Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-04691/USCOURTS-cand-5_05-cv-04691-10/pdf.json

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

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 The original order, which was filed on August 26, 2008, directed that the action be 1

remanded to the Alameda Superior Court. The Court has received a letter from counsel for

STMicroelectronics clarifying that venue has been transferred from the Alameda Superior Court

to the Santa Clara Superior Court. Accordingly, the order is amended to direct that the action be

remanded to the Santa Clara Superior Court.

 This disposition is not designated for publication in the official reports. 2

Case No. C 05-01281 JF

ORDER GRANTING PLAINTIFF’S MOTION TO REMAND

(JFEX3)

**E-Filed 8/27/08**

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

STMICROELECTRONICS, INC., 

 Plaintiff,

 v.

ELIYAHOU HARARI, et al.,

 Defendants.

Case Number C 05-4691 JF

AMENDED ORDER GRANTING 1 2

PLAINTIFF’S MOTION TO REMAND

[re: docket no. 101]

Plaintiff STMicroelectronics, Inc. (“ST”) moves to remand the above entitled action to

the Santa Clara Superior Court. For the reasons set forth below, the motion will be granted.

Case 5:05-cv-04691-JF Document 114 Filed 08/27/08 Page 1 of 9
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 Under this agreement, Harari represented that: 3

1. All previous work done by me for [WSI] in any way to the

conception, design, development or support of products for [WSI]

is the property of [WSI].

2. I will maintain in confidence and will not disclose or use,

either during or after the term of my employment without the prior

written consent of [WSI], any proprietary or confidential

information or know-how belonging to [WSI] (“Proprietary

Information”). . . . Upon termination of my employment or at the

request of my supervisor before termination, I will deliver to [WSI]

all written and tangible material in my possession incorporating the

Proprietary Information or otherwise relating to [WSI’s] business. 

3. I will promptly disclose and describe to [WSI] (I) all

inventions, improvements, discoveries and technical developments

(“Inventions”), whether or not patentable, made or conceived by

me, either alone or with others, during the term of my employment,

provided that [WSI] shall receive such information in confidence. 

I hereby assign and agree to assign to [WSI] my entire right, title

and interest in and to such Inventions which relate in any way to or

are useful in [WSI’s] business as presently conducted or as

conducted at any future time during my employment, and agree to

cooperate with [WSI] . . . both during and after my employment in

the procurement and maintenance . . . and/or other protection of

[WSI’s] rights in such inventions. I will keep and maintain

adequate and current written records of all such Inventions, which

shall and remain the property of [WSI].

4. (a) There is no other contract or duty on my part now in

existence to assign Inventions. 

(b) I will not disclose or induce [WSI] to use any

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Case No. C 05-01281 JF

ORDER GRANTING PLAINTIFF’S MOTION TO REMAND

(JFEX3)

I. BACKGROUND

On August 1, 1983, Eliyahou Harari (“Harari”) co-founded a company called Wafer Scale

Integration (“WSI”), which designed and sold programmable system devices, including memory

systems and nonvolatile memories. Complaint (“Compl.”) at ¶¶ 6, 9. On February 22, 1984,

Harari signed an Employee Agreement Regarding Confidentiality and Inventions (“Inventions

Agreement”). Id., Ex. A. Until his resignation, Harari held numerous positions within WSI, 3

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confidential information or material that I am now or shall become

aware of which belongs to anyone other than [WSI]. 

(c) During my employment by [WSI], I will not engage in

any employment, consulting or other activity in any business

without [WSI’s] express written agreement. 

Compl., Ex. A, ¶¶ 1-4. 

 On April 26, 1988, Harari filed Patent Application 07/185,699 with the United States 4

Patent and Trademark Office (“PTO”), which resulted in U.S. Patent 4,933,739, entitled “Trench

resistor structures for compact semiconductor memory and logic devices.” On June 8, 1988,

Harari filed Patent Application 07/204,175 with the PTO, which resulted in twenty-two issued

patents. On July 8, 1988, Harari filed Patent Application 07/216,873 with the PTO, which

resulted in three issued patents. On March 15, 1989, Harari filed Patent Application 07/323,779

with the PTO, which resulted in U.S. Patent 5,070,032, entitled “Method of making dense flash

EEPROM semiconductor memory structures.” These patents relate to WSI’s flash memory

products. Id. at ¶¶ 24-27

 On April 13, 1989, Harari filed two additional patent applications with the PTO. Patent 5

Application 07/337,566 resulted in the issuance of twenty-one patents and Patent Application

07/337,579 resulted in the issuance of two patents. These patents relate to flash memory devices

under development at WSI. Id. at ¶ 30. 

