Case 3:13-cv-02656-BEN-NLS Document 28-4 Filed 01/31/14 PageID.2752 Page 1 of 98
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`EXHIBITS
`
`Page No.
`
`Exhibit A .................................................................................................3
`
`Exhibit B ...............................................................................................10
`
`Exhibit C ...............................................................................................19
`
`Exhibit D ...............................................................................................26
`
`Exhibit E................................................................................................47
`
`Exhibit F................................................................................................49
`
`Exhibit G ...............................................................................................51
`
`Exhibit H ...............................................................................................72
`
`Exhibit I.................................................................................................98
`
`Exhibit J...............................................................................................100
`
`Exhibit K .............................................................................................225
`
`Exhibit L..............................................................................................235
`
`Exhibit M.............................................................................................251
`
`Exhibit N .............................................................................................253
`
`Exhibit O .............................................................................................261
`
`Prime Focus Ex 1028-1
`Prime Focus v Legend3D
`IPR2016-01243
`
`

`

`Case 3:13-cv-02656-BEN-NLS Document 28-4 Filed 01/31/14 PageID.2753 Page 2 of 98
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`EXHIBIT A
`
`Exhibit A, page 3
`
`Prime Focus Ex 1028-2
`Prime Focus v Legend3D
`IPR2016-01243
`
`

`

`Case 3:13-cv-02656-BEN-NLS Document 28-4 Filed 01/31/14 PageID.2754 Page 3 of 98
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`PHILIP H, DYSON
`ATTORNEY AT LAW
`
`8461 LA MESA BOULEVARD
`LA MESA, CALIFORNIA 91942
`TELEPHONE (cid:9)
`619.462.3311
`FACSIMILE (cid:9)
`619.4623382
`PHILDYSONLAW.COM
`
`November 15, 2013
`
`VIA EMAIL mario.moore@morganlewis.com AND U.S. MAIL
`
`Mario Moore, Esq.
`Morgan, Lewis & Bockius LLP
`5 Park Plaza, Suite 1750
`Irvine, CA 92614
`
`Re: N4D, LLC v. Legend3D, Inc., et aL
`U.S. Dist. Ct. (S.D. Cal.) Case No. 13-CV-2656-BEN-NLS
`
`PRIVILEGED COMMUNICATION (Cal. Civ. Code § 47(b))
`MALICIOUS-PROSECUTION NOTICE (Zamos v. Stroud (2004) 32 Ca1.4th 958)
`
`Dear Mr. Moore:
`
`This law office represents Charles Gregory ("Greg") Passmore and Bird Rock MultiMedia,
`Inc. d/b/a Passmore Lab and/or Z Media (collectively, "Passmore"). We are informed that
`you have named Passmore as a defendant in the above-referenced matter, although Passmore
`has not yet been formally served with the summons and complaint..
`
`Pursuant to Zamos v. Stroud (2004) 32 Cal.4th 958, we hereby put you, your firm, and your
`client N4D, LLC, and its principals (collectively "N4D") on notice that the continued
`maintenance of this action against Passmore:
`•
`Is without probable cause,
`•
`Is being prosecuted with malice,
`•
`Exposes you, your firm, and N4D to monetary sanctions under Rule 11(b) of the
`Federal Rules of Civil Procedure for bringing an action that is presented to harass or
`cause unnecessary delay, and
`Upon termination in Passmore's favor, will subject you, your firm, and N4D to
`liability for malicious prosecution.
`
`•
`
`Under California Business and Professions Code section 6068(c) and Rule 3-200 of the
`California Rules of Professional Conduct, you have an ethical obligation to the court and to
`the legal profession "[t]o counsel or maintain those actions, proceedings, or defenses only
`
`Exhibit A, page 4
`
`Prime Focus Ex 1028-3
`Prime Focus v Legend3D
`IPR2016-01243
`
`

