Cellport Systems, Inc. v. Harman International Industries Inc.
E.D. Tex.3/28/2024
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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS SHERMAN DIVISION CELLPORT SYSTEMS, INC., ET AL. § § v. § CIVIL NO. 4:22-CV-808-SDJ § HARMAN INTERNATIONAL § INDUSTRIES INC., ET AL. § MEMORANDUM OPINION AND ORDER Before the Court is Defendants Harman International Industries Inc. (Harman) and Harman Becker Automotive Systems GmbHâs (HBAS) motion to dismiss. (Dkt. #23). Central to Defendantsâ motion is the Settlement and Patent License Agreement (SPLA) between Plaintiff Cellport Systems, Inc. (Cellport) and non-parties Samsung Electronics Company, Ltd. (SEC)âDefendantsâ parent companyâand Samsung Telecommunications America, LLC (collectively, Samsung). (Dkt. #25-1). However, because the Courtâs review of a motion to dismiss is limited to the contents of the pleadingsâwhich did not include the SPLAâthe Court converted the motion to dismiss to a motion for summary judgment pursuant to Federal Rule of Civil Procedure 12(d). As required by Rule 12(d), the Court gave the parties a reasonable opportunity to present all material pertinent to the motion. (Dkt. #40 at 5). Having considered the motion and the briefing, the supplemental evidence, and the applicable law, the Court concludes that (1) it lacks personal jurisdiction over HBAS and (2) Harman is entitled to summary judgment because the SPLA bars Plaintiffsâ claims. I. BACKGROUND Cellport is a wireless communications and telematics systems developer responsible for the development of the âautomotive industryâs first universal, hands- free, in-vehicle wireless voice and data communications and telematics system.â (Dkt. #1 ¶ 18â19).1 Cellport is the owner of several patents, including those numbered 6,430,164 (â164 patent); 7,366,892 (â892 patent); 6,341,218 (â218 patent); and 6,377,825 (â825 patent). Harman and its wholly owned subsidiary, HBAS, manufacture automotive communications, telematics, and infotainment systems. In 2004, HBASâa German corporation with a principal place of business in Germanyâentered into a licensing agreement with Cellport (C-HLA), whereby Cellport granted HBAS and its affiliates licenses to use certain patents related to the technology described above. In March of 2017, Defendants were acquired by non-party SEC. Cellport alleges that Defendants misused its intellectual property, thereby infringing its patents and violating the C-HLA. It asserts nine different counts against Defendants. Counts One through Four allege various state-law claims, including breach of contract, breach of the duty of good faith and fair dealing, tortious interference with contract, and unjust enrichment. Counts Five through Nine allege that Defendants infringed the â164, â892, â218, and â825 patents. Defendants move to dismiss all claims, arguing that the SPLAâa 2013 settlement agreement between Samsung and Cellportâprecludes Cellportâs claims. 1 Plaintiff CyberCar, Inc. is a wholly owned subsidiary of Cellport. The Court will refer to Cellport and CyberCar collectively as âCellportâ or âPlaintiffs.â (Dkt. #23). Defendants also assert that the Court does not have personal jurisdiction over HBAS. In the alternative to dismissal, Defendants request that the Court transfer the case to Colorado pursuant to the C-HLAâs forum selection clause. Because the Court found that the âviability of Cellportâs claims depends on the applicability of the SPLA to this case,â the Court converted Defendantsâ motion to dismiss to a motion for summary judgment pursuant to Rule 12(d). (Dkt. #40). The Court now considers whether (1) the Court has personal jurisdiction over HBAS and (2) whether Plaintiffsâ claims are barred by the SPLA such that Defendants are entitled to summary judgment. II. LEGAL STANDARDS A. Personal Jurisdiction A party may move to dismiss an action for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). This defense is premised on the fact that the Courtâs jurisdiction over a defendant is constrained by due process. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471â72, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). To pursue a lawsuit against a defendant, a plaintiff must establish that the defendant maintains adequate contacts with the forum state such that haling it to the State to defend itself would neither be â[un]reasonableâ nor offend âtraditional notions of fair play and substantial justice.â Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 592 U.S. 351, 358, 141 S.Ct. 1017, 209 L.Ed.2d 225 (2021) (quoting Intâl Shoe Co. v. Washington, 326 U.S. 310, 316â17, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). Although the burden rests with the plaintiff to establish the core elements of personal jurisdiction, the plaintiff can satisfy that burden at the pleading stage by simply presenting a prima facie case for jurisdiction. Walk Haydel & Assocs., Inc. v. Coastal Power Prod. Co., 517 F.3d 235, 241 (5th Cir. 2008). âAllegations in [a] plaintiffâs complaint are taken as true except to the extent that they are contradicted by [a] defendantâs affidavits.