Case 2:23-cv-00172-RWS-RSP Document 35 Filed 03/20/24 Page 1 of 19 PageID #: 1183
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`
`
`
`
`
`
`
`SLYDE ANALYTICS LLC,
`
`
`Plaintiff,
`
`
`
`v.
`
`ZEPP HEALTH CORPORATION,
`
`
`Defendant.
`
`
`
`PLAINTIFF SLYDE ANALYTICS LLC’S RESPONSE IN OPPOSITION
`TO DEFENDANT ZEPP HEALTH CORPORATION’S
`MOTION TO DISMISS PLAINTIFF’S AMENDED COMPLAINT
`UNDER FED. R. CIV. P. 12(b)(7) (DKT. 27)
`
`
`
`Case No. 2:23-CV-00172-RWS-RSP
`
`JURY TRIAL DEMANDED
`
`
`
`

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`Case 2:23-cv-00172-RWS-RSP Document 35 Filed 03/20/24 Page 2 of 19 PageID #: 1184
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`
`
`
`I.
`
`II.
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`III.
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`IV.
`
`TABLE OF CONTENTS
`
`Page(s)
`
`INTRODUCTION .............................................................................................................. 1
`
`RESPONSE TO STATEMENT OF THE ISSUES ............................................................ 2
`
`BACKGROUND ................................................................................................................ 2
`
`LEGAL STANDARD ......................................................................................................... 3
`
`A.
`
`Failure to Join a Necessary and Indispensable Party .............................................. 3
`
`V.
`
`ARGUMENT ...................................................................................................................... 3
`
`B.
`
`C.
`
`D.
`
`E.
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`ZNA is Not a Necessary or Indispensable Party ..................................................... 4
`
`ZHC Will Adequately Protect the Purported Interests of ZNA .............................. 6
`
`ZNA Is Not the “Primary Participant” .................................................................... 7
`
`ZHC’s Attempts to Manufacture a Venue Dispute Should Be
`Disregarded ........................................................................................................... 11
`
`VI.
`
`CONCLUSION ................................................................................................................. 12
`
`
`
`i
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`

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`Case 2:23-cv-00172-RWS-RSP Document 35 Filed 03/20/24 Page 3 of 19 PageID #: 1185
`
`
`
`Cases
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Abbott v. BP Expl. & Prod. Inc.,
`781 F. Supp. 2d 453 (S.D. Tex. 2011) .....................................................................................11
`
`Akoloutheo, LLC v. Sys. Soft Techs., Inc.,
`No. 4:20-cv-985, 2021 WL 1947343 (E.D. Tex. May 14, 2021) ..........................................3, 4
`
`Alto v. Black,
`738 F.3d 1111 (9th Cir. 2013) ...................................................................................................5
`
`Arigna Tech. Ltd. v. Bayerische Motoren Werke AG,
`No. 2:21-CV-00173-JRG, 2023 WL 6606722 (E.D. Tex. Oct. 6, 2023) ...........................2, 5, 6
`
`Arigna Techs. Ltd. v. Apple Inc.,
`No. 6:21-CV-00943-ADA, 2022 WL 3448747 (W.D. Tex. Aug. 16, 2022) .............................4
`
`Bowman v. W. Rim Prop. Servs., Inc.,
`No. 4:14-cv-672, 2016 WL 7799625 (E.D. Tex. Feb. 9, 2016) .................................................3
`
`Cont’l Auto. Sys., Inc. v. Avanci, LLC,
`No. 3:19-CV-02933-M, 2020 WL 13157810 (N.D. Tex. July 5, 2020) ....................................6
`
`Dainippon Screen Mfg. Co. v. CFMT, Inc.,
`142 F.3d 1266 (Fed. Cir. 1998)..................................................................................................3
`
`Davis Cos. v. Emerald Casino, Inc.,
`268 F.3d 477 (7th Cir.2001) ....................................................................................................11
`
`Dernick v. Bralorne Res., Ltd.,
`639 F.2d 196 (5th Cir. 1981) .....................................................................................................7
`
`Dine Citizens Against Ruining Our Env’t v. Bureau of Indian Affs.,
`932 F.3d 843 (9th Cir. 2019) .....................................................................................................5
`
`Freeman v. Nw. Acceptance Corp.,
`754 F.2d 553 (5th Cir. 1985) .....................................................................................................7
`
`Gay v. AVCO Fin. Servs., Inc.,
`769 F. Supp. 51 (D.P.R. 1991) .................................................................................................10
`
`Jaffer v. Standard Chartered Bank,
