Case 5:20-cv-05676-EJD Document 14 Filed 09/04/20 Page 1 of 25
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`YAR R. CHAIKOVSKY (SB# 175421)
`yarchaikovsky@paulhastings.com
`PHILIP OU (SB# 259896)
`philipou@paulhastings.com
`ANDY LEGOLVAN (SB# 292520)
`andylegolvan@paulhastings.com
`JOSEPH J. RUMPLER, II (SB# 296941)
`josephrumpler@paulhastings.com
`BERKELEY FIFE (SB# 325293)
`berkeleyfife@paulhastings.com
`BORIS LUBARSKY (SB# 324896)
`borislubarsky@paulhastings.com
`PAUL HASTINGS LLP
`1117 S. California Avenue
`Palo Alto, California 94304-1106
`Telephone: 1(650) 320-1800
`Facsimile: 1(650) 320-1900
`Attorneys for Plaintiff
`APPLIED MATERIALS, INC.
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`
`APPLIED MATERIALS, INC.,
`Plaintiff,
`
`vs.
`DEMARAY LLC,
`Defendant.
`
`CASE NO. 5:20-cv-05676-EJD
`APPLIED MATERIALS, INC.’S
`MOTION FOR PRELIMINARY
`INJUNCTION TO ENJOIN DEMARAY
`LLC FROM PROCEEDING WITH
`CUSTOMER SUITS DURING THE
`PENDENCY OF THIS ACTION
`
`Hearing Date: October 22, 2020
`Hearing Time: 9:00 a.m.
`
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`APPLIED’S MOTION FOR
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`APPLIED MATERIALS EXHIBIT 1078
`
`

`

`INTRODUCTION .............................................................................................................. 2
`FACTUAL BACKGROUND ............................................................................................. 3
`A.
`Demaray’s Infringement Actions against Applied’s Customers ............................. 3
`B.
`Applied’s Declaratory Judgment Action against Demaray ..................................... 4
`LEGAL ARGUMENT ........................................................................................................ 7
`A.
`This Court Has Authority to Enjoin a Customer Suit Where the
`Manufacturer’s Action Has the Potential to Resolve Major Issues in the
`Customer Suits ........................................................................................................ 7
`This Action Is the First Filed Action Under the “First-to-File” Rule—Not
`the Customer Suits—and Regardless, the “Customer Suit” Exception
`Applies .................................................................................................................. 14
`The Comparative Convenience of this District and the District Where the
`Customer Suits Are Venued Favors This Action over the Customer Suits .......... 17
`There Are No Comity Concerns Due to the Procedural Posture of the
`Customer Suits ...................................................................................................... 18
`CONCLUSION ................................................................................................................. 20
`
`C.
`
`D.
`
`B.
`
`Case 5:20-cv-05676-EJD Document 14 Filed 09/04/20 Page 2 of 25
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`TABLE OF CONTENTS
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`Page
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`I.
`II.
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`III.
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`IV.
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`Case 5:20-cv-05676-EJD Document 14 Filed 09/04/20 Page 3 of 25
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`
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Cases
`
`Amazon.com, Inc. v. Corydoras Techs., LLC,
`No. 1:19-cv-1095-RP, 2020 U.S. Dist. LEXIS 57969 (W.D. Tex. Apr. 2, 2020) ............ passim
`
`Codex Corp. v. Milgo Electronic Corp.,
`553 F.2d 735 (1st Cir. 1977) ...............................................................................................16, 17
`
`Corydoras Techs., LLC v. Best Buy Co.,
`No. 2:19-cv-00304-JRG-RSP, 2020 U.S. Dist. LEXIS 45578 (E.D. Tex. Mar.
