Case 4:18-cv-06185-HSG Document 51 Filed 03/29/19 Page 1 of 31
`
`
`
`Michael Liu Su (SBN 300590)
`michael.liu.su@finnegan.com
`FINNEGAN, HENDERSON, FARABOW,
` GARRETT & DUNNER, LLP
`3300 Hillview Avenue
`Palo Alto, CA 94304
`Telephone:
`(650) 849-6600
`Facsimile:
`(650) 849-6666
`
`Lionel M. Lavenue (pro hac vice)
`lionel.lavenue@finnegan.com
`Bradford C. Schulz (pro hac vice)
`bradford.schulz@finnegan.com
`FINNEGAN, HENDERSON, FARABOW,
` GARRETT & DUNNER, LLP
`Two Freedom Square
`11955 Freedom Drive
`Reston, VA 20190
`Telephone:
`(571) 203-2700
`Facsimile:
`(202) 408-4400
`
`Attorneys for Plaintiff
`ZTE (USA) Inc.
`
`
`
`
`UNITED STATES DISTRICT COURT
`
`NORTHERN DISTRICT OF CALIFORNIA
`
`OAKLAND DIVISION
`
`
`
`ZTE (USA) INC.,
`
`
`Plaintiff,
`
`
`v.
`
`AGIS SOFTWARE DEVELOPMENT LLC,
`
`
`Defendant.
`
`
`
`
`
`
`
`
`
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`
`
`
`
`
`CASE NO. 4:18-cv-06185-HSG
`(Former Case No. 2:17-cv-00517-JRG)
`(E.D. Tex.)
`
`RESPONSE TO DEFENDANT’S
`NOTICE OF MOTION AND MOTION
`FOR SANCTIONS
`
`[Declaration of counsel and exhibits]
`
`Hearing on June 6, 2019 at 2:00 PM in
`Oakland Courtroom 2 (4th Floor) before
`Judge Haywood S. Gilliam Jr.
`
`
`
`ZTE’S RESPONSE TO DEFENDANT’S MOTION FOR SANCTIONS
`CASE NO. 4:18-CV-06185-HSG
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`Case 4:18-cv-06185-HSG Document 51 Filed 03/29/19 Page 2 of 31
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`
`
`I.
`
`TABLE OF CONTENTS
`
`PRELIMINARY STATEMENT .........................................................................................1
`
`II.
`
`BACKGROUND .................................................................................................................2
`
`A.
`
`B.
`
`C.
`
`D.
`
`AGIS, Inc. ................................................................................................................2
`
`The Patent Family ....................................................................................................3
`
`AGIS, Inc.’s Failures Led to the Formation of AGIS Software ..............................3
`
`The Current Action in the Northern District of California ......................................5
`
`III.
`
`LEGAL STANDARD ..........................................................................................................6
`
`A.
`
`B.
`
`Fed. R. Civ. P. 11 ....................................................................................................6
`
`Personal Jurisdiction for Declaratory Judgment Actions.........................................7
`
`IV.
`
`ARGUMENT .......................................................................................................................9
`
`A.
`
`AGIS Mischaracterizes or Ignores Well-Pleaded Facts and Relevant Case Law ..10
`
`1.
`
`2.
`
`3.
`
`4.
`
`AGIS Ignores the Federal Circuit’s de Facto Exception ...........................10
`
`AGIS Ignores the Federal Circuit’s Holdings from Jack Henry................14
`
`AGIS Mischaracterizes the Facts and Law and Ignores Its Burden to
`Establish that Exercising Jurisdiction Here Would Be Unreasonable .......15
`
`AGIS Ignores the Well-Pleaded Facts Relating to Unenforceability and
`AGIS’s Unclean Hands ..............................................................................17
`
`5.
`
`This Matter Was Properly Transferred to this District ..............................20
`
`AGIS Makes No Effort to Demonstrate ZTE’s Inquiry Was Unreasonable .........21
`
`This Court Should Award ZTE Attorney’s Fees ...................................................22
`
`B.
`
`C.
`
`V.
