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`Case 5:20-cv-05676-EJD Document 43 Filed 12/14/20 Page 1 of 18
`
`
`
`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
`
`NORTHERN DISTRICT OF CALIFORNIA
`
`SAN JOSE DIVISION
`
`APPLIED MATERIALS, INC.,
`
`
`Plaintiff,
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`
`
`DEMARAY LLC,
`
`
`vs.
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`Defendant.
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`
`
`
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`10897913
`
`
`Case No. 5:20-cv-05676-EJD
`
`DEMARAY LLC’S REPLY
`MEMORANDUM IN SUPPORT OF
`MOTION TO DISMISS
`
`Hearing Date: March 4, 2021
`Hearing Time: 9:00 a.m.
`
`
`
`)
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`REPLY ISO DEMARAY’S MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
`
`

`

`Case 5:20-cv-05676-EJD Document 43 Filed 12/14/20 Page 2 of 18
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`2
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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
`
`II.
`
`APPLIED’S DECLARATORY JUDGMENT COMPLAINT LACKS
`SUBJECT MATTER JURISDICTION .............................................................................. 3
`
`A.
`
`B.
`
`C.
`
`Applied Fails To Show Any Affirmative Act Of Enforcement By
`Demaray Directed At Applied ................................................................................. 3
`
`Applied Improperly Relies On Extraneous Evidence And Post-
`Complaint Conduct ................................................................................................. 5
`
`Applied’s Grounds For A Case And Controversy Regarding Indirect
`Infringement Claims Should Be Rejected ............................................................... 8
`
`D.
`
`The Court Should Decline To Exercise Discretionary Jurisdiction ........................ 9
`
`THE COURT SHOULD DISMISS APPLIED’S DEFENSES BASED ON
`ITS UNLAWFUL LICENSING PROVISIONS ............................................................... 10
`
`A.
`
`B.
`
`C.
`
`Applied’s New Unpleaded Theories Do Not Establish A Claim In
`The FAC For Which Relief Can Be Granted ........................................................ 10
`
`The Law Is Clear That Applied’s Unlawful Employee Assignment
`Provisions Are Entirely Void ................................................................................ 11
`
`Applied’s New Argument Regarding The SRA Also Fails To
`Support A Plausible Claim For Relief ................................................................... 13
`
`CONCLUSION ................................................................................................................. 14
`
`- i -
`
`REPLY ISO DEMARAY’S MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
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`IV.
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`10897913
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`

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`Case 5:20-cv-05676-EJD Document 43 Filed 12/14/20 Page 3 of 18
`
`
`
`Cases1
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Am. Title Ins. Co. v. Lacelaw Corp.,
`861 F.2d 224 (9th Cir. 1988) ......................................................................................................13
`
`Applied Materials, Inc. v. Advanced Micro-Fabrication Equip. (Shanghai) Co.,
`630 F. Supp. 2d 1084 (N.D. Cal. May 20, 2009) .......................................................2, 11, 12, 14
`
`Armorlite Lens Co. v. Campbell,
`340 F. Supp. 273 (S.D. Cal. 1972) .......................................................................................11, 12
`
`Arris Group, Inc. v. British Telecomms. PLC,
`639 F.3d 1368 (Fed. Cir. 2011) ....................................................................................................9
`
`Bal Seal Engineering, Inc. v. Nelson Products, Inc.,
`2016 WL 11518601 (C.D. Cal. Sept. 8, 2016) .............................................................................7
`
`Benitec Australia, Ltd. v. Nucleonics, Inc.,
`495 F.3d 1340 (Fed. Cir. 2007) ....................................................................................................2
`
`Bd. of Trs. of Leland Stanford Junior Univ. v. Roche Molecular Sys., Inc.,
`583 F.3d 832 (Fed. Cir. 2009) ..............................................................................................10, 11
`
`Cisco Sys., Inc. v. OpenTV Inc.,
`2013 WL 2285226 (N.D. Cal. May 23, 2013) (Davila, J.)...........................................................4
`
`DermaFocus LLC v. Ulthera, Inc.,
`201 F. Supp. 3d 465 (D. Del. 2016) .............................................................................................8
`
`Dolby Labs., Inc. v. Intertrust Techs. Corp.,
`2019 WL 5788574 (N.D. Cal. Nov. 6, 2019) ...............................................................................5
`
`Garcia v. Healy,
`2019 WL 1230439 (N.D. Cal. Mar. 15, 2019) ...........................................................................11
`
`Hewlett-Packard Co. v. Acceleron LLC,
`587 F.3d 1358 (Fed. Cir. 2009) ....................................................................................................1
`
`Innovative Therapies, Inc. v. Kinetic Concepts, Inc.,
`599 F.3d 1377 (Fed. Cir. 2010) ....................................................................................................1
`
`
`1 Unless otherwise noted, internal citations, quotations and subsequent history are omitted,
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`and emphasis is added.
