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`Case 5:20-cv-05676-EJD Document 39 Filed 11/23/20 Page 1 of 20
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`
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`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
`
`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
`
`SAN JOSE DIVISION
`
`APPLIED MATERIALS, INC.,
`
`
`Plaintiff,
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`DEMARAY LLC,
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`vs.
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`Defendant.
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`10891631
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`Case No. 5:20-cv-05676-EJD
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`DEMARAY LLC’S NOTICE OF MOTION
`AND MOTION TO DISMISS
`
`Hearing Date: March 4, 2021
`Hearing Time: 9:00 a.m.
`
`DEMARAY’S NOTICE OF MOTION AND
`MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
`
`

`

`Case 5:20-cv-05676-EJD Document 39 Filed 11/23/20 Page 2 of 20
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`TO THE COURT AND ALL PARTIES AND THEIR COUNSEL OF RECORD:
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`PLEASE TAKE NOTICE THAT on March 4, 2021, at 9:00 a.m., or as soon thereafter as
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`may be heard, Defendant Demaray LLC (“Demaray”) shall and hereby does move for an order
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`dismissing Applied Materials, Inc.’s (“Applied”) First Amended Complaint (“FAC”) with
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`prejudice. This Motion is based upon this Notice of Motion, the accompanying Memorandum of
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`Points and Authorities included herewith, the accompanying Declaration of C. Maclain Wells and
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`evidence attached thereto, the files, records, and pleadings in this case, such evidence and
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`argument as may be proffered at the hearing of this Motion, and any other matters that the Court
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`deems appropriate.
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`Dismissal is warranted under Federal Rules of Civil Procedure 12(b)(1) for lack of subject-
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`matter jurisdiction and 12(b)(6) and failure to state a claim upon which relief can be granted.
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`Dismissal is also appropriate pursuant to this Court’s discretion to decline declaratory-judgment
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`jurisdiction.
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`Dated: November 23, 2020
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`10891631
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`Respectfully submitted,
`
`Irell & Manella LLP
`
`By: /s/ C. Maclain Wells
`C. Maclain Wells
`Attorneys for Plaintiff
`DEMARAY LLC
`
`
`
`DEMARAY’S NOTICE OF MOTION AND
`MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
`
`

`

`Case 5:20-cv-05676-EJD Document 39 Filed 11/23/20 Page 3 of 20
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`I.
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`
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`TABLE OF CONTENTS
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`Page
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`PRELIMINARY STATEMENT ......................................................................................... 1
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`II.
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`BACKGROUND ................................................................................................................. 2
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`A.
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`B.
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`The Parties ............................................................................................................... 2
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`Texas Litigation ....................................................................................................... 2
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`III.
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`ARGUMENT ...................................................................................................................... 3
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`A.
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`The Court Should Dismiss Applied’s Declaratory Judgment
`Complaint For Lack Of Subject Matter Jurisdiction ............................................... 3
`
`1.
`
`2.
`
`3.
`
`Legal Standard For Declaratory Judgment Subject Matter
`Jurisdiction .................................................................................................. 3
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`Demaray’s Texas Complaints Do Not Support Jurisdiction ....................... 4
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`No Other Demaray Actions Give Rise To Jurisdiction ............................... 9
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`The Court Should Exercise Its Discretion To Decline Jurisdiction
`Even If It Finds A Case Or Controversy ............................................................... 10
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`The Court Should Dismiss Applied’s Defenses Based On Unlawful
`Licensing Provisions ............................................................................................. 11
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`B.
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`C.
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`CONCLUSION ................................................................................................................. 15
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`- i -
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`DEMARAY’S NOTICE OF MOTION AND
`MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
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`IV.
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`10891631
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`Case 5:20-cv-05676-EJD Document 39 Filed 11/23/20 Page 4 of 20
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`
`
`Cases1
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Adobe Sys., Inc. v. Kelora Sys.,
`2011 WL 6101545 (N.D. Cal. Dec. 7, 2011) ...............................................................................4
`
`Amazon.com, Inc. v. Straight Path IP Grp., Inc.,
`2015 WL 3486494 (N.D. Cal. May 28, 2015) ...........................................................................11
`
`Applied Materials, Inc. v. Advanced Micro-Fabrication Equip. (Shanghai) Co.,
`630 F. Supp. 2d 1084 (N.D. Cal. May 20, 2009) ............................................................... passim
`
`Ass’n for Molecular Pathology v. Myriad Genetics, Inc.,
`569 U.S. 576 (2013) .....................................................................................................................4
`
`Ass’n for Molecular Pathology v. U.S. Patent & Trademark Office,
`689 F.3d 1303 (Fed. Cir. 2012) ....................................................................................................4
`
`Bd. of Trs. of Leland Stanford Junior Univ. v. Roche Molecular Sys., Inc.,
`583 F.3d 832 (Fed. Cir. 2009) ..............................................................................................13, 14
`
`Cepheid v. Roche,
`2013 WL 184125 ..............................................................................................................9, 10, 11
`
`Crossbow Tech., Inc. v. YH Tech.,
`531 F. Supp. 2d 1117 (N.D. Cal. 2007) .......................................................................................4
`
`Kamilche Co. v. United States,
`53 F.3d 1059 (9th Cir. 1995) ......................................................................................................14
`
`MedImmune, Inc. v. Genentech, Inc.,
`549 U.S. 118 (2007) .....................................................................................................................4
`
`Microsoft v. DataTern,
`755 F.3d 899 (Fed. Cir. 2014) ............................................................................................ passim
`
`Power Integrations, Inc. v. De Lara,
`2020 WL 1467406 (S.D. Cal. Mar. 26, 2020) ............................................................................15
`
`Proofpoint, Inc. v. InNova Patent Licensing,
`2011 WL 4915847 (N.D. Cal. Oct. 17, 2011) ....................................................................5, 9, 10
`
`
`1 Unless otherwise noted, internal citations, quotations and subsequent history are omitted,
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`and emphasis is added unless otherwise indicated.
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`10891631
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`- ii -
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`DEMARAY’S NOTICE OF MOTION AND
`MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
`
`

