Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_04-cv-02000/USCOURTS-cand-4_04-cv-02000-85/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

Delaware corporation,

Plaintiff,

v.

O2 MICRO INTERNATIONAL LIMITED, a

Cayman Island corporation,

Defendant. /

AND RELATED COUNTERCLAIMS.

 /

O2 MICRO INTERNATIONAL LIMITED, a

Cayman Island corporation,

Plaintiff,

v.

MONOLITHIC POWER SYSTEMS, INC., a

Delaware corporation, et al., 

Defendants. /

AND RELATED COUNTERCLAIMS AND CROSSCLAIMS.

 /

No. C 04-2000 CW

(consolidated with

No. C 06-2929 CW)

ORDER ON O2 MICRO'S

AND MPS' CROSSMOTIONS FOR SUMMARY

JUDGMENT

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For the Northern District of California

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O2 Micro International Limited moves for summary judgment in

its favor on the second, third and fourth counterclaims asserted by 

Monolithic Power Systems, Inc. (MPS). MPS does not oppose

O2 Micro's motion for summary judgment as to its third and fourth

counterclaims, but it opposes O2 Micro's motion as to its second

counterclaim. MPS and its chief executive officer Michael Hsing

move for summary judgment in their favor as to the fourth count of

O2 Micro's third amended complaint. O2 Micro opposes this motion

and separately cross-moves for a continuance under Federal Rule of

Civil Procedure 56(f). MPS and Hsing oppose the motion for a

continuance. The matters were heard on February 16, 2007. Having

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

argument, the Court grants both motions in part and denies them in

part; O2 Micro's request for a continuance is denied.

BACKGROUND

In May, 2004, MPS filed the 04-2000 suit in this district

against O2 Micro for a declaratory judgment finding O2 Micro's U.S.

Patent No. 6,396,722 (the '722 patent) invalid and not infringed. 

O2 Micro counterclaimed and added Advanced Semiconductor

Manufacturing Company, Ltd. (ASMC) as a counterdefendant. 

Five months after MPS filed suit in this district, O2 Micro

filed suit in the Eastern District of Texas, accusing MPS of

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

O2 Micro later amended its complaint, asserting that ASMC infringed

the '129 patent and that ASUSTeK Computer, Inc. and Compal

Electronics, Inc. infringed the '129 patent, the '722 patent and O2

Micro's U.S. Patent No. 6,259,615 (the '615 patent). Various

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cross-claims and counterclaims were filed. The Texas action was

transferred to this Court, and assigned Case No. 06-2929. After

the case was transferred, the Court found the 06-2929 case to be

related to the 04-2000 case.

On July 26, 2006, O2 Micro filed its third amended complaint

in the 06-2929 case. Its fourth cause of action is entitled,

"Unfair Competition by MPS and Michael Hsing." According to O2

Micro, MPS and Hsing agreed to give stock options to certain

employees of MPS' customers to entice them to enter into and

maintain a customer relationship with MPS. In addition, MPS and

Hsing allegedly sold certain products in Taiwan in violation of

Taiwanese court injunctions, knowing that the products would be

used in devices and hardware destined for the United States,

solicited one or more companies to serve as second source suppliers

of MPS integrated circuits and interfered with O2 Micro's

prospective business relationships. 

MPS answered O2 Micro's third amended complaint, also bringing

a claim under California's Unfair Competition Law. MPS' second

counterclaim alleged that O2 Micro violated the Unfair Competition

Law; its third and fourth counterclaims were for intentional

interference with contractual and current economic relations and

intentional inference with prospective economic advantage. These

three counterclaims are based on two factual allegations:

(1) O2 Micro misappropriated MPS' confidential information and

trade secrets relating to CCFL inverters by inducing third parties

to breach their non-disclosure agreements with MPS and to disclose

MPS' information to O2 Micro, and (2) O2 Micro, in bad faith,

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asserted and enforced its patents against MPS and its suppliers,

customers and distributors of CCFL inverters. 

On August 9, 2006, the Court consolidated the 04-2000 and 06-

2929 cases. On October 11, 2006, it signed O2 Micro's stipulated

dismissal with prejudice of its infringement claim concerning the

'129 patent.

