Free Motion to Dismiss - District Court of California - California

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Kevin C. McCann (SB# 120874) PAUL, HASTINGS, JANOFSKY & WALKER LLP 55 Second Street Twenty-Fourth Floor San Francisco, CA 94105 Telephone: (415) 856-7000 Facsimile: (415) 856-7100 Email: [email protected] Robert M. Masters (DC Bar No. 435623) (pro hac vice) Timothy P. Cremen (DC Bar No. 478705) (pro hac vice) Bhaskar Kakarla (DC Bar No. 488976) (pro hac vice) PAUL, HASTINGS, JANOFSKY & WALKER LLP 875 15th St., N.W. Washington, DC 20005 Telephone: (202) 551-1700 Facsimile: (202) 551-1705 Email: [email protected] Email: [email protected] Email: [email protected] Attorneys for Defendant AEROMECHANICAL SERVICES LTD.

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

STAR NAVIGATION SYSTEMS GROUP LTD., Plaintiff, v. AEROMECHANICAL SERVICES LTD., Defendant.

CASE NO. C 07-4820 (MMC) AEROMECHANICAL SERVICES LTD.'S NOTICE OF MOTION AND MOTION TO DISMISS AND SUPPORTING MEMORANDUM Date: June 20, 2008 Time: 9:00 a.m. Place: Courtroom 7, 19th Floor Honorable: Maxine M. Chesney

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TABLE OF CONTENTS Page NOTICE OF MOTION ................................................................................................................... 1 STATEMENT OF ISSUES TO BE DECIDED ............................................................................. 1 I. INTRODUCTION AND BACKGROUND ................................................................................ 1 II. ARGUMENT I (NO PERSONAL JURISDICTION)................................................................ 2 A. B. C. AMS Has No Substantive Contacts with California ............................................... 2 Standard of Review ................................................................................................. 3 For This Forum To Have Personal Jurisdiction Over AMS, AMS Must Have Minimum Contacts Herein ............................................................................ 4 1. 2. D. General Jurisdiction .................................................................................... 4 Specific Jurisdiction .................................................................................... 5

AMS Does Not Have "Minimum Contacts" To Confer Personal Jurisdiction .............................................................................................................. 6

III. ARGUMENT II (JOINDER) .................................................................................................... 9 A. B. C. Mr. Vieira Has Not Been Joined, and The Canadian Action Is Still Pending ........ 9 Star Has Failed To Join Mr. Vieira As An "Involuntary Plaintiff" ...................... 10 Star Cannot Show That Mr. Vieira Should Be An "Involuntary Plaintiff," And The Case Should Be Dismissed Until The Canadian Action is Complete ............................................................................................................... 11 1. 2. 3. The Court May Dismiss Star's Complaint ................................................ 12 Alternatively, The Court May Stay These Proceedings............................ 13 The Court May Also Dismiss or Stay the Proceedings Under the Colorado River Doctrine........................................................................... 14 4. The Court Should Not Waste Its Resources.............................................. 16

IV. CONCLUSION....................................................................................................................... 16

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TABLE OF AUTHORITIES Page CASES Akro Corp. v. Luker, 45 F.3d 1541 (Fed. Cir. 1995)............................................................................................. 4 Amoco Egypt Oil Co. v. Leonis Navigation Co., Inc., 1 F.3d 848 (9th Cir. 1993)............................................................................................... 4, 8 Applera Corp. v. Illumina, Inc., 282 F. Supp. 2d 1120 (N.D. Cal. 2003) ............................................................................ 15 AT&T v. Compagnie Bruxelles Lambert, 94 F.3d 586 (9th Cir. 1996)............................................................................................. 3, 4 Bancroft & Masters v. Augusta National, 223 F.3d 1082 (9th Cir. 2000)..................................................................................... 5, 6, 7 Burger King Corp. v. Rudzewicz, 471 U.S. 462 (U.S. 1985)................................................................................................ 5, 8 Caprio v. Wilson, 513 F.2d 837 (9th Cir. Cal. 1975) ..................................................................................... 11 Citi Apts., Inc. v. Markel Insurance Co., 2007 U.S. Dist. LEXIS 44469 (N.D. Cal. 2007)................................................................. 9 CMAX, Inc. v. Hall, 300 F.2d 265 (9th Cir. 1962)............................................................................................. 13 Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976) .................................................................................................... 14, 15 Data Discount, Inc. v. Systems Tech. Associate, Inc., 557 F.2d 1280 (9th Cir. 1977)............................................................................................. 3 Doe v. Unocal Corp., 248 F.3d 915 (9th Cir. 2001)............................................................................... 3, 4, 6, 7, 8 Electronics For Imaging, Inc. v. Coyle, 340 F.3d 1344 (Fed. Cir. 2003)........................................................................................... 4 Ethicon, Inc. v. United States Surgical Corp., 135 F.3d 1456 (Fed. Cir. 1998)......................................................................................... 12 Ferguson Beauregard/Logic Controls v. Mega Sys., LLC, 350 F.3d 1327 (Fed. Cir. 2003)................................................................................ 10 Gen-Probe, Inc. v. Amoco Corp., 1996 U.S. Dist. LEXIS 5393 (S.D. Cal., 1996) ................................................................ 14 Helicopteros Nacionales de Colombia, S. A. v. Hall, 466 U.S. 408 (1984) .................................................................................................... 5, 6, 7
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TABLE OF AUTHORITIES (continued) Page International Gamco, Inc. v. Multimedia Games, Inc., 2007 U.S. App. LEXIS 24099 (Fed. Cir. 2007)................................................................ 11 Intermedics Infusaid, Inc. v. Regents of University of Minnesota, 804 F.2d 129 (Fed. Cir. 1986)........................................................................................... 13 International Shoe Co. v. Washington, 326 U.S. 310 (1945) ............................................................................................................ 6 Joint Mktg. Int'l v. L&N Sales & Mktg., 2006 U.S. Dist. LEXIS 48017 (E.D.N.Y., 2006).............................................................. 11 Keeton v. Hustler Magazine, Inc., 465 U.S. 770 (1984) ............................................................................................................ 5 Landis v. North Am, Co., 299 U.S. 248 (1936) .......................................................................................................... 12 L.E.A. Dynatech, Inc. v. Allina, 49 F.3d 1527 (Fed. Cir. 1995)........................................................................................... 12 Leyva v. Certified Grocers of California, Ltd., 593 F.2d 857 (9th Cir. Cal. 1979) ..................................................................................... 12 McShan v. Sherrill, 283 F.2d 462 (9th Cir. 1960)............................................................................................. 10 McNutt v. General Motors Acceptance Corp., 298 U.S. 178 (1936) ............................................................................................................ 3 Neuchatel Swiss General Ins. Co. v. Lufthansa Airlines, 925 F.2d 1193 (9th Cir. Cal. 1991) ................................................................................... 14 One Up, Inc. v. Webcraft Technologies, Inc., 1989 U.S. Dist. LEXIS 11313 (N.D. Ill., 1989)................................................................ 15 Pennington Seed. Inc. v. Produce Exchange No. 299, 457 F.3d 1334 (Fed. Cir. 2006)....................................................................................... 5, 7 Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952) .................................................................................................... 5, 6, 7 Pirkle v. Ogontz Controls Co., 1987 U.S. Dist. LEXIS 10555 (E.D. Pa., 1987)................................................................ 15 Prima Tek II, L.L.C. v. A-Roo Co., 222 F.3d 1372 (Fed. Cir. 2000)......................................................................................... 10 Rano v. Sipa Press, Inc., 987 F.2d 580 (9th Cir. 1993)............................................................................................... 8

