Case 8:20-cv-00702-JVS-ADS Document 28 Filed 07/13/20 Page 1 of 31 Page ID #:483
`
`p Robert Benson (STATE BAR NO. 155971)
`rbenson@orrick.com
`ORRICK, HERRINGTON & SUTCLIFFE LLP
`2050 Main Street
`Suite 1100
`Irvine, CA 92614-8255
`Telephone: +1 949 567 6700
`Facsimile: +1 949 567 6710
`Attorney for Plaintiffs TCT MOBILE U.S. (US)
`INC. and HUIZHOU TCL MOBILE
`COMMUNICATION CO. LTD.
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`TCT MOBILE (US) INC. AND
`HUIZHOU TCL MOBILE
`COMMUNICATION CO. LTD.,
`Plaintiff,
`
`v.
`CELLULAR COMMUNICATIONS
`EQUIPMENT LLC,
`Defendant.
`
`Case No. 8:20-cv-00702-JVS-ADS
`MEMORANDUM OF POINTS
`AND AUTHORITIES IN
`OPPOSITION TO DEFENDANT
`CELLULAR
`COMMUNICATIONS
`EQUIPMENT LLC’S RENEWED
`MOTION TO DISMISS
`Date: August 3, 2020
`Time: 1:30 p.m.
`Courtroom: 10C
`Judge: Hon. James V. Selna
`
`MEMORANDUM OF POINTS AND AUTHORITIES
`IN OPPOSITION TO RENEWED MOTION TO
`DISMISS – CASE 8:20-CV-00702-JVS-ADS
`
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`Case 8:20-cv-00702-JVS-ADS Document 28 Filed 07/13/20 Page 2 of 31 Page ID #:484
`
`I.
`II.
`
`B.
`
`C.
`
`INTRODUCTION ........................................................................................... 1
`FACTUAL BACKGROUND ......................................................................... 3
`A.
`To Obtain Venue in the Eastern District of Texas, CCE Only
`Named as Defendants Foreign TCL Entities That Do Not Import
`or Sell the Accused Products in the United States ................................ 3
`TCT Mobile U.S. and Huizhou TCL Filed this Complaint So the
`Manufacturer of the Accused Products and the Only Entity
`Importing and Selling in the U.S. Could Be Joined in a Single
`Case ....................................................................................................... 5
`TCT Mobile U.S. Cannot Be Added to the Texas Litigation
`Because Venue is Improper in the Eastern District of Texas ............... 6
`III. MULTIPLE EXCEPTIONS TO THE FIRST-TO-FILE RULE AND
`JUDICIAL EFFICIENCY WEIGH STRONGLY AGAINST A
`DISMISSAL OR STAY OF THIS ACTION .................................................. 7
`A.
`Exceptions to the First-To-File Rule Are “Not Rare” and Are
`Made Based on the Just and Effective Disposition of Disputes
`and the Convenience and Suitability of Competing Forums ................ 7
`This Action Should Not Be Dismissed or Stayed Because TCT
`Mobile U.S. Is a “Necessary or Desirable Party” and Cannot Be
`Joined to the Texas Litigation Due to Lack of Venue .......................... 8
`This Action Should Not Be Dismissed or Stayed Because This
`Is the Only Forum Where the Entire Dispute Can Be Resolved
`in a Single Litigation ........................................................................... 13
`This Action Should Not Be Dismissed or Stayed Because TCT
`Mobile U.S. Has the Strongest Interest in the Outcome of This
`Dispute and Cannot Be Joined in the Eastern District of Texas ......... 16
`The Balance of Convenience Factors Strongly Favors the
`Central District of California, As CCE and TCT Mobile U.S.
`Are Both Based in Orange County and the Most Significant
`Third-Party Witnesses Are Also in California .................................... 17
`1. Most or All Relevant Witnesses and Evidence in the U.S.
`Are Located in this Forum Because TCT Mobile U.S. and
`CCE/Acacia Are Based in Orange County ............................... 20
`Google Is the Developer of the Accused Android Code
`and Its Witnesses and Evidence Are Also Located in
`California .................................................................................. 22
`i
`MEMORANDUM OF POINTS AND AUTHORITIES
`IN OPPOSITION TO RENEWED MOTION TO
`DISMISS – CASE 8:20-CV-00702-JVS-ADS
`
`B.