`301 F.R.D. 256 (N.D. Tex. 2014) ............................................................................................10
`
`ii
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`

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`Case 2:23-cv-00172-RWS-RSP Document 35 Filed 03/20/24 Page 4 of 19 PageID #: 1186
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`
`
`Lee v. Anthony Lawrence Collection, L.L.C.,
`47 F.4th 262 (5th Cir. 2022) ......................................................................................................5
`
`Litecubes, LLC v. N. Light Prods., Inc.,
`523 F.3d 1353 (Fed. Cir. 2008)..................................................................................................9
`
`Hood ex rel. Miss. v. City of Memphis,
`570 F.3d 625 (5th Cir. 2009) .....................................................................................................3
`
`NorthStar Sys. LLC v. Volkswagen AG,
`No. 2:22-CV-00486-JRG, 2023 WL 5723648 (E.D. Tex. Sept. 5, 2023) ....................... passim
`
`Nottingham v. Gen. Am. Commc’ns Corp.,
`811 F.2d 873 (5th Cir. 1987) .................................................................................................3, 4
`
`Timberlake v. Synthes Spine, Inc.,
`No. V-08-4, 2011 WL 2607044 (S.D. Tex. June 30, 2011)...............................................10, 11
`
`Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc.,
`617 F.3d 1296 (Fed. Cir. 2010)............................................................................................9, 10
`
`United States v. Rutherford Oil Corp.,
`No. G–08–0231, 2009 WL 1351794 (S.D. Tex. May 13, 2009) .............................................11
`
`W. Horizontal Drilling, Inc. v. Jonnet Energy Corp.,
`11 F.3d 65 (5th Cir. 1994) .........................................................................................................6
`
`Statutes
`
`35 U.S.C. § 271 ................................................................................................................................4
`
`35 U.S.C. § 271(a) ...........................................................................................................................4
`
`Other Authorities
`
`7 Charles Alan Wright & Arthur R. Miller, FEDERAL PRACTICE AND
`PROCEDURE § 1614 (3d ed.) ..................................................................................................4
`
`Fed. R. Civ. P. 12(b)(5)....................................................................................................................6
`
`Fed. R. Civ. P. 12(b)(7)..........................................................................................................2, 3, 12
`
`Fed. R. Civ. P. 19 .........................................................................................................................3, 4
`
`Fed. R. Civ. P. 19(a) ........................................................................................................................3
`
`Fed. R. Civ. P. 19(a)(1)(B)(i) ...........................................................................................................5
`
`Fed. R. Civ. P. 19(a)(3) ....................................................................................................................2
`
`iii
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`
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`Fed. R. Civ. P. 19(b) .......................................................................................................................3
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`
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`iv
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`Case 2:23-cv-00172-RWS-RSP Document 35 Filed 03/20/24 Page 6 of 19 PageID #: 1188
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`Slyde Analytics LLC (“Slyde” or “Plaintiff”) files this response in opposition to Defendant Zepp
`
`Health Corporation’s (“ZHC” or “Defendant”) motion to dismiss amended complaint under Federal Rules
`
`of Civil Procedure 12(b)(7) (Dkt. 27 or the “Mot.”). The Motion should be denied because ZHC has failed
`
`to demonstrate that its subsidiary, Zepp North America, Inc. (“ZNA”) is an indispensable party to this
`
`litigation. For these reasons, which are set forth below in greater detail, the Motion should be denied.
`
`I.
`
`INTRODUCTION
`
`Slyde accuses ZHC of infringing the asserted patents. That infringement is entirely
`
`independent of its United States subsidiary, ZNA, which is not named or accused in this action.
`
`ZHC is a foreign entity that is indisputably subject to jurisdiction in the Eastern District of Texas.
