Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-06613/USCOURTS-cand-4_06-cv-06613-1/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 28:1338 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

FUJITSU LIMITED, a Japanese

corporation, and FUJITSU

MICROELECTRONICS AMERICA, INC., a

California corporation,

Plaintiffs,

v.

NANYA TECHNOLOGY CORP., a Taiwanese

corporation, and NANYA TECHNOLOGY

CORP., U.S.A., a California

corporation,

Defendants. /

No. C 06-6613 CW

ORDER DENYING

DEFENDANTS'

MOTION TO

DISMISS, TRANSFER

OR STAY CASE, AND

GRANTING

DEFENDANT NANYA'S

MOTION TO QUASH 

Defendants Nanya Technology Corp. (Nanya) and Nanya Technology

Corp. U.S.A. (Nanya USA) (collectively, Defendants) move to

dismiss, transfer or stay this action, arguing that there is a

first-filed action in the District of Guam with identical parties

and issues. In a separate motion, Defendant Nanya moves to dismiss

the complaint against it based on insufficient service of process

or, alternatively, to quash service. Plaintiffs Fujitsu Limited

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For the Northern District of California

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and Fujitsu Microelectronics America, Inc. (FMA) (collectively,

Plaintiffs) oppose the motions. The matters were heard on February

2, 2007. Having considered all of the parties' papers and oral

argument, the Court denies Defendants' motion to dismiss, transfer

or stay the action and grants Defendant Nanya's motion to quash the

service that has ineffectively been made on it.

BACKGROUND

In 1999, Fujitsu Limited accused Nanya of unauthorized use of

its memory chips technology. Over the next years, Fujitsu Limited

and Nanya met numerous times in Japan to discuss the terms of

licenses to patents covering Fujitsu Limited's technology. They

were unable to come to any agreement. According to Nanya, Fujitsu

Limited was pressuring it to pay worldwide licensing fees on

Fujitsu Limited's Japanese and United States patents, many of which

were expired, and all of which were allegedly invalid or

unenforceable.

Although negotiations continued, in August, 2005, Fujitsu

Limited filed suit against Nanya in Tokyo District Court in Japan, 

alleging that Nanya infringed one of Fujitsu Limited's Japanese

patents. That litigation continues, and Fujitsu Limited and Nanya

have engaged in court-supervised negotiations to settle that

dispute. Nanya alleges that Fujitsu Limited continues to demand

that it take a worldwide license. 

On August 10, 2006, prior to a negotiation session, Nanya

requested a list of all the patents Fujitsu Limited believed Nanya

infringed. The next day, Fujitsu Limited provided Nanya with a 

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1

According to the complaint, FMA is a wholly-owned subsidiary

of Fujitsu Limited. Its principal place of business is in

Sunnyvale, California.

2

According to the complaint, Nanya USA is a wholly-owned

subsidiary of Nanya. Its principal place of business is in San

Jose, California.

3

list of its Korean, Japanese and U.S. patents allegedly infringed

by Nanya.

On September 13, 2006, Nanya sued Fujitsu Limited and FMA1 in

Guam. The complaint alleged antitrust violations based on Fujitsu

Limited's misuse of its patent portfolio and infringement of

Nanya's patents on related technology. In addition, Nanya sought

declaratory relief that certain Fujitsu Limited patents asserted in

the negotiations are invalid, unenforceable and not infringed by

Nanya. Nanya states that it chose the District of Guam for several

reasons, including that Guam is the closest district court to

Fujitsu Limited, located in Japan, and Nanya, located in Taiwan. 

The next day, during a settlement conference, Nanya's counsel

delivered a copy of the Guam complaint to Fujitsu Limited. FMA and

Fujitsu Limited were later served with the complaint.

On October 24, 2006, the day before Fujitsu Limited and Nanya

were to meet again in Japan to discuss settlement, Fujitsu Limited

and FMA filed this action against Nanya and Nanya USA, which was

not a party in the Guam action.2

 This action also involves a

patent not originally named in the Guam action. 

Plaintiffs first attempted to serve Nanya by giving the

documents to an unnamed receptionist at Nanya's office in Taiwan. 

According to the Updated Return of Service, the server first asked

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the receptionist to see the manager of the legal department. After

the receptionist stated that the manager was not available, she

purportedly consented to receive the documents and agreed to

forward the documents to Nanya's legal department. 

