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Intellisoft, Ltd v. Acer America Corp.

United States District Court, N.D. California

May 29, 2018

INTELLISOFT, Ltd, Plaintiff,
v.
ACER AMERICA CORPORATION, et al., Defendants.

          ORDER DENYING COUNTER-DEFENDANTS' MOTION TO DISMISS, RE: DKT. NO. 48

          PHYLLIS J. HAMILTON UNITED STATES DISTRICT JUDGE

         Before the court is counter-defendants Intellisoft, Ltd and Bruce Bierman's motion to dismiss defendants and counter-plaintiffs Acer America Corp. and Acer Inc.'s (together, “Acer”) counterclaim for declaratory relief under the Declaratory Judgment Act. The matter is fully briefed and suitable for decision without oral argument. Having read the parties' papers and carefully considered their arguments and the relevant legal authority, and good cause appearing, the court hereby DENIES counter-defendants' motion as follows.

         BACKGROUND[1]

         On March 21, 2014, Bierman and Intellisoft filed this action in the Superior Court of the State of California for the County of Marin against Acer. Bierman later voluntarily dismissed himself from the case and assigned his interest to Intellisoft. In brief, Intellisoft alleges that Bierman invented certain trade secrets related to computer power management. Fourth Amended Complaint (“4thAC”), ¶¶ 41-65. Intellisoft further alleges that in the early 1990s, Bierman shared those purported trade secrets with Acer pursuant to a non-disclosure agreement, that Acer stole those trade secrets, and that Acer obtained a series of patents (the “'713 patents” or the “patents”) based on those trade secrets without Bierman's knowledge. Id. ¶¶ 27-65. On September 25, 2015, Intellisoft filed its fifth pleading, the 4thAC, asserting causes of action for: (1) misappropriation of trade secrets, (2) intentional misrepresentation and concealment, (3) breach of contract- non disclosure agreement, and (4) accounting. Id. ¶¶ 70-101.

         On October 30, 2017, Acer removed the matter to this court after Intellisoft revealed through last-minute expert discovery that, according to Acer, Intellisoft's case rested on patent theories of inventorship, infringement, and infringement-based royalty damages. Notice of Removal, Dkt. 1. On November 20, 2017, Acer filed an amended counterclaim against Bierman and Intellisoft seeking a declaratory judgment that Bierman did not contribute to the invention of the ideas in the '713 patents and was properly not named as an inventor of those patents. Dkt. 20 ¶ 7.

         On January 22, 2018, the court denied Intellisoft's motion to remand, holding that the court had federal subject-matter jurisdiction on two independent grounds. See generally Dkt. 35 (the “Remand Order”). First, Acer's Declaratory Judgment Act counterclaim provided a basis for removal under 28 U.S.C. § 1454 and 35 U.S.C. § 256. Id. at 16-22. Second, jurisdiction existed under §§ 1338 & 1441 because Intellisoft's state law claims necessarily raised questions of patent law. Id. at 11-16.

         Counter-defendants now move to dismiss Acer's Declaratory Judgment Act counterclaim because, according to counter-defendants, there is no case or controversy and because Acer lacks standing as it has not alleged an injury. The court's Remand Order specifically addressed the justiciability of Acer's counterclaim under Medimmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). Id. at 20-22. Nevertheless, counter-defendants argue that the present motion demands a different result because of two newly-submitted pieces of evidence: (i) declarations from Bierman and Andrew Spielberger, counter-defendants' counsel, that contain “covenants not to sue” and (ii) a declaration from Intellisoft's expert Irving Rappaport attesting that he will not offer testimony that Bierman or Intellisoft should have been named as inventors on any of the '713 Patents.

         As discussed below, the court finds that these two “new” facts do not extinguish the controversy supporting Acer's declaratory judgment counterclaim.

         DISCUSSION

         A. Legal Standard

         1. Rule 12(b)(6)

         A motion to dismiss under Rule 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 the minimal notice pleading requirements of 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, ” Fed.R.Civ.P. 8(a)(2), 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 must accept as true all 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. 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. Rule 12(b)(1)

         On a motion to dismiss pursuant to Rule 12(b)(1), the applicable standard turns on the nature of the jurisdictional challenge. A defendant may either challenge jurisdiction on the face of the complaint or provide extrinsic evidence demonstrating lack of jurisdiction on the facts of the case. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). Where, as here, the party makes a factual challenge, the party “rel[ies] on affidavits or any other evidence properly before the court to contest the truth of the complaint's allegations.” Courthouse News Service v. Planet, 750 F.3d 776, 780 (9th. Cir. 2014) (internal quotation marks omitted, alteration in original). “When the defendant raises a factual attack, the plaintiff must support her jurisdictional allegations with ‘competent proof, ' under the same evidentiary standard that governs in the summary judgment context.” Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014) (internal citation omitted). The burden of establishing that a cause of action lies within the court's limited jurisdiction rests upon the party asserting jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).

         The Ninth Circuit has explained:

As required by Article III, courts may adjudicate only actual cases or controversies. U.S. Const. art. III, ยง 2, cl.1. When presented with a claim for a declaratory judgment, therefore, federal courts must take care to ensure the presence of an actual case or controversy, such that the judgment does not become an unconstitutional advisory opinion. Absent a true case or controversy, a complaint solely ...

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