Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 1 of 27
`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 1 of 27
`
`Sarah G. Hartman (Cal. Bar No. 281751)
`shartman@brownrudnick.com
`Peter Lambrianakos (pro hac vice)
`plambrianakos@brownrudnick.c0m
`Vincent J. Rubino, 111 @ro hac vice)
`vrubino@brownrudnick.com
`Brown Rudnick LLP
`
`7 Times Square
`New York, NY 10036
`Telephone:
`(212) 209-4800
`Facsimile:
`(212) 209-4801
`
`Aljun Sivakumar (Cal. Bar No. 297787)
`asivakumar@brownrudnick.com
`Brown Rudnick LLP
`
`2211 Michelson Drive, Seventh Floor
`Irvine, Califomia 92612
`Telephone: (949) 752-7100
`Facsimile:(949) 252-1514
`
`Attorneys for Defendant
`AGIS Software Development LLC.
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`OAKLAND DIVISION
`
`Case No. 18-cv-06185-HSG
`
`ZTE (USA) INC.,
`
`V.
`
`Plaintiff,
`
`DEFENDANT’S NOTICE OF MOTION AND
`
`MOTION FOR SANCTIONS;
`MEMORANDUM OF POINTS AND
`
`AUTHORITIES IN SUPPORT THEREOF
`
`AGIS SOFTWARE DEVELOPMENT LLC, et
`
`al,
`
`[Declaration ofMalcolm K. Beyer, Jr. ; and
`Deciarmion of VincentJ. Rubino, III, and exhibits
`flied concurrently herewith; Proposed Order]
`
`Defendant.
`
`Hearing Date:
`Time:
`Trial Date:
`
`May 9, 2019
`2:00 pm.
`None set
`
`1
`NOTICE OF MOTION AND MOTION FOR SANCTIONS, CASE NO. l8-cv-06185-HSG
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`\DWQONM-bWNH
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`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 2 of 27
`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 2 of 27
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`NOTICE OF MOTION AND MOTION FOR SANCTIONS
`
`PLEASE TAKE NOTICE that on May 9, 2019, at 2:00 p.m., or as soon thereafter as
`
`the matter may be heard before the Honorable Judge Haywood S. Gilliam, Jr. in the United
`
`States District Court for the Northern District of California, in the Ronald V. Dellums Federal
`
`Building and United States Courthouse, Courtroom 2, 4th Floor, 1301 Clay Street, Oakland,
`
`California 94612, Defendant AGIS Software Development LLC (“AGIS Software”) will and
`
`hereby does move the Court for an order awarding sanctions against the attorneys of Plaintiff
`
`ZTE (USA) Inc. (“ZTE” or “Plaintiff”) for asserting unwarranted and frivolous claims in
`
`violation of Rule 11(b)(2) of the Federal Rules of Civil Procedure (“FRCP”). This Motion is
`
`brought pursuant to FRCP Rule 11(c)(2), and requests fees and costs necessary to prepare and
`
`file this Motion, the Motion to Dismiss filed in this action, and for all other expenses resulting
`
`from Plaintiff s violations.
`
`The Motion will be and is based on this Notice of Motion and Motion, the accompanying
`
`Memorandum of Points and Authorities, Defendants’ Motion to Dismiss and Memorandum of
`
`Points and Authorities in Support of the Motion to Dismiss, the pleadings and papers filed
`
`/ / /
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`NOTICE OF MOTION AND MOTION FOR SANCTIONS, CASE NO. 18-cv-06185-HSG
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`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 3 of 27
`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 3 of 27
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`herein, as well as upon such other and further matters, papers, and arguments as may be
`
`submitted to the Court.
`
`Dated: February 20, 2019
`
`Respectfully Submitted,
`
`BROWN RUDNICK LLP
`
`By:
`
`/s/ Peter Lambrianakos
`
`Peter Lambrianakos
`NY Bar No. 2894392
`
`Email: p1ambrianakos@brownrudnick.com
`Vincent J. Rubino, 111
`NY Bar No. 4557435
`
`Email: vrubino@brownrudnick.com
`Sarah G. Hartman
`
`CA Bar No. 281751
`
`Email: shartman@brownrudnick.com
`BROWN RUDNICK LLP
`
`7 Times Square
`New York, NY 10036
`
`Telephone: 212-209-4800
`Facsimile: 212-209-4801
`
`Arjun Sivakumar
`CA Bar No. 297787
`BROWN RUDNICK LLP
`
`2211 Michelson Drive, Seventh Floor
`Irvine, CA 92612
`
`Attorneys for Defendant
`AGIS Software Development LLC
`
`STATEMENT OF ISSUES TO BE DECIDED
`
`1.
