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U.S. Ethernet Innovations, LLC v. Acer, Inc.

United States District Court, Ninth Circuit

August 7, 2013

U.S. ETHERNET INNOVATIONS, LLC, Plaintiff,
v.
ACER, INC.; ACER AMERICA CORPORATION; APPLE, INC.; ASUS COMPUTER INTERNATIONAL; ASUSTEK COMPUTER, INC.; DELL, INC.; FUJITSU, LTD.; FUJITSU AMERICA, INC.; GATEWAY, INC.; HEWLETT PACKARD CO.; SONY CORPORATION; SONY CORPORATION OF AMERICA; SONY ELECTRONICS INC.; TOSHIBA CORPORATION; TOSHIBA AMERICA, INC.; and TOSHIBA AMERICA INFORMATION SYSTEMS, INC., Defendants, INTEL CORPORATION; NVIDIA CORPORATION; MARVELL SEMICONDUCTOR, INC.; ATHEROS COMMUNICATIONS, INC.; and BROADCOM CORPORATION, Intervenors.

ORDER DENYING PLAINTIFF'S MOTION FOR LEAVE TO ASSERT CLAIMS AGAINST THIRD PARTY DEFENDANTS SILICON INTEGRATED SYSTEMS, INC. AND ORACLE CORPORATION (Docket No. 754) AND GRANTING SILICON INTEGRATED SYSTEMS CORPORATION'S MOTION TO DISMISS AND QUASH (Docket No. 731).

CLAUDIA WILKEN, District Judge.

Plaintiff U.S. Ethernet Innovations, LLC (USEI) moves for leave to assert claims alleging infringement of United States Patent Nos. 5, 307, 459, 5, 434, 872, 5, 732, 094, and 5, 299, 313 against Third Party Defendants Silicon Integrated Systems Corporation (Sis) and Oracle Corporation. Oracle opposes the motion. Sis has not filed a response to the motion. Silicon Integrated Systems Corporation (Taiwan) (SIS-TW) moves to dismiss the third party complaint filed against it by Third-Party Plaintiffs ASUSTek Computer Inc. (ASUSTek) and ASUS Computer International (ACI). ASUSTek and ACI oppose Sis-TW's motion.

For the reasons set forth below, the Court DENIES USEI's motion and GRANTS Sis-TW's motion.

I. Sis-TW's motion to dismiss

A. Personal jurisdiction

Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, a defendant may move to dismiss for lack of personal jurisdiction. The plaintiff then bears the burden of demonstrating that the court has jurisdiction. Schwarzenegger v. Fred Martin Motor Co. , 374 F.3d 797, 800 (9th Cir. 2004). To satisfy this burden, the plaintiff "need only demonstrate facts that if true would support jurisdiction over the defendant." Ballard v. Savage , 65 F.3d 1495, 1498 (9th Cir. 1995). Uncontroverted allegations in the complaint must be taken as true. AT&T v. Compagnie Bruxelles Lambert , 94 F.3d 586, 588 (9th Cir. 1996). However, the court may not assume the truth of such allegations if they are contradicted by affidavit. Data Disc, Inc. v. Systems Technology Assocs., Inc. , 557 F.2d 1280, 1284 (9th Cir. 1977). If the plaintiff also submits admissible evidence, conflicts in the evidence must be resolved in the plaintiff's favor. AT&T , 94 F.3d at 588.

There are two independent limitations on a court's power to exercise personal jurisdiction over a non-resident defendant: the applicable state personal jurisdiction rule and constitutional principles of due process. Sher v. Johnson , 911 F.2d 1357, 1361 (9th Cir. 1990); Data Disc, Inc. , 557 F.2d at 1286. Because California's jurisdictional statute is co-extensive with federal due process requirements, jurisdictional inquiries under state law and federal due process standards merge into one analysis. Rano v. Sipa Press, Inc. , 987 F.2d 580, 587 (9th Cir. 1993).

The exercise of jurisdiction over a non-resident defendant violates the protections created by the due process clause unless the defendant has sufficient "minimum contacts" with the forum state that the exercise of jurisdiction "does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington , 326 U.S. 310, 316 (1945).

Personal jurisdiction may be either general or specific. ASUSTek and ACI assert that both exist here. General jurisdiction exists when the defendant maintains significant contacts with the forum state, even if the cause of action is unrelated to those contacts. Helicopteros Nacionales de Colombia, S.A. v. Hall , 466 U.S. 408, 414 (1984). Specific jurisdiction, in contrast, exists when the cause of action arises out of the defendant's contacts with the forum state, even if those contacts are isolated and sporadic. Data Disc , 557 F.2d at 1287.