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TABLE OF AUTHORITIES (continued) Page Red Wing Shoe Co., Inc. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998)........................................................................................... 7 Robinson v. Heilman, 563 F.2d 1304 (9th Cir. 1977)........................................................................................... 10 Santrade, Ltd. v. General Elec. Co., 1990 U.S. Dist. LEXIS 19260 (E.D.N.C., 1990) .............................................................. 14 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797 (9th Cir. 2004)............................................................................... 3, 4, 5, 6, 7 Sheldon v. West Bend Equipment Corp., 718 F.2d 603 (3d Cir. Pa. 1983)........................................................................................ 11 Sladek v. Bell Sys. Mgmt. Pension Plan, 880 F.2d 972 (7th Cir., 1988)............................................................................................ 10 Summa Four v. AT&T Wireless Servs., 994 F. Supp. 575 (D. Del. 1998) ....................................................................................... 15 Travelers Health Association v. Virginia, 339 U.S. 643 (1950) ............................................................................................................ 5 Viam Corp. v. Iowa Export-Import Trading Co., 84 F.3d 424 (Fed. Cir. 1996)............................................................................................... 6 World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) ........................................................................................................ 5, 6 STATUTES Fed. R. Civ. P. 12(b)(2)......................................................................................................... 2, 3, 16 Fed. R. Civ. P. 12(b)(7)....................................................................................................... 2, 10, 16 Fed. R. Civ. P. 19(a)(2) ............................................................................................................ 1, 10 Cal. Civ. Proc. Code § 410.10......................................................................................................... 4

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NOTICE OF MOTION TO ALL PARTIES AND THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICE that on June 20, 2008, at 9:00 AM, or as soon thereafter as the matter may be heard, in the United States District Court for the Northern District of California, Courtroom 7, 19th Floor, 450 Golden Gate Ave., San Francisco, California, before the Honorable Maxine M. Chesney, defendant Aeromechanical Services, Ltd ("AMS") will, and hereby does move the Court, pursuant to Federal Rules of Civil Procedure 12(b)(2) and (7), and its inherent power to control its docket, for an Order dismissing plaintiff Star Navigation Systems Group Ltd.'s ("Star") Second Amended Complaint (D.I. 61) or, in the alternative, staying these proceedings until conclusion of a related Canadian court action. AMS brings this motion pursuant to: Federal Rule of Civil Procedure 12(b)(2) because this Court cannot reasonably be said to have personal jurisdiction over AMS; (2) Federal Rule of Civil Procedure 12(b)(7) because Star has failed to join both owners of the `852 Patent; and (3) this Court's inherent powers to control its docket because the tenuous existence of Star's purported license to the `852 Patent (and thus the possibility of this action continuing) is currently being litigated in Canada. The motion is based upon this notice, the accompanying memorandum of points and authorities, the Declaration of Darryl Jacobs filed with this motion, the Declaration of Timothy P. Cremen filed with this motion, and such other matters as we may call to the Court's attention at or before the time of the hearing. STATEMENT OF ISSUES TO BE DECIDED 1. Whether Star's complaint should be dismissed because this Court cannot reasonably be said to have personal jurisdiction over AMS. 2. Whether Star's complaint should be dismissed because Star has failed to join both of the owners of the patent-in-suit pursuant to the Court's April 8, 2008 Order. 3. Whether Star's complaint should be dismissed, or these proceedings stayed, because Star may not have a license to the `852 Patent and the existence of such a license is being actively litigated in Canada.

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Dated: May 12, 2008

PAUL, HASTINGS, JANOFSKY & WALKER LLP By: /s/Kevin C. McCann Kevin C. McCann (SB# 120874) 55 Second Street Twenty-Fourth Floor San Francisco, CA 94105 Telephone: (415) 856-7000 Facsimile: (415) 856-7100 Email: [email protected] Robert M. Masters (DC Bar No. 435623) (pro hac vice) Timothy P. Cremen (DC Bar No. 478705) (pro hac vice) Bhaskar Kakarla (DC Bar No. 488976) (pro hac vice) 875 15th St., N.W. Washington, DC 20005 Telephone: (202) 551-1700 Facsimile: (202) 551-1705 Email: [email protected] Email: [email protected] Email: [email protected] Attorneys for Defendant Aeromechanical Services Ltd.

