Case 2:17-cv-04273-JVS-JCG Document 33 Filed 10/23/17 Page 1 of 32 Page ID #:555
`
`
`
`RUSS AUGUST & KABAT
`Brian Ledahl (CA SB No. 186579)
`Neil A. Rubin (CA SB No. 250761)
`Jacob Buczko (CA SB No. 269408)
`RUSS AUGUST & KABAT
`12424 Wilshire Boulevard 12th Floor
`Los Angeles, California 90025
`Telephone: 310-826-7474
`Facsimile: 310-826-6991
`bledahl@raklaw.com
`nrubin@raklaw.com
`jbuczko@raklaw.com
`
`Attorneys for Plaintiff Document Security Systems, Inc.
`
`
`
`UNITED STATES DISTRICT COURT
`
`CENTRAL DISTRICT OF CALIFORNIA - SOUTHERN DIVISION
`
`Plaintiff,
`
`DOCUMENT SECURITY SYSTEMS,
`INC., a New York corporation,
`
`
`
`vs.
`
`
`EVERLIGHT ELECTRONICS CO.,
`LTD., and EVERLIGHT AMERICAS,
`INC..,
`
`
`
`
`Defendants.
`
`
`
`
`
`Case No. 2:17-cv-04273-JVS-JCG
`
`
`PLAINTIFF DOCUMENT
`SECURITY SYSTEMS, INC.’S
`OPPOSITION TO DEFENDANTS’
`MOTION TO DISMISS THE FIRST
`AMENDED COMPLAINT
`
`
`Judge: Honorable James V. Selna
`Date: November 13, 2017
`Time: 1:30 pm
`Place: Courtroom 10C
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`RUSS, AUGUST & KABAT
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`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
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`Case 2:17-cv-04273-JVS-JCG Document 33 Filed 10/23/17 Page 2 of 32 Page ID #:556
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`Table of Contents
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`Page
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`I.
`
`II.
`
`INTRODUCTION .......................................................................................... 1
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`BACKGROUND ............................................................................................ 2
`
`III. LEGAL STANDARDS .................................................................................. 4
`
`IV. ARGUMENT .................................................................................................. 7
`
`A. This Court has Personal Jurisdiction over ELA. .................................. 7
`
`B. DSS More Than Sufficiently Pleads Direct Infringement .................. 12
`
`1. The ’771 Patent............................................................................. 14
`
`2. The ’087 Patent ............................................................................ 15
`
`3. The ‘787 and ’486 Patents ........................................................... 16
`
`C. DSS More Than Sufficiently Pleads Induced Infringement. .............. 17
`
`D. DSS Sufficiently Pleads Everlight’s Willful/Egregious
`Infringement. ...................................................................................... 23
`
`E. Even If Everlight’s Motion Were Well Taken, DSS Should Be
`Granted Leave to Amend.................................................................... 25
`
`V.
