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1 RON E. SHULMAN, State Bar No. 178263


rshulman@wsgr.com
2 JULIE M. HOLLOWAY, State Bar No. 196942
jholloway@wsgr.com
3 S. MICHAEL SONG State Bar No. 198656
msong@wsgr.com
4 TUNG-ON KONG, State Bar No. 205871
tkong@wsgr.com
5 WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
6 650 Page Mill Road
Palo Alto, CA 94304-1050
7 Telephone: (650) 493-9300
Facsimile: (650) 565-5100
8
M. CRAIG TYLER, Pro Hac Vice
9 ctyler@wsgr.com
WILSON SONSINI GOODRICH & ROSATI
10 Professional Corporation
900 South Capital of Texas Highway
11 Las Cimas IV, Fifth Floor
Austin, Texas 78746-5546
12 Telephone: (512) 338.5400
Facsimile: (512) 338.5499
13
Attorneys for Plaintiff
14 NUANCE COMMUNICATIONS, INC.
15 UNITED STATES DISTRICT COURT

16 NORTHERN DISTRICT OF CALIFORNIA

17 SAN FRANCISCO DIVISION


18 NUANCE COMMUNICATIONS, INC., ) Case No.: C 08-02912 JSW MEJ
)
19 Plaintiff, ) NUANCE COMMUNICATIONS INC.’S
) OPPOSITION TO ABBYY SOFTWARE
20 v. ) LTD.,’S AND ABBYY PRODUCTION
) LLC’S MOTION TO DISMISS
21 ABBYY SOFTWARE HOUSE, et al. )
) Date: August 21, 2009
22 Defendant. ) Time: 9:00 a.m.
) Court: Courtroom No. 11
23 ) Hon. Jeffrey S. White
)
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OPPOSITION TO MOTION TO DISMISS
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1 SUMMARY OF ARGUMENT
2 Defendants ABBYY Software and ABBYY Production are present in and maintain
3 significant contacts with California. According to their own public statements, ABBYY

4 Software and ABBYY Production comprise the leadership of a single “international company”

5 that has a “regional office” in Milpitas, California. ABBYY infringing products are found on the
6 shelf in retail outlets throughout the state and are sold by numerous California companies.

7 ABBYY Software and ABBYY Production’s activities in California result from their scheme to

8 “infiltrate” and “conquer” the United States market with infringing products. In fact, ABBYY
9 Software and ABBYY Production have stated their intent to seek revenge against plaintiff

10 Nuance for filing this litigation by increasing sales of infringing products in the United States.

11 Under these circumstances, the Court can properly exercise either general or specific
12 jurisdiction over ABBYY Software and ABBYY Production. See International Shoe Co. v.

13 Washington, 326 U.S. 310, 320 (1945). (“Presence in the state in this sense has never been

14 doubted when the activities of the corporation there have not only been continuous and
15 systematic, but also give rise to the liabilities sued on, even though no consent to be sued or

16 authorization to an agent to accept service of process has been given.”); Asahi Metal Industry

17 Co. v. Superior Court of California, 480 U.S. 102, 109 (1987) (“The forum state does not exceed
18 its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that

19 delivers its products into the stream of commerce with the expectation that they will be

20 purchased by customers in the forum State.”) (quoting World-Wide Volkswagon Corp. v.


21 Woodson, 444 U.S. 286, 297-98 (1980)).

22 In addition, Nuance properly served ABBYY Production in accordance with Rule

23 4(f)(2)(C)(i) of the Federal Rules of Civil Procedure. ABBYY Production’s argument that
24 Nuance did not properly effect service in accordance with the Hague Convention is inapposite

25 because there is no agreed-upon means of service between the Russian Federation and the United

26 States.
27

28

OPPOSITION TO MOTION TO DISMISS


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1 TABLE OF CONTENTS
2 Page
3 I. INTRODUCTION...............................................................................................................1

4 II. STATEMENT OF THE ISSUES TO BE DECIDED.........................................................2

5 III. STATEMENT OF FACTS..................................................................................................2


6 A. ABBYY Defendants and Their Business ................................................................2

7 B. ABBYY Defendants Comprise a Single “International Company”........................3

8 C. Defendants ABBYY Software Ltd. and ABBYY Production LLC Intend to


“Conquer” the United States with Infringing Products ...........................................3
9
D. ABBYY Software and ABBYY Production’s Scheme to “Infiltrate” and
10 “Conquer” the United States Has Resulted In Substantial Business Contacts
in California.............................................................................................................4
11
E. ABBYY Software and ABBYY Production Have a Regional Office In
12 Milpitas, California .................................................................................................5

13 F. Service of ABBYY Production LLC Was Proper...................................................6

14 G. The Russian Federation Unilaterally Suspended All Judicial Cooperation


With the United States in Civil and Commercial Matters.......................................6
15
IV. ARGUMENT REGARDING PERSONAL JURISDICTION ............................................6
16
A. Applicable Legal Standard ......................................................................................6
17
B. The Court Can Properly Exercise General Jurisdiction Over ABBYY
18 Software and ABBYY Production ..........................................................................7

19 C. The Court Can Properly Exercise Specific Jurisdiction Over ABBYY


Software and ABBYY Production ..........................................................................9
20
1) ABBYY Software and ABBYY Production have purposefully
21 directed their activities at California Residents.........................................10

22 2) This Action Arises from ABBYY Software and ABBYY Production


Activities Related to Infringing Products..................................................10
23
3) Jurisdiction Over ABBYY Software and ABBYY Production Is
24 Reasonable and Fair ..................................................................................11