`
`CONCLUSION ..................................................................................................................25
`
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`ZTE’S RESPONSE TO DEFENDANT’S MOTION FOR SANCTIONS
`CASE NO. 4:18-CV-06185-HSG
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`Case 4:18-cv-06185-HSG Document 51 Filed 03/29/19 Page 3 of 31
`
`
`
`Cases
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`3D Sys., Inc. v. Aarotech Labs., Inc.,
`160 F.3d 1373 (Fed. Cir. 1998)......................................................................................................11
`
`Advanced Ground Info. Sys., Inc. v. Life360, Inc.,
`No. 9:14-cv-80651-DMM, Dkt. 32 (S.D. Fla. May 16, 2014) ............................................... passim
`
`AGIS Software Dev. LLC v. Huawei Device USA Inc.,
`No. 2:17-cv-00513-JRG, Dkt. 56-1, ¶ 12 (E.D. Tex. June 21, 2017) ..............................................3
`
`Alien Tech. Corp. v. Intermec, Inc.,
`No. 3:06-cv-51, 2007 WL 63989 (D.N.D. Jan. 4, 2007) .................................................................8
`
`Amphastar Pharm., Inc. v. Momenta Pharm., Inc.,
`No. ED CV 15-1914 RGK, 2016 WL 6822312 (C.D. Cal. Jan. 26, 2016) ..............................21, 22
`
`Apple, Inc. v. AGIS Software Dev., LLC,
`IPR2018-00819, Paper 9 (P.T.A.B. Nov. 7, 2018) ....................................................................3, 24
`
`AU Optronics Corp. Am. V. Vista Peak Ventures, LLC,
`No. 4:18-cv-04638-HSG, Dkt. 17 (N.D. Cal. Feb. 2, 2019) ......................................................9, 15
`
`Autonomy, Inc. v. Adiscov, LLC,
`No. C11-0420-SBA, 2011 WL 2175551 (N.D. Cal. June 3, 2011) ...............................................17
`
`Avocent Huntsville Corp. v. Aten Int’l Co.,
`552 F.3d 1324 (Fed. Cir. 2008)......................................................................................9, 16, 17, 19
`
`Babadjanian v. Deutsche Bank Nat’l Tr. Co.,
`No. 10-cv-02580 2011 WL 13214300 (C.D. Cal. Mar. 29, 2011).................................................17
`
`Bancroft & Masters, Inc. v. Augusta Nat’l Inc.,
`223 F.3d 1082 (9th Cir. 2000) .........................................................................................................9
`
`Estate of Blue v. Cty. of Los Angeles,
`120 F.3d 982 (9th Cir. 1997) ...........................................................................................................7
`
`Brooks Furniture Mfg. Inc. v. Dutailier Int’l, Inc.,
`393 F.3d 1378 (Fed. Cir. 2005)......................................................................................................23
`
`Burger King Corp. v. Rudzewicz,
`471 U.S. 462 (1985) .........................................................................................................................9
`
`Cambrian Sci. Corp. v. Cox Commc’ns, Inc.,
`79 F. Supp. 3d 1111 (C.D. Cal. 2015) ...........................................................................................25
`
`
`
`
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`ZTE’S RESPONSE TO DEFENDANT’S MOTION FOR SANCTIONS
`CASE NO. 4:18-CV-06185-HSG
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`Case 4:18-cv-06185-HSG Document 51 Filed 03/29/19 Page 4 of 31
`
`
`
`Christian v. Mattel, Inc.,
`286 F.3d 1118 (9th Cir. 2002) ...................................................................................................6, 17
`
`CommVault Sys. Inc. v. PB&J Software, LLC,
`No. C13-1332-MMC, 2013 WL 3242251 (N.D. Cal. June 25, 2013) ...........................................17
`
`Coremetrics, Inc. v. Atomic Park.com, LLC,
`370 F. Supp. 2d 1013 (N.D. Cal. 2005) ...........................................................................................8
`
`Dainippon Screen Mfg. Co. v. CFMT, Inc.,
`142 F.3d 1266 (Fed. Cir. 1998).............................................................................................. passim
`
`Deprenyl Animal Health, Inc. v. Univ. of Toronto Innovations Found.,
`297 F.3d 1343 (Fed. Cir. 2002)........................................................................................................8
`
`Doe v. Unocal Corp.,
`248 F.3d 915 (9th Cir. 2001) .........................................................................................................11
`
`Elecs. for Imaging, Inc. v. Coyle,
`340 F.3d 1344 (Fed. Cir. 2003)........................................................................................................7
`
`Golden Eagle Distrib. Corp. v. Burroughs Corp.,
`801 F.2d 1531 (9th Cir. 1986) .......................................................................................7, 18, 23, 24
`
`Google Inc. v. Rockstar Consortium U.S. LP,
`No. C13-5933 CW, 2014 WL 1571807 (N.D. Cal. Apr. 17, 2014) ....................................... passim
`
`Greenberg v. Sala,
`822 F.2d 882 (9th Cir. 1987) .........................................................................................................23
`
`Hall v. Hamilton Family Ctr.,
