Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_19-cv-00001/USCOURTS-casd-3_19-cv-00001-1/pdf.json

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

---

1

3:19-cv-001-CAB-(BLM)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

U-BLOX AG, et al.,

Plaintiffs,

v.

INTERDIGITAL, INC., et al.,

Defendants.

Case No.: 3:19-cv-001-CAB-(BLM)

ORDER REGARDING MOTION TO 

DISMISS [Doc. No. 50]

Before the Court is a motion to dismiss filed by defendants InterDigital Inc., 

InterDigital Communications, Inc., InterDigital Technology Corp., InterDigital Patent 

Holdings, Inc., InterDigital Holdings, Inc., and IPR Licensing, Inc., (collectively 

“InterDigital “). [Doc. No. 50.] Plaintiffs u-blox AG, u-blox San Diego, Inc., and u-blox 

America, Inc. (“u-blox”) opposed the motion. [Doc. No. 53.] InterDigital filed a reply. 

[Doc. No. 59.] For the reasons set forth below, the motion is GRANTED IN PART AND 

DENIED IN PART.

I. Background

InterDigital has a portfolio of patents in 2G, 3G and 4G wireless technology. There 

is no dispute that the InterDigital patents are standard essential patents (“SEP”) and subject 

to fair, reasonable and non-discriminatory (“FRAND”) licensing. From 2011 to 2016, ublox had a license to practice the patents in InterDigital’s portfolio under FRAND terms. 

Two original design manufacturers (“ODMs”) made devices for u-blox under a “have 

Case 3:19-cv-00001-CAB-BLM Document 63 Filed 04/11/19 PageID.<pageID> Page 1 of 8
2

3:19-cv-001-CAB-(BLM)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

made” provision of u-blox’s license with InterDigital. These ODMs also have license 

agreements with InterDigital for the same SEP portfolio. While u-blox paid the license 

fee, the ODMs were covered and owed no royalties.

At the end of 2016, the license between u-blox and InterDigital expired. InterDigital 

notified the ODMs that they would be responsible for royalty payments in accordance with 

the terms of their licenses with InterDigital, as u-blox was unlicensed. U-blox then 

negotiated with InterDigital for a new license, which was entered in August, 2017, 

retroactive to January, 2017, and with an expiration date at the end of September, 2018.

As the 2017 license was reaching expiration, u-blox sought to renew on new terms, 

as it asserted the current terms were not FRAND licensing terms. The parties extended the 

2017 license agreement to December 31, 2018 to continue negotiations, but they had not 

reached terms by that date and the license again expired. 

On January 1, 2019, u-blox filed a complaint against InterDigital for: (1) breach of 

contract; (2) promissory estoppel; (3) declaratory judgment (seeking the Court declare 

FRAND terms for the license to InterDigital’s SEP portfolio); (4) antitrust monopolization 

in violation of Section 2 of the Sherman Act; (5) declaratory judgment of non-infringement 

of U.S. Patent No. 8,432,876; and (6) declaratory judgment of non-infringement of U.S. 

Patent No. 8,953,548. [Doc No. 1.] On February 25, 2019, InterDigital filed a motion to 

dismiss the second, third and fourth causes of action of the complaint. [Doc. No. 50.]

II. Legal Standard

Federal Rule of Civil Procedure 12(b)(6) permits a party to raise by motion the 

defense that the complaint “fail[s] to state a claim upon which relief can be granted”—

generally referred to as a motion to dismiss. The Court evaluates whether a complaint 

states a cognizable legal theory and sufficient facts in light of Federal Rule of Civil 

Procedure 8(a)(2), which requires a “short and plain statement of the claim showing that 

the pleader is entitled to relief.” Although Rule 8 “does not require ‘detailed factual 

allegations,’ . . . it [does] demand . . . more than an unadorned, the defendant-unlawfullyCase 3:19-cv-00001-CAB-BLM Document 63 Filed 04/11/19 PageID.<pageID> Page 2 of 8
3

3:19-cv-001-CAB-(BLM)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. 

Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

“To survive a motion to dismiss, a complaint must contain sufficient factual 

matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id.

(quoting Twombly, 550 U.S. at 570); see also Fed. R. Civ. P. 12(b)(6). A claim is facially 

plausible when the collective facts pled “allow . . . the court to draw the reasonable 

inference that the defendant is liable for the misconduct alleged.” Id. There must be 

“more than a sheer possibility that a defendant has acted unlawfully.” Id. Facts “‘merely 

consistent with’ a defendant’s liability” fall short of a plausible entitlement to relief. Id. 

(quoting Twombly, 550 U.S. at 557). The Court need not accept as true “legal 

conclusions” contained in the complaint, id., or other “allegations that are merely 

conclusory, unwarranted deductions of fact, or unreasonable inferences,” Daniels-Hall v. 

Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010).

A complaint must “state with particularity the circumstances constituting fraud.” 

Fed.R.Civ.P. 9(b). Allegations of fraud must be stated with “specificity including an 

account of the ‘time, place, and specific content of the false representations as well as the 

identities of the parties to the misrepresentations. ” Swartz v. KPMG LLP, 476 F.3d 756, 

764 (9th Cir.2007) (quoting Edwards v. Marin Park, Inc., 356 F.3d 1058, 1066 (9th 

Cir.2004)). To survive a motion to dismiss, “ ‘allegations of fraud must be specific 

enough to give defendants notice of the particular misconduct which is alleged to 

constitute the fraud charged so that they can defend against the charge and not just deny 

that they have done anything wrong.’ ” Id. (quoting Bly–Magee v. California, 236 F.3d 

1014, 1019 (9th Cir.2001)).

III. Discussion

A. Second Cause of Action, Promissory Estoppel

InterDigital argues that u-blox’s promissory estoppel claim should be dismissed 

because it is based on a “promise” that is found in the written ETSI licensing declaration 

that is governed by French law; and French law does not recognize promissory estoppel as 

Case 3:19-cv-00001-CAB-BLM Document 63 Filed 04/11/19 PageID.<pageID> Page 3 of 8
4

3:19-cv-001-CAB-(BLM)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

a valid cause of action. [Doc. No. 50-1 at 12.] U-blox does not specifically oppose this 

argument. 

Here, u-blox alleges that Interdigital “made a clear and definite promise to all 

potential implementers of the 2G, 3G, and 4G standards through its commitments to ETSI 

and 3GPP that it had granted, or would grant, licenses to any essential patents on fair, 

reasonable, and non-discriminatory terms and conditions.” [Doc. No. 1, Complaint, ¶143.] 

Thus, the claim is based on a “promise” that is found in the written ETSI licensing 

declaration that is governed by French law. [Doc. No. 1-18 at 2.] Because InterDigital 

made its alleged promises in connection with its FRAND commitments to ETSI, that 

agreement’s choice-of-law clause governs u-blox’s promissory estoppel claim. See Apple 

Inc. v. Samsung Electronics Co., Ltd., No. 11-CV-1846, 2012 WL 1672493, at *15 (N.D. 

Cal. May 14, 2012)(citations omitted). Under French law, promissory estoppel is not a 

valid cause of action. [Doc. No. 50-5 (Decl. of Prof. Yves-Marie Laithier) at 3-7, ¶¶ 8-15.] 

See also Apple Inc. v. Samsung, 2012 WL 1672493 at 15 (N.D. Cal. May 14, 

2012)(promissory estoppel claim based on defendant’s alleged promises in connection with 

its FRAND commitments to ETSI dismissed because French law does not recognize a 

substantive claim for promissory estoppel). Accordingly, the motion to dismiss the second 

cause of action for promissory estoppel is GRANTED WITHOUT LEAVE TO 

AMEND.

