Case 2:17-cv-04273-JVS-JCG Document 34 Filed 10/30/17 Page 1 of 25 Page ID #:659
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`
`
`Michael Bednarek (admitted pro hac vice)
`michael.bednarek@arlaw.com
`ADAMS AND REESE LLP
`20 F Street NW, Suite 500
`Washington, District of Columbia 20001
`Telephone: (202) 478-1216
`Facsimile: (202) 478-1238
`
`Ben M. Davidson (SBN 181464)
`bdavidson@davidson-lawfirm.com
`DAVIDSON LAW GROUP, ALC
`11377 West Olympic Boulevard
`Los Angeles, California 90064
`Telephone: (310) 473-2300
`Facsimile: (310) 473-2941
`
`Counsel for Defendants
`Everlight Electronics Co.
`and Everlight Americas, Inc.
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`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
`
`Case No.: 2:17-cv-04273-JVS-JCG
`
`REPLY OF EVERLIGHT
`ELECTRONICS CO., LTD AND
`EVERLIGHT AMERICAS’ INC. IN
`SUPPORT OF MOTION TO DISMISS
`
`
`
`Hon. James V. Selna
`
`
`Date:
`
`Time:
`Courtroom:
`
`
`EVERLIGHT ELECTRONICS CO.,
`LTD., AND EVERLIGHT
`AMERICAS, INC.,
`
`
`vs.
`
`
`
`
`
`DOCUMENT SECURITY
`SYSTEMS, INC.,
`
`
`Plaintiff,
`
`Defendants.
`
`
`November 13, 2017
`1:30 pm
`10C
`
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`EVERLIGHT AMERICAS AND EVERLIGHT ELECTRONICS
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`Case 2:17-cv-04273-JVS-JCG Document 34 Filed 10/30/17 Page 2 of 25 Page ID #:660
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`INTRODUCTION ......................................................................................... 1
`I.
`PROCEDURAL BACKGROUND ............................................................... 3
`II.
`III. ARGUMENT ................................................................................................. 7
`A. DSS’s Willfulness Allegations Are Deficient Because DSS Failed
`To Allege Pre-Suit Knowledge Or Post-Suit Egregious Behavior ..... 7
`B.
`Products Into The United States So As To Infringe .......................... 10
`C.
`Representative ................................................................................... 15
`IV. CONCLUSION ............................................................................................ 20
`
`TABLE OF CONTENTS
`
`DSS’s Inducement Allegations Based On Overseas Sales Are
`Deficient Because They Are Not Supported By Facts Plausibly
`Showing That Everlight Electronics Or Everlight Americas
`Induced Overseas Customers To Import Their Own Manufactured
`
`DSS’s Infringement Allegations Are Deficient For Product Lines
`that DSS Does Not Support With Examples That It Alleges Are
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`

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`Case 2:17-cv-04273-JVS-JCG Document 34 Filed 10/30/17 Page 3 of 25 Page ID #:661
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`CASES
`
`TABLE OF AUTHORITIES
`
`
`
`Archie v. Pop Warner Little Scholars, Inc.
`
`2017 U.S. Dist. LEXIS 123446, at *41 (C.D. Cal. May 12, 2017) .................... 5
`
`Ashcroft v. Iqba
`556 U.S. 662 (2009) ................................................................................... passim
`
`
`Atuahene v. City of Hartford
`10 F. App'x 33 (2d Cir. 2001) ........................................................................... 15
`
`
`Bell Atl. Corp. v. Twombly
`550 U.S. 544 (2007) ................................................................................... passim
`
`
`Cont'l Circuits LLC v. Intel Corp.
` No. CV16-2026 PHX DGC, 2017 WL 679116
`
`at *6 (D. Ariz. Feb. 21, 2017) ........................................................................... 18
`
`Everlight Electronics Co., Ltd. v. Bridgelux, Inc.
` No. C 17-03363 JSW (N.D. Cal. October 23, 2017) ........................................ 19
`
`Freeney v. Bank of Am. Corp.
`
`2015 U.S. Dist. LEXIS 92848, at *17 (C.D. Cal. July 16, 2015) ....................... 4
`
`Glob.-Tech Appliances, Inc. v. SEB S.A.
`
`563 U.S. 754 (2011) .................................................................................... 10, 11
`
`Grecia v. VUDU, Inc.
