Intel Corp. v. Silicon Storage Technology, Inc.

20 F. Supp. 2d 690, 1998 U.S. Dist. LEXIS 13363, 1998 WL 665209
District Court, D. Delaware·Decided August 5, 1998·No. Civil Action 97-608-RRM·Published·Cited by 17 cases

Opinion

MEMORANDUM OPINION

MCKELVIE, District Judge.

This is a patent case. Plaintiff Intel Corporation (“Intel”) owns four patents for electrically erasable programmable read only memory chips (“EEPROMs”), also known as flash memory chips. Intel is a Delaware corporation with its principal place of business in Santa Clara, California. Defendant Silicon Storage Technology, Inc. (“SST”) is a California corporation with its principal place of business in Sunnyvale, California. On November 14, 1997, Intel filed a complaint in this court claiming that SST has infringed its patents by using and selling infringing flash EEPROM chips, and by inducing others to use and sell infringing flash EEPROM chips, in the District of Delaware and elsewhere in the United States. On December 4, 1997, SST filed a motion to dismiss for lack of personal jurisdiction and improper venue, or in the alternative, to transfer venue to the Northern District of California. The following is the court’s decision on this motion.

I. FACTUAL AND PROCEDURAL BACKGROUND

The court draws the following facts from the briefs and evidentiary exhibits submitted by the parties. Both parties have submitted, along with their briefs on the issue of jurisdiction, transcripts of depositions taken during jurisdictional discovery, as well as copies of financial reports, contracts, and advertisements.

A. What Is an EEPROM?

Intel is a leading manufacturer of microprocessors and memory devices, including EEPROM flash memory chips. Read-only memory, or ROM, is a type of computer memory that retains its contents even when the computer’s power is turned off. Programmable ROM, or PROM, is manufactured as blank memory and can be programmed by the user. Erasable PROM, or EPROM, can be erased and reprogrammed, usually by exposure to ultraviolet light. Electrically erasable PROM, or EEPROM, can be erased simply by applying electricity. Flash EEP-ROM can be programmed or erased in blocks of data, rather than one byte at a time, for improved speed. The chips are used in personal computers and other electronic products manufactured and distributed worldwide.

B. The Parties

Intel has 48,500 employees worldwide. Intel’s revenue for the nine months ending September 27, 1997 was $18.5 billion. Its flash memory business employs 88 engineers and generated $584 million in revenue during the first three quarters of 1997.

SST also designs and manufactures semiconductor memory products, including EEP-ROMs. It has 184 employees, including sales and marketing personnel in Japan, Massachusetts, and Florida. SST’s revenue for the nine months ending September 27, 1997 was $55 million.

SST engages in research and development in California and New Mexico. It manufactures products in New Mexico and Japan, and sells 86% of its products overseas. Its customers include Panasonic, Sony, Dell, and Acer, manufacturers whose products are available by direct sale or through retail channels in Delaware. It is unclear whether any SST products are actually present in products sold in Delaware by these manufacturers.

SST advertises its products in trade publications circulated throughout the United States. SST’s advertisements recommend its flash EEPROM products to manufacturers for use in cellular phones, video games, and digital cameras, as well as in computer products. They provide a toll-free telephone number and a web site address. The ads appear in EDN Magazine, which has 220 subscribers in Delaware, Electronic Buyers’ News, which has 109 subscribers in Delaware, and Electronic Engineering Times, which has 166 subscribers in Delaware.

SST makes its products available in the United States through four independent regional distributors. The distributors warehouse the product, process customer orders, *693 and ship products to customers. Nu Horizons Electronics Corporation (“Nu Horizons”) of Amityville, New York is SST’s regional distributor for the mid-Atlantic region, which includes Delaware. On .March 13,1998, after Intel had filed its complaint, an employee of Intel’s Delaware counsel contacted Nu Horizons. The employee ordered four SST parts by telephone and received those parts at counsel’s Delaware office on March 16, 1998.

In addition to its regional distributors, SST has contracts with several regional sales representative firms, each of which seeks out prospective customers for products supplied by a number of manufacturers. Delaware is one of thirty-four states assigned to sales representatives acting on behalf of SST. S-J Mid-Atlantic, Inc. of Mount Laurel, New Jersey is SST’s sales representative in New Jersey, Delaware, and eastern Pennsylvania. S-J Mid-Atlantic sales representatives visit customers in Delaware on behalf of manufacturers other than SST, but they have never presented SST products for sale to anyone in Delaware. There appear to be no prospective customers for flash EEPROM products in Delaware.

SST publishes a technical data book which provides product specifications, a corporate overview, and lists of distributors and sales representatives. In one instance S-J Mid-Atlantic shipped an SST data book from its New Jersey location to a manufacturer in Delaware. S-J Mid-Atlantic did not make a price quote and did not complete a sale. At the time of the filing of Intel’s complaint, it appears that SST had never made a sale in Delaware either directly or through its distributors or sales representatives.

C. The Complaint and the Motion to Dismiss

In its opening brief, defendant SST argues that Intel’s complaint should be dismissed pursuant to Federal Rules of Civil Procedure Rule 12(b)(2) for lack of personal jurisdiction. SST claims that it has not sold any products in Delaware, does not derive any revenue from Delaware, and does not have any significant contacts with Delaware. SST states that it does not have any offices, facilities, or employees in Delaware, that it has not entered into any contracts in Delaware, that it is not licensed to do business in Delaware, and that it does not have any plan to specifically target Delaware residents as customers. SST states that its chips are present in only a minimal number of products, many of which are not sold in the United States. SST claims that any presence in Delaware of products produced by other manufacturers and incorporating SST components is “merely fortuitous” and not the result of any SST business plan.

In its answering brief Intel claims that SST has sold infringing products directly and indirectly in Delaware. Intel also claims that SST’s placement of advertisements in national magazines with subscribers in Delaware, along with its maintenance of a sales and distribution network targeting Delaware, constitute infringing offers to sell under 35 U.S.C. § 271(a).

Intel claims that SST' has maintained a chain of distribution that reaches into Delaware, and that through its agents S-J Mid-Atlantic and Nu Horizons it has targeted the Delaware market and shown its willingness and intent to sell infringing products in Delaware.

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Intel Corp. v. Silicon Storage Technology, Inc., 20 F. Supp. 2d 690, 1998 U.S. Dist. LEXIS 13363, 1998 WL 665209 (D. Del. 1998).

20 F. Supp. 2d 690 (Intel Corp. v. Silicon Storage Technology, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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