`

`Case 3:13-cv-02656-BEN-NLS Document 28-4 Filed 01/31/14 PageID.2755 Page 4 of 98
`
`Mario Moore, Esq.
`November 15, 2013
`Page 2
`
`as appear...legal or just" and not "[t]o bring an action...[or] assert a position in
`litigation...without probable cause and for the purpose of harassing or maliciously injuring
`any person." Sorenson v. State Bar (1991) 52 Ca1.3d 1036. The prosecution and
`maintenance of this action are barred on various legal grounds, specifically the statute of
`limitations, the issues of ownership and consent, and waiver and estoppel, and those bars
`have been the subject of judicial decisions in another court in which N4D sued Passmore.
`
`Be advised that any continued prosecution of this action by you, after this notice is received,
`will be used as evidence of bad faith under California Civil Code section 3426.4. Therefore,
`this office demands that you dismiss the federal lawsuit against Passmore immediately.
`
`N4D'S RELATED CASES
`
`N4D has been in ongoing litigation with Passmore in at least three (3) separate court actions
`related to this matter: Bird Rock Multimedia, Inc. v. 3DH Communications, Inc., et al., San
`Diego Superior Court Case No. 37-2009-00100935-CU-BC-CTL ("the 3DH case"); Bird
`Rock Multimedia, Inc. v. N4D, LLC, San Diego Superior Court Case No. 37-2010-00103118-
`CU-MC-CTL ("the N4D case"); and N4D, LLC v. Passmore, et al., Gwinnett County,
`Georgia Superior Court Case No. 10-A-11197-7 ("the Georgia case")) Thus, N4D has had
`access to all of the underlying facts and circumstances with the aid of legal discovery.
`
`N4D has also sued Defendant Legend3D, Inc. ("Legend") in a separate related case: N4D,
`LLC v. Legend3D, Inc., San Diego Superior Court Case No. 37-2012-00088480-CU-NP-CTL
`("the Legend case"). In the Legend case, N4D alleges the same common facts as in the
`Georgia case and this case, albeit couched in slightly different causes of action. Before suing
`Legend in the California superior courts, N4D unsuccessfully moved in 2011 to have Legend
`added as a co-defendant in the Georgia case.
`
`It must be noted that in the civil cover sheet that you filed with the United States District
`Court, you left the section for "related cases" blank.
`
`'A copy of your client's complaint against Passmore in the Georgia case is
`attached as Exhibit 1 to this letter. The Georgia complaint includes, as Exhibits A and F
`respectively, the 2003 and 2009 Software Development Agreements ("SDAs") that you
`quote in, but did not attach to, your complaint in this case.
`
`Exhibit A, page 5
`
`Prime Focus Ex 1028-4
`Prime Focus v Legend3D
`IPR2016-01243
`
`

`

`Case 3:13-cv-02656-BEN-NLS Document 28-4 Filed 01/31/14 PageID.2756 Page 5 of 98
`
`Mario Moore, Esq.
`November 15, 2013
`Page 3
`
`CHOICE OF VENUE AND CLAIMS OF JURISDICTION
`
`In your complaint, you allege that your client is a Delaware LLC with its principal place of
`business in Fresno County, California, and that a "substantial part of the events or omissions
`giving rise to the claim occurred" in the Southern District of California. Complaint, § 32.
`However, your client, in the Georgia case which has factual claims nearly identical to the
`claims alleged in your complaint, alleged that venue was properly in Georgia because "a
`substantial part of the business was transacted [or] the tortious act, omission, or injury
`occurred" in Georgia (0.C.G.A. § 9-10-93), and that your client's principal place of business
`was in Georgia. Therefore, your client can be deemed to be venue-shopping, with you as the
`enabler.
`
`STATUTE OF LIMITATIONS
`
`As an initial matter, your various causes of action, including the breach of contract claim, are
`barred by the one-year contractual limitations period agreed to in the 2003 and 2009 Software
`Development Agreements (SDAs) between N4D and Passmore, which (as stated infra) you
`cite in the complaint as the basis for Passmore' s liability but did not attach to the complaint.
`See Order on Plaintiff's and Defendants' Motions for Summary Judgment in the Georgia
`Case ["Georgia MSJ Order"] attached hereto as Exhibit 2 for reference, pp. 2-5.
`
`Although the statute of limitations for breach of a written contract or for "an action upon any
`contract, obligation or liability founded upon an instrument in writing" is four years in
`California (and six years in Georgia), the parties to a contract can agree to a shorter period
`than what the statute provides, provided that the contractual limitation for bringing suit is not
`so unreasonable as to show imposition or undue advantage. Schram v. Robertson, 111 F.2d
`722 (9th Cir. 1940)(diversity case applying California law); Hamaker v. Williams (1937) 22
`Cal.App.2d 256. Both the 2003 SDA (Complaint (Georgia Case), Exh. A, para. 34) and the
`2009 SDA (Complaint (Georgia Case), Exh. F, para. 33) have a one-year contractual
`limitation of actions.
`
`Based on the evidence presented in Passmore's motions for summary judgment in the
`Georgia case, which N4D' s other counsel neither refuted nor disputed, N4D was on notice
`of these claims against Passmore for breach of contract and unauthorized transfer of
`technology to Legend on November 3, 2009, at the latest. Since the agreed-upon contractual
`limitation period is one year, N4D's complaint in this case, as with its complaint in the
`Georgia case, is time-barred.
`
`Exhibit A, page 6
`
`Prime Focus Ex 1028-5
`Prime Focus v Legend3D
`IPR2016-01243
`
`

