Case 2:21-cv-00072-JRG-RSP Document 179-2 Filed 10/23/21 Page 1 of 6 PageID #: 6208
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`Exhibit B
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`Case 4:21-cv-01871-JST Document 44 Filed 09/07/21 Page 1 of 5Case 2:21-cv-00072-JRG-RSP Document 179-2 Filed 10/23/21 Page 2 of 6 PageID #: 6209
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`LYFT, INC.,
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`Plaintiff,
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`v.
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`QUARTZ AUTO TECHNOLOGIES LLC,
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`Defendant.
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`Case No. 21-cv-01871-JST
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`ORDER DENYING MOTION TO
`DISMISS
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`Re: ECF No. 26
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`In this action, Plaintiff Lyft, Inc. seeks a declaratory judgment of non-infringement as to
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`five patents for which Defendant Quartz Auto Technologies LLC has asserted ownership. Quartz
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`has filed a motion to dismiss on three grounds: (1) that it is not subject to personal jurisdiction in
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`this district; (2) that the Court should decline to exercise jurisdiction under the Declaratory
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`Judgment Act; and (3) that the action should be dismissed under the anticipatory suit exception to
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`the first-to-file rule. ECF No. 26. The Court will deny the motion.
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`First, Quartz is subject to specific personal jurisdiction in this district. “[C]ommunications
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`sent into a state may create specific personal jurisdiction, depending on the nature and scope of
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`such communications,” and, “in the context of patent litigation, communications threatening suit
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`or proposing settlement or patent licenses can be sufficient to establish personal jurisdiction.”
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`Trimble Inc. v. PerDiemCo LLC, 997 F.3d 1147, 1155 (Fed. Cir. 2021). The parties do not dispute
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`that Quartz’s counsel communicated with Lyft’s counsel, who is located in this district, by
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`telephone eight times and by email twice during the seven-month period between July 2020 and
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`February 2021. Quartz’s principals sought to have a discussion with Lyft’s principals, but there is
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`no indication that such a discussion ever occurred. The communications between counsel
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`included an hour-long phone call regarding an emailed presentation that discussed the five patents
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`Northern District of California
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`United States District Court
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`Case 4:21-cv-01871-JST Document 44 Filed 09/07/21 Page 2 of 5Case 2:21-cv-00072-JRG-RSP Document 179-2 Filed 10/23/21 Page 3 of 6 PageID #: 6210
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`at issue. At the time, one of those patents, U.S. Patent No. 7,958,215 (“the ’215 Patent”), was the
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`subject of an infringement action brought by Quartz in the Western District of Texas. Since the
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`filing of Lyft’s complaint in this case, the ’215 Patent was dismissed from the Texas litigation for
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`improper venue, and Quartz filed an infringement action in the District of Delaware that includes
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`all five patents at issue here.1
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`The contacts began when Lyft’s counsel contacted Quartz’s counsel to discuss resolution
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`of the Texas litigation. Although Quartz argues that Lyft is the party that “shifted and amplified
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`the conversation” to extend beyond the patents at issue in that case, ECF No. 38 at 7, Quartz’s
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`counsel’s own declaration indicates that he was the one who brought up the possibility of
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`resolving issues related to other patents:
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`Mr. Taylor [Lyft’s counsel] asked about the type of settlement that
`Quartz had in mind and asked if Quartz had a specific monetary
`settlement demand. I explained that Quartz was willing to resolve not
`only the pending case but also other pending issues by providing a
`license under the patents asserted in the Texas Action (“Asserted
`Texas Patents”) and other patents owned by Quartz in exchange for a
`lump sum settlement payment.
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`ECF No. 26-2 ¶ 5 (emphasis added). In subsequent communications, Quartz provided additional
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`details regarding “the patents to be included, a more specific settlement range, and the basis for
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`Quartz’s settlement valuation,” as well as “exemplary claim charts . . . provided for the purpose of
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`demonstrating additional value of the portfolio license being discussed.” Id. ¶¶ 7, 13.
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`Quartz’s communications were far more extensive than those that the Federal Circuit found
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`insufficient in Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998).
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`In that case, the court determined that sending three letters suggesting patent infringement and
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`offering to negotiate a license was not sufficient to subject the defendant to personal jurisdiction.
