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`Case 2:17-cv-00932-JLR Document 90 Filed 05/23/18 Page 1 of 8
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`THE HONORABLE JAMES L. ROBART
`
`UNITED STATES DISTRICT COURT
`
`WESTERN DISTRICT OF WASHINGTON
`
`AT SEATTLE
`
`
`CYWEE GROUP LTD.,
`
`
`Plaintiffs,
`
`v.
`
`
`
`
`
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`HTC CORPORATION, and HTC AMERICA,
`INC.,
`
`
`Defendants.
`
`Case No.: 2:17-cv-00932-JLR
`
`
`
`
`
`THIRD-PARTY DEFENDANT
`STMICROELECTRONICS, INC.’S
`MOTION FOR SANCTIONS PURSUANT
`TO RCW 4.84.185
`
`NOTE ON MOTION CALENDAR: JUNE 8,
`2018
`
`ORAL ARGUMENT REQUESTED
`
`
`HTC CORPORATION, and HTC AMERICA,
`INC.,
`
`
`Third-Party Plaintiffs,
`
`
`STMICROELECTRONICS N.V.,
`STMICROELECTRONICS, INC., and CYWEE
`MOTION GROUP LTD.,
`
`
`Third-Party Defendants.
`
`
`v.
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`
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`
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`STMICROELECTRONICS INC’S MOTION FOR SANCTIONS
`CASE NO.: 2:17-CV-00932-JLR
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`Shearman & Sterling LLP
`1460 El Camino Real
`Menlo Park, CA 94025
`Tel: 650-838-3737
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`Case 2:17-cv-00932-JLR Document 90 Filed 05/23/18 Page 2 of 8
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`Third-party defendant STMicroelectronics, Inc. (“ST Inc.”) respectfully moves for fees and
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`expenses from third-party plaintiffs HTC Corporation and HTC America, Inc. (collectively,
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`“HTC”) pursuant to Washington Revised Code (“RCW”) Section 4.84.185.
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`HTC filed a third-party complaint (“TPC”) against ST Inc. and its parent company,
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`STMicroelectronics N.V. (“ST N.V.”), asserting claims for defense, indemnity, breach of
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`warranty, and contribution for the patent infringement allegations brought against HTC by
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`plaintiff CyWee Group Ltd. (“CyWee”). However, there are no arguably relevant contracts or
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`purchase orders between HTC and ST Inc. Nor has ST Inc. ever sold or supplied accused products
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`to HTC, or agreed to defend and indemnify HTC for any third-party patent infringement
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`allegations. Additionally, no ST-branded product is accused by CyWee of patent infringement in
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`the underlying litigation—rather, CyWee’s allegations of infringement have at all times been
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`directed towards HTC’s wireless communications devices, which utilize Google’s Android
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`operating system and a Qualcomm chip.
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`HTC clearly knew that its claims were frivolous, yet pursued them anyway before
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`ultimately opting not to oppose ST Inc.’s motion to dismiss. Unfortunately, HTC remains
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`undeterred. It is continuing its pursuit of ST N.V., and recently moved for leave to amend the
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`TPC to add yet another foreign entity, STMicroelectronics Asia Pacific Pte. Ltd. (“ST Asia”),
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`even though there are still no ST-branded products accused of patent infringement by CyWee.
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`This is not ST Inc.’s fight, and it should have never been forced to spend legal fees—to the
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`tune of nearly $60,000 before accounting for this motion—defending against HTC’s frivolous
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`claims. As such, and to deter HTC’s ongoing harassment and abuse of the judicial system—the
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`underlying policies behind RCW 4.84.185—ST Inc. respectfully requests that the Court award it
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`fees and costs incurred in defending this matter.
`I.
`
`Facts
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`On July 6, 2017, CyWee filed an Amended Complaint asserting that HTC infringes two
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`CyWee patents by selling a variety of mobile phones. Dkt. # 20. CyWee’s Amended Complaint
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`specifically identified the combination of hardware components in the phones and the Android
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`STMICROELECTRONICS INC’S MOTION FOR SANCTIONS
`CASE NO.: 2:17-CV-00932-JLR
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`1460 El Camino Real
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`Case 2:17-cv-00932-JLR Document 90 Filed 05/23/18 Page 3 of 8
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`operating system as the basis for alleged infringement, and attached claim charts reflecting that
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`position. E.g., Dkt. # 20 at ¶¶ 38-39. For example, in its Amended Complaint, CyWee identified
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`“https://android.googlesource.com” as the source of the accused computer code. Dkt. # 20, Exh.