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MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION AND BACKGROUND

Star commenced this action on September 19, 2007, by filing a complaint, in its own name, alleging infringement of the `852 Patent by defendant AMS. AMS moved to dismiss on two grounds: (1) that Star did not have standing to bring an infringement action without joining the patent owners; and (2) that this Court cannot reasonably be considered to have personal jurisdiction over AMS. On April 8, 2008, the Court granted AMS's motion to dismiss without prejudice on the grounds that Star did not have the requisite standing to proceed in its name only, and gave Star until April 30, 2008 to join the co-owners of the patent, Viraf Kapadia and Hillary Vieira (the Court did not rule on the personal jurisdiction issue). Star was apparently able to join Mr. Kapadia to this action, but not Mr. Vieira. Mr. Vieira purportedly declined to assert his patent against defendant AMS, and refused to join this action. Not to be stopped, Star went ahead anyway, and amended its complaint, which purports to join Mr. Vieira as an "involuntary plaintiff." This Court cannot reasonably be considered to have personal jurisdiction over AMS. AMS is a Canadian company, has never conducted any business in the State of California and does not have the requisite minimum contacts with the State of California such that it should be dragged into this State to defend this action. Additionally, Star has failed to comply with the Court's April 8, 2008 Order (D.I. 60) to join the co-owners (Viraf Kapadia and Hillary Vieira) of the `852 Patent. Star's labeling of Mr. Vieira as an "involuntary plaintiff" in the Second Amended Complaint (D.I. 61) is not sufficient ­ a party can only be declared an "involuntary plaintiff" by Court order under Rule 19(a)(2). Even if Star had proceeded properly by seeking a Court order to join Mr. Vieira as an "involuntary plaintiff," such a motion should not be granted. The ability of Star to bring any action, and to move to join Mr. Viera as an "involuntary plaintiff," is based solely on a license agreement - the existence of which is currently being contested in a Canadian court. This Court should not proceed with a time- and cost- intensive patent litigation until the rights of Star (if any) are determined by the Canadian court. -1Case No. C 07-4820 (MMC) AEROMECHANICAL SERVICES LTD.'S NOT. OF MOTION & MOTION TO DISMISS; MPA IN SUPPORT OF MOTION TO DISMISS

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A.

Accordingly, based on separate and independent reasons, AMS respectfully moves to: (1) Dismiss Star's Second Amended Complaint under Fed. R. Civ. P. 12(b)(2)

because this Court does not have personal jurisdiction over AMS; (2) Dismiss Star's Second Amended Complaint under Fed. R. Civ. P. 12(b)(7)

because Star has failed to join Mr. Vieira to this action, and does not otherwise have standing to sue without Mr. Vieira; and (3) Dismiss Star's Second Amended Complaint, or otherwise stay this action, under

this Court's inherent powers to control its docket because the existence of Star's license to the `852 Patent (and thus the possibility of this action continuing) is currently being litigated in Canada. II. ARGUMENT I (NO PERSONAL JURISDICTION)

AMS Has No Substantive Contacts with California AMS is a Canadian corporation, with its principal place of business (and only offices) in

Calgary, Alberta, Canada.1 Jacobs Decl., ¶ 4. AMS has never: had an office in California; maintained any mailing address or telephone listing in California; been licensed or registered to do business in California; or paid any tax to California. Jacobs Decl., ¶¶ 6-8 and 12. AMS has never had employees, sales representatives, vendors, contractors, partners, service providers or associates in California. Jacobs Decl., ¶ 9. AMS has never owned property or other assets, or maintained any bank accounts, in California. Jacobs Decl., ¶¶ 10, 11. AMS has never entered into, or solicited entry into, any business or contract with a California customer. Jacobs Decl., ¶ 13. No AMS employee, sales representative, vendor, contractor, partner, service provider or associate has ever traveled to California to do business with customers on behalf of AMS. Jacobs Decl., ¶ 14. AMS has never directed any customer communications into or out of California. Jacobs Decl., ¶ 15. AMS has never solicited business or customers in California via advertising, presentations, or sales pitches. Jacobs Decl., ¶ 16. AMS's website has never allowed direct

AMS has U.S. mailing addresses for FAA papers and sales documents in states other than California. Jacobs Decl., ¶ 5.
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purchases. Jacobs Decl., ¶ 17. AMS has never manufactured goods or distributed products in California. Jacobs Decl., ¶ 18. AMS has never conducted research, testing, or development regarding any of its products or services in California. Jacobs Decl., ¶ 19. AMS has never provided any service, repairs or support of its systems in California. Jacobs Decl., ¶ 20. AMS has never provided services or support to customers in California. Jacobs Decl., ¶ 21. In previous filings with this Court, Star has alleged that AMS has conducted business with three different companies in California ­ Aloha Airlines, China Eastern Airlines, and Meggit, PLLC. With respect to China Eastern Airlines and Meggitt, AMS has not conducted any business with these companies in California. Jacobs Decl., ¶¶ 43-48. With respect to Aloha Airlines, any contacts with California by virtue of AMS's business with Aloha can only be described as random, fortuitous, or attenuated, and were caused by Aloha's actions, not AMS's. Jacobs Decl., ¶¶ 31-42. Further, Aloha has gone out of business, and no Aloha planes fly into California any longer. Jacobs Decl., ¶¶ 33, 34. B. Standard of Review Federal Rule of Civil Procedure 12(b)(2) provides a district court with the ability to dismiss an action for lack of personal jurisdiction. Data Disc, Inc. v. Systems Tech. Assoc., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). When the defendant moves to dismiss under Rule 12(b)(2), the plaintiff bears the burden of proving personal jurisdiction, and cannot rest on the bare allegations of the complaint. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). This Court is not confined to the facts contained in the complaint when considering motions under Rule 12(b)(2). Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001). Dismissal is required where the plaintiff cannot present competent proof supporting jurisdiction. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936); AT&T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996) ("[a]s the party seeking to invoke federal jurisdiction, [plaintiff] has the burden of establishing its existence").

