Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_04-cv-02000/USCOURTS-cand-4_04-cv-02000-3/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 28:1331 Fed. Question

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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

California corporation,

Plaintiff,

v.

O2 MICRO INTERNATIONAL LIMITED, a

Cayman Islands corporation,

Defendant.

 /

O2 MICRO INTERNATIONAL LIMITED, a

Cayman Islands corporation,

Counterclaimant,

v.

MONOLITHIC POWER SYSTEMS, INC., a

California corporation; and

ADVANCED SEMICONDUCTOR

MANUFACTURING LIMITED aka ADVANCED

SEMICONDUCTOR MANUFACTURING

CORPORATION OF SHANGHAI, a Chinese

joint venture,

Counterdefendants.

 /

No. C 04-2000 CW

ORDER DENYING

COUNTERDEFENDANT

ASMC'S MOTION TO

DISMISS FOR LACK

OF PERSONAL

JURISDICTION

Case 4:04-cv-02000-CW Document 99 Filed 12/21/05 Page 1 of 11
United States District Court

For the Northern District of California

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Counterdefendant Advanced Semiconductor Manufacturing

Corporation Limited (ASMC) moves for dismissal of the action

against it for lack of personal jurisdiction. Defendant and

Counterclaimant O2 Micro International Limited (O2 Micro) opposes

the motion. The matter was heard on December 2, 2005. Having

considered the parties' papers, the evidence cited therein and oral

argument, the Court denies Counterdefendant ASMC's motion to

dismiss and finds that ASMC has the necessary minimum contacts for

this Court to have specific jurisdiction over it.

BACKGROUND

As ASMC notes, this is one of many patent infringement suits

between O2 Micro and Monolithic Power Systems, Inc. (MPS). ASMC

manufactures semiconductor wafers for MPS and thus has been drawn

into the fray between O2 Micro and MPS. On May 20, 2004, MPS filed

this suit, seeking a declaration that it did not infringe O2

Micro's U.S. Patent 6,396,722. O2 Micro counterclaimed against MPS

and ASMC. 

ASMC and MPS entered into a written agreement in August, 2001.

Zhen Sun Dec. ¶ 15. MPS is headquartered in Los Gatos, California. 

ASMC is located in Shanghai, China. Id. at ¶ 4. The agreement

between the two companies provides that it shall be governed by the

laws of the People's Republic of China; it requires that disputes

arising from or relating to the agreement must be submitted to the

China International Economic and Trade Arbitration Commission in

Beijing, whose award is final and binding. Id. at ¶ 15. Under the

agreement, ASMC receives MPS purchase orders in Shanghai. Id. at

¶ 17. ASMC then manufactures the wafers, according to plans and

Case 4:04-cv-02000-CW Document 99 Filed 12/21/05 Page 2 of 11
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For the Northern District of California

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specifications provided by MPS, in its Shanghai facilities. Id. at

¶¶ 16, 17. After the wafers are produced, ASMC places them in a

package for delivery to MPS; as soon as the wafers leave the

Shanghai facility, the wafers become MPS' property. Id. at ¶ 18. 

According to a document O2 Micro received during limited

jurisdictional discovery, in 2004, ASMC sold wafers worth a large

sum of money to MPS. Bijal Vakil Dec., Ex. G (Under Seal) at

ASM0000469.

ASMC has no offices, facilities, subsidiary or parent company,

employees or bank accounts in California; it is not licensed to do

business in California. Zhen Sun Dec. at ¶¶ 6, 7, 10, 12, 13. It

has no agent for service of process or real property in California. 

Id. at ¶¶ 8, 9. Nor does it pay taxes in California. Id. at ¶ 11. 

ASMC states that it does not direct its advertising to

California residents, id. at ¶ 19, even though it uses Californiabased Semisource, Inc. to introduce it to potential customers,

wherever the customers may be based. Supp. Zhen Sun Dec. ¶ 7. 

Semisource is not authorized to enter into any agreements on behalf

of ASMC and does not deliver or distribute any products on behalf

of ASMC. Id. 

ASMC is a member of the Chinese American Semiconductor

Professional Association (CASPA), the largest Chinese American

semiconductor professional organization worldwide. CASPA's

headquarters are in the Silicon Valley, California; CASPA has nine

local chapters worldwide, including a chapter in Shanghai. ASMC's

president, Tony Liu, was president of CASPA over a decade ago. 

Supp. Zhen Sun Dec. ¶ 2. As a benefit of membership, CASPA

Case 4:04-cv-02000-CW Document 99 Filed 12/21/05 Page 3 of 11
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provided ASMC with an ad in CASPA's April 2005 newsletter. Id. at

¶ 3; see Bijal Vakil Dec., Ex. N at ASMC000476.

