Sywula v. DaCosta

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8 UNITED STATES DISTRICT COURT

9 SOUTHERN DISTRICT OF CALIFORNIA

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11 KRZYSZTOF SYWULA, Case No. 21-cv-01450-BAS-SBC

12 Plaintiff,

ORDER

13 v.

(1) GRANTING MOTION TO

14 TELEPORT MOBILITY, INC., et al.,

COMPEL ARBITRATION; and

15 Defendants.

(2) STAYING ACTION

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(ECF No. 80)

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19 Pending before the Court is Defendant Teleport Mobility, Inc. (“Teleport”)’s motion

20 to compel arbitration of this patent-inventorship action (“Inventorship Action”). (Mot.,

21 ECF No. 80.) It is joined by its co-Defendants, Alexis DaCosta (“DaCosta”) and Vincent

22 Coletti (“Coletti”). (Not. of Joinder, ECF No. 81.) Plaintiff Krzysztof Sywula (“Sywula”)

23 opposes (Opp’n, ECF No. 84) and Teleport replies (Reply, ECF No. 86.) The Court finds

24 Teleport’s Motion suitable for resolution without the need for oral argument. See Civ. L.

25 R. 7.1(d)(1). For the reasons stated below, the Court GRANTS the Motion and STAYS

26 this case pending arbitration.

27 //

28 //

1 I. BACKGROUND

2 By now, this Court is well versed in the facts that gave rise to the web of disputes

3 pending between the parties, including this Inventorship Action. (See ECF Nos. 27, 35,

4 54, 76.) Therefore, this Court repeats only those facts and pieces of procedural history that

5 are necessary to frame the issues presented by the instant Motion.

6 A. The Mobile Application Venture

7 In 2016, DaCosta and Coletti had the idea to develop a ride-share aggregator that

8 would enable users to compare the prices of app-based taxi services on their mobile phones.

9 (Order Dismissing First Amended Complaint (“Dismissal Order”) at 2:7-12, ECF No. 54.)

10 They teamed up with Sywula, a software developer, to help design and create the

11 application’s code and to aid in drafting patent applications—tasks Sywula took upon

12 himself as a side gig to his full-time job as an engineer at Intel. (See id.) Sywula, DaCosta,

13 and Coletti formalized their arrangement in August 2016 when they entered into their

14 Consulting Agreement. (See id. at 2:13-23.) The Consulting Agreement provides that, in

15 exchange for his services, Sywula would be given equity in the entity DaCosta and Coletti

16 planned to establish to own the venture’s intellectual property. (See id. at 2:21-23.) The

17 Consulting Agreement does not contain an arbitration provision. (See Consulting

18 Agreement, ECF No. 25-10.)

19 In November 2018, Sywula, DaCosta, and Coletti entered the Xelerate Partnership

20 Agreement (“XPA”).1 (XPA, Ex. 4 to Decl. of Frederic G. Ludwig, Esq. (“First Ludwig

21 Decl.), ECF No. 80-2.)2 The XPA established a partnership for the purpose of

22 “develop[ing] and sell[ing] or monetiz[ing] intellectual property,” defined in the XPA as

23 United States Patent and Trademark Office (“USPTO”) utility application numbers

24 “20180053136 [and] 20180053423” (collectively, “Xelerate IP”). (See id. § 3.) In the

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27 1 The XPA is dated April 7, 2018, but the parties did not sign the XPA until November 2018. (See

XPA at pp. 1, 20.)

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1 same section in which it sets out the purpose of Xelerate and defines Xelerate IP, the XPA

2 also states:

3 [A]ny new or further intellectual property developed by any individual

partners related to [the Xelerate IP] will not be restricted by this [XPA] and

4

may be governed by another contract. Any new or further intellectual

5 property developed by an individual partner . . . includes, but is not limited to

continuation patent(s), continuation-in-part (CIP) patent(s), divisional

6

patent(s), utility application(s), provisional application(s), PCT(s), or any

7 relevant patent(s) or any relevant application(s) related to the intellectual

property described in this Partnership Agreement.

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9 (Id. (alterations added).)

