`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case 5:20-cv-05676-EJD Document 23 Filed 09/25/20 Page 1 of 32
`
`IRELL & MANELLA LLP
`Morgan Chu (70446)
`MChu@irell.com
`Benjamin W. Hattenbach (186455)
`BHattenbach@irell.com
`C. Maclain Wells (221609)
`MWells@irell.com
`1800 Avenue of the Stars, Suite 900
`Los Angeles, California 90067-4276
`Telephone: (310) 277-1010
`Facsimile:
`(310) 203-7199
`
`Attorneys for Defendant
`DEMARAY LLC
`
`APPLIED MATERIALS, INC.,
`
`
`Plaintiff,
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`SAN JOSE DIVISION
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`
`Case No. 5:20-cv-05676-EJD
`
`DEMARAY LLC’S OPPOSITION TO
`APPLIED MATERIALS’ MOTION FOR
`PRELIMINARY INJUNCTION
`
`Hearing Date: November 12, 2020
`Hearing Time: 9:00 a.m.
`
`OPPOSITION TO APPLIED MATERIALS’ MOTION FOR
`PRELIMINARY INJUNCTION
`
`
`
`
`
`
`DEMARAY LLC,
`
`
`vs.
`
`Defendant.
`
`
`
`
`10877827
`
`
`

`

`Case 5:20-cv-05676-EJD Document 23 Filed 09/25/20 Page 2 of 32
`
`TABLE OF CONTENTS
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`
`I.
`II.
`III.
`
`IV.
`
`
`10877827
`
`
`C.
`
`D.
`
`E.
`
`Page
`PRELIMINARY STATEMENT ......................................................................................... 1
`SUMMARY OF FACTS ..................................................................................................... 3
`DISCUSSION ..................................................................................................................... 5
`A.
`The Court Lacks Subject Matter Jurisdiction Over Applied’s Claims .................... 5
`B.
`Applied Has Not Proven Entitlement To The Extraordinary Remedy
`It Seeks .................................................................................................................... 8
`Applied Applies The Wrong Legal Standard In Requesting An
`Extraordinary Remedy Based Upon Unfounded
`Licensing/Ownership Claims ................................................................................ 10
`Applied Bases Its Request Upon On Contract Provisions Already
`Adjudicated In This District To Be Unlawful ....................................................... 11
`The Customer Suit Exception Does Not Warrant Enjoining The
`Texas Actions ........................................................................................................ 16
`Intel And Samsung Are Not Mere Resellers Of Applied
`1.
`Reactors ..................................................................................................... 16
`Intel’s And Samsung’s Supposed Agreement To Be Bound
`Would Leave Major Open Issues Unresolved ........................................... 17
`Applied Does Not Allege Or Show That It Is The Only Intel
`And Samsung PVD Reactor Supplier ....................................................... 19
`Major Issues Present In Texas Are Lacking From The
`Present Case .............................................................................................. 20
`Applied Again Applies The Wrong Legal Standard ................................. 22
`5.
`Convenience Factors Do Not Favor One Forum Over The Other ........................ 23
`F.
`CONCLUSION ................................................................................................................. 25
`
`2.
`
`3.
`
`4.
`
`- i -
`
`

