Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Sanyo Electric Co., Ltd. v. Intel Corp.

United States District Court, D. Delaware

April 17, 2019

SANYO ELECTRIC CO., LTD, Plaintiff,
v.
INTEL CORPORATION, Defendant,

          MEMORANDUM

         Plaintiff, Sanyo Electric Co., Ltd., originally filed this suit in the Court of Chancery of the State of Delaware against Intel Corporation alleging state law causes of action and seeking declaratory and injunctive relief as to the parties' rights under a 2006 patent cross-license agreement ("Cross License Agreement"). (D.I. 2, Ex. A)[1]. Sanyo asserted four claims against Intel complaining of Third Party Interference, Intentional Interference, Trespass to Chattels, and requesting a declaration that Intel is not authorized to sell wireless communication modules under the Cross License Agreement. (D.I. 2, Ex A at ¶¶ 128-78). Intel filed a notice of removal to this Court, asserting that this Court has original jurisdiction of this case under 28 U.S.C. § 1338(a). (D.I. 2 at 1). Intel asserts at least one of Sanyo's claims and at least one of Intel's counterclaims "arise under" federal patent law. (Id.).

         Presently before this Court is Sanyo's Motion to Remand for lack of federal jurisdiction. (D.I. 11 at 1). The issues have been fully briefed. (D.I. 12, 16, 22). For the reasons set forth below, Sanyo's Motion is GRANTED, and this action will be remanded to the Court of Chancery of the State of Delaware.

         I. Background

         Sanyo filed this action against Intel in the Court of Chancery of the State of Delaware on October 7, 2018. (D.I. 2, Ex. A). Sanyo and Intel negotiated the Cross License Agreement over a period of eighteen months. (D.I. 2, Ex. A at ¶ 2 and Ex. 1). At its heart, the Agreement identifies the categories of products Intel can make and sell under patents Sanyo owned at the time, and vice versa. (D.I. 2, Ex. A at ¶ 25).

         In addition, and critical to resolving this motion for remand, the Cross License Agreement contains a forum selection clause, which in pertinent part provides that: "All. . . litigation arising out of or related to this Agreement, . .. shall be subject to the exclusive jurisdiction of the courts of the State of Delaware or of the Federal courts sitting therein. Each Party ... hereby irrevocably submits to the personal jurisdiction of such courts and irrevocably waives all objections to such venue." (D.I. 2, Ex. A at Ex. 1, § 6.9).

         In 2011, Sanyo sold certain of its patents to Hera Wireless S.A., including patents concerning Wi-Fi technology, pursuant to a patent assignment agreement. (D.I. 2, Ex. A at ¶¶ 9, 97). While Hera took all right, title, and interest in the patents, the assignment agreement grants Sanyo a portion of the revenues that Hera receives through licensing or patent infringement enforcement activities. (Id. at ¶ 98). The assignments were recorded with the U.S. Patent and Trademark Office. (D.I. 2, Ex. B (Intel's Answer and Counterclaims) at Counterclaim ¶ 17 ("According to ... the assignment records of the U.S. Patent and Trademark Office, Sanyo assigned the nine asserted [Wi-Fi] patents after the Cross License became effective.")). Intel does not dispute that Hera-not Sanyo-owns the patents. (See id.).

         Beginning in July 2017, Hera and its authorized licensing company, Sisvel UK Limited, sued several companies for patent infringement, including Intel's customer Lenovo-Hera Wireless S.A. and Sisvel UK Ltd. v. Lenovo Holding Co., Inc., No. 17-1088 (RGA). (D.I. 2, Ex. B at Counterclaim ¶¶ 16, 24-26, 32, 34-42). Those cases are now before this Court.[2] In particular, Hera and Sisvel have asserted nine of the patents that Hera purchased from Sanyo (the "Wi-Fi Patents")[3] against Lenovo. (D.I. 18 (Campbell Decl), Ex. 4 at ¶¶ 10-23).

