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Ltd. v. Ati Technologies ULC

United States District Court, D. Delaware

February 11, 2014

S3 GRAPHICS CO., LTD., Plaintiff,
ATI TECHNOLOGIES ULC et al., Defendants.


LEONARD P. STARK, District Judge.

This case generally concerns whether certain patents (the "Disputed Patents") were part of a business transaction years ago and the parties' dispute as to which of them now owns the patents. Three motions are pending before the Court. For the reasons stated below, the Court will: (i) DENY the Motion to Dismiss for Failure to State a Claim under Fed.R.Civ.P. 12(b)(6) (the "ATI Motion to Dismiss") (D.I. 10), filed by defendants Advanced Micro Devices, Inc. ("AMD"), ATI Technologies ULC, and ATI International SRL (collectively "ATI") (collectively, "AMD/ATI" or "Defendants"), with respect to Counts II-IV of plaintiff S3 Graphics Co., Ltd.'s ("S3G" or "S3G Ltd.") Complaint (D.I. 1); (ii) GRANT Counterclaim-Defendants' Motion to Dismiss All Counter claims Against S3 Graphics, Inc. ("S3G Inc. Motion to Dismiss") (D.I. 55), filed by S3 Graphics, Inc. ("S3G Inc."); and (iii) GRANT Defendants' Motion to Amend Scheduling Order ("Motion to Amend") (D.I. 128).


On December 28, 2011, Plaintiff S3 Graphics, Co., Ltd. filed suit against Defendants, seeking a declaratory judgment that S3G Ltd. is the owner of certain patents, and that none of the Defendants either owns or is licensed under any of the patents. (D.I. 1 Count I) S3G Ltd.'s Complaint also asserts state law tort claims: slander of title (Count II), conversion (Count III), and unfair competition (Count IV).

On August 24, 2012, Defendants filed an Answer to S3G Ltd's declaratory judgment claim (Count I) and moved to dismiss the state law tort claims (Counts 11-IV). (D.I. 10, 14) At the same time, Defendants asserted counterclaims against S3G Ltd. and also against non-Plaintiff S3G Inc., which is Plaintiff S3G Ltd.'s wholly-owned subsidiary and a licensee to the patents at issue. (D.I. 14 at¶¶ 93, 143-47; see also D.I. 26 at¶ 93 (admitting that S3G Inc. is wholly-owned subsidiary of S3G Ltd.); D.I. 47 at¶ 93 (same)) In their Counterclaim, Defendants seek a declaratory judgment that the rights in the Disputed Patents were transferred to ATI, that these rights include ownership of the patents, and that S3G Inc. and S3G Ltd. do not have rights in the patents. ( See D.I. 14 at¶ 146)

On October 9, 2012, S3G Ltd. and S3G Inc. answered the Counterclaim (D.I. 26); they later amended their answer on April 5, 2013 (D.I. 47). On June 14, 2013, S3G Inc. filed its motion to dismiss the Counterclaim as against it for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(h)(3). (D.I. 55)

On December 17, 2013, the Court conducted a discovery teleconference, and ordered S3G to comply with certain discovery requests served by Defendants, after submission of an order implementing the Court's ruling. ( See D.I. 121 at 26-31) During the call, Defendants indicated that the parties had agreed to extend the deadline for completion of fact discovery from the end of January, 2013, but had not yet discussed by how long to extend discovery. ( See id at 29)

Following extensions of the deadline for submission of an order (see D.I. 122, 126), on January 14, 2013 the parties submitted a proposed order relating to Defendants' motion to compel (D.I. 127), which the Court entered on January 16. In the meantime, on January 15, Defendants moved to amend the schedule, including to extend the fact discovery deadline by four months. (D.I. 128) S3G is agreeable only to a two-month extension. (D.I. 130 at 1)


I. ATI Motion to Dismiss

Defendants ask the Court to dismiss S3G Ltd.'s state law tort claims for slander of title, conversion, and unfair competition for failure to state a claim under Rule 12(b)(6). (D.I. 10) Defendants contend such relief is required because each of these claims is pre-empted under federal patent law and barred under the Noerr-Pennington doctrine.

When presented with a Rule 12(b)(6) motion to dismiss for failure to state a claim, courts conduct a two-part analysis. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). First, courts separate the factual and legal elements of a claim, accepting "all of the complaint's well-pleaded facts as true, but [disregarding] any legal conclusions." Id. at 210-11. This first step requires courts to draw all reasonable inferences in favor of the non-moving party. See Maio v. Aetna, Inc., 221 F.3d 472, 500 (3d Cir. 2000). However, the Court is not obligated to accept as true "bald assertions, " Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) (internal quotation marks omitted), "unsupported conclusions and unwarranted inferences, " Schuylkill Energy Res., Inc. v. Pennsylvania Power & Light Co., 113 F.3d 405, 417 (3d Cir. 1997), or allegations that are "self-evidently false, " Nami v. Fauver, 82 F.3d 63, 69 (3d Cir. 1996).

Second, courts determine "whether the facts alleged in the complaint are sufficient to show that the plaintiff has a plausible claim for relief.'" Fowler, 578 F.3d at 211 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. This is a context-specific determination, requiring the court "to draw on its judicial experience and common sense." Id. at 679. At bottom, "[t]he complaint must state enough facts to raise a reasonable expectation that discovery will reveal evidence of [each] necessary element" of a claim. Wilkerson v. New Media Tech. Charter Sch. Inc., 522 F.3d 315, 321 (3d Cir. 2008) (internal quotation marks omitted).

The Court concludes that S3G Ltd.'s state law tort claims are not pre-empted. No conflicts exist between federal patent law and anything contained in S3G's state law claims. S3G does not seek imposition of liability upon AMD/ATI for improperly publicizing patents they own, but instead alleges that these Defendants have falsely and in bad faith "laid claim to patents they do not own, or hold any other interest in." (D.I. 27 at 1, 3) "[F]ederal patent law bars the imposition of liability for publicizing a patent in the marketplace unless the plaintiff can show that the patent holder acted in bad faith." Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318, 1336 (Fed. Cir. 1998), overruled on other grounds, Midwest Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356 (Fed. Cir. 1999) (en bane). S3G Ltd.'s state tort claims are predicated on allegations that Defendants are acting in bad faith in their efforts to obtain and/or publicize their rights in the asserted patents. (See, e.g., ...

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