In November, Nanya filed an amended complaint in the Guam

action to include Nanya USA as a party. In addition, the amended

complaint added new causes of action, including a declaratory

judgment claim on Fujitsu Limited's patent at issue in this action,

not previously named in the Guam action. Fujitsu Limited and FMA

have moved to dismiss the action against them in Guam or,

alternatively, to transfer the action to this district. The

hearing on that motion is scheduled for March 22, 2007. 

After Nanya filed its motion to dismiss based on invalid

service, Plaintiffs again attempted to serve Nanya: a court clerk

dispatched the summons and complaint to Nanya by international

express mail. According to a United States Postal Service Track &

Confirm print-out, on December 5, 2006, the package containing the

summons and complaint was "delivered abroad." In addition, on

December 18, 2006, Plaintiffs initiated service of process on Nanya

by Letter Rogatory by filing with the Court an Application for

Issuance of Letter of Request (Letter Rogatory), which the Court

signed.

DISCUSSION

Defendants move to dismiss, transfer to Guam or stay this case

because of the first-filed action there with the same parties and

issues. Nanya separately moves to dismiss the complaint against

it, arguing it was not served properly. Plaintiffs respond that

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this case should not be dismissed, that Nanya was properly served

and that Nanya USA failed to answer the complaint and, thus, is in

default. 

I. Motion to Dismiss, Transfer or Stay Case

The well-established first-to-file rule provides that “where

substantially identical actions are proceeding in different courts,

the court of the later-filed action should defer to the court of

the jurisdiction of the first-filed action by either dismissing,

staying, or transferring the later-filed suit.” SAES Getters

S.p.A. v. Aeronex, Inc., 219 F. Supp. 2d 1081, 1089 (S.D. Cal.

2002). The Federal Circuit explains that, in cases involving

patents, it applies "the general rule whereby the forum of the

first-filed case is favored, unless considerations of judicial and

litigant economy, and the just and effective disposition of

disputes, require otherwise." Genentech, Inc. v. Eli Lilly & Co.,

998 F.2d 931, 937 (Fed. Cir. 1993). Although the forum of the

first-filed action is favored, exceptions "are not rare, and are

made when justice or expediency requires." Id. Nonetheless, there

must be "sound reason that would make it unjust or inefficient" for

the district court to exercise its discretion to decline to apply

the first-to-file rule. Id. ("the trial court's discretion tempers

the preference for the first-filed suit, when such preference

should yield to the forum in which all interests are best served"). 

Arguments that the first-to-file rule should not be applied,

however, should be addressed to the court in the first-filed

action. Alltrade Inc. v. Uniweld Products, Inc., 946 F. 2d 622, 

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628 (9th Cir. 1991); Pacesetter Sys., Inc. v. Medtronic, Inc., 678

F.2d 93, 96 (9th Cir. 1982). 

Here, it is undisputed that Nanya filed the Guam action six

weeks before Plaintiffs filed this action. Plaintiffs, however,

contend that this action was the first-filed action because Nanya's

amended complaint, which added Nanya USA as a party and declaratory

judgment claims against U.S. Patent No. 6,104,486 (the '486 patent)

and which was filed on November 17, 2006, after this case was

filed, does not relate back to Nanya's original complaint, filed in

September. That is incorrect. Federal Rule of Civil Procedure 15

explains that an amended complaint "relates back" for purposes of

the filing date, if "the claims or defense asserted in the amended

pleading arose out of the conduct, transaction, or occurrence set

forth or attempted to be set forth in the original pleading." 

Citing an out-dated out-of-circuit case, Plaintiffs argue that an

alleged infringement of one patent is not the same conduct,

transaction or occurrence as the alleged infringement of another

patent. See Illinois Tool Works, Inc. v. Foster Grant Co., 395 F.

Supp. 234, 250-51 (N.D. Ill. 1974). Nanya's original complaint,

however, includes antitrust claims based on Fujitsu Limited and

FMA's alleged attempt to extort a worldwide license on patents that

have expired or are invalid. The amended complaint adds claims 

arising out of Fujitsu Limited and FMA's alleged antitrust

misconduct.

A complaint adding an additional party relates back if the

relief sought "is sufficiently similar to constitute an identity of

interest." Bowles v. Reade, 198 F.3d 752, 762 (9th Cir. 1999). 

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For the Northern District of California

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Here, Nanya USA seeks the same relief for anti-trust violations as

Nanya did in the original complaint. Therefore, the amended Guam

complaint relates back to the original claim, and the California

action is not first-filed, as Plaintiffs assert. 