`
`C.
`
`D.
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`E.
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`2.
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`Case 8:20-cv-00702-JVS-ADS Document 28 Filed 07/13/20 Page 3 of 31 Page ID #:485
`
`TABLE OF CONTENTS
`(continued)
`
`Page
`
`IV. DEFENDANTS IN THE TEXAS ACTION WILL MOVE TO
`DISMISS, STAY OR TRANSFER OF THE TEXAS ACTION ................. 24
`CONCLUSION ............................................................................................. 25
`
`V.
`
`ii
`
`MEMORANDUM OF POINTS AND AUTHORITIES
`IN OPPOSITION TO RENEWED MOTION TO
`DISMISS – CASE 8:20-CV-00702-JVS-ADS
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`Case 8:20-cv-00702-JVS-ADS Document 28 Filed 07/13/20 Page 4 of 31 Page ID #:486
`
`TABLE OF AUTHORITIES
`
` Page(s)
`
`Cases
`A123 Sys., Inc. v. Hydro-Quebec,
`657 F.Supp.2d 276 (D. Mass. 2009) .................................................................... 13
`
`Anza Tech., Inc. v. Xilinx, Inc.,
`No. 17-cv-0687-WJM-STV, 2017 WL 4864947, *5 (D. Colo. Oct.
`27, 2017) .............................................................................................................. 23
`Bridgelux, Inc. v. Cree, Inc.,
`No. C 06-6495 PJH, 2007 WL 2022024 (N.D. Cal. July 9, 2007) ..................... 14
`Commc’ns Test Design, Inc. v. Contec, LLC,
`952 F.3d 1356 (Fed. Cir. 2020) ......................................................................... 7, 8
`Crystal Semiconductor Corp. v. TriTech Microelectronics Int’l, Inc.,
`246 F.3d 1336 (Fed. Cir. 2001) ....................................................................... 9, 10
`Elecs. for Imaging, Inc. v. Coyle,
`394 F.3d 1341 (Fed. Cir. 2005) ............................................................................. 7
`France Telecom S.A. v. Marvell Semiconductor Inc.,
`82 F. Supp. 3d 987 (N.D. Cal. 2015) ..................................................................... 9
`Futurewei Techs., Inc. v. Acacia Research Corp.,
`737 F.3d 704 (Fed. Cir. 2013) ..................................................................... 7, 8, 16
`In re Genentech, Inc.,
`566 F.3d 1338 (Fed. Cir. 2009) ........................................................................... 18
`Genentech, Inc. v. Eli Lilly and Co.,
`998 F.2d 931 (Fed. Cir. 1993), cert. denied, 510 U.S. 1140 (1994),
`abrogated on other grounds, Wilton v. Seven Falls Co., 515 U.S.
`277 (1995) .............................................................................................. 7, 8, 13, 16
`In re Google Inc.,
`588 Fed. Appx. 988 (Fed. Cir. Oct. 9, 2014) ................................................ 19, 24
`In re HTC Corp.,
`889 F.3d 1349 (Fed. Cir. 2018) ............................................................................. 1
`MEMORANDUM OF POINTS AND AUTHORITIES
`iii
`IN OPPOSITION TO RENEWED MOTION TO
`DISMISS – CASE 8:20-CV-00702-JVS-ADS
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`Case 8:20-cv-00702-JVS-ADS Document 28 Filed 07/13/20 Page 5 of 31 Page ID #:487
`
`Katz v. Lear Siegler, Inc.,
`909 F.2d 1459 (Fed. Cir. 1990) ........................................................................... 16
`
`Kyocera Communications, Inc. v. Potter Voice Technologies, LLC
`No. 13-CV-0766-H, 2013 WL 2456032, at *1 (S.D. Cal. June 5,
`2013) .................................................................................................................... 11
`Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co.,
`342 U.S. 180 (1952) ............................................................................................ 13
`Lucent Techs., Inc. v. Gateway, Inc.,
`580 F.3d 1301 (Fed. Cir. 2009), cert. denied, 130 S. Ct. 3324
`(2010) ..................................................................................................................... 9
`MEMC Elec. Materials, Inc. v. Mitsubishi Materials Silicon Corp.,
`420 F.3d 1369 (Fed. Cir. 2005) ........................................................................... 16
