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LG Display Co. Ltd. v. Obayashi Seikou Co., Ltd.

United States District Court, District of Columbia

January 28, 2013

LG DISPLAY CO. LTD., Plaintiff,
OBAYASHI SEIKOU CO., LTD. et al., Defendants.

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Richard L. Stroup, Michael Vincent O'Shaughnessy, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., Washington, DC, for Plaintiff.

Jeremy I. Levin, Ryan E. Bull, Joshua R. Barron, Michael J. Barta, Rafik Paul Zeineddin, Baker Botts, LLP, Washington, DC, for Defendants.





The parties have been litigating this patent dispute for the better part of a decade. LG Display, Co., Inc. (" LG" ) alleges that Sakae Tanaka, one of its former employees, stole its proprietary information and passed it along to a third party, Naoto Hirota. LG alleges that Hirota then used the stolen technology to obtain several patents. The parties entered into a settlement agreement, but their discussions soon fell apart. LG brought suit in South Korea, eventually scoring a win in that country's highest court of appeal. LG then filed suit here, asking this court to recognize the Korean judgment. In addition, LG brings various common-law claims against the defendants for their alleged theft of LG's intellectual property.

Now before the court are several motions. LG moved for partial summary judgment, arguing that this court should recognize the Korean Supreme Court's judgment. In addition, one of the defendants— Sakae Tanaka— asked to be dismissed from this case for lack of personal jurisdiction. Finally, the defendants moved to dismiss several counts under the doctrine of forum non conveniens. For the reasons explained below, the court will grant in part and deny in part LG's motion, grant defendant Tanaka's motion to dismiss for lack of personal jurisdiction, and deny the defendants' contingent motion to dismiss.


A. The Parties and the Patents

Three U.S. patents lie at the heart of this suit.[1] The plaintiff, LG, is a South Korean company that researches, develops, manufactures, and sells LCD panels. Compl. ¶ 1. Defendant Sakae Tanaka is a former LG employee. Id. ¶ 7. He is a citizen of Japan who has lived, on occasion, in South Korea.[2] Id. Defendant Naoto

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Hirota is also a citizen of Japan. He is the president of a Japanese company, Obayashi Seikou Co., Ltd. (" Obayashi Co." ), which currently owns the patents at issue. Id. ¶¶ 5-7.

LG claims that Tanaka misappropriated its trade secrets during his employment with the company. Id. ¶¶ 8-9, 18. LG alleges that Tanaka then passed the stolen information along to Hirota, who used the material to apply for various patents in the U.S. and abroad. Id. ¶¶ 26-28. Hirota maintains that he invented the patented technology without Tanaka's assistance. Defs.' Opp'n, Ex. 8 (Hirota Decl.) ¶¶ 8, 16-17.

B. Threats, Negotiations, and the April 2004 Settlement Agreement

The dispute began in early 2003. Hirota sent a warning letter to LG, threatening to sue the company for patent infringement and offering to resolve the dispute with a licensing agreement. Hirota Decl. ¶ 18; id., Ex. D (" Please look at your liquid crystal display under a 100x magnifying lens. If the electrode is curved in a zigzag pattern, it is in conflict with the patent of our company.... If no response has been received by the end of this month, a claim for loss, or in the worst case, an injunction may be demanded and it could lead to a situation where your company may no longer be able to produce and sell LCDs in Japan, Taiwan, South Korea, and the United States." ). Hirota sent similar letters to other companies in the field, including Hitachi, Sony, Samsung and NEC. Hirota Decl. ¶ 18. Hitachi chose to enter into a licensing arrangement with Hirota, under which Hitachi agreed to pay approximately $5-6 million in exchange for the right to use the patented technology. See Hirota Decl. ¶ 18; id., Ex. E (Hitachi License Agreement). LG took a different tack. In a warning letter of its own, LG accused Tanaka of stealing LG's technology and demanded that Hirota transfer ownership of the patents to LG. See Hirota Decl. ¶ 20; id., Ex. H (" [A]ll of [these] patents your company holds are the inventions related to the work of Mr. [Sakae] Tanaka's who was an employee of our company, and should belong to our company." ).[3]