`16, 2020) ...................................................................................................................................19
`
`Demaray LLC v. Intel Corporation,
`No. 6:20-cv-634 (W.D. Tex. July 14, 2020) ...............................................................................3
`
`Demaray LLC v. Samsung Electronics Co., Ltd, et al.,
`No. 6:20-cv-636 (W.D. Tex. July 14, 2020). .........................................................................3, 4
`
`Ethicon, Inc. v. U.S. Surgical Corp.,
`135 F.3d 1456 (Fed. Cir. 1998) .................................................................................................11
`
`Finjan, Inc. v. Qualys Inc.,
`No. 4:18-cv-07229-YGR, 2020 U.S. Dist. LEXIS 65446 (N.D. Cal. Apr. 13,
`2020) .........................................................................................................................................10
`
`In re Founds. Worldwide, Inc.,
`542 F. App’x 998 (Fed. Cir. 2013) ...........................................................................................14
`
`In re Google Inc.,
`588 F. App’x 988 (Fed. Cir. 2014) ................................................................................... passim
`
`Google Inc. v. Rockstar Consortium U.S. LP,
`No. C 13-5933 CW, 2014 U.S. Dist. LEXIS 53757 (N.D. Cal. Apr. 17, 2014) .................15, 16
`
`Kahn v. Gen. Motors Corp.,
`889 F.2d 1078 (Fed. Cir. 1989) .............................................................................................8, 16
`
`Katz v. Lear Siegler, Inc.,
`909 F.2d 1459 (Fed. Cir. 1990) ......................................................................................... passim
`
`Lab. Corp. of Am. Holdings v. Chiron Corp.,
`384 F.3d 1326 (Fed. Cir. 2004) .............................................................................................7, 19
`
`Merial Ltd. v. Cipla Ltd.,
`681 F.3d 1283 (Fed. Cir. 2012) .................................................................................................14
`
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`Case 5:20-cv-05676-EJD Document 14 Filed 09/04/20 Page 4 of 25
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`
`
`In re Nintendo of Am., Inc.,
`756 F.3d 1363 (Fed. Cir. 2014) ...................................................................................................8
`
`Pacesetter Sys. Inc. v. Medtronic, Inc.,
`678 F.2d 93 (9th Cir. 1982) ............................................................................................... passim
`
`ProBatter Sports, LLC v. Joyner Techs., Inc.,
`463 F. Supp. 2d 949 (N.D. Iowa 2006) ...................................................................................7, 9
`
`Sillage LLC v. Kenrose Perfumes Inc.,
`No. 8:14-cv-02043-CAS(RNBx), 2015 U.S. Dist. LEXIS 75965 (C.D. Cal.
`June 9, 2015) .............................................................................................................................11
`
`Spread Spectrum Screening LLC v. Eastman Kodak Co.,
`657 F.3d 1349 (Fed. Cir. 2011) .............................................................................................9, 16
`
`STC.UNM v. Intel Corp.,
`754 F.3d 940 (Fed. Cir. 2014) ...................................................................................................11
`
`William Gluckin & Co. v. Int’l Playtex Corp.,
`407 F.2d 177 (2d Cir. 1969) ......................................................................................................16
`
`Statutes
`
`35 U.S.C. § 271(a) ...........................................................................................................................10
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`Case 5:20-cv-05676-EJD Document 14 Filed 09/04/20 Page 5 of 25
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`NOTICE OF MOTION AND MOTION
`PLEASE TAKE NOTICE that on October 22, 2020 at 9:00 a.m., or as soon thereafter as
`the matter may be heard, Plaintiff Applied Materials, Inc. (“Applied”) will and hereby does move
`for a preliminary injunction to enjoin Defendant Demaray LLC (“Demaray”) from proceeding
`with patent infringement suits against Applied’s customers—Intel Corporation (“Intel”) and
`Samsung Electronics Co. Ltd., et al. (“Samsung”)—during the pendency of this action. See
`Demaray LLC v. Intel Corporation, No. 6:20-cv-634 (W.D. Tex. July 14, 2020); Demaray LLC v.
`Samsung Electronics Co., Ltd, et al., No. 6:20-cv-636 (W.D. Tex. July 14, 2020). The Motion is
`based on this Notice of Motion, the Points and Authorities, and on other such evidence as may be
`presented in connection with this Motion.
`A preliminary injunction is expressly authorized and warranted under the circumstances of
`this case and the relevant law. Demaray sued two of Applied’s customers—Intel and Samsung—
`for patent infringement based on products manufactured by Applied that were supplied to Intel
`and Samsung. While Demaray accused Applied’s products, Demaray did not sue Applied.
