The opinion of the court was delivered by: Hayes, Judge
The matter before the Court is Plaintiff's motion to remand this case back to the California State Superior Court in San Diego, California. (Doc. # 20). The Court finds this matter suitable for submission on the papers and without oral argument.
On April 18, 2008, Plaintiff Merdad Valikhani filed the pending class action lawsuit against Defendant Qualcomm Incorporated (Qualcomm) in the California State Superior Court in San Diego, California. (Doc. # 1 at Ex. A). On April 30, 2008, Defendant Qualcomm removed the case to this Court pursuant to 28 U.S.C. §§ 1332(d) & 1441. (Doc. # 1). On May 16, 2008, Plaintiff filed the pending motion to remand this case back to the California State Superior Court. (Doc. # 20). On June 9, 2008, Defendant filed an opposition to the motion. (Doc. # 25). On June 16, 2008, Plaintiff filed a reply to support the motion. (Doc. # 28).
ALLEGATIONS OF THE COMPLAINT AND FACTUAL BACKGROUND
Plaintiff Merdad Valikhani resides in Los Angeles, California. Complaint (Doc. # 1 at Ex. A), ¶ 8. Plaintiff purchased a subsidized LF-CU500 cell phone from AT&T and receives cellular phone service from AT&T. Compl., ¶ 8.
Defendant Qualcomm is a Delaware corporation which is headquartered in San Diego, California. Compl., ¶ 9. "Qualcomm commercializes technology involved in cellular communications and applications," and owns patents which are significant in the wireless communications industry. Compl., ¶ 9. Qualcomm generates billions in revenues by licensing its patents. Compl., ¶ 9.
The wireless communications industry consists of many components, including wireless carriers who provide cell phone service to consumers, cell phone manufacturers who manufacture cell phones, and cell phone component manufactures who manufacture parts of cell phones. Compl., ¶¶ 16-17. In order "[f]or a carrier's wireless system to function properly, all of the system's components (e.g. base stations in various geographic locations and consumers' cell phones) must seamlessly interface with each other." Compl., ¶ 19. This requires that "each cell phone," no matter who manufactures it, "must be capable of interfacing with all of the other components in a carrier's wireless system." Compl., ¶ 19.
Because of the "demand for interoperability," telecommunication standards determining organizations (SDOs) have created industry and global-wide standards for wireless carriers, cell phone manufacturers, and component makers. Compl., ¶¶ 20-22. When telecommunication SDOs consider implementing new standards, "[t]he ownership of relevant intellectual property (IP) and related IP licensing practices are critical issues . . . ." Compl., ¶ 24. "If the implementation of a standard requires the use of particular [intellectual property], such as a patent, the [intellectual property] owner may have the ability to prevent, delay or distort the development of technology implementing that standard (sometimes referred to as 'patent hold-up') and thereby undermine the purpose of the SDO." Compl., ¶ 24. "Accordingly, SDOs typically require that their members declare whether they believe they hold patents necessary for compliance with a particular standard, and if so whether they are willing to license such patents on fair, reasonable, and non-discriminatory (FRAND) terms." Compl., ¶ 24.
"Patents necessary to implement a particular standard are known as 'essential patents' for the standard to which they relate," and "[e]ach SDO relevant to this action requires that owners of essential patents agree to FRAND licensing before the SDO will agree to include the technology that depends upon those patents in any industry standard." Compl., ¶¶ 24, 43. Once adopted, "[a]n industry-wide standard necessarily eliminates previously available alternative technologies, which can no longer be used and are no longer competitive." Compl., ¶ 34. "The adoption of an industry-wide standard, therefore, confers monopoly power on the holders of patents essential to implementing that standard." Compl., ¶ 34.
Relevant wireless communication SDOs adopted the Universal Mobile Telecommunications System (UMTS) standard for the wireless communication industry, and Defendant Qualcomm holds "essential" patents with respect to the UMTS standard. Compl., ¶¶ 1-4, 33-38. Specifically, "Qualcomm's WCDMA patents are essential to the manufacture of UMTS-compliant cell phones and other UMTS-compliant devices, and are also essential for the implementation of the UMTS standard." Compl., ¶ 38. Before the relevant SDOs included Qualcomm's technology and intellectual property in the UMTS standard, "Qualcomm made repeated and express written representations to SDOs . . . that Qualcomm would license any of its essential WCDMA patents on FRAND terms prior to the adoption of the UMTS standard." Compl., ¶¶ 44-45.
After the relevant SDOs adopted the UMTS standard, Defendant Qualcomm did not license its UMTS-related patents in a fair, reasonable, and non-discriminatory manner. Compl., ¶ 48. Rather, Qualcomm has charged "supracompetitive" prices for goods and licenses which do not bear a relationship to its patents. Compl., ¶¶ 47-88. Qualcomm never intended to offer its patent portfolio on FRAND terms, and only represented that it would license on FRAND terms to induce the relevant SDOs to include Qualcomm's technology in the UMTS standard. Compl., ¶¶ 44-48. On behalf of himself and others similarly situated, Plaintiff Valikhani alleges that "Qualcomm acquired monopoly power by intentionally misrepresenting to the relevant SDOs and their members that Qualcomm would license its WCDMA patents on fair, reasonable, and non-discriminatory terms." Compl., ¶ 101. Plaintiff Valikhani alleges that he and others similarly situated were forced to pay "supracompetitive" prices for goods in the wireless communications marketplace as a result of Defendants' improper actions. Compl., ¶ 109.
Plaintiff seeks certification of, and purports to represent, two different classes of persons in this lawsuit. Compl., ¶ 1. First, Plaintiff alleges and represents a "Device Class," defined as all persons who purchased a UMTS-capable cellular device. Compl., ¶¶ 1, 89. Over 14 million UMTS devices, each requiring a patent license from Defendant, have been sold in the United States from 2005 through 2007. Declaration of Andres Leyva (Doc. # 25-1), ¶ 3. Qualcomm estimates that "326 million UMTS devices were sold globally in the last three years." Compl., ¶ 90. According to the Complaint, "[t]he Device Class seeks injunctive relief under state anti-trust laws, and money damages (including treble damages under the Cartwright Act) . . . for persons who purchased a UMTS-capable cellular device." Compl., ¶ 7. Second, Plaintiff alleges and represents a "Service Class," defined as all persons who purchased cellular service from any carrier in the United States which bundles its cellular service with subsidized UMTS-compliant devices." Compl., ¶ 93. The Service Class seeks "injunctive relief under state antitrust laws, and money damages (including treble damages under the Cartwright Act) for persons who purchased cellular service from a carrier that bundled its cellular services with subsidized UMTS-capable devices." Compl., ¶ 87. The Complaint seeks reasonable attorneys' fees and restitution, among other relief. Compl., ¶ 115.
Plaintiff alleges that "Defendant's actions have injured Plaintiff and the Device and Service Class members and threaten them with additional antitrust injury in the form of more expensive UMTS cellular devices, reduced selection, and lessened non-price competition." Compl., ¶ 105. Plaintiff and the Class Members allege that they have sustained antitrust injuries from the Defendant's actions ...