25 D. ABBYY Software and ABBYY Production’s Arguments Against Personal


Jurisdiction Are Spurious ......................................................................................11
26
V. ARGUMENT REGARDING SERVICE OF SUMMONS...............................................13
27
A. Nuance Properly Served ABBYY Production LLC..............................................13
28
B. The Hague Convention Is Not an Agreed-Upon Method of Service in
Russia ....................................................................................................................13
OPPOSITION TO MOTION TO DISMISS i
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1 C. ABBYY Production’s Motion To Dismiss Is Coordinated With ABBYY


USA’s Soon-To-Be-Filed Request to Compel Supplemental Infringement
2 Contentions............................................................................................................14
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OPPOSITION TO MOTION TO DISMISS ii


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1 TABLE OF AUTHORITIES
2 Page(s)
3 CASES
4 Akro Corp. v. Luker, 45 F.3d 1541, 1544 (Fed. Cir. 1995) ................................................... 6, 7, 9,
11
5
Asahi Metal Indus. Co. v. Superior Court of California, 480 U.S. 102 (1987) .............................. 9
6
Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558 (Fed. Cir. 1994) .................. 10, 11
7
Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) .................................................................. 7
8
Deprenyl Animal Heath, Inc. v. Univ. of Toronto Innovations Found., 297 F.3d
9 1343 (Fed. Cir. 2002) .......................................................................................................... 7

10 Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-16 (1984) ...................... 7

11 Howard v. Everex Sys., Inc., 228 F. 3d 1057 (9th Cir. 2000) .......................................................... 9
12 Inamed Corp. v. Kuzmak, 249 F.3d 1356 (Fed. Cir. 2001) ............................................................. 6

13 International Shoe Co. v. Washington, 326 U.S. 310 (1945)...................................................... 7, 8

14 Kilpatrick v. Texas & P. Ry., 72 F. Supp. 635 (S.D.N.Y. 1947)................................................... 12


15 Patin v. Thoroughbred Power Boats, Inc., 294 F.3d 640 (5th Cir. 2002)....................................... 9

16 Systems Division, Inc. v. Teknek Electronics, Ltd, 2007 WL 3151697 (Fed. Cir.
2007).................................................................................................................................... 8
17
United Food & Commercial Workers Union v. Alpha Beta Co., 736 F.2d 1371 (9th
18 Cir. 1984) .......................................................................................................................... 14

19 United States v. Toyota Motor Corp., 561 F. Supp. 354, 359 (C.D. Cal. 1983) ............................ 9

20 Viam Corp. v. Iowa Export-Import Trading Co., 84 F.3d 424 (Fed. Cir. 1996)........................... 10
21 Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694 (1988).......................................... 14

22 Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406 (9th Cir. 1977) ........................... 12

23 World-Wide Volkswagon Corp. v. Woodson, 444 U.S. 286, (1980) ............................................... 9


24 STATUTES
25 35 U.S.C. § 271 ............................................................................................................................... 2

26 Cal. Code Civ. P. § 410.10 .............................................................................................................. 7


27 RULES
28 Federal Rule of Civil Procedure 4........................................................................................... 13, 14

OPPOSITION TO MOTION TO DISMISS iii


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1 Federal Rule of Civil Procedure 4(f)(2) .......................................................................................... 1

2 Federal Rule of Civil Procedure 4(f)(2)(C)................................................................................... 13


3 Federal Rule of Civil Procedure 4(f)(2)(C)(i) ............................................................................... 13

4 Federal Rule of Civil Procedure 4(f)(3) ........................................................................................ 14

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OPPOSITION TO MOTION TO DISMISS iv


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2 I. INTRODUCTION
3 Defendants ABBYY Software Ltd. (“ABBYY Software”) and ABBYY Production LLC

4 (“ABBYY Production”) seek dismissal of the claims against them on the basis of lack of

5 personal jurisdiction. ABBYY Production also seeks dismissal on the basis of improper service.
6 Their motion should be denied because it relies on the fiction that neither ABBYY Software nor

7 ABBYY Production have contacts in California. Public admissions by and published articles

8 quoting ABBYY Software Ltd. and ABBYY Production show that they have established and
9 currently maintain significant business contacts in California that warrant the exercise of either

10 general or specific jurisdiction:

11  “ABBYY is an international company with 9 offices in different countries


including . . . the United States [Milpitas, California].” Miller Decl., Ex. 7.
12
 The ABBYY “Global Management Team” includes a high-ranking member
13 based in Milpitas, California. Miller Decl., Ex. 12.

14  “In 1998 the company went out to conquer the West.” Miller Decl., Ex. 5.
15  “The founder of Abbyy David Yan[g] once failed at the American market,
but did not leave the ambition of conquering it. Now he is going to make his
16 return with new solutions.” Id.

17  “In the opinion of the company’s management, nothing is able to prevent the
company now from conquering the US market.” Id.
18

19 The presence of ABBYY Software and ABBYY Production in this forum is undeniable.

20 They have purposefully directed significant business activities at California and the United States
21 by, inter alia, selling, offering for sale and importing infringing products. Those same infringing

22 products are at issue in this action.

23 Regarding service, Nuance served ABBYY Production in accordance with the Federal
24 Rules. ABBYY Production’s only complaint is that Nuance did not effect service in accordance

25 with the Hague Convention. Its complaint is spurious because ABBYY Production’s home state,

26 Russia, refuses to serve Hague Convention requests from the United States. The Federal Rules
27 provide alternatives that account for such situations, including Rule 4(f)(2).

