Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-02009/USCOURTS-cand-4_06-cv-02009-0/pdf.json

Parties Involved:
Immersion Corporation
Counter-defendant
Internet Services LLC
Counter-claimant

Document Text:

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

INTERNET SERVICES, LLC, a California

Limited Liability Company,

Plaintiff,

v.

IMMERSION CORPORATION, a Delaware

corporation,

Defendant. /

No. C 06-2009 CW

ORDER DENYING

PLAINTIFF'S

MOTION TO REMAND

Plaintiff Internet Services LLC (ISLLC) moves to remand this

action to the Superior Court of California for Santa Clara County. 

Defendant Immersion Corporation (Immersion) opposes the motion to

remand. The matter was taken under submission on the papers. 

Having considered all of the papers filed by the parties, the Court

denies ISLLC's motion to remand. 

BACKGROUND

This case is related to Immersion's 2002 lawsuit against Sony

Computer Entertainment America, Inc., and Sony Computer

Entertainment, Inc., (collectively Sony) for patent infringement,

in which a jury found that Immersion’s U.S. Patent Nos. 6,275,213

(the '213 patent) and 6,424, 333 (the '333 patent) were valid and

Case 4:06-cv-02009-CW Document 28 Filed 07/10/06 Page 1 of 6
United States District Court

For the Northern District of California

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Additional details about the Immersion action and ISLLC's

interest therein are set forth in the December 29 Order. 

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infringed and awarded Immersion $82 million in damages. Immersion

Corp. v. Sony Computer Entertainment America, Inc., No. C 02-0710

CW (N.D. Cal., amended judgment entered, Apr. 7, 2005). ISLLC is a

licensee of Immersion's patents; the license agreement between

ISLLC and Immersion provides, "With respect to CONTENT-RESTRICTED

MATERIAL, such license shall be exclusive." Immersion, Dec. 29,

2004 Order Granting Pl.'s Mot. to Dismiss Third Party's CrossClaims (hereinafter Dec. 29 Order) (quoting ISLLC Answer Ex. B).1

The parties dispute the meaning of "content restricted material." 

The Court dismissed ISLLC's cross-claims against Immersion and

counterclaims against Sony, finding that ISLLC's "exclusive area of

license does not encompass" the patents-in-suit. Dec. 29 Order at

7. Specifically, the Court found, as a matter of federal patent

law, that ISLLC was neither an assignee nor an exclusive licensee

of the patents-in-suit, and therefore did not have standing to sue

under the patents on its own or as a co-plaintiff with Immersion. 

The Court also dismissed ISLLC’s claims for declaratory relief,

breach of contract and judicial apportionment, because they all

rested on the same flawed assumption that ISLLC had proprietary

rights in the patents-in-suit. The Court instructed ISLLC to file

any amended claims in a separate lawsuit. 

ISLLC then filed amended cross-claims against Immersion, and

the Court also dismissed these. Immersion, March 24, 2005 Order

Granting Pl.'s Mot. to Dismiss Third Party's Am. Cross-Claims

(hereinafter March 24 Order). The Court found that ISLLC's amended

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cross-claim for declaratory adjudication that it had exclusive

rights to Immersion's IP, including the ‘213 and ‘333 patents,

merely re-stated the issue that the Court had already decided, that

ISLLC has no exclusive rights to those patents. The Court

dismissed with prejudice ISLLC’s cross-claim for judicial

apportionment between ISLLC and Immersion of the damages awarded by

the jury, on the grounds that the damage award was based on

Immersion’s suit for patent infringement, a suit which ISLLC had no

standing to bring. It similarly dismissed with prejudice ISLLC's

cross-claim for breach of contract to the extent that it was based

on Immersion's lawsuit against Sony, on the grounds that the right

to sue under the patents was not, as ISLLC alleged, within its

field of exclusivity. The Court acknowledged that ISLLC could

potentially state a claim for breach of contract and unjust

enrichment on the basis of the compulsory license which Immersion

had obtained against Sony, and noted that such a claim "would

require the Court to construe the contracts between Immersion and

ISLLC." March 24, 2005 Order at 6. However, the Court dismissed

that cross-claim without prejudice to refiling it in a separate

lawsuit pursuant to the instructions in the December 29 Order. 