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`10897913
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`- ii -
`
`REPLY ISO DEMARAY’S MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
`
`

`

`Case 5:20-cv-05676-EJD Document 43 Filed 12/14/20 Page 4 of 18
`
`Page(s)
`
`Mass Engineered Design, Inc. v. Planar Sys., Inc.,
`426 F. Supp. 3d 680 (D. Or. 2019) ...............................................................................................8
`
`MedImmune, Inc. v. Genentech, Inc.,
`549 U.S. 118 (2007) .....................................................................................................................3
`
`Microsoft Corp. v. DataTern, Inc.,
`755 F.3d 899 (Fed. Cir. 2014) ............................................................................................ passim
`
`OGD Equip. Co. v. Overhead Door Corp.,
`2019 WL 5390589 (E.D. Tex. July 15, 2019) ..............................................................................1
`
`Proofpoint, Inc. v. InNova Patent Licensing,
`2011 WL 4915847 (N.D. Cal. Oct. 17, 2011) ..............................................................................9
`
`TSMC Tech., Inc. v. Zond, LLC,
`2015 WL 661364 (D. Del. Feb. 13, 2015) ...................................................................................5
`
`W.L. Gore & Assocs., Inc. v. AGA Med. Corp.,
`2012 WL 924978 (D. Del. Mar. 19, 2012) ...................................................................................1
`
`Whitewater W. Indus., Ltd. v. Alleshouse,
`--- F.3d ---, 2020 WL 6788760 (Fed. Cir. Nov. 19, 2020) ...................................................10, 12
`
`Statutes
`
`California Business & Professions Code § 16600 ...............................................................11, 12, 14
`
`California Labor Code § 2870 ..........................................................................................................10
`
`Rules
`
`Fed. R. Civ. P. 12 .....................................................................................................................1, 2, 11
`
`Other Authorities
`
`Restatement (Second) of Judgments § 27 ........................................................................................13
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`10897913
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`- iii -
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`REPLY ISO DEMARAY’S MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
`
`

`

`Case 5:20-cv-05676-EJD Document 43 Filed 12/14/20 Page 5 of 18
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`
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`I.
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`PRELIMINARY STATEMENT
`
`Applied’s declaratory judgment First Amended Complaint (“FAC”) should be entirely
`
`dismissed under Federal Rule of Civil Procedure 12(b)(1) for lack of a case and controversy
`
`between Demaray and Applied supporting declaratory judgment subject matter jurisdiction. The
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`Texas complaints show that Demaray’s focus is on the actual parties, e.g., Intel and Samsung, using
`
`the infringing reactor configurations to produce semiconductor products, not equipment suppliers
`
`like Applied. See Microsoft Corp. v. DataTern, Inc., 755 F.3d 899, 907 (Fed. Cir. 2014) (no
`
`jurisdiction because “DataTern’s litigation strategy appears to involve suing software users, not
`
`software suppliers”). It is undisputed that the “Demaray patents … do not cover all PVD reactor
`
`configurations” and that the “reactors provided by Applied Materials, Inc. have many
`
`configurations unrelated to bias pulsed DC sputtering.” See Dkt. 23-1 ¶ 12. Further, Applied admits
`
`that in the Texas complaints Demaray did not rely on Applied information for several limitations,
`
`e.g., the narrow band-rejection filter. See Opp. at 4–5. Under the Federal Circuit’s reasoning in
`
`DataTern, the Texas complaints did not create an objective risk that Demaray would sue Applied.
`
`See 755 F.3d at 905–06 (no jurisdiction where infringement allegations against purchasers did not
`
`rely upon supplier documentation for “key claim limitations”).