`No. 13-CV-03646-WHO, 2014 WL 1410555 (N.D. Cal. Apr. 11, 2014) .....................................17
`
`Helicopteros Nacionales de Colombia, S.A. v. Hall,
`466 U.S. 408 (1985) .........................................................................................................................8
`
`Himaka v. Buddhist Churches of Am.,
`917 F. Supp. 698 (N.D. Cal. 1995) ..................................................................................................6
`
`Hirsch v. Blue Cross, Blue Shield,
`800 F.2d 1474 (9th Cir. 1986) .........................................................................................................8
`
`Holgate v. Baldwin,
`425 F.3d 671 (9th Cir. 2005) .........................................................................................................17
`
`Hudson v. Moore Bus. Forms, Inc.,
`836 F.2d 1156 (9th Cir. 1987) ...................................................................................................7, 23
`
`ICU Med., Inc. v. Alaris Med. Sys., Inc.,
`No. 04-cv-00689, 2007 U.S. Dist. LEXIS 34467 (C.D. Cal. Apr. 16, 2007) ............................7, 17
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`ZTE’S RESPONSE TO DEFENDANT’S MOTION FOR SANCTIONS
`CASE NO. 4:18-CV-06185-HSG
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`Case 4:18-cv-06185-HSG Document 51 Filed 03/29/19 Page 5 of 31
`
`
`
`Jack Henry & Assocs., Inc. v. Plano Encryption Techs., LLC,
`910 F.3d 1199 (Fed. Cir. 2018)......................................................................................9, 14, 15, 16
`
`In re Keegan Mgmt. Co., Sec. Litig.,
`78 F.3d 431 (9th Cir. 1996) .....................................................................................................18, 23
`
`Kyocera. Kyocera Int’l, Inc. v. Semcon IP, Inc.,
`No. 3:18-cv-1575-CAB, 2018 WL 5112056 (S.D. Cal. Oct. 19, 2018) ........................................14
`
`Lauser v. City Coll. of San Francisco,
`No. C-07-6464 SC, 2008 WL 2357246 (N.D. Cal. June 6, 2008), aff’d, 359 F.
`App’x 755 (9th Cir. 2009) .............................................................................................................17
`
`Lemos v. Fencl,
`828 F.2d 616 (9th Cir. 1987) ...........................................................................................................7
`
`Les Shockley Racing, Inc. v. Nat’l Hot Rod Assoc.,
`884 F.2d 504 (9th Cir. 1989) .........................................................................................................18
`
`Life360, Inc. v. Advanced Ground Info. Sys., Inc.,
`No. 5:15-cv-00151-BLF, Dkt. 52 (N.D. Cal. Jan. 12, 2015) ................................................. passim
`
`Love v. The Mail on Sunday,
`No. CV05-7798 ABC, 2006 WL 4046169 (C.D. Cal. July 13, 2006) ...........................................22
`
`Mahon v. Morton Golf, LLC,
`No. 2:14-cv-02972-TLN-EFB, 2018 WL 4787006 (E.D. Cal. Oct. 3, 2018) ..................................7
`
`Misa Mfg., Inc. v. Pac. Egg & Poultry,
`No. 86-1495-AHS, 1987 WL 119913 (C.D. Cal. Jan. 7, 1987) ...............................................22, 23
`
`Monolithic Power Sys. v. O2 Micro Int’l Ltd.,
`726 F.3d 1359 (Fed. Cir. 2013)......................................................................................................25
`
`New World Int’l, Inc. v. Ford Glob. Techs., LLC,
`859 F.3d 1032 (Fed. Cir. 2017)..................................................................................................9, 15
`
`Nuance Commc’ns, Inc. v. Abbyy Software House,
`626 F.3d 1222 (Fed. Cir. 2010)........................................................................................................8
`
`NXP Semiconductors USA, Inc. v. Brevets,
`No. 14-225-SI, 2014 WL 4621017 (N.D. Cal. Sept. 15, 2014) ...............................................13, 14
`
`Operating Eng’rs Pension Tr. v. A-C Co.,
`859 F.2d 1336 (9th Cir. 1988) .........................................................................................................7
`
`Orange Prod. Credit Ass’n v. Frontline Ventures Ltd.,
`792 F.2d 797 (9th Cir. 1986) .........................................................................................................17
`
`Pistoresi v. Madera Irrigation Dist.,
`No. CV-F-08-843-LJO-DLB, 2008 WL 5070051 (E.D. Cal. Nov. 25, 2008) ...............................18
`ZTE’S RESPONSE TO DEFENDANT’S MOTION FOR SANCTIONS
`CASE NO. 4:18-CV-06185-HSG
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`Case 4:18-cv-06185-HSG Document 51 Filed 03/29/19 Page 6 of 31
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`
`
`Radio Sys. Corp. v. Accession, Inc.,
`638 F.3d 785 (Fed. Cir. 2011)........................................................................................................17
`
`Sec. Farms v. Int’l Bhd. of Teamsters,
`124 F.3d 999 (9th Cir. 1997) .........................................................................................................17
`
`Silent Drive, Inc. v. Strong Indus., Inc.,
`326 F.3d 1194 (Fed. Cir. 2003)................................................................................................15, 17