LEGAL STANDARD

 Summary judgment is properly granted when no genuine and

disputed issues of material fact remain, and when, viewing the

evidence most favorably to the non-moving party, the movant is

clearly entitled to prevail as a matter of law. Fed. R. Civ.

P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986);

Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1288-89 (9th Cir.

1987).

The moving party bears the burden of showing that there is no

material factual dispute. Therefore, the court must regard as true

the opposing party's evidence, if supported by affidavits or other

evidentiary material. Celotex, 477 U.S. at 324; Eisenberg, 815

F.2d at 1289. The court must draw all reasonable inferences in

favor of the party against whom summary judgment is sought. 

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

587 (1986); Intel Corp. v. Hartford Accident & Indem. Co., 952 F.2d

1551, 1558 (9th Cir. 1991). 

Material facts which would preclude entry of summary judgment

are those which, under applicable substantive law, may affect the

outcome of the case. The substantive law will identify which facts

are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

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(1986).

Where the moving party does not bear the burden of proof on an

issue at trial, the moving party may discharge its burden of

production by either of two methods. Nissan Fire & Marine Ins.

Co., Ltd., v. Fritz Cos., Inc., 210 F.3d 1099, 1106 (9th Cir.

2000). 

The moving party may produce evidence negating an

essential element of the nonmoving party’s case, or,

after suitable discovery, the moving party may show that

the nonmoving party does not have enough evidence of an

essential element of its claim or defense to carry its

ultimate burden of persuasion at trial. 

Id. 

If the moving party discharges its burden by showing an

absence of evidence to support an essential element of a claim or

defense, it is not required to produce evidence showing the absence

of a material fact on such issues, or to support its motion with

evidence negating the non-moving party's claim. Id.; see also

Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 885 (1990); Bhan v.

NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991). If the

moving party shows an absence of evidence to support the non-moving

party's case, the burden then shifts to the non-moving party to

produce "specific evidence, through affidavits or admissible

discovery material, to show that the dispute exists." Bhan, 929

F.2d at 1409. 

If the moving party discharges its burden by negating an

essential element of the non-moving party’s claim or defense, it

must produce affirmative evidence of such negation. Nissan, 210

F.3d at 1105. If the moving party produces such evidence, the

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burden then shifts to the non-moving party to produce specific

evidence to show that a dispute of material fact exists. Id.

If the moving party does not meet its initial burden of

production by either method, the non-moving party is under no

obligation to offer any evidence in support of its opposition. Id.

This is true even though the non-moving party bears the ultimate

burden of persuasion at trial. Id. at 1107.

DISCUSSION

I. O2 Micro's Motion for a Continuance 

O2 Micro requests that, if the Court is inclined to grant MPS

and Hsing's motion for summary judgment, the Court continue the

proceedings pending a decision from Magistrate Judge Laporte on O2

Micro's Motion to Compel Further Deposition Testimony and Related

Documents from Defendants. 

Rule 56(f) provides that:

Should it appear from the affidavits of a party opposing the

motion that the party cannot for reasons stated present by

affidavit facts essential to justify the party's opposition,

the court may refuse the application for [summary] judgment or

may order a continuance to permit affidavits to be obtained or

depositions to be taken or discovery to be had or may make

such other order as is just.

This rule should be applied with a spirit of liberality to

prevent injustice to the party facing summary judgment. See 10B

Wright & Miller, Fed. Practice & Proc., § 2740, p. 402 (West 1998);

First Chicago Int'l v. United Exchange Co., 836 F.2d 1375, 1380

(D.C. Cir. 1988). Nonetheless, “the party seeking a continuance

bears the burden to show what specific facts it hopes to discover

that will raise an issue of material fact. The mere hope that

further evidence may develop prior to trial is an insufficient

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basis for a continuance under Fed. R. Civ. P. 56(f).” Continental

Maritime of San Francisco v. Pacific Coast Metal Trades Dist.

Council, Metal Trades Dep’t, AFL-CIO, 817 F.2d 1391, 1395 (9th Cir.

