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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`SAN JOSE DIVISION
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`APPLIED MATERIALS, INC.,
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`Plaintiff,
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`v.
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`DEMARAY LLC,
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`Defendant.
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`Case No. 5:20-cv-09341-EJD
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`ORDER GRANTING IN PART AND
`DENYING IN PART DEFENDANT’S
`MOTION TO DISMISS
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`Re: Dkt. No. 30
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`
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`In this declaratory judgment action, Plaintiff Applied Materials, Inc. (“Applied”) asks the
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`Court to declare that its products do not infringe Defendant Demaray LLC’s (“Demaray”)
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`patents—(i) U.S. Patent No. 7,544,276 (hereafter “276”) and (ii) U.S. Patent No. 7,3381,657
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`(hereafter “657”) (collectively the “Asserted Patents”). Applied seeks further declaratory relief
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`asserting that infringement is precluded by a non-exclusive, perpetual license and an assignment of
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`rights.
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`Presently before the Court is Demaray’s motion to dismiss, in which Demaray contends
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`that Applied has failed to allege a justiciable controversy under the Declaratory Judgment Act.
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`See Notice of Motion and Motion to Dismiss (“Mot.”), Dkt. No. 30. Additionally, Demaray
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`argues Applied has failed to state a claim which would warrant declaratory relief for its licensing
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`and assignment of rights-based claims. Id. Applied has filed an opposition (“Opp’n”) (Dkt. No.
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`38), to which Demaray filed a reply (“Reply iso Mot.”) (Dkt. No. 41). Having considered the
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`record, the parties’ submissions, and the relevant legal authority, the Court GRANTS in part and
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`DENIES in part Demaray’s motion.1
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`1 The Court took this motion under submission for decision without oral argument pursuant to
`Civil Local Rule 7-1(b)
`Case No.: 5:20-cv-09341-EJD
`ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO
`DISMISS
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`Case 5:20-cv-09341-EJD Document 63 Filed 09/16/21 Page 2 of 21
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`I.
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`FACTUAL AND PROCEDURAL BACKGROUND
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`A. The Asserted Patents
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`Demaray’s Asserted Patents concern the specific configuration of physical vapor
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`deposition (“PVD”) reactors and a method for the deposition of thin layer films onto substrate
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`materials used during the semiconductor manufacturing process. See Complaint (“Compl.”), Dkt.
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`No. 1-1, Ex. A (Demaray LLC v. Intel Corp., (W.D. Tex. No. 6:20-cv-634-ADA filed July 14,
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`2020) (hereinafter, “Intel Compl.”)); see also Dkt. No. 1-2, Ex. B (Demaray v. Samsung
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`Electronics Co., Ltd. (A Korean Company) et al, (W.D. Tex. No. 6:20-cv-636-ADA filed July 14,
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`2020) (hereinafter, “Samsung Compl.”)). Both patents are entitled “Biased Pulse DC Reactive
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`Sputtering of Oxide Films” and share a common specification. The ‘276 patent discloses
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`apparatus claims directed to PVD reactors having certain claim elements requiring the use of a
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`reactor configuration with three power supply-related limitations: (1) a “pulsed DC power supply
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`coupled to the target,” (2) “an RF bias power supply coupled to the substrate,” and (3) “a narrow
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`band-rejection filter that rejects at a frequency of the RF bias power supply coupled between the
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`pulsed DC power supply and the target area.” Compl. ¶ 33 (citing Intel Compl. ¶¶ 33, 36, 39;
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`Samsung Compl. ¶¶ 36, 39, 42).
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`The ‘276 patent is supplemented by Demaray’s ‘657 patent, which discloses method
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`claims delineating the deposition of thin layer films onto a substrate by pulsed DC reactive
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`sputtering using “a pulsed DC power supply coupled to the target” and “an RF bias power supply
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`coupled to the substrate.” Compl. ¶ 29. The ‘657 patent also describes and claims the use of “a
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`narrow band-rejection filter that rejects at a frequency of the RF bias power supply coupled
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`between the pulsed DC power supply and the target area.” Id. The narrow band rejection filter
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`allows the power sources to properly function, but prevents damaging feedback to the pulsed DC
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`power source from the RF bias power supply. Id. ¶ 36 (citing Intel Compl. ¶¶ 39-40; Samsung
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`Compl. ¶¶ 42-43).
