Case: 1:15-cv-00799 Document #: 93 Filed: 06/18/15 Page 1 of 12 PageID #:364
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`UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`Case No. 1:15-cv-00799
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`Judge Joan H. Lefkow
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`§§§§§§§§§§
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`ROSETTA-WIRELESS CORP.,
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`v.
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`APPLE INC., et al.,
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`Plaintiff,
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`Defendants.
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`DEFENDANTS’ MEMORANDUM IN SUPPORT OF THEIR MOTION
`TO SEVER THE PROCEEDINGS PURSUANT TO 35 U.S.C. § 299
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`ROSETTA-2008
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`Case: 1:15-cv-00799 Document #: 93 Filed: 06/18/15 Page 2 of 12 PageID #:365
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`I.
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`BACKGROUND
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`The Amended Complaint filed by Plaintiff Rosetta-Wireless Corp. (“Rosetta”) names
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`groups of distinct and unrelated parties in a single action and collectively accuses these parties of
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`patent infringement based on different and unrelated products. Because such joinder of parties is
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`not permissible under 35 U.S.C. § 299, Defendants move this Court to sever the claims against
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`them to separate actions.1 Defendants have asked whether Rosetta would agree to severance, but
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`Rosetta would not agree to severance without seeking certain conditions such as each Defendant
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`agreeing to not file a motion to transfer venue. Defendants do not believe that it is proper for
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`Rosetta to insist on such conditions in exchange for Rosetta complying with 35 U.S.C. § 299.
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`Rosetta filed its Amended Complaint on June 1, 2015 naming as defendants: Apple Inc.
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`(“Apple”); Samsung Electronics Co. Ltd. and Samsung Electronics America, Inc. (collectively,
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`“Samsung”); Motorola Mobility LLC (collectively, “Motorola”); LG Electronics Co. and LG
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`Electronics U.S.A., Inc. (collectively, “LG”); and High Tech Computer Corp. and HTC America
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`Inc. (collectively, “HTC”), (collectively, “Defendant Groups”).2 Dkt. 82 at ¶¶ 2-12. Rosetta’s
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`Amended Complaint alleges that the Defendant Groups infringe its U.S. Patent No. 7,149,511
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`(“the ’511 Patent”), entitled “Wireless Intelligent Personal Server.” Id. at ¶¶ 14-15.
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`The Amended Complaint does not allege that the five Defendant Groups are related
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`entities, that they acted in concert with one another, or that they cooperated in any way with
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`1 If Defendants’ motion to sever is granted, HTC believes that the appropriate remedy, pursuant
`to Federal Rule of Civil Procedure 21, is for the HTC Defendants to be dismissed. See Golden
`Bridge Technology, Inc. v. Apple Inc., No. 2:12-cv-4014, 2012 WL 3999854, *5 (C.D. Cal. Sep.
`11, 2012) (“Upon severance, the Court may dismiss the severed parties.”).
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`2 Rosetta voluntarily dismissed Motorola, Inc. and Samsung Telecommunications America,
`LLC from this action prior to filing its Amended Complaint. See Dkts. 1, 9, 37. It should
`additionally be noted that several of the aforementioned Defendants were misnamed. For
`example, LG Electronics Co. should be LG Electronics, Inc.
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`ROSETTA-2008
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`0002
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`Case: 1:15-cv-00799 Document #: 93 Filed: 06/18/15 Page 3 of 12 PageID #:366
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`respect to the purported infringement. Nor does the Complaint allege joint or several liability.
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`Instead, the Complaint merely asserts that each Defendant has done business in the Northern
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`District of Illinois and has committed and continues to commit separate acts of infringement in
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`this District. Id. at ¶ 13. As to what constitutes the alleged infringement, Rosetta’s allegations
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`are set forth in a single paragraph:
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`Upon information and belief, Defendants have infringed directly and
`15.
