Energetiq Technology, Inc. v. ASML Netherlands B.V.

Citations: 113 F. Supp. 3d 461; 2015 U.S. Dist. LEXIS 89838; 2015 WL 4175078Docket: Civil Action No. 15-10240-LTS

Court: District Court, D. Massachusetts; July 10, 2015; Federal District Court

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Energetiq, a Massachusetts-based company, holds patents for laser pumped light sources and has supplied products to ASML BV, a Dutch company, for several years. In 2012, ASML BV considered using Energetiq's lights for its YieldStar-250 product but ultimately chose Qioptiq after Energetiq declined. Following this, Excelitas acquired Qioptiq in 2013. In January 2014, ASML BV began importing the YieldStar 250 and engaged Energetiq, Qioptiq, and ASML BV in a non-disclosure agreement (NDA) regarding a potential light source for the YieldStar 350. The NDA allowed independent competition but, according to Energetiq, was understood to prevent Qioptiq from competing directly for the development of the light source. Energetiq alleges ASML BV assured it that Qioptiq would not be a competitor and misled it about the nature of their collaboration. During this period, Qioptiq secretly developed its own light source, the LS2, and provided Energetiq with false technical requirements. In September 2014, Energetiq was informed that the LS2 would be used instead of its product. Energetiq believes the LS2 is similar to its own technology. After declining requests from ASML BV and Qioptiq to license its patents, Energetiq initiated this lawsuit, claiming patent infringement and violations of state common law, and filed a motion for a preliminary injunction. The defendants responded with a motion to dismiss, which was denied without prejudice following the filing of an amended complaint.

The Court is considering a motion for a preliminary injunction, acknowledging Energetiq's concession that additional discovery is necessary before proceeding. Concurrently, a renewed motion to dismiss from the Defendants, along with competing scheduling submissions and a motion to stay, are pending. In reviewing the dismissal motion, the Court accepts all allegations in Energetiq's amended complaint as true and draws reasonable inferences in Energetiq's favor, not considering facts beyond the complaint except for personal jurisdiction analysis.

The Defendants argue multiple grounds for dismissal. Firstly, they claim Energetiq violated Federal Rule of Civil Procedure 15 by amending the complaint without court permission or their consent. The Court denies this claim, emphasizing that Rule 15 encourages granting leave to amend, and there is no valid basis for denial. The Court allows Energetiq to amend its complaint retroactively.

Regarding jurisdiction, all parties agree that the Court has subject matter jurisdiction over the patent claims. Excelitas does not contest personal jurisdiction, while ASML BV and Qioptiq challenge it. Personal jurisdiction for patent infringement is determined by Federal Circuit law, which requires resolving factual disputes in favor of the plaintiff when jurisdictional discovery hasn't occurred. Energetiq must make a prima facie showing of jurisdiction.

Energetiq alleges two theories of personal jurisdiction against ASML BV: (1) ASML BV induced Excelitas to infringe, and (2) ASML U.S. acted as ASML BV's agent, establishing jurisdiction in Massachusetts. The Court evaluates specific personal jurisdiction based on three due process factors: (1) whether ASML BV directed activities at forum residents, (2) whether the claims relate to those activities, and (3) whether exercising jurisdiction is reasonable and fair.

Energetiq has met the first requirement of the jurisdictional test by demonstrating that ASML BV has engaged in activities directed at Massachusetts, including an ongoing development relationship with Energetiq that resulted in significant activities within the state. ASML BV's employees visited Massachusetts, and the company communicated with parties in the state during this relationship. Energetiq has also shown that its claims are connected to ASML BV’s activities in Massachusetts by alleging that ASML BV induced Excelitas to infringe its patent through research and development efforts and by directing Excelitas and Qioptiq in the manufacturing of the Qioptiq LS2 product. The presence of Excelitas and its subsidiary Qioptiq in Massachusetts supports the inference that the inducing activities occurred there.

ASML BV argues that personal jurisdiction cannot be exercised without direct infringement in Massachusetts, a position that typically concludes the jurisdictional inquiry. However, Energetiq's claims involve induced, contributory, and foreign infringement, which are based on ASML BV's activities in Massachusetts. Under 35 U.S.C. § 271(b), a party can be held liable for actively inducing patent infringement, contingent upon showing that direct infringement occurred and that the alleged infringer had knowledge and intent to induce that infringement. Courts have recognized that both the location of inducing activities and the location of direct infringement can be considered as sites of injury, thereby establishing minimum contacts for personal jurisdiction.

Energetiq has sufficiently linked its patent claims to ASML BV’s conduct in Massachusetts, particularly through ASML BV's collaborative efforts with both Energetiq and Qioptiq to develop a laser-pumped light source. These collaborations provided ASML BV with essential knowledge about Energetiq's patented technology, reinforcing the grounds for personal jurisdiction based on the inducing conduct aimed at Massachusetts.

ASML BV's ability to infringe on patent claims may be facilitated by its contacts with Massachusetts-based companies, Energetiq and Excelitas. The Federal Circuit's interpretation of the language 'arise out of or related to' allows for a broader standard of establishing personal jurisdiction compared to strict 'proximate cause' or 'but for' standards. ASML BV must demonstrate that exercising personal jurisdiction is 'reasonable and fair,' but it has failed to provide sufficient arguments or evidence for this prong, as it attempted to incorporate arguments from a prior motion that was denied as moot. Consequently, those arguments are waived. 