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`Case No.: 5:20-cv-09341-EJD
`ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO
`DISMISS
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`Case 5:20-cv-09341-EJD Document 63 Filed 09/16/21 Page 3 of 21
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`B. Demaray’s Actions Against Applied’s Customers
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`Applied and Demaray’s dispute follows allegations that Intel Corporation (“Intel”) and
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`Samsung Electronics Co. Ltd. (“Samsung”), two of Applied’s customers, have infringed
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`Demaray’s Asserted Patents. In July 2020, Demaray filed separate patent infringement lawsuits
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`against Intel and Samsung in the Western District of Texas (“WDTX Customer Cases”), alleging
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`that both have infringed the Asserted Patents by configuring reactors, including Applied’s Endura
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`line of reactors, in an infringing manner while also employing Demaray’s patented method in the
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`fabrication of their semiconductor devices. See generally Intel Compl.; Samsung Compl.
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`C. Applied’s Actions Against Demaray
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`In response to the WDTX Customer Cases, Applied filed a declaratory relief action against
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`Demaray, which also focused on the Asserted Patents. See Applied Materials, Inc. v. Demaray
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`LLC, (N.D. Cal. No. 5:20-cv-05676 filed August 13, 2020) (“Applied I”). Compl. ¶ 40. Similar to
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`its claims in this action, Applied sought a declaration that its reactors did not infringe the Asserted
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`Patents. Applied I, First Amended Complaint, Dkt. No. 13 ¶ 1. Applied also sought to enjoin
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`Demaray from continuing to litigate the WDTX Customer Cases while the declaratory relief
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`action remained ongoing. See Applied I, Motion for Preliminary Injunction, Dkt. No. 14.
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`Demaray opposed Applied’s request for a preliminary injunction, arguing in part that the
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`Court lacked subject matter jurisdiction over Applied’s action and should therefore deny its
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`request to enjoin Demaray. See Applied I, Opposition to Applied Materials’ Motion for
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`Preliminary Injunction, Dkt. No. 13 at 5-8. Thereafter, Demaray also filed a motion to dismiss the
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`Applied I action for lack of subject matter jurisdiction or alternatively, for failure to state a claim.
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`Applied I, Dkt. No. 39. Before ever turning to Demaray’s motion to dismiss, the Court denied
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`Applied’s motion for preliminary injunction finding that it lacked subject matter jurisdiction over
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`its action for declaratory relief. Applied I, Order Denying Motion for Preliminary Injunction
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`(“Prelim. Ord”), Dkt. No. 47. At that time, Applied had not sufficiently alleged the existence of
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`an actual case or controversy between the parties; Applied failed to sufficiently allege either that
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`Case No.: 5:20-cv-09341-EJD
`ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO
`DISMISS
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`Case 5:20-cv-09341-EJD Document 63 Filed 09/16/21 Page 4 of 21
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`Demaray had engaged in affirmative acts directed at Applied or that Applied might be liable for
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`direct or indirect infringement related to its customers’ alleged infringement. Id. at 4-12.
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`Following the denial of its motion for preliminary injunction, Applied filed this separate
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`action for declaratory relief on December 24, 2020.2 Applied’s latest complaint includes new
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`factual allegations relating to Demaray’s conduct since Applied filed its first amended complaint
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`in Applied I. The complaint notes: (i) declarative statements from Intel and Samsung officials
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`asserting that neither company performs the post-installation modifications to Applied’s reactors
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`which Demaray contends takes place; (ii) Demaray’s refusal to grant Applied a covenant not to
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`sue; (iii) Demaray’s refusal to inform Applied or the Court if it will assert compulsory
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`counterclaims against Applied; (iv) Demaray’s requests to obtain discovery from Applied to
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`determine if Applied allegedly infringes the Asserted Patents; (v) that Demaray asked Applied to
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`produce materials regarding the reactors it supplies to Intel and Samsung; and (vi) representations
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`made by Demaray to the court in the WDTX Customer Cases about the need for discovery from
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`Applied to determine which of Intel’s and Samsung’s reactors allegedly infringe. Compl. ¶ 52.
