2019-08-23 Response to SJM Non-Infringmentpdf
2019-08-23 Response to SJM Non-Infringmentpdf
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  1. 2019-08-21IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION SEMCON IP INC., Plaintiff, v. ASUSTEK COMPUTER INC., Defendants. § § § § § § § § § § § Case No. 2:18-cv-00193-JRG (LEAD CASE) JURY TRIAL DEMANDED PLAINTIFF SEMCON IP INC.’S RESPONSE IN OPPOSITION TO ASUSTEK COMPUTER, INC.’S MOTION FOR SUMMARY JUDGMENT OF NON-INFRINGEMENT (DKT. 73) Case 2:18-cv-00193-JRG Document 94 Filed 08/23/19 Page 1 of 29 PageID #: 2289
  2. i TABLE OF CONTENTS Page(s)I.INTRODUCTION ................................................................................................................ 1II.RESPONSE TO STATEMENT OF ISSUES TO BE DECIDED BY THE COURT ................................................................................................................................. 2III.UNDISPUTED FACTS ........................................................................................................ 3A.Response to ASUSTeK’s Recitation of Undisputed Facts ....................................... 31.ASUSTeK imports, offers to sell, and sells the Accused Products in the United States ....................................................................................... 32.ASUSTeK Knew of the Asserted Patents Before September 5, 2018............................................................................................................... 5B.Counterstatement of Undisputed Facts ..................................................................... 61.ASUSTeK’s Reliance on the Declaration of Netty Lee (the “Lee Declaration”) ................................................................................................. 62.ASUSTeK’s Sale, Offer for Sale, and Importation in the United States ............................................................................................................. 73.Indirect Infringement .................................................................................... 10IV.LEGAL STANDARD ........................................................................................................... 11A.Summary Judgment .................................................................................................. 11B.Direct Infringement ................................................................................................... 12C.Indirect Infringement ................................................................................................ 13V.ARGUMENT ........................................................................................................................ 14A.Direct Infringement ................................................................................................... 141.ASUSTeK Has Admitted That it Sells and Imports Accused Products in the United States ........................................................................ 142.A Genuine Dispute of Material Fact Exists, and ASUSTeK Cannot Show that it is Correct as a Matter of Law ................................................... 163.ASUSTeK Sells the Accused Products in the United States through its Website ..................................................................................................... 18Case 2:18-cv-00193-JRG Document 94 Filed 08/23/19 Page 2 of 29 PageID #: 2290
  3. ii B.Pre-Service Indirect Infringement ............................................................................. 20VI.CONCLUSION ..................................................................................................................... 22Case 2:18-cv-00193-JRG Document 94 Filed 08/23/19 Page 3 of 29 PageID #: 2291
  4. iii TABLE OF AUTHORITIES Page(s) Cases Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ...........................................................................................................12, 14 Commil USA, LLC v. Cisco Sys., Inc., 135 S. Ct. 1920 (2015) .............................................................................................................13 Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011) .....................................................................................................13, 14, 21 Litecubes, LLC v. N. Light Prods., Inc., 523 F.3d 1353 (Fed. Cir. 2008)..........................................................................................12, 16 McGoldrick v. Berwind–White Coal Mining Co., 309 U.S. 33 (1940) ...................................................................................................................13 N. Am. Philips Corp. v. Am. Vending