`

`Case 3:13-cv-02656-BEN-NLS Document 28-4 Filed 01/31/14 PageID.2757 Page 6 of 98
`
`Mario Moore, Esq.
`November 15, 2013
`Page 4
`
`N4D'S LACK OF EVIDENCE THAT TECHNOLOGY IN "LEGEND PATENTS"
`NECESSARILY DERIVED FROM PASSMORE'S WORK FOR 3DHIN4D
`
`Your complaint is based on a faulty premise for which N4D has not been able to produce
`evidence in the 3DH case, the N4D case, or the Georgia case: that the Legend Patents'
`underlying technology necessarily derived from Passmore's work for 3DHIN4D under the
`2003 and 2009 SDAs. The Georgia court has stated (Georgia MSJ Order, p. 5):
`
`Further, [N4D] has failed to point to any evidence of a material misrepresentation
`made by [Passmore] as to ownership of the 2D to 3D technology. In fact, the
`evidence of record shows that Defendant Passmore has contended that he created the
`core technology himself prior to entering into a business relationship with 3DH and
`has maintained ownership of his core technology ever since. See excerpt of Passmore
`Dep, Vol. IV at p. 770 attached to Plaintiffs January 31, 2013 Appendix.
`
`If N4D could have rebutted this evidence, it would have done so to oppose Passmore's
`Motions for Summary Judgment in the Georgia case. N4D did not, since there is no way for
`N4D to rebut. Furthermore, the "technology" at issue here still has not been specifically
`identified by N4D (whether in the 3DH case, the N4D case, or the Georgia case) so that it
`can be clearly distinguished from the public domain and established proprietary rights of
`others such as Passmore or Legend. See Brescia v. Angelica (2009) 172 Cal.App.4th 133,
`147.
`
`WAIVER AND ESTOPPEL
`
`Moreover, evidence has been presented in the Georgia case that N41) has consented to the
`acts it complaints of, even though those acts may be in error. See Cal. Civ. Code §§ 3515
`("He who consents to an act is not wronged by it"), 3516 ("Acquiescence in error takes away
`the right of objecting to it").
`
`The Georgia court found that N40 had notice of Fassmore's claims and that N4D
`nevertheless stood on the contracts, thereby preventing N4D from rescinding the 2009 SDA
`on the basis of fraud. (Georgia MSJ Order, pp. 3-6.) As a partial result of N4D's notice and
`acquiescence, the Georgia court granted summary judgment to Passmore on all of N4D's
`claims with respect to the 2003 and 2009 SDAs. (Georgia MSJ Order, p. 6.)
`
`Exhibit A, page 7
`
`Prime Focus Ex 1028-6
`Prime Focus v Legend3D
`IPR2016-01243
`
`