`
`ZHC attempts to introduce ZNA, a Delaware corporation with a purported principal place of
`
`business in California, to manufacture otherwise non-existent venue issues. ZNA is not a
`
`necessary party, let alone a “primary participant” in infringement. This Court has seen through
`
`this tactic before and has denied the requested relief. It should do so again here.
`
`The Amended Complaint specifically alleges that ZHC, and ZHC only, directly infringes
`
`the Patents-in-Suit by “making, using, offering to sell, selling, and/or importing into the United
`
`States products that satisfy each and every limitation of one or more claims” of the Patents-in-
`
`Suit.1 Moreover, ZHC’s public statements to the United States Securities and Exchange
`
`Commission (the “SEC”) show that ZHC, including through Anhui and other intermediaries, sells
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`its smart wearable products to customers in the United States. Ex. A. at 5. These infringing acts
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`likely include sales to ZNA. Any alleged infringement by ZNA is separate and apart from that of
`
`ZHC. Slyde is not required to bring suit against ZNA for the infringing actions of its parent, merely
`
`
`1 While ZHC attempts to complicate matters by asserting that the Amazfit smartwatches are made
`by Anhui Huami Information Co., Ltd (“Anhui”), ZHC’s public filings with the Securities and
`Exchange Commission (“SEC”) including, but not limited to, its 2022 Form 20-F (the “Form”),
`make clear that Anhui is controlled by ZHC. Ex. A. at 5.
`
`
`
`

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`
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`to support ZHC’s attempts to transfer this case to the CDCA. Indeed, ZHC’s public statements to
`
`the SEC also demonstrate that ZNA has limited activities in general and cannot be considered the
`
`primary participant in ZHC’s infringement. Id.
`
`As such, ZHC has not met its burden to demonstrate that ZNA, or any United States
`
`subsidiary, is an “indispensable party”. ZHC also fails to address case law from this District
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`recognizing that a plaintiff may pursue an action for infringement solely against a foreign entity
`
`and not its domestic counterparts.2 In this way, this Court has already rejected the reasoning
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`underlying ZHC’s argument that ZNA is a necessary and indispensable party. As discussed in
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`greater detail below, the Motion should be denied.
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`II.
`
`RESPONSE TO STATEMENT OF THE ISSUES
`
`Plaintiff’s Amended Complaint should not be dismissed under Fed. R. Civ. P. 12(b)(7)
`
`and/or Fed. R. Civ. P. 19(a)(3) because ZHC’s United States subsidiaries, including ZNA, are not
`
`necessary or indispensable parties.
`
`III. BACKGROUND
`
`Slyde filed a complaint for patent infringement against ZHC on April 14, 2023, alleging
`
`infringement of U.S. Patent Nos. 8,588,033, 9,651,922, 9,804,678, 10,198,085, 9,320,457,
`
`9,873,018, and 9,536,134 (collectively, the “Patents-in-Suit”). See Dkt. 1 (the “Original
`
`Complaint”). On December 11, 2023, ZHC filed three (3) motions: (1) a motion to dismiss
`
`pursuant to Rule 12(b)(6); (2) a motion to dismiss pursuant to Rule 12(b)(7); and (3) a motion to
`
`transfer venue to the Central District of California. See Dkts. 9, 10, 11. Thereafter, on January
`
`
`2 See, e.g., NorthStar Sys. LLC v. Volkswagen AG, No. 2:22-CV-00486-JRG, 2023 WL 5723648
`(E.D. Tex. Sept. 5, 2023) (denying defendant’s motion to dismiss pursuant to Rule 12(b)(7)
`because plaintiff is permitted to maintain an action for patent infringement against a foreign parent
`without naming its wholly-owned U.S. subsidiary); see also Arigna Tech. Ltd. v. Bayerische
`Motoren Werke AG, No. 2:21-CV-00173-JRG, 2023 WL 6606722 (E.D. Tex. Oct. 6, 2023).
`
`2
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`

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`30, 2024, Slyde filed an amended complaint for patent infringement (the “Amended Complaint”).
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`See Dkt. 16. On March 6, 2024, ZHC made a motion pursuant to Rule 12(b)(7) to dismiss the
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`Amended Complaint. See Dkt. 27.
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`IV.