`Therefore, to protect its customers, Applied initiated the instant declaratory judgment action to
`seek resolution of issues that would prove dispositive of the issues presented in Demaray’s
`customer suits. The patent infringement, patent ownership, and patent license issues presented in
`this action will be dispositive of the majority—and potentially all—of the issues in Demaray’s
`customer suits against Intel and Samsung. Under such circumstances, the interests of judicial
`efficiency, preventing needless waste of judicial and party resources, and preventing the
`possibility of conflicting decisions, a temporary halt of Demaray’s customer suits is warranted.
`
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`Case 5:20-cv-05676-EJD Document 14 Filed 09/04/20 Page 6 of 25
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`MEMORANDUM OF POINTS AND AUTHORITIES
`
`INTRODUCTION
`This declaratory judgment action involves a patent infringement, license, and ownership
`dispute between Plaintiff Applied Materials, Inc. (“Applied”) and Defendant Demaray LLC
`(“Demaray”) relating to two patents: U.S. Patent Nos. 7,544,276 and 7,381,657 (the “Asserted
`Patents”). The instant action was necessitated because Demaray sued two of Applied’s
`customers—Intel and Samsung—in Texas for patent infringement based on the Asserted Patents
`and based on products Applied manufactured and supplied to Intel and Samsung. Although
`Demaray accused Applied’s products in the customer suits, Demaray did not sue Applied for
`infringement in Texas or elsewhere.
`Therefore, to come to the aid of its customers, Applied filed the instant action seeking a
`declaratory judgment against Demaray asserting that Applied’s products do not infringe the
`Asserted Patents. Additionally, Applied seeks a declaratory judgment that: (1) Applied’s products
`do not infringe the Asserted Patents because the rights of a named inventor in the Asserted Patent
`were assigned to Applied by his employment agreement with Applied, making Applied at least a
`co-owner that has not joined and will not join Demaray in alleging infringement of the Asserted
`Patents; and (2)(a) Applied’s products do not infringe because Applied holds a license to the
`Asserted Patents based on a license agreement between Applied’s affiliate, Applied Komatsu
`Technology, Inc. (“Applied Komatsu”), and Demaray’s predecessor company, Symmorphix, Inc.
`(“Symmorphix”); or, alternatively, (2)(b) Applied’s products do not infringe because the rights of
`one or more of the named inventors to the Asserted Patents were assigned to Applied Komatsu by
`their employment agreement, making Applied Komatsu at least a co-owner of the Asserted
`Patents that has not joined and will not join Demaray in alleging infringement of the Asserted
`Patents.
`These actions present the quintessential “customer suit” scenario warranting a temporary
`halt of Demaray’s suits against Applied’s customers while the instant action proceeds to the
`merits on issues that will prove dispositive of the customer suits. See Katz v. Lear Siegler, Inc.,
`909 F.2d 1459, 1464 (Fed. Cir. 1990) (“litigation against or brought by the manufacturer of
`APPLIED’S MOTION FOR PRELIMINARY
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`INJUNCTION
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`infringing goods takes precedence over a suit by the patent owner against customers of the
`manufacturer”); see also Pacesetter Sys. Inc. v. Medtronic, Inc., 678 F.2d 93, 96 (9th Cir. 1982)
`(“sound judicial administration” supports enjoining patentee “from proceeding with a first-filed
`action against a customer for infringement when a second action has been filed by the
`manufacturer against the patentee contesting the validity of the patent”).
`This action will dispose of the majority—if not all—of the issues in the customer suits,
`not only by reason of a non-infringement judgment as to Applied’s products, but also by reason of
`case dispositive ownership and licensing issues presented in this action. For example, if Applied
`has a license to the Asserted Patents, then Demaray cannot pursue infringement claims against
`Applied by reason of the license, and Applied’s customers are similarly protected under the
`doctrine of patent exhaustion. In the interests of judicial efficiency, avoiding needless and
`expensive parallel litigation, avoiding the prospect for conflicting determinations relating to the
`same Asserted Patents and accused products, and because Applied, as the manufacturer of the
`accused products, has the greater interest in defending its products, the Court should temporarily
`enjoin Demaray from proceeding with the customer suits during the pendency of this action. Such
`an order is in accord with Federal Circuit precedent and it is the most equitable, efficient, and
`cost-effective manner to resolve all actions.
`
`II.
