Case 3:14-cv-02235-JAH-DHB Document 53 Filed 09/11/14 Page 1 of 17
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
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`APPLE INC.,
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`Plaintiff,
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`v.
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`WI-LAN INC.; and OPEN NETWORK
`SOLUTIONS, INC.,
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`Defendants.
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`________________________________/
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`Plaintiff Apple Inc. brought this action against Defendants
`Wi-LAN Inc. and Open Network Solutions, Inc. (ONS), seeking
`declaratory judgment of non-infringement, invalidity, and
`unenforceability of seven patents.1 Each Defendant moves to sever
`its case from that of the other Defendant, to transfer, and to
`dismiss certain claims. Plaintiff opposes the motions. After
`considering the parties' submissions and oral argument, the Court
`GRANTS Wi-LAN's motion (Docket No. 25) to sever and transfer and
`to dismiss one count with leave to amend; and GRANTS ONS's motion
`(Docket No. 26) to sever and to dismiss one count with leave to
`amend, and denies its motion to transfer.
`BACKGROUND
`The following facts are alleged in the amended complaint.
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`Apple is a corporation located in Cupertino, California, which
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`No. C 14-2838 CW
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`ORDER GRANTING IN
`PART DEFENDANTS'
`MOTIONS TO SEVER,
`TRANSFER, AND
`DISMISS (Docket
`Nos. 25, 26)
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`
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`1 At issue are United States Patent Nos. 8,457,145;
`8,462,723; 8,462,761; 8,615,020; and 8,537,757 (collectively, the
`Wi-LAN patents-in-suit); and United States Patent Nos. 6,745,259
`and 6,907,476 (collectively, the ONS patents-in-suit).
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`For the Northern District of California
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`United States District Court
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`manufactures computers, mobile phones, tablets, portable digital
`media players, and other consumer electronics products.
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`Wi-LAN is a Canadian corporation with its principal place of
`business in Ottawa, Ontario, Canada. ONS is a wholly-owned
`subsidiary of Wi-LAN, incorporated in Delaware just five months
`ago.2 Both Wi-LAN and ONS are primarily in the business of
`acquiring and asserting patents.
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`Before Apple initiated this case, Wi-LAN had sued Apple four
`times: Wi-LAN Inc. v. Acer, Inc., et al., Case No. 2:07-cv-473
`(E.D. Texas); Wi-LAN Inc. v. Apple Inc., Case No. 6:11-cv-453
`(E.D. Texas); Wi-LAN Inc. v. Apple Inc., Case No. 6:12-cv-920
`(E.D. Texas); and Wi-LAN USA, Inc. v. Apple Inc., Case No. 1:12-
`cv-24318 (S.D. Fla.). The case initially brought in the Southern
`District of Florida has since been transferred on Apple's motion
`to the Southern District of California,3 where it has been
`assigned the case number 13-cv-798-DMS(BLM) (the 2013 CASD case).
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`On June 13, 2014, ONS sent a letter to Apple alleging that
`several Apple products, including Apple TV, the iPhone, the iPad,
`and the iPod Touch, "fall with[in] the scope of the claims" of the
`ONS patents-in-suit, and asking Apple to respond by June 27, 2014.
`Am. Compl. ¶ 18; Decl. Scarsi Ex. D (Docket No. 35-4) (ONS Notice
`Letter). On June 16, 2014, Wi-LAN sent an email to Apple alleging
`
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`2 ONS represents that its corporate headquarters are in Costa
`Mesa, California.
`3 Wi-LAN USA, Inc. v. Apple Inc., 2013 U.S. Dist. LEXIS 47509
`(S.D. Fla.) (ordering transfer to Southern District of
`California).
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`For the Northern District of California
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`United States District Court
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`Case 3:14-cv-02235-JAH-DHB Document 53 Filed 09/11/14 Page 3 of 17
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`that various Apple products infringed the Wi-LAN patents-in-suit.
`Am. Compl. ¶ 15; Decl. Scarsi Ex. I (Docket No. 35-9).
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`Apple initiated this case on June 19, 2014, by filing its
`complaint against Wi-LAN; later that same day, Apple filed its
`amended complaint asserting claims against both Wi-LAN and ONS.