`
`LEGAL STANDARD
`
`A.
`
`Failure to Join a Necessary and Indispensable Party
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`Rule 12(b)(7) permits dismissal of an action for “failure to join a party under Rule 19.”
`
`Fed. R. Civ. P. 12(b)(7). “Whether a party is indispensable under Rule 19(b) is a matter of regional
`
`circuit law.” Dainippon Screen Mfg. Co. v. CFMT, Inc., 142 F.3d 1266, 1269 (Fed. Cir. 1998).
`
`Rule 19 generally requires a two-step inquiry. Hood ex rel. Miss. v. City of Memphis, 570 F.3d
`
`625, 628–29 (5th Cir. 2009). First, “the district court must determine whether the party should be
`
`added under the requirements of Rule 19(a).” Id. Second, “[i]f the necessary party cannot be
`
`joined without destroying subject-matter jurisdiction, the court must then determine whether that
`
`person is ‘indispensable,’ that is, whether litigation can be properly pursued without the absent
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`party.” Id. at 629.
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`However, “[p]atent infringement is a tort” and “[i]t is well-settled that joint tortfeasors are
`
`not considered ‘required’ or indispensable parties under Rule 19.” Akoloutheo, LLC v. Sys. Soft
`
`Techs., Inc., No. 4:20-cv-985, 2021 WL 1947343, at *2 (E.D. Tex. May 14, 2021) (denying
`
`12(b)(7) motion); see also Bowman v. W. Rim Prop. Servs., Inc., No. 4:14-cv-672, 2016
`
`WL 7799625, at *2 (E.D. Tex. Feb. 9, 2016) (citing Nottingham v. Gen. Am. Commc’ns Corp.,
`
`811 F.2d 873, 880 (5th Cir. 1987)).
`
`V. ARGUMENT
`
`Slyde alleges that ZHC’s actions importing, selling, offering to sell, making, and using the
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`Accused Products in the United States infringe the Asserted Patents. By ZHC’s own statements,
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`it sells the Accused Products to customers in the United States, either itself or through
`
`3
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`

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`Case 2:23-cv-00172-RWS-RSP Document 35 Filed 03/20/24 Page 9 of 19 PageID #: 1191
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`
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`intermediaries. The fact that ZNA may be one of those customers, and may resell the Accused
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`Products in the United States, does not render it a “primary participant” in ZHC’s infringement
`
`such that it is a necessary and indispensable party. Nor does its status as a wholly-owned
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`subsidiary render it necessary and indispensable. This Court has already held that subsidiaries like
`
`ZNA are not necessary and indispensable parties based on virtually identical fact patterns and
`
`should do so again here.
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`B.
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`ZNA is Not a Necessary or Indispensable Party
`
`ZNA is not a necessary or indispensable party to this action, as this Court’s long-standing
`
`precedent makes clear.
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`Under the laws of the United States, patent infringement is a tort. See 35 U.S.C. § 271.
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`Patent laws provide a cause of action against “whoever without authority makes, uses, offers to
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`sell, or sells any patented invention, within the United States or imports into the United States any
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`patented invention.” 35 U.S.C. § 271(a) (emphasis added); see also Arigna Techs. Ltd. v. Apple
`
`Inc., No. 6:21-CV-00943-ADA, 2022 WL 3448747, at *2 (W.D. Tex. Aug. 16, 2022); accord,
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`e.g., 7 Charles Alan Wright & Arthur R. Miller, FEDERAL PRACTICE AND PROCEDURE §
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`1614 (3d ed.) (“A suit for infringement may be analogized to other tort actions. All infringers are
`
`jointly and severally liable. Thus, plaintiff may choose whom to sue and is not required to join all
`
`infringers in a single action.”). “It is well-settled that joint tortfeasors are not considered ‘required’
`
`or indispensable parties under Rule 19.” Akoloutheo, LLC, 2021 WL 1947343, at *2; see also
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`Nottingham, 811 F.2d at 880. “[B]ecause such infringers are by long tradition severally as well as
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`jointly liable, they may be sued separately (that is, they are not necessary parties).” Arigna Techs.