`

`Case 5:20-cv-05676-EJD Document 23 Filed 09/25/20 Page 3 of 32
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`
`
`Cases1
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Alfarah v. City of Soledad,
`No. 5:15-cv-05569-EJD, 2016 U.S. Dist. LEXIS 82624 (N.D. Cal. June 24,
`2016) (J. Davila) .........................................................................................................................11
`
`Alltrade, Inc. v. Uniweld Products, Inc.,
`946 F.2d 622 (9th Cir. 1991) ................................................................................................15, 25
`
`Am. Acad. of Sci. v. Novell, Inc.,
`No. C-91-4300 EFL, 1992 U.S. Dist. LEXIS 20145 (N.D. Cal. July 9, 1992) ....................17, 21
`
`Amazon.com, Inc. v. Corydoras Techs., LLC,
`No. 1:19-cv-1095-RP, 2020 U.S. Dist. LEXIS 57969 (W.D. Tex. Apr. 2, 2020) .....................10
`
`Applied Materials, Inc. v. Advanced Micro-Fabrication Equip., Inc.,
`630 F. Supp. 2d 1084 (N.D. Cal. May 20, 2009) ............................................................... passim
`
`Ass’n for Molecular Pathology v. U.S. Patent & Trademark Office,
`689 F.3d 1303 (Fed. Cir. 2012) ....................................................................................................5
`
`Axis Reinsurance Co. v. Northrop Grumman Corp.,
`No. 2:17-cv-08660-AB, 2018 U.S. Dist. LEXIS 222622 (C.D. Cal. June 21,
`2018) .............................................................................................................................................9
`
`Berkeley*IEOR v. Teradata Operations, Inc.,
`No. 17 C 7472, 2019 U.S. Dist. LEXIS 36563 (N.D. Ill. March 7, 2019) .................................21
`
`Church of Scientology v. United States Dep’t of the Army,
`611 F.2d 738 (9th Cir. 1979) ......................................................................................................25
`
`Cisco Sys. v. TiVo, Inc.,
`No. C 12-02766 RS, 2012 U.S. Dist. LEXIS 112923 (N.D. Cal. Aug. 10, 2012) .....................16
`
`Codex Corp. v. Milgo Electronic Corp.,
`553 F.2d 735 (1st Cir. 1977) ......................................................................................................24
`
`Corydoras Techs., LLC v. Best Buy Co.,
`No. 2:19-cv-00304-JRG-RSP, 2020 U.S. Dist. LEXIS 45578 (E.D. Tex. Mar.
`16, 2020) .....................................................................................................................................22
`
`Crossbow Tech., Inc. v. YH Tech.,
`
`1 Unless otherwise noted, internal citations, quotations and subsequent history are omitted,
`and emphasis is added unless otherwise indicated.
`
`10877827
`
`
`- ii -
`
`

`

`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case 5:20-cv-05676-EJD Document 23 Filed 09/25/20 Page 4 of 32
`
`531 F. Supp. 2d 1117 (N.D. Cal. 2007) .......................................................................................5
`
`Del Mar Avionics v. Quinton Instruments Co.,
`645 F.2d 832 (9th Cir. 1981) ........................................................................................................9
`
`eBay Inc. v. MercExchange, L.L.C.,
`547 U.S. 388 (2006) ...................................................................................................................23
`
`Erfindergemeinschaft UroPep GbR v. Eli Lilly & Co.,
`No. 2:15-CV-1202-WCB, 2016 U.S. Dist. LEXIS 55205 (E.D. Tex. Apr. 26,
`2016) ...........................................................................................................................................21
`
`Finisar Corp. v. Cheetah Omni, LLC,
`No. 11-cv-15625, 2012 U.S. Dist. LEXIS 198501 (E.D. Mich. Nov. 19, 2012) .......................23
`
`Futurewei Techs., Inc. v. Acacia Research Corp,
`737 F.3d 704 (Fed. Cir. 2013) ....................................................................................................16
`
`In re Google Inc.,
`588 F. App’x 988 (Fed. Cir. 2014) .............................................................................................23
`
`Intersearch Worldwide, Ltd. v. Intersearch Group, Inc.,
`544 F. Supp. 2d 949 (N.D. Cal. 2008) .......................................................................................16
`
`Katz v. Lear Siegler, Inc.,
`909 F.2d 1459 (Fed. Cir. 1990) .......................................................................................... passim
`
`Kline v. Burke Constr. Co.,
`260 U.S. 226 (1922) ...............................................................................................................9, 15
`
`Microchip Tech., Inc. v. United Module Corp.,
`No. CV-10-04241-LHK, 2011 U.S. Dist. LEXIS 73276 (N.D. Cal. July 7,
`2011) ...........................................................................................................................................20
`
`Microsoft v. DataTern,
`755 F.3d 899 (Fed. Cir. 2014) ............................................................................................ passim
`
`Nat’l Union Fire Ins. Co. v. Payless Shoesource, Inc.,
`No. C-11-1892 EMC, 2012 U.S. Dist. LEXIS 112346 (N.D. Cal. Aug. 9, 2012) .....................15
`
`Native Fed’n of the Madre De Dios River & Tributaries v. Bozovich Timber Prods.,
`491 F. Supp. 2d 1174 (2007) ........................................................................................................5
`
`In re Nintendo of Am., Inc.,
`756 F.3d 1363 (Fed. Cir. 2014) ..................................................................................................23
`
`Open Text, S.A. v. Box, Inc.,
`36 F. Supp. 3d 885 (N.D. Cal. 2014) (J. Davila) ..............................................................9, 11, 24
`
`Pacesetter Sys. Inc. v. Medtronic, Inc.,
`
`10877827
`
`
`- iii -
`
`

