Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_13-cv-02016/USCOURTS-casd-3_13-cv-02016-5/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

INDUSTRIAL TECHNOLOGY

RESEARCH INSTITUTE,

Plaintiff/Counterclaim Defendant,

CASE NO. 3:13-cv-2016-GPC-WVG

ORDER:

(1) DENYING INDUSTRIAL

TECHNOLOGY RESEARCH

INSTITUTE’S MOTION TO

DISMISS FOR WANT OF

SUBJECT MATTER

JURISDICTION;

(2) VACATING HEARING DATE

[ECF No. 143]

v.

LG ELECTRONICS, INC., and LG

ELECTRONICS U.S.A., INC.,

Defendants/Counterclaim Plaintiffs.

and

LG DISPLAY CO., LTD.,

Intervenor.

I. INTRODUCTION

Before the Court is PlaintiffIndustrial Technology Research Institute’s (“ITRI”)

Motion to Dismiss for Want of Subject Matter Jurisdiction. (ECF No. 143.) Intervenor

LG Display Co., Ltd. (“LGD”) opposes. (ECF No. 171.)

The parties have fully briefed the motions. (ECF Nos. 143, 171, 179.) The Court

findsthe motion suitable for disposition without oral argument pursuant to Civil Local

Rule 7.1(d)(1). Upon review ofthe moving papers, admissible evidence, and applicable

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law, the Court DENIES ITRI’s Motion to Dismiss for Want of Subject Matter

Jurisdiction.

II. BACKGROUND

On August 29, 2013, ITRI filed a complaint against LG Electronics, Inc. and LG

Electronics U.S.A., Inc. (collectively, “LGE”) alleging infringement of U.S. Patent No.

6,163,355 (the “’355 patent”). (ECF No. 1.) On June 26, 2014, ITRI filed a First

Amended Complaint (the “FAC”). (ECF No. 35.) On July 14, 2014, LGE filed an

answer to the FAC, including three counterclaims under 28 U.S.C. §§ 2201–02 for

declaratory judgments of: (1) invalidity,(2) unenforceability, and (3) non-infringement.

(ECF No. 37 ¶ 40.)

On July 29, 2014, LGD filed a motion to intervene assupplier to LGE. (ECF No.

47.) On October 17, 2014, the Court granted LGD’s motion to intervene as of right

under Federal Rule of Civil Procedure 24(a)(2). (ECF No. 101.) On October 21, 2014,

LGD filed its complaint in intervention alleging two causes of action: (1) a declaratory

judgment of non-infringement of the ’355 patent, and (2) a declaratory judgment of

unenforceability of the ’355 patent. (ECF No. 108.)

On December 3, 2014, ITRI filed this motion to dismiss. (ECF No. 143.) On

January 9, 2015, LGD filed an opposition to ITRI’s motion. (ECF No. 171.) On

January 23, 2015, ITRI filed a reply to LGD’s opposition. (ECF No. 179.)

III. LEGAL STANDARD

Federal Rule ofCivil Procedure 12(b)(1) allows courtsto dismiss based on “lack

of subject matter jurisdiction.” FED. R. CIV. P. 12(b)(1). Jurisdictional attacks under

Rule 12(b)(1) are either “facial” or “factual.” White v. Lee, 227 F.3d 1214, 1242 (9th

Cir. 2000). “In a facial attack, the challenger asserts that the allegations contained in

a complaint are insufficient on their face to invoke federal jurisdiction. By contrast, in

a factual attack, the challenger disputes the truth of the allegations that, by themselves,

would otherwise invoke federal jurisdiction.” Safe Airfor Everyone v. Meyer, 373 F.3d

1035, 1039 (9th Cir.2004).

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“Article III of the Constitution confinesthe federal courts to adjudicating actual

‘cases’ and ‘controversies.’” Allen v. Wright, 468 U.S. 737, 750 (1984). Such cases and

controversies are identified by the doctrine of standing. Lujan, 504 U.S. at 560. There

are three requirements to Article III standing: (1) “injury in fact,” (2) causation, and

(3) redressability. Id. at 560–61. The Declaratory Judgment Act allows plaintiffs to file

causes of action where an “actual controversy” exists, 28 U.S.C. § 2201(a), which is

identical to an Article III case or controversy. Aetna Life Ins. Co. of Hartford, Conn.

v. Haworth, 300 U.S. 227, 239–41 (1937).