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`Ltd., 2022 WL 3448747, at *2 (quoting 8 Chisum on Patents § 21.03(e) (2021)). “A patentee is
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`not required to sue all infringers or forego its remedies against a single infringer.” Robert A.
`
`Matthews, Jr., 1 ANNOTATED PATENT DIGEST § 9:10. “Indeed, all joint tortfeasors need not
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`4
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`Case 2:23-cv-00172-RWS-RSP Document 35 Filed 03/20/24 Page 10 of 19 PageID #: 1192
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`be named in the [patent infringement] suit as they are generally not indispensable parties.” Id. §
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`30:111.
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`The Court recently decided motions in two separate actions involving the same issue raised
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`here. First, in NorthStar Sys. LLC, 2023 WL 5723648, the Court denied Bayerische Motoren
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`Werke AG’s motion to dismiss pursuant to Rule 12(b)(7) for failure to name BMW North America,
`
`LLC as a party. There, the Court stated:
`
`The Court is not convinced that disposing of the action in BMW
`NA’s absence would impair or impede BMW NA’s ability to protect
`its interest. This is for the simple reason that BMW NA is a wholly-
`owned subsidiary of BMW, so the interests of these two entities
`align. In other words, BMW will adequately protect the interests of
`BMW NA. See Dine Citizens Against Ruining Our Env’t v. Bureau
`of Indian Affs., 932 F.3d 843, 852 (9th Cir. 2019) (“As a practical
`matter, an absent party’s ability to protect its interest will not be
`impaired by its absence from the suit where its interest will be
`adequately represented by existing parties to the suit.” (quoting Alto
`v. Black, 738 F.3d 1111, 1127 (9th Cir. 2013))); Lee v. Anthony
`Lawrence Collection, L.L.C., 47 F.4th 262, 268 (5th Cir. 2022)
`(citing Dine Citizens, 932 F.3d 843 with approval in other respects).
`Further, BMW’s speculation as to the predicted effects of going
`forward without BMW NA is just that—speculation. Such is
`inadequate to invoke Rule 19(a)(1)(B)(i).
`
`
`Id. at *4. The Court also noted that “while BMW NA may wish to ‘take the fall’ and be considered
`
`the primary participant (so it may pave the way for BMW to defeat venue), its wishes do not
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`change the text of the Complaint, which clearly accuses only BMW, and not BMW NA. BMW
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`NA is not the primary participant here such that failure to join them in this action would be
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`improper.” Id. at *5. Second, the Court reiterated its holding in Arigna Tech. Ltd. v. Bayerische
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`Motoren Werke AG, No. 2:21-CV-00173-JRG, 2023 WL 6606722 (E.D. Tex. Oct. 6, 2023). In
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`the Arigna Tech. decision, the Court again denied Bayerische Motoren Werke AG’s motion to
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`dismiss pursuant to Rule 12(b)(7) for failure to name BMW North America, LLC because the
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`interest of the parent company and its wholly-owned subsidiary were aligned, and because the
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`5
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`
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`parent could adequately protect the interests of the wholly-owned subsidiary. Id. at *12 (citing
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`NorthStar Sys. LLC, 2023 WL 5723648 at *4).
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`
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`The relevant facts here mirror the above cases. ZNA is merely attempting to “take the fall”
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`for ZHC, when ZHC is the primary participant and the Amended Complaint has only alleged
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`infringement by ZHC. But Slyde may maintain an action against a foreign entity without naming
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`its wholly-owned, domestic subsidiary. The Motion should be denied.
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`C.
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`ZHC Will Adequately Protect the Purported Interests of ZNA
`
`ZHC’s claims that ZNA is a necessary and indispensable party under Rule 19 because its
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`“claims and interest” and “disposing of the action” in ZNA’s absence may “as a practical matter
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`impair or impede” ZNA’s ability to protect its interests are meritless. As a preliminary matter, it
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`is undisputed that Slyde has identified the specific infringing activities of ZHC. Even if ZNA did
`
`have an interest in the instant action, ZHC will “adequately protect the interests of” ZNA.3 See
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`Northstar Systems, LLC, 2023 WL 5723648 at *4 (“The Court is not convinced that disposing of
`
`the action in BMW NA’s absence would impair or impede BMW NA’s ability to protect its
`
`interests. This is for the simple reason that BMW NA is a wholly-owned subsidiary of BMW, so
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`the interests of these two entities align. In other words, BMW will adequately protect the interests
`
`of BMW NA.”). Accordingly, ZNA’s purported interests will be adequately protected by ZHC.