`
`FACTUAL BACKGROUND
`Demaray’s Infringement Actions against Applied’s Customers
`A.
`On July 14, 2020, Demaray filed two actions against Applied’s customers, accusing them
`of infringing the Asserted Patents by using Applied’s products. Demaray LLC v. Intel
`Corporation, No. 6:20-cv-634 (W.D. Tex. July 14, 2020); Demaray LLC v. Samsung Electronics
`Co., Ltd, et al., No. 6:20-cv-636 (W.D. Tex. July 14, 2020). (For ease of reference, the complaints
`in these actions are attached as Exhibits A and B to Applied’s First Amended Complaint (“FAC”)
`for Declaratory Judgment. The complaints are identical in many respects and therefore throughout
`this Motion, Applied will refer only to the complaint against Intel to avoid needless duplicative
`citations, unless otherwise noted.)
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`The product technology at issue—and in the Asserted Patents—generally relate to
`techniques for semiconductor manufacturing, including “magnetron sputtering.” See Ex. A to
`FAC at ¶¶ 11–15. In both actions, Demaray alleges that its founder—Dr. Richard Earnest
`Demaray (“Mr. Demaray”)—served as general manager of the physical vapor deposition (PVD)
`division for one of Applied’s affiliates, Applied Komatsu, in the late 1990s, developing
`magnetron sputter machines. Id. at ¶¶ 1–3. Demaray alleges Mr. Demaray left Applied Komatsu
`to serve as Chief Technology Officer and Chairman of the Board for Symmorphix. Id. at ¶ 2.
`Thereafter, Demaray alleges Mr. Demaray left Symmorphix to work for “more prominent
`companies in the industry” and ultimately founded Demaray LLC to “focus on research,
`development, and commercialization of new product applications based on technologies [Mr.
`Demaray] had developed, including technologies protected by” the Asserted Patents. Id. Demaray
`further alleges Mr. Demaray is a named inventor of the Asserted Patents, along with three other
`named inventors, and that Demaray is the assignee and owner of “all right, title, and interest” in
`the Asserted Patents. Id. at ¶¶ 1, 5.
`As to both Intel and Samsung, Demaray accuses Applied’s customers of infringing the
`Asserted Patents by using “RMS reactors” in the “Endura product line from Applied Materials,
`Inc.” Id. at ¶¶ 25–31 (footnotes 2–5, 7, and 8 cite to Applied’s website); see also Ex. B to FAC at
`¶¶ 28–34 (same).1 Demaray seeks damages against Intel and Samsung and, among other things,
`an injunction against both companies. Ex. A to FAC at Prayer for Relief.
`While Demaray accused Applied’s products, Demaray did not name Applied as a
`defendant in either action.
`
`
`
`Applied’s Declaratory Judgment Action against Demaray
`B.
`Because Demaray accused Applied’s products and Applied’s customers of patent
`infringement—thus placing a cloud over Applied’s business—Applied initiated the instant action
`
`
`1 Although Demaray appears to suggest there may be infringing reactors made by manufacturers
`other than Applied, Demaray did not identify any other manufacturer or otherwise confirm that
`any other manufacturer exists. See Ex. A to FAC at ¶ 25 (. . . including, but not limited to . . .).
`
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`to come to the aid of its customers and to confirm that none of Intel, Samsung, and Applied
`infringes the Asserted Patents by reason of Applied’s products. FAC at ¶¶ 1–2. In this action,
`Applied seeks a declaratory judgment against Demaray asserting that that Applied’s products do
`not directly or indirectly infringe the Asserted Patents. Id. at ¶¶ 43–52.
`Additionally, Applied seeks a declaratory judgment against Demaray that: (1) Applied’s
`products cannot infringe the Asserted Patents because the rights of a named inventor, Mukundan
`Narasimhan, in the Asserted Patents were assigned to Applied, making Applied at least a co-
`owner of the Asserted Patents that has not joined and will not join Demaray in alleging
`infringement of the Asserted Patents; and (2)(a) Applied holds a license to the Asserted Patents
`based on an agreement between Applied’s affiliate (Applied Komatsu) and Demaray’s
`predecessor company (Symmorphix); or, alternatively, (2)(b) Applied’s products cannot infringe
`the Asserted Patents because the rights of one or more named inventors were assigned to Applied
`Komatsu, making Applied Komatsu at least a co-owner of the Asserted Patents that has not joined
`and will not join Demaray in alleging infringement of the Asserted Patents. Id. at ¶¶ 53–64.2
`Mr. Demaray and each of the three other named inventors of the Asserted Patents are
`former and/or current employees of Applied or Applied’s affiliate, Applied Komatsu. See id. at ¶
`23. Importantly, each named inventor agreed to assign certain patented inventions to Applied or
`Applied Komatsu. Id. at ¶¶ 24–25. This includes the inventions described in the Asserted Patents.