`On June 23, 2014, Wi-LAN sued Apple in the United States District
`Court for the Southern District of California, alleging
`infringement of the same five Wi-LAN patents that are at issue in
`this case. Wi-LAN, Inc. v. Apple Inc., No. 14-cv-1507-DMS(BLM)
`(S.D. Cal.) (the 2014 CASD case).4
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`Wi-LAN moves (1) to sever Apple's claims against it from
`Apple's claims against ONS; (2) to transfer Apple's claims against
`it to the Southern District of California; and (3) to dismiss
`Apple's claim for unenforceability due to unclean hands for
`failure to state a claim upon which relief can be granted.
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`ONS moves (1) to dismiss Apple's claims against it for lack
`of declaratory judgment jurisdiction; (2) to dismiss Apple's claim
`for unenforceability due to unclean hands for failure to state a
`claim upon which relief may be granted; (3) to sever Apple's
`claims against it from Apple's claims against Wi-LAN; and (4) to
`transfer Apple's claims against it to the District of Delaware.
`
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`4 In the Southern District of California, that case was
`reassigned to the Hon. Dana M. Sabraw as related to the 2013 CASD
`case. Wi-LAN, Inc., No. 14-cv-1507-DMS(BLM), Report of Clerk and
`Order (Docket No. 7). Apple has moved to dismiss the 2014 CASD
`case on the basis that its lawsuit in this Court was the first-
`filed action. Id., Mot. Dismiss (Docket No. 18). That motion is
`set for decision without oral argument, and the parties have been
`instructed to advise that court of this Court's ruling on the
`present motions. Id., Order (Docket No. 23).
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`United States District Court
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`DISCUSION
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`I. ONS's Motion to Dismiss for Lack of Declaratory Judgment
`Jurisdiction
`ONS argues that, because it gave Apple until June 27, 2014,
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`to respond to the ONS Notice Letter, there was no "substantial
`conflict" of "sufficient immediacy and reality" to create an
`actual controversy when Apple filed suit on June 19, 2014, and
`therefore, the Court lacks declaratory judgment jurisdiction.
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`The Declaratory Judgment Act provides, "In a case of actual
`controversy within its jurisdiction, any court of the United
`States . . . may declare the rights and other legal relations of
`any interested party seeking such declaration, whether or not
`further relief is or could be sought." 28 U.S.C. § 2201. The
`"actual controversy" requirement of the Declaratory Judgment Act
`is the same as the "case or controversy" requirement of Article
`III of the United States Constitution. Teva Pharm. USA, Inc. v.
`Novartis Pharm. Corp., 482 F.3d 1330, 1337 (Fed. Cir. 2007). The
`declaratory judgment plaintiff must establish that the "facts
`alleged under all the circumstances show that there is a
`substantial controversy between parties having adverse legal
`interests of sufficient immediacy and reality to warrant the
`issuance of declaratory judgment." Micron Tech., Inc. v. Mosaid
`Techs., Inc., 518 F.3d 897, 901 (Fed. Cir. 2008) (citing
`MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007)). In
`a patent case, "whether there has been potentially infringing
`activity or meaningful preparation to conduct potentially
`infringing activity[] 'remains an important element in the
`totality of circumstances which must be considered in determining
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`Case 3:14-cv-02235-JAH-DHB Document 53 Filed 09/11/14 Page 5 of 17
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`whether a declaratory judgment is appropriate.'" Prasco, LLC v.
`Medicis Pharm. Corp., 537 F.3d 1329, 1336 n.4 (Fed. Cir. 2008)
`(quoting Cat Tech LLC v. TubeMaster, Inc., 528 F.3d 871, 880 (Fed.
`Cir. 2008)).
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`Here, the totality of the circumstances--specifically, ONS's
`history of recent litigation asserting infringement of the ONS
`patents-in-suit and the content of the ONS Notice Letter--
`demonstrates that there was an actual controversy when Apple filed
`this suit.
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`First, the ONS Notice Letter names several specific Apple
`products that it alleges "fall within the scope of the claims of
`the '476 and '259 patents," ONS Notice Letter at 1, and there is
`no dispute that Apple has engaged in potentially infringing
`activity.
