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Gabriel Technologies Corporation and v. Qualcomm Incorporated

September 28, 2012

GABRIEL TECHNOLOGIES CORPORATION AND TRACE TECHNOLOGIES, LLC,
PLAINTIFFS,
v.
QUALCOMM INCORPORATED, SNAPTRACK, INC. AND NORMAN KRASNER,
DEFENDANTS.



The opinion of the court was delivered by: Hon. Anthony J. Battaglia U.S. District Judge

ORDER: (1) GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT [Doc. No. 292]; MOTIONS TO FILE DOCUMENTS UNDER SEAL [Doc Nos. 290, 303 and 317]; AND PLAINTIFFS' EX PARTE ) MOTION TO SUPPLEMENT THE RECORD [Doc. No. 320]; AND (2) DENYING AS MOOT DEFENDANTS' MOTION TO EXCLUDE EXPERT TESTIMONY [Doc. No. 294]; AND and MOTION TO FILE DOCUMENTS UNDER SEAL [Doc. No. 291 and 299]; AND PLAINTIFFS' MOTION TO EXCLUDE EXPERT TESTIMONY [Doc. ) No. 301].

Presently before the Court are Defendants Qualcomm, Inc., SnapTrack, Inc., and Norman Krasner (collectively "Defendants") motion for summary judgment (Doc. No. 292); motions to file documents under seal (Doc. Nos. 290 and 317); and motion to exclude expert testimony (Doc. No. 294). Plaintiffs, Gabriel Technologies Corporation and Trace Technologies, LLC, have filed a motion to exclude expert testimony (Doc. No. 301); motions to file documents under seal (Doc. Nos. 299 and 303); and an ex parte motion to supplement the record (Doc. No. 320).

Defendants' motion for summary judgment relates to Plaintiffs' remaining three claims set forth in the Fourth Amended Complaint ("FAC") (Doc. No. 53): (1) Plaintiff's second claim for breach of contract as to ground one and ground six; (2) Plaintiff's fifth claim for correction of inventorship pursuant to 35 U.S.C. § 256; and (3) Plaintiff's sixth claim for declaratory judgment of ownership interest in the patents pursuant to 28 U.S.C. § 2201. (Doc. No. 292.) Plaintiffs filed an opposition, (Doc. No. 304), and Defendants filed a reply, (Doc. No. 318.) Based upon the parties' moving papers and for the reasons set forth below, the Defendants' motion for summary judgment, (Doc. No. 292), is GRANTED; motions to file under seal (Doc. Nos. 290 and 303 and 317) are GRANTED and (Doc. Nos. 291 and 299) are DENIED; motions to exclude expert testimony (Doc. Nos. 294 and 301) are DENIED AS MOOT; and the ex parte motion to supplement the record (Doc. No. 320) is GRANTED.

Background

This action arises out of events related to technology licenses and joint ventures between Plaintiffs and their predecessor in interest, and Defendants, commencing in 1998. The facts as set forth below are taken from the FAC and the parties' moving papers. Plaintiff Gabriel Technologies Corporation ("Gabriel"), is a publicly-traded corporation focused on technologies related to asset tracking and physical security. (FAC at ¶12.) Gabriel is organized pursuant to the laws of Delaware, with its principal place of business in Omaha, Nebraska. (Id. at ¶5.) Gabriel and Loc8.net a/k/a Locate Networks, Inc. ("Locate"),*fn1 a predecessor in interest to Gabriel, created Trace Technologies ("Trace") as a joint venture. (Id. at ¶¶2, 14.) Trace is a wholly-owned subsidiary of Gabriel, and is a limited liability company organized under the laws of Nevada. (Id. at ¶6.)

In late 1998, the founders of Locate, Richard Crowson and William Clise, started discussing joint development projects with Defendants Norman Krasner and SnapTrack. (Id. at ¶15.) Locate focused on location-determining devices and location-based services; SnapTrack developed broadband network and assisted Global Positioning System ("aGPS") technology. (Id. at ¶¶12, 19.) On August 20, 1999, SnapTrack and Locate entered into a license agreement ("1999 Agreement"). (FAC at ¶23.) The 1999 Agreement set forth the terms under which Locate obtained a license to use SnapTrack's aGPS software in exchange for paying SnapTrack licensing and royalty fees. (Id. at ¶25.) The parties also agreed to jointly own "Program Technology," defined as work product carried out by the parties in connection with the 1999 Agreement, and identified as Program Technology in the agreement. (Id. at ¶¶23, 28.) Plaintiffs allege that SnapTrack and Krasner used the relationship created by the 1999 Agreement to obtain millions of dollars from Locate to keep SnapTrack afloat while negotiating a billion dollar buyout of SnapTrack by Qualcomm. (Id. at ¶2.)

In March of 2000, Qualcomm*fn2 acquired SnapTrack for $1 billion, stating in its press release that "SnapTrack's patents are necessary for the commercial viability of any Wireless Assisted GPS System." . at ¶46.)