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`Id. at 1357, 1361. The court characterized the letters as “warning letters” and held that
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`“[s]tandards of fairness demand that [the defendant] be insulated from personal jurisdiction in a
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`distant foreign forum when its only contacts with that forum were efforts to give proper notice of
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`its patent rights.” Id. at 1361. The court explained that “[a]n offer to license is more closely akin
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`1 The Texas litigation continues as to four other patents not at issue in this case.
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`Northern District of California
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`United States District Court
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`Case 4:21-cv-01871-JST Document 44 Filed 09/07/21 Page 3 of 5Case 2:21-cv-00072-JRG-RSP Document 179-2 Filed 10/23/21 Page 4 of 6 PageID #: 6211
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`to an offer for settlement of a disputed claim rather than an arms-length negotiation in anticipation
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`of a long-term continuing business relationship.” Id.
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`The Federal Circuit recently held that Red Wing was correctly decided on its facts but that
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`“there is no general rule that demand letters can never create specific personal jurisdiction.”
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`Trimble, 997 F.3d at 1156. In Trimble, the court found the minimum contacts or purposeful
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`availment test to be satisfied by the company’s “far more extensive [contacts] than those in Red
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`Wing” – twenty-two communications over three months – that “went far beyond solely informing
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`a party who happens to be located in California of suspected infringement.” Id. at 1156-57
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`(quotation marks, alteration marks, and citation omitted). Like Quartz in this case, the patent
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`holder in Trimble “amplified its threats of infringement as the communications continued,
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`asserting more patents and accusing more of [Lyft’s] products of infringement.” Id. at 1157. The
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`Court does not find Quartz’s failure to threaten litigation or send a draft complaint, or its failure to
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`retain counsel in this district, to be dispositive. While those factors were present in Trimble, the
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`Court concludes that Quartz’s conduct relevant to the patents at issue in this case was sufficient to
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`subject Quartz to personal jurisdiction. Quartz “deliberately reached out beyond its home,” and
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`Lyft’s claims “arise out of or relate to [Quartz’s] contacts” with this forum. Id. at 1153 (quotation
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`marks and citations omitted). Although there were fewer communications by Quartz than those at
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`issue in Trimble, the Court has no difficulty in concluding that Lyft’s “attempts to extract a license
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`in this case are much more akin to an arms-length negotiation in anticipation of a long-term
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`continuing business relationship, over which a district court may exercise jurisdiction.” Id. at
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`1157 (quotation marks and citation omitted). Also weighing in favor of a finding of jurisdiction
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`are the facts that Lyft is headquartered in California, and that Quartz has entered into a license
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`with Uber, another company that operates in this state. Id.
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`Because Quartz “purposefully has directed [its] activities at forum residents,” it must, to
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`defeat jurisdiction, “present a compelling case that the presence of some other considerations
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`would render jurisdiction unreasonable.” Id. at 1153 (quoting Burger King Corp. v. Rudzewicz,
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`471 U.S. 462, 477 (1985)) (emphasis in Trimble). The Supreme Court has recognized five factors
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`to consider when making this determination: “(1) the burden on the defendant; (2) the forum’s
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`3
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`Northern District of California
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`United States District Court
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`Case 4:21-cv-01871-JST Document 44 Filed 09/07/21 Page 4 of 5Case 2:21-cv-00072-JRG-RSP Document 179-2 Filed 10/23/21 Page 5 of 6 PageID #: 6212
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`interest in adjudicating the dispute; (3) the plaintiff’s interest in obtaining convenient and effective
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`relief; (4) the interstate judicial system’s interest in obtaining the most efficient resolution of
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`controversies; and (5) the shared interest of the states in furthering fundamental substantive social
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`policies.” M-I Drilling Fluids UK Ltd. v. Dynamic Air Ltda., 890 F.3d 995, 1002 (Fed. Cir. 2018)
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`(citing Burger King, 471 U.S. at 477). Quartz concedes that the second through fifth factors are
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`neutral.2 ECF No. 26 at 23-24; ECF No. 38 at 13-14. Thus, the question is whether Quartz has
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`demonstrated a compelling case against jurisdiction based on the burden to Quartz of litigating in
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`this district. It has not: Quartz is incorporated in Maryland and has filed suit against Lyft in both
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`Texas and Delaware. The burden to litigate in California “is, at most, only slightly greater than
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`litigating in [Quartz’s] preferred fora.” Trimble, 997 F.3d at 1158. In addition, any such burden is
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`mitigated by the nature of Quartz’s “primary business of asserting its patents,” which “requires it
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`to litigate far from” its offices.3 Id. Quartz has failed to present a compelling case that jurisdiction
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`would be unreasonable.