10 Section 19 of the XPA (the “Arbitration Provision”) states:

11 Any controversy or claim arising out of or relating to this Agreement, or the

breach thereof, shall be settled by arbitration administered by the Judicial

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Arbitration and Mediation Service (JAMS) in accordance with its Commercial

13 Arbitration Rules. The arbitration hearing shall take place in San Diego[,]

California before a single arbitrator. Judgment on the award rendered by the

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arbitrator may be entered in any court having jurisdiction thereof.

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17 (Id.)

18 Over time, the business arrangement between Sywula, DaCosta, and Coletti evolved,

19 both in corporate structure and name. Eventually, Sywula and DaCosta formed Teleport

20 to own and develop the ride-share mobile application. (See Dismissal Order at 3:3-9.)

21 Sywula became Teleport’s Chief Technology Officer and obtained a large minority stake

22 in the company. (See id.) In that position, Sywula avers he continued to develop the

23 application’s software and technology and to draft related patent applications. (See id.)

24 DaCosta is a director on Teleport’s board and its majority shareholder. (See id.) Coletti

25 allegedly works alongside DaCosta to control the entity. (See id.) Sywula also entered

26 into Teleport’s Employee Proprietary Information and Inventions Agreement (“Inventions

27 Agreement”), under which he, in essence, promised to assign practically everything he

28 developed with Teleport to the entity. (See Inventions Agreement §§ 2.2–2.3, ECF No. 14-

1 3; Dismissal Order at 3–4.) The Inventions Agreement does not contain an arbitration

2 provision. (See generally Inventions Agreement.)

3 Sywula avers that between 2016 and 2020, he developed the source code and

4 algorithms for the venture’s software and wrote 25 domestic and international patent

5 applications claiming that technology. (Second Am. Compl. ¶ 25, ECF No. 59.) Several

6 of those applications matured into the five patents-in-suit: U.S. Patent Nos. 11,087,250

7 (“’250”), 11,087,252 (“’252”), 11,087,253 (“’253”), 11,176,500 (“’500”), 11,182,709

8 (“’709” and, collectively, the “Subject Patents”). Despite his contributions, DaCosta and

9 Coletti purportedly omitted Sywula’s status as an inventor in the applications. (See, e.g.,

10 id. ¶ 58.) Thus, when the USPTO issued the Subject Patents, it did so without crediting

11 Sywula as an inventor. (Id.)

12 In approximately 2020, the business relationship between Sywula, DaCosta, and

13 Coletti devolved and litigation ensued.

14 B. The Northern District Action

15 Teleport, and its subsidiary Northern Lights, struck first in February 2021. (See

16 Northern District Action Compl., Ex. A to First Ludwig Decl.) They filed suit in the

17 Northern District of California alleging, inter alia, that Sywula breached several

18 agreements, including the Consulting Agreement, the Inventions Agreement, and the XPA,

19 and that Sywula had misappropriated Teleport’s intellectual property. (See id. ¶¶ 63–68

20 (alleging breach of contract); id. ¶¶ 69–79, 92–99 (alleging misappropriation of intellectual

21 property).) Teleport and Northern Lights also pressed a claim for declaratory relief. (See

22 id. ¶¶ 127–33.) In particular, they sought a declaratory judgment recognizing that

23 “DaCosta and Coletti, and not Sywula, are the joint inventors of the inventions claimed in

24 United States Patent Application Nos. 16/222,817; 15/680,439, 16/038,487; 15/675,757;

25 62/539,706; 62/482,306; 62/426,549; 62/375,491; and/or 17,124,833; and PCT

26 Application Nos. PCT/US18/043363 and PCT/US18/043359[.]” (Id. ¶ 128(a).)

27 On April 23, 2021, Sywula moved to compel the Northern District Action, in its

28 entirety, to arbitration. (Sywula’s Mot. to Compel, Ex. 2 to First Ludwig Decl.) Teleport

1 and Northern Lights opposed. On June 4, 2021, United States District Judge Susan Illston

2 compelled the Northern District Action to arbitration. (Judge Illston’s Arbitration Order,