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`A, pp.4-9. Nowhere in the Amended Complaint did CyWee identify an ST-branded product.
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`Nevertheless, on October 2, 2017, HTC sent a letter addressed jointly to ST Inc. and ST
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`Asia, a foreign affiliate of ST Inc. based in Singapore, demanding defense and indemnification of
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`CyWee’s patent infringement claims. See Dkt. # 66, Exh. A. The letter enclosed a purchase order
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`dated July 28, 2017, in which HTC Corporation sought to order microcontrollers from ST Asia.
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`Id. That purchase order specifies that dispute resolution must occur in Taiwan. Id. at ¶ 12. ST
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`Inc. did not receive, fulfill, or play any role in connection with this purchase order. Dkt. # 65, ¶ 3.
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`Nor has ST Inc. ever sold or supplied to HTC the microcontroller product referenced in the
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`purchase order (STM32F411CEYTR), or any product similar thereto. Id.
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`On December 29, 2017, CyWee served its infringement contentions on HTC (pursuant to
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`Local Patent Rule 120), which again focused on Android computer code and a Qualcomm chip.
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`Dkt. 66, Exh. B. The infringement contentions make no mention of any ST-branded product. Id.
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`Undeterred, on January 11, 2018, HTC filed the TPC against ST Inc. and ST N.V.,
`asserting claims for defense and indemnification, breach of warranty, and contribution.1 Dkt. #
`43. The TPC did not identify any particular part numbers of products allegedly supplied by ST
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`Inc. or ST N.V., or particular purchase order agreements. Rather, the TPC alleged that ST Inc. and
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`ST N.V. (collectively, “STM”) “sold and supplied to HTC certain motion sensor devices and
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`technology, including the Sensor Fusion Hub . . . pursuant to purchase order agreements that
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`obligate STM to defend and indemnify HTC with respect to claims of patent infringement.” Id. at
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`¶ 32.
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`On March 9, 2018, CyWee filed a Second Amended Complaint, which maintained the
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`same core infringement allegations against HTC. Dkt. # 61. In other words, CyWee continued to
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`1 The TPC also names CyWee Motion Group Ltd. as a third-party defendant and asserts an additional claim against
`that entity.
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`STMICROELECTRONICS INC’S MOTION FOR SANCTIONS
`CASE NO.: 2:17-CV-00932-JLR
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`Shearman & Sterling LLP
`1460 El Camino Real
`Menlo Park, CA 94025
`Tel: 650-838-3737
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`Case 2:17-cv-00932-JLR Document 90 Filed 05/23/18 Page 4 of 8
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`allege that HTC infringes two CyWee patents based on the combination of hardware components,
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`including a Qualcomm chip, and the Android operating system. Dkt. # 61, Exhs. A-B.
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`HTC still did not withdraw the TPC. Instead, ST Inc. was forced to file a motion to
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`dismiss, explaining that it had no connection to this litigation whatsoever, and that, even if it had
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`supplied products to HTC or agreed to defense and indemnification (which it did not), CyWee has
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`consistently identified Android software and a Qualcomm chip within the accused HTC handsets,
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`and not any ST-branded product, as the basis for its patent infringement claims. Dkt. # 64. HTC
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`did not oppose ST Inc.’s motion to dismiss (Dkt. # 77), and the Court granted it on April 23, 2018.
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`Dkt. # 79.
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`ST Inc. incurred $57,351.06 in fees and costs up through the Court’s dismissal, which
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`includes fees and costs associated with analyzing HTC’s TPC, attempting to negotiate dismissal
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`without the need for motion practice, and ultimately filing its motion to dismiss. See Declaration
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`of Matt Berkowitz in Support of STMicroelectronics, Inc.’s Motion for Sanctions (“Berkowitz
`Decl.,” filed concurrently with this motion.2 ST Inc. has already incurred in excess of $7,500 in
`additional fees associated with this motion, and will likely incur more unless HTC elects not to
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`oppose. Id.
