IP Law Daily, PATENT—D. Del.: Linkplay fails in bid to dismiss Sonos patent case, (Oct 30, 2024)

By George Basharis, J.D.

Court rejected Chinese tech company’s jurisdictional challenge and request to transfer wireless audio patent dispute to California.

The U.S. District Court for the District of Delaware has denied Linkplay Technology’s attempts to dismiss or transfer a patent infringement lawsuit filed by wireless speaker maker Sonos, ruling that the Chinese company can be sued in Delaware despite having no physical presence in the state. The court also denied a joint request from Linkplay Technology Inc., Nanjing (Linkplay CN) and its Delaware-incorporated subsidiary to transfer the case to the Northern District of California. The ruling allows Sonos to proceed with its lawsuit alleging that Linkplay’s WiiM multi-room audio system infringes Sonos patents related to wireless audio technology (Sonos, Inc. v. Linkplay Technology Inc., No. 1:24-cv-00131-JNR (D. Del. Oct. 29, 2024)).

The lawsuit centers on five Sonos patents related to multi-room audio systems: U.S. Patent Nos. 7,571,014; 9,164,532; 9,213,357; 10,541,883; and 10,853,023. Sonos alleges that Linkplay’s WiiM system, which competes directly with Sonos products in the multi-room audio market, infringes these patents. According to Sonos, Linkplay CN sells WiiM products to its U.S. subsidiary, which then distributes them throughout the United States through Amazon. The company also sells accused products to other third parties in the U.S., or to parties who take delivery outside the U.S. and then sell products incorporating the accused technology in the American market. Linkplay filed a motion to dismiss the case for lack of personal jurisdiction or in the alternative to transfer the action from Delaware to the Northern District of California.

Stream of commerce. The court rejected arguments from Linkplay CN that Delaware courts lack jurisdiction over the Chinese corporation. The court found that Delaware courts can exercise jurisdiction over Linkplay CN under the state’s dual jurisdiction theory, which applies when companies place products into the stream of commerce intended for Delaware consumers. The court noted that Linkplay CN admitted having “an intent to serve the U.S. market” and sold accused products through its Delaware subsidiary, with some products ultimately reaching Delaware end users. “Linkplay CN has also failed to introduce evidence that it intended to exclude Delaware from its United States marketing and distribution efforts,” the court explained, adding that certain accused products had been sold by a Delaware-based reseller.

Due process requirements satisfied. The court also rejected Linkplay CN’s argument that exercising jurisdiction would violate constitutional due process requirements. While acknowledging that Linkplay CN would face some difficulties litigating in Delaware, the court found these challenges were mitigated by “progress in communications and transportation” and the fact that Linkplay CN shares counsel with its Delaware subsidiary. “Delaware has an interest in discouraging injuries that occur within the state, which extends to patent infringement actions such as the one here,” the court noted, citing previous cases.

Transfer to California deemed unnecessary. Analyzing Linkplay’s request to transfer the case to California, the court conducted a detailed review of private and public interest factors established by the Third Circuit Court of Appeals. Most factors were found to be neutral, with only a few tilting either way. The private factors included the plaintiff’s and defendant’s forum preferences, where the claim arose, convenience to parties and witnesses, and location of evidence, while public factors covered issues like court congestion, local interests, and enforceability of judgments.

The court gave weight to Sonos’s choice of Delaware as the forum, particularly because both Sonos and Linkplay’s U.S. subsidiary are incorporated there. While acknowledging that neither company has significant operations in Delaware beyond incorporation, the court noted that companies accepting the benefits of Delaware incorporation should not easily escape its courts absent unique or unexpected burdens.

Court congestion favors Delaware. One significant factor weighing against transfer was the relative congestion of the two courts. Recent statistics showed the Northern District of California has more pending cases per judge and longer median times to trial compared to Delaware. The court also noted its own designation to hear the case was specifically intended to help address Delaware court congestion.

The court was unconvinced by Linkplay’s arguments about witness convenience and location of evidence. It found the companies failed to show that any witnesses would refuse to testify in Delaware and noted that modern technology makes document production and virtual appearances routine in either venue.

The Case is No. 1:24-cv-00131-JNR.

Judge: Ranjan, J.

Attorneys: Philip A. Rovner (Potter Anderson & Corroon, LLP) for Sonos, Inc. Andrew Russell (Shaw Keller LLP) for Linkplay Technology Inc.

Companies: Sonos, Inc.; Linkplay Technology Inc.

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