`

`Case 5:20-cv-05676-EJD Document 39 Filed 11/23/20 Page 5 of 20
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`Page(s)
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`Reactive Surfaces Ltd, LLP v. Toyota Motor Corp.,
`2015 WL 4876810 (W.D. Tex. Aug. 13, 2015) ...........................................................................7
`
`In re Vistaprint Ltd.,
`628 F.3d 1342 (Fed. Cir. 2010) ..................................................................................................11
`
`Wenke v. Forest Labs., Inc.,
`2018 WL 1911957 (N.D. Cal. Apr. 23, 2018) ...........................................................................13
`
`Whitewater W. Indus., Ltd. v. Alleshouse,
`--- F.3d ---, 2020 WL 6788760 (Fed. Cir. Nov. 19, 2020) ...............................................1, 14, 15
`
`XpertUniverse, Inc. v. Cisco Sys., Inc.,
`2018 WL 2585436 (N.D. Cal. May 8, 2018) .............................................................................14
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`Statutes
`
`California Business & Professions Code § 16600 .........................................................12, 13, 14, 15
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`California Labor Code § 2870 ..............................................................................................13, 14, 15
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`Rules
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`Federal Rule of Civil Procedure 12(b)(1) ..........................................................................................1
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`Federal Rule of Civil Procedure 12(b)(6) ....................................................................................1, 15
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`Other Authorities
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`Restatement (Second) of Judgments § 27 ........................................................................................14
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`7 Witkin, Cal. Procedure (5th ed. 2020), Judgment § 419 ..............................................................13
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`10891631
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`- iii -
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`DEMARAY’S NOTICE OF MOTION AND
`MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
`
`