`Metropolitan Life Ins. Co. v. Bancorp Serv., LLC,
`No. 4:07-cv-1338, 2007 WL 4404175 (E.D. Mo. Dec. 17, 2007) ................ 20, 21
`Micron Tech., Inc. v. Mosaid Techs., Inc.,
`518 F.3d 897 (Fed. Cir. 2008) ..................................................................... 7, 8, 17
`Nexon America Inc. v. Uniloc 2017 LLC,
`No. 19-1096-CFC, 2020 WL 3035647 (D. Del. June 5, 2020) ........................... 11
`Ours Tech., Inc. v. Data Drive Thru, Inc.,
`645 F. Supp. 2d 830 (N.D. Cal. 2009)................................................................. 10
`Pacific Coast Bldg. Prod., Inc. v. CertainTeed Gypsum Mfg., Inc.,
`No. 4:18-cv-4165, 2019 WL 4046550 (W.D. Ark. Aug. 27, 2019) .................... 19
`
`Package Concepts & Materials, Inc.,
`No. 6:05-1184-HMH, 2005 WL 3055073 at *6 (D.S.C. Nov. 14,
`2005) .................................................................................................................... 14
`Polymer Indus. Prod. Co. v. Bridgestone/Firestone, Inc.,
`347 F.3d 935 (Fed. Cir. 2003) ............................................................................. 15
`
`Rockstar Consortium US LP v. Samsung Elec.s Co., Ltd.,
`No. 13-5933-CW, 2014 WL 1571807 (N.D. Cal. April 17, 2014) ..................... 19
`
`iv
`
`MEMORANDUM OF POINTS AND AUTHORITIES
`IN OPPOSITION TO RENEWED MOTION TO
`DISMISS – CASE 8:20-CV-00702-JVS-ADS
`
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`Case 8:20-cv-00702-JVS-ADS Document 28 Filed 07/13/20 Page 6 of 31 Page ID #:488
`
`Silicon Labs. Inc. v. Maxlinear, Inc.,
`No. 12-CV-1765, 2012 WL 12885232 (S.D. Cal. Oct. 17, 2012) ...................... 12
`Spread Spectrum Screening LLC v. Eastman Kodak Co.,
`657 F.3d 1349 (Fed. Cir. 2011) ........................................................................... 16
`Summit 6 LLC v. Research in Motion Corp.,
`No. 3:11-cv-367, 2013 WL 12124321, at *4 (N.D. Tex. June 26,
`2013) ...................................................................................................................... 9
`TC Heartland LLC v. Kraft Foods Group Brands LLC,
`137 S. Ct. 1514, 1521 (2017) ................................................................................ 6
`In re Verizon Bus. Network Servs. Inc.,
`635 F.3d 559 (Fed. Cir. 2011) ............................................................................. 23
`Woodway USA, Inc. v. Samsara Fitness, LLC,
`No. 15-cv-956-pp, 2016 WL 3282218 (E.D. Wis. June 14, 2016) ..................... 12
`Statutes
`28 U.S.C. § 1400(b) .................................................................................................... 6
`28 U.S.C. § 1404(a) ............................................................................................ 17, 18
`35 U.S.C. § 271(a) ................................................................................................ 8, 16
`Other Authorities
`Fed. R. Civ. P. Rule 12(h)(1) .................................................................................... 22
`Fed. R. Civ. P. 19 ...................................................................................................... 25
`
`v
`
`MEMORANDUM OF POINTS AND AUTHORITIES
`IN OPPOSITION TO RENEWED MOTION TO
`DISMISS – CASE 8:20-CV-00702-JVS-ADS
`
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`Case 8:20-cv-00702-JVS-ADS Document 28 Filed 07/13/20 Page 7 of 31 Page ID #:489
`
`I.
`
`INTRODUCTION
`This is a patent dispute between two companies based in Irvine, California.
`Cellular Communications Equipment LLC (“CCE”) is a patent monetization entity
`owned by Acacia Research. The overlapping officers of CCE and Acacia are
`predominantly in Irvine, California. TCT Mobile (US) Inc. (“TCT Mobile U.S.”) is
`also based in Irvine and is the only TCL-related entity that imports and sells the
`accused Android phones in the United States. Google develops the Android code
`accused of infringement and is similarly headquartered in California.