`

`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Case 5:20-cv-05676-EJD Document 23 Filed 09/25/20 Page 5 of 32
`
`678 F.2d 93 (9th Cir. 1982) ......................................................................................10, 16, 24, 25
`
`Power Integrations, Inc. v. De Lara,
`No. 20-cv-410-MMA (MSB), 2020 U.S. Dist. LEXIS 52724 (S.D. Cal. Mar.
`26, 2020) .....................................................................................................................................14
`
`Proofpoint, Inc. v. InNova Patent Licensing, LLC,
`No. 5:11-CV-02288-LHK, 2011 U.S. Dist. LEXIS 120343 (N.D. Cal. Oct. 17,
`2011) .....................................................................................................................................15, 19
`
`Proofpoint, Inc. v. InNova Patent Licensing,
`No. 5:11-cv-02288-LHK, 2011 WL 4915847 (N.D. Cal. Oct. 17, 2011) ........................8, 16, 25
`
`RegenLab USA LLC v. Estar Techs. Ltd.,
`No. 16-cv-08771 (ALC), 2017 U.S. Dist. LEXIS 131495 (S.D.N.Y. Aug. 17,
`2017) ...........................................................................................................................................22
`
`Robert Bosch LLC v. Pylon Mfg. Corp.,
`659 F.3d 1142 (Fed. Cir. 2011) ..................................................................................................23
`
`Sillage LLC v. Kenrose Perfumes Inc.,
`No. 8:14-cv-02043-CAS(RNBx), 2015 U.S. Dist. LEXIS 75965 (C.D. Cal. June
`9, 2015) .......................................................................................................................................19
`
`Spread Spectrum Screening LLC v. Eastman Kodak Co.,
`657 F.3d 1349 (Fed. Cir. 2011) .......................................................................................... passim
`
`Tegic Communs. Corp. v. Bd. of Regents,
`458 F.3d 1335 (Fed. Cir. 2006) ................................................................................15, 16, 17, 19
`
`Telebrands Corp. v. Nat’l Exp., Inc.,
`No. 12-6671, 2014 U.S. Dist. LEXIS 140279 (D.N.J. Oct. 2, 2014) .........................................22
`
`Titan Tire Corp. v. Case New Holland, Inc.,
`566 F.3d 1372 (Fed. Cir. 2009) ......................................................................................13, 14, 24
`
`Ultra Prods., Inc. v. Best Buy Co.,
`No. 09-1095, 2009 U.S. Dist. LEXIS 78678 (D.N.J. Sept. 1, 2009) .........................................22
`
`Vantage Point Tech., Inc. v. Amazon.com, Inc.,
`2015 U.S. Dist. LEXIS 675 (E.D. Tex. Jan. 6, 2015) ....................................................10, 22, 26
`
`Wenke v. Forest Labs., Inc.,
`No. 5:14-cv-01898-EJD, 2018 U.S. Dist. LEXIS 68176 (N.D. Cal. Apr. 23,
`2018) (J. Davila) .........................................................................................................................14
`
`Winter v. Natural Res. Def. Council, Inc.,
`555 U.S. 7 (2008) .................................................................................................................11, 14
`
`
`
`10877827
`
`
`- iv -
`
`

