tutorial video tutorial video Discover the CiteMap in 3 minutes

Lawyers, other representatives, expert(s), tribunal’s secretary

    Partial Award

    1.
    The Request for Arbitration in this matter was filed by Claimant, Amkor Technology, Inc. on 7 August 2009. Amkor is a company incorporated under the laws of the State of Delaware, USA, with its principal place of business at 1900 South Price Road, Chandler, Arizona 85248-1694, USA. Amkor is assisted and represented in this arbitration by Matthew Powers, Esq., and Steve Cherensky, Esq., Weil, Gotshal & Manges, LLP, 201 Redwood Shores Parkway, Redwood Shores, CA 94065; David J. Ball, Esq., Michael R. Franzinger, Esq., and Amber Taylor, Esq., Weil, Gotshal & Manges, LLP, 1300 Eye Street, NW, Washington, DC 20005, USA.

    Telephone: +1-202-682-7000 Telefax: +1-202-857-0940
    Email: matthew.powers@weil.com
    steven.cherensky@weil.com
    david.ball@weil.com
    michael.franzinger@weil.com
    amber.taylor@weil.com

    Respondent Tessera, Inc., filed its Answer on 2 November 2009. Tessera is a company incorporated under the laws of the State of Delaware, USA, with its principal place of business at 3025 Orchard Parkway, San Jose, CA 95134, USA. Tessera is assisted and represented in this arbitration by Morgan Chu, Esq., Jonathan Steinberg, Esq., Christine Byrd, Esq., Benjamin W. Hattenbach, Esq., Ellisen Turner, Esq., Jason Sheasby, Esq., and Anthony E. Falcone, Esq., Irell & Manella LLP, 1800 Avenue of the Stars, Suite 900, Los Angeles, CA 90067-4276, USA.

    Telephone: +1-310-277-1010
    Telefax: +1-310-203-7199
    Email: Tessera-Amkor@irell.com

    2.
    The Terms of Reference were established on 22 June 2010. The parties agreed that the Licensing Agreement upon which the Request for Arbitration is based would be "governed, interpreted and construed in accordance with the laws of the State of California as if without regard to its provisions with respect to conflicts of Laws." (Sec. XVI) The parties agreed in the same provision: "If such disputes, controversies, claims or differences cannot be settled between the parties, such disputes, controversies, claims or differences shall be finally settled by arbitration under the Rules of Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with said rules." The Tribunal members are as follows:

    Chair of the Arbitral Tribunal:
    Hon. Fern M. Smith (Ret.)
    JAMS Resolution Center
    Two Embarcadero Center, Suite 1500
    San Francisco, CA 94111, USA
    Telephone: +1-415-982-5267
    Telefax: +1-415-982-5287
    Email: fsmith@jamsadr.com

    whose nomination as Chair of the Arbitral Tribunal has been confirmed by the Secretary General of the ICC International Court of Arbitration, in accordance with Article 9(2) of the Rules, on October 22, 2009.

    The Honorable Abraham D. Sofaer
    The Hoover Institution
    Stanford University
    434 Galvez Mall
    Stanford, CA 94305-6010, USA
    Telephone: +1-650-725-3763
    Telefax: +1-650-723-2103 or 650-723-8583
    Email: sofaer@hoover. Stanford.edu

    whose nomination as co-arbitrator has been confirmed by the Secretary General of the ICC International Court of Arbitration, in accordance with Article 9(2) of the Rules, on October 22, 2009.

    Don Martens, Esq.
    KNOBBE MARTENS OLSON AND BEAR, LLP
    2040 Main Street, 14th Floor
    Irvine, California 92614-3614, USA
    Telephone: +1-949-760-0404
    Telefax: +1-949-760-9502
    Email: dmartens@kmob.com

    whose nomination as co-arbitrator has been confirmed by the Secretary General of the ICC International Court of Arbitration, in accordance with Article 9(2) of the Rules, on 22 October 2009. All three members of the Arbitral Tribunal were confirmed by the ICC Secretary General on 22 October 2009, pursuant to Article 9(2) of the Rules, the parties having agreed jointly to nominate the Chair of the Arbitral Tribunal. On 22 October 2009 the Secretariat forwarded the file to the members of the Arbitral Tribunal.