`In March 2020, CCE filed a patent case in the Eastern District of Texas
`against TCL-related entities located in China. CCE does not allege any specific
`acts of direct infringement in the U.S. by any of the foreign defendants, nor can it.
`Rather, CCE repeatedly alleges that the Chinese companies “control” or conduct
`business “through or in concert with” TCT Mobile U.S. Yet TCT Mobile U.S. is
`not named as a defendant in the Texas action. How did we get into this situation?
`CCE is known as a “Highly Assertive Entity,” a company with “a business
`model focused solely or significantly on deriving economic benefit from asserting
`patent rights in legal proceedings.”1 The Eastern District of Texas had been the
`most popular district for such patent assertion entities, but this changed after TC
`Heartland, which restricted venue in patent cases. New patent lawsuit filings in the
`Eastern District plummeted more than 65% the following year. 2
`NPEs such as CCE devised a workaround. Venue for foreign defendants is
`proper in any district. In re HTC Corp., 889 F.3d 1349, 1357-58 (Fed. Cir. 2018).
`So, to maintain a suit in the Eastern District of Texas, CCE only sued five TCL-
`related entities based in China. Motion at Ex. C, ¶¶ 2-6. CCE then asserted direct
`infringement of a method claim based on alleged “testing” of the accused phones.
`
`1 Analysis of Patent Litigation in the Eastern District of Texas, Docket Navigator, at
`11-12 (2018), attached to Benson Decl., Ex. 16.
`2 M. Curriden, TC Heartland Anniversary: EDTX Patent Filings Plummet, NDTX
`Benefits, The Texas Lawbook (May 20, 2018), attached to Benson Decl., Ex. 17.
`MEMORANDUM OF POINTS AND AUTHORITIES
`1
`IN OPPOSITION TO RENEWED MOTION TO
`DISMISS – CASE 8:20-CV-00702-JVS-ADS
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`Case 8:20-cv-00702-JVS-ADS Document 28 Filed 07/13/20 Page 8 of 31 Page ID #:490
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`But CCE never alleges that the foreign defendants test products in the U.S., nor can
`it. None of the named foreign defendants make, sell, offer for sale, use, or import
`the accused products into the U.S. See infra at 3-4. To address this issue, CCE has
`advanced an unsupported theory that these foreign entities somehow “control” or
`work “in concert with” TCT Mobile U.S. At the same time, CCE has intentionally
`omitted TCT Mobile U.S. from the Texas lawsuit, because naming TCT Mobile
`U.S. would defeat venue in Texas. And depending on the outcome, CCE may still
`be able to sue TCT Mobile U.S. for infringement in a future lawsuit.
`To remedy this unjust and judicially inefficient situation, the most interested
`parties filed a declaratory judgment action in this Court: TCT Mobile U.S. and
`Huizhou TCL Mobile Communication Co. Ltd. (“Huizhou TCL”), the manufacturer
`of the accused products. CCE can counterclaim for infringement and bring all
`defendants in the Texas litigation into this action, who will not object to venue or
`personal jurisdiction in this Court, for this case only. Benson Decl. ¶ 11. In this
`way, CCE’s infringement claims can be resolved in a single litigation, with all
`interested parties participating, and in the most convenient and interested forum.
`Federal Circuit precedent supports exercising jurisdiction in this situation,
`even if it is the second-filed case. Numerous exceptions to the “first-filed” rule
`apply under these facts. First, TCT Mobile U.S. is clearly a “necessary or desirable
`party,” as it is central to this dispute, but it cannot be joined to the Texas action
`because venue would be improper. Second, this is the only Court in which all of
`CCE’s claims for infringement of the ’923 patent by all TCL-related entities can be
`resolved in a single case, to avoid multiplicity of litigation. Third, TCT Mobile
`U.S. has the strongest interest in this patent dispute, as the only entity that can
`potentially be held liable for importing and selling the accused products in the U.S.
`This further weighs in favor of a forum where TCT Mobile U.S. can participate in
`the litigation. And finally, the balance of convenience factors strongly favors this
`forum. CCE’s motion to dismiss or stay this case should be denied.
