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CyWee Group Ltd. v. HTC Corp.

United States District Court, W.D. Washington, Seattle

June 13, 2019

CYWEE GROUP LTD., Plaintiff,
v.
HTC CORPORATION, et al., Defendants/Third-Party Plaintiffs,
v.
CYWEE MOTION GROUP LTD., Third-Party Defendant.

          ORDER ON THIRD-PARTY DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND ON CROSS-MOTIONS FOR STAY

          The Honorable James L. Robart, U.S. District Court Judge.

         I. INTRODUCTION

         Before the court are three motions. First, Third-Party Defendant CyWee Motion Group Ltd. ("CyWee Motion") moves for summary judgment against Defendants and Third-Party Plaintiffs HTC Corporation ("HTC Corp.") and HTC America, Inc. ("HTC America") (collectively, "HTC"). (MSJ (Dkt. # 107).) HTC opposes CyWee Motion's summary judgment motion. (Resp. (Dkt. ## 112 (redacted), 113 (sealed).) Second, Plaintiff CyWee Group Ltd. ("CyWee Group") and CyWee Motion (collectively, "CyWee") move for a partial stay of this matter pending inter partes review ("IPR") proceedings. (CyWee MTS (Dkt. # 123).) Third, HTC cross-moves for a complete stay pending IPR proceedings. (HTC MTS (Dkt. #126).) The court has considered the motions, the parties' submissions concerning the motions, the relevant portions of the record, and the applicable law. Being fully advised, [1] the court DENIES CyWee Motion's motion for summary judgment without prejudice to refiling according to the timeline set forth herein. The court further GRANTS in part and DENIES in part CyWee's motion for a partial stay and GRANTS in part and DENIES in part HTC's motion for a complete stay.

         II. BACKGROUND

         This case features patent infringement and other disputes between technology companies. The court identifies the parties before summarizing the factual and procedural background.

         A. The Parties

         CyWee Group provides products and services in the areas of "motion processing, wireless high definition video delivery, and facial tracking technology." (SAC (Dkt. # 61) ¶ 2.) CyWee Group owns two patents protecting technology that detects, measures, and calculates the movements of machines: United States Patent No. 8, 441, 438 and United States Patent No. 8, 552, 978 (collectively, "the Patents-in-Suit"). (Id. ¶¶ 15, 20-22, 122-24.) CyWee Motion, which is "affiliated" with CyWee Group, specializes in "wireless streaming, facial tracking, and motion processing technology solutions for home entertainment and mobile devices." (CyWee Motion Am. Countercl. (Dkt. # 104) ¶ 7.)

         HTC Corp. manufactures consumer electronics, including mobile phones and tablets. (SAC ¶ 3; Answer to SAC (Dkt. # 62) ¶ 3.) HTC America, a wholly-owned subsidiary of HTC Corp., imports and sells HTC Corp.'s mobile phones and tablets in the United States. (SAC ¶ 4; Answer to SAC ¶ 4.)

         B. Factual Background

         [XXXXX] [2] [XXXXX].

         [XXXXX] [3] [XXXXX] CyWee Motion, Inc. is a wholly-owned subsidiary of CyWee Motion. (Liou Decl. (Dkt. # 107-2) ¶2.)

         [XXXXX]. Specifically, HTC integrated into its mobile phones STM sensor hub modules with CyWee Software. (Id. ¶ 4.) Whenever HTC required new sensor fusion functionalities, "HTC would request the support from CyWee Motion to develop the new functionalities in the CyWee Software." ¶ 6.) [XXXXX] HTC asserts that "CyWee Motion provided each version of the CyWee Software directly to HTC in binary form" and "did not place any restrictions on HTC's use of the CyWee Software in HTC devices." (Id. ¶¶ 7-8.) HTC further contends that it understood that CyWee Motion was compensated for the CyWee Software [XXXXX] and that CyWee Motion "has never requested payment from HTC for the integration and use of CyWee Software in HTC devices." (Id. ¶ 8.)

