Case 2:17-cv-00932-JLR Document 87 Filed 05/15/18 Page 1 of 7
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`THE HONORABLE JAMES L. ROBART
`
`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
`AT SEATTLE
`
`CASE NO.: 2:17-cv-00932-JLR
`HTC’S MOTION FOR LEAVE TO
`FILE FIRST AMENDED THIRD-
`PARTY COMPLAINT
`
`NOTE ON MOTION CALENDAR:
`JUNE 1, 2018
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`JURY TRIAL DEMANDED
`
`CYWEE GROUP LTD.,
`
`Plaintiff,
`
`v.
`HTC CORPORATION, and HTC AMERICA,
`INC.,
`
`Defendants.
`
`HTC CORPORATION, and HTC AMERICA,
`INC.,
`
`Third-Party Plaintiffs,
`
`v.
`STMICROELECTRONICS N.V.,
`STMICROELECTRONICS, INC., AND CYWEE
`MOTION GROUP LTD.,
`
`Third-Party Defendants.
`
`Pursuant to Rule 15(a) of the Federal Rules of Civil Procedure and LCR 15, Defendants
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`and Third-Party Plaintiffs HTC Corporation (“HTC Corp.”) and HTC America, Inc. (“HTC
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`America”) (collectively, “HTC”) respectfully move the Court for leave to file a FIRST
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`AMENDED THIRD-PARTY COMPLAINT, a copy of which is attached to this motion. The
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`HTC’S MOTION FOR LEAVE TO AMEND
`THIRD-PARTY COMPLAINT
`CASE NO. 2:17-CV-00932-JLR
`
`
`WILSON SONSINI GOODRICH & ROSATIWILSON SONSINI GOODRICH & ROSATI
`
`701 Fifth Avenue, Suite 5100 701 Fifth Avenue, Suite 5100
`
`Seattle, WA 98104-7036 Seattle, WA 98104-7036
`
`Tel: (206) 883-2500 Tel: (206) 883-2500
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`Fax: (206) 883-2699Fax: (206) 883-2699
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`Case 2:17-cv-00932-JLR Document 87 Filed 05/15/18 Page 2 of 7
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`proposed new pleading, attached as Exhibit A to the Declaration of James C. Yoon1, adds a new
`party, STMicroelectronics Asia Pacific Pte. Ltd. (“STM Asia”), and deletes former Third-Party
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`Defendant STMicroelectronics, Inc. (“STM Inc.”), while maintaining the same claims and
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`allegations against Third-Party Defendants STMicroelectronics N.V. (“STM N.V.”) and CyWee
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`Motion Group Ltd. (“CyWee Motion”). (See also Ex. B [showing HTC’s proposed changes in
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`redline].)
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`I.
`
`BACKGROUND
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`On July 6, 2017, Plaintiff CyWee Group Ltd. (“CyWee”) filed a First Amended
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`Complaint (Dkt. # 20) asserting that HTC infringes U.S. Patent No. 8,441,438 (“the ’438
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`Patent”) and U.S. Patent No. 8,552,978 (“the ’978 Patent”) (collectively, the “Asserted
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`Patents”) by making, using, selling, offering to sell, and/or importing into the United States
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`products that embody or practice the apparatus and/or method covered by one or more of the
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`claims of the Asserted Patents, including the HTC One M9, HTC One A9, HTC 10, HTC Bolt,
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`and HTC U Ultra (collectively, “Accused Products”). CyWee’s infringement allegations—both
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`therein and in the now operative Second Amended Complaint filed on March 9, 2018 (Dkt.
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`# 61)—focus upon six-axis or nine-axis motion sensor modules and functionalities in a wireless
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`device. CyWee’s Infringement Contentions, served on December 29, 2017, focused primarily
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`on generic motion sensor hardware components and Android source code and functionalities.
`(Yoon Decl.2 at ¶ 3.)
`To respond
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`to CyWee’s
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`infringement contentions, HTC performed an
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`initial
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`investigation with the assistance of Dr. Benjamin Goldberg, who concluded that the portions of
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`source code functions cited for every asserted independent claim are inoperable on the Accused
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`Products. (Id. ¶ 4.) On January 29, 2018, HTC served its Preliminary Non-Infringement
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`Contentions denying allegations of use of the accused Android code. (Id. ¶ 5.) The fact that the
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`alleged Android source code is inoperable in HTC’s products should have been no surprise to
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`1 All exhibits referenced herein are attached to the Declaration of James C. Yoon.
`2 “Yoon Decl.” refers to the concurrently filed Declaration of James C. Yoon.
