Summary Judgment of Non-Infringement Granted Where No Infringement Occurred “Within the United States”

Judge Armstrong granted Defendants’ Motion for Summary Judgment of Non-Infringement with regard to certain extraterritorial acts in Ziptronix, Inc. v. Omnivision Techs., Inc., No. 10-5525 (N.D. Cal. October 21, 2014). There is a presumption that US patent law does not operate outside the United States to prohibit infringement abroad. Accordingly, the defendants argued that they had not committed or induced any infringing acts “within the United States.”  Judge Armstrong granted summary judgment of non-infringement without oral argument.

Plaintiff Ziptronix accused defendants OmniVision Technologies, Inc. (“OmniVision”), Taiwan Semiconductor Manufacturing Company, Ltd. (“TSMC Ltd.”), and TSMC North America Corp. (“TSMC NA”), of infringing nine patents involving image sensors found in devices such as tablets and smartphones.

OmniVision is a Delaware corporation with headquarters in Santa Clara, California, that designs image sensor chips. OmniVision produces the image sensors using several manufacturing partners in Asia, including TSMC Ltd., a Taiwanese corporation. Defendant TSMC NA is a subsidiary of TSMC Ltd. based in San Jose. TSMC NA performs marketing, customer service, and administrative functions in the United States for TSMC Ltd.

TSMC Ltd. manufactures wafers on behalf of OmniVision in Taiwan. After the wafers are made, OmniVision arranges for additional components to be added to the wafers in Asia. After manufacturing is complete, the finished products—the accused image sensors—are delivered to third-party fabricators in Asia for inclusion into end-user products such as tablets and smartphones. According to Ziptronix, the end-user products are then imported into the United States by OmniVision’s customers. Ziptronix accuses TSMC Ltd. and TSMC NA of  direct infringement by TSMC Ltd.’s and/or TSMC NA’s sale of the image sensors and/or the wafers used in the image sensors within the United States. Ziptronix alleged indirect infringement in the form of TSMC Ltd.’s and/or TSMC NA’s inducement of OmniVision’s direct infringement, and by TSMC Ltd.’s inducement of TSMC NA’s direct infringement.

Direct Infringement. First, the court found that it was undisputed that neither TSMC Ltd. nor TSMC NA imports the accused image sensors and/or the wafers used in the image sensors into the United States, and there was no evidence that TSMC Ltd. or TSMC NA directs any entity to import the accused products. Second, the court held that, as it was undisputed that TSMC Ltd. manufactures and distributes the accused wafers in Taiwan, the TMSC entities “engaged in conduct amounting to domestic contracts for foreign sales–that is, contracts executed in the United States but contemplating strictly foreign manufacture and delivery.” The court held that such conduct “does not constitute direct infringement because the accused wafers are manufactured and sold outside the United States.”

Indirect Infringement. Because Ziptronix had failed to identify any infringing acts occurring in the United States, the court granted summary judgment of no indirect infringement. Although  Ziptronix alleged that OmniVision engaged in “infringing activity related to actively marketing and selling the accused image sensors to third-party customers within the United States,” Ziptronix failed to cite any evidence in the record demonstrating that OmniVision uses, offers to sell, or sells the accused image sensors within the United States, or evidence demonstrating that OmniVision imports the accused image sensors into the United States. To the extent the plaintiff was attempting to argue that TSMC Ltd. and/or TSMC NA could be liable for indirect infringement for inducing infringement by OmniVision’s customers, the court rejected this argument because the operative complaint failed to allege that theory of liability.