In addition to its relationship with MPS, ASMC has other

clients who are based in or have offices in California. Currently,

ASMC has nine clients with offices in California. Supp. Zhen Sun

Dec. ¶ 5. ASMC notes that none of the agreements with these

customers was negotiated or executed in California; instead, they

were negotiated and executed by email, facsimile and/or mail. Most

of the wafers ASMC manufacturers for customers with California

offices are not shipped directly to California: from January to

September, 2005, approximately three-fourths of all wafers

manufactured for customers with California offices were shipped to

destinations outside the United States. Id. Since 2001, ASMC has

sold goods worth a great deal of money to companies with offices in

California. Bijal Vakil Dec., Ex. G (Under Seal) at ASM0000469.

LEGAL STANDARD

Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, a

defendant may move to dismiss for lack of personal jurisdiction. 

In a suit for patent infringement, Federal Circuit law is applied

to determine whether the district court has personal jurisdiction

over an accused out-of-State corporation. Beverly Hills Fan Co. v.

Royal Sovereign Corp., 21 F.3d 1558, 1564-65 (Fed. Cir. 1994).

The district court must construe all pleadings and affidavits

in the light most favorable to the plaintiff. Trintec Indus., Inc.

v. Pedre Promotional Prods., Inc., 395 F.3d 1275, 1282-83 (Fed.

Cir. 2005). Where a district court concludes that the existing

record is insufficient to support personal jurisdiction and the

Case 4:04-cv-02000-CW Document 99 Filed 12/21/05 Page 4 of 11
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plaintiff demonstrates that it can supplement its jurisdictional

allegations through discovery, the plaintiff is entitled to

jurisdictional discovery. Id. at 1283.

DISCUSSION

"Determining whether personal jurisdiction exists over an

out-of-state defendant involves two inquiries: whether a forum

state's long-arm statute permits service of process, and whether

the assertion of personal jurisdiction would violate due process." 

Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1359 (Fed. Cir. 2001). 

California's jurisdictional statute is co-extensive with federal

due process requirements; therefore, jurisdictional inquiries under

State law and federal due process standards merge into one

analysis. Id. at 1360.

The exercise of jurisdiction over non-resident defendants

violates the protections created by the due process clause unless

those defendants have "minimum contacts" with the forum State so

that the exercise of jurisdiction "does not offend traditional

notions of fair play and substantial justice." Int'l Shoe Co. v.

Washington, 326 U.S. 310, 316 (1945). "[I]t is essential in each

case that there be some act by which the defendant purposefully

avails itself of the privilege of conducting activities within the

forum State, thus invoking the benefits and protections of its

law." Hanson v. Denckla, 357 U.S. 235, 253 (1958). 

Personal jurisdiction may be either general or specific. 

General jurisdiction exists when a defendant maintains "continuous

and systematic" contacts with the forum State even if the cause of

action has no relation to those contacts. Helicopteros Nacionales

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de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984). Specific

jurisdiction exists when the cause of action arises out of or

relates to a defendant's contacts with the forum State even if

those contacts are isolated and sporadic. Trintec Indus., 395 F.3d

at 1279. 

The Federal Circuit has identified three factors to consider

in determining whether the exercise of specific personal

jurisdiction over an out-of-State defendant comports with due

process: 1) whether the defendant "purposefully directed" its

activities at residents of the forum; 2) whether the claim "arises

out of or relates to" the defendant's activities in the forum; and

3) whether the exercise of jurisdiction is reasonable and fair. 

Deprenyl Animal Health, Inc. v. Univ. of Toronto Innovations

Found., 297 F.3d 1343, 1351 (Fed. Cir. 2002). 

With respect to the first factor, the Supreme Court has

allowed the exercise of specific jurisdiction over a defendant

whose only contact with the forum State is the "purposeful

direction" of a foreign act having an effect in the forum State. 

Calder v. Jones, 465 U.S. 783, 789 (1984). In World-Wide

Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980), the Court

explained that "the foreseeability that is critical to due process

analysis . . . is that the defendant's conduct and connection with

the forum State are such that he should reasonably anticipate being

haled into court there." Id. at 297. Jurisdiction is proper where

the contacts proximately result from actions by the defendant

itself that create a substantial connection with the forum State. 

McGee v. Int'l Life Ins. Co., 355 U.S. 220, 223 (1957). 

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There is a presumption of reasonableness upon a showing that

the defendant purposefully directed its activities at forum

residents; the defendant bears the burden of overcoming the

presumption by presenting a compelling case that specific

jurisdiction would be unreasonable. Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 472-73 (1985). Several factors should be

considered in determining whether jurisdiction is reasonable:

(1) the burden on the defendant, (2) the interests of the forum

State, (3) the plaintiff's interest in obtaining relief, (4) the

interstate judicial system's interest in obtaining the most

efficient resolution of controversies, and (5) the shared interest

of the several States in furthering fundamental substantive social

policies. Elecs. for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1352

(Fed. Cir. 2003); Asahi Metal Indus. Co. v. Super. Ct. of Cal., 480

U.S. 102, 113 (1987).

O2 Micro argues that ASMC has sufficient contacts with

California to be subject to both general and specific jurisdiction

here. ASMC disagrees, maintaining that it has not purposefully

availed itself of the privilege of conducting activities within

California, thus invoking any benefits and protections of

California law, and therefore neither general jurisdiction nor

specific jurisdiction is proper.