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Case No. C 05-01281 JF

ORDER GRANTING PLAINTIFF’S MOTION TO REMAND

(JFEX3)

including employee, chief executive officer, chief technology officer (“CTO”), director, chairman

of the board, and consultant. Id. at ¶¶ 9, 11, 20. 

During his tenure as CTO, Harari began developing flash memory products. Id. at ¶¶ 6,

17. Harari later resigned from his employment, but he continued as a director and a consultant

under a Consulting and Directorship Agreement (“Consulting Agreement”) signed February 29,

1988. Id. at ¶¶ 20-21; see id., Ex. C. In the Consulting Agreement, Harari reaffirmed the

obligations that the Inventions Agreement previously imposed. Id. at ¶ 21; see id., Ex. C. 

While serving as a director and consultant to WSI, Harari filed four patent applications. 

Id. at ¶¶ 24-27. On March 21, 1989, Harari resigned from WSI’s board of directors and 4

requested that his resignation be back-dated to March 15, 1989. Id. at ¶ 28. Before the board of

directors accepted his resignation, Harari filed two more patent applications. Id. at ¶ 29. In or 5

about June, 1988, Harari founded SanDisk Corp. (“SanDisk”), which began developing flash

memory products. Id. at ¶¶ 40, 42. Harari later assigned his six pending patent applications to

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In the Matter of Certain NAND Flash Memory Circuits and Products Containing Same,

6

Investigation No. 337-TA-526, was filed before the United States International Trade

Commission (“the ITC action”). SanDisk Corp. v. STMicroelectronics, Inc., C04-04379 JF, was

filed in this Court, Compl. ¶ 46, and was stayed pending the outcome of the ITC action. 

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Case No. C 05-01281 JF

ORDER GRANTING PLAINTIFF’S MOTION TO REMAND

(JFEX3)

SanDisk. Id. at ¶ 45. On May 17, 1989, WSI’s board of directors accepted Harari’s letter of

resignation and agreed to back-date the resignation. Id. at ¶ 31. The board did not know about

Harari’s six patent applications. Id. ST alleges that Harari disclosed only one patent application

to WSI during his tenure. Id. at ¶ 35. 

In July, 2000, ST merged with WSI, and ST succeeded to all of WSI’s rights and

property. Id. at ¶ 7. On October 15, 2004, SanDisk filed two complaints alleging that ST was

infringing U.S. Patent No. 5,172,338. Id. at ¶ 46. On October 14, 2005, ST filed a complaint in 6

the Alameda Superior Court against Harari, SanDisk, and Does 1-20 (collectively “Defendants”). 

The complaint asserted claims for (1) breach of fiduciary duty; (2) breach of written contract; (3)

fraud; (4) conversion; (5) inducing breach of contract; (6) unjust enrichment; and (7) unfair

competition under California Business & Professions Code § 17200. The complaint alleged that

“[a]ll of the causes of action . . . arise under state law. None of the causes of action . . . are

created by federal law, including the patent laws of the United States.” Id. at ¶ 54.

Defendants first removed the action to this Court in 2005. Initially, the Court denied

ST’s motion to remand because Defendants’ opposition papers indicated that the Inventions

Agreement only covered patents to which Harari had made an “inventive contribution.” To

determine Harari’s inventive contribution, it would have been necessary for the Court to decide

whether Harari invented each patented item, which in turn would have raised a substantial patentlaw question. The Court later reconsidered its ruling and granted the motion to remand when it

was brought to its attention that the Inventions Agreement required Harari to assign all patents

for which he applied by himself or with others, a fact that removed all federal issues from the

case. 

In April 2008, while this case was pending in the state court, ST asserted in an answer to

a written interrogatory that the Inventions Agreement contained a clause that automatically

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Case No. C 05-01281 JF

ORDER GRANTING PLAINTIFF’S MOTION TO REMAND

(JFEX3)

assigned Harari’s patents to WSI, rather than providing for a future assignment of all patents to

WSI. Relying on a recent Federal Circuit decision, DDB Techs. L.L.P. v. MLB Advanced Media,

L.P., 517 F.3d 1284 (Fed. Cir. 2008), which held that whether a contract provides for automatic

assignment is a federal question because it is related to standing to sue for patents, Defendants

again removed the action to this Court. Defendants claim that in light of DDB Techs., ST has

introduced a substantial federal question through its answer to the interrogatory. 