`MEMORANDUM OF POINTS AND AUTHORITIES
`IN OPPOSITION TO RENEWED MOTION TO
`DISMISS – CASE 8:20-CV-00702-JVS-ADS
`
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`Case 8:20-cv-00702-JVS-ADS Document 28 Filed 07/13/20 Page 9 of 31 Page ID #:491
`
`II.
`
`FACTUAL BACKGROUND
`A.
`To Obtain Venue in the Eastern District of Texas, CCE Only
`Named as Defendants Foreign TCL Entities That Do Not Import
`or Sell the Accused Products in the United States
`On March 17, 2020, CCE filed its Original Complaint in the Eastern District
`of Texas, asserting infringement of U.S. Patent No. 7,218,923 (“the ’923 patent”)
`by two defendants, TCL Corporation (“TCL Corp.”) and TCL Electronics Holdings
`Limited (“TCL Electronics”). TCT Mobile U.S.’s Amended Complaint, D.I. 20-2,
`Ex. B. CCE’s Complaint alleged that TCL Corp. is a Chinese corporation with its
`principal place of business in China, and that TCL Electronics is a Cayman Islands
`company with its principal place of business in Hong Kong. Id., Ex. B ¶¶ 2-3.
`After Plaintiffs TCT Mobile U.S. and Huizhou TCL filed their Complaint in
`this action, infra at 5-6, CCE filed an Amended Complaint in the Eastern District of
`Texas—but intentionally omitted TCT Mobile U.S. CCE added three new foreign
`defendants: TCL Communication Technology Holdings Limited (“TCL
`Communication”), Huizhou TCL Mobile Communication Co. Ltd. (“Huizhou
`TCL”) and TCT Mobile U.S. International Ltd. (“TCT HK”). TCT Mobile U.S.’s
`Amended Complaint, D.I. 20-4, Ex. D, ¶¶ 2-36. CCE’s Amended Complaint
`alleges that TCL Communication is a Cayman Islands company with its principal
`place of business in China; that Huizhou TCL is a Chinese company with its
`principal place of business in China; and that TCT International is a Hong Kong
`company with its principal place of business in Hong Kong. Id. ¶¶ 3-5.
`None of the foreign defendants named in the Texas litigation are involved in
`any business activities in the U.S. related to the accused products. TCL Corp., TCL
`Electronics, and TCL Communication are mere holding companies, their business
`activities only consisting of the holding of their subsidiaries. Zhou Decl. ¶ 6; Yin
`Decl. ¶ 6; Yeh Decl. (TCL Communication) ¶ 6. None of TCL Corp., TCL
`Electronics, or TCL Communication “design, develop, manufacture, sell, offer for
`sale, use, import, export, or distribute any of the products identified in CCE’s
`MEMORANDUM OF POINTS AND AUTHORITIES
`IN OPPOSITION TO RENEWED MOTION TO
`DISMISS – CASE 8:20-CV-00702-JVS-ADS
`
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`Case 8:20-cv-00702-JVS-ADS Document 28 Filed 07/13/20 Page 10 of 31 Page ID #:492
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`Complaint,” nor do they place such products into the stream of commerce. Zhou
`Decl. ¶ 7; Yin Decl. ¶ 7; Yeh Decl. (TCL Communication) ¶ 7. Moreover, while
`CCE often asserts that TCL Corp. is the parent company of the other foreign
`defendants, everything cited by CCE is dated before 2019. TCL Corp. divested
`itself of any interest in the other defendants in March 2019. Yin Decl. ¶¶ 8-13.
`Huizhou TCL and TCT HK are the only two defendants named in the Texas
`litigation that are actively engaged in the business of mobile phones, but they do
`not conduct such business activities in the United States. Huizhou TCL
`manufactures the accused products in China, but it “does not … and did not, make,
`use, offer to sell, or sell in the United States, or import into the United States” any
`of the accused products or other mobile phones. Yeh Decl. (Huizhou TCL) ¶ 7.
`Similarly, TCT HK sells the accused products in China, but it likewise “does not …
`and did not, make, use, offer to sell, or sell in the United States, or import into the
`United States” any of the accused products. Yeh Decl. (TCT HK) ¶ 7.