`
`United Nat’l Ins. Co. v. R&D Latex Corp.,
`242 F.3d 1102 (9th Cir. 2001) .........................................................................................................6
`
`Wistron Corp. v. Phillip M. Adams & Assocs., LLC,
`No. C-10-4458 EMC, 2011 WL 1654466 (N.D. Cal. Apr. 28, 2011) .............................................8
`
`Zaldivar v. City of Los Angeles,
`780 F.2d 823 (9th Cir. 1986), overruled on other grounds by Cooter & Gell v.
`Hartmarx Corp., 496 U.S. 384 (1990) .............................................................................................7
`
`ZTE (USA) Inc. v. AGIS Software Dev. LLC,
`No. 4:18-cv-06185-HSG, Dkts. 43-2 (N.D. Cal. Mar. 5, 2019) ......................................................3
`
`Federal Statutes
`
`28 U.S.C. § 1404 ....................................................................................................................................5
`
`28 U.S.C. § 1406 ....................................................................................................................................5
`
`35 U.S.C. § 112 ......................................................................................................................................3
`
`America Invents Act ............................................................................................................................19
`
`Rules
`
`Fed. R. Civ. P. 11 ......................................................................................................................... passim
`
`Fed. R. Civ. P. 11(b) ..............................................................................................................................1
`
`Fed. R. Civ. P. 11(c)(2) ........................................................................................................................23
`
`Fed R. Civ. P. 12(b)(6)...........................................................................................................................7
`
`Fed. R. Civ. P. 15(a)(1)(B) ....................................................................................................................6
`
`Local Civil Rules 7-4(b) ......................................................................................................................24
`
`Other Authorities
`
`Annotated Patent Digest (Matthews), § 36:82 .....................................................................................11
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`ZTE’S RESPONSE TO DEFENDANT’S MOTION FOR SANCTIONS
`CASE NO. 4:18-CV-06185-HSG
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`Case 4:18-cv-06185-HSG Document 51 Filed 03/29/19 Page 7 of 31
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`
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`I.
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`MEMORANDUM OF POINTS AND AUTHORITIES
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`PRELIMINARY STATEMENT
`
`AGIS1 wants this case to be in Texas and is repeating its pattern of aggressive litigation
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`tactics to do whatever it can to strip this Court of its rightful jurisdiction. After suing in the Eastern
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`District of Texas (“EDTX”), the wrong forum for this case, ZTE successfully secured transfer out of
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`the EDTX to this Court under the improper venue statute. Rather than take the loss and litigate in
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`California, AGIS picked up its ball and left—voluntarily dismissing the case. ZTE then filed a
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`declaratory judgment action in the correct forum, this one, and AGIS is now lashing out by filing the
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`Motion to Dismiss the Second Amended Complaint (“Motion to Dismiss”), Dkt. 41, and this
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`unfounded and duplicative Motion for Sanctions pursuant to Fed. R. Civ. P. 11(b) (“Motion for
`
`Sanctions”), Dkt. 48, regarding the Second Amended Complaint (“SAC”), arguing essentially the
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`same things. But as explained in ZTE’s response to AGIS’s Motion to Dismiss, Dkt. 43, jurisdiction
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`here is completely proper under the facts of this case, as well as, under Federal Circuit law, including
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`the de facto exception for imputing co-entities’ activities in the personal jurisdiction analysis. AGIS
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`has a long history of activities in California and against California residents, including a finding that
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`jurisdiction was proper over a closely related entity regarding a parent patent to the patents-in-suit.