`

`Case 3:13-cv-02656-BEN-NLS Document 28-4 Filed 01/31/14 PageID.2758 Page 7 of 98
`
`Mario Moore, Esq.
`November 15, 2013
`Page 5
`
`For instance, the 2009 SDA (Complaint (Georgia Case), Exh. F, p. 2, ¶ 7) states as follows:
`
`[Passmore] shall not during the term of this Agreement thereby be precluded from
`engaging in any other business activity, whether or not such business activity is
`pursued for gain, profit or other pecuniary advantage and is in direct or indirect
`competition with the business activities of [N4D], however, in exchange for
`[Passmore] agreeing not to compete with VoxelPro, [N4D] agrees to provide
`fPassmore] a perpetual, worldwide license to any IP rights in "2D to 3D
`conversion"...that it may own, or claim to own. (Bold italics added)
`
`The 2009 SDA also provides that the provisions of the above-referenced paragraph "shall
`survive termination of this Agreement and remain in full force and effect." (Complaint
`(Georgia Case), Exh. F, p. 9, ¶ 30.)
`
`The Georgia court also held that the 2009 Technology Cross Licensing Agreement ("TCLA")
`was not subject to rescission. (Georgia MSJ Order, p. 6) Significantly, the TCLA
`(Complaint (Georgia Case), Exh. G, p. 2) contains the following provisions:
`
`N4D grants to [Passmore] the following perpetual, worldwide, non-exclusive,
`royalty-free and transferable licenses, under N4D's copyrights and trade secrets in
`and to the N4D Licensed Products.
`
`The TCLA (Complaint (Georgia Case), Exh. G, p. 8, Exhibit A) defines "N4D Licensed
`Products" as "Any and all IP and software pertaining to '2D to 3D conversion' ..." So, even
`if N413 had any rights in the "technology" at issue (which is disputed), it licensed that
`technology to Passmore, to be used and transferred without restriction.
`
`Therefore, N4D either has no ownership interest or other rights in the technology at all, or
`it expressly consented to Passmore's use and transfer to Legend, and thus its claims are
`barred by waiver and estoppel.
`
`MALICE
`
`Malice may be inferred in this case if you persist in prosecuting this case despite your
`knowledge that the case lacks probable cause. Daniels v. Robbins (2010) 182 Cal.App.4th
`204, 226; Ross v. Kish (2006) 145 Cal.App.4th 188, 204. Furthermore, this action is being
`maintained with ill will and for improper purposes, namely to punish Passmore for being a
`business competitor.
`
`Exhibit A, page 8
`
`Prime Focus Ex 1028-7
`Prime Focus v Legend3D
`IPR2016-01243
`
`

`

`Case 3:13-cv-02656-BEN-NLS Document 28-4 Filed 01/31/14 PageID.2759 Page 8 of 98
`
`Mario Moore, Esq.
`November 15, 2013
`Page 6
`
`"[A] person who attempts to establish a claim to property knowing of its falsity can only be
`motivated by an improper purpose." Albertson v. Raboff (1956) 46 Ca1.2d 375, 383. This
`office has learned that after the Georgia MSJ Order was issued, and despite its ruling against
`N4D, N4D's admitted principal Anthony Balakian has made statements to various third
`parties that neither Passmore nor Legend is the owner of the "technology" at issue, which
`implies - maliciously - N4D's ownership.
`
`GROUNDS FOR RULE 11 SANCTIONS
`
`Sanctions are appropriate against an attorney (and by extension, that attorney's firm) when
`the attorney brings suit "for any improper purpose, such as to harass, [or] cause unnecessary
`delay" or the factual contentions in the suit lack evidentiary support. Fed. R. Civ. P.
`11(b)(1), (3). The filing of claims that are time-barred or that are barred by res judicata or
`collateral estoppel, when a reasonable inquiry would show that the claims are so barred, will
`merit Rule 11 sanctions. Estate of Blue v. County of Los Angeles, 120 F.3d 982 (9th Cir.
`1997); Buster v. Griesen, 104 F.3d 1186, 1190 (9th Cir. 1997).
`
`In this case, your claims are time-barred as being based upon two agreements with one-year
`contractual limitations for filing suit, and the Georgia court has already denied your client's
`claims for breach of contract against Passmore (as derived from the 2003 and 2009 SDAs)
`and granted summary judgment to Passmore on those claims, thereby making any revival of
`those claims in this case to be res judicata or collaterally estopped. Should you persist in
`presenting this case, Rule 11 sanctions would be merited.
`
`Should you have any questions regarding the foregoing, please feel free to contact our
`office at your earliest convenience.
`
`Sincer ly,
`
`ILIP H. DYSON
`D/d1h
`
`Enclosures (by mail only)
`
`cc: (cid:9)
`
`Stephen R. Finn, Esq., Managing Partner, Morgan, Lewis & Bockius (Irvine)
`All Other Partners, Morgan, Lewis & Bockius (Irvine)
`Danna Cotman, Esq., and Ariel Sabban, Esq., Counsel for Legend3D, Inc. (Email)
`
`Exhibit A, page 9
`
`Prime Focus Ex 1028-8
`Prime Focus v Legend3D
`IPR2016-01243
`
`