Sales, Inc., 35 F.3d 1576 (Fed. Cir. 1994)............................................................................................12, 17Realtime Data, LLC v. CME Group Inc., 6:09-CV-327-LED-JDL, 2010 WL 11558071 (E.D. Tex. May 21, 2010) ........................18, 19 Realtime Data, LLC v. CME Group Inc., 6:09CV327-LED-JDL, 2010 WL 11561107 (E.D. Tex. Aug. 26, 2010) ..................................8 Semcon IP Inc. v. Kyocera Corporation, No. 2:18-CV-00197-JRG (E.D. Tex. May 3, 2019) ......................................................4, 13, 16Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc., 617 F.3d 1296 (Fed. Cir. 2010)................................................................................................13 Vivid Techs., Inc. v. Am. Sci. & Eng’g., Inc., 200 F.3d 795 (Fed. Cir. 1999)..................................................................................................12 Statutes 35 U.S.C. § 271(a) ...................................................................................................................12, 17 35 U.S.C. § 271(b) ...................................................................................................................13, 14 Other Authorities Rule 30(b)(6) ................................................................................................................................1, 3Case 2:18-cv-00193-JRG Document 94 Filed 08/23/19 Page 4 of 29 PageID #: 2292
  5. Plaintiff Semcon IP Inc. (“Semcon” or “Plaintiff”), by and through its undersigned counsel, respectfully submits this response in opposition to Defendant ASUSTeK Computer, Inc.’s (“ASUSTeK” or “Defendant”) sealed Motion for Summary Judgment of Non-Infringement (the “Motion”)(Dkt. 73). ASUSTeK’s motion should be denied because there exist genuine issues of material fact with respect to direct and indirect infringement, and because ASUSTeK has failed to show that summary judgment is correct as a matter of law. I.INTRODUCTION ASUSTeK’s motion for summary judgment rests entirely on disputed facts set forth in a declaration submitted by its sole corporate designee, Ms. Netty Lee, not the evidence of record. At her deposition, These conflicting statements Case 2:18-cv-00193-JRG Document 94 Filed 08/23/19 Page 5 of 29 PageID #: 2293
  6. 2 reveal numerous questions of fact regarding ASUSTeK’s infringing conduct in the United States that prevents a finding of summary judgment of no direct infringement. supports Semcon’s position that ASUSTeK infringes the Asserted Patents through its website. Regarding indirect infringement, ASUSTeK has failed to satisfy its burden for summary judgment because there are genuine disputes of material fact pertaining to its knowledge of the Asserted Patents at least because ASUSTeK fails to address willful blindness. The deposition of Netty Lee and ASUSTeK’s own documents reveal numerous issues of material fact regarding ASUSTeK’s knowledge of the Asserted Patents that prevent summary judgment on indirect infringement. II.RESPONSE TO STATEMENT OF ISSUES TO BE DECIDED BY THE COURT Issue a.: Can ASUSTeK be liable for directly infringing the Asserted Patents when ASUSTeK does not make, use, offer to sell, or sell the Accused Products within the United States or import them into the United States? Response: Does a genuine dispute of material fact exist as to whether ASUSTeK makes, uses, sells, imports, or offers for sale the Accused Products in the United States? Issue b.: Can ASUSTeK be liable for indirectly infringing the Asserted Patents before the filing date of the lawsuit when ASUSTeK had no pre-suit knowledge of the Asserted Patents? Response: Does a genuine dispute of material fact exist as to whether ASUSTeK had knowledge (or laid willfully blind in order to avoid learning) of the Asserted Patents prior to September 5, 2018? Case 2:18-cv-00193-JRG Document 94 Filed 08/23/19 Page 6 of 29 PageID #: 2294
  7. 3 III.UNDISPUTED FACTS A.Response to ASUSTeK’s Recitation of Undisputed Facts 1.ASUSTeK imports, offers to sell, and sells the Accused Products in the United States Therefore, it is disputed that ASUSTeK is a Taiwan-based company that does not make, use, offer to sell, or sell the Accused Products in the United States. Dkt. 73 at 2; see alsoinfra III.B.2. ASUSTeK has stated that it has employees and commercial activities in the United States, which include operations related to the making and using of the Accused Products. Ex. O at ¶ 4. It is disputed that ASUSTeK contracts with vendors to manufacture the Accused Products to the extent that ASUSTeK implies that ACI has any relationship with those manufacturers separate from ASUSTeK, and that