`
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`3 ZHC’s arguments that ZNA is so interested in the outcome of an action concerning its parent
`casts doubts regarding their corporate separation and observation of corporate formalities. To the
`extent that ZNA is acting as a mere sales pipeline to the United States, as ZHC appears to suggest,
`any lack of real corporate separation only weighs further against treating ZNA as a necessary and
`indispensable party as ZHC would more than adequately represent its interests. See W. Horizontal
`Drilling, Inc. v. Jonnet Energy Corp., 11 F.3d 65, 68 (5th Cir. 1994) (holding that a corporation is
`as an “alter ego” when “a corporation is organized and operated as a mere tool or business conduit
`of another corporation.”) (internal quotations and citations omitted); see also Cont’l Auto. Sys.,
`Inc. v. Avanci, LLC, No. 3:19-CV-02933-M, 2020 WL 13157810, at *2 (N.D. Tex. July 5, 2020)
`(holding that defendant’s U.S. subsidiary was a “mere conduit or vehicle for entering and
`exploiting the American market[,]” such that service upon the U.S. subsidiary was sufficient to
`deny a motion to dismiss pursuant to Rule 12(b)(5).)
`
`6
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`
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`D.
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`ZNA Is Not the “Primary Participant”
`
`ZNA is not the “primary participant” and therefore, Slyde is not required to name ZNA as
`
`a necessary or indispensable party. Despite ZHC’s claims to the contrary, Slyde’s allegations are
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`solely against ZHC, not its U.S. subsidiary. ZHC’s arguments that the allegations in the Amended
`
`Complaint are actually against ZNA as the “primary participant” are conclusory and self-serving,
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`designed to couch ZNA as a necessary and indispensable party in a clear effort to destroy venue
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`and transfer this case to the CDCA. They fundamentally fail to rebut Slyde’s position that ZHC’s
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`acts independently constitute infringement.
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`
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`A subsidiary must only be joined in an action where it is “the primary participant in the
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`events giving rise to the lawsuit.” Dernick v. Bralorne Res., Ltd., 639 F.2d 196, 199 (5th Cir.
`
`1981). However, where the parent is the principal actor, joinder of the subsidiary is not required.
`
`Id. Further, when a subsidiary is merely an active participant, joinder is not required. Freeman v.
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`Nw. Acceptance Corp., 754 F.2d 553, 559 (5th Cir. 1985) (finding joinder of a subsidiary was
`
`necessary when it was the primary participant, not merely an active participant). Importantly, none
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`of the direct infringement allegations in the Amended Complaint are directed toward any entity
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`other than ZHC. See generally, Dkt. 1. This alone is sufficient to demonstrate, in a patent
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`infringement action, that a wholly-owned subsidiary is not the primary participant. See NorthStar
`
`Sys. LLC, 2023 WL 5723648 at *5 (holding that where a complaint clearly accuses only the parent
`
`entity, the wholly-owned subsidiary cannot attempt to “take the fall” and claim to be the primary
`
`participant and its “wishes do not change the text of the Complaint, which clearly accuses only
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`BMW, and not BMW NA”).