`
`CONCLUSION ............................................................................................. 25
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`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
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`Case 2:17-cv-04273-JVS-JCG Document 33 Filed 10/23/17 Page 3 of 32 Page ID #:557
`
`
`Cases
`
`Table of Authorities
`
`Page
`
`Advanced Optical Tracking, LLC v. Koninklijke Philips Elecs. N.V.,
`CV 12-1292-LPS-CJB, 2013 WL 4786463 (D. Del. Sept. 9, 2013) ............ 23
`
`Advanced Optical Tracking, LLC v. Koninklijke Philips Elecs. N.V.,
`CV 12–1292–LPS–CJB, 2013 WL 5486857 (D. Del. Sept. 30, 2013) ........ 23
`
`AFTG-TG, LLC v. Nuvoton Tech. Corp.,
`689 F.3d 1358 (Fed. Cir. 2012) ...................................................................... 6
`
`Ameranth, Inc. v. Hilton Resorts Corp.,
`No. 11-CV-1810 JLS (NLS)
`2013 WL 12071642 (S.D. Cal. July 18, 2013) ............................................. 20
`
`Anglefix Tech, LLC v. NuVasive, Inc.,
`No. 13-CV-983-BEN RBB, 2014 WL 197736 (S.D. Cal. Jan. 14, 2014) ...... 7
`
`Ashcroft v. Iqbal,
`556 U.S. 662 (2009) ............................................................................... passim
`
`Bell Atlantic Corp. v. Twombly,
`550 U.S. 544 (2007) ........................................................................ 4, 5, 19, 20
`
`Beverly Hills Fan Co. v. Royal Sovereign Corp.,
`21 F.3d 1558 (Fed.Cir.1994) ................................................................. passim
`
`Carl Zeiss AG v. Nikon Corp., et al,
`2:17-cv-03221 (RGK-MRW) (September 27, 2017, C.D. Cal)...................... 9
`
`Cont'l Circuits LLC v. Intel Corp.,
`No. CV16-2026 PHX DGC, 2017 WL 679116 (D. Ariz. Feb. 21, 2017) .... 13
`
`DermaFocus LLC v. Ulthera, Inc.,
`201 F. Supp. 3d 465 (D. Del. 2016) .............................................................. 24
`
`DeSoto v. Yellow Freight System, Inc.,
`957 F.2d 655 (9th Cir. 1992) ........................................................................ 25
`
`Everlight Electronics Co., LTD., v. Bridgelux, Inc.,
`No. C 17-03363 (N.D. Cal.).......................................................................... 12
`
`Halo Electronics, Inc. v. Pulse Electronics, Inc.,
`__ U.S. __, 136 S. Ct. 1923, 195 L. Ed. 2d 278 (2016) ................ 7, 23, 24, 25
`
`In re Bill of Lading Transmission and Processing Sys. Patent Litig.,
`681 F.3d 1323 (Fed. Cir. 2012) ............................................................. passim
`
`Incom Corp. v. The Walt Disney Co.,
`No. CV15-3011 PSG (MRWx)
`2016 U.S. Dist. LEXIS 71319 (C.D. Cal. Feb 4, 2016) ........................... 6, 13
`
`K-Tech Telecomms., Inc. v. Time Warner Cable,
`Inc., 714 F.3d 1227 (Fed. Cir. 2013) .............................................................. 5
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`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
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`RUSS, AUGUST & KABAT
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`Case 2:17-cv-04273-JVS-JCG Document 33 Filed 10/23/17 Page 4 of 32 Page ID #:558
`Table of Authorities
`
`(continued)
`Labyrinth Optical Techs., LLC v. Fujitsu Am., Inc.,
`SACV 13-0030 AG (MLGx (C.D. Cal. Aug. 21, 2013) ............................... 22
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`Page
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`Largan Precision Co, Ltd v. Genius Elec. Optical Co.,
`No. 13-CV-02502-WHO,
`2013 WL 5934698 (N.D. Cal. Nov. 4, 2013) ......................................... 20, 23
`
`Lifetime Indus., Inc. v. Trim-Lok, Inc.,
`___ F.3d ___ (Fed. Cir. 2017), 2017 WL 3908174 (Sep. 7, 2017)................. 5
`
`Los Angeles Biomedical Research Inst. at Harbor-UCLA Med. Ctr. v. Eli Lilly &
`Co.,
`No. LACV1308567JAKJCGX
`2014 WL 11241786 (C.D. Cal. May 12, 2014) ............................................ 21
`
`Manzarek v. St. Paul Fire & Marine Ins. Co.,
`519 F.3d 1025 (9th Cir. 2008) ........................................................................ 4
`
`McAfee Enterprises, Inc. v. Yamaha Corp. of Am.,
`No. CV2162562BROFFM,
`2016 WL 6920675 (C.D. Cal. June 24, 2016) ................................................ 6
`
`Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.,
`545 U.S. 913 (2005) ........................................................................................ 7
`
`N. Star Innovations, Inc v. Etron Tech. Am. Inc.,