â Intâl Truck & Engine Corp. v. Quintana, 259 F.Supp.2d 553, 557 (N.D. Tex. 2003) (citing Wyatt v. Kaplan, 686 F.2d 276, 282 n.13 (5th Cir. 1982)). B. Motion for Summary Judgment Because the Court converted Defendantsâ motion to dismiss to a motion for summary judgment pursuant to Rule 12(d), the summary judgment standard applies here. See Allen v. Hays, 812 F.Appâx 185, 189 (5th Cir. 2020) (explaining that the Rule 56 summary judgment standard applies to conversions to Rule 12(b)(6) motions). âSummary judgment is appropriate only when âthe movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.ââ Shepherd ex rel. Shepherd v. City of Shreveport, 920 F.3d 278, 282â83 (5th Cir. 2019) (quoting FED. R. CIV. P. 56(a)). If the moving party presents a motion for summary judgment that is properly supported by evidence, âthe burden shifts to the nonmoving party to show with âsignificant probative evidenceâ that there exists a genuine issue of material fact.â Hamilton v. Segue Software Inc., 232 F.3d 473, 477 (5th Cir. 2000) (quoting Conkling v. Turner, 18 F.3d 1285, 1295 (5th Cir. 1994)). Because Federal Rule of Civil Procedure 56 requires that there be no âgenuine issue of material factâ to succeed on a motion for summary judgment, âthe mere existence of some alleged factual disputeâ is insufficient to defeat a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247â48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (first emphasis omitted). A fact is âmaterialâ when, under the relevant substantive law, its resolution might govern the outcome of the suit. Id. at 248. âAn issue is âgenuineâ if the evidence is sufficient for a reasonable jury to return a verdict for the nonmoving party.â Hamilton, 232 F.3d at 477 (citing Anderson, 477 U.S. at 248). Courts consider the evidence in the light most favorable to the nonmovant, but the nonmovant may not rely on mere allegations in the pleading; rather, the nonmovant must respond to the motion for summary judgment by providing particular facts showing that there is a genuine issue for trial. Intâl Assân of Machinists & Aerospace Workers v. Compania Mexicana de Aviacion, S.A. de C.V., 199 F.3d 796, 798 (5th Cir. 2000). If, when considering the entire record, no rational jury could find for the nonmoving party, the movant is entitled to summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citation omitted). III. DISCUSSION Defendants assert that the SPLA precludes all claims against them and that the Court does not have personal jurisdiction over HBAS. Because â[p]ersonal jurisdiction . . . is an essential element of the jurisdiction of [the Court], without which the [C]ourt is powerless to proceed to an adjudication,â the Court must determine whether it has personal jurisdiction over HBAS before deciding whether the SPLA bars Cellportâs claims. Pervasive Software Inc. v. Lexware GmbH & Co. KG, 688 F.3d 214, 231â32 (5th Cir. 2012) (cleaned up). A. The Court Lacks Personal Jurisdiction Over HBAS. Personal jurisdiction over a defendant can be established under two general theoriesâeither general jurisdiction, which refers to the Courtâs âall-purposeâ jurisdiction over defendants that are essentially at home in the forum state; or specific jurisdiction, which refers to âcase-linkedâ jurisdiction arising from a defendantâs activities directed toward the forum state. The Court has neither general nor specific jurisdiction over HBAS. General jurisdiction exists when the defendantâs contacts with the forum state are âso continuous and systematic as to render [the defendant] essentially at home in the forum State.â Daimler AG v. Bauman, 571 U.S. 117, 139, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014) (cleaned up). In general, âa corporationâs âhomeâ falls in two paradigmatic places: (1) the state of incorporation and (2) the state where it has its principal place of business.â Frank v. P N K (Lake Charles) L.L.C., 947 F.3d 331, 337 (5th Cir. 2020). Cellport acknowledges that HBAS is a German corporation with a principal place of business in Germany. (Dkt. #1 ¶ 8). Nonetheless, Cellport asserts that this Court has general jurisdiction over HBAS because HBAS purportedly has conducted âsubstantial business in the State of Texas and this judicial district, including regularly doing or soliciting business in Texas, and/or engaging in persistent conduct and/or deriving substantial revenue from goods and services provided to customers in Texas.