1987) (internal citation omitted). Parties seeking a continuance

must show: "(1) that they have set forth in affidavit form the

specific facts that they hope to elicit from further discovery,

(2) that the facts sought exist, and (3) that these sought-after

facts are 'essential' to resist the summary judgment motion." 

State of California v. Campbell, 138 F.3d 772, 779 (9th Cir. 1998).

O2 Micro sets forth the specific facts concerning MPS' grant

of stock options that it seeks to elicit from further discovery; it

makes a compelling case that the facts sought exist. But these

sought-after facts are irrelevant to the Court's decision,

discussed below, that O2 Micro has provided no evidence that it is

entitled to the monetary relief it seeks. Thus, even if O2 Micro's

motion to compel is granted, and the facts show that MPS did indeed

induce individuals through stock options to buy from MPS and not

from O2 Micro, O2 Micro is still not entitled to the monetary

relief it seeks. See Korea Supply Co. v. Lockheed Martin Corp., 29

Cal. 4th 1134, 1151 (2003). Therefore, O2 Micro's request for a

continuance is denied. 

II. O2 Micro's Motion for Summary Judgment

A. MPS' Second Counterclaim

O2 Micro raises numerous arguments against MPS' second

counterclaim for violation of California's Unfair Competition Law. 

See Cal. Bus. & Prof. Code § 17200 (defining "unfair competition"

as any "unlawful, unfair or fraudulent business practice"). 

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O2 Micro contends that, to the extent that the claim is based on

its assertion and enforcement of its patent rights, MPS fails to

proffer any evidence of bad faith or sham litigation or to show

that O2 Micro's patent enforcement activities are not immune from

state law tort liability. It further contends that, to the extent

that the claim is based on trade secret misappropriation, it is

preempted by California's Uniform Trade Secrets Act and,

furthermore, that MPS cannot meets its evidentiary burden with

respect to the existence of the alleged trade secrets or that O2

Micro used improper means to acquire knowledge of the alleged trade

secrets. Finally, O2 Micro argues that MPS' claim fails as a

matter of law because MPS cannot show that it has suffered injury.

1. Assertion and Enforcement of Patent Rights

MPS points out that pursuing patent infringement actions in

bad faith is conduct that courts have found "unfair" under

California's Unfair Competition Law. In re Acacia Media Techs.

Corp., 2005 WL 1683660, *4-5 (N.D. Cal.). O2 Micro does not

dispute this; rather, it asserts that its enforcement of its patent

rights, including filing infringement suits and sending prelitigation letters, constitutes a form of petition activity that is

ordinarily immune from antitrust liability under the NoerrPennington doctrine. While the Noerr-Pennington doctrine was

formulated in the context of antitrust cases, it has been extended

to cases involving other types of civil liability, including state

law claims of unfair competition. Meridian Project Sys., Inc. v.

Hardin Constr. Co., LLC, 404 F. Supp. 2d 1214, 1220-23 (E.D. Cal.

2005); Hi-Top Steel Corp. v. Lehrer, 24 Cal. App. 4th 570, 577-78

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(1994). O2 Micro contends that, unless MPS proves that O2 Micro's

patent enforcement activities amount to "sham litigation," it is

entitled to Noerr-Pennington immunity. See Professional Real

Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S.

49 (1993); Freeman v. Lasky, Haas & Cohler, 410 F.3d 1180 (9th Cir.

2005). To prove sham litigation, MPS must demonstrate that O2

Micro's lawsuits and patent enforcement activities were

(1) objectively baseless, and (2) a concealed attempt to interfere

with MPS' business relationships. Freeman, 410 F.3d at 1184;

Professional Real Estate Investors, 508 U.S. at 62 ("sham

litigation must constitute the pursuit of claims so baseless that

no reasonable litigant could realistically expect to secure

favorable relief"). O2 Micro argues that MPS cannot.

In addition to immunity under the Noerr-Pennington doctrine,

O2 Micro contends that it is immune from state law tort litigation

under California's litigation privilege. California Civil Code

section 47(b) provides that communications made in or related to

judicial proceedings are absolutely immune from tort liability. 

