Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_15-cv-05008/USCOURTS-cand-5_15-cv-05008-2/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:145 Patent Infringement

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Case No. 15-cv-05008-PSG

ORDER GRANTING PARTIAL MOTION TO DISMISS

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CORE WIRELESS LICENSING S.A.R.L.,

Plaintiff,

v.

APPLE INC,

Defendant.

Case No. 15-cv-05008-PSG

ORDER GRANTING PARTIAL 

MOTION TO DISMISS

(Re: Docket No. 180)

Second chances in the law are hard to come by, no matter how clever the argument. This 

case offers yet another example.

Plaintiff Core Wireless Licensing S.a.r.l. alleges that Defendant Apple Inc. infringes three 

Core Wireless patents.

1

 The patents’ original owner, Nokia Corporation, declared before the 

European Telecommunications Standards Institute that they, and some 1,200 other patents, cover 

technology essential to implementing several popular wireless standards, including GSM/GPRS, 

UMTS and LTE.

2

 ETSI’s Intellectual Property Rights Policy states that holders of these so-called 

standards-essential patents “should be adequately and fairly rewarded” for their use.3 The IPR 

Policy also says that these licenses should be granted “on fair, reasonable and non-discriminatory 

(‘FRAND’) terms.”4 As a result, Core Wireless contends that Apple, as an ETSI member, is 

 

1

See Docket No. 109 at ¶¶ 10-14, 63-127. Although Core Wireless’ amended complaint alleges 

infringement of five patents, the parties later agreed to drop two of them. See Docket No. 178.

2

See Docket No. 109 at ¶¶ 15-18.

3 Docket No. 109-1 at § 3.2.

4

Id. at § 6.1.

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obligated to take licenses to these patents on FRAND terms.5

When Core Wireless asserted this theory as a pair of breach of contract claims in the 

parties’ previous litigation in the Eastern District of Texas, that court dismissed the claims because 

it found no evidence that Apple had entered into a contract.

6

 Taking the hint, Core Wireless 

dropped its corresponding breach of contract claims in this case.7 It retained, however, a single 

cause of action, in which it seeks a declaratory judgment that Apple is an unwilling FRAND 

licensee.8 Apple now moves to dismiss this last claim on a number of grounds.9 Among other 

things, Apple argues that res judicata bars the declaratory judgment cause of action because Core 

Wireless raised or could have raised it in the Texas action. Because the court agrees on this point, 

it need not reach the others. The motion is GRANTED.

I.

Under the doctrine of res judicata, a final judgment on the merits precludes further claims 

by the same parties based on the same cause of action.10 The doctrine shields parties from the 

burden of repeated litigation on the same issues, avoids inconsistent results and conserves judicial 

resources.

11

 To that end, claim preclusion—a subspecies of res judicata—applies “if there is (1) 

an identity of claims, (2) a final judgment on the merits, and (3) identity or privity between 

 

5

See Docket No. 109 at ¶¶ 22-31.

6

See Core Wireless Licensing S.a.r.l. v. Apple Inc. (Core Wireless I), Case No. 6:12-cv-00100, 

2015 WL 4775973, at *3-4 (E.D. Tex. Mar. 16, 2015).

7

See Docket No. 182.

8

See Docket No. 109 at ¶¶ 51-57. Core Wireless dropped a second declaratory judgment cause of 

action after the parties had finished briefing the instant motion. See Docket No. 192.

9

See Docket No. 180.

10 See In re Schimmels, 127 F.3d 875, 881 (9th Cir. 1997) (quoting Montana v. United States, 440 

U.S. 147, 153 (1979)).

11 See Tahoe-Sierra Preservation Council, Inc. v. Tahoe Reg’l Planning Agency, 322 F.3d 1064, 

1077 (9th Cir. 2003) (citations omitted).

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parties.”12

In the lawsuit it filed in the Eastern District of Texas in 2012, Core Wireless alleged that 

Apple infringed no fewer than 14 of its patents.13 Apple counterclaimed, among other things, that 

Core Wireless had breached its ETSI commitments by refusing to offer Apple a FRAND license to

those patents, which also were among those that Nokia had declared to be standards-essential.14

Core Wireless responded with two breach-of-contract counterclaims of its own.15 In one count, 

Core Wireless alleged that Apple had breached a binding agreement with Core Wireless, arising 

out of Apple’s ETSI membership, by failing to negotiate FRAND royalties for Core Wireless’ 

portfolio of standards-essential patents.