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`Case 5:20-cv-05676-EJD Document 39 Filed 11/23/20 Page 6 of 20
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`MEMORANDUM OF POINTS AND AUTHORITIES
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`I.
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`PRELIMINARY STATEMENT
`
`Applied’s declaratory judgment FAC should be dismissed under Federal Rule of Civil
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`Procedure 12(b)(1). Applied does not contend that it anticipated legal action from Demaray.
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`Instead, Applied brought its FAC because it perceived “a cloud” over its business from Demaray’s
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`earlier-filed complaints in Texas against Intel and Samsung. See FAC (Dkt. 13) ¶ 1 (“Demaray’s
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`lawsuits has placed a cloud on Applied’s product ….”). In the Texas complaints, Demaray has
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`accused methods of thin-film deposition in a physical vapor deposition (“PVD”) reactor with a
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`specific configuration used by Intel and Samsung, and that specific reactor configuration of
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`infringement. Demaray has not accused Applied’s reactors standing alone of infringement and has
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`made no express or implied infringement assertions against Applied in the Texas complaints or
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`anywhere else. On these facts, controlling Federal Circuit precedent dictates that the Texas
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`complaints do not give rise to a justiciable controversy.
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`Even if subject matter jurisdiction over this action did exist (it does not), efficiency and
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`judicial economy warrant the Court’s exercise of its discretion to decline jurisdiction. Applied’s
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`conduct, both here and in Texas, establishes that it did not bring this case to address a threat of legal
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`action, but rather as an extreme attempt at forum shopping. The Texas cases are well underway,
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`have already been scheduled for trial in December of next year, and are best suited to resolving the
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`In addition, the Court should dismiss Applied’s licensing and ownership declaratory
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`judgment claims on the separate basis that they fail to state a claim for which relief can be granted
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`under Federal Rule of Civil Procedure 12(b)(6). Applied’s claims depend on employee agreement
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`assignment provisions that Judge Ware from this district already ruled are “unlawful non-compete
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`provisions” and void as a matter of public policy. See Applied Materials, Inc. v. Advanced Micro-
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`Fabrication Equip. (Shanghai) Co., 630 F. Supp. 2d 1084, 1090 (N.D. Cal. May 20, 2009). Just last
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`week, the Federal Circuit reconfirmed Judge Ware’s reasoning in Advanced Micro-Fabrication in
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`Whitewater West Industries, Ltd. v. Alleshouse, --- F.3d ---, 2020 WL 6788760, at *4 (Fed. Cir.
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`Nov. 19, 2020) (reversing district court reliance on unlawful assignment provisions). Applied
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`10891631
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`- 1 -
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`DEMARAY’S NOTICE OF MOTION AND
`MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
`
`

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`Case 5:20-cv-05676-EJD Document 39 Filed 11/23/20 Page 7 of 20
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`cannot support a colorable claim on which relief could be granted based upon contract provisions
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`already adjudicated against it.
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`II.
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`BACKGROUND
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`A.
`
`The Parties
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`Demaray is a limited liability company organized under the laws of the State of Delaware.
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`FAC ¶ 4. Demaray owns U.S. Patent Nos. 7,544,276 and 7,381,657 (the “Demaray patents”). Ex.
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`1 (“Intel Compl.”) ¶ 5; Ex. 2 (“Samsung Compl.”) ¶ 5 (collectively, the “Texas complaints”).2
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`Demaray was founded for research, development, and commercialization of new product
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`applications based on technologies developed by Dr. Richard E. Demaray, including the patented
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`technology for the production of low-defect thin-films for advanced electronic devices. Intel
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`Compl. ¶ 3; Samsung Compl. ¶ 3.
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`Applied is a materials engineering company that is headquartered in Santa Clara,
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`California. FAC ¶ 3. Applied manufactures products used in semiconductor fabrication, including
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`PVD reactors in the Endura product line. Id. Intel and Samsung use PVD reactors, from Applied
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`and other suppliers, configured in a specific manner to deposit certain thin-films in their
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`semiconductor products. Intel Compl. ¶ 25; Samsung Compl. ¶ 28.
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`B.
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`Texas Litigation
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`In July 2020, Demaray filed the Texas complaints against Intel and Samsung, alleging that
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`Intel’s and Samsung’s use of specific reactor configurations infringed the Demaray patents. See,
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`e.g., Intel Compl. ¶¶ 22, 47; Samsung Compl. ¶¶ 25, 50. The Demaray patents have claim
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`elements requiring, for example, the use of a reactor configuration with “a narrow band-rejection
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`filter that rejects at a frequency of the RF bias power supply coupled between the pulsed DC
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`power supply and the target area.” See, e.g., Ex. 3 (’276 Patent), claim 1. The Texas complaints
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`alleged that Intel and Samsung each “configures, or causes to be configured, [their] RMS reactors
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`such that they comprise a narrow band-rejection filter.” See, e.g., Intel Compl. ¶¶ 39–40 (alleging
`
`that “Intel configures, or causes to be configured, the Intel RMS reactors such that they comprise a
`
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`2 All exhibits are attached to the concurrently filed Declaration of C. Maclain Wells.
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`10891631
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`- 2 -
`
`DEMARAY’S NOTICE OF MOTION AND
`MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
`
`