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`The Court should deny both AGIS’s underlying Motion to Dismiss and its Motion for Sanctions.
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`Both of AGIS’s Motions have the same fundamental flaw—ZTE’s SAC lays out a valid case
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`for jurisdiction, and AGIS has not met its burden to prove that the exercise of personal jurisdiction is
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`unreasonable and the SAC is unfounded. Instead, AGIS jumps from one case quote to the next
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`without demonstrating how particular holdings apply to the facts at bar. AGIS’s Motion is thus an
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`unsupported façade and fails to demonstrate that jurisdiction is unreasonable or that ZTE has
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`committed any sanctionable conduct.
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`The Court should not condone AGIS’s conduct. By filing these frivolous motions, AGIS
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`continues to needlessly increase the judicial strain and costs of litigation for this matter. Instead of
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`addressing the merits of this dispute, AGIS would have this Court ignore the fifteen-year California
`
`
`
`1 AGIS Software Development LLC (“AGIS Software”), AGIS Holdings, Inc. (“AGIS Holdings”),
`and Advanced Ground Information Systems, Inc. (“AGIS, Inc.”) (collectively “AGIS”).
`1
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`ZTE’S RESPONSE TO DEFENDANT’S MOTION FOR SANCTIONS
`CASE NO. 4:18-CV-06185-HSG
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`Case 4:18-cv-06185-HSG Document 51 Filed 03/29/19 Page 8 of 31
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`
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`footprint of its nearly identical co-subsidiary—AGIS, Inc.—to hide behind a twenty-day-old
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`entity—AGIS Software—that was created in an effort to anchor jurisdiction to Texas alone.
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`Compounding this problem, AGIS relies on activities pertaining to the entire patent portfolio when it
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`suits its need to defend the validity of the patents-in-suit; but in the underlying jurisdictional analysis
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`where infringement and enforcement of the patents-in-suit are material, AGIS wants the Court to
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`discount the full breadth of its patent activity. And now, in an attempt to further shield its portfolio
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`and divert attention from its past wrongdoing, including a sanctions order by a Florida district court,
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`AGIS improperly brings sanctions allegations against ZTE.
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`AGIS’s Motion for Sanctions is meritless and should be denied. The Court should award
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`ZTE attorney’s fees as the prevailing party in defending against AGIS’s Motion for Sanctions.
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`II.
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`BACKGROUND
`
`A.
`
`AGIS, Inc.
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`AGIS, Inc. has been in the business of developing location-based communication software
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`for the military, first responders, and the general public since its inception in 2004. Advanced
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`Ground Info. Sys., Inc. v. Life360, Inc., No. 9:14-cv-80651-DMM, Dkt. 32 at 2 (S.D. Fla. July 11,
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`2014) (hereinafter “Life360-Florida”). Its Chief Executive Officer and Chairman of the Board of
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`Directors, Malcolm K. (“Cap”) Beyer, Jr., founded the company and is the first-named inventor for
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`its patent portfolio, including the patents-in-suit. Id. Margaret Beyer, Malcolm’s wife, is the
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`corporate secretary. Id. The remaining officers are AGIS, Inc.’s President, Sandel Blackwell, and
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`the Chief Financial Officer, Ronald Wisneski. Id. at 2-3. Additionally, David Sietsema licenses
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`AGIS, Inc.’s patent portfolio, including the patents-in-suit. See ZTE (USA) Inc. v. AGIS Software
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`Dev. LLC, No. 4:18-cv-06185-HSG, Dkts. 43-2, ¶ 17; and 43-3 (N.D. Cal. Mar. 5, 2019).