`continue to infringe directly the ’511 Patent. The infringing acts include, but are
`not limited to, the manufacture, use, sale, or offer for sale within the United
`States, or the importation into the United States of products that embody the
`patented invention, including the products listed for each Defendant in the
`attached Exhibit B. Defendants are liable for infringement of the ’511 Patent
`pursuant to 35 U.S.C. § 271.
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`Dkt. 82 at ¶ 15. Further, included as a list in Exhibit B to the Complaint, Rosetta accuses nearly
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`300 different products of infringing the ’511 Patent, none of which overlap across multiple
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`Defendant Groups. Dkt. 1-2.
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`II.
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`LEGAL STANDARD
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`While Rule 20 of the Federal Rules of Civil Procedure normally governs joinder in
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`district court actions, on September 16, 2011, Congress enacted the Leahy-Smith America
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`Invents Act, Pub. L. 112-29 (“AIA”), which, inter alia, altered the standard for joinder in actions
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`involving patents. Specifically, section 19(d) of the AIA, codified at 35 U.S.C. § 299, expressly
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`prohibits joining multiple defendants “based solely on allegations that they each have infringed
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`the patent or patents in suit.” 35 U.S.C. § 299(b). Instead, accused infringers can be joined in
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`the same action only if:
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`any right to relief is asserted against the parties jointly, severally, or in the
`alternative with respect to or arising out of the same transaction, occurrence, or
`series of transactions or occurrences relating to the making, using, importing into
`the United States, offering for sale, or selling of the same accused product or
`process.
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`Case: 1:15-cv-00799 Document #: 93 Filed: 06/18/15 Page 4 of 12 PageID #:367
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`35 U.S.C. § 299(a)(1). Section 299 also requires that “questions of fact common to all
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`defendants or counterclaim defendants will arise in the action.” 35 U.S.C. § 299(a)(2). Thus, the
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`AIA sets a more stringent standard for joinder than required by Rule 20, and in the absence of
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`joint or several liability, prohibits joinder unless the alleged infringement by each defendant
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`arises out of the same transactions relating to infringement of the patent-in-suit by the same
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`accused product or process. See In re Nintendo Co., Ltd., 544 F. App’x 934, 939 (Fed. Cir.
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`2013) (characterizing “[t]he AIA’s joinder provision [as] more stringent than Rule 20”); see also
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`Atlas IP, LLC v. Medtronic, Inc., No. 13-23309, 2014 U.S. Dist. LEXIS 48802, at *4 (S.D. Fla.
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`Mar. 17, 2014) (“Section 299’s language makes joinder in patent cases more difficult than
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`traditional joinder under Rule 20.”) (citation and internal quotations omitted); Reese v. Sprint
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`Nextel Corp., No. 2:13-cv-3811, 2013 U.S. Dist. LEXIS 98635, at *1 (C.D. Cal. Jul. 15, 2013)
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`(describing 35 U.S.C. § 299 as requiring “a higher standard for joinder”).
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`While courts in this District have not yet opined on a post-AIA motion to sever, Congress
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`expressly cited this District’s jurisprudence of Rule 20 when enacting Section 299. See H.R.
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`Rep. 112-98, pt. 1 at 55 n.61 (2011) (explaining that “Section 299 legislatively abrogates the
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`construction of Rule 20(a) adopted [by a minority of jurisdictions]—effectively conforming
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`these courts’ jurisprudence” to the majority view followed in Rudd v. Lux Products Corp., No.
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`09-6957, 2011 WL 148052 (N.D. Ill. Jan. 12, 2011)). And courts in this District have found that
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`a party fails to satisfy the requirement for “‘a common transaction or occurrence where unrelated
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`defendants, based on different acts, are alleged to have infringed the same patent.’” Body
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`Science LLC v. Boston Scientific Corp., 846 F. Supp. 2d 980, 987 (N.D. Ill. 2012) (quoting Rudd,
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`2011WL 148052, at *3); see also Pinpoint Inc. v. Groupon, Inc., No. 11-C-5597, 2011 U.S. Dist.
