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Home Semiconductor Corp. v. Samsung Electronics Co., Ltd.

United States District Court, D. Delaware

January 14, 2020

HOME SEMICONDUCTOR CORPORATION, Plaintiff,
v.
SAMSUNG ELECTRONICS CO., LTD., SAMSUNG ELECTRONICS AMERICA, INC., SAMSUNG SEMICONDUCTOR, INC., and SAMSUNG AUSTIN SEMICONDUCTOR, LLC, Defendants.

          REPORT AND RECOMMENDATION

          SHERRY R. FALLON UNITED STATES MAGISTRATE JUDGE.

         I. INTRODUCTION

         Presently before the court in this patent infringement action is a motion to dismiss for lack of standing pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(h)(3) filed by defendants Samsung Electronics Co., Ltd. ("SEC"), Samsung Electronics America, Inc. ("SEA"), Samsung Semiconductor, Inc. ("SSI"), and Samsung Austin Semiconductor, LLC ("SAS") (collectively, "Samsung"). (D.I. 175) For the reasons that follow, the court recommends GRANTING Samsung's motion to dismiss without prejudice.[1]

         II. BACKGROUND

         a. Procedural History

         On December 16, 2013, plaintiff Home Semiconductor Corporation ("HSC")[2] originally filed this patent infringement action against SEC, SEA, Samsung Telecommunications America, LLC ("STA"), and SSI, alleging infringement of United States Patent Numbers 5, 452, 261 ("the '261 patent"), 6, 030, 893 ("the '893 patent"), 6, 146, 997 ("the '997 patent"), and 6, 150, 244 ("the '244 patent"). (D.I. 1 at ¶¶ 2-5, 17-21) Only the '997 patent and the '261 patent remain as the Patents-in-Suit (the "Patents-in-Suit"). The '997 patent and '261 patent relate to methods of manufacturing semiconductor devices. (D.I. 1, Ex. A; Ex. C) The Second Amended Complaint avers that HSC is the owner by assignment of the Patents-in-Suit, and alleges that Samsung's dynamic random-access memories ("DRAMs"), NAND flash memories, and processors are infringing products. (D.I. 188 at¶¶ 17-18, 24-41)

         On May 14, 2014, HSC filed its First Amended Complaint (the "First Amended Complaint"), which added SAS as a defendant. (D.I. 21) On December 17, 2014, Samsung filed petitions for inter partes review ("IPR") of the '893 patent, the '997 patent, and the '244 patent before the Patent Trial and Appeal Board ("PTAB") of the United States Patent and Trademark Office ("USPTO"). (D.I. 55) The present case was stayed and administratively closed pending the IPRs on December 22, 2014. (Id.; D.I. 56) The asserted claims of the '893 patent, the asserted claims of the '244 patent, and claims 1 and 3-8 of the '997 patent were found unpatentable at the conclusion of the IPRs. (D.I. 66) The stay was lifted on November 9, 2017, and on November 28, 2017, a supplemental scheduling order was entered. (D.I. 67; D.I. 70)

         On June 11, 2018, HSC dismissed defendant STA, because it had merged into SEA. (D.I. 79; D.I. 80) On June 12, 2018, HSC dismissed its claims with respect to the '893 patent and the '244 patent. (D.I. 81; D.I. 82) On December 28, 2018, HSC filed a motion for leave to amend the First Amended Complaint to add a claim of infringement of the '997 patent under 35 U.S.C. § 271(g).[3] (D.I. 108; D.I. 109)

         On May 1, 2019, Samsung filed the present motion to dismiss for lack of standing. (D.I. 175) On May 16, 2019, in a Memorandum Opinion, the court granted HSC's motion for leave to amend the First Amended Complaint. (D.I. 186; D.I. 187) On May 17, 2019, HSC filed its Second Amended Complaint (the "Second Amended Complaint"). (D.I. 188)

         b. Facts

         The '261 patent was invented by Jinyong Chung and Michael A. Murray, who assigned the patent to Mosel Vitelic Inc. ("Mosel Vitelic") on September 7, 1994. (D.I. 188 at ¶ 17; D.I. 177, Ex. 4) The '997 patent was invented by Jacson Liu and Jing-Xian Huang, who assigned the patent to Mosel Vitelic on September 29, 1999. (D.I. 188 at ¶ 18; D.I. 177, Ex. 5) ProMOS Technologies Inc. ("ProMOS") acquired the '261 patent and the '997 patent from Mosel Vitelic on June 20, 2005 and May 24, 2004 respectively. (D.I. 177, Ex. 6; Ex. 7)