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C.

For This Forum To Have Personal Jurisdiction Over AMS, AMS Must Have Minimum Contacts Herein Federal Circuit law governs personal jurisdiction determinations in patent cases. Akro

Corp. v. Luker, 45 F.3d 1541, 1543 (Fed. Cir. 1995). When, as here, the defendant is a nonresident of the forum, the determination of whether personal jurisdiction exists over the defendant requires an analysis of whether: (1) "a forum state's long-arm statute permits service of process;" and (2) "the assertion of jurisdiction would be inconsistent with due process." Electronics For Imaging, Inc. v. Coyle, 340 F.3d 1344, 1349 (Fed. Cir. 2003). Because California's long arm statute2 is co-extensive with the outer limits of due process under the state and federal constitutions, the jurisdiction analysis in California narrows to one inquiry - whether jurisdiction comports with due process. Elecs. for Imaging, Inc., 340 F.3d at 1350. Courts may exercise general or specific jurisdiction. A finding of general jurisdiction permits a defendant to be haled into the courts of the forum state for any cause of action, even if it is unrelated to the defendant's activities with the forum. Schwarzenegger, 374 F.3d at 801. Specific jurisdiction permits a court to adjudicate only claims that arise out of the defendant's contact with the forum. AT&T, 94 F.3d at 588. 1. General Jurisdiction

To establish general jurisdiction, Star must demonstrate that AMS's contacts with the forum are "substantial, continuous and systematic" (Doe, 248 F.3d at 923), or that its contacts "`approximate physical presence' in the forum state" (Schwarzenegger, 374 F.3d at 801). "This is an exacting standard, as it should be, because a finding of general jurisdiction permits a defendant to be haled into court in the forum state to answer for any of its activities anywhere in the world." Schwarzenegger, 374 F.3d at 801. For this reason, the Ninth Circuit "regularly [] decline[s] to find general jurisdiction even where the contacts were quite extensive." Amoco Egypt Oil Co. v. Leonis Navigation Co., Inc., 1 F.3d 848, 851 n.3 (9th Cir. 1993). For example,

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See Cal. Civ. Proc. Code § 410.10 ("A court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States").
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even the entry into sales contracts with California choice-of-law provisions, retention of services of a California direct-mail marketing company, retention of California consultants, and maintenance of a Web site available to California residents, "fall[s] well short of [] `continuous and systematic' contacts."3 Schwarzenegger, 374 F.3d at 801. 2. Specific Jurisdiction

In contrast, to show specific jurisdiction (i.e., jurisdiction directly relating to the matter being litigated) Star must satisfactorily show that: (1) AMS has purposefully availed itself of the privileges of conducting activities in California; (2) Star's claim arises out of or results from AMS's activities in California; and (3) the exercise of jurisdiction over AMS is reasonable. Doe, 248 F.3d at 923; Pennington Seed. Inc. v. Produce Exchange No. 299, 457 F.3d 1334, 1344 (Fed. Cir. 2006). Regarding the first two prongs, a defendant that has only random, fortuitous, or attenuated contacts with a particular forum cannot be considered to have purposely availed itself of the privileges of that forum. Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984); WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 299 (1980). But, where the defendant has deliberately engaged in significant activities within a State (Keeton, 465 U.S. at 781), or has created continuing obligations between himself and residents of the forum (Travelers Health Ass'n v. Virginia, 339 U.S. 643, 648 (U.S. 1950)), it has availed itself of the privilege of conducting business there, and it is not unreasonable to require him to submit to the burdens of litigation there. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (U.S. 1985). Regarding the third prong, the reasonableness of jurisdiction is determined by balancing several factors, namely: "(1) the burden on the defendant; (2) the interests of the forum state; (3)

Courts have considered several factors when determining whether a defendant's contacts are "continuous and systematic," including whether the defendant: (1) is incorporated or authorized to do business; (2) maintains its principal place of business, or offices, property, or employees; (3) makes sales or serves the markets; (4) has designated an agent for service of process; (5) maintains corporate files; (6) holds director's meetings; (7) maintains accounts; or (8) makes key business decisions, in the forum. Bancroft & Masters v. Augusta Nat'l, 223 F.3d 1082, 1086 (9th Cir. 2000); Helicopteros Nacionales de Colombia, S. A. v. Hall, 466 U.S. 408, 416 (1984); and Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 438, 445 (1952).
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the plaintiff's interest in obtaining relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and (5) the interest of the states in furthering their social policies." Viam Corp. v. Iowa Export-Import Trading Co., 84 F.3d 424, 429 (Fed. Cir. 1996); Burger King Corp, 471 U.S. at 477. However, the factors considered in the analysis of reasonableness are not sufficient alone to vest the court with jurisdiction over a non-resident defendant when the minimum contacts analysis weighs against the exercise of jurisdiction. World-Wide Volkswagen , 444 U.S. at 294. D. AMS Does Not Have "Minimum Contacts" To Confer Personal Jurisdiction Exercising jurisdiction over AMS in this case would contravene the requirements of due process. AMS does not have the "minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." See Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). As discussed above, and in the Declaration of Darryl Jacobs, AMS has done nothing to purposefully avail itself of the benefits and privileges of doing business in California. AMS is a Canadian company, and has never: had employees (direct or otherwise); maintained facilities; owned, leased or possessed assets; been registered as a business in; or paid tax to, California. Jacobs Decl., ¶¶ 4, 6-12. AMS has never solicited business in California, directed business communications into California, or entered into business with a California customer. Jacobs Decl., ¶¶ 13-16. AMS has never manufactured goods or distributed products in California. Jacobs Decl., ¶ 18. AMS has never conducted research, testing, or development regarding any of its products or services in California. Jacobs Decl., ¶ 19. AMS has never provided any service, repairs or support of its systems in California. Jacobs Decl., ¶¶ 20-21. Thus, general personal jurisdiction cannot be reasonably applied, as AMS does not have "substantial, continuous and systematic" contacts (Doe, 248 F.3d at 923) with California that would "approximate physical presence" therein (Schwarzenegger, 374 F.3d at 801). None of the factors listed in Perkins, Bancroft or Helicopteros weigh in favor of general personal jurisdiction