ST filed the instant motion in response to this second removal. ST claims that the

Defendants’ removal is procedurally flawed because it is untimely and barred as res judicata, and

also that removal is improper on the merits. According to ST, removal is untimely because

Defendants received documents that made them aware that the Inventions Agreement contained

an automatic-assignment clause more than thirty days before they filed their notice of removal. 

ST asserts that removal is improper on the merits because the Federal Circuit case of Beghin-Say

Int’l Inc. v. Rasmussen, 733 F.2d 1568 (Fed. Cir. 1984), and not DDB Techs., is controlling. 

Beghin-Say holds that disputes over patent assignment agreements are governed by state contract

law, and that accordingly federal courts have no jurisdiction over them. Beghin-Say, 733 F.2d at

1571. ST also argues that the putative federal question asserted by Defendants relates to the

applicable statute of limitations and not the substance of ST’s claims. 

II. LEGAL STANDARD 

Section 1441(b) permits removal of “[a]ny civil action of which the district courts have

original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of

the United States . . . .” 28 U.S.C. § 1441(b). Under 28 U.S.C. § 1447(c), “[i]f at any time

before final judgment it appears that the district court lacks subject matter jurisdiction, the case

shall be remanded. An order remanding the case may require payment of just costs and any

actual expenses, including attorney fees, incurred as a result of the removal. . . . The State court

may thereupon proceed with such case.” 28 U.S.C. § 1447(c). However, “[t]he district courts

shall have original jurisdiction of any civil action arising under any Act of Congress relating to

patents. . . . Such jurisdiction shall be exclusive of the courts of the states in patent . . . cases.”

28 U.S.C. § 1338(a) (emphasis added).

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Case No. C 05-01281 JF

ORDER GRANTING PLAINTIFF’S MOTION TO REMAND

(JFEX3)

Defendants have the burden of establishing that removal was proper under 28 U.S.C. 

§ 1441. See, e.g., Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996). “Because of the

Congressional purpose to restrict the jurisdiction of the federal courts on removal, the statute is

strictly construed and federal jurisdiction must be rejected if there is any doubt as to the right of

removal in the first instance.” Id. (citations and internal quotations omitted). The law of the

Federal Circuit controls this case because jurisdiction is based upon 28 U.S.C. § 1338. Panduit

Corp. v. All States Plastic Mfg. Co., 744 F.2d 1564, 1573 (Fed Cir. 1984), overruled on other

grounds by Richardson-Merrell, Inc. v. Koller, 472 U.S. 424 (1985). 

III. DISCUSSION

Under 28 U.S.C. § 1446(b), a defendant must remove an action within thirty days of

receiving a paper indicating that the action is removable. ST asserts that the removal at issue

here is untimely for two reasons. First, it claims that the only paper relevant for removal under

the well-pleaded-complaint rule is the complaint itself. Defendants obviously have had ST’s

complaint for well over thirty days. Second, it argues that more than thirty days before removal

Defendants received a paper in a related action before the International Trade Commission

(“ITC”) indicating that ST was asserting the existence of an automatic-assignment clause.

The Court agrees with Defendants that the complaint is not the only relevant paper. 

When subsequent events in litigation reveal that the plaintiff’s claim depends on a substantial

federal issue, the documents revealing those facts also may introduce a federal issue into the

claim. See Eyak Native Village, 25 F.3d 773, 779 (9th Cir. 1994); cf. S.W.S. Erectors, Inc. v.

Infax, Inc., 72 F.3d 489 (5th Cir. 1996) (documents introduced after the complaint indicating

amount-in-controversy allow for removal); Johnson v. America Online, Inc., 280 F. Supp. 2d

1018 (N.D. Cal. 2003) (documents other than the complaint established amount-in-controversy

for removal). As noted above, the Federal Circuit did not decide DDB Techs., which provides

the legal basis for the present removal, until February 2008.

However, the Court agrees with ST that Defendants were on notice that this case might be

removable by virtue of ST’s brief in the related ITC case, which Defendants received more than

thirty days before they sought the present removal. Although Defendants received the ITC brief

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Case No. C 05-01281 JF

ORDER GRANTING PLAINTIFF’S MOTION TO REMAND

(JFEX3)

on March 3, 2008, they did not seek removal until May 6, 2008. The ITC brief asserts plainly

that the contractual provision at issue provides for automatic assignment of the Harari patents. 

