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Uniloc United States of America, Inc v. Apple Inc.

United States District Court, N.D. California

May 25, 2018

UNILOC UNITED STATES OF AMERICA, INC., et al., Plaintiffs,
v.
APPLE INC., Defendant.

          ORDER RE: DKT. 104, 106, 109, 116

          PHYLLIS J. HAMILTON UNITED STATES DISTRICT JUDGE

         Apple Inc.'s (“Apple”) motion to dismiss (Dkt. 116), motion for sanctions (Dkt. 109), and motion for protective order (Dkt. 104), as well as Uniloc USA, Inc.'s and Uniloc Luxembourg, S.A.'s (together “Uniloc”) motion to file under seal (Dkt. 106) came on for hearing before this court on April 11, 2018. Plaintiffs appeared through their counsel, James Foster. Defendant appeared through its counsel, Clayton James, Srecko Vidmar, and Alali Dagogo-Jack. Having read the papers filed by the parties and carefully considered their arguments and the relevant legal authority, and good cause appearing, the court hereby rules as follows.

         BACKGROUND

         On June 2, 2017, Uniloc filed its original Complaint in this action in the Eastern District of Texas, asserting infringement of U.S. Patent No. 7, 690, 556. Dkt. 1. On August 22, 2017, this action was consolidated with other cases in the Eastern District of Texas, with this as the Lead Case. Dkt. 24. As such, the docket contains a number of filings concerning other cases.

         On December 19, 2017, Uniloc filed a First Amended Complaint, the operative complaint in this case. Dkt. 68. The amended complaint alleges direct infringement, induced infringement, and contributory infringement of a single patent.

         On December 22, 2017, the Eastern District of Texas court granted Apple's motion to transfer the consolidated cases to the Northern District of California. Dkt. 71. On January 9, 2018, Apple filed a motion to dismiss Uniloc's First Amended Complaint. Dkts. 76, 116. The case was transferred to this District on January 17, 2018. Dkt. 78.

         On January 2-4, Uniloc's expert Chuck Easttom inspected portions of Apple's source code at the offices of Apple's counsel. Dkt. 107-10 ¶ 8.

         On January 9, 2018, Apple moved for sanctions pursuant to Rule 11 based on Uniloc filing its complaint without undertaking an adequate investigation. Dkts. 77, 109.

         On January 19, 2018, the case was assigned to Magistrate Judge Sallie Kim. Dkt. 79. On January 25, 2018, Magistrate Judge jurisdiction was declined. Dkt. 82. On January 26, 2018, this case was reassigned to Judge White. Dkt. 84. On January 29, 2018, Judge White granted the parties' stipulation to extend Uniloc's deadline to reply to Apple's motion for sanctions. Dkt. 87. Uniloc stated that it needed to examine Apple's source code and depose an Apple employee to reply to Apple's motion. Dkt. 87.

         On February 7-8, Uniloc's expert Chuck Easttom again inspected portions of Apple's source code at the offices of Apple's counsel. Dkt. 107-10 ¶ 8. Uniloc served a deposition notice for Apple employee Steve Jackson to take place on February 14, 2018, and when that date was refused a new notice was issued for March 12, 2018. Dkt. 115- 2. Similarly, Uniloc served a deposition notice for former Apple employee Anil Kandangath to take place on February 7 (Dkt. 102-8), and when that date was refused a new notice was issued for February 12 (Dkt. 102-2).

         On February 21, 2018, this case was related with case 18-cv-361, and on February 22, 2018, it was reassigned to this court. Dkts. 103, 105. On February 21, 2018, Apple filed a motion for a protective order to preclude Uniloc from conducting depositions related to Apple's Rule 11 sanctions motion. Dkt. 104.

         DISCUSSION

         A. Legal Standards

         1. Motion to Dismiss Under Rule 12(b)(6)

         A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests for the legal sufficiency of the claims alleged in the complaint. Ileto v. Glock, 349 F.3d 1191, 1199-1200 (9th Cir. 2003). Under Federal Rule of Civil Procedure 8, which requires that a complaint include a “short and plain statement of the claim showing that the pleader is entitled to relief, ” a complaint may be dismissed under Rule 12(b)(6) if the plaintiff fails to state a cognizable legal theory, or has not alleged sufficient facts to support a cognizable legal theory. Somers v. Apple, Inc., 729 F.3d 953, 959 (9th Cir. 2013).

         While the court accepts as true the factual allegations in the complaint, legally conclusory statements not supported by actual factual allegations need not be accepted. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). The complaint must proffer sufficient facts to state a claim for relief that is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 558-59 (2007).

         “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citation omitted). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'” Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)). Where dismissal is warranted, it is generally without prejudice, unless it is clear the complaint cannot be saved by any amendment. Sparling v. Daou, 411 F.3d 1006, 1013 (9th Cir. 2005).

         2. Motion for Sanctions Under Rule 11

         Federal Rule of Civil Procedure 11 imposes upon attorneys a duty to certify that they have read any pleadings or motions they file with the court and that such pleadings and motions are well-grounded in fact, have a colorable basis in law, and are not filed for an improper purpose. Fed.R.Civ.P. 11(b); see also Business Guides, Inc. v. Chromatic Comm. Enters., Inc., 498 U.S. 533, 542 (1991). Rule 11 authorizes sanctions for its violation and serves “to deter baseless filings in district court and thus . . . streamline the administration and procedure of the federal courts.” Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990).

         The 9th Circuit has held that an attorney may not be sanctioned under Rule 11 “for a complaint that is not well-founded, so long as she conducted a reasonable inquiry . . . [nor] [m]ay she be sanctioned for a complaint which is well-founded, solely because she failed to conduct a reasonable inquiry.” In re Keegan Management Co. Sec. Litig., 78 F.3d 431, 434 (9th Cir. 1996). Under that test, the district court must “consider after-acquired factual evidence that would have adequately supported the complaint” when determining whether sanctions are appropriate under Rule 11. Id. ...


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