1. General jurisdiction

"A court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all claims against them when their affiliations with the State are so "continuous and systematic" as to render them essentially at home in the forum State.'" Mavrix Photo, Inc. v. Brand Techs., Inc. , 647 F.3d 1218, 1223-1224 (9th Cir. 2011) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown , 131 S.Ct. 2846, 2851 (2011)). "For general jurisdiction to exist, a defendant must engage in continuous and systematic general business contacts'... that approximate physical presence' in the forum state...." Id. at 1223-24 (internal citations omitted). The standard is an "exacting" one and "is met only by continuous corporate operations within a state [that are] thought so substantial and of such a nature as to justify suit against [the defendant] on causes of action arising from dealings entirely distinct from those activities.'" Id. at 1224 (citation omitted, (alterations in original). "To determine whether a nonresident defendant's contacts are sufficiently substantial, continuous, and systematic, we consider their [l]ongevity, continuity, volume, economic impact, physical presence, and integration into the state's regulatory or economic markets.'" Id . (quoting Tuazon v. R.J. Reynolds Tobacco Co. , 433 F.3d 1163, 1172 (9th Cir. 2006). The Ninth Circuit has observed that the "Supreme Court has found general personal jurisdiction over a non-resident defendant in only one case." Id . (citing Perkins v. Benguet Consol. Mining Co. , 342 U.S. 437, 447-48 (1952)).

Sis-TW asserts that it is a Taiwanese corporation and is a separate legal entity than Silicon Integrated Systems Corporation (USA) (Sis-USA). It argues that the Court is unable to assert personal jurisdiction over it based simply on the relationship between it and Sis-USA, which is a California corporation.[1]

Sis-TW has filed a declaration attesting to the following facts, among others. Its operations are based solely in Taiwan, it does not have an office in California and it does not have any employees, officers, directors or managing agents located in California or elsewhere in the United States. Chen Decl. ¶¶ 3-4, 6. It is not registered to do business and does not have a mailing address in California or the United States. Id. at ¶¶ 5, 7. It does not own property, pay taxes or file tax returns in California or the United States, does not have assets or service locations in those areas and does not sell the products at issue there. Id. at ¶¶ 9-12.

Sis-TW attests that it entered into a purchase order agreement with ASUSTeK, which is also a Taiwanese company, in Taiwan, and sold and delivered its products to ASUSTeK there or in China. Id. at ¶¶ 13-14, 21; Third-Party Compl. ¶ 5. It also states that it has no control or direction over where ASUSTeK sells its products and that, while it "is aware that ASUSTeK sells its products worldwide including the United States in general, Sis-TW has no knowledge as to where ASUSTeK specifically sells its products in the United States." Chen Decl. ¶ 16.

As to its relationship with Sis-USA, Sis-TW states that it "is the grandparent organization of Sis-USA in a chain of companies, " specifically that Sis-USA is a wholly-owned subsidiary of a Cayman Islands company that is in turn a wholly-owned subsidiary of Sis-TW. Id. at ¶ 27. It attests that the two entities maintain separate business records, external CPAs and bank accounts. Id. at ¶ 28.

ASUSTeK and ACI do not contest "that a subsidiary's contacts with California do not, standing alone, confer jurisdiction on a parent corporation" but contend that SIS-TW has "taken over the role of the U.S. entity" and now has sufficient minimum contacts with California to support the exercise of general jurisdiction. Docket No. 782, 2. The Ninth Circuit has recognized that, "if the parent and subsidiary are not really separate entities, or one acts as an agent of the other, the local subsidiary's contacts with the forum may be imputed to the foreign parent corporation.'" Doe v. Unocal Corp. , 248 F.3d 915, 926 (9th Cir. 2001) (quoting El-Fadl v. Central Bank of Jordan , 75 F.3d 668, 676 (D.C. Cir. 1996)). "An alter ego or agency relationship is typified by parental control of the subsidiary's internal affairs or daily operations." Id . (citing Kramer Motors, Inc. v. British Leyland, Ltd. , 628 F.2d 1175, 1177 (9th Cir. 1980)).

ASUSTeK and ACI state that, in an answer filed in the Eastern District of Texas last year, Sis-TW "admitted" that "[o]n November 18, 2008, SIS America decided to discontinue operations in the United States; since then, SIS Taiwan has assumed responsibility for United States sales." Opp. at 2 (citing Brigham Decl., Ex. 5). They also assert that Sis-TW has filed a joint financial report for itself and its subsidiaries and that an officer of the American entity was a named ...


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