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`In addition, "the Federal Circuit and several other courts
`have held that a patentee's history of litigation with other
`parties is an appropriate factor for courts to consider in
`determining whether subject matter jurisdiction exists under the
`Declaratory Judgment Act." Pharmanet, Inc. v. DataSci LLC, 2009
`U.S. Dist. LEXIS 11661, at *19 (D.N.J.) (citing, inter alia,
`Prasco, 537 F.3d at 1341)). Here, ONS acknowledges that between
`May 16, 2014, and June 19, 2014, the date on which Apple initiated
`this case, ONS filed sixteen suits in the District of Delaware
`alleging infringement of the ONS patents-in-suit.5
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`5 In addition, ONS filed a seventeenth suit in Delaware the
`same day that Apple filed this suit, as well as two more suits in
`the following week, for a total of nineteen suits alleging
`infringement of the ONS patents-in-suit.
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`Case 3:14-cv-02235-JAH-DHB Document 53 Filed 09/11/14 Page 6 of 17
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`District courts have found that notice letters similar to the
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`ONS Notice Letter were sufficient to create an actual controversy.
`For example, in Pharmanet, the defendant's attorney sent the
`plaintiffs a letter that identified a patent that the defendant
`owned, offered to license that patent to the plaintiff, and
`provided a date by which the defendant expected the plaintiff to
`respond. 2009 U.S. Dist. LEXIS 11661, at *5-6. Rather than
`responding, the plaintiff filed suit seeking declaratory judgment
`of non-infringement and invalidity. Id. at 6-7. Notwithstanding
`the fact that the deadline in the defendant's notice letter had
`not passed when the lawsuit was filed, the district court found
`that it was "objectively reasonable for a reader to perceive that
`failure to respond by that date would result in the filing of an
`infringement suit against them." Id. at *27-28. Ultimately, the
`Pharmanet court held that the defendant's notice letter, combined
`with the defendant's prior litigation involving the patent at
`issue and other factors, was "sufficient to establish an Article
`III case or controversy between the parties." Id. at *28-29.
`
`Similarly, in Crutchfield New Media, LLC v. Charles E. Hill &
`Assocs., Inc., 2007 U.S. Dist. LEXIS 33264 (S.D. Ind.), the
`defendant sent a letter to the plaintiff that (1) provided
`information about certain patents that it owned and litigation it
`had pursued concerning those patents, and (2) provided a deadline
`for the plaintiff to take a license under those patents. Id. at
`*2. The district court found that the contents of that letter
`"indicate to any reasonable reader that a substantial controversy
`exists between parties with adverse legal interests and it is of
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`Case 3:14-cv-02235-JAH-DHB Document 53 Filed 09/11/14 Page 7 of 17
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`sufficient immediacy and reality to warrant the issuance of a
`declaratory judgment." Id. at *6.
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`The ONS Notice Letter is substantially similar to the notice
`letters at issue in Pharmanet and Crutchfield: it (1) advised
`Apple that ONS has retained counsel, (2) identified specific
`patents and alleged that various Apple products "fall within the
`scope of the claims" of those patents, (3) offered an opportunity
`to "discuss" those patents, and (4) provided a deadline by which
`ONS expected a response. Therefore, the Court finds that the ONS
`Notice Letter, considered in the context of ONS's recent Delaware
`litigation asserting infringement of the ONS patents-in-suit,
`created an actual controversy sufficient to establish declaratory
`judgment jurisdiction, and ONS's motion to dismiss Apple's
`declaratory judgment claims is DENIED.
`II. Motions to Sever
`
`Each Defendant argues that Apple's claims against it are
`improperly joined with claims against the other Defendant and
`should be severed.
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`Parties may be joined as defendants only if "(A) any right to
`relief is asserted against them jointly, severally, or in the
`alternative with respect to arising out of the same transaction,
`occurrence, or series of transactions or occurrences; and (B) any
`question of law or fact common to all defendants will arise in the
`action." Fed. R. Civ. P. 20(a)(2). As a practical matter, this
`means that claims involving different parties cannot be joined
`together in one complaint if the facts giving rise to the claims
`are not factually related in some way--that is, if there is not
`"similarity in the factual background." Coughlin v. Rogers, 130
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`F.3d 1348, 1350 (9th Cir. 1997). General allegations are not
`sufficient to support similarity when the specifics are different.