` No. C-14-1220-EMC, 2015 U.S. Dist. LEXIS 16256
`
`at *29 (N.D. Cal. Feb. 9, 2015) ......................................................................... 10
`
`In re Turbodyne Technologies, Inc. Sec. Litig.
`
`2000 U.S. Dist. LEXIS 23020 at *30; 2000 WL 33961193
`
`at *10 (C.D. Cal. Mar. 15, 2000) ........................................................................ 5
`
`InCom Corp. v. Walt Disney Co.
` No. CV15-3011 PSG (MRWx), 2016 U.S. Dist. LEXIS 71319
`
`at *8 (C.D. Cal. Feb. 4, 2016) ........................................................................... 19
`
`Lifetime Indus., Inc. v. Trim-Lok, Inc.
`
`869 F.3d 1372 (Fed. Cir. 2017) ........................................................................ 20
`
`McAfee Enters. v. Yamaha Corp. of Am.
`
`2016 U.S. Dist. LEXIS 173699, *7 (C.D. Cal. June 14, 2016) ........................ 19
`
`Microsoft Corp. v. DataTern, Inc.
`755 F.3d 899 (Fed. Cir. 2014) .......................................................................... 10
`
`
`Neology, Inc. v. Kapsch Trafficcom IVHS, Inc.
` Civil Action No. 13-2052-LPS, 2014 U.S. Dist. LEXIS 131568
`
`at *10-13 (D. Del. Sep. 19, 2014) ..................................................................... 15
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`Case 2:17-cv-04273-JVS-JCG Document 34 Filed 10/30/17 Page 4 of 25 Page ID #:662
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`STATUTES
`RULES
`
`
`Schneider v. California Dept. of Corrections
`151 F.3d 1194, 1197, n. 1 (9th Cir. 1998) .......................................................... 5
`
`
`Unilin Beheer B.V. v. Tropical Flooring
` No. CV 14-02209 BRO (SSX), 2014 U.S. Dist. LEXIS 85955
`
`at *17 (C.D. Cal. June 13, 2014) ........................................................................ 9
`
`
`
`35 U.S.C. § 271(b) ................................................................................................. 10
`
`
`
`Federal Rule of Civil Procedure 8(a)(2) ................................................................ 14
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`Federal Rule of Civil Procedure 7(a) ....................................................................... 5
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`Federal Rule of Civil Procedure 11 ................................................................. passim
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`Case 2:17-cv-04273-JVS-JCG Document 34 Filed 10/30/17 Page 5 of 25 Page ID #:663
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`I.
`
`INTRODUCTION
`Stripped of its diversionary arguments, the opposition of Plaintiff
`Document Security Systems (“DSS”) confirms that the First Amended Complaint
`(“FAC”) filed by DSS contains several factually-unsupported and implausible
`claims that must be dismissed.
`(“Everlight
`First, as Defendants Everlight Electronics Co., Ltd.
`Electronics”) and Everlight Americas, Inc. (“Everlight Americas”) (collectively,
`“Defendants”) pointed out in their motion, DSS did not actually allege willful
`infringement but instead, in the FAC, “reserves the right to request . . . a finding
`[of willful infringement] at time of trial.” Motion (Dkt. 31-1) at 22. See also
`FAC ¶¶ 25, 39, 54, 67. DSS argues in its opposition that this was not actually a
`“reservation of rights” (despite the words used by DSS) but an allegation of
`willful infringement. Opp. (Dkt. 33) at 23 n.8. But if words have any meaning, a
`reservation of rights is not a factual allegation of willful infringement. Indeed, the
`Court already has recognized this same phrase, as used by DSS in the Seoul
`Semiconductor and Osram cases, to be a reservation of rights by which “DSS
`concedes that at this time, it cannot plead facts sufficient to state a plausible claim
`for willful infringement.” See Tentative Order Regarding Motion To Dismiss in
`Document Security Systems Inc. v. Seoul Semiconductor Co., Ltd., et al., Case No.
`8:17-cv-00981-JVS-JCG, which the Court adopted as the order of the Court after
`oral argument on October 23, 2017. For that reason, and also because DSS
`concedes that it did not provide notice of its patents before filing the Complaint
`against Defendants in the Eastern District of Texas (which it then dismissed and
`immediately refiled in this District to avoid a venue challenge), the allegation of
`willful infringement must be dismissed, consistent with the Court’s rulings in the
`Seoul Semiconductor and Osram cases.