`
`Did ZTE (USA), Inc.’s (“ZTE”) counsel violate Rule 11(b) of the Federal Rules of Civil
`
`Procedure (“FRCP”) by filing a complaint that it should have known, after a reasonable
`
`inquiry, lacks a basis for the exercise of personal jurisdiction over Defendant AGIS
`
`Software Development, LLC?
`
`Should ZTE’s counsel be subject to sanctions under FRCP Rule 11(c) for violating
`
`FRCP Rule 11(b)?
`
`2
`NOTICE OF MOTION AND MOTION FOR SANCTIONS, CASE NO. 18-cv-06185-HSG
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`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 4 of 27
`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 4 of 27
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`TABLE OF CONTENTS
`
`Page! SI
`
`PRELIMINARY STATEMENT .............................................................................................. 1
`
`II.
`
`III.
`
`IV.
`
`A.
`
`B.
`
`A.
`
`The Parties2
`
`Prior Enforcement Actions
`
`3
`
`The Filing of ZTE’s Initial and Amended Complaints Violates Rule 11
`Because They Assert Legally and Factually Baseless Allegations of Personal
`Jurisdict10n7
`
`1.
`
`2.
`
`ZTE Should Have Known That No Legal or Factual Basis Exists for
`the Exercise of General Jurisdiction over AGIS Software ............................... 8
`
`ZTE Should Have Known That No Legal or Factual Basis Exists for
`the Exercise of Specific Jurisdiction over AGIS Software ............................. 11
`
`MONETARY SANCTIONS ARE APPROPRIATE 16
`
`VI.
`
`CONCLUSION ....................................................................................................................... 18
`
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`NOTICE OF MOTION AND MOTION FOR SANCTIONS, CASE NO. 18-cv-06185-HSG
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`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 5 of 27
`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 5 of 27
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`TABLE OF AUTHORITIES
`
`Page(s)
`
`Federal Cases
`
`Adobe Sys. Inc. v. Tejas Research, LLC.,
`No. C-14-0868 EMC, 2014 WL 4651654 (N.D. Cal. Sept. 17, 2014)12, 13,14
`
`AGIS Software Dev. LLC v. ZTE Corp,
`No. 2:17-CV-00517—JRG, 2018 WL 4854023 (ED. Tex. Sept. 28, 2018) ..................................... 7
`
`Amphastar Pharmaceuticals, Inc. v. Momenia Pharmaceuticals, Inc.,
`No. ED CV 15--1914 RGK, 2016 WL 6822312 (CD. Cal. Jan. 26, 2016)7
`
`Autogenomics, Inc. v. Oxford Gene Tech. Ltd.,
`566 F.3d 1012 (Fed. Cir. 2009)............................................................................................ 8, 10, 11
`
`Autonomy, Inc. v. Adiscov, LLC,
`No. C11—0420 SBA, 2011 WL 2175551(N.D. Cal. June 3, 2011) .................................... 11,13,15
`
`Avocent Huntsville Corp. v. Aten Int’l Co.,
`552 F.3d 1324 (Fed. Cir.2008)8
`
`Babaajanian v. Deutsche Bank Nat’l Tr. C0.,
`N0. CV1002580MMMRZX, 2011 WL 13214300 (CD. Cal. Mar. 29, 2011)7
`
`Breckenridge Pharm., Inc. v. Metabolite Labs., Inc.,
`444 F.3d 1356 (Fed. Cir. 2006)...................................................................................................... 11
`
`Burger King Corp. v. Rudzewicz,
`471U.S.462(1985)8, 15,16
`
`Campbell Pet Co. v. Miale,
`542 F .3d 879 (Fed.Cir. 2008) ...........................................................................................................9
`
`Christian v. Mattel, Inc.,
`286 F.3d 1118 (9th Cir. 2002)5, 6
`
`Comm Vault Sys., Inc. v. PB & J Software, LLC,
`No. C13—1332 MMC, 2013 WL 3242251 (N.D. Cal. June 25, 2013)14
`
`Cooter & Gell v. Hartmarx Corp,
`
`Daimler AG v. Bauman,
`571 U.S. 117(2014)9, 10,11
`
`Elecs. for Imaging, Inc. v. RAH Color Techs. LLC,
`No. 18-CV-01612-WHO, 2018 WL 5304838 (N.D. Cal. Oct. 24, 2018) ...................................... 14
`
`ii
`NOTICE OF MOTION AND MOTION FOR SANCTIONS, CASE NO. 18-cv-06185-HSG