The California Supreme Court explains that the purpose of the

privilege is “to afford litigants . . . the utmost freedom of

access to the courts without fear of being harassed subsequently by

derivative tort actions.” Silberg v. Anderson, 50 Cal. 3d 205, 213

(1990). This Court has previously stated, "The litigation

privilege applies to any communications (1) made in a judicial

proceeding; (2) by litigants or other participants authorized by

law; (3) to achieve the objects of the litigation; (4) that have

some connection or logical relation to the action." Sharper Image

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Corp. v. Target Corp., 425 F. Supp. 2d 1056, 1077 (N.D. Cal. 2006)

(citing Silberg, 50 Cal. 3d at 212). Courts have broadly applied

the privilege to demand letters and other prelitigation

communications by attorneys, as long as the party has an "actual

good faith contemplation of an imminent, impending resort to the

judicial system for the purpose of resolving a dispute." Id. at

1078. As noted in a case MPS cites, "The privilege applies

'without regard to malice or evil motives.'" Hynix Semiconductor

Inc. v. Rambus, Inc., 2006 WL 1883353, *2 (N.D. Cal.) (quoting

Brown v. Kennard, 94 Cal. App. 4th 40, 45 (2001)). 

MPS argues that O2 Micro asserted the '615 patent in bad faith

because O2 Micro knew that this Court's prior order, granting

summary judgment that MPS did not infringe the patent, would have

preclusive effect. It notes that, based on this order, the

district court in Eastern Texas ruled that O2 Micro was

collaterally estopped from asserting the '615 patent against MPS'

customer Sumida. As evidence of O2 Micro's bad faith in asserting

the '129 patent against MPS and its customers, MPS notes that

O2 Micro filed claims concerning the '129 patent in Texas, but as

soon as the case was transferred to this Court, O2 Micro dropped

its claims concerning the '129 against MPS, ASUSTeK and Compal. 

O2 Micro, however, continues to assert its patent claims against

Hon Hai in Eastern Texas. MPS contends that O2 Micro withholding

the best mode of practicing the alleged invention, and treating it

as a trade secret, provides further evidence of O2 Micro's unfair

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1The Court, however, concluded the '722 patent is not invalid,

as a matter of law, for failure to comply with the best mode

disclosure requirement of the Patent Act. See February 8, 2007

Order Denying MPS' Motion for Summary Judgment of Invalidity of the

'722 patent. The '129 patent is a continuation of the '722 patent,

which is a continuation '615 patent.

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competition.1

MPS proffers some evidence of bad faith; however, it fails to

show that O2 Micro had no probable cause to bring its patent

infringement actions against MPS and its customers. See

Professional Real Estate Investors, 508 U.S. at 62 ("the existence

of probable cause to institute legal proceedings precludes a

finding that an antitrust defendant has engaged in sham

litigation"). The United States Supreme Court explains that

probable cause requires no more than a reasonable belief that there

is a chance that a claim may be held valid upon adjudication. Id.

As O2 Micro notes, it has already prevailed at trial on the

validity and infringement of the'129 patent; thus, it had probable

cause to bring claims against MPS and others based on that patent. 

See id. at 60 n.5 ("A winning lawsuit is by definition a reasonable

effort at petitioning for redress and therefore not a sham."). As

to the '615 patent, O2 Micro states that it appealed this Court's

summary judgment ruling and, thus, while the appeal was pending, it

reasonably believed that there was a chance that the Federal

Circuit would reverse the Court's judgment. O2 Micro acknowledges

that, on November 15, 2006, the Federal Circuit affirmed this

Court's grant of summary judgment. Yet, as MPS notes, O2 Micro

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continues to pursue its '615 patent claims against ASUSTeK, Compal,

Hon Hai and Samsung, despite clear collateral estoppel. 