â (Dkt. #1 ¶ 15). Because Cellportâs broad allegation âmerely amount[s] to [a] vague and overgeneralized assertion[] of contacts that give[s] no indication as to the extent, duration or frequency of [HBASâs] contacts,â the Court does not have general personal jurisdiction over HBAS. Sangha v. Navig8 ShipManagement Priv. Ltd., 882 F.3d 96, 102 (5th Cir. 2018) (cleaned up). âSpecific jurisdiction arises when the defendantâs contacts with the forum âarise from, or are directly related to, the cause of action.ââ Revell v. Lidov, 317 F.3d 467, 470 (5th Cir. 2002) (citation omitted). The Court evaluates specific jurisdiction using a âthree-stepâ procedure. Admar Intâl, Inc. v. Eastrock, L.L.C., 18 F.4th 783, 786 (5th Cir. 2021). First, the plaintiff must demonstrate that the defendant has minimum contacts with the forum stateâmeaning that the defendant purposefully directed its activities at the forum state and availed itself of the privilege of doing business in the State. Id. Second, the plaintiff must demonstrate that the causes of action asserted against the defendant arose from the defendantâs contacts with the forum state. Id. And third, after the plaintiff establishes the first two requirements, the burden then shifts to the defendant to prove that maintaining a lawsuit in the forum state would be either âunfairâ or âunreasonable.â Id. To establish minimum contacts, Cellport must show that HBAS âpurposefully availed [itself] of the benefits and protections of [Texas] such that [it] should reasonably anticipate being haled into court there.â Carmona v. Leo Ship Mgmt., Inc., 924 F.3d 190, 193 (5th Cir. 2019) (cleaned up). This requirement âensures that a defendant will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts, or of the unilateral activity of another party or a third person.â Id. at 193â94 (quoting Burger King Corp., 471 U.S. at 475). Cellport hinges its minimum contacts argument on the âstream of commerceâ theory. âThat doctrine recognizes that a defendant may purposely avail itself of the protection of a stateâs lawsâand thereby will subject itself to personal jurisdictionâ âby sending its goods rather than its agentsâ into the forum.â In re DePuy Orthopaedics, Inc., Pinnacle Hip Implant Prod. Liab. Litig., 888 F.3d 753, 778 (5th Cir. 2018) (quoting J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 882, 131 S.Ct. 2780, 180 L.Ed.2d 765 (2011)). To succeed under this theory, a plaintiff âneed only show that [the defendant] delivered the product that injured [it] âinto the stream of commerce with the expectation that it would be purchased by or used by consumers in the forum state.ââ Id. at 779 (quoting Ainsworth v. Moffett Engâg, Ltd., 716 F.3d 174, 177 (5th Cir. 2013)); see also Luv Nâ Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 470 (5th Cir. 2006) (âThis court has consistently held that âmere foreseeability or awareness [is] a constitutionally sufficient basis for personal jurisdiction if the defendantâs product made its way into the forum state while still in the stream of commerce.ââ (citation omitted)). Cellportâs theory of specific jurisdiction over HBAS fails. In its complaint, Cellport identifies a number of products that it alleges have made their way to Texas, which it argues demonstrates the âoffering and sale of Harman products by . . . HBAS in the United States.â (Dkt. #34 at 30). However, HBASâs declarant, Christian Kolb, confirms that â[HBAS] has not conducted business in Texas, and has not solicited business in Texas, or derived revenue from products provided in Texas,â and that it has not âdesigned, manufactured, sold, or offered for sale any accused product in Texas or done any business relevant to the Complaint allegations in Texas.â (Dkt. #23-1 ¶ 4). Kolb further attests that HBAS has not âtransferred or shipped [the accused products] in or to Texas[,] [n]or has [HBAS] sold any of these products to any entity located in the United States or shipped any of these products to any customer location in the United States.â (Dkt. #23-1 ¶ 6). Kolb also states that HBAS has not performed any of the alleged misconduct in Texas. (Dkt. #23-1 ¶¶ 8â10). As Cellport acknowledges, Kolbâs declaration directly contradicts its allegations. â[W]hen unsubstantiated allegations are controverted by affidavit or declaration, the affidavit or declaration trumps the allegations.â In re Norplant Contraceptive Prods. Liab. Litig., 899 F.Supp. 315, 317 (E.D. Tex. 1995); see also Travelers Indem. Co. v. Calvert Fire Ins. Co., 798 F.2d 826, 831 (5th Cir. 1986) (â[T]he allegations of the complaint are taken as true except as controverted by the defendantâs affidavits.