Case 2:17-cv-00517-JRG Document 74 Filed 06/20/18 Page 1 of 8 PageID #: 1019
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`Plaintiff,
`
`
`
`v.
`
`
`AGIS Software Development, LLC,
`
`
`
`
`
`ZTE CORPORATION, ZTE (USA) INC.,
`AND ZTE (TX), INC.,
`
`
`
`
`
`
`
`Defendants.
`
`
`
`
`
`
`Case No. 2:17-CV-00517-JRG
`
`
`
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`
`
`
`
`
`
`SUR-REPLY IN OPPOSITION TO AGIS’S
`MOTION FOR ALTERNATIVE SERVICE
`
`
`
`
`

`

`Case 2:17-cv-00517-JRG Document 74 Filed 06/20/18 Page 2 of 8 PageID #: 1020
`
`
`
`AGIS seeks extraordinary relief from this Court—an exemption from the requirement to
`
`serve the Amended Complaint—by seeking alternative means of service.1 In AGIS’s opening
`
`brief, AGIS explained that it sought to serve the original Complaint, but AGIS was silent on
`
`service of the Amended Complaint. As ZTE responded, AGIS has never even attempted to serve
`
`the Amended Complaint, a fatal defect. In its Reply brief, AGIS does not deny that it has never
`
`attempted to serve the Amended Complaint, and, for that reason alone, the remedy requested by
`
`AGIS (alternative service) should be denied. AGIS must follow the rules for proper service.
`
`Notwithstanding the failure to even attempt service of the Amended Complaint, AGIS
`
`asks that this Court overlook controlling law on service, including both Supreme Court and Fifth
`
`Circuit, as well as the plain and ordinary meaning of Fed. R. Civ. Pro. Rule 4. The Supreme
`
`Court and Fifth Circuit both confirm that even alternative service methods are required to
`
`comport with Due Process, including a state’s long arm statute, yet AGIS refuses to even
`
`consider Texas state law. Also, in error, AGIS seeks service within the United States under rules
`
`specifically limited to service outside the United States. And lastly, the facts here are
`
`significantly different from every case that is cited by AGIS, such that the extraordinary relief
`
`that AGIS requests is not justified. For all of these reasons, the Court should deny AGIS’s
`
`request for the extraordinary relief of alternative service means and require proper service.
`
`I.
`
`AGIS HAS NEVER ATTEMPTED TO SERVE THE AMENDED COMPLAINT
`
`AGIS never even attempted service of the operative Amended Complaint here on ZTE
`
`Corp. The only complaint that AGIS attempted to serve was the original Complaint, but the
`
`original Complaint was rendered ineffective on October 17, 2017, when AGIS amended it. Dkt.
`
`
`
`1 ZTE (USA), Inc. (“ZTA”) and ZTE (TX) Inc. (“ZTX”) (“Defendants” or “ZTE”) submit this Sur-reply, addressing
`Plaintiff AGIS Software Development, LLC’s (“AGIS”) Motion for Alternative Service seeking alternative means
`to serve ZTE Corporation (“ZTE Corp.”). ZTE Corp. is not a party, until AGIS has served the Amended Complaint.
`
`
`
`