`
`Unable to point to affirmative enforcement acts by Demaray against Applied, Applied relies
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`on its self-servingly alleged subjective “belief” that the Texas complaints “implicitly accused
`
`Applied of infringement.” See Opp. at 5–6, 13. But it is black letter law that “[t]he test [for
`
`declaratory judgment jurisdiction in patent cases] … is objective [and] it is the objective words and
`
`actions of the patentee that are controlling.” Hewlett-Packard Co. v. Acceleron LLC, 587 F.3d
`
`1358, 1363 (Fed. Cir. 2009). Applied’s self-serving, subjective claims are not part of the analysis.
`
`See Innovative Therapies, Inc. v. Kinetic Concepts, Inc., 599 F.3d 1377, 1382 (Fed. Cir. 2010)
`
`(subjective belief does not create jurisdiction); see also OGD Equip. Co. v. Overhead Door Corp.,
`
`2019 WL 5390589, at *8 (E.D. Tex. July 15, 2019) (jurisdiction “requires a determination of
`
`whether there was an objective possibility of litigation, not a subjective belief.”); W.L. Gore &
`
`Assocs., Inc. v. AGA Med. Corp., 2012 WL 924978, at *6 (D. Del. Mar. 19, 2012) (“Plaintiff's
`
`subjective belief, absent any action taken by Defendant, is insufficient to generate a substantial
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`10897913
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`- 1 -
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`REPLY ISO DEMARAY’S MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
`
`

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`Case 5:20-cv-05676-EJD Document 43 Filed 12/14/20 Page 6 of 18
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`controversy.”).
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`Applied points to materials served in the Texas cases and Intel, Samsung, and Applied
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`declarations from this case regarding the confidential commercial relationships between Applied
`
`and purchasers of its reactors. But all of those materials, which in any event do not support
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`Applied’s claims, were served or filed after Applied filed the FAC and none of them were part of
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`Demaray’s allegations in the Texas complaints. “The burden is on the party claiming declaratory
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`judgment jurisdiction to establish that such jurisdiction existed at the time the claim for declaratory
`
`relief was filed ….” Benitec Australia, Ltd. v. Nucleonics, Inc., 495 F.3d 1340, 1344 (Fed. Cir.
`
`2007). “[P]ost-complaint facts cannot create jurisdiction where none existed at the time of filing.”
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`10
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`DataTern, 755 F.3d at 906. These later-filed materials cannot create a case and controversy at the
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`time Applied filed the FAC.
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`Even if subject matter jurisdiction over this action did exist (it does not), the Court should
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`exercise its discretion to decline jurisdiction. The Texas cases are well underway, scheduled for trial
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`in December of next year, and best suited to resolving the issues. On the other hand, proceedings in
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`this case are continued until at least January 21, 2021. Applied fails to identify any reason to
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`address the subset of overlapping issues anew in this Court.
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`Alternatively, Applied’s licensing and ownership declaratory judgment claims should be
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`dismissed because they fail to state a claim for which relief can be granted under Rule 12(b)(6).
`
`Those claims are predicated on provisions already squarely adjudicated against Applied in this
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`District as being “unlawful non-compete provisions.” See Applied Materials, Inc. v. Advanced
`
`Micro-Fabrication Equip. (Shanghai) Co., 630 F. Supp. 2d 1084, 1090 (N.D. Cal. May 20, 2009).
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`Applied should not be permitted to continue brandishing these facially illegal clauses for any
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`reason, and certainly not in a manner that imposes significant costs on the very employees this
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`District’s binding ruling was meant to protect. Applied’s positions are incompatible with both
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`preclusion law and the applicable precedents on California public policy.
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`10897913
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`- 2 -
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`REPLY ISO DEMARAY’S MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
`
`

`

`Case 5:20-cv-05676-EJD Document 43 Filed 12/14/20 Page 7 of 18
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`
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`II.
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`APPLIED’S DECLARATORY JUDGMENT COMPLAINT LACKS SUBJECT
`MATTER JURISDICTION
`
`A.
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`Applied Fails To Show Any Affirmative Act Of Enforcement By Demaray
`Directed At Applied
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`Applied’s reliance on “Demaray’s allegations in the [Texas] complaints” (Opp. at 5) as
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`establishing a case and controversy between Demaray and Applied is misplaced. The parties agree
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`that the Texas complaints alleged infringement in part because Intel and Samsung “configure[]
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`RMS reactors, including, but not limited to reactors in the Endura product line from Applied” in
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`an infringing manner. Ex. 1 (“Intel Compl.”) ¶ 25; Ex. 2 (“Samsung Compl.”) ¶ 28; see also Opp.