â). Cellport points to importation records and activities of HBASâs affiliates to show that Kolbâs declaration is false and that HBAS has purposefully availed itself of Texasâs benefits. However, as Defendants correctly note, the evidence Cellport proffers is unrelated to the accused products, unrelated to HBAS, and/or unrelated to Texas. First, while one importation record shows that HBAS has imported some goods into Texas, it does not show that HBAS imported the accused products. (Dkt. #34-1). Thus, the second prong of the personal jurisdiction analysis is not met because these products are not the bases of Cellportâs claims. See Admar Intâl, Inc., 18 F.4th at 786. Second, much of the remaining evidence Cellport proffers does not relate to HBAS specifically. For example, Cellport points to another importation record demonstrating that HBASâs affiliateânot HBAS itselfâimported products to Texas. Indeed, throughout its briefing, Cellport heavily relies on the fact that entities associated with HBAS placed the accused products into the stream of commerce. (Dkt. #34-2); see (Dkt. #39 at 12) (âHBAS has placed its accused products in the stream of commerce, through its affiliates, including [Harman], and the distribution systems of third parties, and those products, while flowing down the commercial stream, have ended up in Texas, the location of [Harman], its parent company and American affiliate.â (emphasis added)). The problem with haling HBAS into court in Texas based on the alleged actions of its parent company, Harman, or any other affiliate is that, â[g]enerally, âthe proper exercise of personal jurisdiction over a nonresident corporation may not be based solely upon the contacts with the forum state of another corporate entity with which the defendant may be affiliated.ââ Diece-Lisa Indus., Inc. v. Disney Enters., Inc., 943 F.3d 239, 251 (5th Cir. 2019) (quoting Freudensprung v. Offshore Tech. Servs., Inc., 379 F.3d 327, 346 (5th Cir. 2004)). As the Fifth Circuit has explained, this âpresumption of institutional independenceâ can be rebutted âby âclear evidence,â which requires a showing of âsomething beyondâ the mere existence of a corporate relationship between a resident and nonresident entity.â Id. (quoting Freudensprung, 379 F.3d at 346). Cellport does not even attempt to make such a showing. It fails to allege any facts demonstrating an alter-ego relationship between HBAS and Harman or any other affiliate. Instead, this case aligns with cases in which courts have found a âpassive parent-subsidiary relationshipâ that is âinsufficient to support jurisdiction.â In re DePuy Orthopaedics, 888 F.3d at 780; see also Dickson Marine Inc. v. Panalpina, Inc., 179 F.3d 331, 339 (5th Cir. 1999) (observing that âthe mere fact that a corporate relationship exists is not sufficient to warrant the assertion of jurisdiction over a related corporate entityâ and finding that plaintiff had âfailed to carry the burden of establishing a prima facie showing of sufficient control to establish an alter-ego or agency relationshipâ between the entities). Thus, the fact that Harman and other HBAS affiliates import products or have other ties to Texas is insufficient to impute personal jurisdiction over HBAS. In sum, the Court finds that Cellport has failed to offer sufficient evidence to contradict Kolbâs declaration, and thus his declaration is accepted as true. Unable to show that HBAS placed accused products in the stream of commerce knowing they would end up in Texas, Cellport relies on the activities of HBASâs affiliates. But, as explained above, a mere affiliation with a corporation that has interacted with Texas is insufficient to establish that the Court has personal jurisdiction. Therefore, the Court finds that it does not have personal jurisdiction over HBAS.2 2 Cellport also argues that HBASâs interactions with the Federal Communications Commission (FCC) regarding the approval of its products and the fact that vehicles that use âHarman productsâ are distributed âthroughout the United States, including Texas,â establish personal jurisdiction over HBAS. (Dkt. #39 at 12â13). Both arguments fail. First, HBASâs communications with the FCC have nothing to do with Texas. This argument is an irrelevant tributary to Cellportâs flawed stream-of-commerce theory. Second, the exhibits B. The SPLA Precludes Plaintiffsâ Claims. Defendants also argue that the release in the SPLA bars Cellportâs claims against them. Since the Court determined that it does not have personal jurisdiction over HBASâand thus has no power to adjudicate the merits of Cellportâs claims against itâthe Court will only consider whether the SPLA precludes Cellportâs claims against Harman. Before considering the language of the instrument, the Court must first determine which stateâs laws apply. The SPLA designates Colorado as the choice-of- law state. (Dkt. #25-1 ¶ 15). âWhere parties have contractually agreed to a choice-of- law provision, Texas choice-of-law rules favor enforcement of these provisions, unless the provision violates a fundamental public policy of Texas.