Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_14-cv-02238/USCOURTS-cand-3_14-cv-02238-6/pdf.json

Parties Involved:
Kilopass Technology Inc.
Defendant
Sidense Corp.
Plaintiff

Document Text:

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SIDENSE CORP.,

Plaintiff,

v.

KILOPASS TECHNOLOGY INC.,

Defendant.

Case No. 14-cv-02238-SI 

ORDER DENYING DEFENDANT’S 

MOTION TO DISMISS

Re: Dkt. No. 44

Now before the Court is defendant Kilopass Technology Inc.’s motion to dismiss. Dkt. 44. 

Pursuant to Civil Local Rule 7-1(b), the Court finds this matter appropriate for resolution without 

oral argument and VACATES the hearing set for December 4, 2015. Having carefully considered 

the papers submitted, the Court hereby DENIES the motion.

BACKGROUND

The present dispute requires a summary of the litigation history between the parties.

1. The Patent Infringement Case

In 2010, Kilopass Technology Inc. (“Kilopass”) brought suit against Sidense Corp.

(“Sidense”) alleging patent infringement and several other business torts. Kilopass Tech. Inc. v. 

Sidense Corp., No. 10-cv-02066 (“Patent Infringement Case”), Dkt. 1 (Complaint).

2. The Business Torts Case 

In August 2011, Sidense filed a separate but related lawsuit against Kilopass alleging: (1) 

Defamation; (2) Unfair Competition under the Lanham Trade-Mark Act, § 43(a), as amended, 15 

U.S.C. § 1125(a); (3) Intentional Interference with Contractual Relations; (4) Intentional 

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Interference with Prospective Economic Advantage; and (5) Unfair Competition under California 

Business and Professions Code § 17200 (“UCL”). Sidense Corp. v. Kilopass Tech. Inc., No. 11-

04112 (“Business Torts Case”), Dkt. 1 (Complaint); Dkt. 8 (Order Relating the Case). Several of 

the allegations in Sidense’s original complaint in the Business Torts Case were based on the 

theory that Kilopass’s patent infringement case was a baseless lawsuit. See id. at Dkt. 1.

Kilopass moved to dismiss the Business Torts Case complaint, arguing that it was 

protected by litigation privilege and that, like malicious prosecution claims, claims predicated on a 

baseless lawsuit were not ripe until after the underlying litigation had been concluded in the 

defendant’s favor. Id. at Dkt. 10. In response, Sidense voluntarily filed an amended complaint 

withdrawing its allegations that the Patent Infringement Case was baseless. Id. at Dkt. 11 (First 

Amended Complaint). 

The Court granted in part a second motion to dismiss filed by Kilopass, and Sidense twice 

amended its pleadings. Id. at Dkts. 35, 40, 56. This left the Third Amended Complaint. Id. at 

Dkt. 56. 

On August 16, 2012, this Court granted in part and denied in part Kilopass’s motion for 

summary judgment on the Third Amended Complaint in the Business Torts Case.

1

 Id. at Dkt. 99. 

This Court granted summary judgment in favor of Kilopass on Sidense’s Defamation claims based 

on the allegations that (1) Kilopass made a statement to a potential customer that Sidense’s 

technology was not commercially viable and (2) Kilopass threatened to sue Sidense’s customers 

and potential customers as patent infringers. Id. at Dkt. 99 at 6-8, 10-11. The Court also granted 

summary judgment in favor of Kilopass on Sidense’s (1) Lanham Trade-Mark Act false 

advertising claim based on the publishing of a “White Paper”; (2) Intentional Interference with 

Prospective Economic Advantage claim; and (3) Unfair Competition claim pursuant to the 

“unfair” and “fraudulent” prongs of the UCL. Id. at Dkt. 99 at 15-16, 19-20. 

The following claims of the Business Torts Case survived summary judgment: 

 Defamation with respect to allegations that Kilopass made statements (i) in a

 

1

The Court referred to a second amended complaint its summary judgment order; it is 

clear, however, that the Court was in fact ruling on the Third Amended Complaint.