`No. CV 8:16-00599, 2016 WL 9046909 (C.D. Cal. Sept. 21, 2016) ........... 14
`
`Nanosys, Inc. v. QD Vision, Inc.,
`2016 WL 4943006 (N.D. Cal. Sept. 16, 2016) ............................................. 22
`
`Nichia Corp. v. Everlight Americas, Inc.,
`855 F.3d 1328 (Fed. Cir. 2017) .................................................................... 11
`
`Nichia Corp. v. Everlight Elecs. Co.,
`No. 02:13-CV-702-JRG
`2016 WL 310142 (E.D. Tex. Jan. 25, 2016) ....................................... 4, 11, 19
`
`Nuance Commc'ns, Inc. v. Abbyy Software House,
`626 F.3d 1222 (Fed. Cir. 2010) ...................................................................... 5
`
`Oak Industries, Inc. v. Zenith Electronics Corp.,
`697 F. Supp. 988 (N.D. Ill. 1988) ................................................................... 7
`
`Polar Electro Oy v. Suunto Oy,
`829 F.3d 1343 (Fed. Cir. 2016) .................................................................. 5, 6
`
`Precision Co, Ltd v. Genius Elec. Optical Co.,
`No. 13-CV-02502-WHO, 2013 WL 5934698 (N.D. Cal. Nov. 4, 2013) ..... 23
`
`Reiber v. W. Digital Corp.,
`No. 2:14-CV-00763-KJM, 2015 WL 1509212 (E.D. Cal. Apr. 1, 2015) ..... 19
`
`Shroyer v. New Cingular Wireless Servs., Inc.,
`622 F.3d 1035 (9th Cir. 2010) ......................................................................... 4
`
`
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`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
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`RUSS, AUGUST & KABAT
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`Case 2:17-cv-04273-JVS-JCG Document 33 Filed 10/23/17 Page 5 of 32 Page ID #:559
`Table of Authorities
`
`(continued)
`Sockeye Licensing TX, LLC v. Lenovo (US), Inc.,
`2:17-cv-05266 (JVS(DFMx), (October 11, 2017, C.D. Cal) .............. 6, 14, 22
`
`Page
`
`1
`
`Straight Path IP Grp., Inc. v. Apple Inc.,
`No. C 16-03582 WHA, 2017 WL 3967864 (N.D. Cal. Sept. 9, 2017) ..... 7, 24
`
`TCL Commc’ns Tech. Holding Ltd. v. Telefonaktenbologet LM Ericsson,
`No. SACV 14-00341-JVS
`2014 WL 12588293 (C.D. Cal. Sep. 30, 2014) ............................................ 20
`
`Unilin Beheer B.V. v. Tropical Flooring,
`No. CV 14-02209 BRO SSX,
`2014 WL 2795360 (C.D. Cal. June 13, 2014) .............................................. 19
`
`Unisone Strategic IP, Inc. v. Life Techs. Corp.,
`No. 3:13-CV-1278-GPC-JMA
`2013 WL 5729487 (S.D. Cal. Oct. 22, 2013) ............................................... 21
`
`Walden v. Fiore,
`134 S. Ct. 1115 (2014) .................................................................................... 5
`
`Xilinx, Inc. v. Papst Licensing GmbH & Co. KG,
`848 F.3d 1346 (Fed. Cir. 2017) ...................................................................... 5
`Statutes
`
`35 U.S.C. § 284 ................................................................................................... 7, 24
`Rules
`
`Fed. R. Civ. P. 15 .................................................................................................... 25
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`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
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`Case 2:17-cv-04273-JVS-JCG Document 33 Filed 10/23/17 Page 6 of 32 Page ID #:560
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`
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`I.
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`INTRODUCTION
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`Defendants Everlight Electronics Co., LTD., (“ELT”) and Everlight
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`Americas, Inc. (“ELA”) (collectively “Everlight”) move to dismiss Plaintiff
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`Document Security Systems, Inc.’s (“DSS”) First Amended Complaint (“FAC”) on
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`the purported grounds it does not plead personal jurisdiction over ELT and does
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`not state a plausible claim of direct,
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`induced, and/or willful/egregious
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`infringement. Everlight’s motion fails on each ground. In general, this motion
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`does nothing but inflict burden on the parties and the Court. DSS has alleged the
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`necessary facts for all of its claims.