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`Despite HTC’s prior statement of non-opposition to ST Inc.’s motion to dismiss, it
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`continues to pursue the same claims against ST N.V. (See Dkt. # 68), and, more recently, has
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`moved for leave to add yet another entity, ST Asia, as an additional third-party defendant. Dkt. #
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`87. HTC has never explained why these companies are differently-situated than ST Inc., given
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`that CyWee has never accused ST-branded products, and the only purchase order HTC could
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`possibly be relying upon provides for dispute resolution in Taiwan.
`II.
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`Argument
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`RCW 4.84.185 provides:
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`In any civil action, the court having jurisdiction may, upon written findings by the
`judge that the action, counterclaim, cross-claim, third party claim, or defense was
`frivolous and advanced without reasonable cause, require the nonprevailing party to
`pay the prevailing party the reasonable expenses, including fees of attorneys,
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`2 ST Inc. can submit billing records for the Court’s review upon the Court’s request.
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`STMICROELECTRONICS INC’S MOTION FOR SANCTIONS
`CASE NO.: 2:17-CV-00932-JLR
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`Shearman & Sterling LLP
`1460 El Camino Real
`Menlo Park, CA 94025
`Tel: 650-838-3737
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`Case 2:17-cv-00932-JLR Document 90 Filed 05/23/18 Page 5 of 8
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`incurred in opposing such action, counterclaim, cross-claim, third party claim, or
`defense. This determination shall be made upon motion by the prevailing party
`after a voluntary or involuntary order of dismissal, order on summary judgment,
`final judgment after trial, or other final order terminating the action as to the
`prevailing party. The judge shall consider all evidence presented at the time of the
`motion to determine whether the position of the nonprevailing party was frivolous
`and advanced without reasonable cause. In no event may such motion be filed more
`than thirty days after entry of the order.
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`A frivolous action, for purposes of this statute, is one that “cannot be supported by any
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`rational argument on the law or facts.” Eller v. East Sprague Motors & R.V.’s, Inc. 244 P.3d 447,
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`453 (Wash. Ct. App. 2010) (quoting Clarke v. Equinox Holdings, Ltd., 783 P.2d 82, review
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`denied, 777 P.2d 1050 (Wash. 1989)). The action or lawsuit is to be interpreted as a whole. Biggs
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`v. Vail, 830 P.2d 350, 352 (Wash. 1992). However, a showing of bad faith is not required; “[i]t is
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`enough that the action is not supported by any rational argument and is advanced without
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`reasonable cause.” Eller, 244 P.3d at 453 (reversing trial court’s denial of a fees award on the
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`basis that a showing of bad faith is not required).
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`Washington courts have awarded fees under this section where claims, such as those
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`advanced here by HTC, are brought and maintained without any supporting evidence. See, e.g.,
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`Integrity Trust by Cuddeback v. Capital One, N.A., No. 16-927, 2017 WL 2839819, *2 (W.D.
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`Wash. April 5, 2017) (awarding attorneys’ fees where Plaintiff “knowingly filed a baseless lawsuit
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`. . . ”); Lucas v. Camacho, No. 11-5350, 2012 WL 4120310, *2 (W.D. Wash. Sept. 18, 2012)
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`(awarding attorneys’ fees when plaintiffs failed to submit admissible evidence in support of their
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`claims in a motion for summary judgment); Tracy v. State of Wash., No. 09-5588, 2010 WL
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`5395029, *4 (W.D. Wash. Dec. 27, 2010) (awarding attorneys’ fees after summary judgment
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`when plaintiffs made no arguments regarding defendant and did not present any evidence showing
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`defendant was liable under any causes of action stated in the complaint); Grace v. Hagy, No.
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`62902-6-I, 2009 WL 3808574, *3 (Wash. Ct. App. 2009) (awarding attorneys’ fees when plaintiff
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`responded to defendant’s motion to dismiss by withdrawing plaintiff’s initials claims and
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`replacing them with equally meritless claims).
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`STMICROELECTRONICS INC’S MOTION FOR SANCTIONS
`CASE NO.: 2:17-CV-00932-JLR
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`Case 2:17-cv-00932-JLR Document 90 Filed 05/23/18 Page 6 of 8
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`HTC’s claims against ST Inc. were particularly frivolous. HTC filed the TPC alleging that
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`ST Inc. “sold and supplied to HTC certain motion sensor devices and technology, including the
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`Sensor Fusion Hub . . . pursuant to purchase order agreements that obligate [ST Inc.] to defend
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`and indemnify HTC with respect to claims of patent infringement.” This was blatantly false.