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`Since at least 2013, as part of a business growth plan, AGIS, Inc. has been conducting
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`business in California to promote its location-based communication software LifeRing and
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`HoundDog. See Life360, Inc. v. Advanced Ground Info. Sys., Inc., No. 5:15-cv-00151-BLF, Dkt. 52
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`at 5-7 (N.D. Cal. Sept. 21, 2015) (hereinafter “Life360-California”); AGIS Software Dev. LLC v.
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`Huawei Device USA Inc., No. 2:17-cv-00513-JRG, Dkt. 56-1, ¶ 12 (E.D. Tex. Dec. 12, 2017); see
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`ZTE’S RESPONSE TO DEFENDANT’S MOTION FOR SANCTIONS
`CASE NO. 4:18-CV-06185-HSG
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`Case 4:18-cv-06185-HSG Document 51 Filed 03/29/19 Page 9 of 31
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`also Dkt. 30-1, ¶ 6. Per Malcolm Beyer, AGIS, Inc.’s “primary business has revolved around
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`offering the ‘LifeRing’ solution.” Dkt. 43-8, ¶ 12.
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`Both the LifeRing and HoundDog applications embody AGIS, Inc.’s patent portfolio and
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`provide location-based communication software. See Life360-California, Dkt. 23 at 1-2. AGIS
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`admits that the LifeRing software product “practice[s] the claimed inventions” of the patents-in-suit.
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`Dkt. 43-10 at 4. For more than 13 years, AGIS, Inc. developed, designed, tested, offered for sale,
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`and sold LifeRing software versions to numerous customers. Dkt. 43-8, ¶ 12; 43-16 at 11, 284, 335,
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`340. In fact, activities pertaining to the design, development, testing, and sales of the LifeRing
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`product, as well as the enforcement of the underlying patents, have occurred in California. See Dkt.
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`43 at 11-12, 16-17; see also Dkts. 43-12 (Mar. 9, 2015, Trial Tr. 145:16-17, 146:15-22), 43-6 at 11,
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`284, 335; Life360-California, Dkt. 52 at 6-7, 10-11.
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`B.
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`The Patent Family
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`The patents-in-suit are part of a twelve-patent family. See Dkt. 43 at 4 (outlining the patent
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`family). The application resulting in the most senior parent patent, U.S. Patent No. 7,031,728 (“the
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`’728 patent”), was filed on September 21, 2004. And, allegedly, the patents-in-suit claim priority to
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`the ’728 patent.
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`Despite several proceedings finding otherwise, AGIS still maintains that the patents-in-suit
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`are entitled to the ’728 patent’s priority date. See Dkt. 43-17 at 5-6; Dkt. 43-18 at 4-5. However, the
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`U.S. Patent and Trademark Office (“USPTO”) already found that the patents-in-suit have an
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`improper priority chain. See Apple, Inc. v. AGIS Software Dev., LLC, IPR2018-00819, Paper 9 at
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`16-19 (P.T.A.B. Nov. 7, 2018). More still, the USPTO further found that the patents-in-suit lack
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`written description support under 35 U.S.C. § 112. Id. And, the district court in the Southern
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`District of Florida, in the Life360-Florida case, found several terms in the parent ’728 patent invalid
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`for indefiniteness. Dkt. 43-19 at 12.
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`C.
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`AGIS, Inc.’s Failures Led to the Formation of AGIS Software
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`AGIS, Inc.’s first foray into enforcement of its patents in Florida ended disastrously—
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`eventually causing its 2017 corporate restructuring to form both AGIS Holdings and AGIS Software.
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`However, the principal actors remain the same here as from that original enforcement effort.
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`3
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`ZTE’S RESPONSE TO DEFENDANT’S MOTION FOR SANCTIONS
`CASE NO. 4:18-CV-06185-HSG
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`Case 4:18-cv-06185-HSG Document 51 Filed 03/29/19 Page 10 of 31
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`On May 16, 2014, AGIS, Inc. filed its first-ever complaint asserting, among others, the ’728
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`patent against California resident and direct competitor, Life360, Inc. (“Life360”). See Life360-
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`Florida, Dkt. 1; see also Dkt. 43 at 4 (asserted patents in blue). AGIS, Inc. accused Life360 of
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`patent infringement and sought injunctive relief. Id. That action further sprawled into the Northern
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`District of California (“NDCA”) on January 12, 2015, after AGIS, Inc. allegedly interfered with
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`Life360’s business and its key customer, ADT. Life360 sought relief by filing suit against AGIS,
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`Inc. in this District, alleging as follows. See Life360-California, Dkt. 1. After AGIS, Inc. sued
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`Life360 in Florida for alleged infringement of this patent family, AGIS, Inc. “threatened ADT with a
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`lawsuit for patent infringement arising out of ADT’s partnership with Life360 and ADT’s own
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`mobile app.” Id., Dkt. 1, ¶¶ 46-52. AGIS, Inc.’s interference with ADT disrupted Life360’s
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`relationship with ADT and further pressured Life360 into settlement discussions with AGIS, Inc. Id.