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here.4 Nor can specific personal jurisdiction be applied against AMS in view of the requirements set forth in Pennington Seed. Here, AMS: (1) did not "purposefully direct[] its activities at residents of [California];" (2) did not perform "activities in the forum state" relating to Star's claim; or (3) cannot have personal jurisdiction applied against it in a manner that is "reasonable and fair." See Pennington Seed, 457 F.3d at 1344. AMS did not avail itself of the benefits and privileges of California law by purposefully directing activities at California, because it neither performed "some type of affirmative conduct which allows or promotes the transaction of business" in California (Doe, 248 F.3d at 924), nor had a "purposeful direction" expressly aimed at California. Schwarzenegger, 374 F.3d at 803. AMS did not (and does not) direct any business activity toward California. Thus, any contact that AMS might have had with California (if any) can only be categorized as "random, fortuitous, or attenuated," which is not sufficient to show minimum contacts. AT&T, 94 F.3d at 590. Nor can Star allege that personal jurisdiction somehow attaches to AMS due to any of its customer's previous actions in California ­ such as Aloha's flying in and out of California (before Aloha ceased passenger operations). As the Federal Circuit has observed, "doing business with a company that does business in [the forum state] is not the same as doing business in [the forum state]." Red Wing Shoe Co., Inc. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1361 (Fed. Cir. 1998). AMS does not do business in California. Aloha (when it was operating) was in control of where it flew, not AMS, and AMS cannot be argued to be availing itself of California law by such attenuated circumstances. Moreover, even if it could be shown that AMS has "minimum contacts" with California, the bare existence or these contacts "is not sufficient to allow a court to exercise personal
4

Namely, AMS: (1) is not incorporated or otherwise authorized to do business in California; (2) does not maintain its principal place of business, or any offices, property, or employees in California; (3) does not make sales or serve California's markets; (4) has not designated a California agent for service of process; (5) does not maintain corporate files in California; (6) does not hold director's meetings in California; (7) does not maintain accounts in California; (8) does not make key business decisions in California. See Bancroft, 223 F.3d at 1086; Helicopteros Nacionales, 466 U.S. at 416 (1984); and Perkins, 342 U.S. at 438, 445.
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jurisdiction over a defendant." Doe, 248 F.3d at 925. Jurisdiction is still improper if it would be unreasonable because the burdens on the defendant outweigh the plaintiff's interest in the forum and the state's interest in resolving disputes arising within the forum. Burger King, 471 U.S. at 477. An analysis of such reasonableness requires a balancing of seven factors: [(1)] the extent of purposeful interjection[;(2)] the burden on the defendant to defend the suit in the chosen forum[;(3)] the extent of conflict with the sovereignty of the defendant's state[;(4)] the forum state's interest in the dispute; [(5)] the most efficient forum for judicial resolution of the dispute; [(6)] the importance of the chosen forum to the plaintiff's interest in convenient and effective relief; [and (7)] and the existence of an alternative forum. Amoco Egypt Oil Co., 1 F.3d at 852. The jurisdictional barrier is "higher" for foreign defendants than for citizens from a sister state. Rano v. Sipa Press, Inc., 987 F.2d 580, 588 (9th Cir. 1993). Here, the burden is high on AMS, as it is being asked to defend an action in a state where it does no business, and has no contacts. It also cannot be said that California has any particular interest in this litigation, because neither party is from California, AMS has not directed any of its business activities toward California, and there has been no allegation that any substantial portion of the allegedly infringing activities occurred in California. This forum is also inconvenient and inefficient for both parties. Both Star and AMS are Canadian companies. D.I. 61, ¶¶ 1 and 5. AMS has no presence in California, and it is doubtful that Star does either. While this judicial district is known for providing structured and wellmanaged patent-related proceedings, there is no reason to believe that another district where AMS does have a presence could not provide a fair and competent proceeding. Indeed, there is no reason Star could not obtain relief in such other forum. After review of all the evidence, it appears that Star has chosen the Northern District of California for tactical, rather than substantive, reasons. Star's tactical maneuvering should not outweigh the unfairness and burden inherent in forcing AMS, a foreign company that has not purposefully directed any activities to California, to defend itself here.

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A.

III.

ARGUMENT II (JOINDER)

Mr. Vieira Has Not Been Joined, and The Canadian Action Is Still Pending Star commenced this action, as the sole plaintiff, on September 19, 2007, alleging

infringement of the `852 Patent by AMS. Star alleged that it had the right to bring this action based on an April 22, 2008 License Agreement (the "License Agreement")5 to Star from the coowners of the `852 Patent (Viraf S. Kapadia and Hilary Vieira). On April 8, 2008, the Court granted AMS's Motion to Dismiss (D.I. 60) Star's First Amended Complaint, ruling: (1) the License Agreement did not transfer all substantial rights in the `852 Patent to Star; and (2) therefore, Star did not have the requisite standing to bring an infringement action without joining Messrs. Kapadia and Vieira as plaintiffs. Id. at 4. The Court allowed Star until April 30, 2008 to join Messrs. Kapadia and Vieira to the action. Id. at 5. On April 25, 2008, Star filed a Second Amended Complaint that listed Mr. Kapadia as a plaintiff, and Mr. Vieira as an "involuntary plaintiff." D.I. 61. As of today - long past the Court's April 30, 2008 due date - Star has filed no separate motion requesting a Court order joining Mr. Vieira as an "involuntary plaintiff." Further, the License Agreement itself (including its existence) remains at the center of a litigation between Mr. Vieira and Star in the Ontario Superior Court of Justice (hereinafter the "Canadian Action").6 In the Canadian Action, Mr. Vieira contends that the License Agreement was terminated over a year ago - on or about March 6, 2007, long before this case was first commenced - and that Star no longer has any rights under the `852 Patent. Cremen Dec., Ex. B.7 If the Canadian court determines that the License Agreement has been terminated, the respective plaintiffs' rights in the `852 Patent drastically change. Specifically, if the License