`
`HTC’S MOTION FOR LEAVE TO AMEND
`THIRD -PARTY COMPLAINT
`2:17-cv-00932-JLR
`
`2
`
`WILSON SONSINI GOODRICH & ROSATI
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Tel: (206) 883-2500
`Fax: (206) 883-2699
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`Case 2:17-cv-00932-JLR Document 87 Filed 05/15/18 Page 3 of 7
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`CyWee. HTC has repeatedly informed CyWee that the Accused Products incorporate licensed
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`hardware and software provided by CyWee’s licensees, thus triggering HTC’s license and
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`patent exhaustion defenses against CyWee’s patent infringement claims. (Id. ¶ 6.) However,
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`HTC did not have access to all the applicable agreements between CyWee, CyWee Motion, and
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`the STMicroelectronics entities until after it filed its Third-Party Complaint on January 11,
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`2018 (Dkt. # 43). (Yoon Decl. at ¶ 7.) During discovery, CyWee produced technology
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`agreements that helped confirm HTC’s understanding that those parties had intended that the
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`products sold by STMicroelectronics and CyWee Motion would be covered by a license.
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`Based on HTC’s internal investigations, the business and licensing arrangement between
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`ST, CyWee, and HTC were negotiated and supported by STMicroelectronics employees based
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`in a Taiwan office that did not appear to be affiliated with STM Asia. (Yoon Decl. at ¶ 8.)
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`When HTC reached out to STM Asia regarding CyWee, the present action, and indemnification
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`for the Accused Products, STM Asia referred HTC to STM Inc. (Id. ¶ 9; see also Exs. C-E.)
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`On October 6, 2017, Andrew Mayo of STM Inc. responded to HTC’s indemnification request
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`by letter. (See Ex. D.) HTC relied on these communications to prepare its Third-Party
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`Complaint.
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`On March 26, 2018, STM Inc. filed a Motion to Dismiss (Dkt. # 64). In its motion,
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`STM Inc. claimed that STM N.V. is the ultimate parent company of STM Inc. and its affiliates,
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`which include more than 60 companies around the world. (Id. ¶1.) STM Inc. also asserted,
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`through the Declaration of Mr. Karl Straatveit, a senior account manager at STM Inc., that STM
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`Inc. has not sold or supplied motion sensor devices to HTC. (Dkt. # 65 at 1.) After reviewing
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`STM Inc.’s motion and supporting papers, HTC submitted a Statement of Non-Opposition on
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`April 13, 2018, and indicated therein that it may be seeking leave to amend its Third-Party
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`Complaint to remove STM Inc. and replace it with STM Asia. (See Dkt. # 77 at 2.) HTC now
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`respectfully requests that the Court grant HTC leave to amend the Third-Party Complaint.
`
`//
`//
`//
`HTC’S MOTION FOR LEAVE TO AMEND
`THIRD -PARTY COMPLAINT
`2:17-cv-00932-JLR
`
`3
`
`WILSON SONSINI GOODRICH & ROSATI
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Tel: (206) 883-2500
`Fax: (206) 883-2699
`
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`Case 2:17-cv-00932-JLR Document 87 Filed 05/15/18 Page 4 of 7
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`II.
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`LEGAL STANDARD
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`When the deadlines for adding parties and amending pleadings have passed, as is the case
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`here, (see Dkt. # 42 at 1), a plaintiff may seek amendment only by first showing “good cause”
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`under Federal Rule of Civil Procedure 16(b)(4), Johnson v. Mammoth Recreations, Inc., 975
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`F.2d 604, 607-08 (9th Cir. 1992); see Rain Gutter Pros, LLC v. MGP Mfg., LLC, No. C14-0458
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`RSM, 2015 U.S. Dist. LEXIS 141340, at *2-3 (W.D. Wash. Oct. 15, 2015) (“[G]iven that
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`the Court has already entered a Scheduling Order setting a deadline to join new parties and that
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`deadline has passed, the instant motion to add new parties to the Counterclaim is properly
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`analyzed first under Rule 16 as a request to amend the scheduling order.”); Fed. R. Civ. P.
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`16(b)(4) (“A schedule may be modified only for good cause and with the judge’s consent.”).
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`“Rule 16(b)’s ‘good cause’ standard primarily considers the diligence of the party seeking the
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`amendment.” Johnson, 975 F.2d at 609. To show “good cause,” a party must show that it could
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`not meet the deadline in the scheduling order despite the party’s diligence. Id. “Although the
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`existence or degree of prejudice to the party opposing the modification might supply additional
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`reasons to deny a motion, the focus of the inquiry is upon the moving party's reasons for seeking
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`modification.” Id.
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`If a party shows good cause, it must then also demonstrate that the amendment is proper
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`under Federal Rule of Civil Procedure 15. See id. at 608; Rain Gutter Pros, 2015 U.S. Dist.