    3.
    In a previous arbitration between the same parties, and before a Tribunal consisting of the same Tribunal members, Tessera sought and was awarded damages under its License Agreement with Amkor in the form of royalties due through 1 December 2008 for Amkor's use in certain package assemblies manufactured by Amkor of six Tessera patents. Amkor has paid those damages in full.
    4.
    The present arbitration was commenced by Amkor to obtain a declaratory judgment (award) that it is fully in compliance with the License Agreement for the period after December 1, 2008, and also seeking relief from what it claims are false and misleading statements by Tessera that Amkor is not in compliance with the License Agreement. Tessera responded to Amkor's claims in its Answer filed on 2 November 2009, including counterclaims for relief for the alleged use by Amkor in various Amkor products, prior to 1 December 2008, of some 19 Tessera patents, without payment in accordance with the License Agreement. On 15 January 2010, Claimant Amkor submitted a Reply and Counterclaims to Counterclaims. On 12 February 2010, Respondent Tessera submitted an Answer to Claimant’s counterclaims. The Terms of Reference in this matter were established on 22 June 2010, and the current time for rendering the Final Award is 22 December 2010. The Tribunal will seek an extension of time for rendering the Final Award in light of the extensive motion practice and hearings that have been required.
    5.
    The claims to be decided in this arbitration by the Arbitral Tribunal include the following issues (but not necessarily all of them or any of them and not necessarily in the following order):

    • Is Claimant in compliance with the License Agreement and a Licensee in good standing?

    • Has Respondent interfered with Claimants contractual relations with third parties?

    • If the Agreement was materially breached by either party, what monetary damages, if any, should be awarded?

    • Does Respondent have the right to terminate the License Agreement?

    • Has Claimant used any of Respondent’s patents that are at issue in this case?

    • If so, are those patents valid?

    • Is either party entitled to any equitable relief?

    • Has Claimant interfered with Respondent’s prospective economic relationships with third parties?

    The issue leading to the present Partial Award stems from Claimant Amkor’s motion made on 14 May 2010 to bar Tessera's counterclaims insofar as they are based on the alleged use by Amkor prior to 1 December 2008 of Tessera patents covered by the License Agreement. (This motion, called by the parties and hereinafter as one for "summary judgment", seeks a decision that is final as to the issues addressed.) On 11 June 2010, Respondent Tessera filed its Opposition to Amkor’s motion. On 18 June 2010, Claimant Amkor filed a Reply to Tessera’s Opposition. On 25 June 2010, Tessera moved for leave from the Tribunal to file a Surreply to Amkor’s Reply. Amkor opposed this motion in an email on 28 June 2010, on the ground that it failed to present new material sufficient to justify an additional filing. The Tribunal denied Tessera's motion to file a Surreply, as its filing was not provided for by the Tribunal’s briefing schedule of the motion and the proposed Surreply did not add any significant, new material that required the Tribunal’s consideration. On 25 August 2010, the Arbitral Tribunal heard oral argument on this Amkor Motion to bar certain Tessera counterclaims. A transcript has been prepared of that oral hearing. The issue to be decided herein is whether any of Tessera’s counter-claims are barred, under California law, by the doctrine of res judicata.