â See Mission Specialty Pharmacy, LLC v. OptumRx, Inc., 154 F.Supp.3d 453, 458 (W.D. Tex. 2015) (cleaned up). The Court finds that the choice-of-law provision here does not violate any fundamental Texas public policy. Thus, the Court will interpret the SPLA pursuant to Colorado law. Under Colorado law, contract interpretation is a question of law for the Court. French v. Centura Health Corp., 509 P.3d 443, 449 (Colo. 2022). As particularly Cellport proffers to show that HBAS products are found in cars that might be sold in Texas refer to neither HBAS nor Texas. Instead, as Cellport acknowledges, these exhibits identify âHarman customersâ and âHarman products.â (Dkt. #39 at 12â13). But, as explained above, the Court cannot exercise jurisdiction over HBAS for the activities of third parties. Carmona, 924 F.3d at 193â94 (explaining that a defendant cannot be âhaled into a jurisdictionâ as a result of the âunilateral activity of another party or a third personâ). Further, these exhibits do not controvert Kolbâs attestation that HBAS âhas not conducted business in Texas, and has not solicited business in Texas, or derived revenue from products provided in Texas,â and that it has not âdesigned, manufactured, sold, or offered for sale any accused product in Texas or done any business relevant to the Complaint allegations in Texas.â (Dkt. #23-1 ¶ 4). relevant here, Colorado defines a release as âthe relinquishment of a claim to the party against whom such claim was enforceable. . . . Once a claim is released, the release bars the injured party from seeking further recovery.â CMCB Enters., Inc. v. Ferguson, 114 P.3d 90, 96 (Colo. App. 2005). And like other contracts, Colorado law requires courts to examine the partiesâ intent to determine the scope of a release. See French, 509 P.3d at 449 (âIn interpreting a contract, our primary goal is to give effect to the partiesâ intent.â); CMCB Enters., 114 P.3d at 96 (âA court is to construe a release to effectuate the manifest intention of the parties.â). â[I]ntent is primarily determined from the language of the instrument itself.â French, 509 P.3d at 449. So long as the language is unambiguous, the contract is deemed to express the partiesâ intent and must be enforced according to its terms. Id.; see also CMCB Enters., 114 P.3d at 96 (â[C]onstruction [of a release] rests on good sense and plain understanding of the words used.â). âThe mere fact that the parties disagree as to the proper interpretation of a contract does not itself establish an ambiguity in the contract.â French, 509 P.3d at 449. As an initial matter, the Court finds that the SPLA is unambiguous. Although the parties dispute whether the SPLA applies to Harman and whether Cellportâs claims here are contemplated by its terms, neither party asserts that the terms are unclear. Therefore, the Court will interpret the SPLA according to its plain language. Id. In relevant part, the release reads: Cellport, on behalf of itself and its Affiliates, for themselves and their successors and assigns, hereby irrevocably, fully, finally releases, forever discharges, and covenants not to sue [Samsung] and each of [its] Affiliates . . . from any and all claims, actions, causes of action, suits, damages, injuries, duties, rights, obligations, liabilities, adjustments, responsibilities, judgments, trespasses and demands (collectively), whatsoever, in law or in equity, whether known or unknown, suspected or unsuspected to exist, now existing or later acquired, which were made or could have been made or may be made in the future by Cellport relating to the Licensed Patents. (Dkt. #25-1 ¶ 7(b)). Recall that the SPLA went into effect in 2013âprior to SECâs acquisition of Defendants. However, the language here applies to both Samsung (including SEC) and Samsungâs Affiliatesâdefined as âany person, corporation, partnership, trust or other entity that, now or in the future, directly or indirectly, legally or beneficially, owns, is owned by, is under common ownership with or is under direct or indirect control of the Party or the Partyâs owner or ultimate parent.â (Dkt. #25-1 ¶ 3). âPartyâ includes either Samsung or Cellport. (Dkt. #25-1 at 2). Neither party disputes that Harman was acquired by SEC in 2017. Therefore, Harman is âownedâ by SEC. And although Harman was acquired after the parties signed the SPLA, the agreement explicitly states that later-acquired corporations are âAffiliatesâ for purposes of the agreement. Thus, the SPLA applies to Harman. See Oyster Optics, LLC v. Infinera Corp., 843 F.Appâx. 298, 300 (Fed. Cir. 2021) (noting that the language ânow or in futureâ in a settlement agreement made the timing of the subsidiaryâs acquisition immaterial). Having found that the SPLA applies to Harman, the Court turns to the terms of the release. As Cellport correctly notes, âlicenses of patent rights are generally interpreted as prospective, and releases for infringement as retroactive, absent clear language demonstrating a contrary intent.