28 Accordingly, the motion to dismiss should be denied.

OPPOSITION TO MOTION TO DISMISS 1


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2 II. STATEMENT OF THE ISSUES TO BE DECIDED


3 1. Whether the Court can exercise general jurisdiction over ABBYY Software and

4 ABBYY Production.

5 2. Whether the Court can exercise specific jurisdiction over ABBYY Software and
6 ABBYY Production

7 3. Whether Nuance served process on ABBYY Production in accordance with the

8 Federal Rules of Civil Procedure.


9 III. STATEMENT OF FACTS
10 A. ABBYY Defendants and Their Business
11 Defendant ABBYY Software Ltd. (“ABBYY Software”) is a Cypriot entity. ABBYY
12 Software owns 100% of defendant ABBYY Production LLC (“ABBYY Production”), a Russian

13 entity, and defendant ABBYY USA Software House, Inc. (“ABBYY USA”), a California

14 corporation.1
15 The ABBYY defendants develop and sell products accused of infringement, including

16 FineReader, FlexiCapture, Recognition Server, PDF Transformer, Screenshot Reader, and

17 Mobile OCR Engine products.2 See Miller Decl., Ex. 2. FineReader is an optical character
18 recognition (“OCR”) and PDF conversion application that has captured ninety-five percent of the

19 Russian market, over fifty percent of the European market, and less than thirty percent of the

20 United States market. See Miller Decl., Exs. 3, 4-6.


21

22
1
23 ABBYY press releases identify ABBYY USA as a subsidiary of “Abbyy Software House, a
Russian company.” Miller Decl., Ex. 1. On the basis of those unambiguous statements, Nuance
24 named ABBYY Software House as a defendant in this action and effected service of process on
it. See Docket No. 99. Despite its press releases, ABBYY defendants now, for purposes of this
25 litigation, claim that “Abbyy Software House ... does not exist.” Docket No. 106 at 2.
2
26 ABBYY Software and ABBYY Production incorrectly state that “Nuance does not allege
that either [ABBYY Software or ABBYY Production] committed any allegedly infringing act.”
27 ABBYY Brief at 10. Nuance accused both ABBYY Software and ABBYY Production of
infringement under 35 U.S.C. § 271. See Amended Complaint at ¶¶ 50, 55, 60, 65, 70, 75, 80,
28 85.

OPPOSITION TO MOTION TO DISMISS 2


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1 B. ABBYY Defendants Comprise a Single “International Company”


2 ABBYY Software operates its subsidiaries, including ABBYY Production and ABBYY
3 USA, as regional offices of a single “international company.” In ABBYY Software’s own

4 words: “ABBYY is an international company with 9 offices in different countries including

5 Russia, Germany, the United States, Ukraine, the UK, Cyprus, Japan and Taiwan.” Miller
6 Decl., Ex. 73 (emphasis added); see also Miller Decl., Ex. 9 (“Abbyy is an international

7 company with over 880 employees worldwide.”). ABBYY Production, the Russian office, is

8 responsible for developing and maintaining source code for most ABBYY products. Miller
9 Decl., Ex. 10. ABBYY USA, the United States office, is responsible for sales and marketing of

10 ABBYY products in the United States. Miller Decl., Ex. 11.

11 All ABBYY offices are directed by the ABBYY “Global Management Team,” which is
12 led by David Yang, Founder and Chairman of the Board of ABBYY Software. Miller Decl., Ex.

13 12. Second in command of the Global Management Team is Sergey Andreev, CEO of ABBYY

14 Production. Miller Decl., Ex. 12. Thus, both ABBYY Software and ABBYY Production play
15 key roles in the development and implementation of the “international company’s” global plans,

16 including the United States.

17 C. Defendants ABBYY Software Ltd. and ABBYY Production LLC Intend to


“Conquer” the United States with Infringing Products
18

19 Specifically with regard to the United States, ABBYY Software and ABBYY Production

20 have made no secret regarding their “ambition of conquering” the market with infringing
21 products. Miller Decl., Ex. 5. A February 2008 article regarding Messrs. Yang and Andreev

22 states:

23  “The founder of Abbyy David Yan[g] once failed at the American market, but did
not leave the ambition of conquering it. Now he is going to make his return with new
24 solutions.” Miller Decl. Ex. 5 at 1 (emphasis added).
25
 “In the opinion of the company’s management, nothing is able to prevent the
26 company now from conquering the US market.” Id. at 3-4 (emphasis added).

27 3
The domain name www.abbyy.com is registered to ABBYY Software Ltd.. See Miller
28 Decl., Ex. 8.

OPPOSITION TO MOTION TO DISMISS 3


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1
 “The company intends not only to enter the US retail market, but also to infiltrate into two
2 new markets in the next two years. ... ‘By the way, when we started to study the market
of text recognition in these languages we learned that the US government agencies
3
were the key buyers of the Arabic version – which provided us with even a better
4 competitive advantage,’ Sergei Andreev believes.” Id. at 3-4 (emphasis added).

