Opinion
ORDER GRANTING PLAINTIFF'S MOTION TO DISMISS THIRD PARTY'S AMENDED CROSS-CLAIMS
CLAUDIA WILKEN, District Judge.
Plaintiff Immersion Corp. (Immersion) moves to dismiss the amended cross-claims against it filed by Internet Services LLC (ISLLC) for declaratory relief, breach of contract, judicial apportionment of the damages and unjust enrichment, and to strike ISLLC's counter-claims for patent infringement against Defendants Sony Computer Entertainment America, Inc., and Sony Computer Entertainment, Inc., (collectively Sony). Sony also moves to strike ISLCC's counterclaims against it, pursuant to Federal Rule of Civil Procedure 12(f). ISLLC opposes the motion to dismiss, explaining that the counter-claims against Sony were brought in order to preserve the issue for appeal. The matter was taken on the papers.
Having considered all of the papers filed by the parties, the Court grants Sony's motion to strike and Immersion's motion to dismiss.
BACKGROUND
ISLLC seeks to bring claims against Immersion arising out of Immersion's lawsuit against Sony for patent infringement, in which a jury found that Immersion's patents were valid and infringed and awarded Immersion $82 million in damages. Details about the action and ISLLC's interest therein are set forth in the Court's December 29, 2004 Order Granting Plaintiff's Motion to Dismiss Third Party's Cross-Claims (hereinafter December 29 Order). That Order also sets forth the standard used to review a motion to dismiss.
In its December 29 Order, the Court dismissed ISLLC's cross-claims against Immersion and counter-claims against Sony. The Court found that ISLLC had no standing to sue because it did not have a proprietary interest in the patents-in-suit, U.S. Patent Nos. 6, 275, 213 (the '213 patent) and 6, 424, 333 (the '333 patent). The facts alleged in ISLLC's claims against Immersion and Sony rested on the premise that ISLLC possessed such an interest. The Court allowed ISLLC to "file a new complaint against Immersion... if [ISLLC] can do so in good faith without contradicting, or repeating the deficiency of, its original complaint." December 29 Order at 8. ISLLC was instructed to file with its new complaint a notice of related case, which the Court would have related to Immersion v. Sony. ISLLC's counter-claims against Sony for patent infringement were dismissed with prejudice.
DISCUSSION
I. ISLLC's Filing of Amended Cross-Claims and Sony's Motion to Strike Counter-Claims
ISLLC did not follow the Court's instruction to file any amended claims against Immersion in a separate complaint. Instead, ISLLC filed amended cross-claims against Immersion in this case. In addition, ISLLC filed amended counter-claims against Sony.
ISLLC claims that it did not file a separate complaint as ordered by the Court because to do so would have been "improper" given the "unique procedural posture of this case." ISLLC's Opposition at 1, n.1. First, ISLLC claims that the fact that the Court described its dismissal of the cross-claims against Immersion as "without prejudice" suggests that the Court contemplated the filing of an amended complaint in this case. This flies in the face of the Court's explicit instructions that ISLLC file a new complaint with a notice of related case.
ISLLC further argues that its amended cross-claims against Immersion could be considered compulsory in light of Sony's cross-claim against ISLLC for declaratory judgment of non-infringement. However, Sony's cross-claim is moot in light of the Court's December 29 determination that ISLLC lacked standing to sue Sony for patent infringement. See BP Chems., Ltd., v. Union Carbide Corp. , 4 F.3d 975, 978 (Fed. Cir. 1993) (holding that the test for declaratory justiciability includes reasonable apprehension of suit). To clarify the situation, the Court dismisses Sony's declaratory judgment cross-claim against ISLLC.
For these reasons, ISLLC's filing was improper. Therefore, the Court strikes ISLLC's amended counter-claims against Sony. The Court will address the substance of Immersion's motion to dismiss at this time in the interest of efficiency.
II. Immersion's Motion to Dismiss
The Court allowed ISLLC to file a new complaint against Immersion only if ISLLC could do so in good faith and without repeating the deficiency of its original complaint. ISLLC has not avoided these deficiencies.