There is some disagreement as to what occurred next. In March 2004, LG sent Hirota a draft settlement agreement, under which the defendants would ostensibly transfer its LCD-related patent rights to LG. Hirota Decl., Ex. I. The agreement was signed by Tanaka and Obayashi Co.'s attorney on April 3, 2004. Hirota Decl. ¶ 25.[4] That same day, Hirota sent LG a fax indicating that he wanted to add one condition: namely, Hirota wished to leave the Hitachi licensing agreement undisturbed. See Hirota Decl., Ex. J (" I want to accept your all proposal [sic] except one item." ). LG appears to have interpreted this as a partial acceptance of its settlement offer. Hirota Decl., Ex. K (" [T]hank you for your acceptance and proposal." ). But the Hitachi agreement proved to be a bone of contention, and the parties never

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resolved the issue. See Hirota Decl., Exs. L-O (correspondence back and forth on the Hitachi issue).

C. The Korean Litigation

After negotiations broke down, LG filed suit in South Korea.[5] Defs.' Opp'n, Ex. 27 (Kim. Decl.) ¶¶ 4-5. The legal dispute was narrow: the court confined its analysis to the question of whether the April 2004 settlement agreement was valid. See generally Pl.'s Mot., Ex. 11. The court did not rule on any of the underlying issues— i.e., who actually invented the technology, whether Tanaka stole LG's trade secrets, or whether the underlying patents were valid. Id. at 3 (noting that " the main object of dispute and deliberation is merely the interpretation and determination of the validity of the present assignment agreement" ); Kim Decl. ¶ 4 (" At all levels of the Korean Litigation ... the only reason the Courts awarded LG Display ownership of the patents-in-suit was the alleged existence of a settlement contract between Obayashi, Mr. Tanaka and LG Display" ). LG argued that the defendants had contractually agreed to transfer their patent rights to LG. The defendants argued that the settlement agreement was the product of unlawful coercion and/or material mistake. Id. ¶ 5.

LG emphasizes that the Korean litigation was exhaustive: " [Obayashi Co.] submitted eleven (11), fifteen (15), and forty (40) items of documentary evidence to the Seoul Central District Court, Seoul High Court, and the Supreme Court of the Republic of Korea, respectively." Pl.'s Reply 8-9. The defendants won at the trial level, but lost in the court of intermediate appeals. Pl.'s Stmt. of Facts. ¶¶ 19, 29, 32. The defendants then appealed to the Supreme Court, which ruled in favor of LG. See generally Pl.'s Mot., Ex. 11 (Korean Supreme Court ruling). The court ruled that the April 2004 settlement agreement was valid, and that the defendants were required to transfer their patent rights to LG. See Defs.' Opp'n at 4. The defendants have not yet done so.

D. The Japanese Litigation

After the Korean judgment was issued, LG filed three separate lawsuits in Japan. Although details are lacking, it appears that LG sued to enforce the Korean judgment insofar as it pertains to patents registered in Japan. Pl.'s Reply at 5, n. 6.; id., Ex. 8 (Furuta Decl.) ¶ 9. It remains unclear when the Japanese courts will eventually issue their rulings. Furuta Decl. ¶ 12; Defs.' Opp'n, Ex. 37 (Kobayashi Decl.) ¶ 6 (" I expect that the Tokyo court will render final judgment in Defendant's case before the end of 2012." ).

E. The Current Lawsuit

LG's complaint lists seven counts: Count I (Correction of Inventorship under 35 U.S.C. § 256) asks the court for an order directing the U.S. Patent and Trademark Office to recognize that LG is the rightful inventor of the contested patents. Count II (Enforcement of Korean Judgment) asks the court to issue an order recognizing the Korean judgment, which would require the defendants to transfer their patent rights to LG. Count III (Declaratory Judgment) seeks a declaratory judgment stating that LG is the rightful owner of the patents. Count IV (Promissory Estoppel) claims that the defendants made a promise during the 2003 litigation: ...

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