`Second, the FAC tried to introduce a new theory of inducing infringement
`into this case based on “Defendants” collectively having made sales “overseas” to
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`Case 2:17-cv-04273-JVS-JCG Document 34 Filed 10/30/17 Page 6 of 25 Page ID #:664
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`customers who manufacture their own consumer products using LEDs and then
`allegedly import their own products into the United States. As Defendants argued
`in their motion, and DSS failed to rebut, “it is illogical to assume, as DSS
`apparently assumes, that because (1) LEDs are sold by Everlight Electronics
`outside the United States, and (2) Everlight Americas has distributors for LEDs
`inside the United States, then either or both of these companies have intended
`foreign customers to incorporate their LEDs into larger products and then import
`these larger products into the United States.” Motion at 18. DSS camouflages its
`inability to support this theory by conflating Everlight Electronics and Everlight
`Americas as a single entity. Motion at 3. This was not just poor grammar as DSS
`appears to argue in opposition. Opp. at 11 (“a few mis-matched pronouns”). It
`was an illogical allegation of induced infringement that DSS has supported with
`nothing other than the conclusory assertion that Defendants collectively have the
`“specific intent” that their customers import their own consumer products into the
`United States. Having failed to show through facts in its operative pleading how
`each Defendant (or either one of them) allegedly has induced customers
`“overseas” to manufacture products and then import them into the United States
`so as to infringe the patents-in-suit, DSS should not be permitted to proceed on
`this theory against either Defendant.
`Third, as also pointed out by Defendants in their motion and not rebutted in
`the opposition, “DSS provides direct infringement allegations for only a single
`product as an ‘illustrative example’ without alleging, let alone showing through
`facts, how this example is representative of the structure of all the other accused
`products.” Motion at 1. The opposition claims to have provided support for three
`lines of products: Defendants’ Luminosity Full Color LED, 5050 Package Series
`and 3045 Package Series. Opp. at 13-14. The FAC, however, alleges
`infringement against many dozens of other LEDs package series, without ever
`alleging that they are structurally represented by or even similar in relevant
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`Case 2:17-cv-04273-JVS-JCG Document 34 Filed 10/30/17 Page 7 of 25 Page ID #:665
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`respects to the three sets of drawings that DSS has included in its pleading. If
`DSS cannot allege infringement against these other accused products because it
`does not know what their structure is, it should not be allowed to proceed further
`on infringement theories that it does not have. Unlike pleadings, infringement
`contentions are not filed with the Court pursuant to Rule 11, and they are no
`substitute for pleadings that can impose obligations on Defendants to mount a
`defense and provide burdensome discovery.
`II.
`PROCEDURAL BACKGROUND
`Instead of addressing the shortcomings in its pleading, DSS accuses
`Defendants of filing their motion for “nothing but [to] inflict burden on the parties
`and the Court.” Opp. at 1. DSS complains that it was only after the filing of the
`FAC that Defendants’ counsel “for the first time alleg[ed] ‘DSS improperly
`conflates two distinct corporate entities as ‘defendants.’” Opp. at 3. DSS fails to
`mention that this was because the FAC for the first time started conflating these
`two Defendants as a single entity. It did so because, for the first time, DSS added
`a conclusory inducement claim based on the illogical allegation that Defendants’
`joint activities induce customers not only to buy and pay for LEDs, but to then
`import them into the United States as part of finished products because this would
`somehow “develop and serve the United States market for Defendants’ LED
`products”:
`
`
`Defendants also specifically intend their customers to infringe
`the ‘771 Patent through selling ‘771 Accused Instrumentalities
`overseas with the specific intent that the customer import, offer to
`sell, and/or sell the ‘771 Accused Instrumentalities in order to
`develop and serve the United States market for Defendants’ LED
`products, either alone or used in products such as bulbs, displays,
`consumer products and/or fixtures.
` Such customers
`include
`Defendants’ LED distributors, consumer products companies and
`retailers
`that serve
`the United States market.
` See, e.g.,
`https://everlightamericas.com/content/19/Dists,
`naming
`Arrow
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`Case 2:17-cv-04273-JVS-JCG Document 34 Filed 10/30/17 Page 8 of 25 Page ID #:666
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`Electronics, Avnet Electronics, Digikey Electronics, Future
`Electronics, Mouser Electronics, Marsh Electronics, Inc., and Hughes
`Peters as “North American Authorized Distributors.”
