Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_07-cv-02363/USCOURTS-cand-4_07-cv-02363-2/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 28:2201 Declaratory Judgement

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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

MONOLITHIC POWER SYSTEMS, INC., a

Delaware corporation,

Plaintiff,

v.

O2 MICRO INTERNATIONAL LIMITED, a

Cayman Islands corporation,

Defendant.

 /

No. C 07-2363 CW

ORDER DENYING O2

MICRO'S MOTION TO

DISMISS 

Defendant O2 Micro International Limited moves to dismiss the

complaint of Plaintiff Monolithic Power Systems, Inc. (MPS),

arguing that the Court lacks jurisdiction. MPS opposes the motion,

contending that the Court has jurisdiction under the Declaratory

Judgment Act. The matter was decided on the papers. Having

considered all of the parties' papers, the Court denies O2 Micro's

motion. 

BACKGROUND

In this case, MPS seeks a declaration of its rights with

respect to O2 Micro's U.S. Patent No. 6,804,129 (the '129 patent):

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1

 The '129 patent has the same specification as O2 Micro's U.S.

Patent Nos. 6,259,615 (the '615 patent) and 6,396,722 (the '722

patent), both of which the U.S. Patent and Trademark Office

issued before issuing the '129 patent and both of which have been

involved in cases before the Court.

2

it requests that the Court find that it does not infringe any valid

claim of the '129 patent and that the '129 patent is unenforceable

due to inequitable conduct. This case is but the latest in a

series of actions before this Court between MPS and its competitor

O2 Micro. For over seven years, MPS and O2 Micro have accused each

other of infringing each other's patents or of attempting to

enforce patents that are invalid and unenforceable. Thus, the

Court is familiar with the parties, the technology and the patent

at issue.1

In 2004, after MPS filed a declaratory judgment action

concerning O2 Micro's '722 patent in this Court, O2 Micro filed

suit against MPS in the Eastern District of Texas, alleging that

MPS infringed the '129 patent. O2 Micro filed the Texas action the

day that the '129 patent issued. The Eastern District of Texas

court transferred that action to this Court and the Court

consolidated the Texas action with the related '722 patent

litigation. 

On October 11, 2006, after consolidating the two actions

involving O2 Micro's patents, the Court dismissed with prejudice

O2 Micro's '129 patent infringement claim against MPS, pursuant to

a stipulated dismissal signed by the parties. The stipulation,

signed by the Court, provides:

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2 In support of this belief, MPS points to O2 Micro's brief in a

case pending in the Eastern District of Texas. The defendant in

that case argued that, in light of the stipulated dismissal, it

could not infringe the '129 patent. In response, O2 Micro

replied: "The Stipulated Dismissal does not confer on MPS the

right to practice the '129 patent or to sublicense its customers

to do so. Rather, it merely contains a promise by O2 Micro not

to sue MPS for infringing the '129 patent with certain products 

. . . ." Brigham Dec., Ex. 6, O2 Micro's Sur-Reply to Hon Hai's

Motion for Summary Judgment. In addition, MPS notes that O2

Micro has asserted the '129 patent against four other companies,

3

O2 Micro covenants not to assert or reassert its ‘129 patent

against named defendants for infringement by MPS full bridge

inverter controllers (and products incorporating said

controllers) made, used, imported, offered for sale or sold

previously or currently having product designations MP1010,

MP1010B, MP1011, MP1012, MP1013, MP1015, MP 1016, MP1018,

MP1022, MP1023, MP1024, MP1025, MP1026, MP1027, MP1029,

MP1030, MP1031, MP1032, MP1035 and MP1038, evaluation boards

EV0001, EV0002, EV0003, EV0004, EV0014, EV0017, EV0019,

EV0027, EV0031 and EV0037 incorporating certain of those

inverter controllers, Asustek products incorporating the

MP1010B, MP1011, MP1015 and/or MP1037 inverter controller

chips, and Compal’s products incorporating the MP101, MP1010B,

MP1015, MP1016, and/or MP1037 inverter chips.

The stipulation covers all of the MPS products that O2 Micro had

accused of infringing the '129 patent. 