Cremen Dec., Ex. A, or D.I. 61, Ex. B. The Canadian Action was filed on May 3, 2007, shortly after Mr. Vieira's employment with Star ended, and remains pending as of the filing of this motion. 7 This Court may also take judicial notice of this pleading under Fed. R. Civ. P. 201(b)(2). See Citi Apts., Inc. v. Markel Ins. Co., 2007 U.S. Dist. LEXIS 44469, *21 (N.D. Cal. 2007) ("[t]he Court may take judicial notice of a document filed in another court, not for the truth of the matter asserted in the other litigation, but rather to establish the fact of such litigation and filing").
6

5

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Agreement is no longer in effect: (1) Star has not held any license to the `852 Patent since March 6, 2007; and (2) all rights to the `852 Patent now rest with the co-owners, Messrs. Kapadia and Vieira. B. Star Has Failed To Join Mr. Vieira As An "Involuntary Plaintiff" Under Rule 12(b)(7), a party may bring a motion to dismiss for "failure to join a party under Rule 19." Fed. R. Civ. P. 12(b)(7).8 In its complaint, Star concedes that Mr. Vieira is unwilling to join this litigation voluntarily (i.e., under Fed R. Civ P. 19(a)(1)). D.I. 61, par. 4. Thus, Star must proceed under Fed. R. Civ. P. 19(a)(2) to join Mr. Vieira to this lawsuit. Fed R. Civ P. 19(a)(2) specifies: (2) Joinder by Court Order. If a person has not been joined as required, the court must order that the person be made a party. A person who refuses to join as a plaintiff may be made either a defendant or, in a proper case, an involuntary plaintiff. Fed R. Civ P. 19. The plain language of this subsection requires a "Court Order" to add a party as an "involuntary plaintiff" 9 This, Star did not do. Instead of seeking an order of the Court to declare Mr. Vieira an "involuntary plaintiff," Star added a conclusory statement to its Second Amended Complaint that "Hilary Vieira has been joined as an involuntary plaintiff in this action." D.I. 61, par. 4. This does not satisfy the requirements of Fed R. Civ P. 19. Because Star did not move the Court to join Mr. Vieira as an "involuntary plaintiff" under Rule 19(a)(2) by the Court's April 30, 2008 deadline, Star's Second Amended Complaint should be dismissed. The dismissal should be with prejudice for the failure of Star to comply with a Court order.10 This Court may consider facts outside the complaint when considering motions under Rule 12(b)(7). McShan v. Sherrill, 283 F.2d 462, 464 (9th Cir. 1960). 9 See also, e.g., Ferguson Beauregard/Logic Controls v. Mega Sys., LLC, 350 F.3d 1327, 1336 (Fed. Cir. 2003) (specifying that a party was joined and deemed an "involuntary plaintiff" by the district court); Prima Tek II, L.L.C. v. A-Roo Co., 222 F.3d 1372, 1376 (Fed. Cir. 2000) (specifying that "the district court ordered Prima Tek I joined as an involuntary plaintiff"); and Robinson v. Heilman, 563 F.2d 1304, 1305 (9th Cir. 1977) (where a stockholder of a party was "joined by court order as an involuntary plaintiff"). 10 See, e.g., Sladek v. Bell Sys. Mgmt. Pension Plan, 880 F.2d 972 (7th Cir., 1988) ("dismissal (continued) -10Case No. C 07-4820 (MMC) AEROMECHANICAL SERVICES LTD.'S NOT. OF MOTION & MOTION TO DISMISS; MPA IN SUPPORT OF MOTION TO DISMISS
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Because Mr. Vieira has still not been properly joined to this action, AMS still faces the risk of multiple suits. AMS should not be placed in situation where it is faced with the risk of multiple recoveries by multiple plaintiffs. International Gamco, Inc. v. Multimedia Games, Inc., 2007 U.S. App. LEXIS 24099 at *11 (Fed. Cir. 2007). The Court recognized AMS's dilemma in its April 8, 2008 Order. D.I. 60 at 4. C. Star Cannot Show That Mr. Vieira Should Be An "Involuntary Plaintiff," And The Case Should Be Dismissed Until The Canadian Action is Complete Courts have found that Rule 19's "involuntary plaintiff" provision should only be invoked when "the party sought to be joined has a duty to allow plaintiff to use his name in the action." Caprio v. Wilson, 513 F.2d 837, 840 (9th Cir. Cal. 1975).11 Star has failed to make such a showing. While Star cites the presence of a License Agreement in the Second Amended Complaint (D.I. 61, par. 11), it does not show what duty, if any, Mr. Vieira has to Star. Indeed, the License Agreeement is completely silent as to whether Star can use Mr. Vieira's name in a patent infringement lawsuit in the United States. Further, Star's rights in the `852 Patent are tenuous ­ Star's rights are being actively litigated in the Canadian Action, and it is unclear if the License Agreement is still in effect. Mr. Vieira has alleged that the License Agreement to Star was terminated by him on or about March 6, 2007, under Section 9 thereof ­ a section that reserves very broad termination rights to either Messrs. Kapadia or Vieira. Cremen Dec., Ex. A, Sec. 9. Star has not explained how Mr. Vieira's allegation is incorrect, and why the License Agreement would remain in effect at this time. If the License Agreement is no longer operative, Star would no longer have the right to bring an

