, Exs. D-1–4; Dkt. No. 29-6, Exs. E-1–4.) TCT US complains that one of these invoices appears to evince a sale between TCT US and TCL Huizhou, whose name appears on the header of the invoice. (Dkt. No. 29-5, Ex. D-1.) However, the remaining seven invoices contain no such header. Rather, these invoices list TCT International’s name and address in Hong Kong in the footer of the invoice. (Dkt. No. 29-5, Ex. D-2–4; Dkt. No. 29-6, Exs. E-1–4.) These invoices show that TCT International has shipped more than 27,000 Accused Products to Texas since 2015. (Id.) Moreover, TCT International’s Rule 30(b)(6) witness, Mr. Eric Chan, testified that the company was aware that millions of Accused Products were shipped to Fort Worth, Texas over the last five years. (Dkt. No. 29-4, 25:3–26:17.) Indeed, Mr. Chan testified that he personally travelled to Texas in his capacity as an employee of TCT International to “take a look at the location of our handsets after they have been sold to [TCT US].” (Dkt. No. 29-4, 26:21–27:15.) The Court finds that this is sufficient evidence that, “acting in consort” with TCT US, TCT International deliberately and purposefully shipped Accused Products to Texas. See Polar, 829 F.3d at 1350–51. Thus, the Court finds that Semcon “has made a prima facie showing of minimum contacts under all articulations of the stream-of-commerce test.” Id. at 1351.


C. Exercising Personal Jurisdiction is Reasonable and Fair


Finally, TCT International argues that it would be unfair and unreasonable for the Court to exercise personal jurisdiction over it. (Dkt. No. 14, at 8–9.) “The Supreme Court advises that [this] factor applies only sparingly.” Nuance, 626 F.3d at 1231. “When a defendant seeks to rely on the ‘fair play and substantial justice’ factor to avoid the exercise of jurisdiction by a court that otherwise would have personal jurisdiction over the defendant, ‘he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.’” Id. (quoting Burger King, 471 U.S. 462, 477 (1985)). TCT International has failed to make such a compelling case here.


TCT International argues that its burden to defend itself in Texas is substantial because it is located in Hong Kong and, thus, it will be required to travel a great distance and defend itself in a foreign legal system which differs significantly from the legal system in Hong Kong. [Footnote 3] (Dkt. No. 14, at 8.) If these factors standing alone were sufficient to deprive U.S. courts of jurisdiction, no holder of a U.S. patent could ever hale a foreign infringer into court. To the contrary, the Federal Circuit has made clear that “defeats of otherwise constitutional personal jurisdiction ‘are limited to the rare situation in which the plaintiff’s interest and the state’s interest in adjudicating the dispute in the forum are so attenuated that they are clearly outweighed by the burden of subjecting the defendant to litigation within the forum.’” Akro Corp. v. Luker, 45 F.3d 1541, 1549 (Fed. Cir. 1995) (quoting Beverly Hills Fan, 21 F.3d at 1568).


Importantly, TCT International’s arguments are not specific to this Court, but would apply equally to any District Court of the United States. However, this Court “is part of the exclusive mechanism established by Congress for the vindication of patent rights. The fact that it [may have] unique attributes of which plaintiff . . . has an interest in taking advantage does not change the case.” Akro, 45 F.3d at 1549 (quoting Beverly Hills Fan, 21 F.3d at 1568–69). “‘[T]hat it is to plaintiff’s advantage to adjudicate the dispute in the district court’ that it has chosen ‘does not militate against its right to have access to that court.’” Id. (quoting Beverly Hills Fan, 21 F.3d at 1568). Moreover, jurisdiction in this Court is neither unfair nor unreasonable where TCT International “knew the destination of its products, and its conduct and connections with the forum state were such that it should have reasonably have anticipated being brought into court there.” Nuance, 626 F.3d at 1234 (citing World-Wide Volkswagen, 444 U.S. at 292).


TCT International makes several additional arguments in its reply brief that are also unavailing. (Dkt. No. 22, at 8–10.) First, TCT International’s argument that there is no interest in vindicating patent rights where no patent infringement has occurred is a merits argument inappropriate for this stage of the proceedings. Second, whether Semcon has its principal place of business in the district is not determinative of its interest in proceeding in its chosen forum. Third, whether this Court would have jurisdiction over TCT US is irrelevant to whether jurisdiction over TCT International is proper. Last, the Court finds that Diece-Lisa Industries, Inc. v. Disney Store USA, LLC, which held that “a non-exclusive license agreement alone is insufficient to trigger personal jurisdiction over the licensor,” is inapposite to the present case, where no such basis for jurisdiction is alleged. No. 2:12-CV-400, 2017 WL 8786932, at *3 (E.D. Tex. Dec. 19, 2017).


IV. Conclusion


For the reasons set forth herein, TCT International’s Rule 12(b)(2) Motion to Dismiss (Dkt. No. 14) is DENIED.


So ORDERED and SIGNED this 1st day of July, 2019.

2:18-cv-00194-JRG


Footnotes:

  1. Bristol Myers is incorporated in Delaware and headquartered in New York with substantial operations in both New York and New Jersey. Bristol-Myers, 137 S. Ct. at 1777–78.

  2. Even if Bristol-Myers were fairly susceptible to TCT International’s interpretation, the Supreme Court expressly declined to decide whether the same result, decided under the 14th Amendment as applied to state courts, would follow under the 5th Amendment as applied to federal courts. 137 S. Ct. at 1784.

  3. TCT International also argues that Texas’s interest in asserting jurisdiction is “significantly diminished” because TCT International “has not directed any course of conduct at Texas.” (Dkt. No. 14, at 9.) This argument, the factual premise of which has already been rejected by the Court, is an argument directed at the “minimum contacts” prong of the jurisdictional analysis, not the “reasonable and fair” prong. Elecs. For Imaging, 340 F.3d at 1351–52 (“Once the plaintiff has shown that there are sufficient minimum contacts to satisfy due process, it becomes defendants’ burden to present a ‘compelling case that the presence of some other considerations would render jurisdiction unreasonable.’” (emphasis added) (quoting Burger King, 471 U.S. at 477)).