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PowerPoint presentation to third parties that Sidense was knowingly offering 

licenses on invalid patents (Third Amended Complaint ¶ 14); (ii) to Sidense 

customers informing them that Sidense wanted its licensees to be charged as direct 

infringers (Third Amended Complaint ¶ 19); and (iii) to customers that Sidense was 

not financially stable or commercially viable (Third Amended Complaint ¶ 18);

 False Advertising with respect to allegations concerning the PowerPoint 

presentation (Third Amended Complaint ¶ 14);

 Intentional Interference with Contractual Relations; and

 Unfair Competition pursuant to the “unlawful” prong of the UCL

Id. at Dkt. 99 at 10, 13-15, 18-20.

3. Completion of the Patent Infringement and Business Torts Cases

That same day, August 16, 2012, the Court issued its non-infringement order in the 

underlying Patent Infringement Case, finding that Sidense did not infringe Kilopass’s patents. 

Patent Infringement Case, Dkt. 272. 

Shortly thereafter, Sidense stipulated to voluntarily dismiss its remaining claims in the

Business Torts Case with prejudice. Business Torts Case, Dkt. 115. In its stipulation, Sidense 

noted that the Court had adjudicated the underlying patent infringement claim and granted 

Kilopass’s motion for summary judgment on many of Sidense’s alleged business torts, thus 

substantially reducing Sidense’s potential damages recovery compared to the cost of continued 

litigation. Id.

4. The Present Antitrust Lawsuit

Sidense initiated the present antitrust suit on May 14, 2014, alleging that Kilopass 

"weaponized" the litigation process in the Patent Infringement Case to monopolize, or attempt to 

monopolize, the market for complimentary metal-oxide-semiconductor logic (“CMOS”) 

embeddable antifuse one-time programmable (“OTP”) nonvolatile memory (“NVM”) technology. 

Kilopass Techn. Inc. v. Sidense Corp., No. 14-cv-02238 (“Antitrust Case”), Dkt. 1. In its 

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complaint, Sidense alleged that Kilopass initiated a series of baseless lawsuits in a coordinated 

campaign to monopolize the CMOS OTP NVM technology market. See id. at Dkt. 1 ¶¶ 8-9, 12, 

104. Sidense later amended its antitrust complaint, but the claims against Kilopass remained 

substantially the same: attempted and actual monopolization of the market pursuant to Section 2 

of the Sherman Act, 15 U.S.C. § 2. Id. at Dkt. 37. 

Kilopass filed the present motion to dismiss on October 2, 2015, arguing that the claims in 

Sidense’s First Amended Complaint (“FAC”) are barred by res judicata because they repeat 

claims that arise from the same common nucleus of facts as the Business Torts Case that Sidense 

filed and then dismissed with prejudice. Id. at Dkt. 44 at 7-12.

Kilopass additionally contends that Sidense has not pled sufficient facts establishing a 

legally cognizable market. Id. at Dkt. 44 at 13-20.

The Court will address each of these arguments in turn.

LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint

if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to

dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its

face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This “facial plausibility” standard

requires the plaintiff to allege facts that add up to “more than a sheer possibility that a defendant

has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court must assume that

the plaintiff’s allegations are true and must draw all reasonable inferences in the plaintiff’s favor. 

Usher v. City of L.A., 828 F.2d 556, 561 (9th Cir. 1987). However, “recitals of the elements of a 

cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678 

(citing Twombly, 550 U.S. at 555). As a general rule, the Court may not consider materials

beyond the pleadings when ruling on a Rule 12(b)(6) motion. Lee v. City of L.A., 250 F.3d 668,

688 (9th Cir. 2001). Moreover, it is improper for a court to assume “the [plaintiff] can prove facts 

that [it] has not alleged.” Associated Gen. Contractors of California, Inc. v. California State 

Council of Carpenters, 459 U.S. 519, 526 (1983).