Further, both actions involve the same parties and

substantially similar issues. As Defendants note, all of the legal

issues that Plaintiffs ask this Court to adjudicate are currently

pending in the District Court of Guam. It makes no difference that

the Guam complaint contains additional causes of action and

additional patents. See Inherent.com v. Martindale-Hubbell, 420

F. Supp. 2d 1093, 1097 (N.D. Cal. 2006) (noting that two actions

need not be identical, only "substantially similar"). Thus, unless

there is an exception, the first-to-file rule applies and

Defendants’ suit in the Guam district court should be given

priority. 

As stated above, however, the court in the first-filed action

should decide whether there is an exception to the first-to-file

rule. Therefore, this Court will not address Plaintiffs' arguments

that the complaint filed in Guam was anticipatory and evidenced

forum shopping and that a balancing of convenience weighs in favor

of litigation in Northern California. The Court defers to the Guam

district court to decide the appropriate forum and whether the

first-filed rule is applicable. See Pacesetter, 678 F.2d at 96

(noting that normally the respective convenience of the two courts

should be addressed to the court in the first-filed action). 

Likewise, the Court will not address whether the District of Guam

is a proper venue or whether the Guam district court has personal

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jurisdiction over Fujitsu Limited and FMA. As Defendants note,

that is a determination to be made by the Guam district court, not

this Court.

As noted above, Fujitsu Limited and FMA have already moved to

transfer the Guam action to this Court. The Court denies without

prejudice Defendants' motion to dismiss, transfer or stay, pending

the Guam district court's ruling on Fujitsu Limited and FMA’s

motion to transfer. The parties are instructed to notify the Court

promptly upon entry of an order in the pending action in the Guam

district court. If the Guam district court grants Fujitsu Limited

and FMA’s motion to transfer the first-filed action, the actions

will be related and consolidated in this Court. If, however, the

Guam district court denies Fujitsu Limited and FMA’s motion to

transfer, the Court will transfer this case to Guam.

II. Motion to Dismiss for Insufficient Service of Process or, 

Alternatively, to Quash Service of Process

Federal Rules of Civil Procedure 4(f) and 4(h) govern service

on a foreign corporate defendant, such as Nanya. Rule 4(h)(2)

provides that service upon a corporation outside the United States

may be made "in any manner prescribed for individuals by

subdivision (f)." Rule 4(f), in turn, provides the permissible

methods of service upon individuals in foreign countries:

(1) by any internationally agreed means reasonably calculated

to give notice, such as those means authorized by the

Hague Convention on the Service Abroad of Judicial and

Extrajudicial Documents; or

 (2) if there is no internationally agreed means of service or

the applicable international agreement allows other means

of service, provided that service is reasonably

calculated to give notice:

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 (A) in the manner prescribed by the law of the foreign

country for service in that country in an action in

any of its courts of general jurisdiction; or

 (B) as directed by the foreign authority in response to

a letter rogatory or letter of request; or

 (C) unless prohibited by the law of the foreign country,

by

 (i) delivery to the individual personally of a copy

of the summons and the complaint; or

 (ii) any form of mail requiring a signed receipt, to 

 be addressed and dispatched by the clerk of the 

 court to the party to be served; or

 (3) by other means not prohibited by international agreement

as may be directed by the court.

Because Taiwan is not a party to the Hague Convention,

subsection one is not of use. See, e.g., Taylor Made Golf Co.,

Inc. v. Carsten Sports, Ltd., 175 F.R.D. 658, 661 (S.D. Cal. 1997). 

Nor is subsection three; the Court has not directed other means. 

Therefore, the question before the Court is whether Plaintiffs

served Nanya effectively pursuant to subsection two. 

When a defendant challenges the validity of service, the

plaintiff bears the burden of establishing it. Brockmeyer v. May,

383 F.3d 798, 801 (9th Cir. 2004). If the plaintiff is unable to

demonstrate effective service, the Court has broad discretion

either to dismiss or to retain the action. When retaining the

action, the Court quashes the service that has ineffectively been

made on the defendant, while providing the plaintiff the

opportunity to serve the defendant effectively. SVC-Napa, L.P. v.

Strategy Resort Financing, Inc., 2006 WL 2374718, *1 (N.D. Cal.).

Plaintiffs argue that the hand-delivery of the summons and

complaint to the receptionist constitutes proper service under

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Rule 4(f)(2). They correctly note that courts have found a

plaintiff's direct service by hand to be proper on Taiwanese

defendants. See, e.g., Taylor Made Golf, 175 F.R.D. at 661;

Cosmetech Int'l, LLC v. Der Kwei Enter. and Co., Ltd., 943 F. Supp.