`See, e.g., FAC, ¶24. The original Complaint did not include this novel and
`unexplained inducement theory. Dkt. 1. DSS added this theory to the FAC
`against “Defendants” collectively as though they are acting jointly to make
`companies “overseas” import infringing finished goods into the United States. Id.
`Contrary to DSS’s accusations, Defendants have not tried to burden the Court
`with unnecessary briefing. In fact, they tried to reduce the briefing burden on the
`Court, but DSS would not cooperate. First, Defendants urged DSS to amend its
`pleading to include whatever “facts outside the pleading—from a recent case in
`the Eastern District of Texas” that DSS argued somehow would justify “treating
`as a single entity Defendants Everlight Electronics in Taiwan and Everlight
`Americas in the United States.” Dkt. 31-2 (Davidson Decl.) Ex. 3 (email to
`counsel for DSS), p. 115. However, DSS decided to not amend its pleading and is
`now forced to support the FAC based on allegations that are nowhere to be found
`in the pleading itself and therefore cannot properly be considered. For example,
`DSS tries to parse out findings in the Texas litigation and relies on newly-cited
`portions of the Everlight Americas website that it asks the Court to judicially
`notice. For example, DSS argues that because Everlight Americas’ website
`identifies it as a “North American Sales arm” for Everlight Electronics, “it took
`these actions [apparently referring to every action taken by Everlight Americas]
`jointly with” Everlight Electronics. Opp. at 10-11. These allegations are not
`where they should be, in the operative pleading, and whatever they mean, they fail
`to provide notice of the claims against each Defendant. See Freeney v. Bank of
`Am. Corp., 2015 U.S. Dist. LEXIS 92848, at *17 (C.D. Cal. July 16, 2015) (A
`“party cannot cure pleading deficiencies by inserting the missing allegations in a
`document that is not either a complaint or an amendment.”) (internal quotations
`and citations omitted); In re Turbodyne Technologies, Inc. Sec. Litig., 2000 U.S.
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`Case 2:17-cv-04273-JVS-JCG Document 34 Filed 10/30/17 Page 9 of 25 Page ID #:667
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`Dist. LEXIS 23020 at *30; 2000 WL 33961193 at *10 (C.D. Cal. Mar. 15,
`2000) (“In deciding a motion to dismiss, courts may not ‘take into account
`additional facts asserted in a memorandum opposing the motion to dismiss,
`because such memoranda do not constitute pleadings under Rule 7(a).’”) (quoting
`Schneider v. California Dept. of Corrections, 151 F.3d 1194, 1197, n. 1 (9th Cir.
`1998); Archie v. Pop Warner Little Scholars, Inc., 2017 U.S. Dist. LEXIS 123446,
`at *41 (C.D. Cal. May 12, 2017) (“there is no such allegation present in the FAC,
`and the Court will not consider facts raised for the first time in opposition
`papers”).
`Second, DSS is wrong in suggesting that Defendants agreed to waive their
`substantive rights if the FAC provided “a similar level of detail as the Cree and
`Seoul Semiconductor FAC” (Opp. at 3). But Defendants did want the benefit of
`the Court’s rulings on the sufficiency of these FACs before filing a motion to
`dismiss of their own. Defendants therefore proposed that if DSS would not agree
`to amend the FAC, it at least should “agree to a short extension of the time [for
`Defendants] to respond to the FAC so that the parties can take into account the
`Court’s ruling on Seoul Semiconductor’s motion.” Dkt. 31-2 (Davidson Decl.)
`Ex. 3 (email to counsel for DSS), p. 115 (emphasis added). Counsel for DSS did
`not respond to Defendants’ communications, id., which forced Defendants to file
`this motion without the benefit of the Court’s analysis in the Seoul Semiconductor
`and Osram cases. In light of the Court’s rulings in these cases, while Defendants
`maintain that the FAC did not provide sufficient notice of any claim of
`infringement, they no longer seek a ruling at this stage of the proceedings on: (1)
`whether the drawings used by DSS in the FAC provide notice of the infringement
`for the illustrative examples in which they are used; (2) whether the induced
`infringement allegations for these illustrated examples are insufficient to the
`extent that the illustrated products are alleged to have been sold in the United
`States by Defendants themselves—as opposed to having been incorporated into
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`Case 2:17-cv-04273-JVS-JCG Document 34 Filed 10/30/17 Page 10 of 25 Page ID #:668
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`products imported by customers from around the world; and (3) whether there is
`personal jurisdiction over Everlight Electronics based on the allegations of
`induced infringement relating to its own alleged sales of LED products into the
`United States.