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If the Court dismisses a complaint, it must decide whether to grant leave to amend. The 

Ninth Circuit has “repeatedly held that a district court should grant leave to amend even if no 

request to amend the pleading was made, unless it determines that the pleading could not possibly 

be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) 

(citations and internal quotation marks omitted).

DISCUSSION

Kilopass argues that Sidense attempts to avoid res judicata on its monopolization claims 

by strategically amending its complaint and deleting any allegations that overlap with allegations 

made in the Business Torts Case. Antitrust Case, Dkt. 47 at 6-7. In the alternative, Kilopass 

contends that Sidense has not sufficiently pled a legally cognizable market or facts establishing 

barriers to market entry. Id. at Dkt. 44 at 13-19. 

Sidense argues that its claims are not barred by res judicata because the claims in the 

Business Torts Case involved non-litigation conduct during the pendency of the Patent 

Infringement Case, whereas the claims asserted in the present suit allege that Kilopass initiated the 

Patent Infringement Case as a sham lawsuit in an effort to monopolize the market. Id. at Dkt. 46 

at 13-14. Sidense contends that “any slight [factual] overlap with some of the amended business 

tort allegations is merely superficial and contextual.” Id. at Dkt. 46 at 13. Additionally, Sidense 

argues that it has properly pled a relevant product market and that any refinement of the market 

should await factual development. Id. at Dkt. 46 at 14-20.

1. Res Judicata

Kilopass contends that the complaint in this case alleges the same nucleus of facts alleged 

in the Business Torts Case. Id. at Dkt. 44 at 8-11; Dkt. 47 at 3-4. In support of its argument, 

Kilopass examines the evolution of Sidense’s allegations from the Original Complaint in the 

Business Torts Case, the Original Complaint in the Antitrust Case, and the First Amended 

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Complaint in the Antitrust Case.

2

 Sidense argues that the claims are different and that any overlap 

is merely superficial and intended to provide context. Id. at Dkt. 46 at 13. The Court agrees with 

Sidense and finds that the claims brought here are not barred by res judicata.

A claim barred by res judicata requires “(1) an identity of claims, (2) a final judgment on 

the merits, and (3) identity or privity between parties.” Owens v. Kaiser Found. Health Plan, Inc., 

244 F.3d 708, 713 (9th Cir. 2001) (internal quotations and citation omitted).

A. Final Judgment and Identity of Parties

The second and third elements are not in dispute. A final judgment on the merits occurred 

when Sidense voluntarily dismissed the Business Torts Case with prejudice. See Stewart v. U.S. 

Bancorp, 297 F.3d 953, 956 (9th Cir. 2002) (“The phrase ‘final judgment on the merits’ is often 

used interchangeably with ‘dismissal with prejudice.’”). The parties are identical: Sidense is the 

plaintiff and Kilopass the defendant in both the present Antitrust Case and the Business Torts 

Case. The issue is whether there is an identity of claims.

B. Identity of Claims

“The central criterion in determining whether there is an identity of claims between the 

first and second adjudications is whether the two suits arise out of the same transactional nucleus 

of facts.” Frank v. United Airlines, Inc., 216 F.3d 845, 851 (9th Cir. 2000) (internal quotations 

and citation omitted). Although the common nucleus test is often outcome determinative under 

the first res judicata element, there are other criteria a court may examine in determining whether 

two suits involve the same claim: (1) whether rights or interests established in the prior judgment 

would be destroyed or impaired by prosecution of the second action; (2) whether the two suits 

involve infringement of the same right; and (3) whether substantially the same evidence is 

presented in the two actions. Mpoyo v. Litton-Electro-Optical Sys., 430 F.3d 985, 987-88 (9th Cir. 

 

2

It is unclear to the Court why Kilopass does not refer to the operative complaint in the 

Business Torts Case which served as the basis of the summary judgment motion, i.e., the Third 

Amended Complaint.

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2005).