5
In the same article, ABBYY defendants characterize their ambition to “conquer” the
6
United States with infringing products as an act of revenge against Nuance for filing this
7
litigation:
8
Nowdays Abbyy is actively getting ready for the issue of FineReader software
9 program to the American retail market. The company was forced to do so by its
main American competitor – by the Nuance Communications Company,
10 which in the end of last year filed a lawsuit against Abbyy claiming the latter
used the company’s developments in its works. “They felt a threat on our
11 behalf – and struck first. Now Americans demand us to present our software
program code for examination by experts,” Sergei Andreev explains the situation.
12 “We do not want to show it and we demand an independent expert examination.
And we decided to enter the retail market so that their life does not seem so
13 wonderful.” In the past the company thought that retail sales were unprofitable
due to a high entrance price and the need to conduct advertisement campaigns.
14 “However, when the competition inflicted the first blow, this became
becoming a matter of principle, and the winner of the battle may win the
15 whole US market, too. We are no strangers to battles with competition,”
Andreev puts on a brave face. Id. at 3 (emphasis added).
16
D. ABBYY Software and ABBYY Production’s Scheme to “Infiltrate” and
17 “Conquer” the United States Has Resulted In Substantial Business Contacts
in California
18
As reported in the February 2008 article quoted above, ABBYY Software and ABBYY
19
Production entered the United States no later than 1998 and have since only increased their
20
efforts to gain market share. See Miller Decl., Ex. 5 at 3. (“In 1998 the company went out to
21
conquer the West. ... The company started to conquer the West through scanner producers.”);
22
and Miller Decl., Ex. 5 at 3. (“Abbyy is actively getting ready for the issue of the FineReader
23
software program to the American retail market.”). According to press releases available on
24
ABBYY Software’s website (www.abbyy.com), the following California residents are customers
25
and/or licensees of infringing ABBYY products: Hewlett-Packard, Alameda County, Los
26
Angeles County, Hershey Technologies and Innovative Rehabilitation Technology, Inc. See
27
Miller Decl., Exs. 13 (Hewlett-Packard), 14 (Alameda County), 15 (Los Angeles County), 16
28
(Hershey Technologies), and 17 (Innovative Rehabilitation Technology, Inc.).
OPPOSITION TO MOTION TO DISMISS 4
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1 As to the retail market, ABBYY infringing products are available for purchase at the

2 Fry’s Electronics Store in Palo Alto. See Smith Decl., ¶¶ 2-3, Ex. 1. In fact, the ABBYY
3 Software website actively markets its products available in California: “You can buy Abbyy

4 FineReader in [ten] online stores and in the following companies,” including CAF Technology

5 (Irvine, California), Formtran (Lake Forest, California), Fry’s Electronics Retail Stores
6 (statewide), Globetech (Rancho Cordova, California), Hershey Technologies (La Jolla,

7 California), Ingram Micro (Irvine, California), Ocean Interface Co. (Walnut, California), Sabre

8 Software Design, Inc (San Diego, California), Smartech Solution (San Jose, California), Teramar
9 Technology (Carlsbad, California), and Wisetrend (Fremont, California). Miller Decl., Ex. 11

10 In addition, the ABBYY website sells, offers for sale and facilitates download of infringing

11 software to customers in California. Miller Decl., Ex. 3.


12 E. ABBYY Software and ABBYY Production Have a Regional Office In
Milpitas, California
13
ABBYY Software and ABBYY Production maintain an office in Milpitas, California.
14
Miller Decl., Ex. 11. Previously, they maintained an office in Fremont, California. See Miller
15
Decl., Exs. 13, 18 (“The ABBYY Group Headquarters are located in Moscow with offices in . . .
16
the United States (ABBYY USA, Fremont, California)”). The Milpitas office is home to another
17
high-ranking member of the ABBYY “Global Management Team,” Dean Tang. Miller Decl.,
18
Ex. 12. Notwithstanding Mr. Tang’s presence in California, Mr. Andreev also participates in
19
efforts to sell ABBYY products in the United States. See Miller Decl., Ex. 1 (regarding a deal
20
between ABBYY USA and UMAX regarding FineReader, Mr. Andreev stated: “We are glad to
21
bundle our software with UMAX products”).
22
The United States office of ABBYY operates a website at www.abbyyusa.com. See
23
Miller Decl., Ex. 19. On that website, if a visitor clicks on the “Company” link to find
24
information regarding the company, the visitor is re-directed to the ABBYY Software website
25
(www.abbyy.com) and provided the above information regarding ABBYY the “international
26
company.” Miller Decl., Exs. 20, 21 In fact, a vast majority of the links on the ABBYY USA
27
website simply redirect visitors to the ABBYY Software site, including the links for “Products,”
28
“Downloads,” “Support,” and “Press [Releases].” Miller Decl., Exs. 22, 23, 24, 25.
OPPOSITION TO MOTION TO DISMISS 5
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1 F. Service of ABBYY Production LLC Was Proper


2 On May 7, 2009, ABBYY Production LLC received service of the Amended Complaint,
3 Summons and Standing Orders of the Court. See Docket Entry No. 100. Service occurred at

4 Struenie 1, 11 Kasatkina Str., Moscow 129301 which is the address provided by ABBYY USA

5 in response to Interrogatory No. 7. Miller Decl., Ex. 10. Nadezhda Kolpakova, who identified
6 herself as a manager, received the documents in person from a local professional process server.

7 Docket Entry No. 100. Ms. Kolpakova also received versions of the same documents translated

8 into Russian. Declaration of Esha Bandyopadhyay, Ex. C.