Despite being based in the Netherlands, ASML BV has engaged in business relationships relevant to the litigation and has previously traveled to Massachusetts for these dealings, making jurisdiction reasonable given the interests of Massachusetts and the U.S. in resolving the dispute, as well as Energetiq's need for effective relief. Personal jurisdiction over ASML BV concerning patent claims related to LS2 is thus established. 

In contrast, Energetiq's claims regarding LSI lack independent jurisdictional bases since there are no allegations connecting ASML BV's actions regarding LSI, YieldStar 250, or YieldStar 200 to Massachusetts. Although Energetiq alleges that ASML BV imported LSI into the U.S., there are no claims of activities occurring within Massachusetts. However, the Court will allow jurisdictional discovery to investigate whether any infringing activities took place in Massachusetts, particularly regarding sales or imports of LSI. Additionally, Energetiq asserts both general and specific jurisdiction over Qioptiq.

General jurisdiction over Qioptiq is denied, as the court finds no basis for claiming that Massachusetts serves as Qioptiq’s U.S. base of operations. Energetiq's assertion relies on Mr. Nislick's role as CEO of his parent company, Excelitas, which is located in Massachusetts, but Qioptiq clarifies that Mr. Nislick is not an officer or director of Qioptiq and does not manage its daily operations. Additionally, Energetiq fails to demonstrate that Qioptiq is "essentially at home" in Massachusetts, which is necessary for general jurisdiction as established in Daimler AG v. Bauman.

For specific jurisdiction concerning the LS2 patent claims, the court finds sufficient links to Massachusetts through Qioptiq’s interactions with both Excelitas and Energetiq. Qioptiq's representatives frequently visit Massachusetts, and there were collaborations on technology development between Qioptiq's engineers in Germany and Energetiq in Massachusetts. Energetiq alleges that Qioptiq induced infringement by working with Excelitas to develop a laser light source for ASML BV’s YieldStar 350, which directly relates to Qioptiq’s contacts in Massachusetts. The court concludes that Energetiq has established personal jurisdiction over Qioptiq for the LS2 claims based on these connections and the fairness factors.

However, no personal jurisdiction is found over Qioptiq regarding the LSI claims, and the court allows jurisdictional discovery to explore this issue further, similar to ASML BV. Energetiq’s patent infringement claims address both LSI and LS2, and while there is a dispute over the adequacy of allegations regarding LS2, the court notes Energetiq has provided sufficient information to support a plausible claim based on Defendants' disclosures.

Energetiq has adequately pleaded its patent infringement claims, leading to the denial of Defendants' motion to dismiss these claims. The Court confirmed personal jurisdiction exists over all Defendants concerning federal claims, allowing for supplemental jurisdiction over state law claims under 28 U.S.C. § 1367. Defendants contested personal jurisdiction for the state law claims of unjust enrichment and breach of the covenant of good faith and fair dealing, arguing these claims, added in an amended complaint, were governed by Dutch law and negotiated in Europe. However, the Court clarified that personal jurisdiction analysis considers the nature of forum contacts rather than solely the negotiation location or governing law. Energetiq demonstrated a sufficient nexus between the Defendants' Massachusetts contacts and the additional claims, which are closely linked to previously acknowledged claims of fraud, intentional interference, and unfair trade practices.

Defendants' assertion of improper pleading under Fed. R. Civ. P. 12(b)(6) was also rejected, as the Court found Energetiq's allegations met the necessary standards. Consequently, the Court denied the motion to dismiss these claims as well. 

In conclusion, the Court ruled as follows: 1) The Motion to Dismiss is denied in all respects except regarding personal jurisdiction over ASML BV and Qioptiq related to LSI, where it is denied without prejudice, allowing for limited jurisdictional discovery; 2) The Motion to Stay is denied without prejudice, pending actions by the Patent Office; 3) The request for oral argument is denied, as it is deemed unnecessary at this time. The Court also reviewed and considered the parties' competing scheduling proposals.

Discovery will occur in Phases, with Phase I to be completed by September 9, 2015. This phase focuses on jurisdictional and specific discovery related to LS2 within the United States, allowing the plaintiff to pursue limited discovery on alleged infringing activities related to LS2, excluding any research, development, manufacturing, or sales outside the U.S. A joint report outlining proposals for the next phase is due seven days after Phase I, with a scheduling conference set for September 22, 2015.

Energetiq's Motion for a Preliminary Injunction is denied without prejudice. Energetiq asserts six patent claims against ASML BV. Count I alleges direct infringement of the '982 patent, claiming ASML BV used, sold, or imported YieldStar products with the Qioptiq LSI in the U.S., and induced infringement by its agent ASML U.S. and by Excelitas and Qioptiq regarding LS2. Count IX similarly claims induced infringement of the '455 patent. Counts III, IV, and V accuse ASML BV of direct infringement of the '138, '943, and '841 patents, respectively, and also claim induced infringement by Excelitas and Qioptiq. Count VI concerns an unissued patent based on an approved application. Energetiq does not assert general jurisdiction over ASML BV, and the defendants do not challenge the applicability of the Massachusetts long-arm statute, which conforms to due process limits as interpreted by federal and state precedents.