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`at 13 (“Intel and Samsung infringe the Asserted Patents by using Applied’s ‘configured’ reactors
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`….”). The parties also agree that Demaray did not cite to Applied information for certain
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`limitations, e.g., the narrow band-rejection filter (Opp. at 4–5; Intel Compl. ¶¶ 39–40, 57;
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`Samsung Compl. ¶¶ 42–43, 59) and pursued a litigation strategy of suing the actual users of the
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`infringing reactor configurations, not equipment suppliers like Applied. Further, Applied made no
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`attempt in its opposition to challenge Demaray’s acknowledgement that the “Demaray patents …
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`do not cover all PVD reactor configurations,” or that the “reactors provided by Applied Materials,
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`Inc. have many configurations unrelated to bias pulsed DC sputtering.” See Dkt. 23-1 ¶ 12. Given
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`these allegations, under DataTern, Demaray’s Texas complaints do not create a substantial
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`controversy between Demaray and Applied. See 755 F.3d at 905–06.
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`Lacking affirmative acts by Demaray against Applied, Applied improperly relies on its
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`self-servingly alleged subjective “belief” that Demaray was “implicitly alleging” infringement by
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`“Applied’s reactors, by themselves.” See, e.g., Opp. at 13; Forster Decl. (Dkt. 42-1) ¶ 5 (“Based
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`on my review of the Customer Complaints, I understood that Demaray was making an implied
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`assertion of infringement of the Asserted Patents against Applied.”); id. ¶ 9 (“[A]fter Applied
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`reviewed the allegations in the Customer Complaints against Intel and Samsung, Applied
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`interpreted those allegations as directed at Samsung and Intel’s use of the reactors as
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`manufactured, configured and installed by Applied.”). The Supreme Court in MedImmune, Inc. v.
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`Genentech, Inc. rejected the apprehension-of-suit test for declaratory judgment subject matter
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`jurisdiction. See 549 U.S. 118, 127 (2007). Under the correct standard, “it is the objective words
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`10897913
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`REPLY ISO DEMARAY’S 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 43 Filed 12/14/20 Page 8 of 18
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`and actions of the patentee that are controlling.” See, e.g., Cisco Sys., Inc. v. OpenTV Inc., 2013
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`WL 2285226, at *2 (N.D. Cal. May 23, 2013) (Davila, J.). Applied’s self-servingly alleged
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`subjective “belief” is not part of that inquiry.
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`Viewed objectively, Applied’s assertion that the Texas complaints were “implicitly
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`alleging” infringement by “Applied’s reactors, by themselves” (Opp. at 13) should be rejected.
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`First, Applied made no such allegations in its FAC, instead stating that the Texas complaints
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`merely “placed a cloud over Applied’s products.” FAC ¶ 1. “A declaratory judgment plaintiff
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`must plead facts sufficient to establish jurisdiction ….” DataTern, 755 F.3d at 906. Second,
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`Applied only reaches its conclusion by mischaracterizing Demaray’s allegations, stating, for
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`example, that Demaray accused “Applied’s customers of infringing the Asserted Patents by using
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`‘RMS reactors’ in the ‘Endura product line from Applied Materials, Inc.’” Opp. at 3. What
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`Demaray alleged was that Intel and Samsung “configure[] RMS reactors, including, but not
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`limited to reactors in the Endura product line from Applied Materials, Inc. (“Applied Materials”)
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`…. ” Intel Compl. ¶ 25; Samsung Compl. ¶ 28. Applied’s mischaracterizations cannot create an
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`Applied tries to fault Demaray for not alleging in its Texas complaints that Intel and
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`Samsung “on their own, perform post-installation modifications to ‘configure’ the reactor in a
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`manner that would allegedly infringe” (Opp. at 12), but Demaray had no obligation to do so and,
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`indeed, could not do so without discovery from Intel and Samsung. Instead, Demaray relied on
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`reverse engineering of Intel and Samsung products suggesting Intel’s and Samsung’s own
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`configuration and use of the infringing reactor configurations. See Mot. at 5. Applied also tries to
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`fault Demaray for not counterclaiming for infringement against Applied’s reactors standing alone
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`in this matter. As Demaray explained in its opening brief, it based its allegations in the Texas
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`complaints on confidential reverse-engineering reports of Intel and Samsung products. To
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`Demaray’s knowledge, Applied has no such publicly available products; consequently, Demaray
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`does not have the information necessary to determine whether Applied’s reactors standing alone
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`can be accused of infringing the Demaray patents.