`Id.
`Federal Rule of Civil Procedure 21 provides, "On motion or on
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`its own, the court may at any time, on just terms, add or drop a
`party. The court may also sever any claim against a party." A
`court, in its discretion, may sever parties, "so long as no
`substantial right will be prejudiced by the severance." Coughlin,
`130 F.3d at 1350. The court may sever the claims against a party
`in the interest of fairness and judicial economy and to avoid
`prejudice, delay or expense. Coleman v. Quaker Oats Co., 232 F.3d
`1271, 1296-97 (9th Cir. 2000).
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`Apple argues that its non-infringement and invalidity claims
`"will raise common issues of law and fact" because certain Apple
`products are alleged to infringe both Wi-LAN patents-in-suit and
`ONS patents-in-suit. It further argues that its unclean hands
`claim against both Defendants arises out of the same transaction
`or occurrences. However, the Court dismisses that claim against
`ONS, see Part IV, infra, so it does not serve as a basis to
`warrant joinder of Apple's non-infringement and invalidity claims
`against Wi-LAN and ONS.
`
`Defendants' motions to sever are GRANTED, and Apple's claims
`against ONS are hereby SEVERED from this action.
`III. Motions to Transfer
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`A. Wi-LAN's Motion to Transfer to the Southern District of
`California
`Wi-LAN argues (1) that the first-to-file rule requires
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`transfer of Apple's case against it to the Southern District of
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`Case 3:14-cv-02235-JAH-DHB Document 53 Filed 09/11/14 Page 9 of 17
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`California; and, in the alternative, (2) that transfer is
`appropriate under 28 U.S.C. § 1404(a).
`
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`1. The First-to-File Rule
`
`"There is a generally recognized doctrine of federal comity
`which permits a district court to decline jurisdiction over an
`action when a complaint involving the same parties and issues has
`already been filed in another district." Pacesetter Sys., Inc. v.
`Medtronic, Inc., 678 F.2d 93, 94-95 (9th Cir. 1982). This
`doctrine, known as the first-to-file rule, "gives priority, for
`purposes of choosing among possible venues when parallel
`litigation has been instituted in separate courts, to the party
`who first establishes jurisdiction." Northwest Airlines, Inc. v.
`Am. Airlines, Inc., 989 F.2d 1002, 1006 (8th Cir. 1993). In
`applying the first-to-file rule, a court looks to three threshold
`factors: "(1) the chronology of the two actions; (2) the
`similarity of the parties; and (3) the similarity of the issues."
`Z-Line Designs, Inc. v. Bell'O Int'l LLC, 218 F.R.D. 663, 665
`(N.D. Cal. 2003).
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`When cases between the same parties raising the same issues
`are pending in two or more federal districts, the general rule is
`to favor the forum of the first-filed action, regardless of
`whether it is a declaratory judgment action. Micron Tech, 518
`F.3d at 904. The court of the actual first-filed case should rule
`on motions to dismiss or transfer based on exceptions to the
`first-to-file rule or on the convenience factors. See id. Here,
`the parties dispute which is the first-filed action. Apple argues
`that the first-filed action is the present suit, which was filed
`before Wi-LAN filed the 2014 CASD case. Wi-LAN argues that the
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`Case 3:14-cv-02235-JAH-DHB Document 53 Filed 09/11/14 Page 10 of 17
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`2014 CASD case is the first-filed action because it is related to
`the 2013 CASD case, which predates the present suit (and which was
`initially filed in 2012 in the Southern District of Florida).
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`Although the earlier 2013 CASD case involves the same
`parties6 and similar patents, that does not render the 2014 CASD
`case first-filed over this case. This case was filed first of the
`two, and this Court will proceed to determine whether it should
`nonetheless be transferred to the Southern District of California
`based on an exception to the rule or based on the convenience
`factors under 28 U.S.C. § 1404(a). The first-to-file rule "serves
`the purpose of promoting efficiency well and should not be
`disregarded lightly." Church of Scientology of Calif. v. U.S.