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`Moreover, Applied alleges that Demaray’s filings and the continued litigation of the
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`WDTX Customer Cases also give rise to a substantial controversy between the parties because
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`Applied owns and/or is licensed to use the Asserted Patents. Demaray’s founder, Ernest Demaray,
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`and three other named inventors of the Asserted Patents are former and/or current employees of
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`Applied or Applied’s affiliate, Applied Komatsu. Compl. ¶ 18. In December of 1998, Mr.
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`Demaray along with other employees from Applied and Applied Komatsu, left to start a new
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`2 Applied also filed an administrative motion seeking leave to lodge its new declaratory judgment
`complaint and for it to become the operative complaint in Applied I. Applied I, Dkt. No. 48. The
`Court, however, denied Applied’s administrative motion to lodge its new declaratory judgment
`complaint. See Applied I, Dkt. No. 53. The Court found Applied’s request was procedurally
`improper and concluded that Applied was seeking a request for leave to amend or supplement the
`operative complaint in Applied I. Id. at 3. Because Applied had filed its latest complaint as a
`separate action, the Court related the new action to Applied I. See Applied I, Related Case Order,
`Dkt. No. 54. On January 25, 2021, Applied voluntarily dismissed the operative complaint in
`Applied I and all claims asserted therein without prejudice. See Applied I, Dkt. No. 55. As a
`result, Demaray’s pending motion to dismiss in Applied I was terminated. Id., Dkt. No. 62.
`Case No.: 5:20-cv-09341-EJD
`ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO
`DISMISS
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`Case 5:20-cv-09341-EJD Document 63 Filed 09/16/21 Page 5 of 21
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`company, Symmorphix, and began work on similar thin film technology they initially worked on
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`at Applied. Id. ¶ 18-19. Applied Komatsu and Symmorphix executed a Sale and Relationship
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`Agreement (“SRA”), which Applied alleges was later amended to grant Applied Komatsu a
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`perpetual, royalty-free license to “any patent applications filed for inventions, improvements, or
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`enhancements developed by Symmorphix relating to sputtered silicon deposition technology.” Id.
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`¶ 78. Applied also alleges that the SRA allowed Applied Komatsu to transfer or assign the license
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`to Applied and for Applied Komatsu’s customers to use the inventions as well. Id. Separately,
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`Applied contends that one of the named inventors of the Asserted Patents, Mukundan Narasimhan,
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`was an employee of Applied and under the provisions of his employee agreement, Mr.
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`Narasimhan’s ownership rights in the Asserted patents’ parent application were automatically
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`assigned to Applied. Id. ¶ 90.
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`Applied now seeks (1) a declaration that Applied’s reactors, including those in the Endura
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`product line, do not directly or indirectly infringe any claim of the ‘276 patent; (2) a declaration
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`that Applied’s reactors, including those in the Endura product line, do not directly or indirectly
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`infringe any claim of the ‘657 patent; (3) a declaration that Applied holds a non-exclusive,
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`perpetual, royalty free license to the Asserted Patents; and (4) a declaration that Applied’s reactors
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`cannot infringe the Asserted Patents because of an assignment of rights to Applied and Demaray’s
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`failure to join all co-owners. In response, Demaray has filed the instant motion to dismiss, seeking
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`dismissal under Federal Rules of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction
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`and 12(b)(6) for failure to state a claim upon which relief can be granted.
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`II. LEGAL STANDARDS
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`A.
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`Federal Rule of Civil Procedure 12(b)(1)
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`A defendant may move to dismiss for lack of subject matter jurisdiction pursuant to Rule
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`12(b)(1) of the Federal Rules of Civil Procedure. Although lack of statutory standing requires
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`dismissal for failure to state a claim under Rule 12(b)(6), lack of Article III standing requires
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`dismissal for want of subject matter jurisdiction under Rule 12(b)(1). See Maya v. Centex Corp.,
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`Case No.: 5:20-cv-09341-EJD
`ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO
`DISMISS
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`Northern District of California
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`United States District Court
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`Case 5:20-cv-09341-EJD Document 63 Filed 09/16/21 Page 6 of 21
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`658 F.3d 1060, 1067 (9th Cir. 2011).
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`“A Rule 12(b)(1) jurisdictional attack may be facial or factual.” Safe Air for Everyone v.