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`10897913
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`- 4 -
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`REPLY ISO DEMARAY’S MOTION TO DISMISS
`(Case No. 5:20-cv-05676-EJD)
`
`

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`Case 5:20-cv-05676-EJD Document 43 Filed 12/14/20 Page 9 of 18
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`B.
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`Applied Improperly Relies On Extraneous Evidence And Post-Complaint
`Conduct
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`Applied improperly relies on extraneous materials post-dating its complaint in this matter
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`as alleged evidence supporting its subjective claims about Demaray’s allegations. Opp. at 5–7, 10–
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`16. These extraneous materials cannot cure Applied’s insufficient pleadings in the FAC. TSMC
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`Tech., Inc. v. Zond, LLC, 2015 WL 661364, at *3 (D. Del. Feb. 13, 2015). As Demaray pointed
`
`out in its opening brief, “[a] declaratory judgment plaintiff must plead facts sufficient to establish
`
`jurisdiction …” (Mot. at 4 (citing DataTern)) and that “Applied merely provided the general,
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`unsupported allegation that ‘[a]n immediate, real, and justiciable controversy exists between
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`Applied and Demaray as to whether Applied and/or Applied’s products are infringing or have
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`infringed the Asserted Patents’” (id. at 7 (citing FAC ¶ 12)). This facial challenge to Applied’s
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`jurisdictional pleadings cannot be overcome by new matter (and certainly not by new post-filing
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`matter) outside the four corners of the FAC.
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`Contrary to Applied’s assertions (Opp. at 10), Demaray’s submission of a declaration from
`
`Dr. Demaray in support of its Opposition to Applied’s motion for preliminary injunction does not
`
`change this analysis. Demaray relied on Dr. Demaray’s declaration to illustrate that Applied’s
`
`pleaded facts are insufficient to support jurisdiction, not to contest jurisdictional facts that Applied
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`had pleaded. See Mot. at 5 (using Demaray Declaration to explain “[t]here is no allegation in the
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`Texas complaints that the Demaray patents cover all PVD reactor configurations”), 7 (using
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`Demaray Declaration to explain that “there is no allegation in the Texas complaints that Applied’s
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`reactors have no substantial non-infringing uses”), 8 (using Demaray Declaration to explain that
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`Applied’s complaint does not show “implied allegation … that Applied’s reactors do not have
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`non-infringing uses.”). Thus, the Court need not resort to evidence outside of the pleadings in
`
`order to determine whether there is subject matter jurisdiction. Zond, 2015 WL 661364, at *3 n. 4–
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`5 (reference to declaration was “largely to underscore the lack of factual allegations in the
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`Complaint” and did not warrant resort to extra-complaint evidence); Dolby Labs., Inc. v. Intertrust
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`Techs. Corp., 2019 WL 5788574, at *4 (N.D. Cal. Nov. 6, 2019) (relying on declaration to
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`“facially challenge whether the recited facts are sufficient to invoke declaratory judgment”
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`10897913
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`REPLY ISO DEMARAY’S 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 43 Filed 12/14/20 Page 10 of 18
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`jurisdiction was permissible).
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`The timing of Applied’s new materials also renders them legally irrelevant for purposes of
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`the present motion. The law is clear that “[a] declaratory judgment plaintiff must plead facts
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`sufficient to establish jurisdiction at the time of the complaint, and post-complaint facts cannot
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`create jurisdiction where none existed at the time of filing.” DataTern, 755 F.3d at 906. Applied
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`relies, for example, on new declarations from Intel, Samsung, and Applied regarding its
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`confidential “commercial relationship” with its customers. See Dkt. 26-8, 10, 12, 14. Applied
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`marked the portions of each declaration detailing the commercial relationships between Applied
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`and Intel/Samsung as confidential and filed them under seal. See Dkt. 26-8 ¶¶ 10–11, -10 ¶ 12, -12
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`¶ 15–16, -14 ¶ 4. These confidential details of Applied’s commercial relationships with Intel and
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`Samsung were not available to Demaray at the time of the Texas complaints. Applied’s argument
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`that “Demaray was certainly aware of [this information] before it filed the instant motion” (Opp. at
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`6) is unsupported, makes no sense, is not part of the challenged pleadings, and in any event does
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`nothing to establish that a controversy must have existed at the time Applied filed its complaint.