`Dep't of Army, 611 F.2d 738, 750 (9th Cir. 1979). The rule favors
`the forum of the first-filed case "unless consideration of
`judicial and litigant economy, and the just and effective
`disposition of disputes, requires otherwise." Elecs. for Imaging,
`Inc. v. Coyle, 394 F.3d 1341, 1347 (Fed. Cir. 2005). No such
`exception to the first-to-file rule is found here.
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`2. Transfer Pursuant to 28 U.S.C. § 1404(a)
`
`Title 28 U.S.C. § 1404(a) provides, "For the convenience of
`the parties and witnesses, in the interest of justice, a district
`court may transfer any civil action to any other district or
`division where it might have been brought." A district court has
`broad discretion to adjudicate motions for transfer on a case-by-
`
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`6 Both Wi-LAN, Inc. (Defendant in the present case) and Wi-
`LAN USA, Inc. are plaintiffs in the 2014 CASD case; however,
`neither party alleges that this distinction constitutes a material
`difference in the makeup of the parties in these actions.
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`United States District Court
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`case basis, considering factors of convenience and fairness. See
`Stewart Org. Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988); Sparling
`v. Hoffman Constr. Co., 864 F.2d 635, 639 (9th Cir. 1988). Under
`§ 1404(a), the district court may consider: (1) the location where
`the relevant events occurred, (2) the forum that is most familiar
`with the governing law, (3) the plaintiff's choice of forum,
`(4) the respective parties' contacts with the forum, (5) the
`contacts relating to the plaintiff's cause of action in the chosen
`forum, (6) the differences in the costs of litigation in the two
`fora, (7) the availability of compulsory process to compel
`attendance of unwilling non-party witnesses, and (8) the ease of
`access to sources of proof. Jones v. GNC Franchising, Inc., 211
`F.3d 495, 498 (9th Cir. 2000). The party seeking transfer bears
`the burden of proof and generally "must make a strong showing of
`inconvenience to warrant upsetting the plaintiff's choice of
`forum." Decker Coal v. Commonwealth Edison Co., 805 F.2d 834, 843
`(9th Cir. 1986).
`Where transfer under § 1404(a) would promote judicial
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`economy, such transfer may be "in the interest of justice."
`London & Hull Mar. Ltd. v. Eagle Pac. Ins. Co., 1996 U.S. Dist.
`LEXIS 22893, *12-13 (N.D. Cal.). Here, the Court finds that
`judicial economy and the interests of justice, as well as the
`second, seventh, and eighth GNC Franchising factors, favor
`transfer to the Southern District of California.
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`The second GNC Franchising factor, which forum is more
`familiar with the governing law, strongly favors transfer.
`Although both the Northern District of California and the Southern
`District of California are familiar with patent law, the Southern
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`Case 3:14-cv-02235-JAH-DHB Document 53 Filed 09/11/14 Page 12 of 17
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`District is much more familiar with the law as applied to the
`patents at issue. Of the five Wi-LAN patents-in-suit, one is a
`continuation of one of the patents in the 2013 CASD case, and
`three others are continuations in part of that same patent. Thus,
`four of the five Wi-LAN patents-in-suit in the present case share
`the same or substantially the same patent specifications and
`drawings with one of the 2013 CASD case patents, and involve
`overlapping claims. Apple acknowledges that "[m]ost of the Wi-LAN
`Patents-In-Suit are included in the same patent family as one of
`the patents at issue in" the 2013 CASD case. Am. Compl. ¶ 15. In
`presiding over the 2013 CASD case, Judge Sabraw has developed a
`familiarity with the technical issues and has issued a Markman
`ruling. The Southern District's familiarity with the technical
`issues in this case makes the Southern District a more efficient
`venue for judicial economy.