         Many Lenovo laptops use Intel integrated circuit chips that manage wireless communications. Believing that Hera's infringement theory was unavoidably aimed at its chips' functions, Intel demanded, under the Cross License Agreement between Sanyo and Intel, that Sanyo confirm that Sanyo had conditioned its assignment of patents to Hera on Intel's license rights as Section 6.13 of the Cross License Agreement required. Intel further sought Sanyo's consent to disclose the Cross License Agreement to Hera and Sisvel and to communicate a demand to dismiss infringement allegations based on Intel's chips. (D.I. 18, Ex. 7). After Sanyo consented to that disclosure, Intel wrote to Hera and Sisvel in October 2017 outlining in significant detail why Intel's chips were licensed to the asserted patents under the Cross License Agreement. (D.I. 18, Exs. 8 & 9).

         Intel's October 2017 letter further detailed why the infringement theory against Lenovo would necessarily contend that Intel's licensed chips satisfy allegedly inventive aspects of the patent claims resulting in exhaustion of the infringement claims against computers that incorporate those chips. (D.I. 18, Ex. 9). Intel therefore demanded that Hera and Sisvel dismiss laptops with Intel chips from their lawsuit against Lenovo. (Id.). In November 2017, Hera and Sisvel wrote that they were working "with Sanyo to analyze the proper scope of the license," and in January 2018, they refused Intel's demand. (D.I. 18, Ex. 10).

         After Hera and Sisvel refused Intel's demand to dismiss infringement allegations based on Intel's chips, Intel wrote to Sanyo explaining that Sanyo had breached its non-delegable obligations under the Cross License Agreement by assisting and encouraging Hera and Sisvel to ignore Intel's license rights and Lenovo's resulting exhaustion defense. (D.I. 18, Ex. 11). Intel also explained that "before Intel may file suit to remedy Sanyo's breach of contract," Sanyo and Intel must have their senior executives meet to discuss the dispute and then participate in a formal mediation as set out in the procedure of Section 6.10 of the Cross License Agreement. (Id.). At Intel's request and insistence, the senior executive meeting was held, and (later) a mediation was held and concluded without reaching resolution. (D.I. 18, Ex. 2 at ¶ 28; Ex. 8; Ex. 12). During the executives' meeting, Intel presented a detailed slide-show, reiterating its demand that Sanyo confirm Intel's license rights under the Cross License Agreement and cause Hera to dismiss its infringement claims against Lenovo computers with Intel chips because the patents were exhausted as to such claims. (D.I. 18, Ex. 12). Sanyo refused to do so.

         Sanyo alleges that in September 2017, Intel began falsely asserting that the Cross License Agreement authorizes Intel to make or sell wireless communication modules, and that Hera's patent rights in Intel's customers' products incorporating wireless communication modules are exhausted under the doctrine of patent exhaustion. (D.I. 2, Ex. A at ¶¶ 13, 15, 109-13). After attempting to resolve the dispute for over a year, on October 7, 2018, Sanyo sued Intel in the Court of Chancery of the State of Delaware. (D.I. 2, Ex. A at ¶ 20). In its complaint, Sanyo sought a judgment declaring that Intel is not authorized to make or sell wireless communication modules under the Cross License Agreement and asserted additional state law claims for interference with contract and trespass to chattels.

         Specifically, Sanyo's Complaint alleges the following claims: Third Party Interference (D.I 2, Ex. A at ¶¶ 147-55); Intentional Interference (D.I. 2, Ex. A at ¶¶ 155-66); Trespass to Chattels (D.I. 2, Ex. A at ¶¶ 167-78); and a Declaratory Judgment that Intel is not authorized to sell wireless communication modules under the Cross License Agreement (D.I. 2, Ex. A at ¶¶ 128-46).

         On October 29, 2018, Intel served its Answer and Counterclaims. (D.I. 2, Ex. B). Intel alleges the following counterclaims: Breach of Contract (D.I. 2, Ex. B at Counterclaim ¶¶ 43-54); a Declaratory Judgment that non-party-Hera's infringement claims are exhausted and the asserted Wi-Fi Patents are unenforceable as to Lenovo laptop computers that contain the accused Intel Wi-Fi chips (D.I. 2, Ex. B at Counterclaim ¶¶ 55-59); and a Declaratory Judgment that the asserted Wi-Fi patents that are owned by non-party Hera are unenforceable because they are invalid over the prior art (D.I. 2, Ex. B at Counterclaim ¶¶ 60-64).