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`Regarding personal jurisdiction, prior to the FAC, Everlight never
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`mentioned any purported jurisdictional defect to DSS. Everlight’s argument that
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`this Court does not have personal jurisdiction cuts against not only the allegations
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`of the First Amended Complaint (“FAC”) (and the original complaint) but
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`mountains of evidence in the public record confirming that ELA is ELT’s “North
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`American sales arm.” As a threshold matter, ELT must argue that it did not place
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`its products in the “stream of commerce” leading to sales in California. Everlight
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`does not even make this argument because it cannot. ELT’s North American sales
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`arm, ELA has an office in Ontario, California, and ELT’s products are sold
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`nationwide.
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`Regarding direct infringement, Everlight demands a bill of particulars,
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`including complete infringement contention-level mappings for each product
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`identified in the complaint. Such a demand is not reasonable, not supported by
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`current pleading standards and not practical given this Court requires service of
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`detailed infringement contentions early in the case. The remainder of Everlight’s
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`arguments regarding direct infringement, to the extent they are articulated in its
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`brief, rely on a carefully chosen claim construction applied to purported facts
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`resolved against DSS, many that directly contradict the record on this motion.
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`Such arguments are improper and carry no weight at the pleading stage.
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`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
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`RUSS, AUGUST & KABAT
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`Case 2:17-cv-04273-JVS-JCG Document 33 Filed 10/23/17 Page 7 of 32 Page ID #:561
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`Regarding induced infringement, Everlight brushes aside many key detailed
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`allegations in the FAC that refute Everlight’s arguments. For example, Everlight
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`fails to address DSS’s allegations that Everlight knows its products “are designed
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`in such a way that when they are used for their intended purpose, the user
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`infringes…” Everlight also refuses to acknowledge that it specifically intends its
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`customers infringe the asserted patents to “develop and serve the United States
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`market for [Everlight’s] LED products…”. These allegations, among many others,
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`confirm that the FAC sufficiently pleads induced infringement.
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`Regarding willful/egregious infringement, Everlight again attempts to brush
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`aside allegations that it knew of its infringement at least since the earlier-filed
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`Eastern District of Texas complaints, and that Everlight “failed to take remedial
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`measures” afterwards. These allegations of pre-suit knowledge and egregious
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`behavior, among others, defeat Everlight’s motion on this issue.
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`Everlight cannot ignore significant portions of the FAC, rewrite the claims
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`and change the facts in order to piece together its Rule 12(b)(6) motion. The FAC
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`more than satisfies the applicable pleading standards as to each of the challenged
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`issues, and Everlight’s motion should be denied in its entirety.
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`II. BACKGROUND
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`On April 13, 2017, DSS filed a patent infringement action against Everlight
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`in the Eastern District of Texas asserting that specific models of Everlight’s LED
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`products infringed the ‘771 Patent, the ‘087 Patent, the ‘787 Patent, and the ‘486
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`Patent. (Dkt. 32, Ex. 1.) That complaint also alleged specific acts of induced
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`infringement (See, e.g., id. ¶¶ 17, 23, 30, & 37)
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`On May 22, 2017 the Supreme Court issued its decision in TC Heartland v.
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`Kraft Foods Group Brands, 137 S. Ct. 1514 (2017). In light of the Supreme Court
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`decision, and in order to avoid wasteful motion practice regarding potential
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`transfer of venue, on June 8, 2017 DSS voluntarily dismissed the E.D. Texas
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`action. (Dkt. 32, Ex. 2.)
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`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
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`RUSS, AUGUST & KABAT
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`Case 2:17-cv-04273-JVS-JCG Document 33 Filed 10/23/17 Page 8 of 32 Page ID #:562
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`That same day, DSS filed its complaint in this case (Dkt. 1). Besides
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`allegations related to venue and personal jurisdiction, the original complaint in this
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`case is substantially similar to the Complaint in the voluntarily dismissed E.D.