See Johnson Decl., Ex. O, at 3-4. As ST points out, SanDisk is a party to the ITC action, and it is

represented in that action by the same counsel that represents Defendants in this case. 

The thirty-day removal clock begins ticking once the party is put on notice that the suit is

removable. The statute’s text and the case law do not require that the paper be filed in the same

case or even come from the same party. See Durham v. Lockheed Martin Corp., 445 F.3d 1247,

1251 (9th Cir. 2006) (once defendants receive a paper that gives enough information to remove,

defendants are charged with notice of removability); cf. Babasa v. LensCrafters, Inc., 498 F.3d

972 (9th Cir. 2007) (letter prepared for mediation in the case sufficient to put its recipient on

notice about removability). Although the paper that Defendants received was connected with a

different suit in which ST is not a party, that suit is directly related to this one and the arguments

in the paper directly concerned the same contractual provision. Once Defendants received it,

they had sufficient information to remove the instant case, because they were aware that the

Inventions Agreement might include an automatic-assignment clause and thus that a federal issue

might be part of the claim. 

Even if removal were timely, it is unclear that ST’s claims depend on a substantial issue

of federal law. Defendants claim that ST introduced a federal question by its interrogatory

response, which asserted for the first time in this case that the Inventions Agreement contained

an automatic-assignment clause. See Johnson Decl. Ex. I, at 25. However, the fact that a

plaintiff’s theory of the case depends on federal law is insufficient to warrant removal; the claim

itself must depend on federal law, such that the plaintiff cannot make out the elements of the

claim without determination of the federal issue. Christianson v. Colt Indus. Operating Corp.,

486 U.S. 800, 811 (1988). A defense or an anticipation of a defense cannot create federal

jurisdiction, even if the defense is the only issue in dispute in the case. Id.

Defendants argue that ST’s claims depend affirmatively on the non-existence of an

automatic-assignment clause. According to Defendants, Harari never could have assigned the

patents to SanDisk if there were an automatic-assignment clause, because Harari would not have

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Case No. C 05-01281 JF

ORDER GRANTING PLAINTIFF’S MOTION TO REMAND

(JFEX3)

owned the patents. Under this view, any assignment to SanDisk would be invalid, and

consequently ST’s conversion, breach of contract, and unjust enrichment claims all would fail.

This admittedly is a close question, but the Court concludes that Defendants have not

shown beyond doubt that ST’s claims depend on federal law. Whether there was an automaticassignment clause or an agreement to assign the patents in the future, the essence of ST’s claims

is that Harari wrongfully assigned the patents at issue to SanDisk. In either case, it is possible for

ST to recover on its claims without Defendants interposing a defense based on federal law. 

Because all doubts must be resolved in favor of remanding to state court, see, e.g., Duncan, 76

F.3d at 1485; Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992), and because Defendants’

removal was procedurally flawed, the case will be remanded. 

ST requests that the Court award it attorneys’ fees and costs. It argues that Defendants

removed for a second time on the same basis that this Court rejected two years ago. In

appropriate circumstances, where the defendant “lacked an objectively reasonable basis for

seeking removal,” the Court may award fees and costs. Martin v. Franklin Capital Corp., 546

U.S. 132, 141 (2005). As discussed above, the Court finds this to be a close case, and

Defendants’ basis for seeking removal was not objectively unreasonable. Accordingly, the

request for fees and costs will be denied.

IV. ORDER

Good cause therefore appearing, IT IS HEREBY ORDERED that ST’s motion to remand

is GRANTED. The Clerk shall transmit the file to the Santa Clara Superior Court. 

DATED: August 27, 2008

 

JEREMY FOGEL

United States District Court

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Case No. C 05-01281 JF

ORDER GRANTING PLAINTIFF’S MOTION TO REMAND

(JFEX3)

This Order has been served upon the following persons:

Russell L. Johnson, Matthew Laurence McCarthy 

Sidley Austin LLP 

555 California Street, Suite 2000 

San Francisco, CA 94104 

Email: rljohnson@sidley.com 

Email: MLMcCarthy@sidley.com 

James C. Yoon, Michael A. Ladra, Steven S. Baik, Monica Mucchetti

Wilson Sonsini Goodrich & Rosati 

650 Page Mill Rd 

Palo Alto, CA 94304-1050 

Email: jyoon@wsgr.com 

Email: mladra@wsgr.com 

Email: sbaik@wsgr.com 

Email: mmucchetti@wsgr.com

Case 5:05-cv-04691-JF Document 114 Filed 08/27/08 Page 9 of 9