To begin, the Court can see no reason to compare the allegations made in the Original 

Complaint in the Business Torts Case to the allegations made in the First Amended Complaint in 

the Antitrust Case, as Kilopass did in its motion. See, e.g., Antitrust Case, Dkt. 44 at 9. As 

mentioned above, Sidense amended its complaint in the Business Torts Case to remove any 

references to “baseless lawsuits” because it agreed with Kilopass that the claims were not ripe 

while the underlying Patent Infringement Case was still pending. See Business Torts Case, Dkt. 

14-3 (showing the changes made to the Original Complaint in the Business Torts Case to make it 

the First Amended Complaint in the Business Torts Case). The Court has instead compared the 

operative Third Amended Complaint in the Business Torts Case ("BTAC") to the First Amended 

Complaint in the Antitrust Case ("ATAC").

That comparison yields the conclusion that there is not an identity of claims between the 

BTAC and the ATAC. The BTAC alleges that Kilopass engaged in unlawful conduct that was not

directly related to litigation: Kilopass allegedly made false statements to Sidense’s customers and 

others regarding Sidense’s business liability and threatened, in several instances, to sue those 

customers. See, e.g., BTAC ¶¶ 7-19. The ATAC, on the other hand, alleges that Kilopass 

"weaponized" the litigation process in an effort to monopolize the market by “forc[ing] Sidense to 

divert millions of dollars away from its marketplace and technological competition with 

Kilopass.” ATAC ¶ 11. While it mentions scaring away customers, the bulk of the ATAC

addresses the alleged sham litigation itself and its effect on Sidense’s presence in the market. 

ATAC ¶¶ 10, 11, 41, 43, 108. Furthermore, as Sidense points out, Kilopass’s Motion to Dismiss

only takes exception to the supposed “factual overlap” in paragraphs 11, 43, 55, 88, and 101 of the 

ATAC (and these comparisons were all made against the Original Complaint in the Business Torts 

Case). Antitrust Case, Dkt. 44 at 5, 9-13.

Specifically, comparison of the roughly analogous allegations in the two complaints 

demonstrates the following:

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Third Amended Compl., Business Torts 

Case (“BTAC”)

First Amended Compl., Antitrust Case

(“ATAC”)

“KILOPASS and CHENG began contacting 

SIDENSE customers and potential customers 

threatening to imminently sue them as patent 

infringers . . . falsely asserting that its [patents] 

were broad enough to cover SIDENSE’s 1TTM

Fuse memory products.” BTAC ¶ 17.

No corresponding allegation regarding threats 

made against Sidense customers.

“KILOPASS . . . published [the “White 

Paper”] . . . implying that the bit cells 

illustrated therein depicted ‘the Kilopass 1T 

and 2T’ patented antifuse cells. However, the 

bit cell illustration . . . actually depicted 

Sidense’s 1T bit cell.” BTAC ¶ 11 (alterations 

omitted).

No corresponding allegation regarding 

misleading publications.

Kilopass made a statement that was “false, 

misleading and designed to make it appear that 

Sidense, which was founded in 2004, entered 

into business to copy Kilopass’[s] 1T 

technology.” BTAC ¶ 12. Kilopass made a 

“false, misleading statement [] designed to 

make it appear that Sidense . . . entered into 

business to copy Kilopass’[s] 1T technology, 

which is demonstrably untrue.” Id.

No corresponding allegations regarding false 

or misleading statements.

“KILOPASS and CHENG began publishing 

statements falsely indicating that SIDENSE’s 

[patent was invalid] . . . , thereby foreclosing 

SIDENSE from challenging the validity of that 

patent.” BTAC ¶ 15.

No corresponding allegations regarding false 

statements made about Sidense’s patents.

“KILOPASS and CHENG began telling 

customers and potential customers that 

SIDENSE was refusing to take responsibility 

for its costumers’ allegedly infringing chips 

and that SIDENSE was telling the Court that 

its customers, rather than SIDENSE, should be 

sued for patent infringement.” BTAC ¶ 19.