`

`Case 3:13-cv-02656-BEN-NLS Document 28-4 Filed 01/31/14 PageID.2760 Page 9 of 98
`
`EXHIBIT B
`
`Exhibit B, page 10
`
`Prime Focus Ex 1028-9
`Prime Focus v Legend3D
`IPR2016-01243
`
`

`

`Case 3:13-cv-02656-BEN-NLS Document 28-4 Filed 01/31/14 PageID.2761 Page 10 of 98
`
`ARC
`
`INTELLECTUAL PROPERTY LAW
`
`Danna Cotman, Esq.
`*Ariel J. Sabban, Esq.
`
`'Also admitted in Washington D.C.
`
`ARC IP Law, PC
`7744 Herschel Avenue
`La Jolla, CA 92037
`T: 858 729 0800
`F: 858.777.5425
`danna©arciplaw.com
`aliel©artiplaw.com
`www.arciplaw.com
`
`A PRIVILEGED COMMUNICATION (Civil Code § 47(1)))
`
`November 19, 2013
`
`Sent via US Mail and Email
`
`Mario Moore, Esq.
`Morgan, Lewis & Bockius, LLP
`5 Park Plaza, Suite 1750
`Irvine, CA 92614
`mario. moore@morgan lewis.com
`
`Re: N4D, LLC vs. Legend3D, Inc.
`USDC-SDC Case No. `13CV2656 MMA NLS
`SDSC Case No. 37-2012-00088480-CU-NP-CTL
`Our Matter Nos.: LF-L0013 & LF-0014
`
`FRCP RULE 11 AND MALICIOUS PROSECUTION NOTICE
`
`Dear Mr. Moore:
`
`This correspondence is written pursuant to Zamos v. Stroud (2004) 32 Ca1.4th 958 and is
`to put you, your firm, and your client N4D, LLC, and its principals (collectively "N4D") on
`notice that the continued maintenance of this action against our client Legend 3D, Inc.
`("Legend"), is without probable cause, is being prosecuted with malice, and, upon a
`favorable termination that we will diligently pursue, will subject all of the foregoing to
`malicious prosecution liability and/or sanctions for abusive litigation.
`
`Please be advised that is it not our practice to issue notices such as this lightly. And, we
`hasten to add that you have an ethical obligation to the legal profession not to pursue
`matters that are devoid of merit. (California Rules of Professional Conduct, Rule 3-200)
`Please further be advised that we intend to use any continued prosecution of this action
`after this notice as (additional) evidence of malicious prosecution and presentation of the
`claims for an improper purpose.
`In sum, we hereby demand that you dismiss the
`above action immediately before any further damages accrue to our client.
`
`Introduction
`
`As prologue, N4D has been in ongoing litigation with Charles Gregory Passmore and Bird
`Rock Multimedia, Inc., doing business as Passmore Lab and/or Z Media (collectively
`"Passmore") in at least three (3) separate court actions related to this matter, to wit., Bird
`Rock Multimedia, Inc. v. 3DH Communications, Inc., et al., San Diego Superior Court
`Case No. 37-2009-00100935-CU-BC-CTL ("Bird Rock l''); Bird Rock Multimedia, Inc. v.
`N4D, LLC, San Diego Superior Court Case No. 37-2010-00103118-CU-MC-CTL ("Bird
`
`ARC IP LAW, PC (cid:9)
`
`INTELLECTUAL PROPERTY ATTORNEYS
`
`Exhibit B, page 11
`
`Prime Focus Ex 1028-10
`Prime Focus v Legend3D
`IPR2016-01243
`
`