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`Texas action.
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`The first time Everlight contacted DSS about sufficiency of any complaint
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`was on August 31, 2017, when Everlight’s counsel sent DSS counsel an email.
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`Having presumably reviewed the amended complaints DSS filed in the related
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`Cree and Seoul Semiconductor cases, Everlight’s counsel advised:
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`“[w]e are aware that DSS recently has agreed to file amended
`complaints to avoid motion practice in connection with cases it has
`filed against other defendants. We also would like to avoid burdening
`the Court with unnecessary motion practice and would like to reach
`agreement with you on a stipulation to file an amended complaint.”
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`(Buczko Declaration, Ex. 1.) Everlight’s email did not mention any purported lack
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`of personal jurisdiction or any purported failure to identify which Everlight entity
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`engaged in which act of direct and/or indirect infringement.
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`Though DSS disagrees that the original complaint in this case is in any way
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`deficient, DSS agreed to file an amended complaint in an (apparently ultimately
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`futile) attempt to avoid wasteful motion practice. On September 26, 2017, DSS
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`filed its First Amended Complaint (“FAC.”) Though of course the FAC in this
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`case involves different products and defendants than the First Amended Complaint
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`filed in the related cases against Cree, Inc. (2:17-cv-04263) and Seoul
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`Semiconductor (8:17-cv-00981), DSS’s FAC in this case was drafted to give
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`Everlight a similar level of detail as the Cree and Seoul Semiconductor FACs, in
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`response to Everlight’s representation that such amendment would likely avoid
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`“unnecessary motion practice.”
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`Though DSS gave Everlight the detail it sought, on September 29, counsel
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`for Everlight approached DSS about filing a motion to dismiss, for the first time
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`alleging “DSS
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`improperly conflates
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`two distinct corporate entities as
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`‘defendants.’” (Buczko Decl. Ex. 2.) On October 2, 2017, the parties met and
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`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
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`RUSS, AUGUST & KABAT
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`

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`Case 2:17-cv-04273-JVS-JCG Document 33 Filed 10/23/17 Page 9 of 32 Page ID #:563
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`conferred. During the meet and confer, counsel for DSS confirmed to Everlight
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`that allegations of actions by “Defendants” refers to both ELT and ELA, consistent
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`with the plain reading of and definitions in the FAC1. (Buczko Decl. ¶ 12.)
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`Everlight’s remaining positions lacked legal and factual support, similar to
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`Everlight’s arguments in its motion (and described herein.) Additionally, DSS
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`expressed concern
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`that Everlight’s personal
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`jurisdiction and “conflation”
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`arguments directly contradict the FAC as well as the public record, including
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`judicial findings of fact in the E.D. Texas Nichia case, which confirm the
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`allegations in DSS’s FAC. (Buczko Decl. ¶ 12.)
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`Everlight contacted DSS about another possible amendment, but believing
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`the FAC is more than adequate on all grounds and knowing DSS’s jurisdictional
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`allegations have been confirmed by other courts and Everlight itself, DSS declined
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`to further amend its FAC.
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`III. LEGAL STANDARDS
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`A claim can be dismissed only if there is “no cognizable legal theory” for
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`the claim or where there is “an absence of sufficient facts alleged to support a
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`cognizable legal theory.” Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d
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`1035, 1041 (9th Cir. 2010). A complaint must state a claim that is “plausible on its
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`face,” but need not establish that the claim is “probable.” Ashcroft v. Iqbal, 556
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`U.S. 662, 678 (2009). The complaint “does not need detailed factual allegations”
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`to state a claim. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
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`On a motion to dismiss, courts accept as true a plaintiff’s well-pleaded
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`factual allegations and construe all factual inferences in the light most favorable to
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`the plaintiff. See Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025,
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`1031 (9th Cir. 2008). Contrary to many of Everlight’s arguments, the Federal
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`1 The purported “admission” of DSS counsel, concocted on page 4 of Everlight’s
`brief, did not occur and it is telling that Everlight fails to cite a sworn declaration
`or contemporaneous document to support its assertion.