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`LEXIS 139183, at *4 n.1 (explaining that this Court’s view that joinder is improper where a
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`ROSETTA-2008
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`Case: 1:15-cv-00799 Document #: 93 Filed: 06/18/15 Page 5 of 12 PageID #:368
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`“plaintiff merely accuses unrelated defendants of independently infringing the same patent . . . is
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`in accord with the Leahy-Smith America Invents Act”); ThermaPure, Inc. v. Temp-Air, Inc., No.
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`10-cv-4724, 2010 U.S. Dist. LEXIS 136262, at *16-17 (N.D. Ill. Dec. 22, 2010) (finding
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`plaintiff’s allegations against the defendants were not sufficient to justify joinder “absent
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`additional commonalities regarding their method of infringement” because this District’s
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`“requirement for a common transaction or occurrence is not satisfied where multiple defendants
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`are merely alleged to have infringed the same patent or trademark”). Accordingly, where direct
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`competitors are alleged to have infringed the same patent, the prevailing view among district
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`courts is that joinder is improper absent allegations of concerted action or conspiracy. See, e.g.,
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`Broadband iTV, Inc. v. Hawaiian Telcom, Inc., No. 14-00169, 2014 U.S. Dist. LEXIS 154897, at
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`*17-20 (D. Haw. Oct. 30, 2014) (granting a motion to sever on the basis “that competitors cannot
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`be joined in a patent infringement suit under § 299 where they are not alleged to have conspired
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`or acted in concert”); see also Richmond v. Lumisol Elec. Ltd., No. 13-1944 (MCL), 2014 U.S.
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`Dist. LEXIS 59939, at *30-31 (D.N.J. Apr. 30, 2014) (finding that “[l]ogically, competitors,
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`absent a conspiracy, are not part of the same transaction” and may not be joined pursuant to
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`Section 299); MGT Gaming, Inc. v. WMS Gaming, Inc., 978 F. Supp. 2d 647, 659-60 (S.D. Miss.
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`2013) (granting a motion to sever on the basis that defendants were competitors, who were also
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`not acting in concert).
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`If parties are improperly joined in violation of Section 299, Federal Rule of Civil
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`Procedure 21 provides the remedy of severance. Fed. R. Civ. P. 21. Pursuant to Rule 21, “[o]n
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`motion or on its own, the court may at any time, on just terms, add or drop a party [or] may also
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`sever any claim against a party.” Id.
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`ROSETTA-2008
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`0005
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`Case: 1:15-cv-00799 Document #: 93 Filed: 06/18/15 Page 6 of 12 PageID #:369
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`III. ROSETTA’S CLAIMS AGAINST THE DEFENDANT GROUPS ARE
`IMPERMISSIBLY JOINED AND SHOULD BE SEVERED
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`As Rosetta’s Amended Complaint makes no attempt to satisfy the heightened standard of
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`Section 299, nor could it, this Court should sever the claims against each Defendant Group.
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`First, the Amended Complaint does not allege that any one Defendant Group is jointly or
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`severally liable for any of the alleged infringement of any other Defendant Group. See generally
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`Dkt. 82. Rosetta merely alleges that “[u]pon information and belief, Defendants have infringed
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`directly and continue to infringe directly the ’511 Patent.” Id. at ¶ 15. This statement is
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`insufficient to allege any joint or several liability between any of the Defendant Groups. See
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`also id. at ¶¶ 2-12 (failing to allege any relationship, connection, or common ownership between
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`one or more of the Defendant Groups). Thus, the Amended Complaint fails on its face to set
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`forth a factual basis for any joint or several liability that would support joinder under 35 U.S.C. §
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`299.
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`Second, the Amended Complaint fails to allege a common “transaction or occurrence”
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`that relates any one Defendant Group’s products to those of any other Defendant Group. In the
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`absence of joint or several liability, Section 299 prohibits joinder unless each defendant’s alleged
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`infringement of the patent-in-suit arises out of the same transaction or occurrence. See 35 U.S.C.