`

`Case 5:20-cv-05676-EJD Document 23 Filed 09/25/20 Page 6 of 32
`
`
`
`Statutes
`
`Cal. Bus. & Prof. Code § 16600 .................................................................................................12, 14
`
`Rules
`
`Fed. R. Civ. P. 12(b)(6) ....................................................................................................................14
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`10877827
`
`
`- v -
`
`

`

`Case 5:20-cv-05676-EJD Document 23 Filed 09/25/20 Page 7 of 32
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Defendant Demaray LLC (“Demaray”) opposes Plaintiff Applied Materials, Inc.’s
`(“Applied”) Motion for Preliminary Injunction for the reasons set forth below.
`I.
`PRELIMINARY STATEMENT
`In the early 2000s, Dr. Richard Ernest Demaray and his colleagues at Symmorphix, Inc.
`(“Symmorphix”) developed a new method of depositing thin films, and an associated reactor
`configuration, that could be used for a process called physical vapor deposition (“PVD”). These
`inventions turned out to be particularly advantageous for fabricating key thin film layers within
`semiconductor devices. They are protected by U.S. Patent Nos. 7,544,276 (“the ’276 patent”) and
`7,381,657 (“the ’657 patent”) (the “Demaray patents”). Exs. 1-2.2 Dr. Demaray later discovered that
`Intel and Samsung were using his patented technology, without authorization, to manufacture thin
`films in their semiconductor devices. This infringement is occurring within Samsung’s sole
`domestic semiconductor fabrication facility, which is located in the Western District of Texas—the
`same District where Intel also has a large facility and over 1,700 employees developing products
`using infringing methods. Demaray therefore brought suit in the Western District of Texas against
`Samsung and Intel (the “Texas cases”). The cases are assigned to Judge Albright, a knowledgeable
`jurist deeply familiar with patent issues, and are proceeding in an orderly fashion.
`Rather than intervene in Texas, Applied filed this separate case here a month later. Applied
`asks this Court to (1) exercise subject matter jurisdiction over Applied’s claims and then (2) grant
`the extraordinary remedy of an injunction halting the earlier-filed Texas cases pending before
`another Article III judge. Applied invites the Court to engage in clear error, both substantively and
`procedurally, without either the facts or law needed to support the preliminary injunction it seeks.
`Regarding subject matter jurisdiction, the sole alleged basis in Applied’s First Amended
`Complaint (“FAC”) for an actual controversy with Demaray is the filing of the Texas cases against
`Applied customers. But the mere filing of litigation by a patentee against a customer based on
`activities that involve the declaratory judgment plaintiff’s product does not create a case or
`controversy. Microsoft v. DataTern, 755 F.3d 899, 904 (Fed. Cir. 2014) (“To the extent that
`Appellees argue that DataTern’s suits against its customers automatically give rise to a case or
`
`2 All exhibits are attached to the Declaration of C. Maclain Wells filed herewith.
`
`10877827
`
`
`OPPOSITION TO APPLIED MATERIALS’ MOTION FOR
`PRELIMNARY INJUNCTION
`
`- 1 -
`
`

