Northern California Courts Rule in Technology Cases

Northern California Judges have recently ruled in a few technology cases.

FTC v. Inc21.com involves a cramming scam that this blog discussed earlier.  In the current matter, Inc21 is asking the court to stay the order of an injunction that freezes the individual defendant's assets, removes their ability to receive a stipend and does not allocate for attorney's fees.  The defendants argue that they are likely to succeed on the merits of the appeal.  They allege that contradictory testimony of various witnesses creates genuine issues of material fact for trial. Judge William H. Alsup disagreed.

Even absent the allegedly “disputed” portion of Mr. Nelson’s testimony, there were mountains of unrebutted evidence demonstrating that defendants were liable for the conduct alleged in this action.

The defendants also argue that they should obtain stipends and money to pay attorney bills from the amount collected from the Inc21 accounts.  Judge Alsup was somewhat sympathetic to defense counsel, but no one else.

The only payment that this order will authorize is a one time disbursement of $10,000 from funds held in the Court’s registry to defense counsel, Attorney Joel Dichter, for attorney’s fees and expenses. Defendants’ remaining requests to further deplete the already paltry amount of funds that will be available to reimburse harmed consumers are otherwise DENIED.

He denied the motion for a stay pending appeal.

IO Group v. Doe is a copyright infringement lawsuit where IO Group doing business as Titan Media believes that 45 people have made copies of its works through a service called eDonkey2000 through the internet service provider Cox Communications.  It is seeking discovery of the identity of the owners of the IP addresses that downloaded the content so that it can substitute those individuals for the Doe defendants currently listed in the lawsuit.  As Judge Samuel Conti explains the test for third-party discovery before service of the complaint is explained in Columbia Ins. Co. v. Seescandy (N.D. Cal. 1999):

For leave to conduct discovery to identify a Doe defendant, the moving party must: (1) identify the defendant with enough specificity to allow the Court to determine whether the defendant is a real person or entity who could be sued in federal court; (2) recount the steps taken to locate the defendant; (3) show that its action could survive a motion to dismiss; and (4) file a request for discovery with the Court identifying the persons or entities on whom discovery process might be served and for which there is a reasonable likelihood that the discovery process will lead to identifying information.

Judge Conti granted the motion for discovery but only insofar as to allow Cox to email its subscriber and inform them of the subpoena and give them an opportunity to quash it.

Combs v. Doe is a suit for conversion of the internet domain www.csrnation.com. Ms. Combs has tried to locate the person who converted that name but cannot find the person and would like to serve by publication.  Magistrate Harold R. Lloyd noted that service by publication "is a last resort" available only if no other avenue is available. Ms. Combs states that the website is registered to James Diaz, who may not be a person.

Subsequent investigation revealed that Diaz’s contact information is entirely fake. According to plaintiff’s investigator, Diaz’s identified phone number is a Google switchboard number which is used to hide a subscriber’s actual phone number, and Diaz’s purported residence address is actually part of a parking lot adjacent to a Home Depot in Fresno, California.

Judge Lloyd granted the motion for service by publication.


Nanoexa Corp. v. University of Chicago is a suit for patent misuse and breach of contract.  Presently before the court is the defendant's motion to dismiss for lack of person jurisdiction.  As Judge Lucy Koh explained, there are two kinds of jurisdiction, general and specific.  Nanoexa alleges that the University of Chicago is subject to the general jurisdiction of California because it has a license to do business in that state.  Judge Koh disagreed:

Here, the allegations that the University of Chicago is licensed to do business in California and has designated an agent for service of process in California are insufficient to establish general jurisdiction because the contacts do not approximate physical presence in California.

Nanoexa also argued that UChicago Argonne LLC is subject to the specific jurisdiction of California because it engaged with a license agreement with Nanoexa and they have regularly contacted one another. Judge Koh stated that this (coupled with an Illinois forum selection clause in the license) is "a far cry from purposeful availament"

Plaintiff’s Opposition makes much of the allegations that pre-contract negotiations occurred in both California and Illinois. However, “ordinarily, [the] use of the mails, telephone, or other international communication simply do not qualify as purposeful activity invoking the benefits and protection of the [forum] state.” Roth v. Garcia Marquez (9th Cir. 1991).

She granted the motion to dismiss with prejudice.

Nikoonahad v. Rudolph Technology Inc. began as a license dispute over semiconduictor technology that Rudolph Technology licensed for a few months but declined to purchase.  After some motions practice all that remains is Mr. Nikoonahad's claim for a breach of the implied covenant of good faith and fair dealing present in every contract.  The plaintiff argues that Rudolph did not ever intend to use his technology and that the license was just a way to get Mr. Nikoonahad's technology off the market while Rudolph pursued its own product.  Mr. Nikoonahad proffers the deposition testimony that one of Rudolph's employees "didn't like [the plaintiff] too much."  Judge Jeremy Fogel explained that the covenant of good faith and fair dealing is not meant to circumvent the legitimate business interests of the parties.  Rudolph's explanation that it failed to find a market for Mr. Nikoonahad's technology was an adequate reason not to pursue it.  He granted summary judgment for Rudolph.

Image Courtesy of Google Patents

Streak Products v. Antec is a patent infringement suit directed toward a personal computer power supply show here.  The present matter concerns the claim construction.  The parties disputed whether, a person computer power supply expressly excluded other power supplies (like backup power).  Antec argued that Streak had expressly waived including the power supply while prosecuting the patent.  The second was whether "a pluarility of cables" intended two or more or three or more cables.  Judge Richard Seeborg found the former and ruled:

The Court construes “personal computer power supply” as “a device that receives AC current and provides DC current to the components of a personal computer, and expressly excludes redundant power supplies, and “a plurality of component cables” as “two or more cables, each of which is attachable to a different component selected from the group including: (a) motherboard; (b) a magnetic disc drive; (c) an optical disc drive; (d) an input/output card; (e) a memory card; (f) a sound card; (g) a gaming card; (h) a video card; (i) a network card; (j) network hub; (k) a cooling device.”

In Weisblatt v. Apple the plaintiffs claim that Apple and AT&T Mobility (ATTM) perpetrated a classic "bait and switch" fraud scheme upon them by selling Apple 3g iPads for which ATTM was the exclusive provider.  The plaintiffs claim that ATTM stated that two data plans - 250MB per month with overage charge and unlimited data - were available and customers could switch back and forth between them.  Then it changed its mind and got rid of the unlimited data plan after the plaintiffs were induced to purchase the more expensive iPad 3G.  Here, Apple has moved to compel arbitration under the terms of the iPad's activation agreement.  However, whether the agreement is unconscionable under state law or preempted by the Federal Arbirtation Act is currently before the U.S. Supreme Court in AT&T Mobility v. Concepcion.  Judge Ronald M. White denied the motion to compel arbitration without prejudice and ordered the parties to begin written discovery in the case.