`4
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`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
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`RUSS, AUGUST & KABAT
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`

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`Case 2:17-cv-04273-JVS-JCG Document 33 Filed 10/23/17 Page 10 of 32 Page ID #:564
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`Circuit has never, for example, recognized a distinction between the level of detail
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`provided under previous Form 18 and that required under the Supreme Court’s
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`Iqbal and Twombly precedents. See Lifetime Indus., Inc. v. Trim-Lok, Inc., ___
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`F.3d ___ (Fed. Cir. 2017), 2017 WL 3908174 (Sep. 7, 2017) (reversing grant of a
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`motion to dismiss); see also, K-Tech Telecomms., Inc. v. Time Warner Cable, Inc.,
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`714 F.3d 1227, 1284 (Fed. Cir. 2013).
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`Personal Jurisdiction
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`In patent cases, Federal Circuit law governs personal jurisdiction. Xilinx,
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`Inc. v. Papst Licensing GmbH & Co. KG, 848 F.3d 1346, 1352 (Fed. Cir. 2017).
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`For a court to assert jurisdiction over nonresidents, it "generally must have certain
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`minimum contacts [with the forum state] such that the [assertion] does not offend
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`traditional notions of fair play and substantial justice." Walden v. Fiore, 134 S. Ct.
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`1115, 1121 (2014) (internal quotation marks omitted). "The plaintiff bears the
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`burden of establishing minimum contacts, and upon that showing, the burden shifts
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`to the defendant to prove that the exercise of jurisdiction would be unreasonable."
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`Polar Electro Oy v. Suunto Oy, 829 F.3d 1343, 1348 (Fed. Cir. 2016). Where a
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`court determines personal jurisdiction based on a written record without an
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`evidentiary hearing, the "plaintiff need only to make a prima facie showing" of
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`jurisdictional facts. Xilinx, 848 F.3d at 1352. "[W]here the plaintiff's factual
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`allegations are not directly controverted," the court takes them "as true for
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`purposes of determining jurisdiction .... " Nuance Commc'ns, Inc. v. Abbyy
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`Software House, 626 F.3d 1222, 1231 (Fed. Cir. 2010) (internal quotation marks
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`omitted.)
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`A court may exercise specific personal jurisdiction. See Xilinx, 848 F.3d at
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`1353. Due-process analysis of specific jurisdiction may be done under the stream-
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`of-commerce theory. See Polar Electro Oy, 829 F.3d at 1348. The Federal Circuit's
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`binding precedent on stream-of-commerce personal jurisdiction is Beverly Hills
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`Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558 (Fed.Cir.1994); AFTG-TG, LLC
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`5
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`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
`
`RUSS, AUGUST & KABAT
`
`

`

`Case 2:17-cv-04273-JVS-JCG Document 33 Filed 10/23/17 Page 11 of 32 Page ID #:565
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`v. Nuvoton Tech. Corp., 689 F.3d 1358, 1363-64 (Fed. Cir. 2012); Polar Electro
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`Oy, 829 F.3d at 1349.
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`According to Beverly Hills Fan, due process only requires that "defendants,
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`acting in consort, placed the accused [products] in the stream of commerce, [ that]
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`they knew the likely destination of the products, and [that] their conduct and
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`connections with the forum state were such that they should reasonably have
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`anticipated being brought into court there." Beverly Hills Fan, 21 F.3d at 1566.
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`Direct Infringement
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`“The task of the Court at the Rule 12(b)(6) stage is simply to assess whether
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`the ‘short and plain statement’ of the plaintiff's claims in the complaint plausibly
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`states a claim upon which relief can be granted. The patent holder is not required to
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`provide every detail of its claim within the initial pleading.” McAfee Enterprises,
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`Inc. v. Yamaha Corp. of Am., No. CV2162562BROFFM, 2016 WL 6920675, at *3
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`(C.D. Cal. June 24, 2016) citing Iqbal, 556 U.S. at 678; see also Incom Corp. v.
