Quicklogic Corporation v. Konda Technologies, Inc.

Background

QuickLogic Corporation brought declaratory judgment claims concerning a 2010 licensing agreement and certain patents. It sought a declaration that it had not breached the agreement and had not infringed patents that were not licensed under the agreement. Konda Technologies, Inc. and Venkat Konda later asserted counterclaims for patent infringement, breach of contract, breach of the implied covenant of good faith and fair dealing, and breach of confidential relationship.

The court previously dismissed all of the defendants’ counterclaims and allowed an amendment only to a possible contract counterclaim concerning informal dispute-resolution procedures in the 2010 Agreement. The defendants did not amend by the deadline, so the court determined in this order that all of their counterclaims had been dismissed with prejudice.

QuickLogic moved for judgment on the pleadings, asking the court to dismiss its own declaratory judgment claims as moot and to declare QuickLogic the prevailing party entitled to costs. The defendants filed a cross-motion to dismiss for failure to state a claim and lack of subject-matter jurisdiction, and also sought discovery into QuickLogic’s claims. The court construed that motion as arising under Federal Rules of Civil Procedure 12(b)(1) and 12(c), because Rule 12(h) does not itself provide a basis for such a motion.

Subject-Matter Jurisdiction

The court granted the defendants’ motion to dismiss QuickLogic’s non-breach-of-contract declaratory relief claim for lack of subject-matter jurisdiction and denied QuickLogic’s motion to dismiss that claim as moot. The Declaratory Judgment Act does not independently create federal jurisdiction. The court found no federal-question jurisdiction because the claim arose under contract law, no diversity jurisdiction because the complaint alleged that all parties were California citizens, and no other basis for original jurisdiction.

The court also rejected supplemental jurisdiction. Supplemental jurisdiction can cover related state-law claims that share a common factual basis with claims within the court’s original jurisdiction. But the patents involved in QuickLogic’s non-infringement claims were not the patents licensed under the 2010 Agreement. The court therefore found that the contract and patent claims did not share a common nucleus of operative fact. The contract-related claim was dismissed without prejudice to refiling in state court.

Mootness of Patent Claims

The court granted QuickLogic’s motion as to the patent non-infringement claims and denied the defendants’ motion as to those claims as moot. A declaratory judgment requires a continuing, actual controversy. Because the court had determined that the defendants’ mirror-image patent infringement counterclaims were dismissed with prejudice, the court found that QuickLogic’s corresponding non-infringement claims were moot. The court did not decide whether the contract claim was moot because it had already determined that it lacked jurisdiction over that claim.

Discovery and Costs

The court denied the defendants’ request for discovery into QuickLogic’s claims because the patent claims were moot and the court lacked jurisdiction over the contract claim.

The court found QuickLogic to be the prevailing party and awarded it costs. The court reasoned that the dismissal with prejudice of the defendants’ patent infringement counterclaims gave QuickLogic relief on the merits and changed the parties’ legal relationship because the defendants could no longer assert those claims against QuickLogic. The court stated that QuickLogic did not need to prevail on every claim to qualify as the prevailing party, and that the defendants had provided no reason to overcome the usual presumption favoring an award of costs.

Order to Show Cause

After resolving QuickLogic’s declaratory relief claims, the court questioned whether it had subject-matter jurisdiction over the defendants’ state-law counterclaims. Even though no party had challenged jurisdiction over those counterclaims, the court stated that it had an independent duty to examine its jurisdiction. The court ordered the parties to show cause why it should not vacate the dismissals with prejudice of those counterclaims and instead dismiss them for lack of subject-matter jurisdiction. Responses of no more than fifteen pages were due August 25, 2023.