IV. DISCUSSION

There are two requirements for a party seeking to intervene to assert a cause of

action: (1) it must have met the requirementsto intervene, and (2) it must have standing

to assert its cause of action. See Fed. R. Civ. P. 24; Lujan v. Defenders of Wildlife, 504

U.S. 555, 560 (1992). The parties dispute whether there exists a third requirement: an

independent jurisdictional basis. (Compare ECF No. 179, at 1 with ECF No. 171, at

5–6.) The Court has already determined that LGD met the requirements to intervene

as of right under Rule 24. (ECF No. 101.)

A. Subject Matter Jurisdiction

First, it is a longstanding rule of federal jurisprudence that intervenors as of right

under Rule 24(a)(2) need not assert an independent jurisdictional basis for their causes

of action. See Formulabs, Inc. v. Hartley Pen Co., 318 F.2d 485, 492 (9th Cir. 1963)

(“Where the right to intervene is absolute no independent ground offederal jurisdiction

need be shown to support the intervention.”) (quoting 6 JAMES WM. MOORE ET AL.,

MOORE’S FEDERAL PRACTICE, § 24.18, 135–36 (2d ed. 1954)). ITRI argues that this

longstanding rule has been overturned by the 1966 amendments to Rule 24. (ECF No.

179, at 1.) Defendant argues that this rule is still good law. (ECF No. 171, at 5–6.) The

Court notes that two significant changes have occurred since this rule was first

articulated: (1) in 1966, Rule 24 was substantially amended, and (2) in 1990, the

concept of ancillary jurisdiction was replaced by the codification of supplemental

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jurisdiction under 28 U.S.C. § 1367.

While post-1990 caselaw in this area isrelatively sparse, federal courts have still

consistently cited this rule as good law. See, e.g., Grace United Methodist Church v.

City of Cheyenne, 451 F.3d 643, 673 (10th Cir. 2006); United States v. Certain Land

Situated in City of Detroit, 361 F.3d 305, 309 (6th Cir. 2004) (Cole, J., concurring).

Indeed the Ninth Circuit has noted that intervenor causes of action, that are based on

the same federal statutes already relied upon by the parties, do not require an

independent jurisdictional basis. See Freedom from Religion Found., Inc. v. Geithner,

644 F.3d 836, 844 (9th Cir. 2011) (citation omitted); cf. 7C CHARLES ALAN WRIGHT,

ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE & PROCEDURE § 1917

n.45 (3d ed. 2010) (“The supplemental-jurisdiction statute . . . effectively authorizes

jurisdiction in nondiversity actions over permissive intervenors.”). Here, LGD’s causes

of action are based on the same federal statute as LGE’s counterclaim. (Compare ECF

No. 108 ¶ 4 with ECF No. 37 ¶ 41.) If LGD has standing to assert its causes of action,

this Court would have jurisdiction over those causes of action under 28 U.S.C. § 1367.

If LGD does not have standing to assert its causes of action, then, contrary to ITRI’s

argument, (see ECF No. 179, at 3), the “jurisdictional concern drops away” once the

causes of action are dismissed and this Court need not reconsider its order granting

intervention. Freedom from Religion Found., 644 F.3d at 844 (citation omitted). As the

Court either has jurisdiction if LGD has standing or does not need to consider

jurisdiction if LGD does not have standing, the Court turns to whether LGD has

standing.

B. Standing

Though LGD may not require an independent jurisdictional basis to assert its

causes of action, see Perry v. Schwarzenegger, 630 F.3d 898, 906 (9th Cir. 2011), and

need not have established Article III standing to intervene, Yniguez v. State of Ariz.,

939 F.2d 727, 731 (9th Cir.1991), LGD must have Article III standing to assert its

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causes of action. See Lujan, 504 U.S. at 559–61. ITRI argues that LGD lacks standing 1

because all of LGD’s actions occurred outside the United States and thus beyond the

reach of U.S. patent law. (ECF No. 143-1, at 5–9.) LGD responds that it has standing

because: (1) LGD is obligated to indemnify LGE, and (2) the Federal Circuit has held

that extraterritorial actions can give rise to liability for inducement in some instances.

(ECF No. 171, at 6–8.)