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`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 6 of 27
`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 6 of 27
`
`Gallagher v. US,
`No. 17-CV-00586-MEJ, 2017 WL 4390172 (N.D. Cal. Oct. 3, 2017) .................................... 15, 16
`
`Golden Eagle Distrib. Corp. v. Burroughs Corp,
`801 F.2d 1531 (9th Cir. 1986) .....................................................................................................5, 6
`
`Goodyear Dunlap Tires Ops, S.A. v. Brown,
`131 S. Ct. 2846 (2011) ................................................................................................................. 8, 9
`
`Hall v. Hamilton Family Ctr.,
`No. 13-CV-O3646—WHO, 2014 WL 1410555 (N.D. Cal. Apr. 11, 2014) ....................................... 6
`
`Hanson v. Deckla,
`
`Helicopteros Nacionales de Colombia S.A. v. Hall,
`466 US. 408 (1984) ............................................................................................................... 8, 9, 10
`
`Holgate v. Baldwin,
`425 F.3d 671 (9th Cir. 2005) ........................................................................................................... 6
`
`ICU Med, Inc. v. Alaris Med. Sys., Inc.,
`No. SA CV 04-00689 MRP, 2007 WL 6137003 (CD. Cal. Apr. 16, 2007) ................................... 6
`
`Int’l Shoe Co. v. Wash.,
`326 US. 310 (1945) ..................................................................................................................... 8, 9
`
`Invisible Fence, Inc. v. Fido 's Fences, Inc.,
`687 F. Supp. 2d 726 (ED. Tenn. 2009) ......................................................................................... 15
`
`Juniper Networks, Inc. v. SSL Servs., LLC,
`No. COS—5758 SBA, 2009 WL 3837266 (N.D. Cal. Nov. 16, 2009), afl’d, 2010
`WL 5140471 (Fed. Cir. Dec.13, 2010) .............................................................................. 12, 13, 14
`
`Key Source Int ’1 v. CeeColor Indus, LLC,
`No. C12—01776 WHA, 2012 WL 6001059 (N.D. Cal. Nov. 30, 2012) ........................................ 14
`
`Klayman v. Deluca,
`N0. 5:14-CV-03190-EJD, 2015 WL 427907 (N.D. Cal. Jan. 30, 2015)........................................ 15
`
`Kyocera Int'I, Inc. v. Semcon IP, Inc.,
`No. 3:18-CV-1575-CAB-MDD, 2018 WL 5112056 (S.D. Cal. Oct. 19, 2018) .................... passim
`
`Lauser v. City Coll. ofSan Francisco,
`No. C-07-6464 SC, 2008 WL 2357246 (N.D. Cal. June 6, 2008), afl'd, 359 F.
`App’x 755 (9th Cir. 2009) ...............................................................................................................7
`
`Les Shockley Racing, Inc. v. Nat ’I Hot Rod Assoc,
`884 F.2d 504 (9th Cir. 1989) ........................................................................................................... 6
`
`iii
`NOTICE OF MOTION AND MOTION FOR SANCTIONS, CASE NO. 18-cv-06185-HSG
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`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 7 of 27
`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 7 of 27
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`Love v. The Mail on Sunday,
`No. CV05-7798ABCPJWX, 2006 WL 4046169 (CD. Cal. July 13, 2006) ................. 7, 11, 16, 17
`
`Misa Illfg, Inc. v. Pac. Egg & Poultry Assn,
`No. CV 86—1495 AHS, 1987 WL 119913 (CD. Cal. Jan. 7, 1987) .............................. 7, 11, 16, 17
`
`Mitchell v. Reg’l Serv. Corp,
`No. C 13-04212 JSW, 2014 WL 12607809 (N.D. Cal. Apr. 23, 2014) ......................................... 17
`
`Moore v. Keegan Mgmt. Co (In re Keegan Mgmt. Co., Sec. Litig.),
`78 F.3d 431 (9th Cir. 1996) ............................................................................................................. 6
`
`New World Int'l Inc. v. Ford Glob. Techs LLC,
`No. 3: 15-CV-01121 -,M 2016 WL1069675(N..D Tex. Mar. 16, 2016), aff'd, 859
`F. 3d 1032 (Fed. Cir. 2017)....