`

`Case 3:13-cv-02656-BEN-NLS Document 28-4 Filed 01/31/14 PageID.2762 Page 11 of 98
`
`Page 2 of 8
`
`Rock if'); and N4D, LLC v. Passmore, et al., Georgia Superior Case No. 10-A-11197-7
`("N4D Case"), and therefore N4D has had access to all of the underlying facts and
`circumstances along with the benefit of legal discovery. Consequently, your client well
`knows the underlying facts. As will be explained, you had an obligation under Federal
`Rules of Civil Procedure ("FRCP"), Rule 11 to make a reasonable pre-filing inquiry and
`this duty is ongoing. In addition, your client filed a state court action on December 24,
`2012, against Legend entitled N4D, LLC vs. Legend3D, inc., San Diego Superior Court
`Case No. 37-2012-00088480-CU-NP-CTL ("Legend Case") asserting "conversion" of
`some unspecified "technology" that is at odds with the instant action. Significantly,
`Legend demurred to the Legend Case complaint citing much of the evidence discussed
`hereinafter and hence, again, your client was on notice of the same and now so are you.
`
`Additionally, N4D's complaint in the N4D Case filed December 15, 2010, is replete with
`direct references to Legend (see, e.g., 111141(b), 41(g), 41(h), 58, 60, 63, 65, 66, and 77).
`Significantly, N4D attempted to add Legend to the N4D Case (which effectively admits
`that said claims are at least related) but that motion was denied.
`
`Also, as reflected by the complaint in the instant action (1111 3-24, & 33-59), any liability
`whatsoever on the part of Legend is derivative of Passmore such that if Passmore is not
`liable neither is Legend. Although perhaps purposefully unclear from the complaint
`allegations, only the declaratory relief cause of action could theoretically be asserted
`against Legend since there is no contractual relationship whatsoever between N4D and
`Legend (for purposes of the other causes of action for breach of contract and specific
`performance). Even so, the claim against Legend involves derivative liability based on
`the claims against Passmore such that if Passmore is not liable then neither is Legend.
`(See generally 7 Witkin, California Procedure (5th Ed.), Judgment, § 472, pp. 1137-1138)
`
`Revealingly, the complaint affirms the contracts in question by seeking relief thereunder
`and it does not request to have them set aside for any reason. By so doing, N4D is
`bound by the entirety of those contracts and cannot pick and chose among applicable
`provisions. (Civil Code §§ 1598 & 3521) (In addition, N4D by standing on the
`agreements should henceforth be estopped from disavowing the enforceability of those
`agreements in the N4D Case or otherwise.)
`
`FRCP Rule 11 Standards
`
`The purpose behind FRCP Rule 11—consistent with FRCP Rule 1—is to discourage
`dilatory and abusive tactics and streamline litigation and not allow its proliferation.
`(Amendments to Federal Rules of Civil Procedure (Committee Notes to 1983 and 1993
`Amendments) 146 F.R.D. 401, 583-592) Rule 11 embodies an "objective" standard to
`"stop and think" as an affirmative duty before signing and filing a paper with the court and
`this obligation is a continuing one. (ibid.) The "empty-head pure heart" excuse is no
`shield. (Ibid.) This, of course, includes a duty on the part of an attorney to make a
`reasonable pre-filing inquiry into the facts and law and also to certify that the paper is not
`being presented for an improper purpose. (Childs v. State Farm Mut. Auto Ins. Co. (1994
`5th Cir.) 29 F.3d 1018, 1023-1026) This standard can be appropriately characterized as a
`know or should know standard. (Id. at 1025-1026)
`
`ARC EP LAW, PC (cid:9)
`
`INTELLECTUAL PROPERTY ATTORNEYS
`
`Exhibit B, page 12
`
`Prime Focus Ex 1028-11
`Prime Focus v Legend3D
`IPR2016-01243
`
`