As noted above, specific jurisdiction exists when the cause of

action arises out of or relates to a defendant's contacts with the

forum State. The first factor used to determine whether specific

personal jurisdiction is proper is whether ASMC "purposefully

directed" its activities at residents of California. O2 Micro

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contends that, based upon its relationship and contacts with MPS in

California, ASMC has. As O2 Micro notes, MPS and ASMC are engaged

in an ongoing business arrangement, resulting in millions of

dollars in purchases in one year and requiring frequent

communication. Although MPS takes legal ownership of the wafers in

China, ASMC mails the wafers to MPS in California pursuant to

ASMC's agreement with MPS.

ASMC argues that all of its services on behalf of MPS are

performed in Shanghai, and thus it does not purposefully avail

itself of the laws and benefits of California. It notes that MPS

pays for "the amount of any freight, insurances, handling and other

duties levied on the shipment of wafers to MPS." Bijal Vakil Dec.,

Ex. F at ¶ 6.5. As ASMC correctly notes, contacts resulting from

the unilateral activity of a third person are not attributable to a

defendant; minimum contacts must arise from the actions of the

defendant itself. See, e.g., Red Wing Shoe, 148 F.3d at 1361. But

ASMC's attempt to portray itself as a passive participant in its

business relationship with MPS is not persuasive. 

Nor is its argument persuasive that it does not purposefully

direct its activities at California residents because its agreement

with MPS is governed by Chinese law, not California law. ASMC is

correct that the Supreme Court has stated that its cases do not

"suggest that a choice-of-law provision should be ignored in

considering whether a defendant has purposefully invoked the

benefits and protections of a State's law for jurisdictional

purposes." Burger King, 471 U.S. at 482. It is one factor for a

court to consider; but a choice-of-law provision is not

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determinative. It is also not determinative that ASMC does not

manufacture the wafers specifically for the California market and

that it does not know where MPS ships, sells or distributes its

final products that contain wafers made by ASMC. 

The Court finds that ASMC has purposefully directed its

activities at MPS, a valuable customer and a California resident;

ASMC's conduct and connection with California, the home of its

customer MPS and other customers, are such that it should

reasonably anticipate being haled into court in California in a

dispute where MPS is a party. See World-Wide Volkswagen Corp., 444

U.S. at 297. 

Second, the Court must consider whether O2 Micro’s

infringement claim arises out of or relates to ASMC's activities in

California. ASMC again notes that it manufactures all of its

wafers in Shanghai and that MPS takes ownership of the wafers in

Shanghai; it emphasizes that it does not make, use, offer to sell

or sell any patented invention in California. Thus, ASMC argues

that O2 Micro cannot show that its patent infringement action

arises out of or is related to ASMC's activities in California. 

This argument is unpersuasive; as O2 Micro correctly notes, but for

ASMC's sale and shipment of the wafers to MPS in California, there

would be no cause of action against ASMC. The Court finds that

enough to satisfy the second factor. 

The third and final factor that the Court must consider is

whether exercising jurisdiction over ASMC is reasonable and fair. 

ASMC asserts that the burden on it to defend this suit in

California, in a foreign land with a foreign legal system, is

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extraordinary; it again reminds the Court that it is a company

based in China that has no offices, facilities, properties or

employees in California. It requests that the Court heed the

Supreme Court's admonishment to exercise "great care and reserve"

in extending notions of personal jurisdiction into the

international field. See Asahi, 480 U.S. at 115. However, the

Supreme Court has explained that "progress in communications and

transportation has made the defense of a lawsuit in a foreign

tribunal less burdensome." World-Wide Volkswagen, 444 U.S. at 294

(citation omitted). The burden on ASMC is not compelling or

extraordinary. See Beverly Hills Fan, 21 F.3d at 1569 (finding

that burden on company headquartered in People's Republic of China

litigating in Virginia was not sufficiently compelling to outweigh

the plaintiff's and forum State's interests).

ASMC notes that O2 Micro is a Cayman Islands company. And,

although the forum State's legitimate interest is "considerably

diminished" when the plaintiff is not a resident of the forum

State, Asahi, 480 U.S. at 114, the Court finds that California has

an interest in this litigation. MPS is a California resident, and,

as O2 Micro notes, California has an interest in protecting

intellectual property to encourage technological development while

promoting a stable economy for its businesses and residents.

In sum, the Court finds that exercising jurisdiction is

reasonable and fair; this is not one of the rare cases in which due

process requires that jurisdiction be denied because it would be

unreasonable for the forum State to assert jurisdiction. Beverly

Hills Fan, 21 F.3d at 1568. Because the Court finds that specific

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jurisdiction is appropriate, it does not address general

jurisdiction.

CONCLUSION

For the foregoing reasons, Counterdefendant ASMC's motion to 

dismiss for personal jurisdiction (Docket No. 66) is DENIED.

IT IS SO ORDERED.

Dated: 12/21/05

 

CLAUDIA WILKEN

United States District Judge

Case 4:04-cv-02000-CW Document 99 Filed 12/21/05 Page 11 of 11