16

 And in the second count, Core Wireless alleged that the 

same conduct by Apple breached Apple’s agreement with ETSI, as captured in Section 3.2 of the 

IPR Policy, of which Core Wireless was a third-party beneficiary.

17

 

12 FTC v. Garvey, 383 F.3d 891, 897 (9th Cir. 2004) (quoting Providence Health Plan v. 

McDowell, 361 F.3d 1243, 1249 (9th Cir. 2004)); see also Rasooly v. Self, Case No. 14-cv-04521, 

2015 WL 3430092, at *2 (N.D. Cal. May 27, 2015) (citing Scott v. Kuhlmann, 746 F.2d 1377, 

1378 (9th Cir. 1984)) (“A claim may be dismissed under the doctrine of res judicata on a motion 

to dismiss under Rule 12(b)(6) when the Court is able to discern the relevant facts by way of 

judicial notice of the earlier court proceedings.”).

13 See Core Wireless I: Docket No. 61.

14 See id.: Docket No. 107, First Amended Counterclaims at ¶¶ 109-114.

15 See id.: Docket No. 115, Counterclaims of Core Wireless at ¶¶ 6-42.

16 See id. at ¶¶ 6-33. Courts have referred to entities engaging in “hold out” behavior by refusing 

to take or offer to take a patent license on reasonable terms as “unwilling licensees.” See, e.g., 

Apple Inc. v. Motorola, Inc., 757 F.3d 1286, 1333 (Fed. Cir. 2014) (Rader, J., dissenting-in-part) 

(“Market analysts will no doubt observe that a ‘hold out’ (i.e., an unwilling licensee of an SEP 

seeking to avoid a license based on the value that the technological advance contributed to the 

prior art) is equally as likely and disruptive as a ‘hold up’ (i.e., an SEP owner demanding 

unjustified royalties based solely on value contributed by the standardization).”); InterDigital 

Commc’ns, LLC v. Int’l Trade Comm’n, 707 F.3d 1295, 1317 (Fed. Cir. 2013) (quoting an 

industry witness as testifying at a congressional hearing that “patent assertion entities often rely 

upon the domestic activities of their unwilling licensees” to satisfy the International Trade 

Commission’s domestic industry requirement).

17 See Core Wireless I: Docket No. 115, Counterclaims of Core Wireless at ¶¶ 34-42.

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Eventually, the court divided Core Wireless’ contract claims into two types. The contract 

claims related to the patents-in-suit proceeded to trial, while those related to the rest of Core 

Wireless’ patent portfolio were stayed.

18

 At the close of evidence at trial, in March 2015, the court

found that Core Wireless had not proved the existence of a contract and decided not to send the 

contract claims to the jury.19 And after trial, the court dismissed the portfolio-wide claims, giving 

the following explanation:

At trial, Core was given a full and fair opportunity to present its case 

regarding its breach of contract claims as to the Patents-in-Suit. 

During its case-in-chief, Core presented evidence, including 

presumably the evidence Core believed was most relevant to the 

breach of contract claims. After the close of all the evidence in the 

case, the Court concluded that Core had not presented a prima facie 

case of the existence of a contract. Because Core had not overcome 

this threshold issue, the Court did not allow Core’s proposed verdict 

question regarding the alleged breach of contract as to the Patentsin-Suit[] to be submitted to the jury. Though Core objected during 

the charge conference to the omission of this question, Core has not 

requested any post-trial reconsideration of the Court’s decision to 

dismiss the contract question at trial. Core has also not requested 

any other appropriate relief post-trial.

Core does not deny that the contract claims as to the rest of the 

portfolio, which were stayed, appear to rely on the same underlying 

alleged contract as those claims against the Patents-in-Suit, which 

went forward at trial and were subsequently dismissed. . . . When 

prompted during a hearing held on July 6, 2015, Core was unable to 

point to any new potentially-discoverable evidence that would be 

relevant to the issue of the existence of said contract. As noted, the

only evidence that Core identified went, instead, to the issue of the 

potential damages if a breach was found to have occurred.

Because the Court has already dismissed a claim based on the same 

alleged contract for lack of evidence of the existence of said 

contract, the Court finds that the contract claims as to the entire 

portfolio must also be dismissed.20

The court entered final judgment in September.21

 

18 See id.: Docket No. 207 at 1; id.: Docket No. 216 at 18:14-29:8.

19 See id.: Docket No. 428 at 26:9-23; 

20 Core Wireless I, 2015 WL 4775973, at *3-4 (citations omitted).

21 See Core Wireless I: Docket No. 470.

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Meanwhile, near the end of 2014, Core Wireless filed this case, also in the Eastern District 

of Texas.22 On Apple’s motion, the case was transferred to this court late last year.

