Wednesday, February 12, 2014

Samsung wants Rockstar patent lawsuit over Android dismissed for jurisdictional reason

On Monday, Samsung brought a motion to dismiss the Rockstar Consortium's Android-related patent infringement lawsuit filed on Halloween 2013 in the Eastern District of Texas (to which Google was added as a co-defendant on New Year's Eve). None of the other Android OEMs sued has responded to the complaint yet (one of them, Huawei, settled before responding in any way). It's possible that similar motions to dismiss will also be filed in one or more of the other pending Rockstar Android cases.

Samsung's motion to dismiss has two distinct parts. In the narrower part, Samsung's lawyers (from the Quinn Emanuel firm) argue that claim 5 of U.S. Patent No. 6,463,131 on a "system and method for notifying a user of an incoming communication event" covers an abstract idea and should be thrown out because the claimed invention does not constitute patent-eligible subject matter. The broader part of the motion requests dismissal of the entire case for lack of subject-matter jurisdiction. In the following, I'll focus on that part because it would have further-reaching implications should it be granted.

The Android OEM cases in Texas were filed by the Rockstar Consortium as well as a subsidiary it created on the eve of these lawsuits (on October 30, 2013), named MobileStar Technologies. Samsung's motion quotes a Rockstar/MobileStar filing in the Northern District of California (where Google filed a declaratory judgment complaint right before Christmas in an effort to move the Rockstar-Android matters out of Texas over to California) according to which "MobileStar is an indispensable party to this litigation—it is the owner of five of the seven patents-in-suit and the exclusive licensee of the other two patents."

Samsung argues that Rockstar, therefore, "does not have standing to pursue its claims itself, without MobileStar also appearing". But MobileStar allegedly lacked standing at the time the complaint was filed because it was founded in Delaware, not Texas, making it a "foreign entity" in Texas that, under § 9.001 of the Business Organizations Code of Texas, needs to register with the Secretary of State in order to "transact business in this state".

According to Samsung's motion, that registration was made only on December 2, 2013, "more than a month after filing this action". Here's the header of that registration (click on the image to enlarge):

But further down I found something on that page that Samsung's motion does not address. The form does explicitly allow for registration after the first business transaction in Texas occurred, and MobileStar stated that this was the case on October 30, 2013, i.e., the day it was founded, and the day before the patent infringement complaints were filed (click on the image to enlarge or read the text below the image):

The date on which the foreign entity intends to transact business in Texas, or the date on which the foreign entity first transacted business in Texas is: 10/30/2013

Samsung's motion is interesting because of the effect it could have. If the action was dismissed, Rockstar would have to refile to pursue those claims. In that case, however, Google's declaratory judgment action in California would be the first-filed action, which it is not as long as the Texas lawsuits can go ahead. Google would then probably win the venue war.

But the motion faces significant hurdles. It would fail in any of the following scenarios (or any other scenario not listed here):

  • The court may find that MobileStar's subsequent registration conferred standing retroactively because the registration form explicitly allows after-the-fact registrations and MobileStar declared that it first transacted business in Texas on the day before Halloween.

  • The court may disagree with Samsung that a deficiency at the time of filing the complaint can't be cured.

  • Limitations of a company's ability to sue in Texas state court may not apply in federal court (which is where this case was filed), despite Samsung's claim that they do.

Even if this motion failed, it would likely cause some delay nonetheless. If you're interested in all the details, here's the motion along with all of the exhibits (more than 800 pages):

14-02-10 Samsung Motion to Dismiss Rockstar Patent Lawsuit by Florian Mueller

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