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`The Walt Disney Co., No. CV15-3011 PSG (MRWx), 2016 U.S. Dist. LEXIS
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`71319, at *8 (C.D. Cal. Feb 4, 2016) (holding that the plaintiff stated a plausible
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`claim for direct infringement when it identified the defendant's product and alleged
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`that it performed the same function as the plaintiff's product).
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`Factual allegations, including identifying “product model numbers” and
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`identifying “specific features of these products…that are alleged to infringe…are
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`sufficient to support a reasonable inference that [defendant] is liable for
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`infringement.” McAfee Enterprises, Inc., 2016 WL 6920675, at *3.
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`“Formal claim construction at the pleading stage is inappropriate.” Sockeye
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`Licensing TX, LLC v. Lenovo (US), Inc., 2:17-cv-05266 (JVS(DFMx), (October 11,
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`2017, C.D. Cal). (Buczko Decl. Ex. 3) citing In re Bill of Lading Transmission &
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`Processing Sys. Patent Litig., 681 F.3d 1323, 1343 n.13 (Fed. Cir. 2012). If a court
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`is required to construe claim terms and perform an infringement analysis on a
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`motion for judgement on the pleadings, the motion should be dismissed. See
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`6
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`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
`
`RUSS, AUGUST & KABAT
`
`

`

`Case 2:17-cv-04273-JVS-JCG Document 33 Filed 10/23/17 Page 12 of 32 Page ID #:566
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`Anglefix Tech, LLC v. NuVasive, Inc., No. 13-CV-983-BEN RBB, 2014 WL
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`197736, at *2 (S.D. Cal. Jan. 14, 2014).
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`Induced Infringement
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`In the context of a complaint for induced infringement, the complaint must
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`plead facts plausibly showing that a defendant "intended their customers to
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`infringe" the patent and "knew that the customer’s acts constituted infringement."
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`Bill of Lading, 681 F.3d at 1339.
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`The Supreme Court has held that “[e]vidence of active steps ... taken to
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`encourage direct infringement, such as advertising an infringing use or instructing
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`how to engage in an infringing use, show an affirmative intent that the product be
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`used to infringe . . . .” Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545
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`U.S. 913, 936 (2005) (citing Oak Industries, Inc. v. Zenith Electronics Corp., 697
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`F.Supp. 988, 992 (N.D. Ill. 1988)).
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`Willful/Egregious Infringement
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`In Halo Electronics, Inc. v. Pulse Electronics, Inc., __ U.S. __, 136 S. Ct.
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`1923, 195 L. Ed. 2d 278 (2016), the Supreme Court emphasized that the district
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`court should exercise its discretion as provided in 35 U.S.C. § 284 to determine
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`whether to award enhanced damages. The Supreme Court further explained that
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`the patentee must show that the infringement was an “egregious case[] of
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`misconduct beyond typical infringement.” Id. at 1935.
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`The Halo case replaced the previous “unduly rigid” legal standard for
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`willful/egregious infringement under 35 U.S.C. § 284 with a “more flexible
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`standard.” Id. Moreover, “a patent infringement plaintiff does not have to prove
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`willfulness at the pleading stage…” Straight Path IP Grp., Inc. v. Apple Inc., No. C
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`16-03582 WHA, 2017 WL 3967864, at *4 (N.D. Cal. Sept. 9, 2017.)
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`IV. ARGUMENT
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`A. This Court has Personal Jurisdiction over ELA.
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`Everlight’s groundless argument that this Court does not have personal
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`7
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`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
`
`RUSS, AUGUST & KABAT
`
`

`

`Case 2:17-cv-04273-JVS-JCG Document 33 Filed 10/23/17 Page 13 of 32 Page ID #:567
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`jurisdiction over ELT should be rejected. DSS has sufficiently pled, and
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`judicially-noticed facts confirm, that ELA is the North American sales arm of ELT
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`and thus placed accused products, sold in this state, in the “stream of commerce.”