(continued) with prejudice should ordinarily result only after the court has ordered the party joined and the plaintiff has failed to do so."), and Joint Mktg. Int'l v. L&N Sales & Mktg., 2006 U.S. Dist. LEXIS 48017 (E.D.N.Y., 2006) (holding that the case would be dismissed with prejudice if the plaintiff licensee failed to join the patent owner by a date certain). 11 See also Sheldon v. West Bend Equipment Corp., 718 F.2d 603, 606 (3d Cir. Pa. 1983) (holding that "an outsider may be joined as an involuntary plaintiff only ... where (1) the party to be joined has an obligation to permit its name or title to be used to protect rights asserted in the action; (2) is beyond the jurisdiction of the court; and (3) has refused to voluntarily join in the action following notification thereof.").
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infringement action, and Mr. Vieira would inarguably have no "duty" to assist such an action.12 Further, if the License Agreement is no longer operative, Star cannot be maintained as a party to this action. The only named plaintiff would then be Mr. Kapadia ­ who would be unable to force Mr. Vieira to join this action, because the Federal Circuit has explicitly stated that "Rule 19 does not permit the involuntary joinder of a patent co-owner in an infringement suit brought by another co-owner." See Ethicon, Inc. v. United States Surgical Corp., 135 F.3d 1456, 1468 (Fed. Cir. 1998). Thus, if the Canadian Court determines the License Agreement is no longer operative, neither Star nor Mr. Kapadia could force Mr. Vieira to join this suit, and it could not proceed. A determination whether the License Agreement is in effect is therefore crucial. Thus, until the Canadian Court reaches a decision on the License Agreement, this Court should dismiss, or in the alternative stay, the instant Action. The Court has the inherent power to "control the disposition of the cases on its docket with the economy of time and effort for itself, for counsel, and for litigants." Landis v. North Am, Co., 299 U.S. 248, 254 (1936).13 There are several reasons to dismiss or stay this action. 1. The Court May Dismiss Star's Complaint

This Court may dismiss Star's complaint until such time as the Canadian Court reaches a decision on the status of the License Agreement. The Federal Circuit has approved dismissal of patent cases for similar reasons. For example, in L.E.A. Dynatech, Inc. v. Allina, 49 F.3d 1527 (Fed. Cir. 1995), the Federal Circuit found that the district court did not abuse its discretion when it dismissed, without prejudice, the claims in a patent suit because the underlying patent claims had been rejected in a reissue application, and there was no indication of when the patent might actually reissue. Id. at 1530. The Court found that: several policies supported the district court's dismissal without prejudice. The dismissal removed the case from the district court's
12

Star should have presented these arguments in a Motion to add Mr. Vieira as an "involuntary plaintiff." The failure to file this Motion should result in the dismissal of the action, as discussed above. The failure can also be attributed to the inability of Star to show these factors. 13 See also Leyva v. Certified Grocers of California, Ltd., 593 F.2d 857, 864 (9th Cir. Cal. 1979).
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Id.

docket pending the agency appeal. The dismissal also preserved the resources of the court and the parties by preventing further discovery and litigation on claims which might not survive the reissue. In addition, the dismissal eliminated any prejudice to [defendant] from the bare existence of the infringement suit. Finally, the dismissal without prejudice left undisturbed [plaintiff's] opportunity to enforce any patent claims surviving the reissue process.

Although the ability of Star to enforce the `852 Patent is being decided by a foreign court, rather than the U.S. Patent Office, the circumstances here are similar. A dismissal will: (1) remove the case from the district court's docket; (2) preserve the resources of the court and parties; (2) reduce the chance of prejudice to AMS from the existence of the suit; and (4) leave undisturbed Star's opportunity to enforce the `852 Patent (should the Canadian Action result in Star's interest therein being maintained). Similarly, the Federal Circuit approved of a dismissal in Intermedics Infusaid, Inc. v. Regents of University of Minnesota, 804 F.2d 129 (Fed. Cir. 1986). In Intermedics, the Court approved the staying of a patent action until a state court ownership dispute (of the patent-in-suit) between the parties was finalized. The Federal Circuit cited several factors that supported the stay, including: (1) that the state proceedings had been instituted well before the Federal proceedings; (2) that a particular judgment in the state action would end the Federal proceedings; (3) that the state court was not being called on to resolve matters of Federal law; (4) that the decision of the state court would serve as res judicata; and (5) that there was no prejudice to Intermedics. Id. at 134-135. These same factors all weight in favor of dismissal here. 2. Alternatively, The Court May Stay These Proceedings

The Court may also stay the proceedings until such time as the Canadian Court reaches a decision on the status of the License Agreement. When considering a stay, the court must weigh the competing interests, such as: (1) "possible damage which may result from the granting of a stay," (2) "the hardship or inequity which a party may suffer in being required to go forward," and (3) "the orderly course of justice measured in terms of the simplifying or complicating of

