Case 2:17-cv-00514-JRG Document 266 Filed 03/04/19 Page 1 of 15 PageID #: 21166
`
`IN THE UNITED STATES DISTRICT COURT FOR
`THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`CASE NO. 2:17-cv-514-JRG
`(Lead Case)
`
`JURY TRIAL DEMANDED
`
`CASE NO. 2:17-CV-515-JRG
`(Member Case)
`
`JURY TRIAL DEMANDED
`
`§§§§§§§§§
`
`§§§§§§§§§
`
`AGIS SOFTWARE DEVELOPMENT, LLC
`
`Plaintiff,
`
`v.
`
`HTC CORPORATION, et al.
`
`Defendant.
`AGIS SOFTWARE DEVELOPMENT, LLC
`
`Plaintiff,
`
`v.
`
`LG ELECTRONICS INC.
`
`Defendant.
`
`DEFENDANT LG ELECTRONICS INC.’S REPLY IN SUPPORT OF ITS MOTION FOR
`SUMMARY JUDGMENT OF NON-INFRINGEMENT
`
`
`
`IN THE UNITED STATES DISTRICT COURT FOR
`THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`CASE NO. 2:17-cv-514-JRG
`(Lead Case)
`
`JURY TRIAL DEMANDED
`
`CASE NO. 2:17-CV-515-JRG
`(Member Case)
`
`JURY TRIAL DEMANDED
`
`§§§§§§§§§
`
`§§§§§§§§§
`
`AGIS SOFTWARE DEVELOPMENT, LLC
`
`Plaintiff,
`
`v.
`
`HTC CORPORATION, et al.
`
`Defendant.
`AGIS SOFTWARE DEVELOPMENT, LLC
`
`Plaintiff,
`
`v.
`
`LG ELECTRONICS INC.
`
`Defendant.
`
`DEFENDANT LG ELECTRONICS INC.’S REPLY IN SUPPORT OF ITS MOTION FOR
`SUMMARY JUDGMENT OF NON-INFRINGEMENT
`
`
`
`Case 2:17-cv-00514-JRG Document 266 Filed 03/04/19 Page 2 of 15 PageID #: 21167
`
`TABLE OF CONTENTS
`
`Page
`
`I.
`
`II.
`
`III.
`
`AGIS HAS PRESENTED NO EVIDENCE TO SHOW THAT ANY
`GENUINE ISSUE OF MATERIAL FACT EXISTS ......................................................... 1
`
`AGIS CANNOT IMPUTE ACTS OF NON-PARTIES TO LG KOREA .......................... 6
`
`LG KOREA DID NOT HAVE PRE-SUIT KNOWLEDGE OF THE
`PATENTS-IN-SUIT AND WAS NOT WILLFULLY BLIND ......................................... 8
`
`IV.
`
`CONCLUSION ................................................................................................................... 9
`
`i
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`
`
`Case 2:17-cv-00514-JRG Document 266 Filed 03/04/19 Page 3 of 15 PageID #: 21168
`
`TABLE OF AUTHORITIES
`
`Cases
`
`Page(s)
`
`Anderson v. Liberty Lobby, Inc.,
`477 U.S. 242 (1986) ...........................................................................................................1, 7, 9
`
`Bristol-Meyers Squibb Co. v. Matrix Labs. Ltd.,
`No. 12Civ5846 (PAE), 2015 WL 2257705 (S.D.N.Y. May 13, 2014)......................................2
`
`Campos v. Lone Star Wheel Components Inc.,
`No. 3:13-CV-4088-N, 2015 WL 11120533 (N.D. Tex. May 29, 2015) ....................................6
`
`Commil USA, LLC v. Cisco Sys., Inc.,
`135 S. Ct. 1920 (2015) ...............................................................................................................8
`
`DermaFocus LLC v. Ulthera, Inc.,
`201 F. Supp. 3d 465 (D. Del. 2016) ...........................................................................................8
`
`Insituform Techs., Inc. v. CAT Contracting, Inc.,
`385 F.3d 1360 (Fed. Cir. 2004)..................................................................................................6
`
`Rolls Royce Corp. v. Heros, Inc.,
`576 F. Supp. 2d 765 (N.D. Tex. 2008) ......................................................................................6
`
`Stuart v. Spademan,
`772 F.2d 1185 (5th Cir. 1985) ...............................................................................................6, 7
`
`Statutes
`
`35 U.S.C. § 271 ............................................................................................................................2, 3
`
`-ii-
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`
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`Case 2:17-cv-00514-JRG Document 266 Filed 03/04/19 Page 4 of 15 PageID #: 21169
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`Defendant LG Electronics Inc.’s (“LG Korea”) motion for summary judgment of non-
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`infringement should be granted because Plaintiff AGIS Software Development LLC (“AGIS”)
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`fails to show a genuine issue of material fact as to any of the matters raised.