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`Even if considered, the Applied, Intel and Samsung declarations do not state that Intel and
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`Samsung use reactors as configured by Applied. See Dkt. 26-8 ¶ 10–11; -10 ¶ 12; -12 ¶¶ 15–16; -
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`14 ¶ 4. Applied speculates that Intel and Samsung would not want to configure their purchased
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`reactors as they see fit because post-installation modifications by Intel and Samsung “would be
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`inconsistent with … the ordinary process by which Applied supplies RMS reactors to its
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`customers.” Forster Decl. ¶ 6. This speculation goes both ways. Samsung and Intel obviously
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`know how they configure their own reactors, but notably failed to controvert Demaray’s assertion
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`that they configure the reactors themselves. See, e.g., Dkt. 26-8 ¶ 11; -10 ¶ 12. Given this failure,
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`it is reasonable to infer that they do exactly what Applied speculates they do not. Intel and
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`Samsung very well have good reasons to keep their processes run on Applied’s reactors secret,
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`including for research and other commercial purposes, even if they work with Applied to purchase
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`reactors. It is Applied’s burden to show a live controversy, but, despite multiple opportunities to
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`do so, Applied did not offer declarations from it or its customers that they do not modify
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`Applied’s reactors.
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`10897913
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`- 6 -
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`REPLY ISO DEMARAY’S 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 43 Filed 12/14/20 Page 11 of 18
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`As another example, Applied points to Demaray’s preliminary infringement contentions
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`and later-served discovery from the Texas cases.2 First, these documents post-date Applied’s
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`complaint and could not provide an objective basis for jurisdiction at the time this case was filed.
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`Second, Demaray’s infringement contentions are redacted to remove references to confidential
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`Demaray materials and references to reverse engineering reports of Intel and Samsung products—
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`reverse engineering that is not possible because (as far as Demaray knows) Applied does not sell
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`semiconductor products to the public.3 See Lubarsky Decl. (Dkt. 42-1), Exs. E–F. Finally, the
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`contentions, like the Texas complaints, state that Intel and Samsung “configure[] and use[],
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`among other reactors … in the Endura product line from Applied Materials, Inc.” Ex. E at 12;
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`Ex. F at 13. The contentions do not rely on Applied documentation for certain limitations,
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`including the narrow band-rejection filter. Ex. E at 22 (narrow band-rejection filter limitation); Ex.
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`F at 23 (same). For the method claims, the contentions accused Intel and Samsung, not Applied, of
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`practicing the method of depositing the thin-film. Ex. E at 24 (“Intel practices a method of
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`depositing a film ….”); Ex. F at 44 (“Samsung practices a method of depositing a film ….”).
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`Applied attempts to imply something untoward about Demaray’s post-FAC discovery. See Opp. at
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`7 n.5. But Demaray has a real need to determine the location of Intel’s and Samsung’s reactors
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`having the accused configurations.
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`2 Applied also points to Demaray’s response to its demand for a covenant not to sue. Opp.
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`at 16 (citing Dkt. 40). This demand, and Demaray’s response thereto, occurred after Applied filed
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`its complaint. DataTern, 755 F.3d at 906 (holding refusal to covenant not to sue was an irrelevant
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`post-complaint fact). In addition, as discussed above, Demaray is not in a position currently to
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`determine whether Applied’s reactors standing alone infringe the Demaray patents. Finally,
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`Applied’s own case, Bal Seal Engineering, Inc. v. Nelson Products, Inc., 2016 WL 11518601, at
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`*4 (C.D. Cal. Sept. 8, 2016), states that “a refusal to provide such a covenant alone is not
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`particularly significant.”
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`3 Applied attaches to its Opposition only portions of the non-confidential version of
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`Demaray’s infringement contentions. Compare Ex. E (portion of Intel contentions), with Ex. F
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`(Samsung contentions).
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`10897913
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`- 7 -
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`REPLY ISO DEMARAY’S 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 43 Filed 12/14/20 Page 12 of 18
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`Applied also refers to the five-year-old email from Demaray regarding the availability of
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`certain of its patents for license. Opp. at 16 (citing Ex. 5 (E-mail)). Applied admits that “the
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`license offer, by itself, is not sufficient to establish jurisdiction.” Id.