`14
`
`Nuance Comms., Inc. v. Abbyy Software House,
`626 F.3d 1222 (Fed. Cir. 2010)........................................................................................................ 8
`
`Orange Prod. Credit Ass 'n v. Frontline Ventures Ltd,
`792 F.2d 797 (9th Cir. 1986) ...........................................................................................................7
`
`R]. C. Int ’1 Inc. v. Aliflex 2 SpA,
`No. 3:17-CV-0556-CAB-WVG, 2017 WL 3583122 (S.D. Cal. Aug. 17, 2017) ............................ 8
`
`Perkins v. Benguet Consol. Mning Co.,
`342 US. 437 (1952) ......................................................................................................................... 9
`
`Pistoresi v. Madera Irrigation Dist,
`No. CV—F—O8-843-LJO-DLB, 2008 WL 5070051 (E.D. Cal. Nov. 25, 2008) .................................6
`
`Radio Sys. Corp. v. Accession, Inc.,
`638 F.3d 785 (Fed. Cir. 2011) ...................................................................................... 11,12, 14,15
`
`RxHeat, LLC v. Thermapure, Inc.,
`No. 4:10CV2402 JCH, 2011 WL 998158 (E.D. Mo. Mar. 17,2011) ........................................... 15
`
`Sec. Farms v. Int'l Bhd. of Teamsters,
`124 F.3d 999 (9th Cir. 1997) ....................................................................................................... 5, 6
`
`Silent Drive, Inc. v. Strong Indus, Inc.,
`326 F.3d 1194 (Fed. Cir. 2003)...................................................................................................... 11
`
`Truesdell v. S. California Permanente Med. Grp.,
`209 FRD. 169 (CD. Cal. 2002) ............................................................................................. 16, 17
`
`Walden v. Fiore,
`571 US. 277 (2014) .......................................................................................................9,12, 14,15
`
`iv
`NOTICE OF MOTION AND MOTION FOR SANCTIONS, CASE NO. 18-cv-06185-HSG
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`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 8 of 27
`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 8 of 27
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`California Statutes
`
`Cal. Civ. Proc. Code
`§ 410.10............................................................................................................................................ 8
`
`Other Authorities
`
`Fed. R. Civ. P. llpasszm
`
`Fed. R. Civ. P. 11(b)paSSIm
`
`Fed. R. Civ. P. 11(c)6, 7,16
`
`Fed. R. Civ. P. 11(c)(2) .......................................................................................................................... 5
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`Fed. R. Civ. P. 26(0 ............................................................................................................................... 5
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`\OOOQO'SUI-FWNt—n
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`NOTICE OF MOTION AND MOTION FOR SANCTIONS, CASE NO. 18-cv-06185-HSG
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`V
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`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 9 of 27
`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 9 of 27
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`MEMORANDUM OF POINTS AND AUTHORITIES
`
`I.
`
`PRELIMINARY STATEMENT
`
`ZTE (USA), Inc.’s (“ZTE” or “Plaintiff”) counsel violated Rule 11 of the Federal Rules of
`
`Civil Procedure (“Rule 11”) by filing a complaint that lacks a legal or factual basis for the exercise
`
`of personal jurisdiction over AGIS Software Development LLC (“AGIS Software” or “Defendant”).
`
`First, at the time ZTE filed its initial and amended complaints, ZTE could not have concluded, after
`
`a reasonable inquiry, that AGIS Software has contacts with California that are so “continuous and
`
`systematic” that it is essentially “at home” in California, as is required for the exercise of general
`
`personal jurisdiction. Instead, ZTE’s counsel knew that AGIS Software is a limited liability
`
`company organized and existing under the laws of the State of Texas with its principal place of
`
`business in Marshall, Texas.
`
`It further knew or should have known that AGIS Sofiware is not
`
`registered to conduct business in California; does not have a registered agent for service of process
`
`in California; does not have offices, employees, equipment, bank accounts, or other assets in
`
`California; is not subject to and has never paid taxes in California; does not manufacture or sell
`
`products in California; does not engage in or solicit business in California; has not signed contracts
`
`in California; does not recruit employees in California; does not own, lease, or rent any property in
`
`California; and, with the exception of the present suit, has never been a party to a lawsuit in
`
`California. Thus, ZTE’s assertion of general personal jurisdiction is fiivolous in violation of Rule
`
`1 1.