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`Based on these activities and others, the NDCA found sufficient minimum and personal jurisdiction
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`over AGIS, Inc.. Id., Dkt. 52 at 11.
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`Meanwhile, AGIS, Inc. lost the Life360-Florida case. Not only did the court find that several
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`of the ’728 patent terms were indefinite, Dkt. 43-19 at 12, but a jury found that Life360 did not
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`infringe the asserted patents on March 16, 2015, see Life360-Florida, Dkt. 167. And, on December
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`1, 2015, the court further awarded Life360 $684,190.25 in attorney’s fees because AGIS, Inc.
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`brought and maintained “an exceptionally weak case.” Id., Dkt. 200 at 2, 4. The Life360-California
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`matter was dismissed thereafter as well.
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`A year and half after losing the Life360-Florida case, AGIS, Inc. underwent a corporate
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`restructuring on June 1, 2017. Dkt. 43-20; see also Dkt. 43-8, ¶ 7. AGIS Holdings and AGIS
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`Software were formed such that AGIS, Inc. and AGIS Software became co-subsidiaries under parent
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`AGIS Holdings. Id. Despite a change in name, all the principal actors remained the same. Compare
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`Dkt. 43-21 at 21, with Life360-Florida, Dkt. 32 at 2-3. Then, on June 15, 2017, ownership of the
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`patents-in-suit was shuffled from AGIS, Inc. to AGIS Holdings, and then from AGIS Holdings to
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`AGIS Software. Dkt. 43-22 (recorded June 20, 2017).
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`The day after recording the assignment of the patents-in-suit from AGIS Holdings to AGIS
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`Software, AGIS Software asserted the patents EDTX against Apple- and Android-based cell phone
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`4
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`ZTE’S RESPONSE TO DEFENDANT’S MOTION FOR SANCTIONS
`CASE NO. 4:18-CV-06185-HSG
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`Case 4:18-cv-06185-HSG Document 51 Filed 03/29/19 Page 11 of 31
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`manufacturers, including ZTE.2 In response, the defendants, including California residents Apple
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`and Google, filed inter partes review petitions challenging the patents-in-suit.3
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`ZTE also moved for improper venue in the EDTX. On September 28, 2018, Judge Gilstrap
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`found venue was improper over ZTE in the EDTX under 28 U.S.C. § 1404 and in the interests of
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`justice transferred the case to the NDCA under 28 U.S.C. § 1406. See ZTE EDTX matter, Dkt. 85.
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`Rather than litigate in the NDCA, AGIS Software attempted to leverage depositions of its corporate
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`witnesses to coerce a mutual transfer of the case to the Northern District of Texas. Dkt. 43-23 at 6-8
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`(communications dated October 2 and 4, 2018). In the spirit of cooperation and as a courtesy, ZTE
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`offered to take AGIS corporate depositions with co-defendants, but AGIS Software refused. Id. at 4-
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`8 (communications dated October 5, 2018); see also Dkt. 43-24 (discovery hotline order overruling
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`AGIS counsel’s deposition dispute). On October 8, 2018, AGIS Software filed for voluntary
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`dismissal of the transferred case, ZTE EDTX matter, Dkt. 86, which was granted on October 9,
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`2018, id., Dkt. 87. That same day, ZTE filed the present action. Dkt. 1.
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`D.