`Consistent with the evidence presented in support of this Opposition, a
`careful review of CCE’s Amended Complaint reveals that CCE does not allege that
`any of the five foreign defendants themselves engage in any specific acts of
`infringement in the United States. For direct infringement, CCE alleges that
`Defendants “either by themselves or via an agent” infringe the ’923 patent by
`“practicing the method of claim 1 via at least its testing of the native Messaging
`application in its Android phones.” TCT Mobile U.S.’s Amended Complaint, D.I.
`20-4, Ex. D ¶ 48. CCE does not allege any facts of testing in the U.S., by any of the
`named foreign defendants or otherwise. Id. CCE’s claims are thus based primarily
`on an allegation of indirect infringement, namely, that “Defendants instruct and
`encourage users to use the Accused Products in a manner that infringes the ’923
`patent.” Id. ¶¶ 53-54. CCE seeks damages and injunctive relief. Id. at pp. 18-19.
`CCE improperly served the Original Complaint in the Texas litigation, which
`led to early communications between counsel for the parties. Johnson Decl. ¶¶ 3-6.
`MEMORANDUM OF POINTS AND AUTHORITIES
`IN OPPOSITION TO RENEWED MOTION TO
`DISMISS – CASE 8:20-CV-00702-JVS-ADS
`
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`Case 8:20-cv-00702-JVS-ADS Document 28 Filed 07/13/20 Page 11 of 31 Page ID #:493
`
`During those discussions, counsel for the named defendants requested a five-month
`extension to respond to the complaint to relieve CCE of the extensive delays and
`rigors of serving defendants in China pursuant to the Hague Convention. Id. It is
`counsel’s recent experience that serving defendants in China, as required under the
`Hague Convention, can take from 8 to 12 months, and due to the current pandemic,
`it may take even longer. Id. ¶ 7. The parties ultimately agreed on an extension of
`time to respond to the Amended Complaint, for all five foreign defendants, to
`September 7, 2020, based on the defendants’ waiver of service. Id. ¶¶ 8-13.
`The reason for the elongated extension of time in Texas was that it
`eliminated the need for service under the Hague Convention, which would have
`taken much longer. Id. ¶¶ 3-13. Complications due to the coronavirus were
`mentioned, given the location of the defendants in China, but were not the primary
`basis for the extension. Id. CCE’s failure to mention waiver of service under the
`Hague Convention is disingenuous, at best, and its assertion that counsel in this
`action used Covid-19 as the sole basis for this extension is simply false. Id.
`B.
`TCT Mobile U.S. and Huizhou TCL Filed this Complaint So the
`Manufacturer of the Accused Products and the Only Entity
`Importing and Selling in the U.S. Could Be Joined in a Single Case
`On April 9, 2020, prior to CCE filing an Amended Complaint in the Texas
`litigation, TCT Mobile U.S. and Huizhou TCL filed a Complaint for declaratory
`judgment of non-infringement in this Court. On June 22, 2020, Plaintiffs filed an
`Amended Complaint in this Court to resolve one of the issues raised by CCE’s prior
`motion to dismiss regarding its pleading of non-infringement. TCT Mobile U.S.
`and Huizhou TCL seek a declaration that none of the accused phone products
`infringe the ’923 patent and that none of their activities directly or indirectly
`infringe the patent. TCT Mobile U.S.’s Amended Complaint, D.I. 20, ¶¶ 20-23.
`TCT Mobile U.S. and Huizhou TCL filed this action because they are the
`two entities that are most interested in the outcome of the litigation and neither
`entity was named in CCE’s Original Complaint in the Eastern District of Texas.
`MEMORANDUM OF POINTS AND AUTHORITIES
`IN OPPOSITION TO RENEWED MOTION TO
`DISMISS – CASE 8:20-CV-00702-JVS-ADS
`
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`Case 8:20-cv-00702-JVS-ADS Document 28 Filed 07/13/20 Page 12 of 31 Page ID #:494
`
`Huizhou TCL manufactures the accused products, and more generally, is the only
`TCL entity whose principal activities include manufacturing. Id. ¶ 13. Huizhou
`TCL manufactures mobile phone products in China, including the accused
`products. Yeh Decl. (Huizhou TCL) ¶ 2. Huizhou TCL does not and has not
`engaged in making, using, selling, offering for sale, or importing the accused
`products in the U.S. Id.