`

`Case 5:20-cv-05676-EJD Document 39 Filed 11/23/20 Page 8 of 20
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`narrow band-rejection filter”); Samsung Compl. ¶¶ 42–43 (alleging that “Samsung configures, or
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`causes to be configured, the Samsung RMS reactors such that they comprise a narrow band-
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`rejection filter”). They then use those reactors themselves, as configured, to perform the processes
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`that they choose to run in the course of manufacturing semiconductor devices. Intel Compl. ¶¶ 33–
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`35, 39–40; Samsung Compl. ¶¶ 36–38, 42–43.
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`A month after the filing of the Texas complaints, Applied filed its third-filed complaint in
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`this matter on August 13, 2020, and its FAC on September 1, 2020. See Dkts. 1, 13. Applied did
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`so, not because of any threat of impending litigation from Demaray, but to come to the aid of its
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`customers, Intel and Samsung. See FAC ¶ 1 (“Demaray’s lawsuits against Applied’s customers
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`have placed a cloud over Applied’s products … and created a justiciable controversy between
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`Applied and Demaray.”); Dkt. 14 (Applied’s Motion for Preliminary Injunction) at 2 (“[T]o come
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`to the aid of its customers, Applied filed the instant action seeking a declaratory judgment against
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`Demaray ….”). Applied then sought to derail the Texas cases asking this Court for a preliminary
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`injunction enjoining the Texas cases from proceeding. Id.
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`In opposition to Applied’s injunction request, Demaray raised issues regarding the Court’s
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`lack of subject matter jurisdiction (see, e.g., Dkt. 23 at 5-8) and the lack of merit of Applied’s
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`licensing/ownership claims (see, e.g., id. at 11-16). Demaray now moves for formal dismissal
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`upon these bases.
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`III. ARGUMENT
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`A.
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`The Court Should Dismiss Applied’s Declaratory Judgment Complaint For
`Lack Of Subject Matter Jurisdiction
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`The Texas complaints do not support an actual controversy supporting subject-matter
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`jurisdiction for Applied’s FAC. In arguing for jurisdiction in support of its injunction request,
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`Applied relied on mischaracterizations of the Texas cases against Intel and Samsung. But the
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`required affirmative acts by Demaray directed at Applied are entirely missing from the Texas
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`complaints—or anywhere else.
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`1.
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`Legal Standard For Declaratory Judgment Subject Matter Jurisdiction
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`Federal courts have jurisdiction over declaratory-judgment claims only where there is “a
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`10891631
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`- 3 -
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`DEMARAY’S NOTICE OF MOTION AND
`MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
`
`

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`Case 5:20-cv-05676-EJD Document 39 Filed 11/23/20 Page 9 of 20
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`substantial controversy, between parties having adverse legal interests, of sufficient immediacy
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`and reality to warrant the issuance of a declaratory judgment.” MedImmune, Inc. v. Genentech,
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`Inc., 549 U.S. 118, 127 (2007). The party alleging jurisdiction bears the burden of showing an
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`“actual controversy.” Crossbow Tech., Inc. v. YH Tech., 531 F. Supp. 2d 1117, 1120 (N.D. Cal.
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`2007). “A declaratory judgment plaintiff must plead facts sufficient to establish jurisdiction at the
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`time of the complaint, and post-complaint facts cannot create jurisdiction where none existed at
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`the time of filing.” Microsoft Corp. v. DataTern, Inc., 755 F.3d 899, 906 (Fed. Cir. 2014).
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`In patent cases, an actual controversy requires “an affirmative act by the patentee related to
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`the enforcement of his patent rights.” Ass’n for Molecular Pathology v. U.S. Patent & Trademark
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`Office, 689 F.3d 1303, 1318 (Fed. Cir. 2012), rev’d in part on other grounds by Ass’n for
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`Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576 (2013). “[D]eclaratory judgment
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`jurisdiction will not arise merely on the basis that a party learns of the existence of an adversely
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`held patent, or even perceives that such a patent poses a risk of infringement, in the absence of
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`some affirmative act by the patentee.” Id. at 1319–20. The “affirmative act” must be “directed at
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`that plaintiff, not just broad and widespread enforcement activity.” Adobe Sys., Inc. v. Kelora Sys.,
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`2011 WL 6101545, at *3–4 (N.D. Cal. Dec. 7, 2011). The mere filing of litigation by a patentee
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`against a customer based on activities that involve the declaratory-judgment plaintiff’s product
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`does not create a case or controversy. DataTern, 755 F.3d at 904 (“To the extent that Appellees
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`argue that DataTern’s suits against its customers automatically give rise to a case or controversy
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`regarding induced infringement, we do not agree”).
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`2.
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`Demaray’s Texas Complaints Do Not Support Jurisdiction
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`Applied bases jurisdiction on an alleged “cloud” over its business because of Demaray’s
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`lawsuits in the Texas cases. FAC ¶ 1. This violates “the bedrock rule that a case or controversy
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`must be based on a real and immediate injury or threat of future injury that is caused by the
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`defendants.” Ass’n for Molecular Pathology, 689 F.3d at 1319. The Texas cases are directed to
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`Applied’s customers’ use of infringing reactor configurations and thus do not constitute an
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`“immediate injury or threat of future injury” to Applied itself. While Applied may want to aid its
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`customers, that does not support subject matter jurisdiction: “[t]o the extent that Appellees argue
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`10891631
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`- 4 -
`
`DEMARAY’S NOTICE OF MOTION AND
`MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
`
`

