Wapp Tech Ltd. P'ship v. Micro Focus Int'l, PLC

406 F.Supp.3d 585

WAPP TECH LIMITED PARTNERSHIP and Wapp Tech Corp.

v.MICRO FOCUS INTERNATIONAL, PLC

Civil Action No. 4:18-CV-00469

United States District Court, E.D. Texas, Sherman Division.

Signed August 13, 2019

Aakash S. Parekh, Benjamin R. Johnson, Jeffrey G. Toler, Toler Law Group, PC, Austin, TX, Henrik Davidson Parker, Timothy Devlin, Devlin Law Firm LLC, Wilmington, DE, for Wapp Tech Limited Partnership and Wapp Tech Corp.

Mark Nolan Reiter, Gibson Dunn & Crutcher, Dallas, TX, Andrew William Robb, Gibson Dunn & Crutcher LLP, Palo Alto, CA, Jordan Bekier, Gibson Dunn Crutcher LLP, Los Angeles, CA, Neema Jalali, Gibson Dunn & Crutcher, San Francisco, CA, for Micro Focus International, PLC.

MEMORANDUM OPINION AND ORDER

AMOS L. MAZZANT, UNITED STATES DISTRICT JUDGE

Pending before the Court is Defendant Micro Focus International, PLC’s Motion to Dismiss for Lack of Personal Jurisdiction, Failure to Serve, and Improper Service of the Complaint (Dkt. #12); Plaintiffs Wapp Tech Limited Partnership and Wapp Tech Corp.’s Motion for Leave to File Amended Complaint (Dkt. #63); Plaintiffs' Request for Oral Argument on Plaintiffs' motion for leave (Dkt. #73); and Plaintiffs' Corrected Request for Oral Argument on Plaintiffs' motion for leave (Dkt. #74). Having considered the motions and the relevant pleadings, the Court finds Defendant’s motion to dismiss should be granted (Dkt. #12); Plaintiffs' motion for leave should be granted (Dkt. #63); and Plaintiffs' requests for oral argument should be denied as moot (Dkt. #73; Dkt. #74).

BACKGROUND

I. Motion to Dismiss

Plaintiffs filed this suit on July 2, 2018, alleging patent infringement of United States Patent Numbers 9,971,678, 9,298,864, and 8,924,192 (Dkt. #1).¹ On October 17, 2018, Defendant filed the motion at issue (Dkt. #12). Defendant moves the Court to dismiss Plaintiffs' Complaint arguing (1) the Court lacks personal jurisdiction over Defendant and (2) Plaintiffs failed to properly serve Defendant. Plaintiffs filed a response to Defendant’s motion on November 1, 2018 (Dkt. #15). Defendant filed a reply to the motion on November 8, 2018 (Dkt. #16).

II. Jurisdictional Discovery

After a careful review of Defendant’s motion, the Court ordered the parties to conduct jurisdictional discovery on December 20, 2018 (Dkt. #17). As the parties engaged in jurisdictional discovery, a discovery dispute arose. Accordingly, on January 16, 2019, Defendant filed a Motion for Protective Order (Dkt. #18). Defendant requested a protective order because it believed Plaintiffs' jurisdictional discovery requests were (1) improperly broad; (2) related to piercing the veil—a theory not previously asserted by Plaintiffs; and (3) were irrelevant as they related to the merits of the case, not to jurisdiction (Dkt. #18 at pp. 12–18). The parties filed a response and reply to the motion (Dkt. #19; Dkt. #22). The Court disagreed with Defendant and denied Defendant’s motion for protective order finding, "Overall, [Defendant] cannot argue that the contacts cited by [Plaintiffs] are attributable only to its subsidiaries and simultaneously contend that [Plaintiffs are] not entitled to explore [Defendant’s] relationship with these subsidiaries." (Dkt. #24 at p. 4). As a result, on February 7, 2019, the Court ordered that:

The parties shall complete jurisdictional discovery with twenty-one (21) days of this order—February 28, 2019 . The parties shall amend or supplement the briefing related to Micro Focus’s motion to dismiss within eight (8) days of completing jurisdictional discovery—March 8, 2019 .

(Dkt. #24 at pp. 4–5) (emphasis in original).

III. Amended Complaint, Supplemental Briefing, and Motion to Strike

On March 8, 2019, the parties filed supplemental briefing on Defendant’s motion to dismiss (Dkt. #30; Dkt. #32). On the same day, without seeking leave of court, Plaintiffs filed a First Amended Complaint adding five additional parties—Seattle SpinCo Inc., EntIT Software LLC, EntCo Interactive (Israel) Ltd., Entco Government Software LLC, and Micro Focus (US) Inc. (Dkt. #28 ¶¶ 7–11).

On March 12, 2019, without seeking leave of court, Defendant filed a reply to Plaintiffs' supplemental briefing (Dkt. #36).² The next day, Plaintiffs moved to strike Defendant’s reply to Plaintiffs' supplemental briefing and sought clarification concerning the Court’s Order denying Defendant’s motion for protective order (Dkt. #41). Defendant filed a response to Plaintiffs' motion to strike the same day (Dkt. #42). On June 6, 2019, the Court denied Plaintiffs' motion to strike Defendant’s reply (Dkt. #60). The Court also ordered Plaintiffs to file a motion for leave to rectify Plaintiffs' improper filing of the First Amended Complaint without leave of court (Dkt. #60).