ISLLC has filed a notice of appeal to the Federal Circuit of the

Court's orders. 

ISLLC subsequently filed suit against Immersion in Santa Clara

County Superior Court, bringing claims for declaratory relief,

breach of contract, promissory fraud and constructive trust. 

DISCUSSION

Immersion contends that this Court has original jurisdiction

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pursuant to 28 U.S.C. § 1331, over ISLLC's present complaint,

because the claims for declaratory relief, breach of contract and

constructive trust arise under federal patent law. 

Federal courts have original, exclusive jurisdiction over

civil actions relating to patents. 28 U.S.C. § 1338(a). It is

"well-settled," however, that if a "patentee pleads a cause of

action based on rights created by a contract, or on the common law

of torts, the case is not one 'arising under' the patent laws." 

Jim Arnold Corp. v. Hydrotech Sys., Inc., 109 F.3d 1567, 1572 (Fed.

Cir. 1997). Federal jurisdiction over patent law extends "only to

those cases in which a well-pleaded complaint establishes either

that federal patent law creates the cause of action or that the

plaintiff's right to relief necessarily depends on resolution of a

substantial question of federal patent law, in that patent law is a

necessary element of one of the well-pleaded claims." Christianson

v. Colt Indus. Operating Corp., 486 U.S. 800, 809 (1988). A claim

that is "supported by alternative theories in the complaint may not

form the basis for § 1338(a) jurisdiction unless patent law is

essential to each of those theories." Id. at 810 (emphasis added). 

ISLLC concedes that its State complaint raises numerous issues

which arise out of federal patent law and have already been decided

by this Court in Immersion's favor. E.g., compare Notice of

Removal, Ex. A, Verified Complaint ¶ 62 (alleging that Immersion

breached the Amended License Agreement by failing to name ISLLC as

a co-plaintiff in the case against Sony) with Dec. 29 Order at 6-7

(finding that ISLLC lacked standing to sue Sony even as a coplaintiff). At least with respect to the breach of contract claim,

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the Court agrees that under the facts alleged, ISLLC could still

prevail without the need to resolve issues of federal patent law. 

For instance, ISLLC could prove that Sony's compulsory license

derives in part from the sale of software that is within ISLLC's

field of exclusivity as an Immersion licensee, and thus that

Immersion has breached its license agreement with ISLLC. Verified

Compl. ¶ 63. 

With respect to the declaratory relief claim, however, ISLLC

has not shown that its claim may be proved without resolution of

federal patent law issues. The State complaint requests a

declaration

that ISLLC has an exclusive license under the agreement with

respect to, among other things, Immersion IP (including the

'213 and '333 patents) with respect to games 'whose topics or

images are age restricted,' including the games listed in

paragraphs 32 and 34 above.

Verified Compl., Prayer for Relief (A)(1) (emphasis added). Yet it

is the issue of ISLLC's purported "exclusive license" to

Immersion's patents that the Court has already found involves

substantive issues of federal patent law. See March 24 Order at 7

(warning that ISLLC could not base any amended claims on any

purported exclusive right in the ‘213 or ‘333 patents). ISLLC

argues that it could prevail on its claim for declaratory judgment

merely by proving that Immersion has breached the license

agreement, but its claim for declaratory relief is actually too

broad for this. As the Court has explained in prior orders, the

inventions disclosed in the Immersion patents require both software

and hardware, and ISLLC lacks an exclusive license to the latter. 

Even if ISLLC could prove that Immersion had breached the software

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license, this would not mean that ISLLC had an exclusive license

(within the field of content restricted material) to the patents. 

Because the Court finds that ISLLC's right to the declaratory

relief it requests necessarily involves resolution of a substantial

question of federal patent law, federal jurisdiction exists. See

Univ. of W. Virginia Bd. of Trustees v. Vanvoorhies, 278 F.3d 1288,

1295 (Fed. Cir. 2002) (holding federal jurisdiction to be proper

where right to relief in breach of contract claim necessarily

depended on the resolution of whether a patent was a continuationin-part). 

CONCLUSION

For the foregoing reasons, the Court DENIES ISLLC's motion to

remand (Docket No. 16). 

IT IS SO ORDERED.

Dated: 7/10/06 

CLAUDIA WILKEN

United States District Judge

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