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`Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). “In a facial attack, the challenger asserts that the
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`allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction.”
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`Id. The Court “resolves a facial attack as it would a motion to dismiss under Rule 12(b)(6):
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`Accepting the plaintiff’s allegations as true and drawing all reasonable inferences in the plaintiff’s
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`favor, the court determines whether the allegations are sufficient as a legal matter to invoke the
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`court’s jurisdiction.” Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014). “[I]n a factual
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`attack,” on the other hand, “the challenger disputes the truth of the allegations that, by themselves,
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`would otherwise invoke federal jurisdiction.” Safe Air for Everyone, 373 F.3d at 1039. “In
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`resolving a factual attack on jurisdiction,” the Court “may review evidence beyond the complaint
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`without converting the motion to dismiss into a motion for summary judgment.” Id. The Court
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`“need not presume the truthfulness of the plaintiff’s allegations” in deciding a factual attack. Id.
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`Once the defendant has moved to dismiss for lack of subject matter jurisdiction under Rule
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`12(b)(1), the plaintiff bears the burden of establishing the Court’s jurisdiction. See Chandler v.
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`State Farm Mut. Auto Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010).
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`B. Federal Rule of Civil Procedure 12(b)(6)
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`A complaint survives a motion to dismiss under Rule 12(b)(6) if it contains a “short and
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`plain statement of the claim showing that the pleader is entitled to relief.” Ashcroft v. Iqbal, 556
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`U.S. 662, 663 (2009). A claim must be “plausible on its face,” which means that the Court can
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`“draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.; see
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`also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In other words, “a plaintiff’s
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`obligation to provide the grounds of his entitlement to relief requires more than labels and
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`conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly,
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`550 U.S. at 555 (internal quotations and alterations omitted). Allegations of fact are taken as true
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`and construed in the light most favorable to the nonmoving party. See Newdow v. Lefevre, 598
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`Case No.: 5:20-cv-09341-EJD
`ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO
`DISMISS
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`Case 5:20-cv-09341-EJD Document 63 Filed 09/16/21 Page 7 of 21
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`F.3d 638, 642 (9th Cir. 2010), cert. denied, 131 S. Ct. 1612 (Mar. 7, 2011).
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`III. DISCUSSION
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`A.
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` Subject Matter Jurisdiction
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`Demaray first argues that this Court lacks subject matter jurisdiction over Applied’s claims
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`for declaratory relief. Mot. at 7-16. Generally, dismissal for lack of subject matter jurisdiction
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`under Federal Rule of Civil Procedure 12(b)(1) “is a procedural question not unique to patent
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`law,” and is therefore governed by regional circuit law. Toxgon Corp. v. BNFL, Inc., 312 F.3d
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`1379, 1380 (Fed. Cir. 2002). However, “[w]hether an actual case or controversy exists so that a
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`district court may entertain an action for declaratory judgment of non-infringement and/or
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`invalidity is governed by Federal Circuit law.” 3M Co. v. Avery Dennison Corp., 673 F.3d 1372,
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`1377 (Fed. Cir. 2012).
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`The Declaratory Judgment Act states that, “[i]n the case of actual controversy within its
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`jurisdiction, . . . any court of the United States, upon the filing of an appropriate pleading, may
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`declare the rights and other legal relations of any interested party in seeking such declaration.” 28
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`U.S.C. § 2201(a). The phrase “actual controversy” refers to “cases” and “controversies” that are
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`justiciable under Article III of the Constitution. Ass’n for Molecular Pathology v. U.S. Pat. &
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`Trademark Off., 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). Thus, without a case or
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`controversy, there cannot be a claim for declaratory relief. ActiveVideo Networks, Inc. v. Trans
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`Video Elecs., Ltd., 975 F. Supp. 2d 1083, 1086 (N.D. Cal. 2013).