ASUSTeK does not also manufacture the Accused Products. Dkt. 73 at 2; Ex. A at 13 (“Procurement activities of ASUS products are all performed in Taiwan and upon purchase, the materials are delivered directly to manufacturers on a buy-sell basis.”). It is undisputed that ACI is a wholly owned U.S. subsidiary of ASUSTeK that distributes the Accused Products after they are shipped to the United States. See Ex. A (Master File) at 28; Ex. B (2018 Annual) at 88. Semcon disputes ASUSTeK’s assertions that ACI takes title to the Accused Products overseas, and that ASUSTeK does not sell, offer to sell, or import the Accused Products in the United States. See infra note 1. The location of sale is a disputed, highly factual, determination. Semcon disputes the location of the sale, which occurs within the United States. Other than unsupported statements in the Lee Declaration, there is no evidence of record to support that Case 2:18-cv-00193-JRG Document 94 Filed 08/23/19 Page 7 of 29 PageID #: 2295
  8. 4 Taiwan is the location of sale from ASUSTek to any other entity. ASUSTeK is located in Taiwan and ACI is located in the United States. ASUSTeK sells to and delivers the Accused Products to customers in the United States, including ACI. SeeSemcon IP Inc., v. Kyocera Corporation, Civil Action No. 2:18-CV-00197-JRG, Dkt. No. 41 at 5 (E.D. Tex., May 3, 2019) (“this Court need not accept Kyocera’s legal conclusion that Kyocera’s sale of or offers to sell smartphones to Kyocera International are not U.S. sales or offers to sell”). While it is undisputed that ASUSTeK is the owner of www.asus.com and store.asus.com, which are used to offer for sale and to sell the Accused Products, it is disputed that the ASUSTeK websites direct all users with U.S. IP addresses to the US subdomains. It is further disputed that U.S. customers cannot access or purchase the Accused Products through www.asus.com, and store.asus.com. It is thus clear that U.S. customers are provided with offers for sale or are able to purchase the Accused Products from any one of the www.asus.com, store.asus.com, www.asus.com/us, and store.asus.com/us subdomains, which are all part of the same ASUS website. ASUSTeK also owns the www.asus.com/us and store.asus.com/us pages (the “US subdomains”), which are part of the same website. Id.; Dkt. 73 at 2; see also Ex. P; Ex. Q. It is undisputed that customers located in the U.S. purchase the accused products on the U.S. subdomains. Dkt. 73 at 2-3. Semcon disputes ASUSTeK’s assertion that it does not “operate” the US subdomains; disputes that ASUSTeK has no role in processing orders on the US subdomains; disputes that ASUSTeK does not control the content, pricing, and marketing of products sold on the US subdomains; disputes that ASUSTeK is not paid money tendered by customers located in the U.S; disputes Case 2:18-cv-00193-JRG Document 94 Filed 08/23/19 Page 8 of 29 PageID #: 2296
  9. 5 that ASUSTeK’s tax records do not “reflect” sales through the U.S. subdomains; and disputes that ASUSTeK did not control the process for placing, approving and updating advertising and sales content on the US subdomains. See infra III.B.2: No. 8-16. 2.ASUSTeK Knew of the Asserted Patents Before September 5, 2018 Semcon disputes that ASUSTeK did not have awareness of the asserted patents prior to service of the complaint. See infra III.B.3. It is undisputed that Semcon served ASUS with a subpoena in Semcon v. Huawei on July 31, 2017, seeking information regarding DVFS implemented in products accused in the instant case. Ex. D (SEM-ASUS00026964); Dkt. 73 at n. 20. Semcon disputes that ASUSTeK did not become aware of the Asserted Patents based on the July 31, 2017 subpoena. See infra III.B.3: No. 17-20. Because ASUSTeK did not investigate whether it had knowledge of the Asserted Patents and ASUSTeK’s legal department is responsible for the legal operations of both ASUSTeK and ACI, ASUSTeK cannot show that it did not have knowledge of the Asserted Patents before the filing of the complaint in this case. Ex. C at 34:10-16, 40:11-41:13, 77:7-78:19; See infra III.B.3. It is undisputed that Semcon filed the complaint in this case on May 9, 2018, and that ASUSTeK was served with the complaint pursuant to duly issued letters rogatory on September 5, 2018. Dkt. 1; Dkt. 73 at 3. Semcon disputes that ASUSTeK was not aware of the asserted patents as of or before the filing of the complaint, and disputes that Semcon did not identify them Case 2:18-cv-00193-JRG Document 94 Filed 08/23/19 Page 9 of 29 PageID #: 2297