`Id at ¶ 30. Subsequently, Mr. Demaray, along with several colleagues from Applied and Applied
`Komatsu, left in 1998 to start a new company, Symmorphix, working on some of the same
`technology they worked on at Applied and Applied Komatsu, including sputtered silicon
`deposition technology (the technology at issue in this action and the customer suits). Id. at ¶¶ 15–
`
`
`2 Applied filed its initial Complaint on August 13, 2020, Dkt. No. 1, and subsequently filed the
`FAC on September 1, 2020, to add the referenced license and ownership-based non-infringement
`counts, Dkt. No. 13. For ease of reference, and in accordance with this Court’s Standing Order,
`Applied included a red-line document showing the changes made to the initial Complaint. See Ex.
`F to the FAC.
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`16. In late 1998, Applied Komatsu and Symmorphix executed a Sale and Relationship
`Agreement, under which Symmorphix would purchase two Applied Komatsu systems and
`continue using the Applied Komatsu facilities to operate the equipment. Pursuant to the Sales and
`Relationship Agreement, Symmorphix continued using the Applied Komatsu facilities and
`equipment until at least the Fall of 1999. Id. at ¶¶ 17–19.
`In early 1999, Applied Komatsu and Symmorphix entered into an amendment to the Sales
`and Relationship Agreement, under which Symmorphix granted to Applied Komatsu a perpetual,
`royalty-free license to “inventions, improvements, or enhancements developed by Symmorphix
`relating to sputtered silicon deposition technology”—the technology embodied in the Asserted
`Patents. Id. at ¶¶ 17–19. Further, the license grant expressly permitted Applied Komatsu to
`transfer or assign such license grant to Applied, and expressly allowed Applied Komatsu’s
`customers to use such inventions as well. Id. In effect, the amendment to the Sales and
`Relationship Agreement converted the assignment obligations under the former Applied Komatsu
`employees’ employment agreements into a license agreement between Symmorphix and Applied
`Komatsu, which is freely transferable to Applied and Applied’s customers, such as Intel and
`Samsung. Id.
`Separately, one of the named inventors, Mukundan Narasimhan, was an employee of
`Applied, and not an employee of Applied Komatsu. Id. at ¶¶ 29–33. Under the provisions of his
`employee agreement with Applied, Mr. Narasimhan’s ownership rights in the Asserted Patents’
`parent application were automatically assigned to Applied. Id.
`Therefore, in addition to seeking a declaratory judgment in this action that Applied’s
`products do not infringe the Asserted Patents—i.e., that they do not practice the claimed
`inventions—Applied separately seeks a declaration that (1) Applied’s products cannot infringe
`the Asserted Patents because Mr. Narasimhan’s rights were automatically assigned to Applied,
`making Applied at least a co-owner in the Asserted Patents that has not been joined in the
`infringement suits; and (2)(a) Applied holds a license to the Asserted Patents by virtue of an
`agreement between Applied Komatsu and Symmorphix; or, alternatively, (2)(b) Applied’s
`products cannot infringe the Asserted Patents because one or more of the named inventors’ rights
`APPLIED’S MOTION FOR PRELIMINARY
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`INJUNCTION
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`were automatically assigned to Applied Komatsu making it at least a co-owner in the Asserted
`Patents that has not been joined in the infringement suits. A finding as to either Mr. Narasimhan’s
`assignment to Applied or the Applied Komatsu–Symmorphix agreement granting a license and/or
`ownership rights to the Asserted Patents would be dispositive of this action—and similarly
`Demaray’s customer suits would be adjudicated in favor of Intel and Samsung.