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`In addition, the seventh and eighth GNC Franchising factors,
`the availability of compulsory process and the ease of access to
`sources of proof, strongly favor transfer. As Apple acknowledged
`when it sought transfer of the 2013 CASD case from Florida, many
`of the inventors and other witnesses reside in the Southern
`District of California--the same inventors and other witnesses
`that Apple now proposes to bring to the Northern District of
`California. "The convenience of non-party witnesses should be
`given significant consideration because they may be compelled to
`testify unwillingly." Ambriz v. Matheson Tri-Gas, 2014 U.S. Dist.
`LEXIS 79660, at *8 (N.D. Cal.) (citing Strigliabotti v. Franklin
`Res., Inc., 2004 U.S. Dist. LEXIS 31965, at *17 (N.D. Cal.)).
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`Case 3:14-cv-02235-JAH-DHB Document 53 Filed 09/11/14 Page 13 of 17
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`Although Plaintiff's choice of forum is given weight, the
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`Court finds that these factors outweigh Plaintiff's choice in this
`case. Wi-LAN's motion to transfer is GRANTED. After severance of
`the claims against ONS, Apple's claims against Wi-LAN will be
`TRANSFERRED to the Southern District of California.
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`B. ONS's Motion to Transfer to the District of Delaware
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`ONS argues that transfer of the claims against it to the
`District of Delaware is appropriate under 28 U.S.C. § 1404(a) and
`would promote efficiency by allowing Apple's non-infringement and
`invalidity claims to be consolidated with ONS's various
`infringement lawsuits against other defendants, all of which
`concern the same ONS patents-in-suit.
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`Although transfer to a court familiar with the patents-in-
`suit may promote efficiency, that alone is not dispositive.
`Micron Tech, 518 F.3d at 905; see also MedImmune, LLC v. PDL
`BioPharma, Inc., 2009 U.S. Dist. LEXIS 36765, at *9 (N.D. Cal.)
`(same); ICU Med., Inc. v. Rymed Techs., Inc., 2008 U.S. Dist.
`LEXIS 4983, at *13 (D. Del.) (same). In MedImmune, a court in
`this District denied a motion to transfer to the District of
`Delaware, where a case involving some of the same patents (but
`brought by PDL BioPharma against a different defendant) remained
`in its early stages. 2009 U.S. Dist. LEXIS 36765, at *10. Here,
`ONS's motion to transfer is similar to that in MedImmune, where
`the potential transferee court may be familiar with the patents at
`issue but not with all of the parties. Wi-LAN's motion to
`transfer differs, because the Southern District of California
`already is familiar with both the patents and the parties.
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`Although, as ONS argues, transfer of Apple's claims against
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`ONS to the District of Delaware might avoid conflicting claim
`constructions, should that court complete its claim constructions
`first this Court would "accord deference to the prior claim
`construction ruling as persuasive authority." Id. at *10 (citing
`Mendenhall v. Cedarapids, Inc., 5 F.3d 1557, 1570 (Fed. Cir.
`1993)). In addition, ONS argues that litigation in a single
`district would be more convenient for both the parties and the
`witnesses than litigation in two widely separated districts.
`However, both Apple and ONS have their headquarters in California,
`and Apple represents that many of its potential witnesses are in
`California.
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`Ultimately, whatever marginal convenience might be achieved
`by transfer of this case to the District of Delaware is not
`sufficient to overcome the presumption in favor of a plaintiff's
`choice of forum, and the motion to transfer Apple's claims against
`ONS to Delaware is DENIED.
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`IV. Motions to Dismiss Apple's Count XV (Unenforceability due to
`Unclean Hands) Pursuant to Rule 12(b)(6)
`Wi-LAN and ONS both argue that Apple has failed to allege
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`facts sufficient to state a claim for unenforceability due to
`unclean hands.
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`A complaint must contain a "short and plain statement of the
`claim showing that the pleader is entitled to relief." Fed. R.
`Civ. P. 8(a). On a motion under Rule 12(b)(6) for failure to
`state a claim, dismissal is appropriate only when the complaint
`does not give the defendant fair notice of a legally cognizable
`claim and the grounds on which it rests. Bell Atl. Corp. v.