`
`Second, ZTE’s counsel also should have known at the time it filed its complaints that AGIS
`
`Software has not purposefully directed any activities related to the enforcement or defense of the
`
`Patents—In-Suit at California sufficient to confer specific personal jurisdiction over it. The sole
`
`contacts relied on by ZTE to assert jurisdiction over AGIS Software are enforcement actions filed
`
`outside of California, travel to California to take depositions of witnesses in connection with the out-
`
`of-state enforcement actions, and service of subpoenas on a non-party in California in connection
`
`with the out—of—state enforcement actions. The law is clear that such contacts are insufficient to
`
`support the exercise of personal jurisdiction over AGIS Software in this declaratory judgment action.
`
`\OOOQQUI-D-UJNy—d
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`NOTICE OF MOTION AND MOTION FOR SANCTIONS, CASE NO. 18-cv-06185-HSG
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`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 10 of 27
`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 10 of 27
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`ZTE’s counsel, therefore, should have known that it lacked a good faith basis for the assertion of
`
`specific personal jurisdiction over AGIS Software, in violation of Rule 11.
`
`Shortly after the filing of the initial complaint, Defendant’s counsel informed ZTE’s counsel
`
`that ZTE’s allegations of personal jurisdiction over AGIS Software are baseless, provided relevant
`
`authority supporting that conclusion, and offered ZTE’s counsel an opportunity to voluntarily
`
`withdraw its baseless claims. ZTE’s counsel refused. Months later, ZTE’s counsel filed a First
`
`Amended Complaint (“FAC”) (Dkt. 18), which left unchanged the baseless claims of personal
`
`jurisdiction against AGIS Software. AGIS Software filed a motion to dismiss the PAC. On the day
`
`that ZTE’s opposition to AGIS’s Motion to Dismiss was due, rather than filed an opposition, ZTE
`
`filed a Second Amended Complaint (“SAC”) (Dkt. 39), which removed ZTE’s claims of invalidity
`
`as to the Patents-in-Suit, but again left unchanged ZTE’s deficient allegations of personal
`
`jurisdiction.
`
`Accordingly, ZTE’s counsel should be subject to sanctions for its violations of Rule 11.
`
`II.
`
`STATEMENT OF FACTS
`
`A.
`
`The Parties
`
`AGIS Software is the sole owner of all right, title, and interest in and to US. Patent Nos.
`
`8,213,970 (the “’970 Patent”); 9,408,055 (the “’055 Patent”); 9,445,251 (the “’251 Patent”);
`
`9,467,838 (the “’838 Patent”); and 9,749,829 (the “’829 Patent”) (collectively, the “Patents—in-
`
`Suit”). AGIS Software Development LLC v. ZTE Corp, et. al., Case No. 2: 18-cv-00517-JRG, Dkt. l
`
`1] 1 (ED. Tex.); see also Dkt. 39 1111 17-21; Declaration of Malcolm K. Beyer, Jr. (“Beyer Decl.”) 1] 7.
`
`AGIS Software is a limited liability company organized and existing under the laws of the
`
`State of Texas with its principal place of business located in Marshall, Texas. Dkt. 39 1] 3; see also
`
`Beyer Decl. 11 9. AGIS Software’s Chief Executive Officer, Mr. Malcolm K. Beyer, Jr., resides in
`
`Florida, not California. Beyer Decl. 1H] 2, 4. AGIS Software is not registered to conduct business in
`
`California; does not have a registered agent for service of process in California; does not have
`
`offices, employees, equipment, bank accounts, or other assets in California; is not subject to and has
`
`never paid taxes in California; does not manufacture or sell products in California; does not solicit or
`
`engage in business in Califomia; has not signed contracts in California; does not recruit employees
`
`2
`NOTICE OF MOTION AND MOTION FOR SANCTIONS, CASE NO. l8-cv-06185-HSG
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`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 11 of 27
`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 11 of 27
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`\OOONONUI-FUJNr—t
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`in California; and does not own, lease, or rent any property in California. Id. W 10—19. Further, with
`
`the exception of the present suit, no lawsuit has ever been filed by or against AGIS Software in
`
`California for any reason. Id. 11 21; see also Declaration of Vincent J. Rubino, III (“Rubino Decl.”) 11
`
`7.
`
`ZTE alleges that it is a corporation organized under the laws of the State of New Jersey, with
`
`a principal place of business at 2425 N. Central Expressway, Suite 600, Richardson, Texas 75080,
`
`and an office located in Milpitas California. Dkt. 39 1] 2.