         On February 27, 2013, ProMOS and Home Semiconductor, Inc. of Samoa ("HSI")[4]executed a Patent Transfer and License Agreement ("PTLA"). (D.I. 177, Ex. 8) Pursuant to the PTLA, ProMOS retained "an irrevocable, non-terminable, non-exclusive license, without the right to sublicense, under the claims of the Transferred Patents, to make, have made, design, have designed, use, sell, offer for sale, import or otherwise dispose of any products." (Id. at § 2(a)) ProMOS retained thirty-five percent of the aggregate Net Licensing Revenues[5] above one million dollars. (Id. at § 3(b)) The PTLA included a side letter agreement that provided that:

[P]rior to the commencement of any patent enforcement action brought by HSI against one or more alleged infringers, HSI will provide to ProMOS a patent enforcement plan for its review and commentary. ProMOS and HSI will confer in good faith regarding the alleged infringers in which patent enforcement action(s) shall be brought. However, HSI agrees not to bring any patent enforcement action against Hynix and Elpida unless authorized by ProMOS.

(D.I. 177, Ex. 8) Hsu Kuei-Jong ("Mr. Hsu") signed the PTLA as President and CEO of HSI. (Id.)

         On September 23, 2013, Home Semiconductor Corporation, a Samoa corporation ("HSC Samoa"), executed a Patent Agreement (the "Patent Agreement") that assigned its interests in several patents, including the '261 patent and the '997 patent, to plaintiff. (D.I. 177, Ex. 11) On the same day, HSC Samoa and plaintiff executed a promissory note in the amount of one million dollars for the purported transfer of the Patents-in-Suit that matured on September 22, 2018, but was never paid. (D.I. 177, Ex. 12; Ex. 21 at 136:15-137:5) Mr. Hsu signed the Patent Agreement as Director and CEO of HSC. (D.I. 177, Ex. 11)

         On March 25, 2015, HSI and ProMOS entered into a Patent Cooperation Agreement (the "PCA"), wherein ProMOS appointed HSI as "the exclusive agent to monetize the ProMOS Patent Portfolio," which included the '261 patent and the '997 patent. (D.I. 177, Ex. 13 at § 2(a))

         HSI represented that it was "the sole and lawful owner of the HSI Patent Portfolio and ha[d] the right to monetize such patents under [the PCA]." (Id. at § 8(c))

         On November 20, 2017, HSI and SK Hynix Inc., a third party, entered into a Covenant Not to Sue Agreement (the "Covenant Not to Sue"), wherein both parties agreed not to initiate any legal action against each other with respect to HSI's patents, which included the '261 patent and the '997 patent. (D.I. 177, Ex. 15 at ¶¶ 2.1, 2.2) Specifically, the Covenant Not to Sue stated:

2.1 Covenant Not To Sue to SK hynix [sic].For a period of one (1) year after the Effective Date, [HSI] covenants that (i) it will not initiate or maintain any legal or administrative action alleging patent infringement under any patent claim of any Home Patents with respect to making, having made, using, importing, exporting, distributing, selling, offering for sale, developing and advertising products and services of SK hynix and/or its Subsidiaries and (ii) it will not send written communications to SK hynix and/or its Subsidiaries seeking to engage in licensing negotiations regarding the Home Patents and (iii) it will not send written communications to and/or initiate or maintain any legal or administrative action against customers of SK hynix and/or its Subsidiaries alleging patent infringement under any patent claim of any Home Patents solely with respect to making, having made, using, importing, exporting, distributing, selling, offering for sale, developing and advertising products and services of SK hynix and/or its Subsidiaries.
2.2 Covenant Not to Sue to [HSI], For a period of one (1) year after the Effective Date, SK hynix and/or its Subsidiaries covenant that (i) it will not initiate, or support any action or proceeding to challenge the validity, enforceability, or scope of any claim of a Home Patents [sic] (including, without limitation, any litigation, reexamination, interference proceeding, inter partes review proceeding or other post-grant challenge) (each a "Challenge") for any reason, and (ii) it will not initiate any action seeking a declaration that the products or services of SK hynix and/or its Subsidiaries do not infringe any claims of the Home Patents. SK hynix and/or its Subsidiaries further agree that they will not encourage, assist or support any Third Party in undertaking an action to Challenge the Home Patents that SK hynix of [sic] its Subsidiaries would be forbidden from doing under this paragraph 2.2.

(Id.) Mr. Hsu signed both the PCA and Covenant Not to Sue as the President of HSI. (D.I. ...


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