`
`The Motion asserts that ZNA is the “primary participant” of the infringing acts in the
`
`Amended Complaint. Beyond the fact that the Amended Complaint clearly accuses only ZHC,
`
`7
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`Case 2:23-cv-00172-RWS-RSP Document 35 Filed 03/20/24 Page 13 of 19 PageID #: 1195
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`the facts belie ZHC’s claims that ZNA serves as the “primary participant”. The Form4, filed by
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`ZHC with the SEC in 2023 for the fiscal year ending on December 31, 2022, demonstrates that
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`ZHC rather than ZNA is responsible for the development, design, manufacture, and sale of the
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`Amazfit smartwatches. The Motion claims that the Amazfit brand smartwatches are manufactured
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`in China and then imported into the United States by ZNA. Mot. at 4. More specifically, in the
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`Declaration of Mr. Mike Yan Yeung (“Mr. Yeung”), ZHC claims the Amazfit branded
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`smartwatches were manufactured in China by Anhui. Dkt. 27-1 ¶ 5. ZHC’s claims are further
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`contradicted by public statements made to the SEC. According to its own submissions to the SEC,
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`Anhui and ZHC are effectively one in the same: “We commenced operations in December 2013
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`through Anhui Huami Information Technology Co., Ltd., or Anhui Huami, to develop,
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`manufacture and sell smart wearable devices.” Ex. A at 61. Throughout the Form, Anhui is
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`described as a variable-interest entity (“VIE”). See generally, id. These VIE entities act as arms
`
`of ZHC, as admitted in the Form:
`
`In February 2015, Hong Kong Zepp Holding Limited
`established a wholly-owned subsidiary in China, Beijing
`Shunyuan Kaihua Technology Co., Ltd., which we refer to
`as Shunyuan Kaihua or our WFOE in this annual report. Our
`WFOE later entered into a series of contractual arrangements
`with Anhui Huami, Beijing Huami, which two entities we
`collectively refer to as the VIEs in this annual report, and
`their
`respective
`shareholders. These
`contractual
`arrangements enable us to exercise effective control over
`the VIEs; receive substantially all of the economic benefits
`of the VIEs; and have an exclusive option to purchase all
`or part of the equity interests in and assets of them when
`and to the extent permitted by PRC law.
`
`
`4 A Form 20-F is a form issued by the SEC submitted by all “foreign private issuers” with listed
`equity shares on exchanges in the U.S. It requires the submission of an annual report, similar to a
`Form 10-K, which requires the submission of a summary of a company’s financial performance in
`a fiscal year. Both a Form 20-F and Form 10-K include information regarding company history
`organizational structure, compensation, equity, subsidiaries, and audited financial statements,
`among other information.
`
`8
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`

`

`Case 2:23-cv-00172-RWS-RSP Document 35 Filed 03/20/24 Page 14 of 19 PageID #: 1196
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`
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`Id. (emphasis added). Based on ZHC’s own statements as submitted to the SEC, it is evident that
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`ZHC controls the production and sale of the Amazfit-branded watches from China. It is further
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`evident that ZHC sells and imports the Amazfit-branded watches from China to customers in the
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`United States:
`
`In addition, in the ordinary course of our business, Anhui
`Huami, one of the VIEs, sells our smart wearable products
`to Galaxy Trading Platform Limited, our intermediary
`company in Hong Kong, which in turn sells the products to
`overseas third parties. Anhui Huami also sells products to
`Zepp North America Inc. and Zepp Netherlands Trading
`B.V. through an independent customs clearance agency
`for the products to be distributed to local distributors and
`consumers in the U.S. and Europe, respectively. These
`entities settle payments of the smart wearable products in
`accordance with the specific transaction value and payment
`terms under the relevant contracts.
`
`Id. at 5 (emphasis added). ZHC, not ZNA, controls not only the manufacture of the Amazfit-
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`branded smartwatches, but also the sale of the smartwatches into the United States. Id.; see also
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`Litecubes, LLC v. N. Light Prods., Inc., 523 F.3d 1353, 1369-70 (Fed. Cir. 2008) (“[T]he ’selling’
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`of an infringing article has both a physical and a conceptual dimension to it. . . . [I]t is possible to
`
`define the situs of the tort of infringement-by-sale either in real terms as including the location of
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`the seller and the buyer and perhaps the points along the shipment route in between, or in formal
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`terms as the single point at which some legally operative act took place, such as the place where
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`the sales transaction would be deemed to have occurred as a matter of commercial law.”);
`
`Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc., 617 F.3d 1296,
`
`1311 (Fed. Cir. 2010) (“A ‘sale’ is not limited to the transfer of tangible property; a sale may also
`
`be the agreement by which such a transfer takes place.”). ZHC also maintains control over the
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`“transaction value and payment terms” for the Amazfit-branded smartwatches, demonstrating
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`control and participation in the sales within the United States. Id.