â (Dkt. #34 at 11) (citing Oyster Optics, 843 F.Appâx at 302). However, the plain language here does demonstrate a contrary intent: the release states that it applies to ânow existing or later acquiredâ claims, which âwere made or could have been made or may be made in the future.â (Dkt. #25-1 ¶ 7(b)) (emphasis added). By its terms, the release rejects the general rule and embraces a forward-looking discharge of liability. Cf. Augustine Med., Inc. v. Progressive Dynamics, Inc., 194 F.3d 1367, 1371 (Fed. Cir. 1999) (âThe phrase âmay haveâ is necessarily future-oriented. In the context of the Settlement Agreement, it implies a future possibility of [the plaintiff] having a claim.â); see generally (Dkt. #25-1 at 2) (âSamsung wishes to obtain a license and release for any and all past, present, and future actions of Samsung and its Affiliates . . . with respect to the [Licensed Patents] . . ., and Cellport is willing to grant such a license and release.â (emphasis added)). Next, the Court must determine whether the release covers Cellportâs claims against Harman. Through the SPLA, Cellport released âany and all claims . . . whether known or unknown, suspected or unsuspected to exist, . . . relating to the Licensed Patents.â (Dkt. #25-1 ¶ 7(b)). âLicensed Patentsâ means both âFirst Licensed Patentsâ3 and âSecond Licensed Patents.â (Dkt. #25-1 ¶ 2). âSecond Licensed Patentsâ include the â164 patent, the â892 patent, the â218 patent, and the â825 patentâthe patents Harman allegedly infringed. (Dkt. #25-1 at 14); see (Dkt. #1 at 78â119). These claims certainly ârelate toâ the Licensed Patents, and thus they were released. 3 First Licensed Patents are not in issue here. Counts One through Four are premised on state law. In Count One, Cellport asserts that Harman breached the C-HLA, particularly by allegedly failing to comply with its obligation to pay royalties for Licensed Products made under the Licensed Patents, as those terms are used in the C-HLA. Count Two asserts a claim for breach of the duty of good faith and fair dealing against Harman, and is another claim focused on Harmanâs alleged âfail[ure] to pay the royalties specified in the [C-HLA] for all Licensed Products practicing the Licensed Patentsâ and for âusing, without authorization, unlicensed Cellport Intellectual Property in Harman products.â (Dkt. #1 ¶ 261). Count Three asserts a tortious-interference-with-contract claim premised on Harmanâs alleged obstruction of HBASâs compliance with the C-HLA. And Count Four asserts an unjust-enrichment claim arising from Harmanâs purported âunlicensed and unauthorized use and conversion of Cellportâs Licensed Patents and Cellport Intellectual Property.â (Dkt. #1 ¶ 271). Harman argues that all of Cellportâs state-law claims asserted in Counts One through Four are grounded in Harmanâs use of the Licensed Patents under the SPLA. (Dkt. #23 at 10 n.2); (Dkt. #38 at 5). In the C-HLA, Cellport granted HBAS and its affiliates a license âunder the Licensed Patentsâ (listed in Schedule A of the document) to make certain Licensed Products in exchange for royalties. (Dkt. #1-2 ¶¶ 2.1, 3.1). The Licensed Patents to which the C-HLA refers are listed in the SPLA and contemplated in the release.4 And it is Harmanâs alleged failure to comply with 4 Schedule A of the C-HLA includes two European Patents that are not listed in the SPLA. Cellport does not allege that Harman breached its duties with respect to these patents. its obligation to pay royalties and its alleged misuse of the Licensed Patents that underly all of Cellportâs state-law claims. Thus, each of Cellportâs state-law claims is grounded in Harmanâs purported breach of some duty related to the patents expressly covered in the SPLAâs release. Cellport does not dispute that its state-law claims directly relate to the patents listed in the SPLA. Instead, it argues that such relation does not matter here because the SPLA only covers claims for patent infringement and does not encompass its state-law claims. (Dkt. #34 at 12).5 The plain language of the SPLA refutes Cellportâs position. The release is not cabined to just claims of patent infringement, but instead covers âany and all claims . . . relating to the Licensed Patents.â (Dkt. #25-1 ¶ 7(b)) (emphasis added). âRelate toâ is a broad term meaning âto stand in some relation; to have bearing or concern; to pertain; refer; to bring into association with or connection with.â Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992) (quoting BLACKâS LAW DICTIONARY 1158 (5th ed.1979)). And Colorado courts have repeatedly interpreted contract terms like ârelatingâ or ârelate toâ as encompassing all issues surrounding the underlying subject matter. See, e.g., City & Cnty. of Denver v. Dist. Ct., 939 P.2d 1353, 1366 (Colo. 1997) (giving broad definition to the phrase ârelating toâ in an arbitration agreement). The Court 5 Cellport also argues that Harmanâs products at issue in this suit are not âLicensed Productsâ under the SPLA and thus are not released. However, the release itself makes no reference to Licensed Productsâonly to Licensed Patents. Whether an item is a Licensed Product is relevant to the license granted in the SPLA, but not to the release. For this same reason, Cellportâs assertion that â[t]he only claims that are discharged and released by the SPLA are claims for . . . infringement by Samsung products as they were configured at the time of or prior to settlement,â (Dkt. #34 at 13), also fails. concludes that, under Colorado law, this wording embraces any claimâpatent infringement or otherwiseâthat relates to the patents in issue. As explained above, the state-law claims are related to the patents. Cellport also argues that the state-law claims are not released by the SPLA because they ârelate to Harman products defined narratively in the C-HLA; they are not based on the âinfringementâ of a claim of the Licensed Patents.â (Dkt. #39 at 6). Again, however, the plain language of the release makes clear that it is not limited to infringement claims. Thus, it is immaterial whether the state-law claims are based on the âinfringementâ of a Licensed Patent. It is enough that the claims are related to the patents. Cellport does not dispute that they are. Based on the foregoing, the Court concludes that, according to the plain language of the SPLA, (1) Harman is an âAffiliate,â such that it is covered by the SPLA; (2) the release applies to claims arising after the SPLAâs inception; and (3) all of Cellportâs claims relate to the Licensed Patents and were thus released. Cellport argues that this reading is impermissible because, if true, it renders the SPLAâs license provision meaningless. See (Dkt. #34 at 13â14). Not so. Cellport fails to recognize that licenses and releases serve two distinct purposes. See Oyster Optics, 843 F.Appâx at 302â03 (rejecting a similar contention that the courtâs reading rendered âthe release provision superfluousâ because âthe release is broader than the license and does other work in the agreementâ). The SPLAâs license provision grants Samsung and its Affiliates the explicit right to use the Licensed Patents to create Licensed Products. By contrast, the release bars suit for any claim relating to the Licensed Patents, irrespective of whether Samsung or its Affiliates make Licensed Products. Thus, the release is broader than the license, reinforcing Samsungâs and its Affiliatesâ abilities to use the Licensed Patents without any fear of future liability.6 Cellport essentially asks the Court to rewrite and narrow the releaseâs explicit terms. As Colorado law recognizes, this Court has no such power. See, e.g., Fox v. I- 10, Ltd., 957 P.2d 1018, 1022 (Colo. 1998) (âThe courtâs duty is to interpret and enforce contracts as written between the parties, not to rewrite or restructure them.â); Yamin v. Levine, 120 Colo. 35, 38, 206 P.2d 596, 597 (1949) (âIf the contract clearly expresses the intentions of the parties, it must be construed as written . . .â); Gertner v. Limon Natâl Bank, 82 Colo. 13, 41, 257 P. 247, 257 (1927) (stating that â[c]ourts do not make contracts for partiesâ and âdo not open their doors to those that are suffering merely from their own bad bargainsâ). Consistent with these principles, the Court will enforce, rather than revise, the SPLAâs plain language. See CMCB Enters., 114 P.3d at 96 (â[C]onstruction [of a release] rests on good sense and plain understanding of the words used.â). In a final bid to evade the SPLAâs unequivocal language, Cellport argues that Harman is equitably estopped from relying on the SPLA because it is in breach of what it contends is a material representation found in the SPLA. (Dkt. #34 at 14â15). Cellport references paragraph 19 of the SPLA, which provides as follows: Cellport represents that the products made, sold, used and/or imported by Samsung and its Affiliates, as they are presently (and have heretofore 6 This litigation is a prime example of why Samsung may have wanted to include a forward-looking release in addition to obtaining a license. Whereas the release bars suit, a mere license would have required the Court to undertake an intensive factual analysis into the allegedly infringing items and the circumstances of their creation. been) configured, do not infringe any of the Second Licensed Patents, nor are they within the scope of any anticipated claim in any patent application, which Cellport owns or has the right to assignment. Samsung represents that Samsung and its Affiliates do not make or sell electronic control units for automotive telematic systems. (Dkt. #25-1 ¶ 19). Cellport argues that this language created an express warranty, which Harman has violated by making electronic control units (ECUs). It points to Coloradoâs Uniform Commercial Code (UCC), which states that â[a]ny affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.