311, 316 (S.D.N.Y. 1996). But, as Nanya points out, in the cases

Plaintiffs cite the summons and complaint were hand-delivered to a

manager of a corporation or to an individual party, which was not

done here. 

Plaintiffs argue that they also properly served Nanya by

international mail, pursuant to Rule 4(f)(2)(C)(ii). Taiwan law

does not prohibit service of process by mail. Power Integrations,

Inc. v. System Gen. Corp., 2004 WL 2806168, *3 (N.D. Cal.). In

Power Integrations, the court denied the defendant's motion to

quash for insufficiency of service. There, the clerk of the court

dispatched a package, containing the summons and complaint, that

was provided by the plaintiff. Similarly, here, the clerk of the

court confirmed that a customs form, return receipt postcard and

postage were affixed to a package containing the summons and

complaint, and that the package, provided by Plaintiffs, was

deposited with the United States Postal Service, Global Express

Mail. In Power Integrations, the defendant signed for its package.

Nanya, however, did not sign for the package. The only proof

Plaintiffs proffer is that the package reached Taiwan and was

"delivered abroad." Plaintiffs do not provide the return receipt

postcard that was attached to the package, nor do they provide

"other evidence," as required by Rule 4(l), to show that Nanya 

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received the summons and complaint. Therefore, the Court concludes

that Plaintiffs have not met their burden of establishing the

validity of service.

The Court, however, will not dismiss the complaint against

Nanya for insufficient service of process; rather, it quashes the

service that Plaintiffs ineffectively made on Nanya. As noted

above, the Court signed Plaintiffs' Application for Issuance of

Letter of Request (Letter Rogatory). The letter rogatory process

is already in progress. Nanya does not dispute that service by

letter rogatory is proper and, thus, when that process is

completed, Plaintiffs will have served Nanya properly.

III. Default

Plaintiffs contend that Nanya USA is in default because it has

not filed an answer. According to Plaintiffs, Nanya USA's answer

was due November 21, 2006 and that deadline was not tolled by

either of the pending motions. The motion to dismiss for

insufficient service of process was brought solely by Nanya. And,

although the motion to dismiss, transfer or stay states that it is

brought under Rule 12(b)(2) and (5), it is actually brought under

the first-to-file rule. 

As Nanya USA points out, however, while motions under the

first-to-file rule are generally considered to be outside of the

ambit of the Rule 12(b) motions that suffice as responsive

pleadings, they are often considered by courts prior to the filing

of an answer. Sorensen v. Head USA, Inc., 2006 U.S. Dist. LEXIS

79519, 2-3 (S.D. Cal. 2006). See also 5C Charles Alan Wright & 

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Arthur R. Miller, Federal Practice and Procedure § 1360 (3d ed.

2006) ("A motion to stay also is not within the ambit of the

defenses enumerated in Rule 12(b). Nonetheless, relying on their

inherent power, federal courts often consider these motions in an

effort to maximize the effective utilization of judicial resources

and to minimize the possibility of conflicts between different

courts."). While Nanya USA failed to file a responsive pleading,

its motion to stay was a timely and proper filing. Nanya USA is

not ignoring this lawsuit and, contrary to Plaintiffs' assertion,

an entry of default is not appropriate. Nanya USA shall file its

answer within twenty days of the date of this order.

CONCLUSION

For the foregoing reasons, the Court DENIES without prejudice

Defendants' Motion to Dismiss, Transfer or Stay Case (Docket No.

18), pending the Guam district court's ruling on Fujitsu Limited

and FMA’s motion to transfer. As discussed above, if the Guam

district court grants Fujitsu Limited and FMA’s motion to transfer

the first-filed action, the actions will be related and

consolidated. If, however, the Guam district court denies Fujitsu

Limited and FMA’s motion to transfer, the Court will transfer this

case to Guam. The Court GRANTS IN PART Defendant Nanya's Motion to

Dismiss for Insufficient Service of Process or, Alternatively, to

Quash Service of Process (Docket No. 14) and DENIES it IN PART. 

The Court will not dismiss this action against Nanya; however, the

Court quashes the service that has ineffectively been made on

Nanya. Plaintiffs are granted an extension of time to serve Nanya

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3Plaintiffs' Motion for Leave to File Sur-reply (Docket

No. 69) is DENIED.

13

until the letter rogatory process is complete.3

IT IS SO ORDERED.

Dated: 2/9/07 

CLAUDIA WILKEN

United States District Judge

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