`DSS also argues in the background section of its opposition that
`Defendants’ counsel “concocted” an admission from a meet-and-confer
`discussion, specifically that “counsel for DSS confirmed that DSS does not
`contend that each Defendant takes every action attributed to ‘Defendants’
`collectively.” Opp. at 4 n.1 (referring to Motion at 4). While it is possible that
`counsel for DSS has a different recollection of the conversation, Defendants’
`counsel did not concoct the admission. See Declaration of Michael Bednarek filed
`concurrently herewith. In fact, counsel for DSS did admit that not every
`allegation naming “Defendants” actually referred to both Defendants. Id. And ,
`as pointed out in the Motion, that fact is quite clear from the face of the FAC
`itself. For example, DSS alleges that “Defendants manufacture the products” (see,
`e.g., FAC ¶ 22), but DSS could not have meant that “Defendants” here meant
`Everlight Americas because DSS admits in its opposition that Everlight Americas
`is a company engaged in sales. Opp. at 11. As another example, the allegation that
`“Defendants” intend customers to infringe is said to be based on “its United States
`website: See, e.g., https://everlightamericas.com/plcc/2519/eapl3232rgba0.html.”
`FAC ¶ 23. Again, this was a reference to one of the Defendants (“its”), the one
`with a United States website found at www.everlightamericas.com and a United
`States address in California. DSS’s refusal to amend its pleading to clarify which
`allegations are made against which Defendant—or whether DSS is pursuing an
`alter ego allegation against both Defendants (which would require specific
`allegations to be made that have not been made and cannot be made) leaves
`Defendants without notice of the nature and extent of the claims against them.
`This would unnecessarily complicate future proceedings in this case, including
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`Case 2:17-cv-04273-JVS-JCG Document 34 Filed 10/30/17 Page 11 of 25 Page ID #:669
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`when the parties seek guidance from the Court regarding the permissible scope of
`discovery on Defendants’ speculative claims regarding overseas sales, and when
`Defendants seek dismissal of these claims. This motion would not have been
`necessary if DSS had agreed to amend its pleading to avoid conflation of the
`Defendants, to provide reasonable clarity, and to set forth facts presented in their
`opposition brief as part of the pleading.
`III. ARGUMENT
`A. DSS’s Willfulness Allegations Are Deficient Because DSS Failed
`To Allege Pre-Suit Knowledge Or Post-Suit Egregious Behavior
`As explained above, DSS has used a reservation of rights in the FAC so that
`it could at some point choose to pursue willfulness depending on the facts found
`during discovery. The language used in this case is nearly identical to the
`reservation of rights that DSS unsuccessfully included in the FAC filed against
`Seoul Semiconductor:
`DSS Reservation of Rights In FAC
`served on Everlight Defendants
`Defendants have been aware of
`the ’771 Patent and of its
`infringement at least as of the date
`they were served with the Complaint
`in case 2:17-cv-310, which was filed
`[in the Eastern District of Texas] on
`April 13, 2017. Defendants have
`failed to take remedial measures since
`learning of their infringement. To the
`extent additional facts learned in
`discovery confirm that Defendants’
`infringement of the ’771 Patent is or
`has been willful and/or egregious, or
`to the extent that Defendants’ actions
`subsequent to the filing of this
`Complaint—such as their behavior as
`litigants or their continued failure to
`take remedial actions—render their
`infringement egregious, DSS reserves
`
`DSS Reservation of Rights In FAC
`served on Seoul Semiconductor
` Defendants have been aware of the
`’771 Patent and of its infringement as
`of a date no later than the date they
`were served with the complaint in the
`case 2:17-cv-308, filed [in the Eastern
`District of Texas] April 13, 2017.
`Defendants have failed to remedy their
`infringement since learning of the ‘771
`Patent. To the extent additional facts
`learned in discovery show that
`Defendants’ infringement of the ’771
`Patent is or has been willful and/or
`egregious, or to the extent that
`Defendants’ actions subsequent to the
`filing of this Complaint—such as their
`behavior as litigants or their continued
`failure to take remedial actions—render
`their infringement egregious, DSS
`reserves the right to request such a
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`Case 2:17-cv-04273-JVS-JCG Document 34 Filed 10/30/17 Page 12 of 25 Page ID #:670
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`finding at time of trial.