In its prior order, the Court ruled that "ISLLC's exclusive area of license does not encompass the '213 and '333 patents." Order at 7. Specifically, the Court found that ISLLC was neither an assignee nor an exclusive licensee of the patents-in-suit, and therefore did not have standing to sue under the patents on its own or as a co-plaintiff with Immersion. Because ISLLC's original claims for declaratory relief, breach of contract and judicial apportionment all rested on the flawed assumption that ISLLC had proprietary rights in the patent-insuit, the Court dismissed those claims, with leave to amend if ISLLC could identify an alternative basis for them.
The amended complaint repeats in part the deficiencies of the original complaint, albeit in a more oblique manner. For instance, ISLLC alleges that "as to content restricted material, " "those entire rights in patent were transferred to ISLLC pursuant to the Amended License agreement and the Hardware Agreement." ISLLC Amended Cross-Claims ¶ 17. Yet the Court had already concluded that ISLLC did not receive "entire rights" to the patents, and that ISLLC's exclusive right as a licensee as to use Immersion technology to produce content-restricted material "does not encompass the 213 and 333 patents." Order at 7. Indeed, the amended cross-claims repeatedly refer to ISLLC's "exclusive" right to "Immersion IP, " but fail to acknowledge that any exclusive right to Immersion intellectual property does not include the patents-in-suit.
In light of these repeated deficiencies, the Court finds that ISLLC cannot maintain its first cross-claim against Immersion, for declaratory adjudication of, inter alia, ISLLC's "claims that it has exclusive rights to Immersion IP, including the 213 and 333 patents, related to software whose topics or images are age restricted.'" ISLLC Amended Cross-Claims ¶ 52. As the Court has already concluded, ISLLC has no exclusive rights to the 213 and 333 patents. ISLLC's third cross-claim against Immersion, for judicial apportionment of the damages awarded by the jury between ISLLC and Immersion, also fails to state a claim. That damage award was based on Immersion's suit for patent infringement, a suit which ISLLC had no standing to bring, either alone or as a co-plaintiff with Immersion. Order at 6.
Similarly, Immersion's patent infringement suit against Sony cannot be the basis for a breach of contract claim because the right to sue under the patents were not "within ISLLC's field of exclusivity, " as ISLLC alleges. ISLLC Amended Cross-Claims ¶ 59. The only basis identified by ISLLC that could conceivably support its cross-claims for breach of contract and unjust enrichment is the compulsory license Immersion has obtained against Sony.
Evaluation of this claim would require the Court to construe the contracts between Immersion and ISLLC. Immersion argues that none of Sony's accused products fall within the ambit of those contracts. The Amended License and Technology Agreement defines content-restricted materials as follows:
(i) websites or webpages access to which is age restricted to users who certify that they are at least 18 years of age; (ii) chatrooms and other on-line communications whose topics or images are age restricted; or (iii) any other forms of technology including, by way of example only but not limited to, DVD's, CD-Roms, videos, television and games, whether or not appearing as part of a website or webpage, that have content which if it appeared on a website would fall within (i) or (ii) above.
ISLLC Amended Cross-Claims Ex. B ¶ 1.3. This contract leaves the term "age restricted" in clause (ii) open to interpretation. Taking all of the allegations in the complaint as true, and reviewing the contract as a whole, the Court cannot say that Immersion's interpretation of the contract is unambiguously correct. Therefore, the Court cannot dismiss ISLLC's contract claims pursuant to Federal Rule of Civil Procedure 12(b)(6). Falkowski v. Imation Corp. , 309 F.3d 1123, 1132 (9th Cir. 2002) (reversing dismissal of contract claims where ambiguity precluded early judgment). If ISLLC chooses to refile its claims in a new lawsuit, Immersion may bring an appropriate motion for summary adjudication of the contract's meaning.
CONCLUSION
For these reasons, the Court GRANTS Sony's motion to strike ISLLC's amended counter-claims against Sony (Docket No. 1536) and GRANTS Immersion's motion to dismiss ISLLC's amended cross-claims against it (Docket No. 1572). The Court's dismissal of ISLLC's claims for declaratory relief and judicial apportionment is with prejudice. If ISLLC wishes to pursue its claims against Immersion for breach of contract and unjust enrichment, it must bring them in a new complaint. ISLLC may not base its claims on any purported exclusive right in the 213 or 333 patents. ISLLC must file with any new complaint a notice of related case, and the Court will relate it to this case. The Court dismisses as moot Sony's cross-claim against ISLLC for declaratory judgment.
IT IS SO ORDERED.