`

`Case 5:20-cv-05676-EJD Document 39 Filed 11/23/20 Page 10 of 20
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`that DataTern’s suits against its customers automatically give rise to a case or controversy
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`regarding induced infringement, we do not agree.” See DataTern, 755 F.3d at 904.
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`To be clear, this is not a case where an entity makes an infringing product, and its
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`customers are then sued for doing nothing more than purchasing and using it in the only way
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`possible. See Proofpoint, Inc. v. InNova Patent Licensing, 2011 WL 4915847, at *5 (N.D. Cal.
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`Oct. 17, 2011) (dismissing for lack of declaratory-judgment jurisdiction where no party “alleged
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`that the mere making or selling of [supplier’s] products is unlawful”). There is no allegation in the
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`Texas complaints that the Demaray patents cover all PVD reactor configurations. Id.; see also Dkt.
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`23-1 (Demaray Declaration) ¶ 12 (“The Demaray patents are directed generally at methods of
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`depositing high quality thin films in products by using a particular PVD reactor configuration.
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`They do not cover all PVD reactor configurations.”). Rather, the patents cover the use of “a
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`particular PVD reactor configuration.” Id. Demaray’s Texas complaints did not accuse Applied
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`of using, making, selling, or offering to sell the specific reactor configurations that Intel and
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`Samsung themselves decide upon and use. See, e.g., Intel Compl. ¶ 25 (“Intel configures RMS
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`reactors, including, but not limited to reactors in the Endura product line ….”), Samsung Compl.
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`¶ 28 (“Samsung configures RMS reactors, including, but not limited to reactors in the Endura
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`product line from Applied Materials, Inc. ….”).
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`As an example, Demaray patent claims require using “a pulsed DC power supply coupled
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`to the target” and “an RF bias power supply coupled to the substrate.” See, e.g., Ex. 3 (’276
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`Patent), claim 1. The claims also require “a narrow band-rejection filter that rejects at a frequency
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`of the RF bias power supply coupled between the pulsed DC power supply and the target area,”
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`which can prevent damaging feedback that can occur at the DC power source. Id. In the Texas
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`cases, Demaray did not allege that Applied uses this specific configuration to deposit thin-films or
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`cite to Applied documentation to support infringement allegations for this claim limitation. See
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`Intel Compl. ¶¶ 39–40, 57; Samsung Compl. ¶¶ 42–43, 59. Instead, Demaray relied upon reverse
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`engineering of Intel and Samsung products suggesting Intel’s and Samsung’s use of the infringing
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`reactor configurations.
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`While Applied has argued that the Texas complaints included an “implied” assertion of
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`10891631
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`DEMARAY’S NOTICE OF MOTION AND
`MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
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`