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`The Court has subject matter jurisdiction in a declaratory judgment action when “the facts
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`alleged, under all the circumstances, show that there is a substantial controversy, between parties
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`having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a
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`declaratory judgment.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). Under
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`the “all the circumstances” test, courts have “unique and substantial discretion in deciding whether
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`to declare the rights of litigants.” Id. at 136. In case law following MedImmune, the Federal
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`Case No.: 5:20-cv-09341-EJD
`ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO
`DISMISS
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`Case 5:20-cv-09341-EJD Document 63 Filed 09/16/21 Page 8 of 21
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`Circuit has explained that, in the context of patent disputes, an actual controversy requires “an
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`injury in fact traceable to the patentee,” which requires “both (1) an affirmative act by the patentee
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`related to the enforcement of his patent rights and (2) meaningful preparation to conduct
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`potentially infringing activity.” Association for Molecular Pathology, 689 F.3d at 1318.
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`In order to meet the affirmative act requirement, “more is required than ‘a communication
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`from a patent owner to another party, merely identifying its patent and the other’s product line.’
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`[But] [h]ow much more is required is determined on a case-by-case analysis.” 3M Co., 673 F.3d
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`at 1378–79. On the other end of the spectrum is an explicit infringement allegation, which shows
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`“‘there is, necessarily, a case or controversy adequate to support declaratory judgment
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`jurisdiction.’” See Hewlett-Packard Co. v. Acceleron LLC, 587 F.3d 1358, 1362 (Fed. Cir. 2009)
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`(quoting Cardinal Chem. Co. v. Morton Int’l, Inc., 508 U.S. 83, 96, 113 (1993)). The factual
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`scenarios that fall in between require case-by-case analysis, and the objective actions of the
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`patentee are the subject of that inquiry. See 3M Co., 673 F.3d at 1379; Hewlett-Packard Co., 587
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`F.3d at 1363. The patentee need not explicitly threaten to sue or demand a license, but its actions
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`must give reason to believe that it is asserting its rights under the patents. See Hewlett-Packard
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`Co., 587 F.3d at 1362–63.
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`
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`Applied contends that Demaray’s suits against Intel and Samsung created an actual
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`controversy under three theories: first, because all of Demaray’s affirmative acts as alleged in the
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`complaint have been directed at Applied’s products; second, because Demaray’s allegations
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`against Applied’s customers constituted an implied assertion of direct infringement; and third,
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`because Demaray’s allegations against Applied’s customers also constituted an implied assertion
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`of indirect infringement against Applied. Ultimately, a decision must be made as to whether “the
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`totality of the circumstances establishes a justiciable controversy.” Danisco U.S. Inc. v.
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`Novozymes A/S, 744 F.3d 1325, 1327 (Fed. Cir. 2014).
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` Controversy Based on Demaray’s Affirmative Acts Directed at Applied
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`Demaray argues there is no case or controversy between the parties because it is currently
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`Case No.: 5:20-cv-09341-EJD
`ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO
`DISMISS
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`Northern District of California
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`not in a position to determine whether Applied’s reactors, standing alone, infringe the Asserted
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`Patents. Reply iso Mot. at 3. Applied disagrees, arguing instead that Demaray was aware prior to
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`Applied’s current action that Intel and Samsung do not perform any post-installation
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`configurations on their reactors. As such, Applied contends that Demaray’s affirmative acts have
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`been directed specifically at its reactors and not at any actions taken by Intel and Samsung. Opp’n
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`at 12-13.
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`Before determining whether Demaray has engaged in an affirmative act sufficient to confer
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`jurisdiction over Applied’s declaratory judgment claims, the Court addresses which materials and
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`events referenced in Applied’s complaint should be used to make this assessment. As discussed
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`above, Applied filed its operative complaint on December 24, 2020. It is well-settled that the
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`burden is on the declaratory judgment plaintiff “to establish that such jurisdiction existed at the
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`time the claim for declaratory relief was filed and that it has continued since.” Benitec Australia,
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`Ltd. v. Nucleonics, Inc., 495 F.3d 1340, 1344 (Fed. Cir. 2007). “[L]ater events may not create
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`jurisdiction where none existed at the time of filing” of the complaint. GAF Bldg. Materials
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`Corp., v. Elk Corp. of Dallas, 90 F.3d 479, 483 (Fed.Cir.1996) (internal citation omitted). As
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`such, events which occurred after Applied filed its operative complaint cannot substantiate the
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`existence of an objective controversy at the time of Applied’s filing. An actual controversy
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`between Applied and Demaray must have existed at the time Applied filed its complaint on
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`December 24, 2020.3
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`In analyzing affirmative acts, a court considers numerous factors and looks at the parties’
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`conduct and interactions as a whole. See ActiveVideo Networks, Inc., 975 F. Supp. 2d at 1087-88;
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`Akeena Solar, Inc. v. Zep Solar Inc., No. C-09-05040-JSW, 2010 WL 519838, at *4 (N.D. Cal.