`

`Case 3:13-cv-02656-BEN-NLS Document 28-4 Filed 01/31/14 PageID.2763 Page 12 of 98
`
`Page 3 of 8
`
`Under the plain language of FRCP Rule 11, and even if the complaint is grounded in fact
`and law, filing excessive actions to needlessly increase the cost of litigation and harass
`an opposing party can warrant sanctions. (F.D.I.C. v. Maxxam (2008 5th Cir.) 523 F.3d
`566, 584) In other words, and regardless of merit, forum shopping (especially after an
`adverse decision in one forum, i.e., the "N4D Order" discussed infra) by filing excessive
`litigation to bludgeon an opponent or opponents into submission is sanctionable conduct.
`
`A patent example of this is your/your client's principal place of business allegations—
`which tend to vary according to your/their whims. In the N4D Case, N4D asserted its
`principal place of business was Georgia in order to secure venue in that forum (N4D
`Case complaint, ¶ 1) and this should judicially estop N4D from making a later inconsistent
`assertion as here. Now that N4D has suffered an unfavorable ruling (the "N4D Order"),
`you/your client assert that N4D's principal place of business is in California (complaint, ¶
`25). Additional reasons for the groundless/vexatious nature of this action are detailed
`below.
`
`Claim Splitting
`
`California follows primary right theory based on the facts alleged in support thereof. (4
`Witkin, California Procedure (5th Ed.), Pleading, § 34, p. 98) Under primary right theory,
`claim splitting is prohibited because the defendant should be protected against vexatious
`litigation, and it is against public policy to permit litigants to consume court time by
`relitigating matters or asserting claims that should have been settled in a prior action. (4
`Witkin, California Procedure (5th Ed.), Pleading, § 45, pp. 108-109)
`
`The federal analogue, which rises to the level of longstanding United States Supreme
`Court precedent, is the plea of "other suit pending" which similarly disallows claim splitting
`(see The Haytian Republic (1894) 154 U.S. 118, 124-125):
`
`'It is undoubtedly a settled question that a party seeking to enforce a claim legally
`or equitably must present to the court, either in pleading or in proof, or both, all the
`grounds upon which he expects a judgment in his favor. He is not at liberty to split
`up his demand, and prosecute it by piecemeal, or present only a portion of the
`grounds upon which special relief is sought, and leave the rest to be presented in a
`second suit, if the first fail. There would be no end to litigation if such a practice
`were permissible.' (Id. at 125)
`
`The test is whether the evidence necessary to prove one cause of action would establish
`the other. (Ibid.; see also Adams v. California Department of Health Services (2007 9th
`Cir.) 487 F.3d 684, 689 [Same transactional nucleus of facts]) This is separate and apart
`from the prudential concern for the "wise administration of justice."
`(Colorado River
`Water Conservation District v. United States (1976) 424 U.S. 800, 817)
`
`Here, the agreements at issue along with the facts alleged and the causes of action
`asserted are nearly identical to those pending in the N4D Case. Further, the factual
`predicates are substantially similar to those that underlie the Bird Rock land II cases and
`the Legend Case that seemingly asserts paradoxical claims. Dismissal, stay, injunction,
`or some form of consolidation of these multitudinous actions is most appropriate to
`
`ARC FP LAW, PC (cid:9)
`
`INTELLECTUAL PROPERTY ATTORNEYS
`
`Exhibit B, page 13
`
`Prime Focus Ex 1028-12
`Prime Focus v Legend3D
`IPR2016-01243
`
`