`

`Case 2:17-cv-00517-JRG Document 74 Filed 06/20/18 Page 3 of 8 PageID #: 1021
`
`32 at ¶¶ 3, 16; and Dkt. 64 at p. 3. By adding (1) several new legal theories, (2) a new defendant,
`
`and (3) a new asserted patent—AGIS superseded its original Complaint. See Fed. R. Civ. P.
`
`4(c)(1) and King v. Dogan, 31 F.3d 344, 346 (5th Cir. 1994). And, because the Amended
`
`Complaint does not “specifically refer[ ] to and adopt[ ] or incorporate[ ] by reference the earlier
`
`pleading,” the original Complaint has “no legal effect.” Id.; see also Dkt. 32. Of note, in its
`
`Reply brief, AGIS does not dispute these facts or this law.2 Dkt. 70 at 4-5; see also Dkt. 68 at 3-
`
`4. Thus, the original Complaint is “render[ed] [ ] of no legal effect.” King, 31 F.3d at 346. In
`
`the Response brief, Defendants cited a timeline chart on service, Dkt. 68 at 5, and AGIS has not
`
`disputed its veacity. Until AGIS attempts service, any plea for alternative means is premature.
`
`II.
`
`AGIS FAILS TO DEMONSTRATE A NEED FOR ALTERNATIVE SERVICE
`
`A.
`
`
`
`AGIS Fails Service under Rule 4(h)
`
`AGIS seeks alternative service within the United States under Rule 4(f)(3) through
`
`4(h)(2); but, these alternatives contradict the plain meaning of Rule 4(h)(2) (and Rule 4(f)).
`
`AGIS seeks alternative service within the United States—on unrelated U.S. counsel or on other
`
`U.S. defendants—but Rule 4(h)(2) only provides for service on a foreign corporation “at a place
`
`not within any judicial district of the United States, in any manner prescribed by Rule 4(f).” 3
`
`Rule 4(f) is also limited to service “at a place not within any judicial district of the United
`
`States.” So, AGIS cites the wrong rule for alternative service. For service in the U.S., AGIS
`
`
`
`2 AGIS attempts to fashion a legal loophole, by arguing that it is not required to serve the Amended Complaint
`because the initial Complaint is operative until the Amended Complaint “is properly served, not when it is filed.”
`Dkt. 70 at 4-5. AGIS’s understanding of 4(c)(1) should not be adopted, at least because it ignores the controlling
`Fifth Circuit law, that is, that an Amended Complaint supersedes an original Complaint, irrelevant of service, which
`means AGIS never properly served the Amended Complaint. Indeed, here, AGIS is required to serve ZTE Corp.
`with a copy of the correct effective complaint, i.e. the Amended Complaint, but AGIS has so far refused to do so.
`
` AGIS attempts to distinguish 4(h)(1) and 4(h)(2), by arguing that it is serving ZTE Corp. outside the United States
`by transmitting documents to agents in the United States. Dkt. 70 at 1-3. No matter how much lipstick AGIS puts
`on the pig, AGIS’s desired other means of service are within the United States and thus cannot comply with 4(h)(2).
`
` 3
`
`2
`
`

`

`Case 2:17-cv-00517-JRG Document 74 Filed 06/20/18 Page 4 of 8 PageID #: 1022
`
`must use Rule 4(h)(1), which governs service “in a judicial district of the United States.” And,
`
`Rule 4(h)(1) is limited by the time restrictions of Rule 4(m), so use of Rule 4(h)(1) is untimely.4
`
`
`B.
`
`AGIS Fails Service under Rule 4(f)(1)
`
`At one point, AGIS knew that service through the Hague Convention was required.
`
`Specifically, AGIS admits that it originally sought “service of ZTE Corp. under Rule 4(f)(1).”
`
`Dkt. 70 at 5. Rule 4(f)(1) is for service through the Hague Convention, which entails
`
`transmitting service documents abroad. In fact, AGIS admits that it transmitted service
`
`documents abroad for the original Complaint, Dkt. 64-3, and acknowledges “transmittal of
`
`documents abroad triggers application of Hague Convention procedures.” Dkt. 70 at n. 1. AGIS
`
`acknowledged it needed to serve the original Complaint through the Hague Convention,
`
`“because the service that plaintiff attempted fell squarely within the scope of Hague Convention,
`
`[and] insisting on service [as ZTE Corp. does here] pursuant to its provisions was warranted by
`
`existing law.” Sheets v. Yamaha Motors Corp. U.S.A., 891 F.2d 533 (5th Cir. 1990). The error
`
`now is that AGIS has failed to attempt service of the Amended Complaint through Rule 4(f)(1).
`
`III. No Binding Authority Permits Alternative Service under Rule 4(f)(3)
`
`For arguendo, we now turn to the relief that AGIS seeks, or alternative service within the
`
`U.S. under Rule 4(f)(3).5 Contrary to AGIS’s arguments, the Supreme Court has not given a
`
`plaintiff carte blanche to effectuate service as it sees fit. Instead, service on a foreign entity
`
`through a domestic agent, as requested here on U.S. counsel and/or U.S.-based defendants, is
`
`
`4 By seeking alternative service under Rule 4(f)(3), AGIS seeks to circumvent the limits of Rule 4(m), by disguising
`service in the U.S. as form of service “in a foreign country” under Rule 4(h)(2). Dkt. 70 at 5. But, AGIS continues
`to insist on service within the U.S., not in a foreign country, Dkt. 70 at 1-3. Thus, AGIS should comply with the
`time restrictions of Rule 4(m). AGIS filed the Amended Complaint seven months ago, and AGIS has not attempted
`any service of any kind since then, and AGIS has not provided any reason for the delay, so dismissal is appropriate.
`
` AGIS contends, without context, that “courts routinely order alternative service,” Dkt. 70 at 1; however, the cases
`that are cited by AGIS all incorporate extreme circumstances, none of which are present here. See Dkt. 68 at 7-8.
`
` 5
`
`3
`
`