`
`I.
`
`AGIS HAS PRESENTED NO EVIDENCE TO SHOW THAT ANY GENUINE
`ISSUE OF MATERIAL FACT EXISTS
`
`Following LG Korea’s opening brief showing that it does not engage in acts capable of
`
`constituting infringement in the United States, AGIS bore the burden of providing contrary
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`evidence. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986) (“[I]n the face of
`
`the defendant’s properly supported motion for summary judgment, the plaintiff could not rest on
`
`his allegations of a conspiracy to get to a jury without ‘any significant probative evidence
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`tending to support the complaint.’ . . . [T]he adverse party ‘must set forth specific facts showing
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`that there is a genuine issue for trial.’”). AGIS has failed to do so, instead repeatedly offering
`
`conjecture or speculation about what may transpire at trial. As LG Korea showed, it does not
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`manufacture Accused Devices in the United States (D.I. 119-2, ¶ 3);
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`
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`. In response, AGIS hypothesizes that unnamed
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`evidence “may” show something else. But now is the time to put forth evidence, not speculate.
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`As shown below, with no evidence of sales, offers for sale, or use within the United States or of
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`importation into the United States by LG Korea, AGIS’s claims must fail.
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`First, AGIS asserts that LG Korea did not produce contracts reflecting arrangements with
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`its subsidiaries, and that a witness testified that such agreements exist. (D.I. 190 at 15-16.) But,
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`
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` In any event, as
`
`stated to AGIS’s counsel several times, LG Korea searched on more than one occasion and did
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`-1-
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`Case 2:17-cv-00514-JRG Document 266 Filed 03/04/19 Page 5 of 15 PageID #: 21170
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`not locate a supply agreement between LG Korea and its U.S. subsidiaries regarding the
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`purchase and sale of mobile devices. At the hearing on LG Korea’s motion to dismiss for lack of
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`personal jurisdiction, the Court raised this issue; AGIS “made it known that they made a
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`conscious decision not to seek the Court’s involvement in compelling the production of any
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`contractual record between LG Korea and LG United States.” Ex. 1, Aug. 8, 2018 Hearing Tr.,
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`at 20:12-17; 21:2-5; 35:5-8. In fact, AGIS’s counsel stated that it was not critical to have the
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`contract. Id., Aug. 8, 2018 Hearing Tr., at 20:19-20.
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`Second, AGIS makes much of
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`
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`zero evidence of LG Korea selling or importing in the United States, only speculation about what
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` Fatally to its argument, AGIS offers
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`
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`
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` while nothing
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`says it is the importer. “Shipping” is not an act of infringement under 35 U.S.C. § 271, making
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`summary judgment appropriate. Further, AGIS cites nothing in support of its interpretation of
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`“CIP.” LG Korea showed that this “Incoterm” merely transfers risk when product is placed with
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`a logistics company, though the seller still bears the cost. (D.I. 119 at 12 (citing Bristol-Meyers
`
`Squibb Co. v. Matrix Labs. Ltd., No. 12Civ5846 (PAE), 2015 WL 2257705, at * 6 (S.D.N.Y.
`
`May 13, 2014)).) AGIS ignores this case and offers no contrary evidence or authority.
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`Third, AGIS contorts
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`-2-
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`Case 2:17-cv-00514-JRG Document 266 Filed 03/04/19 Page 6 of 15 PageID #: 21171
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`
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` That does not rebut the
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`clear testimony that LG Korea itself does not import.
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`Fourth, AGIS argues that if importation happens after a shipment lands in the United
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`States and passes customs, this may be “probative to title passing on United States soil.” (D.I.
`
`190 at 17.) This, too, is speculative, and insufficient to create an issue of fact in light of LG
`
`Korea’s showing that
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`
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`Lacking evidence, AGIS assumes that
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`if the subsidiaries do not take possession of Accused Devices or make payment at the time of
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`transfer, “it is more likely that passage of title would be triggered by acceptance of the Accused
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`Devices by a customer or third party shipper in the United States.” (D.I. 190 at 17.) AGIS then
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`suggests it is customary for title to pass at or near a port of entry (id.), but that is irrelevant where
`
`AGIS lacks evidence of that being the case. AGIS calls it “implausible that LGEKR allegedly
`
`pays for insurance on shipments to which it does not bear the risk of loss,” but this, too, finds no
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`support in fact. (See id.) While AGIS claims that shipping agreements “often contain terms
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`governing passage of title and risk of loss,” AGIS offers no such agreements for consideration
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`here. (Id. 18.) While AGIS complains about the scope of discovery, as noted above, the onus
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`was on AGIS to pursue evidence it thought necessary, and AGIS did not do so.