         Intel's fifth affirmative defense, that "Hera's infringement claims for the asserted [Wi-Fi] Patents are exhausted as to the Lenovo laptop computers that use the Intel Wifi Chips," and its sixth affirmative defense, that "the claims of the asserted [Wi-Fi] patents that Hera is pursuing are invalid and unenforceable in view of the prior art," are related to these counterclaims. (D.I. 2, Ex. B at ¶¶ 184-85)

         In its answer in Hera v. Lenovo, Lenovo pled several defenses, including that the infringement claims under the asserted patents are exhausted, in whole or in part. (D.I. 18, Ex. 5 at ¶ 165). In this case, Sanyo has alleged that Lenovo's exhaustion defense in Hera v. Lenovo is the direct result of Intel communicating and supporting its position that the infringement claims against Lenovo computers containing Intel licensed chips are barred under the doctrine of patent exhaustion. (D.I. 18, Ex. 1 at ¶ 118).

         On October 30, 2018, Intel removed the case to this Court. (D.I. 2). Intel claimed to have removed this action based on 28 U.S.C. §§ 1338(a), 1441, and 1454, on the ground that this Court has jurisdiction over one or more of Sanyo's claims and one or more of Intel's counterclaims because those claims arise under the patent laws or raise substantial questions of patent law. (D.I. 2, at 1). Intel also contends that supplemental jurisdiction, under 28 U.S.C. § 1367, exists over any claim or counterclaim that does not raise a substantial question of federal patent law. (Id.).

         Sanyo filed its motion to remand, claiming this Court lacks jurisdiction over the parties' claims because they do not arise under the patent laws, do not satisfy the case-or-controversy requirement, or both.

         II. Legal Standard

         Upon removal of an action, a plaintiff may challenge such removal by moving to remand the case back to state court. 28 U.S.C. § 1447. As is the case here, "a motion to remand based on lack of subject matter jurisdiction may be made at any time before final judgment," Foster v. Chesapeake Ins. Co., 933 F.2d 1207, 1212-13 (3d Cir. 1991) (citing 28 U.S.C. § 1447(c)).

         "The party asserting jurisdiction bears the burden of showing that at all stages of the litigation the case is properly before the federal court." Samuel-Bassett v. KIA Motors America, Inc., 357 F.3d 392, 396 (3d Cir. 2004). "The statute governing removal, 28 U.S.C. § 1441, must be strictly construed against removal." Sikirica v. Nationwide Ins. Co., 416 F.3d 214, 219 (3d Cir. 2005) (citing Samuel-Bassett, 357 F.3d at 396).

         A district court has subject matter jurisdiction over cases removed from state court for their assertion of federal patent law claims. Under 28 U.S.C. § 1454, "[a] civil action in which any party asserts a claim for relief arising under any Act of Congress relating to patents, plant variety protection, or copyrights may be removed to the district court of the United States." More generally, pursuant to 28 U.S.C. § 1441, a defendant may remove "any civil action brought in a State court of which the district courts of the United States have original jurisdiction." A district court has original jurisdiction over a civil action "arising under the Constitution, laws, or treaties of the United States," 28 U.S.C. § 1331, as well as "any Act of Congress relating to patents, plant variety protection, copyrights and trademarks," 28 U.S.C. § 1338(a).

         A case "aris[es] under" federal law, and therefore may be removed to federal court, when "federal law creates the cause of action asserted." Gunn v. Minton, 568 U.S. 251, 257 (2013); see 28 U.S.C. §§ 1331, 1338(a), 1441, 1454. For example, federal law "creates" various patent causes of action under Title 35 of the United States Code. See Gunn, 568 U.S. at 257 (citing 35 U.S.C. §§ 271, 281). A case may also "aris[e] under" federal law when a "state-law claim necessarily raise[s] a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balances of federal and state judicial responsibilities." Gunn, 568 U.S. at 258 (quoting Grable & Sons Metal Prods, v. Darue Eng'g & Mfg., 545 U.S. 308, 314 (2005)). In other words, under the Gunn test, [4] "federal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress." Gunn, 568 U.S. at 258. All four factors must support federal jurisdiction, and jurisdiction pursuant to this test is rare. Manning, 772 F.3d at 163 ("Because we conclude that no federal issue has been necessarily raised here, we need not decide whether the other three Grable requirements are met."). But, "the mere presence of a federal issue in a state cause of action does not automatically confer federal-question jurisdiction." Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 813 (1986).

         III. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.