`

`Case 2:17-cv-00517-JRG Document 74 Filed 06/20/18 Page 5 of 8 PageID #: 1023
`
`only valid if it comports with both state law and with the Due Process Clause. Volkswagenwerk,
`
`108 S.Ct. at 2112; see also Lisson v. ING GROEP N.V., 262 Fed. Appx. 567, 570 (5th Cir. 2007);
`
`compare to Dkt. 70 at 2. Here, however, AGIS has not cited any controlling authority, or other
`
`case law or state law, finding that service on unrelated U.S. counsel or on U.S.-based defendants
`
`satisfies the “domestic agent” requirement, let alone the Due Process notice requirement. See
`
`Volkswagenwerk, 108 S.Ct. at 2112 (“[w]here service on a domestic agent is valid and complete
`
`under both state law and the Due Process Clause, our inquiry ends”).
`
`Indeed, the Fifth Circuit offers guidance on the issue of a “domestic agent,”6 guidance
`
`that AGIS ignores. See Dkt. 70 at n. 1. In Sheets II, 7 the Fifth Circuit reaffirmed that a court
`
`must determine whether the state’s long-arm statue permits any contemplated service method
`
`and comports with the Due Process Clause. Sheets II, 891 F.2d at 537 (“[i]n determining
`
`whether service [over an agent] involves the transmittal of documents abroad, courts are to look
`
`to the method of service prescribed by the internal law of the forum state”); see also
`
`Volkswagenwerk, 108 S.Ct. at 2108-11 (1988); and Lisson v. ING GROEP N.V., 262 Fed.
`
`Appx.567, 570 (5th Cir. 2007). Yet, rather than applying Texas law, AGIS cites to California
`
`law. Dkt. 64 at 5-9 and Dkt. 70 at 3-5. Moreover, AGIS refuses to acknowledge that it’s
`
`requested means of service must comply with Texas’s long arm statute, but again, AGIS fails to
`
`prove that the options comply with Texas law. See Dkt. 68 at n. 3; and Dkt. 70 at 2 (“[t]hus
`
`Defendants are incorrect that alternative service must comply with Texas’s long arm statute”).
`
`
`1.
`
`AGIS Has No Legal Basis for Alternative Service on U.S. Counsel
`
`AGIS seeks to serve U.S. counsel in a different case, and for this option, AGIS cites to
`
`
`
`6 The Eleventh Circuit offers additional guidance in Codigo. See Dkt. 68 at 6-7.
`7 See Sheets v. Yamaha Motors Corp., U.S.A., 849 F.2d 179 (5th Cir. 1988) (“Sheets I”); and Sheets v. Yamaha
`Motors Corp. U.S.A., 891 F.2d 533 (5th Cir. 1990) (“Sheets II”).
`
`4
`
`