No corresponding allegations regarding 

Sidense’s refusal to take responsibility for its 

customers’ alleged patent infringement.

“KILOPASS’[s] and CHENG’s acts [may have 

deceived Sidense’s customers and potential 

customers] and were material in that they were 

likely to influence the purchasing decisions of 

those in the marketplace.” BTAC ¶ 29.

No corresponding allegation regarding 

purchasing decisions and, contrary to 

Kilopass’s contention, BTAC ¶ 29 was not 

alleged in the context of patent litigation. See

Antitrust Case, Dkt. 47 at 2.

Kilopass’s conduct described in the complaint 

“is malicious, fraudulent, knowing, willful, and 

deliberate.” BTAC ¶ 30.

“Kilopass initiated and maintained patent 

infringement litigation against Sidense in bad 

faith knowing there was no infringement.” 

ATAC ¶ 86 (though the conduct the BTAC 

describes is statements made about Sidense’s 

patents, not pursuit of underlying patent 

infringement).

“[T]hat Kilopass would imminently file suit 

against Sidense’s customers if they would use, 

or continue to use, Sidense’s technology . . . . 

“Kilopass began plotting to block Sidense’s 

progress with its patent portfolio.” ATAC ¶ 5. 

Allegations that Kilopass was advised that 

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that Sidense refused to take responsibility for 

its customers’ chips that contain the embedded 

Sidense OTP in Kilopass’[s] lawsuit against 

Sidense.” BTAC ¶ 22.

Sidense did not infringe Kilopass’s patents. 

ATAC ¶¶ 18-24. 

Kilopass made false statements regarding 

Sidense’s business “with the knowledge that 

they were false, and with spite, hatred, and ill 

will toward SIDENSE.” BTAC ¶ 23.

Allegations that (1) Kilopass was advised that 

Sidense did not literally infringe Kilopass’s 

patents, (2) how Kilopass hired a new CEO 

looking to use the litigation process to prevent 

Sidense from competing and stifling entry 

from other would-be competitors, (3) Kilopass 

continued pursing litigation even after it lost 

the patent infringement suit on the merits in an 

attempt to interfere with Sidense’s business. 

ATAC ¶¶ 5-10. “Kilopass knew, or should 

have known, that Sidense did not infringe . . . 

Kilopass lacked probable cause or good faith 

belief for its assertion of literal patent 

infringement . . . Kilopass also plainly lacked 

probable cause for the assertion of patent 

infringement by equivalence . . .” ATAC 

¶¶ 39-41.

“As a result of KILOPASS’[s] and CHENG’s 

defamatory statements, SIDENSE has suffered 

loss of customers, harm to its reputation and 

was exposed to contempt.” BTAC ¶ 24.

As a “result of Kilopass’[s] anticompetitive 

conduct, and sham litigation, Sidense has . . . 

sustained a loss of goodwill." ATAC ¶ 105, 

121 (the harm is similar but the alleged 

underlying conduct is different).

“[S]tating in a press release that [the ‘751 

patent was affirmed] foreclose[ing] SIDENSE 

from challenging the validity of that patent.” 

BTAC ¶ 28; see also supra BTAC ¶¶ 29-30. 

“KILOPASS and CHENG acted both 

oppressively and maliciously with intent to 

cause injury to SIDENSE,” BTAC ¶ 40, in 

making statements “designed to interfere with 

and disrupt SIDENSE’s relationships with 

existing and prospective customers.” BTAC 

¶ 39.

“The purpose of Kilopass’[s] sham patent 

infringement suit was not to win on the merits 

but to interfere directly with Sidense’s actual 

and prospective business relationships.” 

ATAC ¶ 42 (in contrast, the BTAC alleges the 

statement made in the press release was 

harmful to Sidense rather than the sham 

lawsuit).