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`Case 5:20-cv-05676-EJD Document 39 Filed 11/23/20 Page 11 of 20
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`infringement (Dkt. 26-4 at 4), nowhere did Demaray allege that Applied’s reactors alone
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`necessarily include a narrow band-rejection filter (itself a specific configuration of filter over other
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`filters). Indeed, Applied argues in its FAC that it does not supply the narrow band-rejection filter.
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`FAC ¶¶ 47 (“Applied’s Endura products do not infringe claim 1 of the ’276 patent at least because
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`these products do not meet or embody … ‘a narrow band-rejection filter that rejects at a frequency
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`of the [RF] bias power supply coupled between the pulsed DC power supply and the target
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`area.’”), 52 (“Using Applied’s Endura products does not infringe claim 1 of the ’657 patent at least
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`because these products do not comprise ‘providing pulsed DC power to the target through a
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`narrow band rejection filter such that the target alternates between positive and negative voltages’
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`….”). Given the lack of any allegation from Demaray in the Texas complaints and Applied’s own
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`assertions that it does not configure reactors in an infringing manner, a justiciable controversy
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`does not exist.
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`The Federal Circuit’s decision in DataTern is instructive. In DataTern, the patent owner
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`provided two groupings of claim charts on which an alleged controversy supporting subject matter
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`jurisdiction was based, one group in which the patent owner relied of supplier “provided user
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`guides and documentation for each claim element,” and a second group where the infringement
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`allegations did not rely upon supplier documentation for “key claim limitations.” 755 F.3d at 905.
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`The Federal Circuit found an adequate controversy existed as to the first group because the “claim
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`charts show that SAP provides its customers with the necessary components to infringe.” Id. As to
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`the second group, the Federal Circuit determined that a controversy was lacking because the charts
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`did not rely upon supplier documentation for “key claim limitations” and there were no other
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`allegations supporting inducement or contributory infringement assertions against the supplier. Id.
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`(“They cite exclusively to third-party … documentation for several key claim limitations … and
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`simply selling a product capable of being used in an infringing manner is not sufficient to create a
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`substantial controversy regarding inducement.”).
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`Applying the same reasoning here demonstrates the lack of a justiciable controversy. Like
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`the second group of claim charts in DataTern, Demaray did not rely on Applied information for
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`several limitations, e.g., the narrow band-rejection filter. For its part, Applied has not argued that it
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`10891631
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`DEMARAY’S NOTICE OF MOTION AND
`MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
`
`

`

`Case 5:20-cv-05676-EJD Document 39 Filed 11/23/20 Page 12 of 20
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`is responsible for Intel’s or Samsung’s infringement and does not allege that it supplies a narrow
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`band-rejection filter. See, e.g., FAC ¶ 27 (“Applied has not caused, directed, requested, or
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`facilitated any such infringement, much less with specific intent to do so. Applied’s reactors in the
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`Endura product line are not designed for use in any combination which infringes any claim of the
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`Asserted Patents. To the contrary, each is a product with substantial uses that does not infringe any
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`claim of these patents.”). Further, the DataTern court noted that “DataTern’s litigation strategy
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`appears to involve suing software users, not software suppliers.…This cuts against Microsoft’s
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`arguments that they might somehow be next or that litigiousness against direct infringers alone
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`ought to create a substantial controversy.” 755 F.3d at 907. Similarly here, Demaray has sued the
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`actual parties, e.g., Intel and Samsung, using the infringing reactor configurations to produce
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`semiconductor products, not equipment suppliers like Applied.
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`Nor do the Texas cases provide any basis for Applied to claim that it apprehends liability
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`for indirect infringement—i.e., induced or contributory infringement. First, Applied did not allege
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`any implied assertion of indirect infringement from the Texas complaints in its FAC. Applied
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`merely provided the general, unsupported allegation that “[a]n immediate, real, and justiciable
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`controversy exists between Applied and Demaray as to whether Applied and/or Applied’s
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`products are infringing or have infringed the Asserted Patents.” See FAC ¶ 12. Even if read to
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`cover indirect infringement, bare conclusory pleading does not create a justiciable controversy.
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`See, e.g., Reactive Surfaces Ltd, LLP v. Toyota Motor Corp., 2015 WL 4876810, at *2 (W.D. Tex.
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`Aug. 13, 2015).
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`Regarding contributory infringement, there is no allegation in the Texas complaints that
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`Applied’s reactors have no substantial non-infringing uses. DataTern, 755 F.3d at 906 (“[T]hey do
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`not imply or suggest that Microsoft’s ADO.NET is not a staple article or commodity of commerce
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`suitable for substantial non-infringing use … our review of the record does not uncover any
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`evidence that Microsoft’s ADO.NET is not suitable for substantial noninfringing uses ….”).
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`Indeed, Demaray has confirmed that there are many reactor configurations that do not infringe the
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`Demaray patents. Dkt. 23-1 (Demaray Decl.) ¶ 12. And Applied itself argues as much: “Applied’s
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`reactors in the Endura product line … each is a product with substantial uses that does not infringe
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`10891631
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`DEMARAY’S NOTICE OF MOTION AND
`MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
`
`