         [XXXXX].[4], [5]. [XXXXX].

         The same day, CyWee Motion notified HTC [XXXXX] (CyWee Motion Am. Countercl. ¶ 18, Ex. B at 1.5) CyWee Motion demanded that HTC "immediately cease and desist any use of [the CyWee S]oftware" and "immediately return any and all copies of the software to CyWee Motion." (Id.) CyWee Motion contends that HTC refused to return its copies of the CyWee Software and, to this day, continues to use the CyWee Software in HTC devices. (MSJ at 2.)

         C. Procedural History

         On June 16, 2017, CyWee Group filed an action for patent infringement against HTC, alleging that certain HTC devices impermissibly practice the Patents-in-Suit. (See Compl. (Dkt. # 1); see also SAC.) This suit is one of seven pending cases in which CyWee Group alleges that a technology company has infringed the Patents-in-Suit. (See CyWee Motion MTS at 2 n.7 (listing cases).) Among other affirmative defenses, HTC asserts that CyWee Group's patent infringement claims are barred by the patent exhaustion doctrine and that HTC holds "an express or implied license" to practice the Patents-in-Suit. (Answer to SAC at 19.) In addition, HTC brings counterclaims against CyWee Group for declaratory judgments of patent invalidity and noninfringement. (Id. ¶¶ 26-41.)

         On January 11, 2018, HTC filed a third-party complaint against CyWee Motion and STM. (TPC (Dkt. # 43).) HTC alleged that the STM components HTC purchased for incorporation into the accused HTC products were covered by the License Agreement, such that STM was obligated to indemnify and defend HTC against CyWee Group's patent infringement claims. (Id. ¶¶ 23, 39-50.) HTC also brought a claim for unfair business practices under Washington law against CyWee Motion and sought contribution from both CyWee Motion and STM. (Id. ¶¶ 51-61.)

         On May 31, 2018, HTC filed a stipulated motion to dismiss with prejudice all its claims against STM. (Stip. MTD (Dkt. # 93); see also 6/1/18 Order (Dkt. # 94) at 2 (granting the stipulated motion to dismiss).) HTC now represents that it agreed to dismiss its claims against STM because STM threatened to stop supplying HTC with STM sensor hub modules if the litigation continued.[6] (Siddiqui Decl. (Dkt. # 113-2) ¶¶ 5-6 (sealed).)

         On September 26, 2018, approximately two months after terminating the License Agreement, CyWee Motion filed counterclaims against HTC for conversion, unjust enrichment, and declaratory judgment of unauthorized possession. (See CyWee Motion Countercl. (Dkt. # 102) ¶¶ 20-33; see also CyWee Motion Am. Countercl. ¶¶ 20.-38.) Additionally, on November 19, 2018, CyWee Motion asserted a replevin claim against HTC. (See CyWee Motion Am. Countercl. ¶¶ 24-27.) In brief, CyWee Motion alleges that HTC impermissibly retained possession of the CyWee Software after CyWee Motion terminated the License Agreement. (Id. ¶¶ 17-19.) On November 28, 2018, CyWee Motion filed the present motion for summary judgment on its conversion and replevin claims. (See MSJ.)

         On March 4, 2019, CyWee filed a motion to partially stay this case pending IPR proceedings involving the Patents-in-Suit. (See CyWee MTS at 2.) Months earlier, in connection with an unrelated suit, non-party Google, Inc. filed IPR petitions with the Patent and Trademark Office's Patent Trial and Appeal Board ("PTAB"), seeking to invalidate claims in each of the Patents-in-Suit. (Id. (citing CyWee Grp. v. Google, Inc. No. 1-18-cv-00571 (D. Del.).) The PTAB granted Google, Inc.'s IPR petitions on December 11, 2018. (Id.) CyWee now seeks to stay CyWee Group's patent infringement claims against HTC, HTC's patent invalidity and noninfringement counterclaims against CyWee Group, and HTC's third-party claims against CyWee Motion for contribution and unfair business practices. (Id. at 4.) In other ...


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