â COLO. REV. STAT. § 4-2-313(1)(a). According to Cellport, Harmanâs violation prevents it from using the SPLA to defend against Cellportâs claims. This argument fails for at least three reasons. First, Cellportâs reliance on the UCC is misplaced. The UCC typically applies only to the sale of goods, and the specific provisions invoked by Cellport make clear that the general rule applies here. See COLO. REV. STAT. § 4-2-313(1)(a) (discussing express warranties created in the sale of goods); id. § 4-2-102(1) (confirming that, â[u]nless the context otherwise requires,â Coloradoâs UCC provisions apply only to âtransactions in goodsâ). The SPLA is not a âtransaction[] in goods,â it is a settlement and patent license agreement. The UCC has no application to such an agreement. Lamle v. Mattel, Inc., 394 F.3d 1355, 1359 n.2 (Fed. Cir. 2005) (holding that UCC did not apply to patent license); Novamedix, Ltd. v. NDM Acquisition Corp., 166 F.3d 1177, 1182â83 (Fed. Cir. 1999) (holding that UCC did not apply to settlement agreement from patent infringement suit). Second, Harman has not violated paragraph 19 of the SPLA, Cellport has misread it. On its face, paragraph 19 reflects present-tense representations by Cellport itself, as well as Samsung, not representations as to future conduct. In paragraph 19, Cellport specifically represents that, at the time the SPLA was executed, Samsung and its Affiliatesâ products, âas they are presently (and have heretofore been) configured,â âdo not infringeâ any of Cellportâs referenced patents. (Dkt. #25-1 ¶ 19). Samsung, in turn, made a reciprocal, present-tense representation that âSamsung and its Affiliates do not make or sell electronic control units for automotive telematic systems.â (Dkt. #25-1 ¶ 19). Even assuming arguendo that, years later, Harman has made ECUs, Harman (and Samsung, for that matter) did not represent in paragraph 19 of the SPLA that they would never make ECUs. Instead, Samsung merely confirmed that, when the SPLA went into effect in 2013, Samsung and its Affiliates did not make or sell such items. This is plainly not a future representation, which the parties demonstrated elsewhere they were fully capable of makingâsee, e.g., the release provision. Again, Cellportâs argument attempts to change the SPLAâs language, transforming Samsungâs present-tense representation in paragraph 19 into a promise of future conduct. For the reasons already stated, the Court will not rewrite the SPLAâs terms. Third, the SPLA explicitly identifies mutual representations and warranties elsewhere, and that provision includes no prohibition on the making or selling of ECUs. See (Dkt. #25-1 ¶ 13). For these reasons, the Court finds that Harman is not equitably estopped from relying on the SPLA. * * * In sum, the Court concludes that HBAS does not have the requisite minimum contacts with Texas for this Court to exercise jurisdiction over it. Therefore, the Court will dismiss all claims against HBAS. Cellportâs remaining patent infringement and state-law claims against Harman were released by Cellport in the SPLA and are thus barred. See CMCB Enters., 114 P.3d at 96 (âOnce a claim is released, the release bars the injured party from seeking further recoveryâ); see also CIC Prop. Owners v. Marsh USA Inc., 460 F.3d 670, 673 (5th Cir. 2006) (affirming the district courtâs grant of summary judgment after concluding that a release barred the claims at issue); Smith v. Amedisys Inc., 298 F.3d 434, 445â46 (5th Cir. 2002) (same); Williams v. Phillips Petroleum Co., 23 F.3d 930, 936â37 (5th Cir. 1994) (same); Foremost Cnty. Mut. Ins. Co. v. Home Indem. Co., 897 F.2d 754, 761 n.11 (5th Cir. 1990) (noting that a release âeliminates any liabilityâ); Natâl Am. Ins. Co. v. Melancon, No. Civ.A. 98- 1273, 1999 WL 600372, at *3 (E.D. La. Aug. 9, 1999) (noting that a release destroys a cause of action).7 Therefore, the Court finds that Harman is entitled to summary judgment. 7 Harman alternatively relies on the SPLAâs covenant-not-to-sue provision. However, because the release fully resolves this case, the Court need not consider whether the covenant not to sue would also preclude Cellportâs claims. IV. CONCLUSION For the foregoing reasons, the Court concludes that it does not have personal jurisdiction over HBAS. The Court also finds that Harman is entitled to summary judgment. Therefore, it is ORDERED that Defendantsâ Motion to Dismiss, (Dkt. #23), which the Court converted to a motion for summary judgment, (Dkt. #40), is GRANTED. Plaintiffsâ claims against HBAS are DISMISSED for lack of personal jurisdiction. Plaintiffsâ remaining claims against Harman are DISMISSED with prejudice.
Case Information
- Court
- E.D. Tex.
- Decision Date
- March 28, 2024
- Status
- Precedential