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`LEXIS 141340, at *3 (“[I]f Defendant establishes good cause for the amendment, it must
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`demonstrate that the amendment is proper under Federal Rule of Civil Procedure 15.”). Unless a
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`party qualifies to amend its pleading “as a matter of course,” Fed. R. Civ. P. 15(a)(1), “a party
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`may amend its pleading only with the opposing party’s written consent or the court’s leave,”
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`Fed. R. Civ. P. 15(a)(2). “In deciding whether to grant leave to amend under Rule 15(a), courts
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`generally consider the following factors: undue delay, bad faith by the moving party, prejudice to
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`the opposing party, futility of amendment, and whether the party has previously amended his
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`pleadings.” Rain Gutter Pros, 2015 U.S. Dist. LEXIS 141340, at *3 (citing Foman v. Davis, 371
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`U.S. 178, 182 (1962)).
`
`HTC’S MOTION FOR LEAVE TO AMEND
`THIRD -PARTY COMPLAINT
`2:17-cv-00932-JLR
`
`4
`
`WILSON SONSINI GOODRICH & ROSATI
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Tel: (206) 883-2500
`Fax: (206) 883-2699
`
`

`

`Case 2:17-cv-00932-JLR Document 87 Filed 05/15/18 Page 5 of 7
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`Rule 15(a) further requires that “court[s] should freely give leave when justice so
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`requires.” Fed. R. Civ. P. 15(a)(2). The Ninth Circuit has “stated that this policy is to be applied
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`with extreme liberality.” Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir.
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`2001). Accordingly, an evaluation of the aforementioned factors (“the Foman Factors”),
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`“[g]enerally . . . should be performed with all inferences in favor of granting the motion.”
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`Griggs v. Pace Am. Grp., Inc., 170 F.3d 877, 880 (9th Cir. 1999). In other words, “[t]he party
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`opposing amendment bears the burden of demonstrating a permissible reason for denying the
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`motion to amend.” Rain Gutter Pros, 2015 U.S. Dist. LEXIS 141340, at *4 (citing DCD
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`Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987); Richardson v. United States, 841
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`F.2d 993, 999 (9th Cir. 1988)).
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`III.
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`ARGUMENT
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`A.
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`HTC’s Diligence Provides Good Cause to Amend the Third-Party Complaint
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`HTC has good cause for seeking the Court’s leave to amend its Third-Party Complaint.
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`The Court’s inquiry turns on whether HTC was “diligent in discovering the basis for and
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`seeking” to join STM Asia. Rain Gutter Pro, 2015 U.S. Dist. LEXIS 141340, at *4. Prior to
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`filing its Third-Party Complaint, HTC reached out to STM Asia regarding indemnification for
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`the Accused Products, but STM Asia referred HTC to STM Inc. (Yoon Decl. at ¶ 9; see also
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`Exs. C-E.) Based on these communications and HTC’s own internal investigation indicating that
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`STM N.V. acts with and through its subsidiaries, HTC filed its Third-Party Complaint against
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`STM N.V. and STM Inc. on January 11, 2018, in compliance with the Court’s scheduling order.
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`(Dkt. # 42 at 1.) Only via the motion to dismiss filed by STM Inc. on March 26, 2018 did HTC
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`learn of STM Inc.’s claims that STM Inc. has not sold or supplied motion sensor devices to
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`HTC. (See Dkt. # 64 at 3; Dkt. # 65 at 1.) After reviewing STM Inc.’s motion and supporting
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`papers and after further internal investigation, HTC accordingly filed a Statement of Non-
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`Opposition to STM Inc.’s motion on April 13, 2018. (See Dkt. # 77.) Notably, HTC filed its
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`Statement of Non-Opposition slightly in advance of its deadline to respond. (Compare Dkt. # 64
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`(noting the motion for consideration on April 20, 2018), and L.P.R. 7(d)(3) (“Any opposition
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`HTC’S MOTION FOR LEAVE TO AMEND
`THIRD -PARTY COMPLAINT
`2:17-cv-00932-JLR
`
`5
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`WILSON SONSINI GOODRICH & ROSATI
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Tel: (206) 883-2500
`Fax: (206) 883-2699
`
`

`

`Case 2:17-cv-00932-JLR Document 87 Filed 05/15/18 Page 6 of 7
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`papers shall be filed and served not later than the Monday before the noting date.”), with Dkt.
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`# 77 (filed on April 13, 2018, the Friday before the noting date).) Since then, HTC has
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`determined STM Asia is a proper party to the Third-Party Complaint, and thus prepared the
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`instant motion and corresponding Amended Third-Party Complaint in a matter of weeks. In
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`other words, HTC was diligent in investigating and filing the initial Third-Party Complaint and
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`has maintained its diligence through the filing of the instant motion. Accordingly, HTC submits
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`that it has good cause for seeking leave to amend the Third-Party Complaint.
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`B.