`
`9
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`

`

`Case 2:23-cv-00172-RWS-RSP Document 35 Filed 03/20/24 Page 15 of 19 PageID #: 1197
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`
`
`
`
`ZHC is also involved with the design of the Amazfit-branded smartwatches. In support of
`
`its motion to transfer to the CDCA, ZHC submitted declarations from two individuals. In their
`
`respective declarations, Mr. Jimmy Lai and Mr. Bing Xie both state: “Zepp Inc. is involved in the
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`design of the smartwatch products accused of infringement by Slyde Analytics.” Dkt. Nos. 27-2
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`and 27-3 ¶ 6. Moreover, as is shown in the Form, as of December 31, 2022, ZHC had 987
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`employees. Ex. A at 116. Of those 987 employees, 564 were involved in “research and
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`development”. Id. And, of those 987 total employees, only 47 were located in North America.
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`Id. There is no evidence that any US employee is involved in the design or development of the
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`accused technology; to the contrary, all the evidence suggests that ZHC carries out the
`
`development of the Accused Products and sells them to customers in the United States.
`
`
`
`It is evident that the majority of the research, design, development, and manufacture of the
`
`accused Amazfit smartwatches is done by ZHC, and that ZHC is responsible for the sale of the
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`Amazfit-branded smartwatches into and within the United States. See Northstar Systems, LLC,
`
`2023 WL 5723648 at *5 (“Accordingly, while BMW NA may wish to ‘take the fall’ and be
`
`considered the primary participant (so it may pave the way for BMW to defeat venue), its wishes
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`do not change the text of the Complaint, which clearly accuses only BMW, and not BMW NA.”).
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`Defendant fails to show that any of ZHC’s acts which Slyde has accused of infringement are
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`attributable to ZNA or Zepp Inc., as opposed to the unrelated and unaccused acts of those
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`subsidiaries in reselling the Accused Products that Defendant apparently wishes were accused, but
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`are not.5 Moreover, “[i]n ruling on a motion to dismiss for failure to join a necessary and
`
`
`5 The case law relied upon by ZHC in the Motion in support of the proposition that ZNA is the
`“primary participant” are clearly distinguishable because none deal with patent infringement. See,
`e.g., Jaffer v. Standard Chartered Bank, 301 F.R.D. 256 (N.D. Tex. 2014); Timberlake v. Synthes
`Spine, Inc., No. V-08-4, 2011 WL 2607044 (S.D. Tex. June 30, 2011); Gay v. AVCO Fin. Servs.,
`
`
`10
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`

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`Case 2:23-cv-00172-RWS-RSP Document 35 Filed 03/20/24 Page 16 of 19 PageID #: 1198
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`
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`indispensable party, a court must accept the complaint allegations as true.” Abbott v. BP Expl. &
`
`Prod. Inc., 781 F. Supp. 2d 453, 460 (S.D. Tex. 2011) (quoting United States v. Rutherford Oil
`
`Corp., No. G–08–0231, 2009 WL 1351794, at *2 (S.D. Tex. May 13, 2009) (citing Davis Cos. v.
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`Emerald Casino, Inc., 268 F.3d 477, 479 n.2 (7th Cir.2001))). The allegations in the Amended
`
`Complaint specifically allege that ZHC infringes the Patent-in-Suit by “making, using, selling,
`
`offering to sell, and/or importing, and by actively inducing others to make, use, sell, offer to sell,
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`and/or importing” infringing products, including Amazfit smartwatches. See, e.g., Dkt. 16 ¶ 21.
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`These sales and offers to sell include those to ZNA, as well as customers and end-users. ZHC’s
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`arguments to the contrary stand in tension with its own statements in the Form to the SEC.
`
`
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`Accordingly, based on the information in the Form and the facts alleged in the Amended
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`Complaint, ZNA is not the primary participant, nor is it a necessary and indispensable party, and
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`the Motion should be denied.6
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`E.
`
`ZHC’s Attempts to Manufacture a Venue Dispute Should Be
`Disregarded
`
`ZHC has already filed a motion to transfer the instant action to the CDCA. See Dkt. 11.
`
`ZHC attempts to manufacture an additional venue dispute in the instant Motion by arguing that
`
`because “venue in the Eas