`
`Unable to present any evidence of importation or domestic sales by LG Korea, AGIS
`
`asks the Court to speculate as to where negotiations took place, again without competent
`
`evidence in support. (Id. at 18-19) AGIS again misconstrues depositions, claiming without basis
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`-3-
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`
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`Case 2:17-cv-00514-JRG Document 266 Filed 03/04/19 Page 7 of 15 PageID #: 21172
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`that LG Korea’s witnesses admitted that the subsidiaries negotiate sales contracts to mobile
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`carriers “at the dictates” of LG Korea. (Id. at 19.) In the passages cited,
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` It says nothing of LG Korea’s subsidiaries or of any
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`contract negotiations. In sum, AGIS lacks evidence of relevant negotiations in the United States.
`
`AGIS next asserts that LG Korea markets its products domestically, “leading to the sale
`
`and import of Accused Devices, and all trademarks and copyrights used by its subsidiaries in
`
`marketing are owned by LGEKR.” (D.I. 190 at 19-20.) AGIS cites no evidence whatsoever in
`
`support. Indeed, the evidence to the contrary is unrefuted: U.S. sales and marketing activity is
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`performed by LGEUS, not LG Korea. (D.I. 119-2, ¶¶ 3, 5-7.) AGIS claims that LG Korea
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`provides software and warranty support for the Accused Devices in the United States, but this is
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`not borne out by what AGIS cites.
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`-4-
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`Case 2:17-cv-00514-JRG Document 266 Filed 03/04/19 Page 8 of 15 PageID #: 21173
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`Moreover, there is no evidence of testing by LG Korea in the United States.
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` AGIS tries to fill in the gap with speculation, asserting that “[t]o the extent that testing
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`performed through a system run, in part, on servers based in the United States occurs inside the
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`United States, a reasonable jury could find that LGEKR uses the Accused Devices in the United
`
`States.” (Id.) This is guesswork, and certainly not a reasonable inference that follows from
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`In addition, AGIS misconstrues
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`Finally, AGIS argues that LG Korea makes the patented invention through its software
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`updates in the United States. But the evidence shows the opposite. LG Korea submitted a
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`declaration of Mr. Nafei in support of its motion, which AGIS does not even reference.
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` AGIS has no evidence that LG Korea does this in the United States.
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`-5-
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`Case 2:17-cv-00514-JRG Document 266 Filed 03/04/19 Page 9 of 15 PageID #: 21174
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`Instead, AGIS points to
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`that
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`II.
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`
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` It is undisputed
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`
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`AGIS CANNOT IMPUTE ACTS OF NON-PARTIES TO LG KOREA
`
`In its opposition brief, AGIS improperly raises a veil-piercing theory and seeks to treat
`
`LG Korea’s subsidiaries as its alter egos. This never-pleaded and factually baseless theory fails.
`
`The Complaint does not allege any theory of liability based on alter ego. (D.I. 1.) AGIS never
`
`sought to amend its Complaint to add such allegations. It cannot constructively do so at this late
`
`stage. (See D.I. 39 (setting June 15, 2018 as deadline to amend pleadings).) See also Campos v.
`
`Lone Star Wheel Components Inc., No. 3:13-CV-4088-N, 2015 WL 11120533, at *3 (N.D. Tex.
`
`May 29, 2015) (dismissing alter ego claim where such theory “is completely absent from
`
`[plaintiff’s] pleadings”) (citing Rolls Royce Corp. v. Heros, Inc., 576 F. Supp. 2d 765, 789 (N.D.
`
`Tex. 2008) (dismissing alter ego claim where “complaint [was] devoid of any factual assertions
`
`to support [it]”)). Putting aside the pleading deficiency, AGIS should also be estopped from
`
`raising this theory because it affirmatively disclaimed such a theory at the jurisdiction and
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`transfer stage. (513 D.I. 68, at 15 (“There is no need to impute the activities of LGEKR’s
`
`subsidiary to LGEKR here . . . .”.).) Indeed, it appears that AGIS copy-and-pasted alter ego
`
`arguments from its briefing in the HTC matter, given that the concluding paragraph references
`
`HTC America and HTC Corp. (D.I. 190 at 25.)