3 Ex. 3 to First Ludwig Decl.) Judge Illston first assessed whether the XPA constitutes “an

4 agreement to arbitrate between the parties.” (Id. at 3:14 (quoting Brennan v. Opus Bank,

5 796 F.3d 1125, 1130 (9th Cir. 2015)).) Although neither Teleport nor Northern Lights is

6 a signatory to the XPA, she answered that question affirmatively. Judge Illston reasoned

7 that Teleport and Northern Lights had “knowingly exploited” the XPA by pressing claims

8 thereunder against Sywula and, thus, that California law of equitable estoppel requires

9 Teleport and Northern Lights to be treated as parties to the XPA, including the contract to

10 arbitrate located at Section 19 therein. (See id. at 4:8-19 (citing, inter alia, Knutson v.

11 Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014)).) Judge Illston found equitable

12 estoppel particularly apposite under the circumstances, considering that DaCosta—

13 Teleport’s director and majority shareholder—signed the XPA. (See id. at 5:4-7

14 (“Equitable estoppel typically applies to third parties who benefit from an agreement made

15 between two primary parties.” (quoting Nguyen v. Barnes & Noble Inc., 763 F.3d 1171,

16 1179 (9th Cir. 2014))).)

17 Having discerned a valid agreement to arbitrate between the parties to the Northern

18 District Action, Judge Illston next addressed arbitrability of the disputes at issue.

19 Arbitrability, she concluded, had been clearly and unmistakably delegated to the arbitrator

20 through the XPA’s incorporation by reference of JAMS Commercial Arbitration Rule 11.

21 (See Judge Illston’s Arbitration Order at 6:9-10, 6:15-21.) Accordingly, Judge Illston did

22 not analyze whether each of Teleport and Northern Light’s claims are covered by the XPA.

23 She did not, for example, assess the closeness of the relationship between the patent

24 applications identified in the declaratory relief claim, on the one hand, and the Xelerate IP,

25 on the other hand. Instead, Judge Illston swiftly compelled the Northern District Action to

26 arbitration, finding it is for the arbitrator—not the court—to determine whether Teleport

27 and Northern Light’s claims are covered by the XPA. (See id.)

28 //

1 C. The Rescission Action

2 One month after the Northern District Action commenced, Sywula filed in March

3 2022 an action in San Diego County Superior Court against not only Teleport and Northern

4 Lights but also DaCosta and Coletti. See Sywula v. DaCosta, No. 21-cv-01456-BAS-AGS,

5 2022 WL 910217, at *2–3 (S.D. Cal. Mar. 29, 2022) (“Remand Order”) (resolving motion

6 to remand). His initial state court complaint raised seventeen claims, including for breach

7 of the Inventions Agreement, rescission of the Inventions Agreement, conversion, failure

8 to pay wages, and declaratory relief. Id. at *2.

9 Teleport and Northern Lights removed the Rescission Action pursuant to 28 U.S.C.

10 § 1331 on the ground that Sywula’s claim for declaratory relief concerned a federal issue:

11 inventorship of patents. Remand Order at *3. In response, Sywula filed a First Amended

12 Complaint that overhauled his declaratory relief claim to expressly seek relief based on

13 rescission of the Inventions Agreement—a matter governed by state law—and to delete

14 reference to patent-inventorship issues. Id. Sywula then renewed his motion to remand,

15 which this Court granted. Id. The Court found that no federal issue arose from the new

16 pleading, and that no ground existed to justify retention of supplemental jurisdiction over

17 Sywula’s medley of state law claims. Accordingly, it remanded the Rescission Action to

18 state court. Id. at *10–11.

19 Upon remand, Teleport and Northern Lights moved to compel arbitration of the

20 Rescission Action and to consolidate such arbitration with the arbitration proceedings for

21 the Northern District Action. ((Rescission Action Minute Order, Ex. 6 to First Ludwig

22 Decl.) The state court granted that motion. (Id.)

23 D. This Inventorship Action

24 In August 2021, Sywula filed Inventorship Action, raising a single claim for

25 correction of patent inventorship under 35 U.S.C. § 256. (Compl., ECF No. 1.) At first,

26 Sywula sought correction only of the ’250, ’252, and ’253 Patents. (See id. ¶ 6.) However,

27 Sywula later amended the action to include the ’500 and ’709 Patents. (See SAC ¶ 6.)

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1 For nearly a year, Sywula failed to demonstrate standing to pursue his § 256 claim.