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`B.
`
`Prior Enforcement Actions
`
`In the summer of 2017, AGIS Software filed five patent infringement actions involving the
`
`Patents—in-Suit in the Eastern District of Texas. See AGIS Software Dev. LLC v. ZTE Corp, et al.,
`
`Case No. 2:17-cv-517 (ED. Tex.), Dkts. 1, 32 (as amended, alleging infringement of all five
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`Patents-in-Suit against ZTE Corporation, ZTE (TX) Inc. and ZTE) (the “ZTE Texas Case”); AGIS
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`Software Dev. LLC v. Apple, Inc., Case No. 2:17-cv-516 (E.D. Tex.), Dkt. 32 (as amended, alleging
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`infi‘ingement of all five Patents—in-Suit) (the “Apple Texas Case”); AGIS Software Dev. LLC v. HTC
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`C0rp., Case No. 2:17-cv-514 (E.D. Tex.), Dkt. l (alleging infringement of the ’838, ’251, ’055, and
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`’970 patents); AGIS Software Dev. LLC v. Huawei Device USA Inc., et al., Case No. 2:17-cv-513
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`(E.D. Tex.), Dkts. l, 20 (alleging infringement of the ’838, ’25 l, ’055, and ’970 patents); and AGIS
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`Software Dev. LLC v. LG Elecs., Inc., Case No. 2: l7-cv-515 (E.D. Tex.), Dkt. 1 (alleging
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`infringement of the ’83 8, ’251, ’055, and ’970 patents) (collectively, the “Texas Cases”). Aside
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`from the filing and prosecution of the Texas Cases, AGIS Sofiware has taken no other action to
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`enforce its rights in the Patents-in—Suit against any entity. Beyer Decl. 1] 22; see also Rubino Decl. 1]
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`8.1
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`1 ZTE alleges that AGIS Sofiware also filed a lawsuit against Life3 60, Inc. in the Southern District
`of Florida in Advanced Ground Information Systems, Inc. v. Life3 60, Inc., Case No. 9: l4-cv-80651-
`DMM (S.D. Fl.) (the “Life360 Case”). Dkt. 39 1} 9. But that action, which alleged infringement of
`patents that are not involved in this action, US. Patent Nos. 7,031,728 (the “’728 Patent”);
`7,764,954 (the “’954 Patent”); 8,126,441 (the “’441 Patent”); and 7,672,681 (the “’681 Patent”), did
`not involve AGIS Software. See Life360 Case, Dkt. 1; see also Rubino Decl. 1] 2.
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`3
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`On September 28, 2018, Judge Gilstrap issued an order to transfer the ZTE Texas Case to the
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`Northern District of California, in response to the defendant’s motion to dismiss or transfer for
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`improper venue. See ZTE Texas Case, Dkt. 85. On October 8, 2018, prior to the transfer, AGIS
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`Software filed a Notice of Voluntary Dismissal (id. Dkt. 86), which the court granted on October 9,
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`2018 (id. Dkt. 87). That same day, ZTE filed the instant action seeking a judicial declaration of non-
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`infringement, invalidity, and/or unenforceability as to the Patents-in-Suit against AGIS Software,
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`AGIS Holdings, Inc. (“AGIS Holdings”), and Advanced Ground Information Systems, Inc. (“AGIS,
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`Inc.,” and together with AGIS Software and AGIS Holdings, the “AGIS Entities”). Dkt. 1.
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`On October 26, 2018, counsel for the AGIS Entities sent ZTE’s counsel e—mail
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`correspondence explaining that this Court lacked subject matter jurisdiction as to AGIS, Inc. and
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`AGIS Holdings (neither of which were involved in the ZTE Texas Case) because AGIS Sofiware is
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`the sole and exclusive owner of all right, title, and interest in and to each of the Patents-in-Suit, and
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`thus, the only entity that has standing to sue for infringement and that can be sued for a declaration
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`of non-infringement, invalidity, and/or unenforceability of the Patents-in-Suit. Rubino Decl. 1[ 9 &
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`Ex. A. Counsel for the AGIS Entities also explained that this Court lacks personal jurisdiction over
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`all three AGIS Entities because none of them purposefully directed activities related to the
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`enforcement or defense of the Patents-in—Suit at California, as is required for the exercise of personal
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`jurisdiction to comport with due process. Id. 11 9 & Ex. A. In support of its position, counsel for the
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`AGIS Entities included a copy of the decision in Kyocera Int’l, Inc. v. Semcon 1P, Inc., No. 3: 1 8—CV-
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`1575-CAB-MDD, 2018 WL 5112056 (S.D. Cal. Oct. 19, 2018) in which the court granted the
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`defendant’s motion to dismiss for lack of personal jurisdiction based on substantially similar facts.