9 G. The Russian Federation Unilaterally Suspended All Judicial Cooperation
With the United States in Civil and Commercial Matters
10

11 The United States Department of State website (http://travel.state.gov/law/info/


12 judicial/judicial_3831.html) states that service via the Hague Convention is not an agreed-upon

13 means for service of process on individuals in Russia:

14 In July 2003, Russia unilaterally suspended all judicial cooperation with the
United States in civil and commercial matters. The Russian Federation
15 refuses to serve letters of request from the United States for service of
process presented under the terms of the 1965 Hague Service Convention or
16 to execute letters rogatory requesting service of process transmitted via the
diplomatic channel. The Russian Federation also declines to give consideration to
17 U.S. requests to obtain evidence. While the Department of State is prepared to
transmit letters rogatory for service or evidence to Russian authorities via the
18 diplomatic channel, in the Department’s experience, all such requests are returned
unexecuted. Likewise requests sent directly by litigants to the Russian Central
19 Authority under the Hague Service Convention are returned unexecuted.
(emphasis added)
20
Russia confirms that it “shall not apply the Convention in relation to [the United
21
States].” Miller Decl., Ex. 26.; see also Ingalls Decl. ¶ 3.
22
IV. ARGUMENT REGARDING PERSONAL JURISDICTION
23
A. Applicable Legal Standard
24
Personal jurisdiction over a foreign corporation is appropriate when the state’s long arm
25
statute permits the assertion of jurisdiction without violating federal due process. See Inamed
26
Corp. v. Kuzmak, 249 F.3d 1356, 1359 (Fed. Cir. 2001). California’s long arm statute is
27
coextensive with the limits of due process, thus, the only inquiry is whether or not the exercise of
28
jurisdiction comports with federal due process. See Akro Corp. v. Luker, 45 F.3d 1541, 1544
OPPOSITION TO MOTION TO DISMISS 6
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1 (Fed. Cir. 1995); Cal. Code Civ. P. § 410.10. “‘[T]he constitutional touchstone’ of the

2 determination whether an exercise of personal jurisdiction comports with due process “remains
3 whether the defendant purposefully established ‘minimum contacts’ in the forum State.” Burger

4 King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985) (quoting International Shoe Co. v.

5 Washington, 326 U.S. 310, 316 (1945)).


6 The exercise of general jurisdiction is proper when a non-resident defendant is present in

7 the forum state. See International Shoe Co., 326 U.S. at 316-17. To determine a corporate

8 entity’s presence in the forum, “[w]e . . . must explore the nature of [the defendant’s] contacts
9 with the [forum State] to determine whether they constitute . . . continuous and systematic

10 general business contacts.” Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,

11 415-16 (1984).
12 The exercise of specific jurisdiction is proper when a non-resident defendant

13 purposefully establishes minimum contacts with the forum state, the cause of action arises out of

14 those contacts and jurisdiction is constitutionally reasonable. See Burger King Corp., 471 U.S.
15 at 472, 476-77. The Federal Circuit outlined a three prong test to determine if specific

16 jurisdiction exists: 1) whether defendant purposefully directed activities at residents of the

17 forum; 2) whether the claim arises out of or relates to those activities; and 3) whether assertion of
18 personal jurisdiction is reasonable and fair. See Akro, 45 F.3d at 1545-46.

19 Because the parties have not conducted discovery, plaintiff need “only to make a prima

20 facie showing” that the defendants were subject to personal jurisdiction. Deprenyl Animal
21 Heath, Inc. v. Univ. of Toronto Innovations Found., 297 F.3d 1343, 1347 (Fed. Cir. 2002). The

22 pleadings and affidavits are to be “construe[d] ... in the light most favorable to” plaintiff. Id.

23 B. The Court Can Properly Exercise General Jurisdiction Over ABBYY


Software and ABBYY Production
24

25 The Court has general jurisdiction over ABBYY Software and ABBYY Production

26 based on their continuous and systematic activities in the forum. Their activities include opening
27 a regional office in Freemont, later opening an office in Milpitas, stationing a high-ranking

28 member if ABBYY “Global Management Team” in the California office, entering into contracts

OPPOSITION TO MOTION TO DISMISS 7


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1 regarding infringing products with California residents (including Hewlett-Packard, Alameda

2 County, Los Angeles County, Hershey Technologies and Innovative Rehabilitation Technology,
3 Inc), engaging at least eleven California residents to resell or distribute ABBYY infringing

4 products, stocking the shelves of California retailers with infringing products, and selling

5 infringing products online (including via www.abbyy.com). Those activities have netted
6 approximately one quarter of the United States market.

7 Not only are ABBYY Software and ABBYY Production’s forum activities continuous

8 and systematic, those same activities have given rise to the causes of action in this lawsuit.
9 Under those circumstances, especially when viewed a light most favorable to Nuance, general

10 jurisdiction over all ABBYY defendants, including ABBYY Software and ABBYY Production,

11 is proper. See International Shoe, 326 U.S. at 320. (“Presence in the state in this sense has never
12 been doubted when the activities of the corporation there have not only been continuous and

13 systematic, but also give rise to the liabilities sued on, even though no consent to be sued or

14 authorization to an agent to accept service of process has been given.”).


