Google Should Face Netlist Claims in Samsung Suit, Judge Says

Alphabet Inc.’s Google failed to convince a federal magistrate judge in Delaware that it shouldn’t be held liable for any alleged infringement by memory modules it bought from Samsung Electronics Co. of three patents owned by Netlist Inc.

Magistrate Judge Jennifer L. Hall said Alphabet’s and Google’s request to dismiss their portions of the case should be denied in all respects but one, according to her report and recommendation filed Aug. 18 in the US District Court for the District of Delaware. Hall said Netlist’s claims of both entities’ indirect infringement should be dismissed, though she said Netlist should be allowed to amend those claims.

Hall recommended denying Google’s bid in the alternative to sever and stay Netlist’s counterclaims until the Samsung clash is resolved. She also said Netlist’s allegations of Google’s willful infringement should survive.

Samsung sued Netlist in October 2021 seeking a noninfringement judgment for several of its memory modules.

Samsung and Netlist have been sparring over rights to a basket of patented memory module technologies since their 2015 joint development and licensing agreement ran into trouble about three years ago. In a separate case, a Texas federal jury on April 21 awarded Netlist $303.15 million after finding that Samsung’s continued supply of products based on the designs in five standard-essential patents after their licensing agreement soured in mid-2020 infringed the patents.

Hall held a hearing May 22 on Alphabet and Google’s motion.

Responding to Google’s request to sever and stay the claims against it, Hall said that “it promotes judicial economy to consider the infringement counterclaims against Samsung, and the infringement counterclaims against the Google Counterclaim Defendants, in the same suit.”

She also said she’s “skeptical that dismissal would ever be an appropriate exercise of discretion under these circumstances, i.e., where everyone agrees that Rule 20 and 35 U.S.C. § 299 are satisfied.” Both Rule 20 of the Federal Rules of Civil Procedure and Section 299 of the US Patent Act are related to the conditions under which parties can join or be joined to a pending lawsuit.

The judge recommended denying Alphabet’s request to dismiss the claims against it, finding Netlist alleges “that Alphabet is itself involved in the infringing acts,” and that those allegations, at this stage, must be taken as true.

Willful Infringement Claims

Hall also said the court should reject Google’s request for dismissal of the willful infringement allegations, but she recommended giving Google a chance to seek a judgment of no enhanced damages “should there be a lack of sufficient evidence that they acted in the face of a risk of infringement that was either known or so obvious that it should have been known.”

Netlist initially sued Samsung in May 2020 in a Los Angeles federal court for allegedly breaching their licensing agreement. The judge overseeing that case ruled in October 2021 that Samsung had materially breached that deal and Netlist had properly terminated the license. An appeal of that decision is pending before the US Court of Appeals for the Ninth Circuit in San Francisco.

The day after the California judge’s decision against Samsung, the Korean electronics giant filed the declaratory-judgment action against Netlist in Delaware, which Netlist characterized in court papers as an attempt to “subvert” the Los Angeles ruling. Netlist filed crossclaims against Google, bringing the search giant into the fray.

Samsung also sought to invalidate Netlist’s patents through inter partes reviews at the Patent Trial and Appeal Board, an arm of the US Patent and Trademark Office. In May, the PTAB canceled two of the three Netlist patents involved in the Delaware case—US Patent Nos. 10,474,595 and 9,858,218, both of which Bloomberg Law estimates would’ve expired in June 2030—while upholding US Patent No. 10,217,523, which has an estimated expiration in October 2029.

Google argued in a court filing that the PTAB’s voiding of the two patents on May 8 and 9 provides good reason to release it from the case.

“Even if this case were to proceed as to Samsung on the ‘523 Patent alone, Google should still be dismissed,” it said, “as the litigation between Netlist and Samsung will determine and narrow the issues as to whether that patent is invalid and whether Samsung infringes, does not infringe, or ultimately settles—which would necessarily resolve any liability by Samsung customers like Google for Samsung products.”

A five-day jury trial is set for February 2025 in Wilmington, Del.

Covington & Burling LLP and Morris, Nichols, Arsht & Tunnell LLP represent Samsung. Shaw Keller LLP and Irell & Manella LLP represent Netlist. Quinn Emanuel Urquhart & Sullivan LLP and Richards, Layton & Finger PA represent Google and Alphabet.

The case is Samsung Electronics Co. Ltd. v. Netlist Inc., D. Del., No. 21-cv-1453, report and recommendation filed 8/18/23.