`
`The one case AGIS cites in support of this argument is of no help here. In it, the Federal
`
`Circuit affirmed a judgment declining to apply an alter-ego theory. Insituform Techs., Inc. v.
`
`CAT Contracting, Inc., 385 F.3d 1360, 1381-82 (Fed. Cir. 2004). Insituform cites to Stuart v.
`
`Spademan, 772 F.2d 1185, 1197 (5th Cir. 1985), for the relevant factors. Insituform, 385 F.3d at
`
`-6-
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`
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`Case 2:17-cv-00514-JRG Document 266 Filed 03/04/19 Page 10 of 15 PageID #: 21175
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`1381. Such factors are: (1) the entity is undercapitalized; (2) the entity does not have separate
`
`books; (3) the entity’s finances are not kept separate from the corporation’s finances; (4) the
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`entity is used to promote fraud or illegality; (5) corporate formalities are not followed; and (6)
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`the entity is merely a sham. Stuart, 772 F.2d at 1197. In Stuart, the Fifth Circuit rejected an
`
`alter ego theory, notwithstanding items in the record arguably blurring the distinction between
`
`the defendant and the putative alter ego corporation. Id. at 1198.
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`Here, AGIS has not shown that LG Korea’s subsidiaries are its alter egos. AGIS asserts
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`that LG Korea’s subsidiaries do not pay anything for the receipt of goods, but that is disproven
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`by undisputed evidence. As discussed above,
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` The deposition testimony
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`that AGIS cites says no such thing, and AGIS cannot create a genuine issue of material fact
`
`merely by hand-waiving and claiming “there is no evidence.” LG Korea has put forth evidence
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`that its subsidiaries are not alter egos: LG Korea does not now, and did not in the past, supervise
`
`or control their daily operations. (D.I. 119 at 9 (citing 513 D.I. 180, Ex. W (Ryu Decl.), ¶14).)
`
`AGIS’s failure to cite any contrary evidence dooms its ill-conceived argument. See Anderson,
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`477 U.S. at 250 (“[W]hen a properly supported motion for summary judgment is made, the
`
`adverse party ‘must set forth specific facts showing that there is a genuine issue for trial.’”).
`
`-7-
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`
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`Case 2:17-cv-00514-JRG Document 266 Filed 03/04/19 Page 11 of 15 PageID #: 21176
`
`III.
`
`LG KOREA DID NOT HAVE PRE-SUIT KNOWLEDGE OF THE PATENTS-IN-
`SUIT AND WAS NOT WILLFULLY BLIND
`
`AGIS asserts that LG Korea “had systemic contact with the patents-in-suit prior to the
`
`filing of the instant lawsuit.” (D.I. 190 at 26.) But “systemic contact” does not suffice for
`
`§ 271(b) liability. AGIS must show actual knowledge of the patents and an intent to induce
`
`infringement. Commil USA, LLC v. Cisco Sys., Inc., 135 S. Ct. 1920, 1925-26, 1928 (2015). It
`
`shows neither.
`
`Unable to establish the requisite knowledge under § 271(b) of the patents themselves,
`
`
`
`
`
`
`
` (citing DermaFocus LLC v. Ulthera, Inc., 201 F.
`
`Supp. 3d 465, 471 (D. Del. 2016) (concluding that no plausible inference that defendant had
`
`knowledge of the patent-in-suit arises from allegation that the patent-in-suit was listed as a prior
`
`art reference in the Information Disclosure Statement filed in connection with defendant’s patent
`
`application)).) AGIS conclusorily asserts that “location services patents are important to LG’s
`
`business, as the current lawsuit shows, and were explicitly and repeatedly referenced by LG or
`
`its Agents,” but once more, AGIS cites no evidence in support. (D.I. 190 at 26.) AGIS argues
`
`that because LG Korea “employs an intellectual property department to manage its portfolio of
`
`patents,” a jury could “conclude that LGEKR knew of the patents-in-suit prior to the filing of
`
`this case, and accordingly, knew that the functionality of its Accused Devices infringed the
`
`patents.” (D.I. 190 at 26.) But AGIS cites only “See Ryu Decl.,” and provides no reference to a
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`specific paragraph of the Ryu declaration. (Id.) AGIS’s contorted logic seems to be that because
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`Mr. Ryu works in LG Korea’s IP Center, and his job includes patent licensing and litigation
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`-8-
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`
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`Case 2:17-cv-00514-JRG Document 266 Filed 03/04/19 Page 12 of 15 PageID #: 21177
`
`FILED UNDER SEAL PURSUANT TO PROTECTIVE ORDER
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`support, somebody must have had knowledge of the Patents-in-Suit. (See D.I. 119-2, ¶ 1.) This
`
`is pure wishful thinking, not a reasonable inference supported by any evidence. While AGIS
`
`argues that “‘[t]he evidence of the non-movant is to be believed, and all justifiable inferences are
`
`to be drawn in his favor,’” AGIS is not permitted to make up facts from whole cloth. (See D.I.