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`The Current Action in the Northern District of California
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`After the EDTX determined that venue was improper in the EDTX but was proper in the
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`NDCA, ZTE filed suit here, asserting noninfringement, invalidity, and unenforceability of the
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`patents-in-suit. ZTE amended the complaint on December 31, 2018, and February 5, 2019. First, on
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`December 31, 2018, and with AGIS’s consent, ZTE filed the First Amended Complaint, removing
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`AGIS Holdings and AGIS, Inc. as named defendants. Dkt. 18. AGIS had contested subject matter
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`jurisdiction over all three AGIS-named defendants on October 26, 2018, and requested that ZTE
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`dismiss the entire action. Dkt. 43-23 at 2-3. ZTE informed AGIS that it would not dismiss the entire
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`
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`2 See AGIS Software Dev. LLC v. Huawei Device USA Inc., 2:17-cv-00513 (E.D. Tex.) (“Huawei
`EDTX matter”); AGIS Software Dev. LLC v. HTC Corp., 2:17-cv-00514 (E.D. Tex.) (“HTC EDTX
`matter”); AGIS Software Dev. LLC v. LG Elecs., Inc., 2:17-cv-00515 (E.D. Tex.) (“LGE EDTX
`matter”); AGIS Software Dev. LLC v. Apple, Inc., 2:17-cv-00516 (E.D. Tex.) (“Apple EDTX
`matter”); and AGIS Software Dev. LLC v. ZTE Corp., 2:17-cv-00517 (E.D. Tex.) (“ZTE EDTX
`matter”) (collectively “EDTX matters”).
`
`3 See IPR2018-01079; IPR2019-00485; IPR2018-00821; IPR2019-00411; IPR2018-01080;
`IPR2019-00432; IPR2019-00487; IPR2018-00818; IPR2019-00524; IPR2019-00523; IPR2018-
`01083; IPR2018-01084; IPR2018-00817; IPR2018-01082; IPR2018-01081; IPR2018-00819;
`IPR2019-00403; IPR2019-00389; IPR2018-01087; IPR2018-01088; IPR2018-01086; IPR2018-
`01085; and IPR2018-01471 (collectively “IPR proceedings”).
`ZTE’S RESPONSE TO DEFENDANT’S MOTION FOR SANCTIONS
`CASE NO. 4:18-CV-06185-HSG
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`Case 4:18-cv-06185-HSG Document 51 Filed 03/29/19 Page 12 of 31
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`action, as sufficient facts confirmed jurisdiction. Id. at 1-2. Nevertheless, in response to AGIS’s
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`demands and to simplify the dispute, ZTE agreed to amend the complaint, removing AGIS Holdings
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`and AGIS, Inc. as named defendants. Dkt. 18; see also Dkt. 43-25 at 2-3. Then, on February 5,
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`2019, ZTE filed the Second Amended Complaint under Fed. R. Civ. P. 15(a)(1)(B), removing direct
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`claims of invalidity on the patents-in-suit, but maintaining the claims of noninfringement and
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`unenforceability. Dkt. 39.
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`Despite this Court already finding that it has personal jurisdiction over one closely related
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`AGIS entity, see Life360-California, Dkt. 52 at 13, AGIS now alleges that the SAC should be
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`dismissed because this Court allegedly lacks personal jurisdiction over AGIS Software, Dkts. 30, 41,
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`and filed the present motion under Fed. R. Civ. P. 11 on the same basis. Dkt. 48.
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`III. LEGAL STANDARD
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`A.
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`Fed. R. Civ. P. 11
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`For motions under Fed. R. Civ. P. 11, regional circuit law controls. Under NDCA and Ninth
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`Circuit law, when a “complaint is the primary focus of Rule 11 proceedings, a district court must
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`conduct a two-prong inquiry to determine (1) whether the complaint is legally or factually ‘baseless’
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`from an objective perspective, and (2) if the attorney has conducted ‘a reasonable and competent
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`inquiry’ before signing and filing it.” Christian v. Mattel, Inc., 286 F.3d 1118, 1127 (9th Cir. 2002)
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`(emphases added) (citation omitted).
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`“[A] cause of action is ‘well-grounded in fact’ if an independent examination reveals ‘some
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`credible evidence’ in support of a party’s statements.” Himaka v. Buddhist Churches of Am., 917 F.
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`Supp. 698, 710 (N.D. Cal. 1995) (citation omitted). Having “some plausible basis, [even] a weak
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`one,” is sufficient to avoid sanctions under Rule 11. United Nat’l Ins. Co. v. R&D Latex Corp., 242
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`F.3d 1102, 1117 (9th Cir. 2001). “As long as the critical information is not absent altogether,
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`lawyers may not be sanctioned for such misjud