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`§ 299(a)(1). Here, Rosetta has not pled any allegation that Defendants have in any way acted in
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`concert with respect to their accused products. Nor does the Amended Complaint state, even in a
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`conclusory fashion, that Rosetta is entitled to relief against each Defendant Group “with respect
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`to or arising out of the same transaction, occurrence, or series of transactions or occurrences.”
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`Rather, Rosetta pleads only that each Defendant Group infringes the same patent, i.e., that
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`unrelated defendants with different accused products are engaging in separate activities that
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`allegedly infringe the ’511 Patent. Effectively, the Amended Complaint describes the Defendant
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`ROSETTA-2008
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`Case: 1:15-cv-00799 Document #: 93 Filed: 06/18/15 Page 7 of 12 PageID #:370
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`Groups as competitors, not collaborators. See also Dkt. 1 at Exh. B (accusing nearly 300
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`different products, none of which overlap across Defendant Groups). Accordingly, Rosetta’s
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`pleading is insufficient to join the Defendant Groups in a single action. See, e.g., In re EMC
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`Corp., 677 F.3d 1351, 1359 (Fed. Cir. 2012) (finding in the context of the less stringent Rule 20
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`that “[t]o be part of the ‘same transaction’ requires shared, overlapping facts that give rise to
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`each cause of action, and not just distinct, albeit coincidentally identical, facts”); see also, e.g.,
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`Broadband, 2014 U.S. Dist. LEXIS 154897, at *17-20 (granting defendants’ motion to sever on
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`the basis “that competitors cannot be joined in a patent infringement suit under § 299 where they
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`are not alleged to have conspired or acted in concert”); Richmond, 2014 U.S. Dist. LEXIS 59939,
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`at *30 (finding “that direct competitors may not be joined in a patent infringement action
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`pursuant to § 299, absent allegations of concerted action”); MGT Gaming, 978 F. Supp. 2d at
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`659-60 (granting a motion to sever where defendants were competitors, who were not acting in
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`concert); Reese, 2013 U.S. Dist. LEXIS 98635, at *3 (finding that none of the defendants had
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`“anything in common beyond having allegedly infringed the ’150 Patent”); Potter Voice Techs.
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`LLC v. Apple, Inc., No. 12-1096, 2013 U.S. Dist. LEXIS 45526, at *15 (D. Col. Mar. 29, 2013)
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`(granting all pending motions to sever on grounds that defendants did not make, use, import,
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`offer to sell or sell the same allegedly infringing product or process); Digitech Image Techs.,
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`LLC v. Agfaphoto Holding GmbH, No. 12-1153, 2012 U.S. Dist. LEXIS 142034, at *3 (C.D. Cal.
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`Oct. 1, 2012) (granting a motion to sever where defendants were competitors who participated
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`independently within a commerce stream); ThermaPure, 2010 U.S. Dist. LEXIS 136262, at *13
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`(granting motions to sever where plaintiff’s “statements that multiple defendants have infringed
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`‘in the area of restoration’ or ‘in the pest eradication business’ [failed to] establish similarities
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`ROSETTA-2008
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`Case: 1:15-cv-00799 Document #: 93 Filed: 06/18/15 Page 8 of 12 PageID #:371
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`between the accused products and methods such that [plaintiff’s] claims can be said to arise out
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`of a common transaction or occurrence”).
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`Third, the accused products for each Defendant Group are not the same. As previously
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`discussed, the only purported similarity between the nearly 300 accused products is that the
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`accused products, according to Rosetta, “embody the patented invention.” See Dkt. 82 at ¶ 15.