B. Third Cause of Action, Declaratory Judgment

InterDigital argues that u-blox’s Third Cause of Action seeking a declaratory 

judgment of FRAND license terms should be dismissed for lack of subject matter 

jurisdiction pursuant to Rule 12(b)(1) because u-blox filed this lawsuit prematurely, 

without making genuine, good faith efforts to negotiate a new license. [Doc. No. 50-1 at 

20-27.] U-blox argues there is subject matter jurisdiction because the controversy 

regarding whether InterDigital has offered ublox a license to InterDigital’s SEPS on 

FRAND terms and conditions is disputed and ripe for adjudication. [Doc. No. 54 at 16-

29.]

Case 3:19-cv-00001-CAB-BLM Document 63 Filed 04/11/19 PageID.<pageID> Page 4 of 8
5

3:19-cv-001-CAB-(BLM)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Under 28 U.S.C. § 2201(a), a federal court may issue a declaratory judgment in a 

“case of actual controversy.” The statutory phrase “case or controversy” refers to the types 

of “cases” or “controversies” that are justiciable under Article III of the U.S. Constitution. 

Aetna Life Ins. V. Haworth, 300 U.S. 227, 239-240 (1937); Medimmune, INc. v. Genentech, 

549 U.S. 118, 125-26 (2007). The burden is on the party claiming declaratory judgment 

jurisdiction to establish that an Article III case or controversy existed at the time the claim 

for declaratory relief was filed. Arris Group, Inc. v. British Telecommunications PLC, 639 

F.3d 1368, 1373-74 (Fed. Cir. 2011).

A declaratory relief case must be “ripe” for judicial determination. A substantial 

controversy must exist between parties having adverse legal interests, “of sufficient 

immediacy and reality to warrant the issuance of a declaratory judgment.” City of Colton 

v. American Promotional Events, Inc.-West, 614 F.3d 998, 1004-05 (9th Cir. 2010)(internal 

quotes omitted); Golden v. California Emergency Physicians Med. Group, 782 F.3d 1083, 

1087 (ripeness concerns may be implicated in contract dispute where breach or injury yet 

to occur).

Here, the Complaint alleges that there is a dispute between the parties concerning 

whether InterDigital has offered u-blox a license to InterDigital’s SEPS on FRAND terms 

and conditions. See e.g. Complaint ¶¶10, 97, 98. While InterDigital has introduced 

evidence outside of the pleadings that u-blox did not negotiate in good faith (Doc. No. 33-

2, Declaration of Julia Mattis), u-blox has introduced evidence (Doc. No. 2-3, Declaration 

of Kent Baker) and has alleged in the Complaint (Complaint ¶¶ 111 −

112, 118, 126, 130) that it did. Thus, at a minimum, there is a triable issue as to whether 

u-blox negotiated in good faith. Moreover, in assessing the breach of contract claim, 

regardless of whether the parties negotiated in good faith, the Court is required to assess

whether FRAND rates have been offered. See TCL Commc’ns Tech. Holdings, Ltd. V. 

Telefonaktiebolaget LM Ericsson, No. CV 15-2370 JVS (DFMS, 2018 WL 4488286, at *2, 

55 (C.D. Cal. Sept. 14, 2018). Here, there is a dispute over whether FRAND rates have 

been offered and, therefore, the declaratory relief case is ripe for judicial determination. 

Case 3:19-cv-00001-CAB-BLM Document 63 Filed 04/11/19 PageID.<pageID> Page 5 of 8
6

3:19-cv-001-CAB-(BLM)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Accordingly, the motion to dismiss the third cause of action for declaratory judgment is 

DENIED.

C. Fourth Cause of Action, Antitrust Monopolization

InterDigital argues the Fourth Cause of Action fails to state a claim under Section 2 

of the Sherman Act because u-blox does not plausibly describe harm to competition or 

anticompetitive conduct, and does not adequately allege fraud against a standards-setting 

organization, intent to deceive or injury-in-fact. [Doc. No. 50-1 at 12-20.] U-blox argues 

that it does state such a claim. [Doc. No. 54 at 29-34.]

To state a claim for monopolization, the plaintiff must plead the possession of 

monopoly power in a relevant market and anticompetitive conduct on the part of the 

possessor. Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 306-08 (3d Cir. 2007). 