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`Feb. 9, 2010). As relevant here, courts consider whether the patent holder took some affirmative
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`3 In addition to supplemental preliminary infringement contentions served in February 2021,
`Applied also relies on Intel and Samsung discovery responses and statements from discovery
`hearings post-dating the complaint. See Opp’n at 1, 4, 8, 11-14; see also Declaration of Philip Ou
`(“Ou Decl.”) Dkt. No. 37-5, Exs. C-D, L. The timing of these materials renders them irrelevant
`for purposes of the present motion.
`Case No.: 5:20-cv-09341-EJD
`ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO
`DISMISS
`
` 9
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`Northern District of California
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`United States District Court
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`Case 5:20-cv-09341-EJD Document 63 Filed 09/16/21 Page 10 of 21
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`acts directed at that plaintiff, not just broad and widespread enforcement activity. See Ass’n for
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`Molecular Pathology, 653 F.3d at 1344-48; see also Proofpoint, Inc. v. Innova Pat. Licensing,
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`LLC, No. 5:11-CV-02288-LHK, 2011 WL 4915847, at *2 (N.D. Cal. Oct. 17, 2011) (relying on
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`Ass’n for Molecular Pathology to find no affirmative acts supporting declaratory judgment
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`jurisdiction where there were no allegations that the patent holder “claimed a right to a royalty
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`from [the supplier], sent [the supplier] a cease-and-desist letter, or communicated with [the
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`supplier’s] employees”).
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`
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`In 3M Co., the Federal Circuit found that 3M had proven the existence of a case or
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`controversy because the defendant had “effectively charged” the plaintiff with infringement. 673
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`F.3d at 1379. The defendant had called 3M, identified a specific product that “[might] infringe,”
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`and mentioned the possibility of licensing. Id. When 3M declined the licensing offer two days
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`later, the defendant stated that it had performed analysis and would provide claim charts. Id. The
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`court found these interactions sufficient to establish a case or controversy and noted that the
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`absence of other factors, for example a deadline during licensing discussions, did not alter its
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`conclusion. Id. at 1380. Although 3M delayed filing suit for over a year, the court found that “the
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`relevant circumstances surrounding [the defendant’s] assertion of its patent rights appear to have
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`remain unchanged.” Id. The court was “disinclined to hold that the case or controversy between
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`the parties sufficiently dissipated” during that time. Id.
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`Here, the Court finds that Demaray’s affirmative acts are sufficient to establish that there is
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`“a substantial controversy” between the parties that is “of sufficient immediacy and reality to
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`warrant the issuance of a declaratory judgment.” See MedImmune, Inc., 549 U.S. at 127.
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`Although the Court was left searching for a substantial controversy in Applied I, Demaray has
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`since sought discovery from Applied as part of its WDTX Customer Cases. Indeed, on December
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`12, 2020, Demaray served Applied with subpoenas for documents and deposition testimony the
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`configuration of Applied reactors sold to Intel and Samsung. Compl. ¶¶ 14, 49-50, Exs. F (“Intel
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`Subpoena”), G (“Samsung Subpoena”). The subpoenas were directed at “each Applied reactor
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`Case No.: 5:20-cv-09341-EJD
`ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO
`DISMISS
`
` 10
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`Northern District of California
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`United States District Court
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`Case 5:20-cv-09341-EJD Document 63 Filed 09/16/21 Page 11 of 21
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`supplied to Intel or Samsung with a RMS PVD chamber” and specifically requested documents
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`discussing, for example, “the configuration of the reactor” (Request No. 6); “any filters configured
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`to be used with the power sources” (Request No. 6); “the power sources to the target and the
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`power sources to the substrate” (Request No. 9); “the use of pulsed DC power to the target in
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`RMS PVD chambers in Applied reactors” (Request No. 10); “the use of an RF bias on the
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`substrate and pulsed DC power to the target in RMS PVD chamber in Applied reactors” (Request
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`No. 11); and “the use of a filter with a RMS PVD chamber in Applied reactors with an RF bias on
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`the substrate and pulsed DC power to the target” (Request No. 12), as well as deposition testimony
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`regarding the same. Id. Importantly, these hardware components and their “configuration” in the
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`reactors are what Demaray previously argued were configurations made by Intel and Samsung.