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issues, proof, and questions of law which could be expected to result from a stay." CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962). Here, it is unclear just which rights that Star, and Messrs. Kapadia and Vieira, have in the `852 Patent. Their respective rights are being determined by the Canadian Court. If Star does not prevail, this suit cannot go forward, and Star would not have been damaged. In contrast, if this action were not dismissed or stayed, AMS would suffer large expenses in time, money, and reputation defending a suit that could very well be found to be lacking a plaintiff. Further, correctly naming the parties in this action has already proven to be of great dispute between Star, Mr. Kapadia and Mr. Vieira. Staying the case until the rights in the `852 Patent are determined would eliminate the ownership issues from this litigation, and remove complicated issues of discovery and questions of foreign law from the litigation. Other district courts have stayed litigation in similar situations. For example, in GenProbe, Inc. v. Amoco Corp., 1996 U.S. Dist. LEXIS 5393 (S.D. Cal., 1996), the District Court granted a stay of an infringement suit in favor of a state court litigation determining ownership of the patent. The Court cited Amoco's argument (similar to that advanced here) that the plaintiff may be deprived of any interest in the patent-in-suit by the state court litigation, and would therefore lack standing to bring the action. Id. at *17. Thus, the Court granted the stay, inter alia, "[b]ecause of the massive costs that proceeding with this litigation would entail for the parties and the court." Id. See also Santrade, Ltd. v. General Elec. Co., 1990 U.S. Dist. LEXIS 19260, *4-5 (E.D.N.C., 1990) (holding that a stay was appropriate because the state action was filed first, a disposition in the state action could end the federal action, and there was no prejudice to the plaintiffs). 3. The Court May Also Dismiss or Stay the Proceedings Under the Colorado River Doctrine

The Court may also dismiss or stay these proceedings under the Colorado River14 abstention doctrine.15 Several District Courts have found it appropriate to stay patent cases in
14 15

Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976). The Colorado River Doctrine has been applied by Courts in situations, as here, where there is a (continued) -14AEROMECHANICAL SERVICES LTD.'S NOT. OF MOTION & MOTION TO DISMISS; MPA IN SUPPORT OF MOTION TO DISMISS

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view of ongoing actions in other fora involving the ownership of the patents-in-suit. In Summa Four v. AT&T Wireless Servs., 994 F. Supp. 575 (D. Del. 1998), the Court, using a modified Colorado River analysis, stayed an infringement action in favor of a state action determining ownership of the patent-in-suit. Id. at 585. Specifically, the Court found that: (1) there was little chance for piecemeal litigation because there were almost no duplicative counts in the state litigation; (2) the state court action was first in time and more advanced; (3) the ownership issue was a state-law issue; (4) the state court action is adequate to protect the plaintiff's rights, because if plaintiff were t prevail in state court, he could still obtain damages in federal court; (5) the state court was substantially assured of reaching a decision before the federal court; (6) the state court decision could obviate the federal litigation, because if the ownership issue went against the plaintiff, the federal action would not continue; (7) the state court dispute includes a colorable ownership dispute; (8) no state court decisions would interfere with the patent law claims; (9) the defendant would be forced to make alternative arguments in federal court; and (10) judicial economy would be substantially advanced. Id. at 583-585. Each of these factors are also present in the instant case. In Applera Corp. v. Illumina, Inc., 282 F. Supp. 2d 1120 (N.D. Cal. 2003), Judge Patel cited Gen-Probe and Summa Four, but distinguished the case at bar from the fact patterns of those cases. Judge Patel indicated that conditions would be aligned in favor of a stay if: (1) the state court litigation was focused on the ownership of the patent; (2) a determination in that forum had a strong chance of obviating the need for patent infringement litigation; and (3) the state court had already been engaged in the proceedings for a lengthy time. Id. at 1128. Each of these factors are also present in the instant case. Two other cases, One Up, Inc. v. Webcraft Technologies, Inc., 1989 U.S. Dist. LEXIS 11313 (N.D. Ill., 1989) and Pirkle v. Ogontz Controls Co., 1987 U.S. Dist. LEXIS 10555 (E.D. Pa., 1987), also granted stays of infringement actions in favor of a state action determining (continued) parallel foreign court proceeding. Neuchatel Swiss General Ins. Co. v. Lufthansa Airlines, 925 F.2d 1193, 1195 (9th Cir. Cal. 1991).
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ownership of the patent-in-suit. Both courts focused on the possibility of the state court ownership decision mooting the federal court litigation. See One Up at *14, *18, and Pirkle at *5. 4. The Court Should Not Waste Its Resources

If this case is allowed to proceed, and the Canadian Court determines that the License Agreement has been rescinded by Mr. Vieira, all of the Court's and parties' time, effort, and expense will be for naught. This Court should not waste its limited resources on a time- and costintensive patent litigation when it is unclear whether the named plaintiffs are even able to bring the suit. AMS should not be forced to go forward and incur substantial expense if, in the end, Star may not have the rights to litigate. Accordingly, the Court should dismiss this action, or stay proceedings until the Canadian Court completes its analysis. IV. CONCLUSION

In view of the foregoing, AMS respectfully requests that this Court dismiss the current action under one or more of: (1) Fed. R. Civ. P. 12(b)(2) because this Court cannot reasonably be said to have personal jurisdiction over AMS; (2) Fed. R. Civ. P. 12(b)(7) because Star has failed to join the owners of the `852 Patent according to Court Order; and (3) this Court's inherent powers to control its docket because the existence of Star's license to the `852 Patent (and thus the possibility of this action continuing) is currently being litigated in Canada.

Dated: May 12, 2008

PAUL, HASTINGS, JANOFSKY & WALKER LLP

By: /s/Kevin C. McCann Kevin C. McCann (SB# 120874) 55 Second Street Twenty-Fourth Floor San Francisco, CA 94105 Telephone: (415) 856-7000 Facsimile: (415) 856-7100 Email: [email protected] Robert M. Masters (DC Bar No. 435623) (pro hac vice) Timothy P. Cremen (DC Bar No. 478705) (pro hac vice) -16Case No. C 07-4820 (MMC) AEROMECHANICAL SERVICES LTD.'S NOT. OF MOTION & MOTION TO DISMISS; MPA IN SUPPORT OF MOTION TO DISMISS

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700030 / 28946

Bhaskar Kakarla (DC Bar No. 488976) (pro hac vice) 875 15th St., N.W. Washington, DC 20005 Telephone: (202) 551-1700 Facsimile: (202) 551-1705 Email: [email protected] Email: [email protected] Email: [email protected] Attorneys for Defendant Aeromechanical Services Ltd.

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