Kilopass offered to pay for an editor, Mr. Clive 

Maxfield, to write an article “to make it falsely 

appear that the information and viewpoints 

appearing in the article were independent and 

unbiased observations of . . . the EE Times . . . 

implying that . . . the EE Times had 

independently, and without bias, concluded 

that companies whose products embody 

SIDENSE’s technology could be exposed to 

costly litigation.” BTAC ¶ 16.

No corresponding allegation regarding either 

the EE Times or its editor, Mr. Clive Maxfield.

Kilopass emailed to customers and potential 

customers falsely stating that, “US and Patent 

Trademark Office Invalidates All Claims of 

Sidense’s Key Patent.” BTAC ¶ 13. See also 

supra, BTAC ¶¶ 15, 17, 19.

The Patent Infringement Case “forced 

Kilopass’[s] only significant competitor, 

Sidense, to divert [resources] away from 

developing technology and marketplace 

competition to defend the lawsuit and respond 

to customer concerns engendered by 

Kilopass’[s] aggressive lawsuit publicity. 

ATAC ¶ 43. “Kilopass’[s] disinformation 

campaign is not protected petitioning activity.” 

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ATAC ¶ 88. “Kilopass’[s] baseless patent 

litigation scare[d] customers away from doing 

business with Sidense.” ATAC ¶ 11. 

“Kilopass’[s] conduct has additionally caused 

Sidense to incur substantial internal costs . . . 

to specifically deal with customer concerns 

regarding Kilopass’[s] patent litigation.” 

ATAC ¶ 101.

Kilopass told “Sidense customers and/or 

potential customers that, based upon 

Kilopass’[s] own ‘in silicon’ evaluation, 

Sidense’s technology was not commercially 

viable, whereas Kilopass knew or should have 

known that these representations were false” 

BTAC ¶ 10.

“Kilopass told prospective customers that 

Kilopass had built and tested the Sidense 

technology and found it could not be 

commercially viable, even though Kilopass 

had never conducted tests on a Sidense product 

that might lead to such a conclusion.” ATAC 

¶ 31 (this was provided for context surrounding 

the antitrust claims).

Kilopass made false statements that Sidense’s 

patents were invalid, Sidense’s customers were 

at risk of being sued, and Kilopass’s conduct 

influenced the purchasing decisions of buyers 

in the marketplace. See supra BTAC ¶¶ 15, 

19, 29

“Kilopass’[s] illegal conduct prevented 

prospective competitors from entering the 

relevant market.” ATAC ¶ 91. “Kilopass’[s] 

baseless patent litigation scare[d] customers 

away from doing business with Sidense.” 

ATAC ¶ 11 (similar harm, different conduct). 

“Kilopass’[s] conduct has harmed competition 

in the market by checking customers and 

potential customers . . . from doing business 

with Sidense out of concern that use of the 

Sidense technology would cause them and 

their end user customers to become liable for 

patent infringement.” ATAC ¶ 97 (against, 

similar harm based upon different conduct). 

Allegations regarding Kilopass’s price lists 

established during the Patent Infringement 

Case and direct evidence that Kilopass had 

market power. ATAC ¶ 68-70.

The highlighted portion above is the only instance where, cosmetically at least, the ATAC 

appears to overlap on the facts of the BTAC. But Sidense urges, this factual overlap appears 

merely to provide context for the causes alleged in the Antitrust Complaint. While the resulting 

harm might be similar if all of the allegations were true — a loss of business to Sidense — the 

claims do not arise from the same transactional nucleus of facts. 

Accordingly, the claims brought by Sidense in the present suit are not barred by res 

judicata.

3

 

3 Having found that res judicata does not bar Sidense’s antitrust claims, the Court need not 

address whether or not Kilopass acquiesced to Sidense’s right to reassert them. See Antitrust 

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2. Relevant Market

Kilopass argues that Sidense has failed to plead facts that establish a legally cognizable 

market. Antitrust Case, Dkt. 44 at 13-16. As with its res judicata argument, Kilopass makes 

several references to the Original Complaint in the Business Torts Case and the Original 

Complaint in the Antitrust Case. Id. at Dkt. 44 at 13-16. Kilopass contends that Sidense’s 

amendments do not express any actual changes to the relevant market. Id. at Dkt. 44 at 14. It 

further argues that the artificially narrowed market should be rejected. Id. at Dkt. 47 at 13. 