`

`Case 5:20-cv-05676-EJD Document 23 Filed 09/25/20 Page 8 of 32
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`controversy regarding induced infringement, we do not agree”). In this instance, Applied’s reactors
`standing alone are not accused of infringement in Texas. Instead, methods of thin film deposition in
`a reactor with a specific configuration used by Intel and Samsung, and that specific reactor
`configuration, are accused. There is no allegation in Texas (or in this case) that Applied provides
`the special reactor configuration to Intel or Samsung or encourages its use, or that Applied’s
`reactors standing alone have no substantial non-infringing uses. On these facts, controlling Federal
`
`Circuit precedent provides that no jurisdiction exists. Id., at 906.
`Regarding the requested injunction, Applied argues that: (1) its licensing/ownership
`declaratory judgment claims will be dispositive of the claims in Texas, and (2) the Texas actions are
`mere “customer suits” and its non-infringement declaratory judgment claims will thus resolve the
`major issues in Texas actions. Mot. at 2. Applied is doubly incorrect.
`First, Applied has no legitimate basis for asserting that it owns or is licensed to use the
`Demaray patents. Applied’s assertions to that effect all rely on Applied or Applied Komatsu
`employee agreement assignment provisions. Applied fails to mention that Judge Ware already ruled
`that the assignment provisions underlying each of Applied’s licensing/ownership claims are
`“unlawful non-compete provisions” and void as a matter of public policy. See Applied Materials,
`Inc. v. Advanced Micro-Fabrication Equip., Inc., 630 F. Supp. 2d 1084, 1090 (N.D. Cal. May 20,
`2009). Applied’s reliance on provisions already adjudicated against it to be unlawful weighs heavily
`against the extraordinary relief it now seeks.
`Second, the Texas actions are not mere “customer suits” addressing simple resale by the
`Texas defendants of Applied products. The Texas cases concern particular uses by the Texas
`defendants of manufacturing equipment those defendants have configured in a specific manner to
`make their own semiconductor products. The Texas cases involve multiple major disputes between
`Demaray and the Texas defendants that are not at issue here, including (i) infringement of reactors
`as configured by the Texas defendants, (ii) infringement of Demaray’s process claims by the Texas
`defendants, (iii) invalidity allegations, (iv) unenforceability arguments, and (v) damages issues
`addressing the Texas defendants’ sale of billions of dollars of semiconductor products produced
`using the claimed processes. As such, even if Applied’s declaratory judgment claims were resolved
`
`10877827
`
`
`- 2 -
`
`OPPOSITION TO APPLIED MATERIALS’ MOTION FOR
`PRELIMINARY INJUNCTION
`
`

`

`Case 5:20-cv-05676-EJD Document 23 Filed 09/25/20 Page 9 of 32
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`in this third-filed action, that would leave unanswered fundamental questions at issue in Texas.
`For the foregoing reasons, as discussed in greater detail below, Applied’s request for the
`extraordinary remedy of an order enjoining the earlier-filed Texas cases should be denied.
`II.
`SUMMARY OF FACTS
`Dr. Demaray, a named inventor on both of the Demaray patents, has been working in and
`with the semiconductor industry for more than forty years. Declaration of Dr. Richard E. Demaray
`
`(“Demaray Decl.”), ¶ 2. Much of this work has focused on novel thin film technologies. Id., ¶ 3.
`In the late 1990s, Dr. Demaray helped form Applied Komatsu Technology, Inc. (“Applied
`Komatsu”), a joint venture between Applied and Komatsu Ltd. Id., ¶ 4. In 1998, Applied Komatsu
`decided to “discontinue sales of PVD systems.” Ex. 3. As part of this shift, Applied Komatsu
`executed a “reduction in AKT's workforce” that included Dr. Demaray and others. See Dkt. 14-07,
`Ex. F, ¶ 9.
`To continue making new developments in thin film technologies, Dr. Demaray formed
`Symmorphix shortly thereafter. Demaray Decl., ¶ 5. Given restrictive covenants in Applied
`Komatsu’s employment agreements, among other issues, Dr. Demaray approached Applied
`Komatsu with his plans. Id., ¶ 6. Symmorphix and Applied Komatsu entered into the Sales and
`Relationship Agreement on December 11, 1998. See Dkt. 14-07, Ex. F (partial copy of the
`agreement). Applied Komatsu agreed to release Dr. Demarary and other former AKTA employees
`joining Symmorphix from broad restrictive covenants in their employment agreements that may
`otherwise prevent them from working the field:
`Notwithstanding the presumption, contained within those certain written
`agreements with AKTA, that AKTA owns all inventions disclosed by AKTA
`employees and related to the work done for AKTA after leaving employment, the
`parties hereto agree that … AKTA does not own and shall not claim any right
`(other than the license grant to AKTA detailed in Section 3 … to intellectual
`property developed by Symmorphix on or after January 1, 1999.
`
`Id. (internal Ex. C, ¶ 4). The parties confirmed this release verbatim in a January 29, 1999
`amendment to the agreement. Id. (internal Amended Ex. C, ¶ 4).
`On March 16, 2002, two and a half years after Dr. Demaray left Applied Komatsu, Dr.
`Demaray and three other Symmorphix employees filed the application leading to the Demaray
`
`10877827
`
`
`- 3 -
`
`OPPOSITION TO APPLIED MATERIALS’ MOTION FOR
`PRELIMINARY INJUNCTION
`
`