23

 The 

operative complaint contains two causes of action for breach of contract, but the parties jointly 

moved to dismiss them shortly after the case arrived here.24 The parties also mutually dismissed a 

related cause of action in which Core Wireless sought a declaratory judgment of a FRAND royalty 

rate.25 The only remaining non-patent claim is a single cause of action for a declaratory judgment

and the subject of this motion.26

In this claim, Core Wireless first alleges that “Apple continues to use Core Wireless’s 

patented technology . . . without paying for a license Core Wireless has offered and is obligated to 

provide to Apple.”27 It then says that “Apple has demonstrated an unwillingness to negotiate a 

FRAND royalty rate . . . in good faith.”28 Because Apple’s conduct allegedly has harmed and 

continues to harm Core Wireless, Core Wireless seeks a declaratory judgment that Apple is an 

unwilling licensee.29

II.

This court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1332, 1338 and 2201. 

The parties further consented to the jurisdiction of the undersigned magistrate judge under 28 

U.S.C. § 636(c) and Fed. R. Civ. P. 72(a).30

 

22 See Docket No. 1.

23 See Docket No. 137.

24 See Docket No. 182.

25 See Docket No. 109 at ¶¶ 58-62; Docket No. 192.

26 See Docket No. 109 at ¶¶ 51-57.

27 Id. at ¶ 53.

28 Id. at ¶ 54.

29 See id. at ¶¶ 55-57.

30 See Docket Nos. 158, 161.

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III.

As noted above, res judicata applies “if there is (1) an identity of claims, (2) a final 

judgment on the merits, and (3) identity or privity between parties.”31 Because there was a final 

judgment between the same parties in Core Wireless I, the only disputed question is whether the 

two cases involved an identity of claims. This requirement “does not mean that an imaginative 

attorney may avoid preclusion by attaching a different legal label to an issue that has, or could 

have, been litigated.”

32

 “Rather, ‘[i]dentity of claims exists when two suits arise from the same 

transactional nucleus of facts.’”33 The Ninth Circuit also has looked to “whether rights or interests 

established in the prior judgment would be destroyed or impaired by prosecution of the second 

action,” “whether substantially the same evidence is presented in the two actions” and “whether 

the two suits involve infringement of the same right.”34

Of these four criteria, whether the two suits arise out of the same transactional nucleus of 

facts is the most important.35 That test is satisfied where the claims share a factual foundation 

such that they could have been tried together.36 This broad definition renders it immaterial 

“whether the claims asserted subsequent to the judgment were actually pursued in the action that 

led to the judgment.”

37 Instead, “the relevant inquiry is whether they could have been brought.”38

 

31 Garvey, 383 F.3d at 897 (quoting Providence Health Plan, 361 F.3d at 1249).

32 Tahoe-Sierra, 322 F.3d at 1077-78.

33 Id. at 1078 (alteration in original) (quoting Stratosphere Litig. L.L.C. v. Grand Casinos, Inc., 

298 F.3d 1337, 1142 n.3 (9th Cir. 2002)).

34 United States v. Liquidators of European Fed. Credit Bank, 630 F.3d 1139, 1150 (9th Cir. 2011) 

(quoting Costantini v. Trans World Airlines, 681 F.2d 1199, 1201-02 (9th Cir. 1982)).

35 See id. at 1151.

36 See W. Sys., Inc. v. Ulloa, 958 F.2d 864, 871 (9th Cir. 1992) (citing Restatement (Second) of 

Judgments § 24(2)).

37 Tahoe-Sierra, 322 F.3d at 1078 (quoting United States ex rel. Barajas v. Northrop Corp., 147 

F.3d 905, 909 (9th Cir. 1998)).

38 Id. (quoting Barajas, 147 F.3d at 909).

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Core Wireless primarily argues that its current claim cannot be identical because it rests on 

a different contract. While in Core Wireless I it alleged breaches of contracts between Apple and 

Core Wireless and Apple and ETSI, here Core Wireless says that it seeks a declaratory judgment 

related to its own contract with ETSI.39 That distinction makes no difference. In Core Wireless I, 

Core Wireless sought a declaratory judgment that, as an “unwilling licensee,” Apple was “no 

longer entitled to FRAND consideration” and that Core Wireless therefore was relieved from its

FRAND obligations.40 Here, it seeks essentially the same relief:

Amended Complaint Core Wireless I

“Declaratory Judgment that Apple Is an 

Unwilling Licensee”

41

“Core Wireless expressly requested a 

judgment that ‘Apple is not a willing 

licensee’ which raises disputed issues of 

fact for the jury to decide.”