Monopoly power may be shown through “direct evidence of supracompetitive prices and 

restricted output” or it may be “inferred from the structure and composition of the relevant 

market.” Id. at 307. “To support an inference of monopoly power, a plaintiff typically must 

plead and prove that a firm has a dominant share in a relevant market, and that significant 

entry barriers protect that market.” Id. (quotation marks omitted). “Anticompetitive 

conduct may take a variety of forms, but it is generally defined as conduct to obtain or 

maintain monopoly power as a result of competition on some basis other than the merits.” 

Id. In Broadcom, the Third Circuit stated that, when patented technology is incorporated 

into a standard, “measures such as FRAND commitments become important safeguards 

against monopoly power.” Id. at 314. Therefore, in the context of “a consensus-oriented 

private standard-setting environment,” “a patent holder's intentionally false promise to 

license essential proprietary technology on FRAND terms, ... coupled with [a standardsetting organization's] reliance on that promise when including the technology in a 

standard, and ... the patent holder's subsequent breach of that promise, is actionable 

anticompetitive conduct.” Id.

Case 3:19-cv-00001-CAB-BLM Document 63 Filed 04/11/19 PageID.<pageID> Page 6 of 8
7

3:19-cv-001-CAB-(BLM)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Here, u-blox states a claim for monopolization pursuant to Broadcom, 501 F.3d at 

306-08.

1

 U-blox alleges that InterDigital obtained monopoly power due to its false promise 

to ETSI to license its SEPs on FRAND terms, which “locked in” its technology as part of 

the standards. Complaint ¶¶159-160. After doing so, InterDigital exploited its undue 

market power by refusing to license its SEPs on FRAND terms. Id. ¶ 161. InterDigital 

injured competition by excluding alternative technologies which could have been included 

in the standard and then forcing implementers of the standards to face drastically higher 

costs for access to the cellular technologies necessary to manufacture standard compliant 

products. Id. ¶¶161, 171-172. This states a claim for antitrust monopolization under 

Broadcom. See Microsoft Mobile Inc. v. Interdigital, Inc., No. CV 15-723-RGA, 2016 WL 

1464545, at *2-3 (D. Del. Apr. 13, 2016 (denying motion to dismiss Section 2 claim based 

on InterDigital’s alleged false FRAND commitments). Finally, u-blox also sufficiently 

alleges fraud (Complaint ¶¶ 65-66, Exs. 1-33), intent (Complaint ¶¶9, 17, 98 and 161) and 

injury (Complaint ¶¶19, 174, 176). Accordingly, the motion to dismiss the fourth cause of 

action for antitrust monopolization claim is DENIED.

IV. Conclusion.

For the reasons set forth above, the motion to dismiss is GRANTED IN PART 

AND DENIED IN PART AS FOLLOWS:

1. The motion to dismiss the second cause of action for promissory estoppel is 

GRANTED WITHOUT LEAVE TO AMEND;

2. the motion to dismiss the third cause of action for declaratory judgment is 

DENIED;

 

1

InterDigital argues that Broadcom is an out-of-circuit case that is not binding on 

this Court and has been subsequently criticized. [Doc. No. 50-1 at 14.] However, 

Broadcom has been followed in the Ninth Circuit, see e.g. Federal Trade Commission v. 

Qualcomm, Inc., No. 17-cv-220-LHK, 2017 WL 2774406, at *21-23, and remains 

sufficiently persuasive for purposes of a motion to dismiss.

Case 3:19-cv-00001-CAB-BLM Document 63 Filed 04/11/19 PageID.<pageID> Page 7 of 8
8

3:19-cv-001-CAB-(BLM)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3. the motion to dismiss the fourth cause of action for antitrust monopolization 

claim is DENIED.

InterDigital shall answer the Complaint, as amended by this order, by April 26, 

2019.

IT IS SO ORDERED.

Dated: April 11, 2019

Case 3:19-cv-00001-CAB-BLM Document 63 Filed 04/11/19 PageID.<pageID> Page 8 of 8