Sidense contends that it has alleged the “market for CMOS embeddable antifuse OTP NVM 

intellectual property” as a recognized market. Id. at Dkt. 46 at 15.

On a Rule 12(b)(6) motion, “the validity of the ‘relevant market’ is typically a factual 

element rather than a legal element.” Newcal Indus., Inc. v. Ikon Office Solution, 513 F.3d 1038, 

1045 (9th Cir. 2008). “[A]lleged markets may survive scrutiny under Rule 12(b)(6) subject to 

factual testing by summary judgment or trial.” Id. Drawing all reasonable inferences in Sidense’s 

favor, and assuming that all of its allegations are true, the Court need not determine what the 

relevant market should be. The Court need only determine if Sidense’s market allegations are 

plausible as pled.

The Court finds that Sidense has sufficiently pled the relevant market for its antitrust 

claims. See generally Antitrust Case, Dkt. 37 ¶¶ 61-65. Sidense alleges that the relevant market is 

“for CMOS embeddable antifuse OTP intellectual property.” Id. at Dkt. 37 ¶ 57. Sidense 

describes the technologies that embeddable NVM products are based on. Id. at Dkt. 37 ¶ 61. It 

then explains how different technologies are chosen, and the factors affecting the market. Id. at 

Dkt. 37 ¶ 61-62. Simply put, Sidense has plausibly alleged a technology market in which Kilopass 

and Sidense compete. 

Taken as true, Sidense has sufficiently pled a relevant market.

 

Case, Dkt. 46 at 6-7.

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3. Barriers to Entry

Insofar as Kilopass is arguing that Sidense has failed to plead facts sufficient to establish 

barriers to market entry, the Court is also unpersuaded. Kilopass argues that Sidense does not 

allege any barriers to market entry that fit neatly into the categories set forth in Rebel Oil Co., Inc. 

v. Atlantic Richfield Co.:

Entry barriers are “additional long-run costs that were not incurred by incumbent 

firms but must be incurred by new entrants,” or “factors in the market that deter 

entry while permitting incumbent firms to earn monopoly returns." The main 

sources of entry barriers are: (1) legal license requirements; (2) control of an 

essential or superior resource; (3) entrenched buyer preferences for established 

brands; (4) capital market evaluations imposing higher capital costs on new 

entrants; and, in some situations, (5) economies of scale.

51 F.3d 1421, 1439 (9th Cir. 1995) (internal citations omitted) (emphasis added). However, 

Kilopass appears to interpret Rebel Oil’s list of factors as the only sources of barriers to entry

rather than the main sources. “In evaluating entry barriers, we focus on their ability to constrain 

not ‘those already in the market, but . . . those who would enter but are prevented from doing so.’” 

Id. at 1439 (citations omitted) (alterations in original).

Sidense alleges that entering the CMOS embeddable antifuse OTP NVM intellectual 

property market requires a substantial cost that would deter many firms from entering the market. 

Antitrust Case, Dkt. 37 ¶ 80. Furthermore, the time investment required in evaluating the 

technologies — incorporating the risk that the technology is defective, leading to financial failure

or ruin — likely also deters new entrants to the market. Id. at Dkt. 37 ¶ 81. Moreover, Sidense 

has alleged that it and Kilopass are the two significant producers in the current relevant market 

allowing for a plausible inference that buyer preferences between the parties have been 

entrenched. Therefore, Sidense has sufficiently pled barriers to market entry.

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CONCLUSION

For the foregoing reasons and for good cause shown, the Court hereby DENIES

Kilopass’s motion to dismiss.

IT IS SO ORDERED.

Dated: December 2, 2015

______________________________________

SUSAN ILLSTON

United States District Judge

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