  10. 6 or provide a copy of the Asserted Patents to ASUSTeK before service of the Complaint. See infra III.B.3. B.Counterstatement of Undisputed Facts 1.ASUSTeK’s Reliance on the Declaration of Netty Lee (the “Lee Declaration”) 1.ASUSTeK has no proof in support of its motion. Similarly, the interrogatory responses on which ASUSTeK relies do not cite to any evidence. Dkt. 71-2 at 11-13. Case 2:18-cv-00193-JRG Document 94 Filed 08/23/19 Page 10 of 29 PageID #: 2298
  11. 7 2.ASUSTeK’s Sale, Offer for Sale, and Importation in the United States 2.ASUSTek has previously admitted to the sale, import, and offer for sale of products in the United States, including the Accused Products such as the Zenfones, and Zenpads.13.ASUSTeK conducts commercial activities in the United States. Ex. O at ¶ 5 (Jacky Lu, Deputy Legal Director responsible for legal operations of ASUSTeK and ACI) (“ASUSTeK and ACI conduct far more commercial activities in the Northern District of California than in the Eastern District of Texas”). Ex. C at 38:11-19. 4.ASUSTeK employs individuals who conduct ASUSTeK business within the United States. Ex. O at ¶ 4 (“representatives and employees from both ASUSTeK and ACI, as well as witnesses with knowledge regarding the sales and distribution of accused products in the United States, are located at ACI's facilities in Fremont, California”). 5.ASUSTeK, not ACI, receives finished products from its manufacturers. See Ex. B at 204; id. at 211; id. at 282-288; Ex. C at 24:7-15. 6.ASUSTeK internally records “sales” to regions including “America.” See Ex. B at 108, 204. 7.ASUSTeK sells and offers the Accused Products for sale to ACI in the United States.                                                             1Ex. E at ¶ 25 (“ASUSTeK admits that either directly or through intermediaries it ships, distributes, offers for sale, and sells products in the United States and the Eastern District of Texas”); Ex. F at 1 (“ASUSTeK Computer, Inc.,. ASUS Computer International, Pegatron Corp. and Unihan Corp. entered into a stipulation that Complainant has satisfied the importation requirement in this Investigation.”); Ex. G at 566-67 (“Judge Essex: Is it your intention to dispute whether or not you have sales in this country? Mr. Nester: No, Your Honor. . . We have conceded importation in this case, so we’re not contesting sales or importation.”); see also Ex. H. at 13 (. The ASUS Respondents admit that they sell wired and wireless devices such as routers that enable networking, broadband access, and network connectivity as well as mobile devices, including their ZenFone smartphones and ZenPad tablets. The ASUS Respondents admit that they design, develop, manufacture (or have manufactured on their behalf), import into the United States, sell for importation into the United States, and /or sell after importation into the United States.”); Ex. I, ASUS v. TPL, Case No. C 08 00884 JF, Dkt. 43 (“ASUSTeK conducts its business in the United States, including sales and product distribution, through ASUS International.”) Case 2:18-cv-00193-JRG Document 94 Filed 08/23/19 Page 11 of 29 PageID #: 2299
  12. 8 ; Ex. A (Master File) (“ASUS entities generally purchase based on three-month rolling forecasts provided by both unrelated and related customers on a monthly basis.”); Ex. B (2018 Annual Report) at 108 (disclosing sales to “America” of NT$93.7 billion in 2017, and NT$87.7 billion in 2018); id. at 203 (“Sales are recognized when control of the product has transferred, being when the products are delivered to the customer”). Accordingly, the sale of the Accused Products is recognized when ACI takes delivery of the Accused Products in the United States. 8.ASUSTeK resolves payments for transactions involving the Accused Products among itself and its subsidiaries as accounting adjustments, and directs its subsidiaries to do the same. Ex. B at 184 (“Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.”); see also Ex. A. at 21 (“ASUS does not apply a general transfer pricing policy to all the companies within the group and sort of transactions, but establishes the corresponding transfer pricing policy on a case-by-case basis”). 9.ASUSTeK delivers Accused Products to ACI in the United States. Ex. A (Master File) at 13 (“The responsibility of shipping, delivery, and logistics in relation to the procured raw materials and finished goods is borne by ASUS. The in-house logistics team plays a crucial function in delivering not only materials but also finished goods . . . for finished mobile phone products, ASUS engages third-party logistics companies to provide logistics services for domestic and international distribution. ASUS in-house Case 2:18-cv-00193-JRG Document 94 Filed 08/23/19 Page 12 of 29 PageID #: 2300
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