Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_05-cv-04063/USCOURTS-cand-4_05-cv-04063-46/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

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

TESSERA, INC.,

Plaintiff,

v.

ADVANCED MICRO DEVICES, INC.,

et al.,

Defendants. /

AND RELATED COUNTERCLAIMS.

 /

No. C 05-4063 CW

ORDER DENYING THE ST

DEFENDANTS’ MOTION FOR A

PRELIMINARY INJUNCTION

Defendants STMicroelectronics, Inc. (ST-Inc.) and

STMicroelectronics, N.V. (ST-NV) (collectively, the ST Defendants)

move for a preliminary injunction prohibiting Plaintiff Tessera,

Inc. from further participating in the International Trade

Commission (ITC) proceedings currently underway against ST-NV. 

Plaintiff opposes the ST Defendants’ motion. The matter was heard

on January 24, 2008. Having considered oral argument and all of

the materials submitted by the parties, the Court denies the ST

Defendants’ motion.

Case 4:05-cv-04063-CW Document 686 Filed 01/28/08 Page 1 of 9
United States District Court

For the Northern District of California

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BACKGROUND

I. Tessera’s Infringement Claims and the ST Defendants’

License Defense

Tessera is an American corporation that develops and patents

semiconductor packaging products. The ST Defendants manufacture

and sell semiconductor chips that allegedly utilize packaging

technology patented by Tessera. ST-NV is a Dutch corporation with

its principal place of business in Switzerland. ST-Inc. is a

wholly-owned American subsidiary of ST-NV.

In 1998, Tessera entered into a license agreement with SGSThompson Microelectronics, Inc., the predecessor in interest to STInc. The agreement gives ST-Inc. the right to use certain

technologies covered by Tessera’s patents. It contains a governing

law provision that reads in part:

Both parties shall use their best efforts to resolve by

mutual agreement any disputes, controversies, claims or

difference [sic] which may arise from, under, out of or

in connection with this Agreement. If such disputes,

controversies, claims or differences cannot be settled

between the parties, any litigation between the parties

relating to this Agreement shall take place in San Jose,

California (if initiated by Tessera) or San Diego,

California (if initiated by Licensee). The parties

hereby consent to personal jurisdiction and venue in the

state and federal courts of California.

Burke Decl. Ex. B at 14.

Tessera brought this lawsuit in 2005. The second amended

complaint charges the ST Defendants, as well as other Defendants,

with infringing Tessera’s patents. It also charges ST-Inc. with

breaching its license agreement by failing to pay royalties due to

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1According to the ST Defendants, the complaint alleges that

ST-NV is a party to, and thereby breached, the license agreement. 

This is false. The complaint alleges breach by the “STM

Licensees,” which are defined as “SGS-Thompson Microelectronics,

Inc., STMicroelectronics, Inc., and any permitted successors,

assigns or affiliates to which rights under the STM License

extended.” While this language could potentially include ST-NV,

Tessera has taken the position that ST-NV is not a party to the

agreement. Because the ST Defendants agree that ST-NV is not a

party to the agreement, there is no basis for the Court to grant

their request that Tessera be estopped from taking this position.

3

Tessera.1

In April, 2007, Tessera filed a complaint in the ITC against,

among others, ST-NV. The ITC complaint did not name ST-Inc. as a

Respondent. The ITC complaint accuses the respondents of

“importing, selling for importation, and/or selling after

importation infringing small format laminate BGA packages and/or

products containing such packages.” Young Decl. Ex. 12 at 1. With

respect to ST-NV, the ITC complaint is not clear on the precise

scope of the alleged infringement. However, it does specify that

the ST M36L0R8060 chip assembly is representative of ST-NV’s

infringement. The complaint alleges that ST-NV sells this chip

overseas, where it is incorporated into Motorola’s SLVR phone. 

This phone is manufactured in China and then shipped to the United

States for sale.

In November, 2007, ST-NV filed a motion for summary

determination in the ITC. The motion seeks dismissal of Tessera’s

claims because ST-NV “only sells products within the United States

after these products are first sold unconditionally to ST-NV by

Tessera’s admitted licensee, ST-Inc.” Young Decl. Ex. 20 at 1. 

Because ST-NV invokes a license defense in connection with these

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products, it asserts that claims involving them must be litigated

in California. This is the same argument that the ST Defendants

make in the present motion, which they filed in December, 2007.

Tessera agrees that, insofar as ST-NV purchases the accused

products from ST-Inc., if the ST Defendants argue that the products

are licensed, litigation over the matter must take place in

California. This is true even though Tessera may disagree that the

products are licensed. However, Tessera claims that only a small

portion of ST-NV’s worldwide sales of the accused products involves

products that are purchased from ST-Inc. and shipped directly to

the United States for sale by ST-NV. ST-NV allegedly sells a much

greater number of the accused products overseas. As with the

representative ST M36L0R8060 chip, ST-NV’s customers then ship

articles incorporating these accused products to the United States

for sale. The ST Defendants apparently do not dispute that ST-NV

does not purchase from ST-Inc. those accused products that it sells

overseas.

According to Tessera, it has been unable to determine the

extent of ST-NV’s overseas sales because ST-NV has stymied

Tessera’s attempts to obtain discovery on this matter in the ITC

proceedings. Specifically, Tessera states that ST-NV has refused

to identify any more than certain sales of forty-seven products. 

The products involved in these sales were all purchased from STInc. prior to being sold by ST-NV, and thus are subject to the

license defense.