`
`III. LEGAL ARGUMENT
`This Court Has Authority to Enjoin a Customer Suit Where the
`A.
`Manufacturer’s Action Has the Potential to Resolve Major Issues in the
`Customer Suits
`As a preliminary matter, Federal Circuit law applies to the Court’s determination of
`whether to enjoin a co-pending patent suit. Lab. Corp. of Am. Holdings v. Chiron Corp., 384 F.3d
`1326, 1331 (Fed. Cir. 2004) (“[B]ecause of the importance of national uniformity in patent cases,
`we hold that injunctions arbitrating between co-pending patent declaratory judgment and
`infringement cases in different district courts are reviewed under the law of the Federal Circuit.”);
`see, e.g., ProBatter Sports, LLC v. Joyner Techs., Inc., 463 F. Supp. 2d 949, 954 (N.D. Iowa
`2006) (applying Federal Circuit law on motion for preliminary injunction to enjoin co-pending
`customer suit); Amazon.com, Inc. v. Corydoras Techs., LLC, No. 1:19-cv-1095-RP, 2020 U.S.
`Dist. LEXIS 57969, at *6 (W.D. Tex. Apr. 2, 2020) (same).
`The Federal Circuit has empowered district courts presiding over a manufacturer’s
`declaratory judgment action against a patentee to enjoin a co-pending infringement action against
`the manufacturer’s customers. See Katz v. Lear Siegler, Inc., 909 F.2d 1459, 1464 (Fed. Cir.
`1990) (affirming preliminary injunction of customer suit during the pendency of manufacturer’s
`suit: “litigation against or brought by the manufacturer of infringing goods takes precedence over
`a suit by the patent owner against customers of the manufacturer”) (citing Codex Corp. v. Milgo
`Electronic Corp., 553 F.2d 735, 737–38 (1st Cir. 1977) (reversing the district court’s denial of an
`injunction to enjoin the patentee’s prior-filed customer suit during the pendency of the
`manufacturer’s declaratory judgment action against the patentee)); see also ProBatter Sports, 463
`F. Supp. 2d at 954–56 (applying “analytical framework of Katz” and issuing preliminary
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`APPLIED’S MOTION FOR PRELIMINARY
`INJUNCTION
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`Case 5:20-cv-05676-EJD Document 14 Filed 09/04/20 Page 12 of 25
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`injunction to enjoin patentee from proceeding with co-pending customer suits during the
`pendency of the manufacturer’s suit).
`The rationale for favoring the manufacturer’s declaratory judgment action over the
`customer suit is simple: “At the root of the preference for a manufacturer’s declaratory judgment
`action is the recognition that, in reality, the manufacturer is the true defendant in the customer
`suit. . . . [I]t is a simple fact of life that a manufacturer must protect its customers, either as a
`matter of contract, or good business, or in order to avoid the damaging impact of an adverse
`ruling against its products.” Katz, 909 F.2d at 1464 (quoting Codex, 553 F.2d at 737–38).
`This principle—that a manufacturer’s suit should take precedence over a patentee’s
`customer suit—is so established that the Federal Circuit has issued multiple writs of mandamus
`ordering district courts to stay customer suits in favor of manufacturer suits where the district
`courts initially declined to do so. See, e.g., In re Google Inc., 588 F. App’x 988, 992 (Fed. Cir.
`2014) (ordering a stay of infringement actions against mobile device makers during the pendency
`of the accused software maker’s declaratory judgment action); In re Nintendo of Am., Inc., 756
`F.3d 1363, 1366 (Fed. Cir. 2014) (ordering a stay of infringement claims against retailers during
`the pendency of infringement claims between the manufacturer and patentee); cf. Kahn v. Gen.
`Motors Corp., 889 F.2d 1078, 1080 (Fed. Cir. 1989) (“There is no functional distinction between
`a stay of the first-filed suit and an injunction against prosecution of the first-filed suit.”).