MPS further argues that, because O2 Micro allegedly has

engaged in baseless litigation and made bad faith threats as part

of a pattern and practice of tortious and anti-competitive conduct,

the California litigation privilege does not apply. In Hynix, the

court noted that, to the extent that the plaintiff was contending

that the defendant's lawsuits and related communications violated

state unfair competition law, "California Civil Code section 47(b)

bars such claims. However, this does not mean that evidence of

such activity cannot be introduced as evidence of an overall course

of anti-competitive conduct." 2006 WL 1883353 at *2. MPS'

reliance on Hynix, however, is unavailing. Except for O2 Micro's

continued efforts to enforce the '615 patent after its appeal was

denied, MPS provides no evidence that O2 Micro engaged in baseless

litigation or made bad faith threats as part of a pattern and

practice of anti-competitive conduct. As discussed above, Federal

Rule of Civil Procedure 56(e) does not permit an adverse party to

rest upon its allegations and denials; instead it must provide

evidence, which MPS largely fails to do.

Because MPS cannot show that 02 Micro's patent infringement

actions or pre-litigation communications were objectively baseless,

these activities are immune and, as a matter of law, cannot be the

basis of MPS' unfair competition claim. MPS, however, can show

that O2 Micro's continued pursuit of its claims of infringement of

the '615 patent is objectively baseless and in bad faith and,

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therefore, this activity is not immune and can be the basis for

MPS' unfair competition claim.

2. Misappropriation

MPS contends that O2 Micro's practice of obtaining MPS'

proprietary technical information by engaging in "industrial

espionage" and inducing MPS' customers to breach confidentiality

further supports its unfair competition claim. It points to three

O2 Micro internal emails. But none of these emails provides

evidence of misappropriation of MPS' confidential information. Two

of the emails, Exhibits G and H, concern the total cost of the bill

of materials (BOM) for an inverter module. MPS provides no

evidence that this cost information is confidential. And, as O2

Micro notes, this information does not belong to MPS; rather, it

belongs to the inverter module manufacturer, such as Sumida or

Delta. See Su Dec., Ex. J, 140:7-14. The third email states, "I

got the MP1010B data sheet from the customer please find it as in

the file below." Mitchell Dec., Ex. I. The file, however, is not

attached. Again, MPS provides no evidence that the data sheet

contained its confidential information. Nor is there any evidence

that O2 Micro induced the customer to breach confidentiality. 

Further, even if the third email were sufficient to establish

a triable issue of fact, the Court finds that, to the extent MPS'

second counterclaim is based on MPS' confidential information, it

is preempted by California's Uniform Trade Secrets Act. 

AirDefense, Inc. v. AirTight Networks, Inc., 2006 WL 2092053 (N.D.

Cal.). In Digital Envoy, Inc. v. Google, Inc., 370 F. Supp. 2d

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1025, 1035 (N.D. Cal. 2005), a judge of this court held that the

Trade Secrets Act preempted the plaintiff's tort and unfair

competition claims because those claims were "based on the same

nucleus of facts as the misappropriation of trade secrets claim for

relief." MPS attempts to distinguish Digital Envoy, arguing that

the unfair competition and tort claims in that case were based on

facts identical to those alleged in the plaintiff's trade secret

misappropriation claim. It contends that is not the case here. 

The pleadings, however, show otherwise. The allegations that form

the predicate facts for MPS' unfair competition claim are based on

the same nucleus of facts as the allegations in MPS' pleading

asserting a claim of trade secret misappropriation against

O2 Micro. 

The Court grants summary judgment in favor of O2 Micro to the

extent that MPS' unfair competition claim is based on O2 Micro's

alleged misappropriation of MPS' confidential information. 

3. Injury

O2 Micro argues that MPS' second counterclaim fails as a

matter of law because MPS does not proffer "any facts that give

rise to the remedies of restitution or disgorgement." Jensen

Enterprises Inc. v. Oldcastle, Inc., 2006 WL 2583681, *8 (N.D.

Cal.) (dismissing unfair competition claim because it alleged only

lost sales and profits and not any facts that would give rise to

the remedies of restitution or disgorgement). MPS agrees that it

is not entitled to monetary relief on its unfair competition claim. 

It contends that it is entitled to injunctive relief and that this

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2In its opposition, O2 Micro notes that it is too late to

raise this argument, which is essentially a motion for a more

definite statement. MPS and Hsing do not address this in their

reply, nor do they again argue that O2 Micro's unfair competition

claim fails because it is not properly pleaded. The Court will not

address MPS and Hsing's argument that O2 Micro failed to plead its

claim for unfair competition with reasonable particularity.