15 ABBYY Software and ABBYY Production contend, for purposes of this litigation, that

16 they have no forum activities and imply that ABBYY USA is solely responsible for any and all

17 California activities. However, according to their own statements, ABBYY Software, ABBYY
18 Production and ABBYY USA are a single “international company” led by ABBYY Software

19 and ABBYY Production. The ambition of the “international company” is to “conquer” the

20 United States with infringing products. They created ABBYY USA in furtherance of that
21 scheme. ABBYY Software and ABBYY Production’s current attempt to evade the Court’s

22 jurisdiction indicates a specific intent to escape liability for their activities in the forum by using

23 their alter ego as a shield. Thus, the Court has general jurisdiction over ABBYY Software and
24 ABBYY Production because their alter ego, ABBYY USA, is present in the forum. See Systems

25 Div., Inc. v. Teknek Elecs., Ltd, No. 2007-1162, 2007 WL 3151697, at *5 (Fed. Cir. Oct. 26,

26 2007) (“The exercise of jurisdiction over an alter ego is compatible with due process because a
27 corporation and its alter ego are the same entity – thus, the jurisdictional contacts of one are the

28 jurisdictional contacts of the other for purposes of the International Shoe due process analysis.”);

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1 Patin v. Thoroughbred Power Boats, Inc., 294 F.3d 640, 653 & n. 18 (5th Cir. 2002) (noting that

2 “federal courts have consistently acknowledged that it is compatible with due process for a court
3 to exercise personal jurisdiction over an individual or corporation that would not ordinarily be

4 subject to personal jurisdiction in that court when the individual or corporation is an alter ego or

5 successor of a corporation that would be subject to personal jurisdiction in that court.”); Howard
6 v. Everex Sys., Inc., 228 F.3d 1057, 1069 n. 17 (9th Cir. 2000) (“[W]here the parent totally

7 controls the actions of the subsidiary so that the subsidiary is the alter ego of the parent,

8 jurisdiction is appropriate over the parent as well.”).


9 Alternatively, general jurisdiction over ABBYY Software and ABBYY Production is

10 proper under an agency theory. ABBYY Software founded ABBYY USA for the purpose of

11 creating, controlling and employing the distribution system intended to bring infringing products
12 into the forum. ABBYY Production admits to exploiting that distribution system by engaging in

13 transactions of infringing products with ABBYY USA. In addition, ABBYY Software and

14 ABBYY Production have also actively promoted ABBYY USA’s sales in the forum. See United
15 States v. Toyota Motor Corp., 561 F. Supp. 354, 359 (C.D. Cal. 1983) (“The fact that Toyota

16 Japan’s products reach the United States market through a wholly-owned subsidiary, rather than

17 directly from the parent corporation, is inconsequential for due process purposes. Instead, due
18 process is satisfied so long as Toyota Japan knew and intended that its vehicles would be sold

19 here, and it actively promoted those sales.”); see also Asahi Metal Indus. Co. v. Superior Court

20 of California, 480 U.S. 102, 109 (1987) (“The forum state does not exceed its powers under the
21 Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products

22 into the stream of commerce with the expectation that they will be purchased by customers in the

23 forum State.”) (quoting World-Wide Volkswagon Corp. v. Woodson, 444 U.S. 286, 297-98
24 (1980)).

25 C. The Court Can Properly Exercise Specific Jurisdiction Over ABBYY


Software and ABBYY Production
26
27 The Court also has specific jurisdiction over ABBYY Software and ABBYY Production

28 because each prong of the Akro test is satisfied.

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1 1) ABBYY Software and ABBYY Production have purposefully directed


their activities at California Residents
2
3 ABBYY Software and ABBYY Production have purposely directed activities at residents

4 of California, including license, sales, reseller and distributor agreements with many California

5 companies, as part of their scheme to “infiltrate” and “conquer” the United States market. As
6 stated by Mr. Andreev, the presence of ABBYY retail products on the shelf in California is an

7 act of revenge against Nuance by ABBYY Software and ABBYY Production.

8 Within the scheme to “infiltrate” and “conquer” the United States, ABBYY USA acts at
9 the direction of ABBYY Software and ABBYY Production. Any sales or offers to sell made by

10 ABBYY USA are within the scope of its authority as delegated by ABBYY Software and

11 ABBYY Production. See Viam Corp. v. Iowa Export-Import Trading Co., 84 F.3d 424, 429
12 (Fed. Cir. 1996) (holding that specific jurisdiction is appropriate over an Italian defendant

13 because the foreign defendant “purposefully directed its activities at the forum State” and its

14 domestic agent “purposefully initiated” the activities that resulted in the litigation); Beverly Hills
15 Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1566 (Fed. Cir. 1994) (“[D]efendants, acting in

16 consort, placed the [device] in the stream of commerce, they knew the likely destination of the

17 products, and their conduct and connections with the forum state were such that they should
18 reasonably have anticipated being brought into court there.”).

19 In addition, ABBYY Production, as the developer of infringing products, is subject to

20 specific jurisdiction because it admits to engaging in transactions with ABBYY USA, a


21 California resident. See Dimosthenous Decl. ¶ 12 and Tereshchenko Decl. ¶ 13. Those

22 transactions were made in furtherance of the scheme to infiltrate and conquer the United States

23 with infringing products and are clearly purposeful. See Viam, 84 F.3d at 430 (“Nor is it unfair
24 to refuse to allow a foreign manufacturer to insulate itself from the jurisdiction of the courts by

25 use of an exclusive distributor.”).