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`Second, the Court would be within its discretion to decline jurisdiction under the
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`Declaratory Judgment Act if it concluded that “the declaratory judgment complaint [were] a
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`tactical measure filed in order to improve [Lyft’s] posture in the ongoing negotiations – not a
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`purpose that the Declaratory Judgment Act was designed to serve.” EMC Corp. v. Norand Corp.,
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`89 F.3d 807, 815 (Fed. Cir. 1996), overruled in part on other grounds by MedImmune, Inc. v.
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`Genentech, Inc., 549 U.S. 118 (2007). The Court does not reach that conclusion here. In EMC,
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`the Federal Circuit determined that it was not an abuse of discretion for a district court to decline
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`jurisdiction where the parties were involved in negotiations at the time the complaint was filed;
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`there was no suggestion that the negotiations were a pretext designed to give the patentee a basis
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`for keeping the alleged infringer from obtaining declaratory relief; the complaint was filed shortly
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`2 Quartz’s motion argues that the fourth factor weighs against a finding of jurisdiction, ECF No.
`26 at 23-24, but its reply states that it is neutral, ECF No. 38 at 14. To the extent Quartz might
`contend its statement in the reply was an inadvertent error, the Court notes that Quartz’s
`discussion of the fourth factor in its motion relied solely on the first factor. ECF No. 26 at 23.
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` Quartz does not dispute Lyft’s statement that “Quartz appears to be a non-practicing entity that
`generates revenue by monetizing its patent portfolio in various forums.” ECF No. 34 at 6.
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`Northern District of California
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`United States District Court
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`Case 4:21-cv-01871-JST Document 44 Filed 09/07/21 Page 5 of 5Case 2:21-cv-00072-JRG-RSP Document 179-2 Filed 10/23/21 Page 6 of 6 PageID #: 6213
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`after the patentee informed the alleged infringer that it was beginning negotiations with other
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`parties; and the alleged infringer characterized the filing of the complaint as “merely a defensive
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`step” and indicated that it “would like to continue to discuss with [the patentee] all the options
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`hopefully in a more meaningful manner over the near term.” Id. Quartz makes much of Lyft’s
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`counsel’s statement, in an email providing a courtesy copy of Lyft’s complaint, that Lyft “is happy
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`to explore resolving this dispute without litigation.” ECF No. 26-6 at 2. But the same email also
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`said that Lyft filed the action because it “does not infringe these patents and would like to clear its
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`name with respect to Quartz’s allegations.” Id. The Court does not conclude from the record
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`before it that Lyft filed the complaint only to gain a tactical advantage during negotiations with
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`Quartz. To be sure, Lyft’s filing of this suit might have had the practical “effect of placing [Lyft]
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`in a more favorable negotiating position,” but any such effect “is not a sufficient reason to decline
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`to hear the suit.” Sony Elecs., Inc. v. Guardian Media Techs., Ltd., 497 F.3d 1271, 1289 (Fed. Cir.
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`2007).
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`Finally, the anticipatory suit exception to the first-to-file rule does not apply here. “A suit
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`is anticipatory when the plaintiff filed upon receipt of specific, concrete indications that a suit by
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`defendant was imminent.” Z-Line Designs, Inc. v. Bell’O Int’l, LLC, 218 F.R.D. 663, 665 (N.D.
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`Cal. 2003). The record reveals no indications from Quartz, let alone specific and concrete ones,
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`that it would be imminently filing a lawsuit regarding the patents at issue in Lyft’s complaint.4
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`For all of the above reasons, Quartz’s motion to dismiss is denied.
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`IT IS SO ORDERED.
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`Dated: September 7, 2021
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`______________________________________
`JON S. TIGAR
`United States District Judge
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`4 The’215 Patent was part of the Texas litigation at the time this suit was filed and was not
`included in Lyft’s original complaint. Lyft did not add the ’215 Patent to this case until after the
`Texas court dismissed it for improper venue. While it might not have been unexpected for Quartz
`to file another lawsuit regarding the ’215 Patent in a different venue, there is no indication in the
`record that the filing of such a suit was imminent.
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`United States District Court
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