    6.
    Amkor argues that Tessera’s claims for additional royalty damages for the period through 1 December 2008, based on some 19 new patents, are all barred by the claim-preclusion element of the doctrine of res judicata, in that, under California law, they could have been advanced by Tessera in the prior arbitration and were based on the same "breach" that Tessera pursued in that proceeding, namely (according to Amkor) the alleged breach by Amkor of the License Agreement's requirement that it pay Tessera for the use in any of Amkor's product designs of any of Tessera's hundreds of patents in accordance with an agreed formula. Amkor contends that Tessera was able in the prior arbitration to raise all the ways in which it claimed that Amkor was violating the License Agreement by using Tessera patents in any of its thousands of products, and that because all such violations of the License Agreement are part of the same "cause of action" - i.e., breach of contract - under California law Tessera was required to pursue them all at that time. Amkor argues that Tessera has already been paid its claimed royalty damages based on its "cause of action" of breach of contract for the period ending 1 December 2008, and that it should not be permitted to engage in piecemeal litigation by seeking further damages for that period based on different patents. It notes that, according to California’s "primary right" doctrine, the right at stake in the first arbitration was the same right sought to be enforced in the present arbitration, i.e., to collect royalty damages for breach of the License Agreement.
    7.
    Tessera, on the other hand, contends that its counterclaims based on new patents deal with products that differ from those challenged in the first arbitration. It argues that California law requires that the scope of a cause of action for res judicata purposes must be determined on the basis of the wording and meaning of the agreement involved. In this matter, it claims that the parties did not intend to create a regime in which Tessera would be required to sue for every possible violation of the License Agreement every time it discovered a single violation. It notes that such a result would be highly impractical, given that the License Agreement now covers some 500 different patents, and potentially applies to hundreds of thousands of different Amkor products. It contends that, in allowing Tessera to add claims during the original arbitration, the Tribunal in its order of January 2007 precluded any further claims based on additional patents. It also notes that Amkor has control over the information required to determine whether it is violating the License Agreement, and that it has demonstrated repeatedly that it is unprepared to provide such information, and indeed claims that it is not required to supply such information. It cites, in this regard, Section XVI.B. of the License Agreement that states that no "single or partial exercise" of any "right or privilege" will "preclude other or further exercise thereof or any other right or privilege." (Sec. XVI.B.) Requiring such comprehensive suits would, moreover, in Tessera’s view, increase rather than relieve the burdens of litigation that the res judicata doctrine is intended to control. Tessera claims that all its new claims are based on patents not previously asserted, with respect to products not previously claimed to incorporate Tessera patents; the only exception to this is six foreign patents which are counterparts of the patents asserted in the original arbitration, and which Tessera claims it did not advance in that arbitration, because Amkor failed in a timely manner to indicate that it intended to rely upon a U.S. nexus defense. Alternatively, Tessera contends that the Tribunal should apply federal patent law in determining the scope of the cause of action at issue in this arbitration. On that basis, it contends, under federal patent law, every failure by Amkor to pay for the use of each of Tessera's patents in any offending product is a separate cause of action, and therefore its current claims are not barred by California law because they all relate to patents other than the 6 patents on which the award in the first arbitration was based.
    8.