In 2004, Locate sold its assets to Trace, transferred its interest in Trace to Gabriel, and went out of business. (FAC at ¶14.) Defendants then presented Trace, the successor in interest to Locate's assets, with a proposed amended license agreement. (Id. at ¶110.) Defendants claimed that no joint program technology existed under the 1999 agreement. (Id. at ¶11.) The proposed amended license agreement deleted the Program Technology section of the 1999 agreement, which stated that "all Program Technology was jointly owned by the parties." (Id. at ¶112.) On January 16, 2006, Trace and Defendants entered into the amended license agreement ("2006 license agreement"). (Id. at ¶123.) Plaintiffs state that at the time, Trace was not aware that SnapTrack had misappropriated Locate's intellectual property and technology. (Id.)

Plaintiffs allege that between 1999 and 2006, Krasner misappropriated Plaintiffs' trade secrets and other confidential information. Plaintiffs assert that Krasner secretly filed and obtained numerous patents based on Locate's technology, which he was able to access when the parties entered into the 1999 license agreement. (FAC at ¶111.) Once Qualcomm acquired SnapTrack, Plaintiffs assert that Qualcomm continued filing patents based on Locate's technology. (Id. at ¶¶111, 120.) Plaintiffs allege that at least ninety-two (92) U.S. and foreign patents and patent applications filed by Krasner and Qualcomm should list Locate employees as the sole inventors, or at least joint inventors. (Id. at ¶62.) By filing these patent applications and obtaining patents, Plaintiffs allege that Defendants acquired valuable technology without paying for it. (Id. at ¶66.) According to Plaintiffs, the procurement of these patents allowed SnapTrack and Qualcomm to create barriers to entry by third-party competition in the GPS market. (Id.) Qualcomm benefits from the patents by licensing them to industry leaders as part of its patent portfolio and business model. (Id.)

Over time, as the patents became publicly available, Plaintiffs discovered certain patents that incorporate Locate's pre-existing technology and jointly owned program technology.*fn3 (FAC at ¶126.) Plaintiffs contend that they approached Qualcomm with these claims in June 2007, and were ignored by Qualcomm's Board of Directors. (Id. at ¶128.) Upon continuing investigation, Plaintiffs filed this lawsuit, which initially contained eleven (11) causes of action against Defendants, including: (1) breach of the 1999 license agreement; (2) breach of the 2006 license agreement; (3) fraud/fraudulent inducement; (4) tortious interference with contract; (5) correction of inventorship; (6) declaration of ownership; (7) equitable patent infringement; (8) misappropriation of trade secrets pursuant to California's Uniform Trade Secrets Act; (9) conversion; (10) unfair competition pursuant to Cal. Bus. & Prof. Code section 17200; and (11) unjust enrichment. Plaintiffs seek over $1 billion in damages.

On September 3, 2009, (Doc. No. 35), the Court granted in part and denied in part the Defendants' motion to dismiss, and ordered Plaintiffs to file an amended complaint by September 14, *fn4

On September 14, 2009, Plaintiffs filed a Second Amended Complaint, which contained an amended fraud and fraudulent inducement claim and incorrectly re-alleged claims that were previously dismissed with prejudice. (Doc. No. 36.) On October 8, 2009, the Court held a telephonic status conference with the parties and granted Plaintiffs leave to file a Third Amended Complaint that did not include the claims previously dismissed with prejudice. (Doc. No. 39.) On October 9, 2009, Plaintiffs filed their Third Amended Complaint, which included the amended fraud and fraudulent inducement claims. (Doc. No. 40.) Defendants again moved to dismiss Plaintiffs' fraud claim. (Doc. No. 41.) On December 14, 2009, the Court granted Defendants' motion and dismissed Plaintiffs' fraud and fraudulent inducement claim with prejudice. (Doc. No. 48.) On January 11, 2010, Plaintiffs filed their Fourth Amended Complaint ("FAC"), which did not contain any causes of action for fraud. (Doc. No. 53.) On August 13, 2010, the Court denied Plaintiffs' motion for leave to file a fifth amended complaint, which sought to add a fraudulent concealment claim. (Doc. No. 104.) On September 27, 2011, Defendants filed a partial motion for summary judgment, (Doc. No. 188), with regard to Plaintiffs' claims for misappropriation of trade secrets and breach of contract, arguing the claims were barred by the statute of limitations. On March 13, 2012, the Court granted Defendant's partial motion for summary judgment as to Plaintiff's eighth claim for misappropriation of trade secrets and second claim for breach of contract on ground one as to trade secrets only and grounds two, three, four, and five. The Order denied partial summary judgment as to ground one and ground six of Plaintiffs' second claim for breach of contract. (Doc. No. 252.) Defendants now move for summary judgment on Plaintiffs' remaining claims.

Legal Standard

Summary judgment is appropriate where the record, when read in the light most favorable to the nonmoving party, demonstrates that "there is no genuine issue as to any material fact and . . . the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). Pursuant to Rule 56(c), the movant bears the initial burden of demonstrating the absence of a genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party satisfies this burden, the non-moving party must set forth, by affidavit or as otherwise provided by Rule 56, "specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e); T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). All reasonable inferences that can be drawn from the evidence ...


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