Monolithic Power Systems, Inc. v. Silergy Corp.

127 F. Supp. 3d 1071, 2015 U.S. Dist. LEXIS 79329, 2015 WL 3799533
CourtDistrict Court, N.D. California
DecidedJune 18, 2015
DocketCase No. 14-cv-01745-VC
StatusPublished
Cited by4 cases

This text of 127 F. Supp. 3d 1071 (Monolithic Power Systems, Inc. v. Silergy Corp.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Monolithic Power Systems, Inc. v. Silergy Corp., 127 F. Supp. 3d 1071, 2015 U.S. Dist. LEXIS 79329, 2015 WL 3799533 (N.D. Cal. 2015).

Opinion

ORDER DENYING IN PART AND GRANTING IN PART MOTION TO DISMISS, AND DENYING MOTION TO STAY

VINCE CHHABRIA, United States District Judge

Breach of Contract

Silergy and Chen’s motion to dismiss MPS’s breach of contract claim is denied.

The breach of contract claim is based on the “Nondisclosure” provision of a settlement agreement reached by the parties to resolve prior litigation. The nondisclosure provision states as follows: “Dr. Chen represents and warrants not to use or disclose any document that contains MPS confidential information, including all documents that Dr. Chen received or sent while he was employed by MPS.” MPS alleges that Chen and Silergy are breaching this nondisclosure provision by “incorporating information obtained from” documents Chen previously stole from MPS “into Silergy’s flip chip package products....”

Silergy and Chen respond that there can be no breach of contract as a matter of law because the alleged theft of the documents took place before the parties reached their settlement agreement, and the alleged use of the documents also began before the parties reached their settlement agreement. They point to language in the agreement by which MPS releases Chen and Silergy from any claims “relating to actions taken before the Effective Date” of the agreement. And they argue that the continued sale today of any product that stems from use of stolen documents before the date of the settlement is covered by the release. The absolute best that can be said of this argument is that it raises the possibility that the settlement agreement is ambiguous. The argument perhaps creates some doubt about whether the continued use of previously-stolen documents in connection with the development or sale of flip chip package products could constitute a violation of the agreement not to “use ... any document that contains MPS confidential information.” But “[a] motion to dismiss cannot be granted against a complaint to enforce an ambiguous contract.” Westlands Water Dist. v. U.S. Dep’t of Interior, 850 F.Supp. 1388, 1408 (E.D.Cal.1994) (citing Consul Ltd. v. Solide Enters., Inc., 802 F.2d 1143, 1149 (9th Cir.1986)); see also Lord Abbett Mun. Income Fund, Inc. v. JoAnn Asami, No. C 12-03694 DMR, 2012 WL 5379591, at *6 (N.D.Cal. Oct 81, 2012); Hervey v. Mercury Cas. Co., 185 Cal.App.4th 954, 110 Cal.Rptr.3d 890, 896 (2010). Therefore, the defendants’ motion to dismiss the breach of contract claim is denied.

Willful Infringement

Silergy’s motion to dismiss MPS’s willful infringement claims is granted. With respect to the '048 patent, MPS has adequately alleged that Silergy had pre-suit knowledge of the patent, but it has not sufficiently alleged that Silergy acted despite an objectively high risk that it was infringing or that Silergy knew of this objectively high risk. With respect to the '758 and '899 patents, MPS has not adequately alleged Silergy’s pre-suit knowledge of the patents, nor has it adequately alleged that Silergy acted willfully in the post-suit time period.

Pre-Suit Knowledge

Silergy and MPS spend the bulk of their energy disputing whether the second amended complaint adequately alleges that Silergy knew about the patents-in-suit before the original complaint was filed. Construing all allegations in the light most favorable to MPS, the complaint sufficient[1074]*1074ly alleges that Silergy knew of the ’048 patent prior to the lawsuit, but it does not sufficiently allege that Silergy knew or should have known of the '758 or '899 patents.

As to the '048 patent, MPS alleges that Chen knew of its existence because of his role on MPS’s Patent Committee, which, according to the complaint, “meant that he was aware of MPS’s entire patent pipeline due to his job responsibilities.” SAC ¶ 21. More specifically, MPS alleges that “Chen was involved in approval and oversight of MPS’s patent application that would lead to” to the '048 patent. SAC ¶ 22. While it is true that “knowledge of a patent application does not equal knowledge of issued patents,” Boundaries Solutions Inc. v. CoreLogic, Inc., No. 5:14-ev-00761-PSG, 2014 WL 4954017, at *4 (N.D.Cal. Sept. 29, 2014), here there is an allegation that Chen was not only aware of the ’048 patent application, but also that he was actively following the MPS patent pipeline that existed at the time Chen left MPS. SAC ¶ 22 (“[Ojnly three months before he left MPS to found Silergy, Dr. Chen requested and received from another MPS employee a summary of MPS’s product-to-patent correlation information. This information included [the application] which would lead to the '048 Patent.”). What’s mox-e, MPS also alleges that Chen and Silergy knew of the, ’048 patent through negotiations related to the settlement agreement mentioned above. According to the complaint, during these settlement negotiations, Silergy and Chen “either evaluated the patent portfolio of MPS, or were willfully blind in not doing so.” SAC ¶ 23. These allegations, taken together, raise a plausible inference that Chen and Silergy had pre-suit knowledge of the ’048 patent.

However, MPS’s allegations are insufficient to suggest that Silergy knew of the '758 and '899 patents prior to the original complaint. MPS makes the same general allegations that it does with respect to the '048 patent, namely, that Sil-ergy knew of the '758 and '899 patents because of Chen’s role on the MPS patent committee and because Chen and Silergy reviewed MPS’s patent portfolio during settlement negotiations. , But the timing of these events renders these allegations implausible. Chen left MPS to form Silergy in February 2008, yet the '758 patent was not issued until October 8, 2012, over four- and-a-half years later. And the '899 was not issued until January 29, 2013, over five years later. Absent specific allegations about Chen’s knowledge of these two patents, the significant time gap between his service on the committee and the date the patents were issued makes it implausible that Chen knew of these patents as a result of his role on the MPS patent committee. Further, neither of these two patents existed when the parties signed the prior settlement agreement on December 6, 2011, so it seems impossible that Chen and Silergy would have learned of them through reviewing MPS’s patent portfolio at the time.

Finally, MPS argues that Silergy gained knowledge of the '758 and '899 patents through the filing of the original complaint on November 1, 2013 in the Central District of California.1 Further, because in July 2014 this Court determined that the settlement agreement between the two parties required them to mediate the dispute before allowing one party to sue the other, MPS argues that the current litigation really only began with the filing of the second amended complaint in February [1075]*10752015, and so the original complaint should essentially be treated as a demand letter that gave the defendants “pre-suit knowledge” of the patents. This is wrong. The litigation began when MPS sued the defendants. The fact that MPS ignored the provision in the settlement agreement which required the parties to mediate, thereby resulting in Silergy’s temporary dismissal from the case, does not change the fact that this is the same lawsuit that MPS originally filed in November 2013.

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Cite This Page — Counsel Stack

Bluebook (online)
127 F. Supp. 3d 1071, 2015 U.S. Dist. LEXIS 79329, 2015 WL 3799533, Counsel Stack Legal Research, https://law.counselstack.com/opinion/monolithic-power-systems-inc-v-silergy-corp-cand-2015.