    Amkor responded to these arguments with several contentions. First, it notes that, while the Tribunal discouraged any claims based on additional patents in the first arbitration it did not preclude such an application; in any event, Amkor argues, it was Tessera’s responsibility to add all of its patent claims when it filed its original request for arbitration. It contends that, under California law, a generic waiver clause of the type contained in the License Agreement cannot be relied upon to waive the application of so fundamental doctrine as res judicata, and that an explicit waiver would be necessary to warrant such a holding. As for the foreign counterpart patents, Amkor states that it was within its rights to raise its U.S. nexus defense, and that it was up to Tessera at that point to assert its foreign patents. The record in fact indicates according to Amkor that Tessera considered the issue but decided not to add the foreign patents in order to avoid further complicating the proceeding. That the counterclaims made by Tessera otherwise rely on different patents, involving fundamentally different technologies, and very different products than those in the original arbitration is irrelevant in Amkor’s view. The issue is the scope of the "primary right" doctrine in California, which Amkor contends includes all the possible violations of the License Agreement as of the date to which the adjudication applied. Federal law does not require application of a different rule, in Amkor’s view, because the California res judicata policy is consistent with federal patent policy, and because this action is not a claim for the breach of a patent as such, but rather for the breach of a License Agreement.
    9.
    The Tribunal has considered the parties’ contentions and the materials they have submitted, as well as their oral arguments. The record on the motion was complete as of the date of the hearing, except for the filing by the parties of slides used in their presentations. The record was therefore effectively closed with regard to any new evidence or argument as of 25 August 2010. In the following ruling the Tribunal grants in part and denies in part Amkor’s motion for summary judgment.
    10.
    The Tribunal agrees with the parties that the doctrine of res judicata promotes judicial economy. It is fully applicable under California law to arbitration decisions. A valid award "is conclusive on matters of fact and law and all matters are thereafter res judicata."Lehto v Underground Construction Co., 69 Cal. App. 3d 933, 939 (1977). The parties here agreed in the License Agreement that "Judgment on the award rendered by the arbitrators [under the Agreement] shall be final." Art. XVI.A, at 12. The finality they sought for such awards means they are conclusive in future arbitration on all matters of fact and law to the same extent that a judicial judgment would be in the California courts.
    11.
    It is common ground between the parties that res judicata in California applies if three elements are present: "(1) the decision in the prior proceeding is final and on the merits; (2) the present proceeding is on the same cause of action as the prior proceeding; and (3) the parties in the present proceeding... were parties in the prior proceeding."Federation of Hillside & Canyon Ass'ns v. City of Los Angeles, 126 Cal. App. 4th 1180, 1202 (2d Dist. 2005) (hereinafter "Federation"). It is also agreed by both parties that the only element in dispute on this motion is whether the present proceeding is on the "same cause of action" as the prior proceeding. In Federation, the California Court of Appeal, Second District, accurately described California law in this regard, stating: "Two proceedings are on the same cause of action if they are based on the same 'primary right' [which is] the right to be free from a particular injury, regardless of the legal theory on which liability for that injury is based."Federation, 126 Cal. App. at 1202. The California Supreme Court in Mycogen Corp. v. Monsanto Co., 28 Cal. 4th 888, 904 (2002) ("Mycogen"), confirmed that the "primary right" doctrine is the basis for determining whether a claim is barred by res judicata in California, and declined to adopt the "transaction approach" of the Restatement of Judgments. We are therefore bound to apply the doctrine to the best extent of our ability to the current situation, rather than the "transaction" approach, though it seems unlikely under the current facts that the result would be different under either test.
    12.
    The "primary right" doctrine is derived from early California law related to the claims a plaintiff was permitted to bring in the same action. Nineteenth century California pleading requirements limited parties to bringing actions based on the same "primary right," which was construed due to the pleading requirements then in force to require for example a person to sue separately for personal injury due to a fire and for damage to property by the same fire. This background is discussed by Professor Heiser, in his enlightening article, "California's Unpredictable Res Judicata (Claim Preclusion) Doctrine," 35 San Diego L. Rev. 559 (1998). He concludes that the Restatement’s "same transaction" approach was intended to reflect modem, permissive pleading rules, which are very liberal in allowing even different "primary rights" or "transactions" to be tried in the same proceeding. It earlier made sense to apply res judicata in as limited a manner as permissive joinder, since it would have been unreasonable to ban a second suit on a claim that could not have been brought in the first. But once related, and even unrelated, claims were allowed to be joined in the first action, a broader application of res judicata in subsequent actions became appropriate.