`

`Case 5:20-cv-05676-EJD Document 23 Filed 09/25/20 Page 10 of 32
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`patents reflecting innovations in advanced thin film deposition that they developed at Symmorphix.
`Demaray Decl. ¶ 7. The patents generally relate to methods of depositing thin films, for example in
`semiconductor devices, by pulsed DC reactive sputtering using “a pulsed DC power supply coupled
`to the target” and “an RF bias power supply coupled to the substrate.” See Ex. 1, claim 1. They
`describe and claim the use of “a narrow band-rejection filter that rejects at a frequency of the RF
`bias power supply coupled between the pulsed DC power supply and the target area.” Id. The
`
`narrow band rejection filter allows the power sources to properly function, but prevents damaging
`feedback to the pulsed DC power source from the RF bias. See id, 1:49-51.
`Dr. Demaray later discovered that Intel and Samsung were using his patented technology,
`without authorization, to manufacture thin films in electronic devices. Demaray Decl. ¶ 11. These
`semiconductor products consist almost entirely of layer-upon-layer of thin films engineered and
`processed to create billions of interconnected transistors that together form microprocessors,
`memories or other semiconductor devices. Id. Demaray therefore filed patent infringement suits
`against Intel and Samsung in the Western District of Texas. Dkt. 13, Exs. A and B.
`The named defendants in the Samsung suit include Samsung Austin Semiconductor, which
`operates the semiconductor fabrication plant known as the “S2-Line” in the Western District of
`Texas, where it uses manufacturing processes pertinent to the Texas actions. Ex. 4. Intel likewise
`has a significant presence in the Western District of Texas maintaining an “Austin facility is a
`research and development center for more than 1,700 employees.” Ex. 5. Though not a party to the
`Texas actions, Applied has two facilities for manufacturing and research in Austin, Texas
`employing over 1,800 people. Exs. 6-7.
`Because the Demaray patents concern methods of depositing high quality thin films in
`products by using particular PVD reactor configurations, and are not directed at general PVD
`reactors standing alone, Applied is not a defendant in the Texas cases. Intel and Samsung actually
`use the claimed methods and determine the processes used to deposit thin films in their
`semiconductor fabrication plants, having made the choice to use the claimed pulsed DC power
`supply coupled to the target, RF bias on the substrate and a narrow band rejection filter as set forth
`in the Demaray patent claims. Applied’s reactors standing alone, in contrast, have many potential
`
`10877827
`
`
`- 4 -
`
`OPPOSITION TO APPLIED MATERIALS’ MOTION FOR
`PRELIMINARY INJUNCTION
`
`