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`None of the Foman Factors Weighs in Favor of Denying Leave to Amend
`Amendment of the Third-Party Complaint would be proper under Federal Rule of Civil
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`Procedure 15. As an initial matter, “[t]he party opposing amendment bears the burden of
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`demonstrating a permissible reason for denying the motion to amend.” Rain Gutter Pros, 2015
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`U.S. Dist. LEXIS 141340, at *4. Accordingly, once HTC has made a showing of good cause, it
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`is CyWee’s burden to demonstrate a reason for denying the motion to amend.
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`In any event, CyWee will not be able to meet that burden. None of the Foman Factors—
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`undue delay, bad faith by the moving party, prejudice to the opposing party, futility of
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`amendment, and whether the party has previously amended his pleadings—weighs in favor of
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`denying HTC’s motion for leave to amend. First, there is no undue delay, as HTC demonstrated
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`above that it has good cause to amend the third party complaint. See supra Part III.A. Second,
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`there should be no allegations of bad faith directed at HTC. As HTC has indicated, it initially
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`reached out to STM Asia regarding indemnification for the Accused Products, and only added
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`STM Inc. to the Third-Party Complaint after STM Asia referred HTC thereto. (Yoon Decl. ¶9;
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`see also Exs. C-E.) Third, the First Amended Third-Party Complaint removes STM Inc. from
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`the Third-Party Complaint and replaces it with STM Asia. (See Exs. A, B.) Accordingly, there
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`should be no prejudice to CyWee in allowing HTC to so amend. Fourth, HTC submits that there
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`are no futility concerns with its proposed Amended Third-Party Complaint and that, in any event,
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`courts have declined to consider assertions of futility at such early stages of litigation. See Berry
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`v. Transdev Servs., No. 15-01299-RAJ, 2018 U.S. Dist. LEXIS 37526, at *6 (W.D. Wash. Mar.
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`HTC’S MOTION FOR LEAVE TO AMEND
`THIRD -PARTY COMPLAINT
`2:17-cv-00932-JLR
`
`6
`
`WILSON SONSINI GOODRICH & ROSATI
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Tel: (206) 883-2500
`Fax: (206) 883-2699
`
`

`

`Case 2:17-cv-00932-JLR Document 87 Filed 05/15/18 Page 7 of 7
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`7, 2018) (“[T]he Court . . . declines to determine whether Plaintiffs’ assertions are futile at this
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`stage in the litigation.”). Finally, HTC has not previously amended its Third-Party Complaint.
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`(See Yoon Decl. at ¶ 10.) With all five factors met, amendment of the Third-Party Complaint
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`would satisfy the “extreme[ly] liberal[]” policy of Rule 15(a). Owens, 244 F.3d at 712.
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`IV.
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`CONCLUSION
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`As HTC has good cause for seeking leave to amend and amendment is proper under
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`Federal Rule of Civil Procedure 15(a), HTC respectfully requests that the Court grant HTC leave
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`to amend its Third-Party Complaint.
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`Dated: May 15, 2018
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`WILSON SONSINI GOODRICH & ROSATI
`
`Respectfully submitted,
`
`
`By: s/ Gregory L. Watts
`Gregory L. Watts, WSBA # 43995
`WILSON SONSINI GOODRICH & ROSATI
`Professional Corporation
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Telephone: (206) 883-2500
`Facsimile: (206) 883-2699
`Email: gwatts@wsgr.com
`
`James C. Yoon, CA Bar #177155 (pro hac vice)
`Ryan R. Smith, CA Bar #229323(pro hac vice)
`Albert Shih, CA Bar # 251726 (pro hac vice)
`Jamie Y. Otto, CA Bar # 295099 (pro hac vice)
`WILSON SONSINI GOODRICH & ROSATI
`650 Page Mill Road
`Palo Alto, CA 94304-1050
`Telephone: (650) 493-9300
`Facsimile: (650) 565-5100
`Email: jyoon@wsgr.com, rsmith@wsgr.com
`ashih@wsgr.com, jotto@wsgr.com
`
`Ty W. Callahan, CA Bar # 312548 (pro hac vice)
`WILSON SONSINI GOODRICH & ROSATI
`633 West Fifth Street, Suite 1550
`Los Angeles, CA 90071-2027
`Telephone: (323) 210-2900
`Facsimile: (866) 974-7329
`Email: tcallahan@wsgr.com
`
`Attorneys for Defendants and Third-Party Plaintiffs
`HTC Corporation and HTC America, Inc.
`7
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`WILSON SONSINI GOODRICH & ROSATI
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Tel: (206) 883-2500
`Fax: (206) 883-2699
`
`HTC’S MOTION FOR LEAVE TO AMEND
`THIRD -PARTY COMPLAINT
`2:17-cv-00932-JLR
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