    13.
    The Restatement proposes that all claims that were part of the transaction (or set of related transactions) out of which the first claim arose, must be brought together with the first claim in the original action. California, too, broadened the scope of res judicata, but not as broadly as the Restatement proposed. Its "primary right" approach is intended to encompass all claims related to the same conduct that led to the first suit. Thus, California would certainly agree with the Restatement that an action that is not part of the "transaction" underlying the first action could not be barred on res judicata grounds in a subsequent action. But California has not barred all claims in subsequent suits even where they stem from the same "transaction" as the claim in the initial litigation. The claims in the subsequent suits must relate in addition to the same "primary right" to be barred.
    14.
    In applying the "primary right" standard to the facts of the present case it is appropriate to begin with the observation that a party is not precluded from bringing a claim in a second suit merely because the party could have brought it with the claim in the first suit. Many decisions that apply res judicata use language to the effect that "Res judicata bars the litigation not only of issues that were actually litigated but also issues that could have been litigated."Federation, 126 Cal. App. 4th at 1202. That language should not be read, however, to mean that the "same cause of action" includes any claim that "could have been" litigated at the same time as the original claim. That language made sense when only causes of action that were part of the same "primary right" could be joined in a single action. Today, however, a party is free to join in a single complaint many indisputably dissimilar causes of action, subject only to the rules that prohibit joinder of such claims when their simultaneous processing and/or trial would be excessively burdensome. A claim may be barred on the basis of res judicata only if its simultaneous assertion in the first action was mandatory, because it was part of the "same cause of action" based on the same "primary right."
    15.
    It follows from the above that raising a claim in California cannot be said to have been mandatory if it could not have been pursued in the original litigation, either because the court or arbitration panel refused to allow it to be pursued, or because the claimant was actually unaware of the claim and could not reasonably have been expected to have learned of the claim at that time. This point reflects the fact that the obligation to join claims in a single action has a practical dimension. It should not be expended to obligate a plaintiff to conduct an investigation into possible, additional but separate claims that is disproportionate to the claims being pursued. Not only would such a rule be unfair, it would be inconsistent with the efficiency-related purpose of the res judicata doctrine by imposing upon courts and tribunals an obligation to permit thorough investigations into possible but separate claims, and to try all the claims a plaintiff may possibly have against a particular defendant that arguably are part of the same cause of action, including for example all the claims that are based on a particular transaction such as a license agreement, regardless of differences among the patents and products involved.
    16.
    The Tribunal does not agree with Tessera that Tessera was precluded from pursuing all the potential claims it had under the License Agreement. The Tribunal does agree, however, that Amkor has failed to demonstrate that no genuine issue of material fact exists as to whether Tessera knew of the claims it is currently advancing (except for those based on the foreign counterpart patents), and therefore could have brought those claims along with those in the first arbitration. The only evidence submitted on this issue, other than with respect to the foreign counterpart patents, consists of statements of Tessera affiants to the effect that Tessera was not aware of the current claims at the time of the original arbitration. The remaining questions, therefore, are whether claims based on the foreign counterpart patents can be asserted even though they could have been brought, and whether, even if Tessera may have been unaware of its other, current claims at that time, it should be precluded by California law from pursuing them because they were based on the same "primary right" as the claims in the first arbitration.