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`However, even prior to the enactment of the AIA, mere similarity between accused products was
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`an insufficient basis for joinder. See In re EMC, 677 F.3d at 1359 (“The sameness of the
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`accused products is not enough to establish that claims of infringement arise from the ‘same
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`transaction.’ Unless there is an actual link between the facts underlying each claim of
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`infringement, independently developed products using differently sourced parts are not part of
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`the same transaction, even if they are otherwise coincidentally identical.”). Rosetta’s allegation
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`that the accused products all infringe the same patent is inadequate to support joinder because
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`Section 299 expressly prohibits joining multiple defendants “based solely on allegations that they
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`each have infringed the patent or patents in suit.” 35 U.S.C. § 299(b). Moreover, the fact that
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`the accused products may share allegedly infringing functionalities cannot support joinder. See
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`Body Science, 846 F. Supp. 2d at 989-90; see also, e.g., Imperium IP Holdings (Cayman), Ltd. v.
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`Samsung Elecs. Co, Ltd., No. 4:14-cv-371, 2015 U.S. Dist. LEXIS 2365, at *9 (E.D. Tex. Jan. 7,
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`2015) (“While this particular functionality of the products with respect to the patent may be the
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`same, the sameness of the accused products or processes is not sufficient.”) (internal quotations
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`omitted); Summit 6 LLC v. HTC Corp., No. 7:14-cv-0014, 2014 U.S. Dist. LEXIS 126800, at
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`*41-43 (N.D. Tex. Sep. 10, 2014) (finding that defendants’ accused products and services were
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`not the same despite plaintiff’s allegations of similar functionalities among those products); Atlas
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`ROSETTA-2008
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`0008
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`Case: 1:15-cv-00799 Document #: 93 Filed: 06/18/15 Page 9 of 12 PageID #:372
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`IP, 2014 U.S. Dist. LEXIS 48802, at *8 (explaining that the mere incorporation of a common
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`component in different accused products is insufficient to support joinder).
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`Finally, contrary to the requirement of Section 299(a)(2), this action necessarily involves
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`questions of fact that are not common among the Defendant Groups. For instance, because
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`different accused products are at issue for each of the different Defendant Groups, the questions
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`of fact for the purposes of the infringement inquiry will be different, as will the facts necessary to
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`analyze any potential claims for damages. See, e.g., SB Designs v. Reebok Int’l, Ltd., 305 F.
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`Supp. 2d 888, 892 (N.D. Ill. 2004) (granting defendants’ motion to sever and rejecting plaintiff’s
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`argument that a common issue of damages existed due to defendants’ “collective infringement”).
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`IV. CONCLUSION
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`Based on the foregoing, the Defendant Groups have been impermissibly joined in this
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`action in violation of 35 U.S.C. § 299. Accordingly, Defendants respectfully request that the
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`Court sever the claims against each Defendant Group.
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`Dated:
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`June 18, 2015
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` Respectfully submitted,
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`/s/ Stacie R. Hartman
`Stacie R. Hartman (IL Bar No. 6237265)
`A. Taylor Corbitt (IL Bar No.6299553)
`SCHIFF HARDIN LLP
`233 South Wacker Drive, Suite 6600
`Chicago, IL 60611
`(312) 258-5607
`(312) 258-5600 FAX
`shartman@schiffhardin.com
`tcorbitt@schiffhardin.com
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`Brian E. Ferguson (pro hac vice)
`Anish R. Desai (pro hac vice)
`David M. DesRosier (pro hac vice)
`Megan H. Wantland (pro hac vice)
`WEIL, GOTSHAL & MANGES LLP
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`ROSETTA-2008
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`Case: 1:15-cv-00799 Document #: 93 Filed: 06/18/15 Page 10 of 12 PageID #:373
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`1300 Eye Street NW, Suite 900
`Washington, DC 20005
` (202) 682-7000
` (202) 857-0940 FAX
`brian.ferguson@weil.com
`anish.desai@weil.com
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`Counsel for Defendant Apple Inc.
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`/s/ Martin R. Bader
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`Stephen S. Korniczky (pro hac vice)
`Martin R. Bader (pro hac vice)
`Ryan P. Cunningham (pro hac vice)
`Sheppard Mullin Richter & Hampton LLP
`12275 El Camino Real, Suite 200
`San Diego, CA 92130-2006
`858-720-8900
`skorniczky@sheppardmullin.com
`mbader@sheppardmullin.com
`rcunningham@sheppardmullin.com
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`Bradley C. Graveline
`Sheppard Mullin Richter & Hampton LLP
`70 West Madison Street, 48th Floor
`Chicago, IL 60602
`312-499-6300
`bgraveline@sheppardmullin.com
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`Counsel for Defendants HTC Corp. and HTC
`America, Inc.