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`There is no such purchase order agreement, and, as HTC knows, ST Inc. never supplied it with
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`any “motion sensor devices.” Moreover, CyWee has never accused any ST-branded products of
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`infringement, so there is nothing for ST Inc. (or any ST entity) to defend and indemnify. Simply
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`put, none of HTC’s claims against ST Inc. had any basis in law or fact.
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`The policy behind RCW 4.84.185 is one of deterrence of harassment and abuses of the
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`judicial system. See In re Longview Fibre Co., 1997 WL 314425, at *3 (Wash. Ct. App. March
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`17, 1997); Cf. Biggs v. Vail, 876 P.2d 448, 541 (Wash. 1994)(en banc) (“A proper sanction [under
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`CR 11] assessed at the time of a transgression will ordinarily have some measure of deterrent
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`effect on subsequent abuses and resultant sanctions.”) (quoting In re Yagman, 796 F.2d 1165,
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`1183 (9th Cir.), amended, 803 F.2d 1085 (1986)). Not only did HTC file a baseless claim against
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`ST Inc., but it continues to pursue the same baseless claims against ST N.V. and ST Asia. As
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`discussed throughout this motion, there are no patent infringement allegations in the case that
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`touch ST-branded products and that would justify a defense and indemnity obligation by any ST
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`entity. And, even if there were, the only possibly relevant purchase order that HTC could be
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`relying on to support its claims—the one it attached to its Oct. 2, 2017 letter—provides for dispute
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`resolution in Taiwan. See Dkt. # 66, Exh. A, ¶ 12. HTC is abusing the judicial system and
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`harassing ST Inc. and its related companies in the process. Accordingly, and in furtherance of the
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`policy underlying RCW 4.84.185, the Court should grant ST Inc.’s motion, and award it fees and
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`costs including those incurred in filing this motion.
`III. Conclusion
`ST Inc. never had any connection to this case. HTC’s defense, indemnity, and breach of
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`warranty allegations were meritless and should never have been brought. To deter further abuses
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`of the judicial system, and harassment of ST Inc. and its related companies (which is ongoing), the
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`STMICROELECTRONICS INC’S MOTION FOR SANCTIONS
`CASE NO.: 2:17-CV-00932-JLR
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`Shearman & Sterling LLP
`1460 El Camino Real
`Menlo Park, CA 94025
`Tel: 650-838-3737
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`Case 2:17-cv-00932-JLR Document 90 Filed 05/23/18 Page 7 of 8
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`Court should grant ST Inc. its total fees including $57,351.06 for fees and costs up to and through
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`the Court’s dismissal, as well as $7,500 for additional fees already incurred in connection with this
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`motion, totaling, $64,851.06.
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`Dated: May 23, 2018
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`By:
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`s/ Matt Berkowitz
`Matthew Berkowitz
`Shearman & Sterling LLP
`1460 El Camino Real, 2nd Floor
`Menlo Park, CA 94025
`Tel.: 650.838.3737
`matthew.berkowitz@shearman.com
`
`Brian G. Bodine, WSBA #22414
`Lane Powell PC
`1420 Fifth Avenue, Suite 4200
`Seattle, WA 98101-2375
`Tel.: 206.223.7406
`Email: bodineb@lanepowell.com
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`
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`Attorneys for Third-Party Defendant
`STMicroelectronics, Inc.
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`STMICROELECTRONICS INC’S MOTION FOR SANCTIONS
`CASE NO.: 2:17-CV-00932-JLR
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`1460 El Camino Real
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`Tel: 650-838-3737
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`Case 2:17-cv-00932-JLR Document 90 Filed 05/23/18 Page 8 of 8
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`CERTIFICATE OF SERVICE
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`I hereby certify that on May 23, 2018, I filed the foregoing with the Clerk of the Court using the
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`CM/ECF system, and served all parties via ECF.
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`Dated: May 23, 2018
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`s/ Matt Berkowitz
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`Matt Berkowitz
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`STMICROELECTRONICS INC’S MOTION FOR SANCTIONS
`CASE NO.: 2:17-CV-00932-JLR
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