    17.
    California's "primary right" approach bars a claim on the basis of res judicata where it is based on the same conduct as a claim brought in an earlier action, and merely advances a different theory or seeks an additional remedy beyond the theory or remedy sought in the original action. In such situations, the claim in the second action is deemed to be based on the "same cause of action" or "primary right" as the claim made in the first. The California Supreme Court in Mycogen ruled in this regard: "Even where there are multiple legal theories upon which recovery may be predicated, one injury gives rise to only one claim for relief." Thus, the mere fact that parties commonly refer to each claim in a complaint as a "Cause of Action" does not make each such claim a separate cause of action for purposes of res judicata. If the claims are based on the same "right" and result from the same "wrong," and if they are merely different theories of relief for that conduct, or if they merely seek different types of relief for the same wrong, any such claim not brought in the first proceeding is barred.
    18.
    In Mycogen, for example, the plaintiff Mycogen initially sought a declaration that it was entitled to the benefits of a license agreement between Monsanto and a Mycogen predecessor (a proceeding to which res judicata is inapplicable), but also demanded specific performance of the agreement. While that case was pending, Mycogen sought damages for the same refusal to honor the license agreement at issue caused by Monsanto's delay in implementing its obligation to perform. The Supreme Court held that the second action was precluded by the first, because Mycogen -- though not able at the time of the first action to know and specify the precise damages caused by Monsanto's failure to comply — was nonetheless required to seek damages at the same time that it sought specific performance by estimating its lost profits. "Delay damages must be requested at the time of the initial action for breach of contract, even if they are still speculative at the time of the suit." While Mycogen involved an effort to secure an additional remedy for the same conduct, other cases establish that this principle applies as well to efforts to seek the same relief on the basis of a different theory. E.g., Lincoln Property Co. N.C., Inc. v. The Travelers Indemnity Co., 137 Cal. App. 4th 905 (2006) (insured may not bring separate actions against insurer based on the same conduct and involving the same incident for breaching its obligation to defend and its implied covenant of good faith and fair dealing). Similarly, an insurer's failure to settle within policy limits may well enable an insured to sue for either or both breach of contract and tort, but res judicata requires both types of claims to be advanced at one time, as they merely represent different theories for the same "primary right" or "cause of action."Purcell v. Colonial Ins. Co., 20 Cal. App. 3d 807 (1971).
    19.
    The "primary right" doctrine extends beyond precluding efforts to pursue the "same injury" on the basis of a new legal theory or different remedy. In Federation, the plaintiff claimed that a City of Los Angeles General Plan violated the California Environmental Quality Act (CEQA) on certain grounds. The Court of Appeal held the same plaintiff was precluded in a second action from attacking the same plan on different grounds that it could have advanced in the original action. The court held "that the two proceedings involve the same primary right and the same cause of action. The primary right in both proceedings is the right to ensure the city's compliance with CEQA's substantive and procedural requirements in connection with the General Plan Framework and the certified EIR [Environmental Impact Report]." 126 Cal. App. 4th 1204.
    20.
    Amkor argues that, just as the primary right in Federation was the right to ensure that the L.A. Plan satisfied CEQA, the primary right in the original and present actions by Tessera is the right to ensure that Amkor complies with the License Agreement. The wrongful conduct involved, according to Amkor, is the use of Tessera patents in Amkor products without making the agreed payment, and the damage suffered is the loss of payments due.
    21.
    This general argument is inconsistent, however, with Mycogen 's treatment of contract claims. Not every breach of every contract gives rise to a primary right that encompasses every other possible breach of the contract at issue. The Court of Appeal in Federation read Mycogen to limit the doctrine's application to "particular" breaches of contract as defined by the facts, transaction, and injury at issue:

    "An injury is defined in part by reference to the set of facts, or transaction, from which the injury arose. [Monsanto] held that a breach of contract gives rise to a single cause of action, all of the remedies for which must be sought in a single action, even if a particular item of damage has not yet been sustained. The court held that the plaintiffs primary right was the right to be free from all of the injuries arising from a particular breach of contract, and distinguished cases where separate and distinct contract covenants were breached at different times."

    126 Cal. App. 4th at 1203 (emphasis added). Where the claim advanced is based on a distinct breach of the same contract alleged to have been breached in the prior action, and where it relates to different conduct and a distinct injury, the new claim is not part of the same primary right under this view of the Monsanto decision. Monsanto holds that "a judgment in an action for breach of contract bars subsequent action for additional relief based on the same breach," not any subsequent action based on other breaches of the same contract. 28 Cal. 4th at 905 (emphasis added).

    22.
    The contract at issue in this proceeding -- the License Agreement — creates an obligation to pay a fee based on the use of Tessera patents in particular products. The contract requires [REDACTED] [REDACTED] This language makes clear that the contract is breached when a particular product uses any covered patent, and the extent of damages for each breach is measured by [REDACTED]. The wrongful conduct is the failure to pay the fee due on each of the products made by or for Amkor. The injury caused is the loss of the amounts not paid by Amkor on each of the products made by or for Amkor that use Tessera patents. Each instance of wrongful conduct and each injury under this contract is distinctly related to each offending product, in that the amount due is measured by [REDACTED]
    23.
    Applying the "primary right" standard as we have construed it to the allegations to which the current motion is addressed requires the Tribunal to examine the counterclaims separately in accordance with the products and patents at issue. The parties appear to agree that Tessera has advanced four types of claims, when viewed in terms of the products alleged to have breached the License prior to December 1, 2008. First, Tessera advances claims based on non-payment of the license fee for the same products as were at issue in the first arbitration, but on the ground that they use six foreign patents which are foreign versions of the six originally relied upon by Tessera. Tessera was aware of these claims at the time of the original proceeding but decided against attempting to join them with its US-based claims in order to avoid complicating the hearing. Those claims were, however, based on the same cause of action (and primary right) as the claim based on US patents. The same wrongful conduct gave rise to the claims based on the use of foreign patents as the conduct that gave rise to the original claims, i.e., the use by Amkor of Tessera patents in certain, specific products without paying the agreed fee. The damages that resulted were part of the damages caused by the same wrongful conduct. Tessera sought its damages for products having no nexus to the US, but did not assert any of the foreign patents as the basis for its claim. By not adding damages caused by the same products for their use of the foreign patents, Tessera failed to recover that portion of the damages attributable to [REDACTED] the same foreign products for which it originally sought relief. This first category of claims is therefore barred by res judicata.
    24.
    The second category of claims being asserted by Tessera, at least according to Amkor, is based on the same packages previously arbitrated but for their having used patents different from those asserted in the first hearing. (Tessera claims not to have advanced such claims, but it argued at the oral argument that it should have the right to do so because the patents are different and because the amount of damages potentially due on such products may vary due to the impact, for example, of offsets.) Such claims, to the extent they have been brought, would also be precluded by the "primary right" doctrine. As to those products for which Tessera has recovered damages, the damages on each of the products relied upon in the original arbitration are the same regardless of which patents Amkor may have used. Had Amkor, for example, used [REDACTED]. While the ultimate damages that Tessera may have been entitled to receive varies based on such factors as offsets, it would be up to Tessera to determine whether such differences warranted joining all the patents used in order to capture such differences in the offsets or based on other factors. Such differences do not alter the fact that the allegedly offending products are the same, the wrongful conduct as to each product is the same, and the injury is the same, literally in fact in that the number of patents used is irrelevant to the basic calculation. This same line of reasoning applies to those products for which relief was denied in the last arbitration. Here, too, the claim advanced was that the specific products cited violated the License, and therefore damages were due based on [REDACTED]. It was Tessera's decision to seek relief based on the six patents it invoked, rather than on the basis of the patents it now advances, and its current effort (if Amkor is correct that such an effort has been made) amounts to advancing the same primary right - to recover damages for specified products - based on a different rationale.
    25.