`

`Case 3:13-cv-02656-BEN-NLS Document 28-4 Filed 01/31/14 PageID.2764 Page 13 of 98
`
`conserve judicial resources and reduce the burden and expense to all.
`California Department of Health Services, supra, 487 F.3d 684, 692)
`
`Black Letter Patent Law
`
`Page 4 of 8
`
`(Adams v.
`
`"Conception is the touchstone of inventorship under 35 U.S.C. § 116. It is 'the formation
`in the mind of the inventor, of a definite and permanent idea of the complete and
`operative invention, as it is hereafter to be applied in practice." (University of Pittsburgh
`of Commonwealth System of Higher Educ. v. Hedrick (2009 Fed. Cir.) 573 F.3d 1290,
`1297)
`Once issued, a patent enjoys a presumption of validity, including "that the named
`inventors are the true and only inventors." (Ethicon, Inc. v. United States Surgical
`Corp. (1998 Fed.Cir.) 135 F.3d 1456, 1460) An allegedly omitted co-inventor "must
`prove their contribution to the conception of the claims by clear and convincing
`evidence." (Id. at 1461 [emphasis ours]) Critically, an inventor under the patent laws is
`the person or persons who conceived the patented invention, and their legal status as
`inventor does not change simply because the inventor uses the services, ideas, and aid
`of others in the process of perfecting their invention. (Hoop v. Hoop (2002 Fed.Cir.) 279
`F.3d 1004, 1007) "One may not qualify as a joint inventor ... by 'merely assisting the
`actual inventor after conception of the claimed invention.' (Ibid. [emphasis in original])
`
`Primogenitor Patent From 2001
`
`Undergirding the fallacy of your claims in the instant complaint is the fact that the root
`patent by Barry Sandrew discloses and claims amongst other innovations, masking
`techniques, including reshaping of masks that may be utilized for any type of conversion
`including colorization or depth conversion. The original patent application was filed
`provisionally in 2001 (as prov. app. no. 60/288,929, filed May 4, 2001). The subsequent
`patents (filed as "patent cooperation treaty" and subsequent "national stage" patent
`applications along with "divisional" and "continuations-in-part" applications [complaint,
`1[13]), specifically claim setting depth parameters associated with the masks that have
`been reshaped, e.g., which is already claimed and covered in a broader manner by the
`2001 patent. (cid:9)
`In addition, the continuation in part applications disclose and claim
`innovations conceived of by Legend3D employees, regardless of who was tasked to write
`software to implement the innovations in Legend3D's software, which include novel
`Legend3D specific artifact free conversion, a.k.a. stacking or clean plate, along with
`several gap-fill, rapid local depth editing, a.k.a. U mapping, and hybrid conversion
`techniques including computer generated imagery, a.k.a. RGBAZ Import referenced in
`your complaint. Consequently, Barry Sandrew (along with others from Legend), not
`Passmore, conceived of these inventions and a presumption is accorded that this is
`correct which can only be overcome by clear and convincing evidence that we submit
`does not exist. It is immaterial whether Passmore was enlisted to write code for Legend
`after conception of these inventions.
`
`What is more, based on public records, 3DH Communications, Inc. (your client's
`averred predecessor-in-interest [complaint, ¶ 1]), did not even come into existence
`until 2005.
`
`ARC FP LAW, PC (cid:9)
`
`INTELLECTUAL PROPERTY ATTORNEYS
`
`Exhibit B, page 14
`
`Prime Focus Ex 1028-13
`Prime Focus v Legend3D
`IPR2016-01243
`
`

`

`Case 3:13-cv-02656-BEN-NLS Document 28-4 Filed 01/31/14 PageID.2765 Page 14 of 98
`
`Page 5 of 8
`
`It is evident from the faulty assertions made in your complaint that you have reviewed the
`records from the United States Patent and Trademark Office ("PTO") and you are
`therefore charged with knowledge of what a reasonable inquiry would have revealed.
`However, since it appears that you did review some PTO records, you would (should)
`know that the patent referenced in paragraph 10 of the complaint (identified as '992) was
`anticipated by prior art in patent number 4,925,294 (the "Gershwin patent") and this
`reference resulted in the abandonment of the patent application. Your insinuation of
`some unscrupulous motive is simply scurrilous.
`
`Further, while Barry Sandrew is named as a defendant, you would know from the PTO
`records that he (and the other inventors not named) assigned all their rights to Legend
`and thus your naming of him as a defendant in your complaint is dubious at best. This
`along with the fact that the other inventors are not named tends to show that Barry
`Sandrew is being named as a defendant solely to harass him as an individual.
`
`All Causes of Action Governed by State Law
`
`Patents are a species of personal property (35 U.S.C. § 261; Board of Trustees of the
`Leland Stanford Junior University v. Roche Molecular Systems, Inc. (2009 9th Cir) 583
`F.3d 832, 846, fn. 2) Ownership of patent rights and on what terms are questions
`exclusively for state courts as are questions governing the interpretation of contracts. (Id.
`at 841) Specifically, the statute of limitations for claims concerning breach of contract
`(subsuming a claim for specific performance thereof) and declaratory relief are governed
`by state law. (Id. at 846)
`
`On that note, California law generally upholds the contractual shortening of the statute of
`limitations when reasonable, and this includes shortening the statute of limitations for
`breach of contact down to one (1) year. (3 Witkin, California Procedure (5th Ed.), Actions,
`§ 469, pp. 595-596 and cases cited therein) The 2003 Software Development Agreement
`("2003 SDA") and the 2009 Software Development Agreement that are asserted as the
`basis for N4D's present claims contain one (1) year statutes of limitations. (2003 SDA,
`34; 2009 SDA, 'ff