`Indeed, even before the Federal Circuit assumed exclusive jurisdiction over appeals from
`district courts cases related to patents, the Ninth Circuit, following guidance from other courts,
`endorsed the policy justification for enjoining a patentee from proceeding with a first-filed
`customer suit during the pendency of the manufacturer’s suit against the patentee. See Pacesetter,
`678 F.2d at 96 (“sound judicial administration” supports enjoining patentee “from proceeding
`with a first-filed action against a customer for infringement when a second action has been filed
`by the manufacturer against the patentee contesting the validity of the patent”) (citing William
`Gluckin & Co. v. Int’l Playtex Corp., 407 F.2d 177, 178 (2d Cir. 1969) (upholding district court
`order enjoining patentee from further litigating prior-filed patent infringement action against
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`APPLIED’S MOTION FOR PRELIMINARY
`INJUNCTION
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`manufacturer’s customers during the pendency of the manufacturer’s declaratory action for non-
`infringement)).
`While ordinarily a preliminary injunction requires analysis of the traditional four-part test,
`the Federal Circuit has confirmed that that test “does not apply to the [] question of whether to
`enjoin the prosecution of concurrent litigation.” Katz, 909 F.2d at 1463 (“it is not controlling
`whether the plaintiff is likely to succeed on the merits”). Rather, under the Katz framework, “a
`primary question is whether the issues and parties are such that the disposition of one case would
`be dispositive of the other.” Id. The manufacturer’s declaratory judgment action need not resolve
`all issues presented in the customer suit; instead, “the manufacturer’s case need only have the
`potential to resolve the ‘major issues’ concerning the claims against the customer—not every
`issue.” Spread Spectrum Screening LLC v. Eastman Kodak Co., 657 F.3d 1349, 1358 (Fed. Cir.
`2011) (quoting Katz, 909 F.2d at 1464); see also Amazon.com, 2020 U.S. Dist. LEXIS 57969, at
`*10 (finding manufacturer’s declaratory judgment action for non-infringement against patentee
`would resolve the “major issues” involved in the co-pending patentee’s customer suit); ProBatter
`Sports, 463 F. Supp. 2d at 954–56 (same).
`A critical policy consideration for favoring a manufacturer’s suit over the customer suit—
`aside from the manufacturer’s greater interest in litigating ahead of its customers—is the
`likelihood that (1) doing so would avoid substantial waste of public and private resources by
`engaging in duplicative litigation, particularly where there are multiple customer suits, and (2) it
`would avoid the potential for conflicting decisions relating to the same asserted patents and the
`same accused products. See In re Google, 588 F. App’x at 990 (“The only potential results of
`adjudicating these cases in parallel fashion would be the Texas and California courts agree on the
`major issues of the litigation, thus producing wasteful and unnecessary litigation, or the courts
`disagree, thus producing conflicting decisions.”).
`The cases here present the classic case warranting a temporary halt of the customer suits
`in favor of the manufacturer’s action. The issues presented in this action will be dispositive of the
`majority—if not all—of the issues raised in Demaray’s customer suits. Thus, proceeding with all
`three actions in tandem would produce wasteful and unnecessary litigation and the potential for
`APPLIED’S MOTION FOR PRELIMINARY
`
`INJUNCTION
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`conflicting decisions. Enjoining Demaray from proceeding with the customers suits resolves these
`problems and produces the most equitable and efficient result.
`First, the patent ownership and license issues presented in this action are likely dispositive
`of this action and the customer suits. At issue in this action is whether Applied’s products can
`infringe the Asserted Patents in light of named inventor Mr. Narasimhan’s assignment of rights in
`the Asserted Patents to Applied, making Applied at least a co-owner of the Asserted Patents that
`has not joined and will not join Demaray in alleging infringement of the Asserted Patents. See
`FAC at ¶¶ 28–33. Also at issue is whether Applied obtained a license to the Asserted Patents
`under the Sales and Relationship Agreement between Applied’s affiliate (Applied Komatsu) and
`Demaray’s predecessor company (Symmorphix). See FAC at ¶¶ 17–19. In the alternative, if the
`Sales and Relationship Agreement did not grant a license, at issue is whether certain of the named
`inventors of the Asserted Patents, who are former employees of Applied Komatsu, assigned the
`Asserted Patents to Applied Komatsu through their employment agreements, making Applied
`Komatsu at least a co-owner of the Asserted Patents that has not joined and will not join Demaray
`in alleging infringement of the Asserted Patents. Id. at ¶¶ 17–19, 24.
`These ownership and licensing issues—which are perso