    The third category of claims being asserted by Tessera is based on the use by Amkor of Tessera patents that were not relied upon in the first arbitration in products (packages) that are different from those cited by Tessera in the first arbitration as having been made or shipped without payment of the amount due. The manufacture of these products entails wrongful conduct different from the conduct cited in the first arbitration in that the product (technology) made and the patents allegedly used differ from those advanced in the claims in the first arbitration. Amkor describes these allegations as "involving completely different products." The harm caused by the new products alleged as violating the License is also entirely different in that the fee allegedly due is separate from the fees alleged to be due in the first arbitration; the fees (or damages) due are calculated on [REDACTED].
    26.
    Even if Tessera had known of these claims based on separate products at the time of the original arbitration, it would not have been obligated to join them in the first arbitration. But it is appropriate to note that Amkor has not provided any evidence to support the proposition that Tessera was aware of the use in these different products of the patents it has alleged at this time. Tessera, on the other hand, has provided affidavits of officials who affirm that they were not aware of the facts necessary to assert these claims at the time of the first arbitration, and that Amkor follows policies designed to prevent, or that have the effect of preventing, Tessera from discovering the facts necessary to reach such conclusions. The claims in this category are different causes of action from those in the first arbitration and therefore not subject to dismissal on res judicata grounds.
    27.
    The fourth category of new Tessera claims involves a single patent (the '850). This patent was issued during the prior arbitration, after the claim had been filed. Tessera alleges this patent was used in products other than those that were asserted in the prior arbitration. To that extent, the claims based on such products are not barred by res judicata. To the extent Tessera may plan to assert claims based on use of the '850 Patent in the same products as those involved in the prior arbitration, the claims are part of the same "primary right" or cause of action presented in the original arbitration, because the products, the wrongful conduct, and the damages suffered are the same, even though the patent is different and may relate to different aspect of those products.
    28.
    Tessera has argued that no aspect of its counterclaims should be barred, because federal patent law rather than state claim preclusion doctrine should apply to the claims it has advanced, and that federal patent law treats each violation of any patent as a separate cause of action. We do not accept this argument. The federal patent law Tessera refers to is based on rulings in actions for infringement of a patent under 35 U.S.C. 271. This proceeding is not an infringement action. This is a counterclaim for breach of a license agreement. The License Agreement here authorizes Amkor to use the Tessera patents subject to payment of royalties. Amkor’s failure to pay the royalties raises a claim for breach of the License Agreement, which substitutes a cause of action for breach of contract for what would otherwise be a cause of action for patent infringement. The obligation to pay royalties is measured by whether Tessera Patents were used in manufacturing the accused products; and "use" of the patents is determined by the same standards as would be applied if this were a claim for infringement of patents. But that does not turn a cause of action for breach of contract into a cause of action for patent infringement. By entering the License Agreement, the parties agreed to package hundreds of Tessera Patents and to require a single royalty for Amkor’s use in each of its products of any or all of those patents. By so packaging the patents the parties created a single cause of action for each use of any of the package of patents in any product no matter how many of the Licensed Patents were used in that product. Nor do we agree that any form of preemption should be applied to override the limited degree of claim preclusion required by California law. Requiring parties to advance all the bases they wish to advance as to why a product should be fee bearing under a license agreement such as the one in the present arbitration is a limited and reasonable curb on the assertion of patent violations. Given the presence of the License Agreement, requiring that all the patents that might be asserted against a given product should be determined in a single litigation is consistent with federal patent policy.
    29.
    Based on the Tribunal’s conclusions as to each category of claims made by Tessera, to which Amkor’s motion is addressed, and after considering all the submissions from each side on Amkor’s motion for summary judgment based on res judicata, and after hearing argument on the issues, the Tribunal for the reasons provided above issues the following Partial Award:

    (1) Tessera’s counterclaims seeking damages for the use in Amkor products advanced in the prior arbitration of foreign counterpart patents to those advanced in the original arbitration are dismissed;

    (2) any Tessera counterclaims seeking damages for the use in Amkor products advanced in the prior arbitration of different patents from those advanced in the original arbitration are dismissed;

    (3) Amkor’s motion for summary judgment is denied to the extent it is addressed to Tessera counterclaims seeking damages for the use in Amkor products different from those advanced in the prior arbitration, whether or not based on patents known or unknown to Tessera at the time the first arbitration was commenced or concluded; and

    (4) the Tribunal hereby reserves decision on all remaining issues in the arbitration, including that of costs and/or fees, to a future Award or Awards.

    Whole document
    para.
    Click on the text to select an element Click elsewhere to unselect an element
    Select a key word :
    1 /