26 2) This Action Arises from ABBYY Software and ABBYY Production


Activities Related to Infringing Products
27
This action arises from and directly relates to ABBYY Software and ABBYY
28
Production’s forum activities regarding infringing products. Nuance is suing ABBYY
OPPOSITION TO MOTION TO DISMISS 10
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1 defendants for patent infringement related to the sale, offer for sale and importation of, inter alia,

2 FineReader products. Thus, specific transactions with California residents are at issue.
3 3) Jurisdiction Over ABBYY Software and ABBYY Production Is
Reasonable and Fair
4

5 Personal jurisdiction over ABBYY defendants is also reasonable and fair. This prong of
6 the Akro test places the burden on the party over whom jurisdiction is sought to “present a

7 compelling case that the presence of some other considerations would render jurisdiction

8 unreasonable.” Akro, 45 F.3d at 1545-46. Put succinctly, “such defeats of otherwise


9 constitutional personal jurisdiction ‘are limited to the rare situation in which the plaintiff’s
10 interest and the state’s interest in adjudicating the dispute in the forum are so attenuated that they

11 are clearly outweighed by the burden of subjecting the defendant to litigation within the forum.’”
12 Id. at 1549 (quoting Beverly Hills Fan, 21 F.3d at 1568) (emphasis added).

13 This is not one of those rare cases. Nuance’s interest in adjudicating this dispute is in

14 alignment with the state’s interest. See, e.g., Beverly Hills Fan, 21 F.3d at 1564-65 (stating that a
15 state has an interest in discouraging injuries that occur within the forum, including patent

16 infringement).

17 D. ABBYY Software and ABBYY Production’s Arguments Against Personal


Jurisdiction Are Spurious
18

19 ABBYY Software and ABBYY Production argue that the Court lacks general and

20 specific jurisdiction. The only factual support is provided by Marianos Dimosthenous (Director
21 of ABBYY Software) and Vadim Tereshchenko (CFO of ABBYY Production), who imply that

22 all ABBYY activities in California are attributable to ABBYY USA. Neither addresses their

23 employers’ public statements to the contrary, including:


24  “ABBYY is an international company with 9 offices in different countries
including Russia, Germany, the United States [Milpitas, California], Ukraine,
25 the UK, Cyprus, Japan and Taiwan.” Miller Decl., Ex. 7.
26  “Abbyy is an international company with over 880 employees worldwide.”
Miller Decl., Ex. 9.
27
 The ABBYY “Global Management Team” includes representatives from all
28 Abbyy offices, including the offices in Cyprus, Russia and Milpitas. Miller
Decl., Ex. 12.
OPPOSITION TO MOTION TO DISMISS 11
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1
 “In 1998 the company went out to conquer the West. ... The company started to
2 conquer the West through scanner producers.”
3  “The founder of Abbyy David Yan[g] once failed at the American market, but did
not leave the ambition of conquering it. Now he is going to make his return with
4 new solutions.” p.1

5  “In the opinion of the company’s management, nothing is able to prevent the
company now from conquering the US market.” P. 3-4.
6
 “Abbyy is actively getting ready for the issue of the FineReader software program
7 to the American retail market. The company was forced to do so by its main
American competitor – by the Nuance Communications Company, which in
8 the end of last year filed a lawsuit against Abbyy claiming the latter used the
company’s developments in its works. ... And we decided to enter the retail
9 market so that their life does not seem so wonderful.”
10 Rather than address those statements, Messrs. Dimosthenous and Tereshchenko instead

11 make the following vague and foundationless statement:


12 ABBYY Software, ABBYY Production and ABBYY USA observe all
corporate formalities. ... ABBYY Software holds the equity interest in both
13 ABBYY Production and ABBYY USA. ABBYY Software “controls” ABBYY
Production and ABBYY USA only to the extent the law permits a 100% equity
14 owner to “control” its company.
15 That conclusory statement is not reliable because it conveys virtually zero probative facts. For

16 example, neither declaration identifies the specific facts “all corporation formalities” purportedly

17 observed, or the specific facts regarding ABBYY Software and ABBYY Production’s control
18 over ABBYY USA. Nor does either declaration explain the basis for the declarant’s

19 understanding of American law regarding corporate control. Accordingly, their declarations do

20 not provide any facts that defeat jurisdiction.


21 Nonetheless, if the Court requires additional evidence to resolve this matter, Nuance, in

22 the alternative, requests a continuance of the hearing date pending limited jurisdictional

23 discovery. The Court has broad discretion in deciding whether to allow jurisdictional discovery.
24 See Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 430 n. 24 (9th Cir. 1977).

25 Generally, the request for jurisdictional discovery “should be granted where pertinent facts

26 bearing on the questions of jurisdiction are controverted ... or where a more satisfactory showing
27 of the facts is necessary.” Id. quoting Kilpatrick v. Texas & P. Ry., 72 F. Supp. 635, 638

28 (S.D.N.Y. 1947). Nuance does not believe that any of the pertinent facts bearing on the question

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1 of jurisdiction are legitimately controverted. However, if the Court would prefer additional

2 details, jurisdictional discovery would serve that end.


3 V. ARGUMENT REGARDING SERVICE OF SUMMONS
4 A. Nuance Properly Served ABBYY Production LLC
5 Nuance properly served ABBYY Production LLC in accordance with Federal Rule of
6 Civil Procedure 4(f)(2)(C)(i) by “delivering a copy of the summons and of the complaint to the

7 individual personally.” ABBYY USA identified the location of ABBY Production as “Struenie

8 1, 11 Kasatkina Str., Moscow 129301.” Miller Decl., Ex. 10. Nuance accomplished service via
9 a Russian process server. The documents served included the Amended Complaint, Summons,

10 the Civil Standing Orders of the Court, and Russian translations thereof. According to the return

11 of service filed by Nuance, ABBYY Production was served personally and in person by
12 providing the documents in person to Nadezhada Kolpakova, a manager at ABBYY Production.