`

`Case 5:20-cv-05676-EJD Document 39 Filed 11/23/20 Page 13 of 20
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`any claim of these patents.” FAC ¶ 27.
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`Applied has argued that Demaray’s allegations somehow give rise to an implied allegation
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`that all intended uses of Applied reactors by Intel and Samsung infringe and thus non-infringing
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`uses are lacking. See Dkt. 26-4 at 6. This could not be further from the truth. Demaray has stated
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`consistently and repeatedly that it is Intel’s and Samsung’s use of specific reactor configurations
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`that infringes. It simply does not follow from the fact that Samsung and Intel are accused of
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`infringing that Applied’s reactors do not have non-infringing uses. It is Applied’s burden to show
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`a live controversy, but Applied did not even attempt to controvert Dr. Demaray’s declaration that
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`the “Demaray patents … do not cover all PVD reactor configurations,” or that the “reactors
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`provided by Applied Materials, Inc. have many configurations unrelated to bias pulsed DC
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`sputtering.” Dkt. 23-1 ¶ 12.
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`For inducement, “simply selling a product capable of being used in an infringing manner is
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`not sufficient to create a substantial controversy regarding inducement.” DataTern, 755 F.3d at
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`905. There is no allegation in the Texas complaints that Applied provides the specific infringing
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`reactor configuration to Intel or Samsung or encourages its use. See DataTern, 755 F.3d at 907
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`(“[T]here is no record evidence that Microsoft encouraged the acts that DataTern argues amount to
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`direct infringement by its customers in the Texas actions.”). To the contrary, Applied affirmatively
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`asserts that Applied has not “caused, directed, requested, or facilitated any [] infringement, much
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`less with specific intent to do so.” FAC ¶ 27 (“Applied’s reactors in the Endura product line …
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`each is a product with substantial uses that does not infringe any claim of these patents.”). This in
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`itself belies any argument from Applied that jurisdiction lies due to a risk of liability for indirect
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`infringement.
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`Applied has mischaracterized Demaray’s Texas complaints as alleging that “Applied
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`provides its customers with certain ‘application-specific process kits’ that allow them to
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`‘modif[y]’ the reactors to fit their needs.” See Dkt. 26-4 at 6. Demaray actually alleged that
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`Applied’s “reactors can be modified with application-specific process kits to deposit specific
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`materials.” Intel Compl. ¶ 25; Samsung Compl. ¶ 28. Despite Applied’s added spin, there is no
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`implication from this assertion that Applied reactor kits suggest using the infringing reactor
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`10891631
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`- 8 -
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`DEMARAY’S NOTICE OF MOTION AND
`MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
`
`

`

`Case 5:20-cv-05676-EJD Document 39 Filed 11/23/20 Page 14 of 20
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`configurations.
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`The court’s decision in Proofpoint is instructive. The district court in Proofpoint found that
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`infringement allegations against the plaintiff’s customer did not confer jurisdiction over the
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`declaratory judgment suit because, even though the customer complaint identified Proofpoint’s
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`product, there was no “reasonable apprehension” of suit for direct or indirect infringement.
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`Proofpoint, 2011 WL 4915847, at *5. The patentee, InNova, sued Proofpoint’s customers for
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`“using” certain products that included Proofpoint’s products or services, but there was no
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`allegation “that the mere making or selling of Proofpoint’s products is unlawful.” Id. (emphasis in
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`original). The court also found that the requisite allegations for indirect infringement were lacking:
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`“[f]urthermore, Proofpoint has not alleged that its technology could not be used without infringing
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`the ’761 Patent, nor that it had