MLC Intellectual Property, LLC v. Micron Technology, Inc.

Background

MLC Intellectual Property, LLC alleged that Micron Technology, Inc. and nine affiliated entities infringed MLC’s patent, titled “Electronically alterable non-volatile memo with N-Bits per cell.” The case involved products covered by the L94 Design ID and products covered by 13 Design IDs involved in an earlier related proceeding against Micron. That earlier proceeding remained pending and had not produced a final judgment.

The motions addressed in this order were filed by Micron Technology, Inc., Micron Semiconductor Products, Inc., and Micron Consumer Products Group, Inc. The court referred to those defendants as the Moving Defendants and to the two subsidiaries as the Micron Subs. IM Flash Technologies also filed a motion to dismiss.

Claim Splitting

The Moving Defendants argued that MLC improperly split one cause of action between the earlier related proceeding and this case. The court held that factual disputes prevented resolution of that issue at the pleading stage. Those disputes included when the L94 products became available, whether they were materially different from the products involved in the earlier proceeding, and whether MLC could have discovered and included them earlier.

The court also rejected dismissal based on claim splitting as to the Micron Subs. The court stated that the L94 issue presented factual disputes. As to the 13 Design IDs from the earlier proceeding, the products were the same, but the court found that factual questions remained concerning diligence and whether the subsidiaries were sufficiently connected to Micron for claim-splitting purposes.

The court therefore denied, without prejudice, the Moving Defendants’ motions to dismiss based on claim splitting.

Collateral Attack

The Moving Defendants also argued that this lawsuit was an improper collateral attack on rulings in the earlier proceeding. The court rejected that argument because the earlier proceeding was still pending and had no final judgment. The court denied the motions to dismiss on that ground.

Damages and Patent Marking

The defendants argued that MLC could not seek damages because the patent had expired on June 9, 2015, and MLC had not adequately alleged either patent marking or notice of infringement before that date. Under the patent statute discussed by the court, a patentee that did not properly mark patented products generally cannot recover damages for infringement before the accused infringer received notice.

As to Micron, the court found factual disputes about whether MLC’s licensees sold products that were required to be marked and whether Micron received legally sufficient notice concerning the L94 products. The court therefore denied, without prejudice, Micron’s motion to dismiss the damages claim.

As to the Micron Subs, MLC alleged notice to Micron but not specific notice to the subsidiaries. MLC argued that notice to Micron should count as notice to the subsidiaries because they were alter egos of Micron. The court found that MLC had not sufficiently alleged an alter-ego relationship. An alter-ego theory requires facts showing such unity of ownership and interests that the entities are no longer genuinely separate, along with facts showing that respecting their separate identities would cause fraud or injustice. The court found that allegations about shared branding, officers, employees, finances, legal support, guarantees, and business activities were consistent with an ordinary parent-subsidiary relationship and did not show pervasive control.

The court granted the Micron Subs’ motions to dismiss the damages claims, but gave MLC leave to amend if it could add supporting facts in good faith.

Personal Jurisdiction and Venue

Micron Semiconductor argued that MLC had not alleged sufficient contacts with California specific to that company. The court agreed that MLC had improperly grouped the defendants together rather than alleging each defendant’s contacts individually. The court also found that MLC had not adequately alleged an alter-ego relationship that would allow Micron’s California contacts to be attributed to Micron Semiconductor.

The court granted Micron Semiconductor’s motion to dismiss for lack of personal jurisdiction, but gave MLC leave to amend its jurisdictional allegations.

The Micron Subs also sought dismissal for improper venue. The court found that MLC had not adequately alleged that either subsidiary committed acts of infringement in the district and maintained a regular and established place of business there. The court also rejected reliance on the insufficiently pleaded alter-ego theory to establish venue.

The court granted the Micron Subs’ motions to dismiss for improper venue, but gave MLC leave to amend.

Disposition

The court’s specific rulings were:

- The motion to dismiss all Moving Defendants based on claim splitting was denied without prejudice. - The motion to dismiss all Moving Defendants based on a collateral attack was denied. - The motion to dismiss Micron based on failure to state a claim for damages was denied without prejudice. - The motion to dismiss the Micron Subs based on failure to state a claim for damages was granted, but with leave to amend. - The motion to dismiss Micron Semiconductor based on lack of personal jurisdiction was granted, but with leave to amend. - The motion to dismiss the Micron Subs based on improper venue was granted, but with leave to amend.

Because MLC was allowed to file a second amended complaint, the court found IM Flash’s motion to dismiss the first amended complaint moot. MLC had 30 days from the order to file the second amended complaint. The order did not decide whether the alleged patent infringement occurred.