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`C.
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`Applied’s Grounds For A Case And Controversy Regarding Indirect
`Infringement Claims Should Be Rejected
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`Applied fails to identify any basis for implied assertions from the Texas complaints for
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`indirect infringement. For inducement, Applied points to Demaray’s assertion that Applied’s
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`“reactors can be modified with application-specific process kits to deposit specific materials,”
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`Intel Compl. ¶ 25; Samsung Compl. ¶ 28. Applied argues that “Demaray could therefore
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`potentially allege the various Applied product materials in Demaray’s complaints provide
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`circumstantial evidence of the necessary mens rea to support an induced infringement claim.”
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`Opp. at 14. But Applied is making a hypothetical argument that has not actually been made, and
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`there is no implication from the cited assertion that Applied reactor kits suggest using the
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`infringing reactor configurations, including, for example, the use of a narrow band-rejection filter.
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`As for contributory infringement, Applied did not even attempt to controvert Dr.
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`Demaray’s declaration that the “Demaray patents … do not cover all PVD reactor configurations,”
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`or that the “reactors provided by Applied Materials, Inc. have many configurations unrelated to
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`bias pulsed DC sputtering.” See Dkt. 23-1 ¶ 12. Instead, Applied asserts, without support, that the
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`alleged infringing uses by large chipmakers like Samsung or Intel make it so that Applied’s
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`reactors are not suitable for substantial infringing uses. See Opp. at 14–15. This is in contradiction
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`to its own pleadings. FAC ¶ 27 (“Applied’s reactors in the Endura product line … each is a
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`product with substantial uses that does not infringe any claim of these patents.”).
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`None of Applied’s cited cases leads to a contrary conclusion. Applied cites to DermaFocus
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`LLC v. Ulthera, Inc., 201 F. Supp. 3d 465, 471 (D. Del. 2016) and Mass Engineered Design, Inc.
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`v. Planar Systems, Inc., 426 F. Supp. 3d 680, 690–91 (D. Or. 2019), but those cases are inapposite
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`because they are simply not about declaratory judgment jurisdiction. Unlike here, the patentee-
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`plaintiffs in those cases actually alleged that the infringer-defendants were liable for induced
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`infringement and contributory infringement. See Mot. at 8 (explaining that Applied’s FAC
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`10897913
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`- 8 -
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`REPLY ISO DEMARAY’S 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 43 Filed 12/14/20 Page 13 of 18
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`affirmatively alleged that Applied does not induce infringement and its reactors have substantial
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`non-infringing uses). Similarly, the court in Arris Group, Inc. v. British Telecomms. PLC, 639
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`F.3d 1368, 1378 (Fed. Cir. 2011), relied on the patentee’s “alleg[ations] that Arris’ CMTSs and E–
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`MTAs were designed specifically for use under the DOCSIS and PacketCable standards for
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`VoIP.” Here, Demaray has not alleged that Applied’s products were designed specifically for
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`infringing uses. The patentee also repeatedly communicated its infringement contentions to the
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`supplier during a protracted negotiation process, which is simply not a part of this case. See id. at
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`1378–79. Instead, this case is analogous to DataTern where “simply selling a product capable of
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`being used in an infringing manner is not sufficient to create a substantial controversy regarding
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`inducement.” 755 F.3d at 905; see also id. at 906 (“[T]hey do not imply or suggest that
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`Microsoft’s ADO.NET is not a staple article or commodity of commerce suitable for substantial
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`non-infringing use. … our review of the record does not uncover any evidence that Microsoft’s
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`ADO.NET is not suitable for substantial noninfringing uses ….”).
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`D.
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`The Court Should Decline To Exercise Discretionary Jurisdiction
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`Even if jurisdiction existed (it does not), it is appropriate for the Court to decline
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`jurisdiction in this case. As discussed in Demaray’s briefing on Applied’s preliminary injunction
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`and motion to dismiss, Dkt. 23 at 16–22; Mot. at 11, the Texas court has a broader set of issues
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`before it that are not limited to Applied’s reactors or to the theories before this Court. While
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`Applied continues to assert that it “is the only supplier of allegedly infringing reactors identified in
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`Demaray’s customer suits” (Opp. at 17), there is no factual support for its argument. Demaray’s
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`Texas complaints are explicitly not limited to reactors supplied by Applied. See, e.g., Intel Comp