United States District Court, N.D. California, San Jose Division
ORDER GRANTING DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT; DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT
[Re: Docket Nos. 128, 141]
EDWARD J. DAVILA, District Judge.
Presently before the court in this licensing dispute action are Plaintiff Tessera, Inc.'s ("Tessera") Motion for Partial Summary Judgment, Dkt. No. 128, and Defendant UTAC (Taiwan) Corporation's ("UTC") Motion for Summary Judgment as to Contract Interpretation, Dkt. No. 141. The court held a hearing on these matters on November 8, 2013. Having reviewed the parties' briefing and heard the parties' arguments, the court GRANTS UTC's Motion and DENIES Tessera's Motion.
a. Factual Background
i. The Parties and their Negotiations
Tessera is a patent holding company and developer of semiconductor packaging technology, which is sometimes referred to as "microBGA technology." Decl. of Joseph M. Lipner ISO Tessera's Mot. Partial Summ. J., Dkt. No. 138 Ex. 1 at 1-2. UTC is a Taiwanese semiconductor packaging assembler. Id . Ex. 2. In 2001, UTC began manufacturing a small-format ball grid array package, which it called "window BGA" or "wBGA." Dkt. No. 138 Ex. 10 at 24:14-20; Ex. 12. By March 2001, a third party named Computer Technology System Corporation ("CTS") had approached UTC regarding a potential patent infringement claim it believed it had against UTC's wBGA package. Dkt. No. 138 Ex. 9. Shortly thereafter, UTC met with Tessera and raised its concern over a potential patent infringement suit by CTS. On April 27, 2001 Tessera's counsel, Christopher Pickett, sent a letter to UTC's President, C.C. Tsai, addressing UTC's concern and particularly noting that, should UTC take a license under Tessera's MicroBGA Technology and patents, and in particular Tessera's U.S. Patents 5, 950, 304 ("the 304 patent") and 6, 133, 627 ("the 627 patent") it could continue to manufacture the packaging using methods that would likely not be held to infringe CTS's patents. Id . In May 2001, Tessera faxed a license term sheet a draft "TCC License Agreement" to UTC. Dkt. No. 138 Ex. 11.
The parties met in person in Taiwan on June 20, 2001 and August 9, 2001 to discuss terms of the licensing agreement, Tessera's willingness to introduce UTC to potential customers, and the parties' interest in working together on future technology development. Dkt. No. 138 Exs. 12-13. After these meetings, on August 22, 2001, UTC's legal and intellectual property manager Wei-Heng Shan emailed Mr. Pickett to express UTC's willingness to enter into a licensing agreement provided the parties could agree on a licensing fee and royalties. Dkt. No. 138 Ex. 15. In that email, Mr. Shan also noted that UTC executives were "impressed" by Tessera's presentation of its "business cooperation plan" and that they hoped to meet with Tessera's "strategic partners" during an upcoming trip to the United States. Id.
On September 4, 2001, Mr. Shan again sent an email to Mr. Pickett summarizing the key points of UTC's position, including highlighting that the nature of UTC and Tessera's relationship is "quite different" from that of a technical transfer arrangement because UTC did not require a technical transfer or any kind of engineering support. Decl. of Dave H. Herrington ISO UTC's Mot. Partial Summ. J., Dkt. No. 142, Ex. 13. In that email, Mr. Shan suggested it would be better to "establish a patent license agreement instead of [a] technical transfer agreement." Id . Three days later, on September 7, 2001, Mr. Pickett emailed Mr. Shan Tessera's TCC License Agreement (the "Agreement"), which he referred to as "the patent license agreement" in the body of the email. Dkt. No. 142 Ex. 14. The parties continued to negotiate the terms of the Agreement through November 2001 and ultimately signed the Agreement on December 3, 2001. See Dkt. No. 138 Ex. 20. The full name of the Agreement, by UTC's request, was "Tessera Inc. and United Test Center Inc.-Packaging Technology [C]ooperat[ion] Agreement." Dkt. No. 138 Ex. 16.
ii. The Terms of the Agreement
Under the Agreement, Tessera granted UTC the right to make, use, and sell "TCC [Tessera Compliant Chip] packages" in exchange for royalties on the basis of those TCCs, calculated by reference to a defined schedule. Dkt. No. 138 Ex. 2 ¶¶ II.A and III.B. Particularly, the Agreement's license grant provided UTC with "a worldwide, non-exclusive, non-transferable, non-sublicensable, limited license to the Tessera Patents and Technical Information to assemble ICs into TCC packages and use or sell such TCC Packages." Dkt. No. 138 Ex. 2 ¶ II.A. The Agreement defined "TCC" as
an acronym for Tessera Compliant Chip, a type of integrated circuit ("IC") package which is the subject matter of certain Tessera Patents licensed hereunder. By way of non-limiting examples, such TCC packages may include IC packages that are in a fan-in arrangement where external electrical terminals overlie a surface of an IC device) or are in a fan-out arrangement (where external electrical terminals are arranged beyond the periphery of an IC device) or are in a fan-in/fan-out arrangement (where external electrical terminals both overlie a surface of an IC device and extend beyond the periphery of the IC device).
Id. ¶ I.A. Neither party addressed the definition of "TCC" during the course of their negotiations. Dkt. No. 142 Ex. 12 at 121:7-122:2. The Agreement went on to define "Technical Information" as
Package assembly know-how relating to the design, manufacture and assembly of TCC packages... which may be proprietary and/or confidential in nature and which may include, without limitation, material specifications, current best method of assembly, tooling specifications, design methods and techniques, proprietary software, process data, yields reliability data, and other Tessera engineering data and test results needed by UTC (the foregoing by mutual agreement) to exercise the rights, licenses and privileges granted thereunder.
Dkt. No. 138 Ex. 2 ¶ I.B. It also contained an attachment listing the specific Tessera patents and applications it covers. Dkt. No. 138 Ex. 2 Attach. A. The term of the Agreement was set such that it "shall remain in full force until the expiration of ...