After the Court signed this stipulation, however, MPS designed

and marketed new power inverter controller products, not previously

accused of infringing the '129 patent. These new products include

a half-bridge inverter controller marketed as the MP1008 and a new

full-bridge inverter controller marketed under the VION brand. MPS

does not believe that these products infringe. But, it believes

that, because O2 Micro takes a narrow view of the stipulated

dismissal, the covenant not to sue does not cover these new

products and, therefore, it is laboring under the shadow of

threatened infringement litigation.2

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at least some of whom are MPS's customers, in the Eastern

District of Texas.

4

O2 Micro contends that it has not accused MPS's new products

of infringing the '129 patent and that, therefore, MPS has no basis

for filing this declaratory judgment action and the Court does not

have subject matter jurisdiction over it. In the alternative, O2

Micro requests that the Court exercise its discretion to decline

jurisdiction over MPS's declaratory judgment action.

LEGAL STANDARD

 Subject matter jurisdiction is a threshold issue which goes to

the power of the court to hear the case. Federal subject matter

jurisdiction must exist at the time the action is commenced. 

Morongo Band of Mission Indians v. Cal. State Bd. of Equalization,

858 F.2d 1376, 1380 (9th Cir. 1988). A federal court is presumed

to lack subject matter jurisdiction until the contrary

affirmatively appears. Stock West, Inc. v. Confederated Tribes,

873 F.2d 1221, 1225 (9th Cir. 1989). 

Dismissal is appropriate under Rule 12(b)(1) when the district

court lacks subject matter jurisdiction over the claim. Fed. R.

Civ. P. 12(b)(1). A Rule 12(b)(1) motion may either attack the

sufficiency of the pleadings to establish federal jurisdiction, or

allege an actual lack of jurisdiction which exists despite the

formal sufficiency of the complaint. Thornhill Publ'g Co. v. Gen.

Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th Cir. 1979); Roberts v.

Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987). 

DISCUSSION

The Declaratory Judgment Act, in accordance with Article III

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of the Constitution, requires an "actual controversy" before the

Court "may declare the rights and other legal relations of any

interested party seeking such declaration." 28 U.S.C. § 2201(a). 

Until recently, the Federal Circuit required that, in order to

prove an actual controversy, a plaintiff had to establish that the

defendant's conduct created an objectively "reasonable

apprehension" that the defendant would initiate suit if the

plaintiff continued the allegedly infringing activity. See Teva

Pharms. USA, Inc. v. Novartis Pharms. Corp., 482 F.3d 1330, 1334-36

(Fed. Cir. 2007). 

In MedImmune, Inc. v. Genentech, Inc., 127 S. Ct. 764 (2007),

however, the Supreme Court noted that the Federal Circuit's

"reasonable apprehension of imminent suit" test conflicted with

several cases in which the Supreme Court had found that a

declaratory judgment plaintiff had a justiciable controversy. 127

S. Ct. at 774 n. 11. The Supreme Court instructed that, although

there is no bright-line rule for distinguishing cases that satisfy

the actual controversy requirement from those that do not, all that

is required is:

that the dispute be definite and concrete, touching the legal

relations of parties having adverse legal interests; and that

it be real and substantial and admit of specific relief

through a decree of a conclusive character, as distinguished

from an opinion advising what the law would be upon a

hypothetical state of facts. . . . Basically, the question in

each case is whether the facts alleged, under all the

circumstances, show that there is a substantial controversy,

between parties having adverse legal interests, of sufficient

immediacy and reality to warrant the issuance of a declaratory

judgment.

Id. at 771-72 (internal citations and quotations omitted).

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Following MedImmune, the Federal Circuit recognized that the

Supreme Court did not approve of its reasonable-apprehension-ofsuit test. SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d

1372, 1380 (Fed. Cir. 2007); Teva Pharms, 482 F.3d at 1340. The

Federal Circuit discarded its "reasonable apprehension" requirement

and adopted MedImmune's "all circumstances" test. Teva Pharms, 482

F.3d at 1339 ("we follow MedImmune's teaching to look at 'all the

circumstances' . . . to determine whether Teva has a justiciable

Article III controversy"). See also SanDisk Corp., 480 F.3d at

1381 ("Article III jurisdiction may be met where the patentee takes

a position that puts the declaratory judgment plaintiff in the

position of either pursuing arguably illegal behavior or abandoning

that which he claims a right to do."). As one district court has

noted, this change in the law with respect to the now defunct

"reasonable apprehension" requirement, has "in effect lower[ed] the

bar for a plaintiff to bring a declaratory judgment action in a

patent dispute." Frederick Goldman, Inc. v. West, 2007 WL 1989291,

at *3 (S.D.N.Y.).