`

`Case 5:20-cv-05676-EJD Document 23 Filed 09/25/20 Page 11 of 32
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`non-infringing configurations and Applied has not alleged that it recommends or configures its
`PVD reactors as required by the claims. Demaray has accordingly never approached Applied about
`licensing the Demaray patents or accused Applied of infringement. Demaray Decl. ¶ 12.
`III. DISCUSSION
`A.
`The Court Lacks Subject Matter Jurisdiction Over Applied’s Claims
`As a threshold issue, Applied’s FAC fails to state a proper basis for its declaratory judgment
`
`claims. “[W]hen ruling on a motion for a preliminary injunction, this Court must consider whether
`it has subject matter jurisdiction ….” Native Fed’n of the Madre De Dios River & Tributaries v.
`Bozovich Timber Prods., 491 F. Supp. 2d 1174, 1180 (2007). The party alleging jurisdiction bears
`the burden of showing an “actual controversy” warranting issuance of a declaratory judgment.
`Crossbow Tech., Inc. v. YH Tech., 531 F. Supp. 2d 1117, 1120 (N.D. Cal. 2007). In the patent
`context, “an actual controversy requires ‘an affirmative act’ by the patentee related to the
`enforcement of his patent rights.” Ass’n for Molecular Pathology v. U.S. Patent & Trademark
`Office, 689 F.3d 1303, 1318 (Fed. Cir. 2012). Contrary to Applied’s assertions, merely filing a
`litigation by a patentee against a customer based on activities that involve the declaratory judgment
`plaintiff’s product does not create a case or controversy. See DataTern, 755 F.3d at 904.
`Applied does not contend that it anticipates any legal action from Demaray. Instead,
`Applied argues that it perceives “a cloud over Applied’s business” (Mot. at 4) and has “come to
`the aid of its customers” (id. at 2) because of the Texas cases. “[D]eclaratory judgment jurisdiction
`will not arise merely on the basis that a party learns of the existence of an adversely held patent, or
`even perceives that such a patent poses a risk of infringement, in the absence of some affirmative
`act by the patentee.” Ass’n for Molecular Pathology, 689 F.3d at 1319. Here, the required element
`of an affirmative act by Demaray directed at Applied is missing.
`The Texas cases do not constitute an “immediate injury or threat of injury” to Applied.
`Demaray never approached Applied regarding a license to the Demaray patents and did not include
`Applied as a defendant in the Texas cases. Demaray Decl., ¶ 12; Dkt. 13, Exs. A-B. Nor did
`Demaray accuse Applied PVD reactors standing alone of infringement in the Texas cases—
`Demaray accused particular reactor configurations, and methods of depositing thin films using
`
`10877827
`
`
`- 5 -
`
`OPPOSITION TO APPLIED MATERIALS’ MOTION FOR
`PRELIMINARY INJUNCTION
`
`