`TCT Mobile U.S. is the TCL-related entity that imports the accused products
`into the U.S. and then sells the products in the U.S. Amended Complaint, D.I. 20,
`¶ 14; Yeh Decl. ¶ 6. “TCL Mobile (US) Inc. is the TCL-related entity that is
`responsible for and engaged in importing, selling, and marketing the Accused
`Products in the United States.” Id. As further explained elsewhere, TCT Mobile
`U.S. is at the center of CCE’s claims and is the most interested party in the outcome
`of this dispute, yet it is excluded from the Texas litigation.
`C.
`TCT Mobile U.S. Cannot Be Added to the Texas Litigation
`Because Venue is Improper in the Eastern District of Texas
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`Venue over TCT Mobile U.S. would be improper in the Eastern District of
`Texas. Thus, TCT Mobile U.S. was not named as a defendant in the Texas
`litigation, nor can it be added as a defendant in the Texas action. Presumably, this
`is the reason that CCE has moved to dismiss or stay the present action and did not
`move to transfer this action to the Eastern District of Texas.
`Under 28 U.S.C. § 1400(b), “Any civil action for patent infringement may be
`brought in the judicial district where the defendant resides, or where the defendant
`has committed acts of infringement and has a regular and established place of
`business.” In TC Heartland LLC v. Kraft Foods Group Brands LLC, the U.S.
`Supreme Court held that a domestic corporation only “resides” in its state of
`incorporation. 137 S. Ct. 1514, 1521 (2017). Accordingly, venue over TCT
`Mobile U.S. does not exist in the Eastern District of Texas. TCT Mobile U.S. is
`incorporated in Delaware and has its principal place of business in Irvine,
`MEMORANDUM OF POINTS AND AUTHORITIES
`IN OPPOSITION TO RENEWED MOTION TO
`DISMISS – CASE 8:20-CV-00702-JVS-ADS
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`Case 8:20-cv-00702-JVS-ADS Document 28 Filed 07/13/20 Page 13 of 31 Page ID #:495
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`California. Yeh Decl. (TCT Mobile U.S.) ¶¶ 3-4. TCT Mobile U.S. does not own
`or lease any real property in Texas; has no offices, facilities, places of business or
`other physical location in Texas; and has no employees or agents in Texas. Id. ¶ 7.
`III. MULTIPLE EXCEPTIONS TO THE FIRST-TO-FILE RULE AND
`JUDICIAL EFFICIENCY WEIGH STRONGLY AGAINST A
`DISMISSAL OR STAY OF THIS ACTION
`A.
`Exceptions to the First-To-File Rule Are “Not Rare” and Are
`Made Based on the Just and Effective Disposition of Disputes and
`the Convenience and Suitability of Competing Forums
`When an infringement action and a declaratory judgment action are pending
`in two different courts, the “general rule favors the forum of the first-filed action,”
`but “courts have discretion to make exceptions to this general rule in the interest of
`justice or expediency.” Micron Tech., Inc. v. Mosaid Techs., Inc., 518 F.3d 897,
`904 (Fed. Cir. 2008). Accord, Genentech, Inc. v. Eli Lilly and Co., 998 F.2d 931,
`937 (Fed. Cir. 1993), cert. denied, 510 U.S. 1140 (1994), abrogated on other
`grounds, Wilton v. Seven Falls Co., 515 U.S. 277 (1995). “Application of the first-
`to-file rule is generally a matter for a district court’s discretion, exercised within
`governing legal constraints.” Futurewei Techs., Inc. v. Acacia Research Corp., 737
`F.3d 704, 708 (Fed. Cir. 2013).
`Exceptions to the “first-filed” rule “are not rare, and are made when justice or
`expediency requires.” Genentech, 998 F.2d at 937. Exceptions may be made if
`justified by “considerations of judicial and litigant economy, and the just and
`effective disposition of disputes.” Futurewei, 737 F.3d at 708; Elecs. for Imaging,
`Inc. v. Coyle, 394 F.3d 1341, 1347 (Fed. Cir. 2005). “The first-filed suit rule …
`will not always yield the most convenient and suitable forum. Therefore, the trial
`court weighing jurisdiction additionally must consider the real underlying dispute:
`the convenience and suitability of competing forums.” Micron, 518 F.3d at 904.