A “supplier has standing to commence a declaratory judgment action if . . . the

supplier is obligated to indemnify its customers from infringement liability.” Arris

Group, Inc. v. British Telecomms. PLC, 839 F.3d 1368, 1375 (Fed. Cir. 2011); see also

Microsoft Corp. v. DataTern, Inc., 755 F.3d 899, 903–04 (Fed. Cir. 2014). ITRI

attempts to distinguish Arris and DataTern in two ways: (1) the indemnitors in those

cases had committed acts in the U.S. that would constitute infringement, and (2) the

indemnitors in those cases had pre-litigation duties and LGD’s agreement in this case

was “voluntary.” (ECF No. 179, at 1–2.) First, whether an indemnitor may be liable for

infringement is immaterial. The Federal Circuit has consistently noted that suppliers

have standing to bring declaratory judgment actionsif they are defending infringement

claims or if they have agreed to indemnify a party defending infringement claims. See

DataTern, 755 F.3d at 903–04; Cisco Sys., Inc. v. Alberta Telecomms. Research Ctr.,

538 Fed. App’x. 894, 898 (Fed. Cir. 2013); Arris, 839 F.3d at 1375; Microchip Tech.

Inc. v. Chamberlain Group, Inc., 441 F.3d 936, 943 (Fed. Cir. 2006). Infringement

claims and indemnification agreements are separate bases for standing and ITRI’s

argument that both bases must be met is inconsistent with Federal Circuit precedent.

See Arris, 839 F.3d at 1375. Even if suppliers were required to potentially be liable for

ITRI makes much of the current circuit split on whether an intervenor must

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meet the standing requirements of Article III. (See ECF No. 179, at 3–6.) However, the

circuits are split on whether a party must have Article III standing to intervene. Mausolf

v. Babbitt, 85 F.3d 1295, 1299 (8th Cir. 1996). Whether or not a party must satisfy

Article III to intervene in no way affects the requirement that an intervenor must have

Article III standing to assert a cause of action. Curiously, though ITRI now argues that

the Court should ignore Ninth Circuit precedent in this area, see, e.g., Yniguez, 939

F.2d at 731, ITRI never made this argument in its opposition to LGD’s motion to

intervene. (See ECF No. 67.)

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infringement to bring a declaratory judgment action—which they are not, see

DataTern, 839 F.3d at 903–04—LGD may be liable for induced infringement even if

all of its actions were extraterritorial. See Merial Ltd. v. Cipla Ltd., 682 F.3d 1283,

1302–03 (Fed. Cir. 2012) (“In short, where a foreign party, with the requisite

knowledge and intent, employs extraterritorial means to actively induce acts of direct

infringement that occur within the United States, such conduct is not categorically

exempt from redress under § 271(b).”). Second, whether the duty to indemnify existed

prior to the commencement of litigation is also immaterial; all that matters is that the

duty exists. In DataTern, the suppliers’ customers had requested indemnification after

the commencement of litigation. 755 F.3d at 904. The Federal Circuit found that these

requests did not provide standing, not because of their timing, but because they were

requests to indemnify and not actual agreements to indemnify. Id. Moreover, all

agreements to indemnify are “voluntary.” If they were not, they would be illegal,

voidable contracts. See, e.g., CAL. CIV. CODE § 1689(b)(1).

As it is undisputed that LGD has an obligation to indemnify LGE, (see ECF No.

47-3 ¶ 3), and may be liable for induced infringement based on extraterritorial actions,

see Merial, 682 F.3d at 1302–03, LGD has standing to assert its declaratory judgment

causes of action against ITRI and the Court has jurisdiction over LGD’s causes of

action. See Arris, 839 F.3d at 1375. Accordingly, the Court DENIES ITRI’s motion to

dismiss.2

/ /

/ /

/ /

/ /

/ /

LGD statesthat it would not oppose the issuance of an order to show cause why 2

ITRI should not be sanctioned for filing its “clearly baseless” motion. (ECF No. 171,

at 8 n.1.) The Court does not find such an order to be appropriate at this time and

declines to issue such an order.

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V. CONCLUSION AND ORDER

Based on the foregoing, IT IS HEREBY ORDERED that:

1. ITRI’s Motion to Dismiss for Want of Subject Matter Jurisdiction, (ECF

No. 143), is DENIED; and

2. The hearing set for February 6, 2015, is VACATED.

DATED: February 5, 2015

HON. GONZALO P. CURIEL

United States District Judge

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