The ITC Investigative Staff has issued a response to ST-NV’s

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motion for summary determination. In this response, the staff

recommends to the ALJ that the motion be denied. The staff argues

that: 1) it is undisputed that ST-NV is not a party to the license

agreement, and therefore it may not rely on the agreement’s forum

selection clause; 2) ST-NV has failed to establish that each of the

accused products sold in the United States was first sold to it by

ST-Inc.; and 3) Tessera has shown that at least some of ST-NV’s

accused chip packages sold abroad to companies such as Motorola and

Hewlett-Packard were not first sold by ST-Inc.

II. Prior Proceedings in This Action

After the ITC proceedings were initiated, the ST Defendants,

joined by Defendants AMD and Spansion, moved the Court for a stay

of this entire action pending a final decision in the ITC

proceedings. After initially opposing the motion, Tessera withdrew

its opposition and consented to a stay. Its consent was based on

28 U.S.C. § 1659, which mandates that a district court stay ongoing

patent infringement proceedings when parallel proceedings have been

brought before the ITC.

After the ITC proceedings had been underway for several

months, another group of Defendants (the ASP Defendants), which had

not been named as parties in the ITC proceedings, moved for a

preliminary injunction prohibiting Tessera from initiating an ITC

action against them. They based their motion on their license

agreement with Tessera, which contains a forum selection clause

similar to the one here. The Court granted the ASP Defendants’

motion in part, but only to the extent that Tessera intended to

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pursue products as to which the ASP Defendants intended to invoke a

license defense. Products that indisputably were not licensed were

not subject to the license agreement’s forum selection clause, and

thus Tessera was permitted to pursue relief with respect to these

products outside of California. See Docket No. 570.

LEGAL STANDARD

A party seeking a preliminary injunction must establish: (1) a

reasonable likelihood of success on the merits; (2) irreparable

harm if an injunction is not granted; (3) a balance of hardships

tipping in its favor; and (4) a public interest favoring the

injunction. Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1374

(Fed. Cir. 2006). These factors can be established by

demonstrating either “(1) a combination of probable success on the

merits and the possibility of irreparable injury or (2) that

serious questions are raised and the balance of hardships tips

sharply in its favor.” Mikohn Gaming Corp. v. Acres Gaming, Inc.,

165 F.3d 891, 895 (Fed. Cir. 1998) (citing Dollar Rent A Car v.

Travelers Indem. Co., 774 F.2d 1371, 1374-75 (9th Cir. 1985)). 

“These are not two distinct tests, but the poles of a ‘continuum in

which the required showing of harm varies inversely with the

required showing of meritoriousness.’” Id. (quoting Rodeo

Collection, Ltd. v. W. Seventh, 812 F.2d 1215, 1217 (9th Cir.

1987).

DISCUSSION

The ST Defendants have not established a likelihood of success

on the merits or the possibility of irreparable injury because they

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have not shown that Tessera is pursuing or intends to pursue an ITC

claim against them over products that are arguably licensed. The

dispute in the ITC proceedings is not over whether a particular

product falls within the scope of the license agreement. This type

of dispute would be subject to the forum selection clause. See

Texas Instruments v. Tessera, Inc., 231 F.3d 1325, 1331 (Fed. Cir.

2000). Instead, the ITC proceedings against ST-NV involve two

distinct groups of products: those purchased from ST-Inc., and

those not purchased from ST-Inc. The ST Defendants claim that the

products in the first group are licensed. Tessera concedes that

whether this license defense is valid is a question that must be

litigated in California. The ST Defendants do not, however, claim

that the products in the second group are licensed. With respect

to these products, there is no dispute over “license related issues

such as the amount of royalty due, term of agreement, and

cross-licensing.” Id. The only questions are whether these

indisputably unlicensed products are imported into the United

States and infringe Tessera’s patents. Tessera is free to litigate

this issue in the ITC.

Tessera has represented to the Court that it is not pursuing

an ITC action against products sold to ST-NV by ST-Inc., and the ST

Defendants have not come forward with any evidence to the contrary. 

While the ST Defendants argue that the sales disclosed thus far in

the ITC proceedings all involve products purchased from ST-Inc.,

this fact is attributable to ST-NV’s refusal to provide discovery

about its overseas sales, which do not involve products purchased

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from ST-Inc. The ITC staff has confirmed Tessera’s view, stating

that at least some of the products already identified were sold

abroad and not first purchased from ST-Inc. ST-NV is attempting to

invoke the forum selection clause to avoid providing relevant

discovery in the ITC proceedings about its unlicensed products. It

cannot do this because the ITC discovery dispute is not related to

licensing issues. Contrary to the ST Defendants’ characterization

of the ITC proceedings, ST-NV is not being forced to litigate the

merits of its license defense in that forum. Accordingly, there is

no basis for the Court to issue a preliminary injunction.

The ST Defendants also argue for the first time in their reply

brief that any remedy the ITC issues would be directed at products,

not parties, and thus would exclude the importation even of

licensed products that ST-NV purchases from ST-Inc. However, the

ST Defendants do not provide any support for this argument. 

Moreover, Tessera has pointed to a representative ITC remedial

order that excludes only unlicensed products. In that order, the

ITC found that “the appropriate form of relief is a limited

exclusion order prohibiting the unlicensed entry of infringing

chips and chipsets.” See Limited Exclusion Order, Matter of

Certain Baseband Processor Chips and Chipsets, Int’l Trade Comm.

Inv. No. 337-TA-543, at 1 (June 7, 2007). Tessera has represented

that it does not seek to ban the importation of licensed products. 

If Tessera does seek to ban licensed products, the ST Defendants

may move again for relief. Thus, the ST Defendants’ concerns are

misplaced. 

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CONCLUSION

For the foregoing reasons, the Court DENIES the ST Defendants’

motion for a preliminary injunction (Docket No. 595).

IT IS SO ORDERED.

1/28/08

Dated: ________________________ 

CLAUDIA WILKEN

United States District Judge

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