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`Compl. ¶ 14.
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`
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`Demaray argues that it only seeks documents from Applied and does not make objective
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`allegations about Applied’s reactors. Opp’n at 7. Further, Demaray contends it sought this
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`information from Applied to respond to allegations raised by Intel and Samsung regarding the
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`potential transfer of the WDTX Customer Cases. Yet, Demaray has stated that the discovery
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`sought was necessary “to determine which reactors are in dispute,” “[g]iven Applied’s
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`involvement in the development, manufacture, assembly and installation of reactors which are
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`then used by Intel/Samsung in an infringing manner.” Compl. ¶¶ 15-16, 50., Ex. H. When
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`considered along with Demaray’s other affirmative acts, including its October 9, 2020 preliminary
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`infringement contentions, the subpoena requests demonstrate its intent to enforce its patents and
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`the threat of future injury facing Applied.
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`
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`Although Demaray continues to argue that there is not a substantial controversy because it
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`was not in a position to affirmatively assert that Applied’s reactors, standing alone, infringe the
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`Asserted Patents, this is merely one factor to be considered in the totality of the circumstances.
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`Moreover, “[t]he test [for declaratory judgment jurisdiction in patent cases], however stated, is
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`objective. . . .” Arrowhead Indus. Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 736 (Fed. Cir.
`
`Case No.: 5:20-cv-09341-EJD
`ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO
`DISMISS
`
` 11
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`Northern District of California
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`United States District Court
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`
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`Case 5:20-cv-09341-EJD Document 63 Filed 09/16/21 Page 12 of 21
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`1988). “Indeed, it is the objective words and actions of the patentee that are controlling.” BP
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`Chemicals Ltd. v. Union Carbide Corp., 4 F.3d 975, 979 (Fed. Cir. 1993); see also Hewlett-
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`Packard Co., 587 F.3d at 1362-1363.
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`
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`Viewed in the light most favorable to Applied, Demaray took the affirmative steps of
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`alleging infringement against Applied products such as, creating preliminary infringement
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`contentions which included references to Applied’s reactors, refusing to grant Applied a covenant
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`not to sue, requesting discovery from Applied to determine if Applied allegedly infringes the
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`Asserted Patents, and making representations about the need for discovery from Applied to
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`determine which of Intel’s and Samsung’s reactors allegedly infringe. Under the totality of
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`circumstances, there is a “definite and concrete” dispute between the two parties regarding
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`Demaray’s Asserted Patents which arose and remains active following Applied’s declaratory
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`judgment action.
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` There Is An Actual Controversy That Applied Might Be Liable for Direct
`Infringement
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`
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`The Court also has subject matter jurisdiction over Applied’s declaratory judgment action
`
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`
`
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`because the claims and initial infringement contentions presented in Demaray’s WDTX Customer
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`Cases suggest a substantial direct infringement controversy. See 35 U.S.C. § 271(a). Pursuant to
`
`§ 271(a) of the Patent Act, “whoever without authority makes, uses, offers to sell, or sells any
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`patented invention, within the United States or imports into the United States any patented
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`invention during the term of the patent therefor, infringes the patent.” 35 U.S.C. § 271(a). In the
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`WDTX Customer Cases, Demaray has accused Intel and Samsung of directly infringing
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`configuration and method claims of the Asserted Patents; Demaray alleges that both Intel and
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`Samsung are in violation of § 271(a) of the Patent Act since they have continued “making, using,
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`offering to sell, and selling . . . semiconductor manufacturing equipment including reactive
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`magnetron sputter reactors configured as described in the claims of the ‘276 patent” and “using the
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`claimed methods for reactive sputtering in an infringing manner to produce semiconductor
`
`Case No.: 5:20-cv-09341-EJD
`ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO
`DISMISS
`
` 12
`
`Northern District of California
`
`United States District Court
`
`
`
`Case 5:20-cv-09341-EJD Document 63 Filed 09/16/21 Page 13 of 21
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