`When patent rights are at issue, Federal Circuit precedent governs whether the first-
`filed rule should be applied to accepting jurisdiction over a declaratory judgment
`action. Commc’ns Test Design, Inc. v. Contec, LLC, 952 F.3d 1356, 1362 (Fed.
`MEMORANDUM OF POINTS AND AUTHORITIES
`IN OPPOSITION TO RENEWED MOTION TO
`DISMISS – CASE 8:20-CV-00702-JVS-ADS
`
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`Case 8:20-cv-00702-JVS-ADS Document 28 Filed 07/13/20 Page 14 of 31 Page ID #:496
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`Cir. 2020); Futurewei, 737 F.3d at 708; Genentech, 998 F.2d at 938.
`The Federal Circuit has expressed concern that both patent holders and
`declaratory judgment filers may have the incentive and opportunity to “race to the
`courthouse.” Therefore, when deciding which of two parallel actions should
`proceed, district courts “should not reach a decision based on any categorical rules”
`based on the timing of the actions but rather “consider the real underlying dispute:
`the convenience and suitability of competing forums.” Micron, 518 F.3d at 904.
`“The convenience and availability of witnesses, absence of jurisdiction
`over all necessary or desirable parties, possibility of consolidation with
`related litigation, or considerations relating to the interest of justice
`must be evaluated to ensure the case receives attention in the most
`appropriate forum. Eventually, robust consideration of these factors
`will reduce the incentives for a race to the courthouse because both
`parties will realize that the case will be heard or transferred to the most
`convenient or suitable forum.”
`Id. at 904-05. Accord, Commc’ns Test Design, 952 F.3d at 1362. Considerations
`relating to the real party in interest also impact whether the second-filed case should
`be stayed or dismissed. Futurewei, 737 F.3d at 708; Genentech, 998 F.2d at 938.
`B.
`This Action Should Not Be Dismissed or Stayed Because TCT
`Mobile U.S. Is a “Necessary or Desirable Party” and Cannot Be
`Joined to the Texas Litigation Due to Lack of Venue
`CCE’s Amended Complaint in the Eastern District of Texas demonstrates
`that TCT Mobile U.S. is central to the infringement claims and to this patent
`dispute. One of the primary exceptions to the “first-to-file” rule is where there is an
`“absence of jurisdiction over all necessary or desirable parties” in the first-filed
`case. Futurewei, 737 F.3d at 708. That is exactly the situation presented here.
`The only specific claim asserted in CCE’s Amended Complaint is method
`claim 1 of the ’923 patent. A company that does not practice a patented method in
`the United States cannot be liable for direct infringement. 35 U.S.C. § 271(a);
`MEMORANDUM OF POINTS AND AUTHORITIES
`IN OPPOSITION TO RENEWED MOTION TO
`DISMISS – CASE 8:20-CV-00702-JVS-ADS
`
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`Case 8:20-cv-00702-JVS-ADS Document 28 Filed 07/13/20 Page 15 of 31 Page ID #:497
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`Crystal Semiconductor Corp. v. TriTech Microelectronics Int’l, Inc., 246 F.3d
`1336, 1351 (Fed. Cir. 2001). “A defendant can only directly infringe a method
`claim ... by ‘using’ the method within the United States, which requires that the
`defendant practice every step of the method within the United States.” France
`Telecom S.A. v. Marvell Semiconductor Inc., 82 F. Supp. 3d 987, 993 (N.D. Cal.
`2015). “To infringe a method claim, a person must have practiced all steps of the
`claimed method.” Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1317 (Fed.
`Cir. 2009), cert. denied, 130 S. Ct. 3324 (2010). Thus, in Summit 6 LLC v.
`Research in Motion Corp., the Court held that neither a foreign nor a domestic
`Samsung entity directly infringed a method claim because there was a lack of
`evidence that either company “practiced the method claims in the United States, for
`example, by testing the product.” No. 3:11-cv-367, 2013 WL 12124321, at *4
`(N.D. Tex. June 26, 2013) (simply creating software that directly infringes a
`method claim cannot constitute direct infringement).
`CCE’s sole theory of direct infringement is recited in paragraph 48 of its
`Amended Complaint: “On information and belief, Defendants have, and continue
`to, either by themselves or via an agent, infringe at least [method] claim 1 of the
`’923 patent by, among other things, prac