13 See Docket No. 100.

14 B. The Hague Convention Is Not an Agreed-Upon Method of Service in Russia


15 ABBYY Production argues that service was improper because Nuance did not follow

16 Hague Convention. ABBYY Production’s argument is incorrect. The Hague Convention is not

17 an agreed-upon means for service of process in Russia because the Russian Federation has
18 unilaterally suspended all judicial cooperation with the United States in civil matters. All Hague

19 Convention requests sent to the Russian Central Authority are returned unexecuted.

20 Under those circumstances, Federal Rule of Civil Procedure 4(f)(2)(C) provides that
21 service is effected by “delivering a copy of the summons and complaint to the individual

22 personally.” Nuance complied with Rule 4(f)(2)(C) by engaging a process server to provide the

23 summons, Amended Complaint, and standing orders of the Court (including Russian translations
24 thereof) to ABBYY Production at its place of business. The process server handed the

25 documents in person to a person who described herself as a manager. That manner of service

26 does not offend the law of Russia. See Ingalls Decl. ¶ 4.


27 Assuming, arguendo, that service did not comply with the technical requirements of the

28 Federal Rules, the motion to dismiss should nonetheless be denied because Federal Rule of Civil

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1 Procedure 4 is “a flexible rule that should be liberally construed so long as a party receives

2 sufficient notice of the complaint.” United Food & Commercial Workers Union v. Alpha Beta
3 Co., 736 F.2d 1371, 1382 (9th Cir. 1984) (upholding the district court’s refusal to dismiss for

4 improper service of process despite the incorrect identification of the deadline to answer in the

5 summons). Here, ABBYY Production does not dispute that it has notice of this action, nor does
6 ABBYY Production dispute that it received and understands the documents served by Nuance.

7 There is also no question that ABBYY Production has had notice of this action since at least

8 February 2008 when Mr. Andreev publicly stated that ABBYY Production and ABBYY
9 Software would seek revenge against Nuance for filing this action.

10 Alternatively, Nuance requests the Court order, pursuant to Rule 4(f)(3), that Nuance can

11 serve ABBYY Production via substitute service on ABBYY USA – its domestic agent. See, e.g.,
12 Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 707-08 (1988) (determining that

13 service on a foreign defendant’s domestic agent was sufficient because “the Due Process Clause

14 does not require an official transmittal of documents abroad every time there is service on a
15 foreign national.”). Substitute service in this manner is a reasonable under the circumstances

16 because, to the extent ABBYY Production is correct that that service is effective only if made

17 pursuant to the Hague Convention, then service on ABBYY Production is impossible due to
18 Russia’s unilateral decision to suspend all judicial cooperation with the United States. ABBYY

19 Production – a company whose infringing product holds a 30% market share in the United States

20 and whose CEO seeks to exact revenge on Nuance for this lawsuit-- cannot reasonably expect to
21 dodge service of summons.

22 C. ABBYY Production’s Motion To Dismiss Is Coordinated With ABBYY


USA’s Soon-To-Be-Filed Request to Compel Supplemental Infringement
23 Contentions
24 ABBYY defendants appear to be attempting to leverage ABBYY Production’s status as a

25 Russian company not only to insulate ABBYY Production from liability, but to insulate

26 allegedly infringing source code from discovery in this action. ABBYY USA claims that it does
27 not have possession, custody or control of the source code and, therefore, cannot produce it.

28 ABBYY USA identifies ABBYY Production as the sole custodian of the source code.

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1 Nuance is concerned because ABBYY USA will soon file a joint letter brief with

2 Magistrate Judge James regarding Nuance’s infringement contentions, which were served on
3 April 3, 2009. The premise of ABBYY USA’s motion is that the infringement contentions are

4 deficient because they does not provide citations to the confidential source code for the

5 infringing ABBYY products. According to ABBYY USA, when software products are accused
6 of infringement, the patentee must cite to the source code in its infringement contentions.

7 However, ABBYY Production claims that it is immune from service of process and third party

8 discovery due to Russia’s suspension of all judicial cooperation with the United States.
9 Thus, ABBYY USA seeks an order that Nuance must supplement its infringement

10 contentions with citations to source code, while ABBYY Production seeks an order dismissing it

11 from any obligations related to this action, including the obligation to produce the infringing
12 source code. The result advocated by ABBYY defendants would be unjust and unduly

13 prejudicial to Nuance. There is no legitimate question that ABBYY Software and ABBYY

14 Production are purposefully present in California. Accordingly, they should be subjected to


15 scrutiny rather than allowed to hide behind a domestic front that serves as nothing other than a

16 shield, especially because they themselves characterize their infringing activities are an act of

17 revenge against Nuance for filing this litigation.


18

19 Dated: July 10, 2009 WILSON SONSINI GOODRICH & ROSATI

20
By: /s/ Tung-On Kong
21 Tung-On Kong
22
WILSON SONSINI GOODRICH & ROSATI
23 Professional Corporation
One Market Street
24 Spear Tower, Suite 3300
San Francisco, CA 94105-1126
25 Telephone: (415) 947-2000
Facsimile: (415) 947-2099
26
Attorneys for Plaintiff
27 NUANCE COMMUNICATIONS, INC.

28

OPPOSITION TO MOTION TO DISMISS 15


Case No. C 08-02912 JSW MEJ