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Tsmc Technology, Inc. v. Zond, LLC

United States District Court, D. Delaware

January 8, 2015

TSMC TECHNOLOGY, INC., TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LIMITED and TSMC NORTH AMERICA CORP., Plaintiffs,
v.
ZOND, LLC, Defendant.

REPORT AND RECOMMENDATION

CHRISTOPHER J. BURKE, Magistrate Judge.

Presently before the Court is Defendant Zond, LLC's ("Zond" or "Defendant") Motion to Dismiss (the "Motion to Dismiss"). (D.I. 17). For the reasons that follow, the Court recommends that Defendant's Motion to Dismiss be GRANTED-IN-PART.

I. Background

A. The Parties

Plaintiff Taiwan Semiconductor Manufacturing Company, Ltd. ("TSMC Ltd.") is a corporation organized under the laws of Taiwan, with its headquarters in Hsinchu, Taiwan. (D.I. 1 at ¶ 2) PlaintiffTSMC Technology, Inc. ("TTI") is a corporation organized under the laws of Delaware with a place of business in San Jose, California, and is an indirect subsidiary ofTSMC Ltd. ( Id. at ¶ 1) Plaintiff TSMC North American Corp. ("TSMC NA, " and together with TSMC Ltd. and TTI, "Plaintiffs" or "TSMC") is a corporation organized under the laws of California, with a place of business in San Jose, California, and is a subsidiary ofTSMC Ltd. ( Id. at ¶ 3)

Zond is a limited liability company organized under the laws of Delaware. ( Id. at ¶ 4). It has its principal place of business in Mansfield, Massachusetts. (D.1. 15 at ¶ 3) Zond is the owner of the various patents-in-suit in this matter: United States Patent Nos. 6, 806, 651 ("the 651 Patent"), 6, 896, 773 ("the 773 Patent"), 6, 896, 775 ("the 775 Patent"), 6, 903, 511 ("the 511 Patent"), 7, 095, 179 ("the 179 Patent"), and 7, 446, 479 ("the 479 Patent") (collectively, "the Group Two Patents"). (D.I. 1 at ¶ 5)

B. Facts Leading Up to the Filing of the Instant Case

In July 2013, Zond filed seven actions against seven different defendants or sets of defendants in the United States District Court for the District of Massachusetts ("District of Massachusetts"); in each case, Zond alleged infringement of seven of Zond's patents (the "Group One Patents"). (D.I. 1 at ¶ 8; D.I. 8 at 3, 7-8); Zand, LLC v. Fujitsu Ltd. et al., Civil Action No. 13-cv-11634-WGY (D. Mass.) ( "Zand, LLC !"), (D.I. 19).[1]In one of those actions (the "First TSMC Massachusetts Action"), although the number and identity of the defendants changed during the case, those defendants eventually came to include TSMC Ltd. and TSMC NA. ( Zand, LLC I, D.I. 19, D.I. 47)[2]In that action, Zond focused its infringement allegations on certain TSMC products ("circuit devices at the 28 and 20 [nanometer] and smaller nodes[]") manufactured using "unique manufacturing processes[.]" ( Zand, LLC I, D.I 19 at ¶ 40). On June 2, 2014, the First TSMC Massachusetts Action was administratively closed, due to pending inter partes review proceedings occurring before the United States Patent and Trademark Office ("PTO"). (D.I. 1 at ¶ 8; Zand, LLC I, D.I. 124)

On June 5, 2014, counsel for Zond sent a letter addressed to TSMC Ltd. and TSMC NA, to the attention of their in-house counsel (the "June 5 Letter"). (D.I. 1, ex. G at 1; D.I. 22 at 4) The letter, after recapping the history of the First TSMC Massachusetts Action, concluded as follows:

[B]ased on investigation, including the discovery in the [First TSMC Massachusetts Action], Zond believes that [TSMC Ltd. and TSMC NA, referred to together in the letter as "TSMC"] infringes several other Zond patents, including without limitation [the six Group Two Patents]. Zond intends to vigorously protect and enforce its intellectual property rights. In particular, Zond intends to file next week a new action in the District of Massachusetts, related to the [First TSMC Massachusetts Action], involving the same parties and the same accused TSMC products and processes, including products sold by TSMC to many of its customers. Unless TSMC promptly obtains a license to the right to use Zond's patented technology, Zond sees litigation as the only available avenue to put an end to TSMC's continued infringing activities. If TSMC wishes to obtain a license to the above referenced and other Zond patents, please reach out to me by Noon Eastern time, on Monday, June [9], 2014.

(D.I. 1, ex. G at 1-2)

C. Procedural Background as to the Instant Case

Instead of "reach[ing] out" to Zond's counsel in response to the above-referenced letter, on June 8, 2014, Plaintiffs commenced this action. (D.I. 1) In Plaintiffs' Complaint, they seek a declaratory judgment that they do not infringe, directly or indirectly, each of the Group Two Patents. ( Id. at ¶¶ 14-37)

On July 8, 2014, Zond filed the Motion to Dismiss. (D.1. 17) On October 16, 2014, Chief Judge Leonard P. Stark referred this action to the Court to hear and resolve all pretrial matters, up to and including the resolution of case-dispositive motions. (D.I. 28) On November 4, 2014, the Court heard oral argument on the instant Motion to Dismiss, as well as on Plaintiffs' motion seeking to enjoin Zond's later-filed action in the District of Massachusetts (the "Motion to Enjoin") and Zond's motion ...


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