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`Id. 1] 9 & Ex. A. ZTE’s counsel replied on October 30, 2018, stating that ZTE would not dismiss its
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`complaint. Id. 1] 10 & Ex. B.
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`In light of ZTE’s refusal to dismiss its complaint, counsel for the AGIS Entities prepared a
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`motion to dismiss the complaint for lack of subject matter jurisdiction as to AGIS, Inc. and AGIS
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`Holdings, and for lack of personal jurisdiction pursuant to all three AGIS Entities, and a motion for
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`sanctions pursuant to Rule 11. Id. 11 1 1. On December 26, 2018, the AGIS Entities shared their
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`portion of the joint case management statement with ZTE, which explained that the AGIS Entities
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`NOTICE OF MOTION AND MOTION FOR SANCTIONS, CASE NO. 18-cv-06185-HSG
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`4
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`intended to file a motion to dismiss for lack of subject matter jurisdiction and personal jurisdiction,
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`as well as a potential motion for sanctions based on ZTE’s counsel’s refusal to dismiss its baseless
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`allegations ofjurisdiction. Id. 11 12. Later that afternoon, the parties participated in a FRCP 26(1)
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`discovery conference. Id. 11 13. During that conference, ZTE’s counsel did not indicate any intent to
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`withdraw its Complaint or to file an amended complaint. Id.
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`On December 31, 2018, the deadline for the AGIS Entities to respond to the initial
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`Complaint, ZTE’s filed its FAC, removing AGIS Holdings and AGIS, Inc. as named defendants, but
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`continuing to assert a baseless claim of personal jurisdiction over AGIS Software. Dkt. 18. AGIS
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`Software then prepared a motion to dismiss the FAC for lack of personal jurisdiction, which it filed
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`on the agreed-deadline of January 22, 2019. Dkt. 30. On February 5, 2019, the deadline for ZTE to
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`file an opposition to AGIS Software’s motion to dismiss, ZTE filed a SAC, removing ZTE’s claims
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`of invalidity as to the Patents-in—Suit, but leaving unchanged ZTE’s deficient allegations of personal
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`jurisdiction. Dkt. 39.
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`Pursuant to the “safe harbor provision” in Rule 11(c)(2), ZTE’s counsel was served with this
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`Motion via email and overnight mail on February 20, 2019. Rubino Decl. 11 14.
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`III.
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`LEGAL STANDARD
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`Rule 11 imposes upon attorneys a duty to certify that (1) they have read any pleadings or
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`motions they file with the court, and (2) to the best of their knowledge, information, and belief,
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`formed after an inquiry reasonable under the circumstances, the pleadings and motions are not being
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`presented for any improper purpose, the claims are warranted by existing law or by a nonfiivolous
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`argument for extending, modifying, or reversing existing law, and the allegations and other factual
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`contentions of the pleading have evidentiary support. Fed. R. Civ. P. 11(b); see also Sec. Farms v.
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`Int'l Bhd. of Teamsters, 124 F.3d 999, 1016 (9th Cir. 1997). Thus, prior to filing a complaint, an
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`attomey has a duty “not only to conduct a reasonable factual investigation, but also to perform
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`adequate legal research that confirms whether the theoretical underpinnings of the complaint are
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`‘warranted by existing law or a good faith argument for an extension, modification or reversal of
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`existing law.”’ Christian v. Mattel, Inc., 286 F.3d 1118, 1127 (9th Cir. 2002) (citing Golden Eagle
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`Distrib. Corp. v. Burroughs Corp., 801 F.2d 1531, 1537 (9th Cir. 1986)).
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`5
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`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 14 of 27
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`“[T]he central purpose of Rule 11 is to deter baseless filings in district court and thus .
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`.
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`.
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`streamline the administration and procedure of the federal courts.” Cooter & Gell v. Hartmarx
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`Corp., 496 US. 384, 393 (1990); see also Golden Eagle Distrib. Corp., 801 F.2d at 1536 (Rule 11 is
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`meant to “reduce frivolous claims, defenses or motions” and to deter “costly meritless maneuvers”).