`
`FAC in Seoul Semiconductor, Case No.
`8:17-cv-00981-JVS-JCG
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`the right to request such a finding at
`time of trial.
`
`FAC, ¶ 25.
`
`The Court granted Seoul Semiconductor’s motion with respect to the
`willfulness allegations at the conclusion of the October 23, 2017 hearing, adopting
`its tentative ruling as the ruling of the Court. Undaunted, however, DSS
`subsequently filed an opposition to Defendants’ motion in this case that repeats
`many of
`the same arguments
`it made
`to unsuccessfully oppose Seoul
`Semiconductor’s motion. Just as it argued in the Seoul Semiconductor case, DSS
`now argues that:
`(1) its allegation was more than a mere “reservation of rights” (Compare
`Opp. (dkt. 33) at 23, with dkt. 29 at 15 n.6 in Case No. 00981 (Seoul
`Semiconductor));
`(2) filing a lawsuit in the Eastern District of Texas then dismissing and
`immediately refiling it here to avoid wasteful transfer motion practice
`constitutes “pre-suit notice.” (Compare Opp. at 24-25, with dkt. 29 at 17 in
`Case No. 00981 (Seoul Semiconductor)).
`The Court rejected the arguments made by DSS in the Seoul Semiconductor case,
`observing:
`
`
`In the FAC, DSS alleges a nearly identical claim of willful
`infringement for each of the patents-in-suit: “To the extent additional
`facts learned in discovery show that Defendants’ infringement of the
`[patents-in-suit] [are] or [have] been willful and/or egregious, or to
`the extent that Defendants’ actions subsequent to the filing of this
`Complaint—such as their behavior as litigants or their failure to take
`remedial actions—render their infringement egregious, DSS reserves
`the right to request such a finding at time of trial.” (FAC, Docket No.
`18, ¶¶ 22, 33, 46.) Thus, DSS concedes that at this time, it cannot
`plead facts sufficient
`to state a plausible claim for willful
`infringement. “Factual allegations must be enough to raise a right to
`relief above the speculative level.” Twombly, 550 U.S. at 555.
`8
`REPLY IN SUPPORT OF MOTION TO DISMISS BY
`EVERLIGHT AMERICAS AND EVERLIGHT ELECTRONICS
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`Case 2:17-cv-04273-JVS-JCG Document 34 Filed 10/30/17 Page 13 of 25 Page ID #:671
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`Therefore, DSS’s willful infringement claims do not meet the
`standards of Twombly and Iqbal. Accordingly, DSS’s claims for
`willful infringement are dismissed with leave to amend.
`
`See tentative ruling adopted as the Court’s ruling on October 23, 2017 in Case No.
`00981. As it did in Seoul Semiconductor, the Court should reject the attempt by
`DSS to reserve the right to allege willfulness based on facts that it admittedly does
`not now have.
`DSS, moreover, has not alleged and cannot allege pre-suit knowledge of
`infringement here because, as in Seoul Semiconductor, the purported “pre-suit
`knowledge” came from “filing an earlier suit” in the Eastern District of Texas and
`then dismissing and immediately refiling it the same day in this District “to avoid
`wasteful motion practice regarding potential transfer of venue.” Opp. at 2, 24-25.
`To state the obvious, the Defendants were already being sued at the time they
`were allegedly given notice of the patents and of the infringement—the lawsuit
`was simply transferred from one venue to another through the procedure of a
`dismissal and immediate refiling. There was no pre-suit knowledge and no basis
`to treat Defendants as willful infringers based on the different procedure that DSS
`chose to use to transfer its case, i.e., because it chose to dismiss and immediately
`refile the case instead of opposing a motion to transfer venue. Consistent with the
`ruling in Seoul Semiconductor, which involved the same exact procedure for
`transferring the case to this Court, the Court should rule that DSS did not provide
`pre-filing notice of infringement. As this Court has held, “California federal
`courts have required plaintiffs to plead presuit knowledge in order to adequately
`plead willful infringement.” TCL Communications Tech. Holdings, Ltd. v.
`Telefonaktenbologet LM Ericsson, No., 2014 U.S. Dist. LEXIS 197559, *32 (C.D.