`

`Case 2:17-cv-00517-JRG Document 74 Filed 06/20/18 Page 6 of 8 PageID #: 1024
`
`Fundamental Innovation. Dkt. 70 at 3; Fundamental Innovation Sys. Int’l, LLC v. ZTE Corp., et
`
`al., No. 3:17-cv-1827 (N.D. Tex. Feb. 13, 2017). However, AGIS fails to show how the
`
`unrelated U.S. counsel act as “valid agents” for ZTE Corp. in this matter.8 Contrary to the
`
`“unique circumstances” in Fundamental Innovation, where counsel from McDermott Will &
`
`Emery had appeared on behalf of ZTE Corp. in that case, Fundamental, No. 3:17-cv-1827, Dkt.
`
`91 at 11; in this case, (1) McDermott, Will & Emery have not appeared on ZTE Corp.’s behalf in
`
`this case and (2) McDermott, Will & Emery do not represent ZTE Corp. in this matter. Thus,
`
`AGIS presents no controlling law (or any case law) that support whether unrelated U.S. counsel
`
`may act as valid agents, and AGIS also fails to demonstrate how the requested alternative service
`
`comports with both state law and the Due Process Clause. Volkswagenwerk, 108 S.Ct. at 2112.
`
`
`2.
`
`AGIS Has No Legal Basis for Service on U.S.-Based Defendants
`
`AGIS also seeks service on U.S.-based defendants, but this method is improper too. Dkt.
`
`70 at 3-5.9 AGIS offers no legal basis for this alternative service means. Also, the Fifth Circuit
`
`found that, “insisting on service [under the Hague] . . . was warranted by existing law.” Sheets II,
`
`891 F.2d at 537. AGIS attempted service through the Hague Convention for the original
`
`Complaint, Dkt. 64-3; it is appropriate for similar service of the operative Amended Complaint.
`
`IV. CONCLUSION
`
`AGIS does not deny that it never attempted to serve the Amended Complaint, and, for
`
`that reason alone, alternative service is improper. AGIS alternative requests are also all afoul of
`
`Supreme Court and Fifth Circuit law. For these reasons, the Court should deny AGIS’s motion.
`
`
`
`8 AGIS’s argument on “serving a foreign defendant’s domestic counsel,” Dkt. 70 at 3, misses the mark. AGIS is
`first required to show that the U.S. counsel are “agents,” of ZTE Corp. under Texas law. See Sheets II at 537.
`9 AGIS alleges that ZTE Corp. and ZTA have a “close relationship” based on allegations of common executive
`officers, alleging “reasonably certain … notice.” Dkt. 70 at 2. Yet, AGIS does not analyze the corporate
`relationship under Texas law, as required. See Sheets II at 537 (analyzing agency under state long-arm statute).
`
`5
`
`

`

`Case 2:17-cv-00517-JRG Document 74 Filed 06/20/18 Page 7 of 8 PageID #: 1025
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Dated: June 20, 2018
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Respectfully submitted,
`
`/s/ Lionel M. Lavenue
`Lionel M. Lavenue
`
`Lionel M. Lavenue (Lead Attorney)
`VA State Bar No. 49,005
`Bradford C. Schulz
`VA State Bar No. 91,057
`FINNEGAN, HENDERSON, FARABOW,
` GARRETT & DUNNER, LLP
`Two Freedom Square
`11955 Freedom Drive
`Reston, VA 20190
`Phone: (571) 203-2700
`Fax: (202) 408-4400
`
`ATTORNEYS FOR DEFENDANTS
`ZTE (USA) INC. AND ZTE (TX), INC.
`
`6
`
`

`

`Case 2:17-cv-00517-JRG Document 74 Filed 06/20/18 Page 8 of 8 PageID #: 1026
`
`CERTIFICATE OF SERVICE
`
`I hereby certify that on June 20, 2018, I electronically filed the foregoing with the Clerk
`
`of Court using the CM/ECF system, which will send a notification of such filing (“NEF”) all
`
`counsel of record who have appeared in this case. I also caused the documents above to be sent
`
`to all counsel of record via electronic mail.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`/s/ Lionel M. Lavenue
`Lionel M. Lavenue
`
`
`
`Lionel M. Lavenue (Lead Attorney)
`VA State Bar No. 49,005
`Bradford C. Schulz
`VA State Bar No. 91,057
`FINNEGAN, HENDERSON, FARABOW,
` GARRETT & DUNNER, LLP
`Two Freedom Square
`11955 Freedom Drive
`Reston, VA 20190
`Phone: (571) 203-2700
`Fax: (202) 408-4400
`
`ATTORNEYS FOR DEFENDANTS
`ZTE (USA) INC. AND ZTE (TX), INC.
`
`7
`
`