`

`Case 5:20-cv-05676-EJD Document 23 Filed 09/25/20 Page 12 of 32
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`them, of infringement in the Texas cases: “Intel configures RMS reactors, including, but not
`limited to reactors in the Endura product line from Applied Materials, Inc. ….” See Dkt. 13, Ex. A,
`¶25, Ex. B, ¶ 28 (“Samsung configures RMS reactors, including, but not limited to reactors in the
`Endura product line from Applied Materials, Inc. ….”). In particular, Intel’s and Samsung’s use of a
`pulsed DC power supply coupled to the target, RF bias on the substrate and a narrow band rejection
`filter to deposit high quality thin films in its semiconductor devices is accused. Id. The Applied
`
`Endura reactors are merely examples of a PVD reactor configurable by third parties in an infringing
`manner. This is not a case where one entity makes an infringing product, and its customers are then
`sued for nothing more than purchasing and using it in the only way possible.
`In its FAC, Applied argues that the Texas complaints gave rise to a controversy “as to
`whether Applied and/or Applied’s products are infringing or have infringed the Asserted Patents.”
`FAC, ¶ 12. Applied’s FAC, however, contains no factual support for that conclusory assertion.
`Applied offers excerpts from the Texas pleadings, but selectively omits that what is accused are
`the specific configurations used by Intel and Samsung. See FAC, ¶ 45 (Count 1), ¶ 50 (Count 2):
`Applied’s FAC ¶ 45 (see also ¶ 50)
`Demaray Intel Complaint ¶ 25 (Dkt. 13, Ex. A
`¶25, Ex. B, ¶ 28)
`“Intel configures RMS reactors, including,
`“… in its complaints against both the Intel and
`but not limited to reactors in the Endura
`Samsung Defendants, Demaray accuses the
`product line from Applied Materials, Inc.
`Defendants’ use of ‘RMS reactors’ from ‘the
`(“Applied Materials”) for deposition of layers
`Endura product line from Applied Materials,
`… in its semiconductor products.”
`Inc.’”
`Applied then adopts its mischaracterization for the remaining Counts 3-5 regarding its
`licensing/ownership claims. Id., ¶¶ 54, 58, 62. Conclusory pleadings based on misquotations of the
`factual record do not create a justiciable controversy.
`Applied also relies on citation to Applied product literature in the Texas cases. See FAC ¶¶
`47, 52. But those citations also fail to show what Applied argues. Importantly, for example,
`Demaray does not cite Applied product literature to show that Intel and Samsung have chosen to
`configure their PVD reactors to use a narrow band rejection filter to prevent damaging feedback to
`the pulsed DC power source for the RF bias on the substrate. See Dkt. 13, Ex. A, ¶¶ 39-40, 57, Ex.
`B, ¶¶ 42-43, 59. To the contrary, Applied contends that its Endura PVD reactors “do not comprise
`‘providing pulsed DC power to the target through a narrow band rejection filter ….” FAC, ¶¶ 47,
`
`10877827
`
`
`- 6 -
`
`OPPOSITION TO APPLIED MATERIALS’ MOTION FOR
`PRELIMINARY INJUNCTION
`
`

`

`Case 5:20-cv-05676-EJD Document 23 Filed 09/25/20 Page 13 of 32
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`52. According to Applied itself, therefore, the direct infringement allegations in the Texas
`complaints are directed squarely at Intel and Samsung, not Applied.3
`Nor are there any assertions in the Texas complaints that Applied indirectly infringes the
`Demaray patents. Demaray acknowledges that Applied reactors standing alone have many non-
`infringing configurations (Demaray Decl. ¶ 12) and Applied makes no allegation whatsoever, in its
`FAC or its motion, that it is responsible for configuration of the Intel and Samsung PVD reactors
`
`accused in the Texas cases. Instead, Applied affirmatively asserts that has not “caused, directed,
`requested, or facilitated any [] infringement, much less with specific intent to do so.” FAC, ¶ 27.
`The Federal Circuit’s reasoning in DataTern is on point. DataTern considered a complaint
`brought by two suppliers after the patentee filed suit against the suppliers’ customers in Texas.
`The Court held that the plaintiff did not “have a right to bring the declaratory judgment action
`solely because their customers have been sued for direct infringement.” Id., at 904. Instead, a
`“supplier has standing to commence a declaratory judgment action if ... there is a controversy
`between the patentee and the supplier as to the supplier’s liability for induced or contributory
`infringement based on the alleged acts of direct infringement by its customers.” Id.
`In Datatern, the patent owner provided two groupings of claim charts on which the alleged
`controversy was based, one group in which the patent owner relied of supplier “provided user
`guides and documentation for each claim element,” and a second group where the infringement
`allegations did not rely upon supplier documentation for “key claim limitations.” Id. The court
`found an adequate controversy existed as to the first group because the “claim charts show that SAP
`provides its customers with the necessary components to infringe.” Id., at 906. As to the second
`group, a controversy was lacking because the infringement read did not rely upon supplier
`documentation for “key claim limitations” and there were no other allegations supporting
`inducement or contributory infringement assertions against the supplier. Id. (“They cite exclusively
`