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`The FAC (and the original complaint) allege that “[ELT] manufactures light-
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`emitting diode (‘LED’) products in Taiwan and, through its subsidiary, Defendant
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`[ELA], imports, sells and/or offers to sell LED products [in] the State of California
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`and elsewhere in the United States.” (FAC ¶ 3.) The FAC also alleges, with
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`respect to ELA “[ELA] imports, sells and/or offers for sale nationwide LED
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`products manufactured by [ELT], including in the State of California and in this
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`judicial district.” (FAC ¶ 4)
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`The FAC continues:
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` “This Court has personal jurisdiction over Defendants in this
`action because, among other reasons, Defendants have committed acts
`within the Central District of California giving rise to this action and
`have established minimum contacts with the forum state of California,
`including by establishing a regular and established place of business
`within this District at 4237 East Airport Dr., Ontario, CA 91761.
`Defendants directly and/or through subsidiaries or intermediaries
`(including distributors, retailers, and others), have committed and
`continue to commit acts of infringement in this District by, among
`other things, making, using, importing, offering for sale, and/or selling
`products and/or services that infringe the patents-in-suit. Thus,
`Defendants have purposefully availed themselves of the benefits of
`doing business in the State of California and the exercise of
`jurisdiction over Defendants would not offend traditional notions of
`fair play and substantial justice.”
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` (FAC ¶ 5.) In addition to ELT’s relationship with ELA, DSS specifically names
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`Everlight’s distributors and identifies generally other intermediaries that, among
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`other allegations, create personal jurisdiction over ELT. (See, e.g., FAC ¶¶ 24, 38,
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`53 & 66.)
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`These allegations are more than sufficient to demonstrate personal
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`jurisdiction of ELT under, at least, the “stream of commerce” theory. Under the
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`Beverly Hills Fan test, DSS must plausibly plead facts showing only that
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`"defendants, acting in consort, placed the accused [products] in the stream of
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`commerce, [that] they knew the likely destination of the products, and [that] their
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`8
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`
`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
`
`RUSS, AUGUST & KABAT
`
`

`

`Case 2:17-cv-04273-JVS-JCG Document 33 Filed 10/23/17 Page 14 of 32 Page ID #:568
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`
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`conduct and connections with the forum state were such that they should
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`reasonably have anticipated being brought into court there." Beverly Hills Fan, 21
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`F.3d at 1566. There is no credible argument that this test is not met in this case.
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`Here, DSS pled the parent/subsidiary relationship of ELT and ELA, the functional
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`relationship between the two entities concerning the accused products, and
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`numerous detailed factual allegations of direct and indirect infringement in this
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`state and this District undertaken jointly by “Defendants.”
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` This case is very similar to a recent order in this District, Carl Zeiss AG v.
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`Nikon Corp., et al, 2:17-cv-03221 (RGK-MRW) (September 27, 2017, C.D. Cal).
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`(Buczko Decl. Ex. 4.) There the court found a much more circuitous connection
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`between a foreign defendant and this state was sufficient to convey personal
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`jurisdiction:
` “Sendai Nikon manufactures digital cameras for its parent Nikon Corp.
`Nikon Corp. then sells the cameras to Nikon Inc., another Nikon Corp. subsidiary.
`The division of labor between manufacturing, marketing, and sales is organized
`association, i.e., Defendants act in consort. By selling the cameras to Nikon Corp.,
`which in tum sells them to Nikon Inc. and eventually to consumers, Sendai Nikon
`placed the cameras in the stream of commerce.” Id.
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`The connection between the foreign defendant and the forum state in Beverly
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`Hills Fan is even more attenuated. Unlike ELT, the foreign defendants in Beverly
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`Hills Fan sold product only through unaffiliated distributors and retailers. Beverly
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`Hills Fan, 21 F.3d at 1560. Here, ELT is indisputably the head controlling its
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`North American sales arm ELA, which DSS alleges and Everlight confirms has a
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`California address. (FAC ¶ 6, Dkt. 32, Ex. 3.)
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`Everlight fails to provide any