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`To this end, a violation of Rule 11(b) subjects an attorney to sanctions, pursuant to Rule 11(c). A
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`party may file a motion for sanctions as long as the filing party complies with Rule 11’s “safe
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`harbor” by serving the motion for sanctions on the offending party at least 21 days before filing it
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`with the court. See Hall v. Hamilton Family Ctr., No. l3-CV-03646-WHO, 2014 WL 1410555, at
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`*1 1 (N.D. Cal. Apr. 11, 2014) (citing Rule 11(c)(2)).
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`Where, like here, a “complaint is the primary focus of Rule 11 proceedings, a district court
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`must conduct a two-prong inquiry to determine (1) whether the complaint is legally or factually
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`baseless from an objective perspective, and (2) if the attorney has conducted a reasonable and
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`competent inquiry before signing and filing it.” Hall, 2014 WL 1410555, at *8 (citing Christian,
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`286 F.3d at 1127). “A claim is legally baseless if it is legally unreasonable, while a claim is
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`factually baseless if it lacks factual foundation.” ICU Med, Inc. v. Alaris Med. Sys., Inc., No. SA
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`CV 04-00689 MRP, 2007 WL 6137003, *3 (CD. Cal. Apr. 16, 2007). A “frivolous” filing is one
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`that is “both baseless and made without a reasonable and competent inquiry.” Id. (citing Moore v.
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`Keegan Mgmt. Co (In re Keegan Mgmt. Co., Sec. Litig.), 78 F.3d 431, 434 (9th Cir. 1996); Holgate
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`v. Baldwin, 425 F.3d 671, 675—76, (9th Cir. 2005)); see also Les Shockley Racing, Inc. v. Nat ’I Hot
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`Rod Assoc, 884 F.2d 504, 510 (9th Cir. 1989) (a filing that does not have a “well-founded basis in
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`fact” is “frivolous” “within the meaning of Rule 11”); Pistoresi v. Madera Irrigation Dist., No. CV-
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`F-08-843-LJO-DLB, 2008 WL 5070051, at *6 (ED. Cal. Nov. 25, 2008) (“A pleading, motion or
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`other paper is frivolous if, at the time of filing, a competent attorney, after reasonable investigation,
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`could not have determined that a well-founded basis in fact and in law or a good faith argument for
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`extension of the law supported the filing”). A frivolous or legally unreasonable complaint violates
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`Rule 11 regardless of whether it was filed in good faith. Sec. Farms, 124 F.3d at 1016 (“Counsel
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`can no longer avoid the sting of Rule 11 sanctions by operating under the guise of a pure heart and
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`NOTICE OF MOTION AND MOTION FOR SANCTIONS, CASE NO. 18-cv-06185-HSG
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`6
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`Case 4:18-cv-06185-HSG Document 48 Filed 03/15/19 Page 15 of 27
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`empty head”); see also Babadjanian v. Deutsche Bank Nat 'l Tr. Co., No. CV1002580MMMRZX,
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`2011 WL 13214300, at *16 (CD. Cal. Mar. 29, 2011).
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`An attorney violates Rule 1 l by filing a complaint in federal court which the plaintiff should
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`have known lacked a legal or factual basis for the assertion ofjurisdiction. See, e.g., Love v. The
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`Mail on Sunday, No. CV05—7798ABCPIWX, 2006 WL 4046169, at *6 (CD. Cal. July 13, 2006)
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`(awarding Rule 11 sanctions where a party filed an amended complaint but did not “provide[] any
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`new bases to satisfy his prima facie burden to establish personal jurisdiction over [the defendant]”);
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`Misa Mfg, Inc. v. Pac. Egg & Poultry Assn., No. CV 86—1495 AHS, 1987 WL 119913, at *2 (CD.
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`Cal. Jan. 7, 1987) (granting motion for sanctions because the plaintiff “failed to demonstrate any
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`reasonable factual or legal basis for bringing any of these parties before this Court,” and noting that a
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`“a competent attorney who made reasonable inquiries would have realized that no legal or factual
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`basis existed” for exercising personal jurisdiction over the defendants); see also Orange Prod. Credit
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`Ass ’n v. Frontline Ventures Ltd., 792 F.2d 797, 801 (9th Cir. 1986); see also, e.g., Lauser v. City
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`Coll. ofSan Francisco, No. C-07—6464 SC, 2008 WL 2357246, at *6 (N.D. Cal. June 6, 2008), afl’d,
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`359 F. App’x 755 (9th Cir. 2009) (awarding