15

Court can issue an injunction preventing unfair competition. 

O2 Micro does not dispute this contention. The Court will not

grant summary judgment on this ground. 

B. MPS' Third and Fourth Counterclaims

As noted above, MPS does not oppose O2 Micro's motion for

summary judgment as to its third and fourth counterclaims. The

Court grants summary judgment in O2 Micro's favor as to MPS' third

and fourth counterclaims.

III. MPS and Hsing's Motion for Summary Judgment

MPS and Hsing argue that O2 Micro's unfair competition claim

fails because California's Unfair Competition Law does not apply to

conduct outside California that injures non-residents and because

O2 Micro failed to plead its claim for unfair competition with

reasonable particularity.2 In addition, they argue that the Court

should grant summary judgment that O2 Micro has no evidence of

damages and preclude O2 Micro's damages expert, Walter Bratic, from

testifying.

A. California Connection

California's Unfair Competition Law "does not apply to actions

occurring outside of California that injure non-residents." 

Standfacts Credit Servs., Inc. v. Experian Information Solutions,

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Inc., 405 F. Supp. 2d 1141, 1148 (C.D. Cal. 2005). Nonetheless, a

claim under section 17200 may be asserted by a non-resident

plaintiff alleging unfair business conduct, if that conduct

occurred in or emanated from California. Norwest Mortgage, Inc. v.

Superior Court, 72 Cal. App. 4th 214, 222 (1999); TruePosition,

Inc. v. Sunon, Inc., 2006 U.S. Dist. LEXIS 32918 (E.D. Pa.). It is

undisputed that O2 Micro is not a California resident.

O2 Micro responds that MPS and Hsing are judicially estopped

from making this argument because, in prior filings with this

Court, they characterized O2 Micro as a "California-based company"

with its principal operating subsidiary, O2 Micro, Inc.,

headquartered in this district. The Ninth Circuit explains,

"Judicial estoppel precludes a party from gaining an advantage by

asserting one position, and then later seeking an advantage by

taking a clearly inconsistent position.” Klamath Siskiyou

Wildlands Center v. Boody, 468 F.3d 549, 554 (9th Cir. 2006) 

(quoting Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 782

(9th Cir. 2001)). Here, there is no inconsistent factual or legal

position; MPS never argued that O2 Micro was a California resident.

Equitable estoppel does not apply. Id. (“an inconsistent factual

or legal position is a threshold requirement of the doctrine”).

O2 Micro argues that, as long as a corporation has significant

operations in California, it may bring an unfair competition claim

under section 17200 regardless of where the alleged unfair business

practices occurred. Ready Transp., Inc. v. AAR Mfg., Inc., 2006 WL

2131308 (E.D. Cal.), however, does not support this argument. 

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There, although the plaintiffs were incorporated in States other

than California, the court stated that the plaintiffs were

California residents. As stated above, O2 Micro is not.

O2 Micro also argues that MPS' wrongful conduct did occur in

California. O2 Micro provides evidence that it was in California

that MPS and Hsing devised and managed the alleged stock option

scheme, giving stock to employees of MPS' customers to entice them

to enter into and maintain a customer relationship with MPS. But

O2 Micro provides no evidence that any of the other allegedly

unfair conduct occurred in California, specifically, either the

alleged conduct concerning Taiwanese court injunctions or the

second source supplier agreements. 

Therefore, the Court grants summary judgment in MPS and

Hsing's favor that the alleged activities relating to Taiwanese

court injunctions and second source supplier agreements cannot be

the basis of MPS' unfair competition claim. 

B. Damages

In Korea Supply Co., the California Supreme Court addressed

"whether disgorgement of profits allegedly obtained by means of an

unfair business practice is an authorized remedy under the UCL

where these profits are neither money taken from a plaintiff nor

funds in which the plaintiff has an ownership interest." 29 Cal.

4th at 1140. It concluded "that disgorgement of such profits is

not an authorized remedy in an individual action under the UCL." 