O2 Micro contends that, even under the Federal Circuit's

revised standard, there is no actual controversy and, therefore, no

jurisdiction over MPS's declaratory judgment claims. It emphasizes

that it has taken not yet taken any express position with respect

to whether MPS's new products infringe the '129 patent. Whether O2

Micro has publicly accused MPS's new products, which are not

covered by the Stipulated Dismissal, is not dispositive to

determining whether an actual controversy exists. 

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3

A jury recently found that, although MPS infringed claim 12

of O2 Micro's '722 patent, the '722 patent was invalid.

7

In Bridgelux, Inc. v. Cree, Inc., 2007 WL 2022024, at *9 (N.D.

Cal.), the court did not, as O2 Micro suggests, find that there was

no actual controversy merely because the defendants had never

accused the plaintiff of infringing their patents. Rather, in

concluding that, under all of the circumstances, there was no

actual controversy, the court pointed out that the plaintiff

provided no evidence that the defendants "had ever sued anyone" on

their patents. Further, in SanDisk Corp., the Federal Circuit

declined to hold that the patentee's statement that it had

"absolutely no plan whatsoever to sue" the plaintiff eliminated the

justiciable controversy created by patentee's actions; rather, the

court concluded that the patentee "engaged in a course of conduct

that shows a preparedness and willingness to enforce its patent

rights" despite that statement. 480 F.3d at 1383. 

O2 Micro has sued numerous parties, including MPS, accusing

them of infringing the '129 patent. O2 Micro has accused MPS of

infringing its '722 and '615 patents as well.3 Such suits indicate

"an assertion of rights and a willingness to pursue litigation"

regarding the patent-in-suit. Cingular Wireless v. Freedom

Wireless, Inc., 2007 WL 1876377, at *3 (D. Ariz.). The Federal

Circuit explains that "related litigation involving the same

technology and the same parties is relevant in determining whether

a justiciable declaratory judgment controversy exists on other

related patents." Teva Pharms., 482 F.3d at 1344-45. And, in

Cingular Wireless, the court concluded that "the assertion of

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rights, evidenced through a prior lawsuit between the same parties

regarding the same technology, coupled with Defendant's knowledge

of the relationship between Plaintiffs, and solidified through the

express press release statement indicating an intent to sue alleged

patent infringers, presents enough evidence to establish the case

or controversy required for declaratory judgment jurisdiction." 

2007 WL 1876377 at *9. Similarly, the Court concludes that MPS

presents evidence establishing that, under all the circumstances,

"there is a substantial controversy, between parties having adverse

legal interests, of sufficient immediacy and reality to warrant the

issuance of a declaratory judgment." See MedImmune, 127 S. Ct. at

772. Therefore, the Court has jurisdiction over MPS's declaratory

judgment claims.

O2 Micro points out that the Declaratory Judgment Act provides

that a court "may" provide declaratory relief, not that it must. 

28 U.S.C. § 2201(a). It requests that the Court exercise its

discretion to decline jurisdiction over MPS's claims. There are

boundaries to the Court's discretion. SanDisk Corp., 480 F.3d at

1383. The Federal Circuit instructs, "'When there is an actual

controversy and a declaratory judgment would settle the legal

relations in dispute and afford relief from uncertainty or

insecurity, in the usual circumstance the declaratory judgment is

not subject to dismissal.'" Id. (quoting Genentech v. Eli Lilly &

Co., 998 F.2d 931, 937 (Fed. Cir. 1993)). Further, there must be a

"sound basis for refusing to adjudicate an actual controversy." 

Id. No good reason exists for the Court to decline jurisdiction

over MPS's declaratory judgment claims. This is the proper Court

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to resolve this dispute. As noted above, the parties have been

battling before this Court for over seven years and the Court is

familiar with the parties, the '129 patent and the technology at

issue. 

CONCLUSION

For the foregoing reasons, O2 Micro's motion to dismiss

(Docket No. 11) is DENIED. The hearing scheduled for August 16,

2007 is VACATED.

IT IS SO ORDERED.

Dated: 8/13/07 

CLAUDIA WILKEN

United States District Judge

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