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Amkor Technology, Inc. v. Tessera, Inc.

United States District Court, N.D. California, San Jose Division

September 9, 2014

AMKOR TECHNOLOGY, INC., Petitioner(s),
TESSERA, INC., Respondent(s)


EDWARD J. DAVILA, District Judge.

There can be no dispute that arbitration as an alternative to the formalities of traditional litigation "has become an accepted and favored method of resolving disputes, praised by the courts as an expeditious and economical method of relieving overburdened civil calendars." Madden v. Kaiser Found. Hosps. , 17 Cal.3d 699, 706-707 (internal citations omitted); Schoenduve Corp. v. Lucent Techs., Inc. , 442 F.3d 727, (9th Cir. 2006) ("Arbitration offers flexibility, an expeditious result, and is relatively inexpensive when compared to litigation."); O.R. Secs., Inc. v. Prof'l Planning Assocs., Inc. , 857 F.2d 742, 747 (11th Cir. 1988) (recognizing that one of "the basic purposes of arbitration" is the "fast, inexpensive resolution of claims"). But this case, which stems from a multi-part arbitration proceeding between Petitioner Amkor Technology, Inc. ("Amkor") and Respondent Tessera, Inc. ("Tessera"), is an example of what can happen when the goals of arbitration are allowed to erode, if not completely disregarded.

As will be explained in more detail, the underlying royalties dispute between Amkor and Tessera that began in arbitration was permitted to branch, in one form or another, into the California state courts, then into the United States District Court for District of Delaware, and then into this court when Amkor removed the California state court action; the same action it initiated, then initially lost, and then appealed.

Tessera now moves to remand. See Docket Item No. 32. Amkor opposes that request. See Docket Item No. 45. After careful consideration of this matter, the court has determined there is no basis for federal jurisdiction under the statute upon which Amkor purportedly removed the case.

Accordingly, Tessera's motion will be granted.


A. Events Prior to Initiation of Removed Proceeding

In or about 1996, Tessera and Amkor entered into a licensing agreement which granted to Amkor certain rights to Tessera's patents and technology in exchange for the payment of royalties. The license agreement contained an arbitration clause. Thus, when Tessera in 2006 believed that Amkor was not paying all royalties due under the agreement, it initiated an arbitration proceeding against Amkor in California. On January 9, 2009, the arbitrators[1] awarded Tessera unpaid royalties through December 1, 2008.

Amkor then initiated another arbitration against Tessera in or about 2009. In that proceeding, Amkor sought an award in the form of a declaratory judgment that its royalty payments after December 1, 2008, were in full compliance with the licensing agreement. Amkor also ceased paying royalties to Tessera while this subsequent proceeding was pending. In response to Amkor's non-payment, Tessera terminated the parties' agreement on February 17, 2011. Amkor, however, continued to use Tessera's technology even after the agreement was terminated.

On July 6, 2012, the arbitrators resolved the proceeding initiated by Amkor by issuing Award No. 3. There, the tribunal determined that Tessera's termination of the agreement on February 17, 2011, was effective under California law, and that Tessera was entitled to the payment of royalties from Amkor from the termination date through the date of Award No. 3. The tribunal did not calculate the amount of royalties owed by Amkor in Award No. 3, but instead left that determination as the subject of a further award.

On the same day it received notice of Award No. 3, Tessera filed a Complaint for patent infringement against Amkor in the United States District Court for the District of Delaware. Amkor answered the Complaint on August 14, 2012, and filed a counterclaim for a declaratory judgment of non-infringement.

B. The Removed Proceeding

On February 27, 2013, Amkor initiated an action in San Francisco County Superior Court by filing a Petition to Correct an Arbitration Award pursuant to California Code of Civil Procedure ยงยง 1285 and 1286.6. In that filing, Amkor asserted that the tribunal exceeded its power when it found, as part of Award No. 3, that Amkor remained liable for royalty payments after Tessera terminated the licensing agreement. Amkor therefore sought an order from the Superior Court striking that finding from Award No. 3. Tessera opposed the Petition (and subsequent motion placing the issue on calendar), and the Superior Court denied Amkor's request for relief in an order filed on June 25, 2013.

Amkor appealed from the June 25th order, which proceeding was pending before the First District Court ...

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