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`Case 3:14-cv-02235-JAH-DHB Document 53 Filed 09/11/14 Page 15 of 17
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`Twombly, 550 U.S. 544, 555 (2007). In considering whether the
`complaint is sufficient to state a claim, the court will take all
`material allegations as true and construe them in the light most
`favorable to the plaintiff. NL Indus., Inc. v. Kaplan, 792 F.2d
`896, 898 (9th Cir. 1986). However, this principle is inapplicable
`to legal conclusions; "threadbare recitals of the elements of a
`cause of action, supported by mere conclusory statements," are not
`taken as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
`(citing Twombly, 550 U.S. at 555).
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`When granting a motion to dismiss, the court is generally
`required to grant the plaintiff leave to amend, even if no request
`to amend the pleading was made, unless amendment would be futile.
`Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911
`F.2d 242, 246–47 (9th Cir. 1990). In determining whether
`amendment would be futile, the court examines whether the
`complaint could be amended to cure the defect requiring dismissal
`"without contradicting any of the allegations of [the] original
`complaint." Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th
`Cir. 1990).
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`A. Wi-LAN's Motion
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`A plaintiff alleging unenforceability for unclean hands in a
`patent action must allege facts demonstrating "bad faith and an
`improper purpose." Reid-Ashman Mfg. v. Swanson Semiconducter
`Serv. LLC, 2007 U.S. Dist. LEXIS 37665, at *22 (N.D. Cal.) (citing
`Glaverbel Societe Anonyme v. Northlake Mktg. & Supply, 45 F.3d
`550, 1558 (Fed. Cir. 1995)).
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`Apple alleges that "Wi-LAN has engaged in a pattern and
`practice of improper activity to acquire, license, and assert its
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`Case 3:14-cv-02235-JAH-DHB Document 53 Filed 09/11/14 Page 16 of 17
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`patents in bad faith, including by making claims of patent
`infringement with knowledge that the patents are not actually
`infringed or are invalid." Am. Compl. ¶ 84. However, Apple's
`amended complaint merely alleges that Wi-LAN has been unsuccessful
`in two prior patent suits against Apple, and that four other suits
`have not yet been decided. Id. at ¶ 85. There are no facts
`alleged in the amended complaint that would suggest that any of
`those suits were brought in bad faith or for an improper purpose.
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`Apple's mere recitation of the elements of an unclean hands
`claim, without any factual allegations whatsoever, is not
`sufficient to state a claim against Wi-LAN. Therefore, Wi-LAN's
`motion to dismiss this claim is GRANTED. However, Apple is
`granted leave to amend in order to plead sufficient facts to
`support its claim that Wi-LAN engaged in conduct comprising
`unclean hands, if it can truthfully do so.
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`B. ONS's Motion
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`In its amended complaint, Apple alleges no specific facts
`accusing ONS of acting in bad faith or with improper purpose.
`Instead, Apple merely generally alleges that:
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`ONS, as a subsidiary, is subject to the direction
`and control of Wi-LAN. Wi-LAN's conduct
`comprising unclean hands (as described herein) is
`therefore attributable to ONS, rendering the ONS
`patents unenforceable in this action.
`Am. Compl. ¶ 86.
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`Again, the mere recitation of the elements of an unclean
`hands claim, without any factual allegations whatsoever, is not
`sufficient to state a claim. ONS's motion to dismiss this claim
`is GRANTED. However, Apple is granted leave to amend in order to
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`plead sufficient facts to support its claim that ONS engaged in
`conduct comprising unclean hands, if it can truthfully do so.
`CONCLUSION
`For the reasons set forth above, Wi-LAN's motion to sever and
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`transfer, and to dismiss the unclean hands cause of action (Docket
`No. 25), is GRANTED. Within seven days of the date of this order,
`Apple shall file a second amended complaint in this case asserting
`only its claims against Wi-LAN, and Apple is granted leave to
`allege in that amended complaint specific facts showing that Wi-
`LAN engaged in conduct comprising unclean hands. Upon filing of
`the second amended complaint, the Court will transfer it to the
`Southern District of California.
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`In addition, ONS's motion to sever, transfer, and dismiss
`(Docket No. 26) is GRANTED in part and DENIED in part. The motion
`to sever is granted; the motion to transfer is denied; and the
`motion to di