42

“Prayer For Relief . . . (d) A declaration 

that Apple violated its duty to negotiate 

in good faith and is an unwilling licensee 

to Core Wireless’s Standard-Essential 

Patents, including the patents-in-suit”

43

“Prayer for Relief . . . [A] judgment 

declaring that Apple is not a willing 

licensee to Core Wireless’ asserted 

Standard Essential Patents”

44

“Prayer for Relief . . . (q) All further 

relief in law or in equity as the Court 

may deem just and proper, including . . . 

an injunction against future infringing 

sales upon a determination that Apple is 

an unwilling licensee.”

45

“Apple’s unwillingness to engage in 

meaningful negotiation raises the legal 

and equitable question of whether . . .

Apple is now subject to injunctive 

relief.”

46

 

39 Apple casts Core Wireless’ characterization of its claim as a belated attempt to amend it, a 

practice frowned upon in this court. See Arevalo v. Bank of Am. Corp., 850 F. Supp. 2d 1008, 

1020 (N.D. Cal. 2011) (quoting Tietsworth v. Sears, 720 F. Supp. 2d 1123, 1145 (N.D. Cal. 

2010)). In any event, that does not affect the result.

40 Core Wireless I: Docket No. 378 at 65:20-22.

41 Docket No. 109 at 10.

42 Core Wireless I: Docket No. 248 at 19 n.9.

43 Docket No. 109 at 34.

44 Core Wireless I: Docket No. 115 at 26-27.

45 Docket No. 109 at 34-35.

46 Core Wireless I: Docket No. 248 at 9.

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Moreover, Apple raised a counterclaim in Core Wireless I alleging that Core Wireless breached 

the contract between Core Wireless and ETSI.47 The jury evaluated that claim, based on the same 

contract that Core Wireless puts at issue here.

48

The same evidence and the same nucleus of facts underlie all of these claims. Both cases 

involved the ETSI IPR Policy, FRAND licensing obligations, Nokia’s standards-essential 

declaration and the licensing negotiations (or lack thereof). Core Wireless purports to identify 

some new evidence that it will present here but did not in Core Wireless I.

49

 But much of this 

evidence—the contract between Core Wireless and ETSI and Core Wireless’ FRAND 

obligations—came up in the earlier case. And any evidence on the patents-in-suit here bore on the 

portfolio-wide breach-of-contract claim in Core Wireless I, which the Eastern District of Texas 

dismissed on its merits. In sum, because the declaratory judgment claim in this suit could have 

been brought in Core Wireless I, it is barred here.

IV.

Apple’s partial motion to dismiss is GRANTED. Although courts are to grant leave to 

amend liberally, dismissal without leave to amend is appropriate if it is clear that the complaint 

could not be saved by amendment or if allowing further amendment would cause undue prejudice 

to the opposing party.50 “[I]t is the consideration of prejudice to the opposing party that carries the 

greatest weight.”51 The court is satisfied that no further amendment could cure the serious defects 

 

47 See id.: Docket No. 107, First Amended Counterclaims at ¶¶ 109-114. It is true that this claim 

involved only the patents-in-suit. But by responding with claims involving its entire patent 

portfolio, Core Wireless confirmed that the negotiations, such as they were, involved the portfolio 

and not just the patents-in-suit. See id.: Docket No. 115, Counterclaims of Core Wireless at ¶¶ 6-

42.

48 See id.: Docket No. 399 at 8.

49 See Docket No. 183 at 4-5.

50 See Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051-52 (9th Cir. 2003) (quoting 

Foman v. Davis, 371 U.S. 178, 182 (1962)).

51 Id. at 1052 (citing DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 185 (9th Cir. 1987)).

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in this claim. More importantly, at this late stage—fact discovery will end in about two 

months52—Apple will suffer undue prejudice if the court permits another round of pleadings. 

Leave to amend therefore is DENIED.

SO ORDERED.

Dated: March 31, 2016

_________________________________

PAUL S. GREWAL

United States Magistrate Judge

 

52 See Docket No. 175 at 2.

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