Id. In reaching its conclusion, the court explained that a claim

under section 17200 "is equitable in nature; damages cannot be

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recovered." Id. at 1144; see also id. at 1151 ("Compensation for a

lost business opportunity is a measure of damages and not

restitution to the alleged victims.”) (quoting MAI Systems Corp. v.

UIPS, 856 F. Supp. 538, 542 (N.D. Cal. 1994)). As recently stated

in Jensen Enterprises Inc., 2006 WL 2583681 at *8, "a UCL claimant

cannot request disgorgement of illicitly-gained profits unless

those funds were previously owned by the plaintiff." 

In O2 Micro's expert report regarding its unfair competition

claims, Mr. Bratic notes that he understands that the monetary

remedy for a violation of the Unfair Competition Law is strictly

equitable in nature. Nonetheless, he states that O2 Micro is

entitled to recover damages, as a result of MPS' alleged wrongful

conduct under section 17200 "in amounts equal to the total monetary

amount that would make O2 Micro whole but-for the alleged behavior

of MPS." Mitchell Dec., Ex. B at 3. Due to MPS and Hsing's

alleged failure to provide necessary documents, however, Mr. Bratic

did not perform any analyses or calculations of the measure of

restitutionary damages. Instead, he explained how he would

calculate the amount, namely by identifying those contracts and

units of sales that "should rightfully have belonged to O2 Micro,"

but which were wrongfully taken away by MPS and Hsing. 

Under the Unfair Competition Law, however, O2 Micro is not

entitled to sales that "should rightfully have belonged to

O2 Micro." As in Korea Supply Co., the remedy sought by O2 Micro

in this case "is not restitutionary because plaintiff does not have

an ownership interest in the money it seeks to recover . . . . Any

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award that plaintiff would recover from defendants would not be

restitutionary as it would not replace any money or property that

defendants took directly from plaintiff." 29 Cal. 4th at 1149. 

Therefore, the Court concludes that, as a matter of law,

O2 Micro's theory of restitution fails and it is not entitled to

the monetary relief that it seeks. Mr. Bratic's theory of recovery

is contrary to California Supreme Court's decisions as to what is

recoverable under the Unfair Competition Law and, if this case goes

to trial, shall not be heard by a jury. See Fed. R. Evid. 702;

Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 591-94 (1993).

CONCLUSION

For the foregoing reasons, O2 Micro's motion for summary

judgment regarding MPS' second, third and fourth counterclaims

(Docket No. 664) is GRANTED IN PART AND DENIED IN PART. O2 Micro's

motion for continuance is DENIED. MPS and Hsing's motion for

summary judgment regarding O2 Micro's fourth count (Docket No. 690)

is also GRANTED IN PART AND DENIED IN PART. Specifically, the

Court rules that O2 Micro's continued pursuit of its claims of

infringement of the '615 patent is not immunized and can be the

basis for MPS' unfair competition claim; the remaining alleged

unfair conduct, however, is immunized or preempted and, thus,

cannot be the basis for MPS' unfair competition claim. In

addition, the Court grants summary judgment in O2 Micro's favor as

to MPS' third counterclaim for intentional inference with

contractual relations and fourth counterclaim for intentional

interference with prospective economic advantage. As to MPS and

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3MPS' motion to strike the declaration of William Chu (Docket

No. 736) is DENIED as moot. The Court has not relied on any

inadmissible evidence in deciding this motion. 

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Hsing's motion, the Court rules that O2 Micro can bring a claim for

unfair conduct based on the stock option activities, which

allegedly occurred in California; the allegations relating to

Taiwanese court injunctions and second source supplier agreements,

however, cannot be the basis of O2 Micro's unfair competition

claim. Further, the Court grants summary judgment that O2 Micro is

not entitled to the monetary relief it seeks under the Unfair

Competition Law and orders that, if this claim goes to trial, Mr.

Bratic is precluded from testifying before the jury concerning any

monetary relief O2 Micro may be entitled to based on its unfair

competition claim.3

IT IS SO ORDERED.

Dated: 3/14/07 

CLAUDIA WILKEN

United States District Judge

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