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`/s/ Steven Pepe
`Marc A. Cavan (SBN 6255725)
`Ropes & Gray LLP
`191 North Wacker Drive
`32nd Floor
`Chicago, IL 60606
`(312) 845-1200
`marc.cavan@ropesgray.com
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`James R. Batchelder (pro hac vice)
`Ropes & Gray LLP
`1900 University Avenue
`6th Floor
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`ROSETTA-2008
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`Case: 1:15-cv-00799 Document #: 93 Filed: 06/18/15 Page 11 of 12 PageID #:374
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`East Palo Alto, CA 94303
`(650) 617-4000
`james.batchelder@ropesgray.com
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`Steven Pepe (pro hac vice)
`Alexander E. Middleton (pro hac vice)
`Ropes & Gray LLP
`1211 Avenue of the Americas
`New York, NY 10036
`(212) 596-9000
`steven.pepe@ropesgray.com
`alexander.middleton@ropesgray.com
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`Matthew J. Rizzolo (pro hac vice)
`Ropes & Gray LLP
`700 12th Street, NW
`One Metro Center
`Washington, DC 20005
`(202) 508-4600
`matthew.rizzolo@ropesgray.com
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`Counsel for Defendant Motorola Mobility LLC
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`/s/ Jenny Colgate
`Steven Lieberman
`Jenny Colgate
`Brian A. Tollefson
`Rothwell, Figg, Ernst & Manbeck, P.C.
`607 14th Street, NW
`Washington, District of Columbia 20005
`+1 (202) 783-6040
`slieberman@rfem.com
`jcolgate@rfem.com
`btollefson@rfem.com
`
`James R. Figliulo
`Lisa Michelle Mazzone
`Thomas Daniel Warman
`Figliulo & Silverman
`10 South LaSalle Street
`Suite 3600
`Chicago, IL 60603
`(312) 251-4600
`jfigliulo@fslegal.com
`lmazzone@fslegal.com
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`Case: 1:15-cv-00799 Document #: 93 Filed: 06/18/15 Page 12 of 12 PageID #:375
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`twarman@fslegal.com
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`Counsel for Defendants LG Electronics, Inc. and
`LG Electronics U.S.A., Inc.
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`/s/ Gene W. Lee
`Richard T. McCaulley (SBN 6225506)
`Eric Wei-inn Chang (SBN 6317702)
`Ropes & Gray LLP
`191 N. Wacker Drive
`32nd Floor
`Chicago, IL 60606
`(312) 845-1200
`richard.mccaulley@ropesgray.com
`eric.chang@ropesgray.com
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`Gene W. Lee (pro hac vice)
`Julian Moore (pro hac vice)
`Seung woo Hur (pro hac vice)
`Ropes & Gray LLP
`1211 Avenue of the Americas
`New York, NY 10036
`(212) 596-9000
`gene.lee@ropesgray.com
`julian.moore@ropesgray.com
`ben.hur@ropesgray.com
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`Counsel for Defendants Samsung Electronics Co.
`Ltd., a Foreign Corporation, and Samsung
`Electronics America, Inc.
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`CERTIFICATE OF SERVICE
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`The undersigned, an attorney, hereby certifies that on June 18, 2015, she electronically
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`filed the foregoing Defendants’ Memorandum In Support Of Their Motion To Sever The
`Proceedings Pursuant To 35 U.S.C. § 299 with the Clerk of the Court by using the CM/ECF
`system, which will send a notice of electronic filing to all counsel of record.
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` s/ Stacie R. Hartman
`Stacie R. Hartman, Ill. Bar No. 6237265
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`-11-
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`ROSETTA-2008
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`0012