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`190 at 26 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 242 (1986)).) Thus, AGIS
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`fails to show knowledge as a matter of law.
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`Perhaps realizing this, AGIS invokes the doctrine of willful blindness. (D.I. 190 at 27.)
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`Again citing no evidence and instead resorting to speculation, AGIS says LG Korea “knew there
`
`was a high probability that its patents infringed references that it so prolifically cited” because
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`“[i]t is not unreasonable to expect that the IP department of a company as large as LGEKR
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`would have an awareness of the references cited in its own patents.” (D.I. 190 at 27.) This, too,
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`is not a justifiable inference. LG Korea has shown, with evidence, that it became aware of the
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`Patents-In-Suit when AGIS filed the Complaint. (D.I. 119-13 at 44.) Mere conjecture does not
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`defeat this. AGIS tries to twist LG Korea’s statement that
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`into a ludicrous assumption: that LG Korea “personnel do not know the contents of
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`their own patents,” tantamount to being willfully blind. (D.I. 190 at 27.) That, too, is baseless
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`speculation, not a justifiable inference, and nowhere near the showing required to overcome the
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`undisputed fact that LG Korea had no pre-suit knowledge of the Patents-In-Suit.
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`IV.
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`CONCLUSION
`
`For the foregoing reasons, LG Korea’s motion for summary judgment of non-
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`infringement should be granted.
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`-9-
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`
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`Case 2:17-cv-00514-JRG Document 266 Filed 03/04/19 Page 13 of 15 PageID #: 21178
`
`Dated: February 27, 2019
`
`Respectfully submitted,
`
`By:
`
`/s/ Michael A. Berta
`J. Mark Mann (SBN: 12926150)
`G. Blake Thompson (SBN: 24042033)
`MANN TINDEL THOMPSON
`300 West Main Street
`Henderson, Texas 75652
`Tel: (903) 657-8540
`mark@themannfirm.com
`blake@themannfirm.com
`
`Michael A. Berta
`ARNOLD & PORTER KAYE SCHOLER LLP
`Three Embarcadero Center, 10th Floor
`San Francisco, CA 94111-4024
`Tel: (415) 471-3277
`Michael.Berta@arnoldporter.com
`
`James S. Blackburn
`Nicholas H. Lee
`Justin J. Chi
`ARNOLD & PORTER KAYE SCHOLER LLP
`777 South Figueroa Street, 44th Floor
`Los Angeles, CA 90017-5844
`Tel: (213) 243-4156
`James.Blackburn@arnoldporter.com
`Nicholas.Lee@arnoldporter.com
`Justin.Chi@arnoldporter.com
`
`Bonnie Phan
`ARNOLD & PORTER KAYE SCHOLER LLP
`3000 El Camino Real
`Five Palo Alto Square, Suite 500
`Palo Alto, CA 94306-3807
`Tel: (650) 319-4500
`Bonnie.Phan@arnoldporter.com
`
`Attorneys for Defendant LG Electronics Inc.
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`-10-
`
`
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`Case 2:17-cv-00514-JRG Document 266 Filed 03/04/19 Page 14 of 15 PageID #: 21179
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`CERTIFICATE OF AUTHORIZATION TO FILE UNDER SEAL
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`The undersigned certifies that the foregoing document is authorized to be filed under seal
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`pursuant to paragraphs 26 and 27 of the Protective Order entered in this case.
`
` /s/ Michael A. Berta
` Michael A. Berta
`
`-11-
`
`
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`Case 2:17-cv-00514-JRG Document 266 Filed 03/04/19 Page 15 of 15 PageID #: 21180
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that counsel of record who are deemed to have
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`consented to electronic services are being served with a copy of this document via the Court’s
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`CM/ECF system per Local Rule CV-5(a)(3) on February 27, 2019.
`
` /s/ Michael A. Berta
` Michael A. Berta
`
`-12-
`
`
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