`Cal. Sep. 30, 2014) (quoting Unilin Beheer B.V. v. Tropical Flooring, No. CV 14-
`02209 BRO (SSX), 2014 U.S. Dist. LEXIS 85955, at *17 (C.D. Cal. June 13,
`2014)).
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`REPLY IN SUPPORT OF MOTION TO DISMISS BY
`EVERLIGHT AMERICAS AND EVERLIGHT ELECTRONICS
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`Case 2:17-cv-04273-JVS-JCG Document 34 Filed 10/30/17 Page 14 of 25 Page ID #:672
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`Moreover, even if the earlier filed Texas complaint somehow could have
`provided the requisite “pre-suit” knowledge of infringement, such a complaint
`could not provide a basis for alleging willfulness for the vast majority of products
`that have been accused in the FAC. As argued in the motion and not rebutted by
`DSS, “the earlier complaint that DSS filed in the Eastern District of Texas did not
`even include allegations for most of the products now accused in FAC ¶¶ 15 and
`28.” Motion at 19 & n.4.1
`For these reasons, and based on the authorities cited in the Motion, the
`purported reservation of the right to allege willful infringement must be dismissed.
`B. DSS’s Inducement Allegations Based On Overseas Sales Are
`Deficient Because They Are Not Supported By Facts Plausibly
`Showing That Everlight Electronics Or Everlight Americas
`Induced Overseas Customers To Import Their Own
`Manufactured Products Into The United States So As To Infringe
`Under 35 U.S.C. § 271(b), a party that “actively induces infringement of a
`patent shall be liable as an infringer.” The Supreme Court has interpreted the
`statute to require not only “intent” to cause infringement but also “knowledge that
`the induced acts constitute patent infringement.” Glob.-Tech Appliances, Inc. v.
`SEB S.A., 563 U.S. 754, 766, 131 S. Ct. 2060, 2068 (2011). “In general, active
`inducement requires affirmative steps to induce another’s infringement.” Grecia
`v. VUDU, Inc., No. C-14-1220-EMC, 2015 U.S. Dist. LEXIS 16256, at *29 (N.D.
`Cal. Feb. 9, 2015) (citing Microsoft Corp. v. DataTern, Inc., 755 F.3d 899, 904
`(Fed. Cir. 2014), and Global-Tech, 131 S. Ct. at 2065).
`
`
`DSS also complains that Defendants “cancelled DSS’s attorney order of
`1
`Everlight LEDs products.” Opp. at 24. Choosing to do business with actual
`customers and not directly interacting with plaintiffs’ lawyers is no basis for
`alleging infringement, let alone “egregious infringement.” DSS, in any event,
`does not allege that any notice of infringement was given during its attempted
`direct contact with Defendants such that it could claim willful infringement. To
`the contrary, DSS admits that it had yet to do a “pre-filing infringement
`investigation” (id.) and could not have given notice of infringement.
`10
`REPLY IN SUPPORT OF MOTION TO DISMISS BY
`EVERLIGHT AMERICAS AND EVERLIGHT ELECTRONICS
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`Case 2:17-cv-04273-JVS-JCG Document 34 Filed 10/30/17 Page 15 of 25 Page ID #:673
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`Importantly, it is not enough to allege that Defendants had the specific
`intent that their customers sell products into the United States, but that they took
`“affirmative steps” to make that happen. Glob.-Tech Appliances, Inc. v. SEB S.A.,
`563 U.S. 754, 760 (2011) (“The addition of the adverb ‘actively’ suggests that
`the inducement must involve the taking of affirmative steps to bring about the
`desired result”).
`Defendants pointed out in their motion that the FAC conflates Everlight
`Americas and Everlight Electronics as a single entity to obscure its inability to
`plausibly show under Iqbal and Twombly that either of them had actively induced
`infringement in the United States through overseas LED sales (i.e., sales that took
`place completely outside the United States to customers located outside the United
`States, who then manufactured products outside the United States for worldwide
`sales). DSS fails to show in its opposition how its foreign-sales theory of
`inducement has been supported with factual allegations. As pointed out in the
`motion, “[t]he only attempt DSS makes to allege a single fact to support this
`inducement claim is that Defendant Everlight Americas lists distributors for its
`LEDs on its U.S. website.” Motion at 18. But, as also pointed out and not
`rebutted by DSS, it is illogical to assume that “because (1) LEDs are sold by
`Everlight Electronics outside the United States; and (2)