IV. Motion for Leave to Amend Complaint and Oral Argument Requests

Pursuant to the Court’s June 6 order, Plaintiffs filed a Motion for Leave to File First Amended Complaint on June 10, 2019 (Dkt. #63). On June 21, 2019, Defendant filed a response to Plaintiffs' motion for leave (Dkt. #67). Defendant argues the Court should deny Plaintiffs' motion because it is futile and there is evidence that Plaintiffs are acting in bad faith. Plaintiffs filed a reply in support of their motion on June 28, 2019 (Dkt. #69). Defendants filed a sur-reply to the motion on July 5, 2019 (Dkt. #70).

On July 18, 2019, Plaintiffs filed a Request for Oral Argument on Plaintiffs' motion for leave (Dkt. #73). Plaintiffs request a hearing on the motion because the briefing, "made reference to statements by counsel for [Defendant] pursuant to settlement discussion, but which were not presented to the Court due to potential confidentiality issues." (Dkt. #73 at p. 1). In the Certificate of Conference to the request, Plaintiffs state that "[d]espite attempts from [Plaintiffs] to schedule a telephonic conference for this Motion for Oral Argument, [Defendant] did not provide any availability." (Dkt. #73 at p. 2). The next day, Plaintiffs filed a corrected Request for Oral Argument (Dkt. #74). The only difference between the original and corrected requests for oral argument is that Plaintiffs allege in the Certificate of Conference to the corrected request that "[d]espite efforts to do so, [the parties] were unable to find a mutually available time for a telephonic conference." (Dkt. #74 at p. 2).

LEGAL STANDARD

I. Personal Jurisdiction

Federal Rule of Civil Procedure 12(b)(2) enables a defendant to move to dismiss a case for lack of personal jurisdiction. Courts "apply Federal Circuit law when reviewing claims ‘intimately involved with the substance of the patent laws’ and the law of the regional circuit when reviewing state law claims." NexLearn, LLC v. Allen Interactions, Inc. , 859 F.3d 1371, 1375 (Fed. Cir. 2017) (quoting Elecs. for Imaging, Inc. v. Coyle , 340 F.3d 1344, 1348 (Fed. Cir. 2003) ); see also Apicore US LLC v. Beloteca, Inc. , 2:19-CV-00077-JRG, 2019 WL 1746079, at *3 (E.D. Tex. Apr. 18, 2019) (quoting Celgard, LLC v. SK Innovation Co., Ltd. , 792 F.3d 1373, 1377 (Fed. Cir. 2015) ) ("Federal Circuit law governs personal jurisdiction where ‘a patent question exists.’ ").

"When the district court’s determination of personal jurisdiction is based on affidavits and other written materials, and no jurisdictional hearing is conducted, the plaintiff usually bears only a prima facie burden." Celgard , 792 F.3d at 1377 (citing Coyle , 340 F.3d at 1349 ). The plaintiff also bears a prima facie burden if the parties conduct jurisdictional discovery, the parties dispute the jurisdictional facts, and the court does not conduct a jurisdictional hearing. Id. ; accord Polar Electro Oy v. Suunto Oy , 829 F.3d 1343, 1347 (Fed. Cir. 2016) (citing Celgard , 792 F.3d at 1378 ).³ Under the prima facie standard, courts "accept the uncontroverted allegations in the plaintiff’s complaint as true and resolve any factual conflicts in the affidavits in the plaintiff’s favor." Avocent Huntsville Corp. v. Aten Int'l Co. , 552 F.3d 1324, 1329 (Fed. Cir. 2008). In determining whether a plaintiff has made a prima facie showing of personal jurisdiction, courts ask " ‘whether a forum state’s long-arm statute permits service of process and whether assertion of personal jurisdiction violates due process.’ " NexLearn, LLC , 859 F.3d at 1375 (quoting Autogenomics, Inc. v. Oxford Gene Tech. Ltd. , 566 F.3d 1012, 1017 (Fed. Cir. 2009) ). "Because the Texas long-arm statute extends to the limits of federal due process, the two-step inquiry collapses into one federal due process analysis." Johnston v. Multidata Sys. Intern. Corp. , 523 F.3d 602, 609 (5th Cir. 2008) (citing Wilson v. Belin , 20 F.3d 644, 647 (5th Cir. 1994) ).

Federal due process requires that an out-of-state defendant have sufficient "minimum contacts" with the forum state such that the suit does not offend "traditional notions of fair play and substantial justice." Maxchief Invs. Ltd. v. Wok & Pan, Ind., Inc. , 909 F.3d 1134, 1137 (Fed. Cir. 2018) (citing Bristol-Myers Squibb Co. v. Superior Court of Cal. , ––– U.S. ––––, 137 S. Ct. 1773, 1785, 198 L.Ed.2d 395 (2017) ). A defendant’s contacts are sufficient to meet the federal due process requirements if the court may exercise general or specific jurisdiction over the defendant. NexLearn, LLC , 859 F.3d at 1375. General jurisdiction exists only when the defendant’s contacts with the forum state are so " ‘continuous and systematic’ as to render them essentially at home in the forum State." Daimler AG v. Bauman , 571 U.S. 117, 127, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown , 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011) ). General jurisdiction does not require the cause of action to relate to the defendant’s contacts with the forum. Autogenomics , 566 F.3d at 1017 (citing Silent Drive, Inc. v. Strong Indus., Inc. , 326 F.3d 1194, 1200 (Fed. Cir. 2003) ). In assessing whether the defendant’s contacts enable the court to exercise...