2 The Court first denied Sywula’s application for a temporary restraining order and

3 preliminary injunction, reasoning the initial Complaint failed to allege Sywula had standing

4 under any of the three viable theories within the patent-inventorship context. (Order

5 Denying TRO, ECF No. 27); see Fina Oil & Chem. Co. v. Ewen, 123 F.3d 1466, 1470

6 (Fed. Cir. 1997) (recognizing that a putative inventor with an ownership interest in the

7 patent in question has standing to pursue a § 256 claim); Chou v. Univ. of Chi., 254 F.3d

8 1347, 1359 (Fed. Cir. 2001) (recognizing that a putative inventor with a financial interest

9 in inventorship credit of a patent has standing to pursue a § 256 claim); Shukh v. Seagate

10 Tech., LLC, 803 F.3d 659, 663 (Fed. Cir. 2015) (recognizing that a putative inventor who

11 suffers a “concrete and particularized reputational injury” from the withholding of

12 inventorship credit of a patent has standing to pursue a § 256 claim).

13 Sywula filed his First Amended Complaint on September 29, 2021, seeking to

14 bolster his claim that DaCosta and Coletti’s failure to credit him as a co-inventor caused

15 him reputational harm sufficient to invoke standing pursuant to Shukh, 803 F.3d at 659.

16 (See First Am. Compl. (“FAC”), ECF No. 15.) Teleport filed a motion to dismiss the First

17 Amended Complaint for lack of standing under Federal Rule of Civil Procedure (“Rule”)

18 12(b)(1) (see ECF No. 25), which the Court granted in July 2022 (see Dismissal Order).

19 In its Dismissal Order, the Court determined Sywula still failed to demonstrate he had

20 suffered a concrete reputational injury as a prerequisite of standing under Shukh.

21 (Dismissal Order at 10:10–12:26.) However, the Court granted Sywula an opportunity to

22 revise his reputational-standing allegations. (Id. at 13:7-8.)

23 On August 11, 2022—almost a year after he initiated this action—Sywula filed his

24 Second Amended Complaint. (See SAC.) This new pleading contained supplemental

25 allegations, which spell out with greater detail the pecuniary nature of the reputational harm

26 Sywula allegedly suffered due to DaCosta and Coletti’s omission of his inventor status.

27 (See SAC ¶¶ 83–98.) These supplemental allegations sufficed. On January 23, 2023, this

28 Court concluded Sywula has standing under Shukh and, thus, denied Teleport’s motion to

1 dismiss the Second Amended Complaint for lack of standing. (See generally Order

2 Denying Third MTD.)

3 E. The Pending Arbitration

4 Teleport initiated arbitration proceedings in June 2021 following Judge Illston’s

5 Arbitration Order. See Teleport Mobility, Inc. v. Sywula, JAMS Case No. 1240024720 (the

6 “Arbitration”). Teleport’s Arbitration Demand essentially mirrors the claims raised in the

7 Northern District Action, including Teleport’s claim for declaratory relief concerning

8 patent inventorship. (Teleport’s Arbitration Demand ¶ 115(a), Ex. 7 to First Ludwig Decl.)

9 Shortly thereafter, Sywula’s Rescission Action claims were added. (See generally

10 Arbitrator Cannon’s Denial, Ex. 9 to First Ludwig Decl.)

11 In December 2022, Sywula moved to dismiss the addition of his Rescission Action

12 claims on the ground that, inter alia, those claims do not allege breach of the XPA, nor do

13 they arise from or relate to the XPA in any sense. (See Sywula’s Mot. to Dismiss the

14 Arbitration at 14–18.), Ex. 8 to First Ludwig Decl.) Sywula argued, in essence, that only

15 two of his claims alleged breach of contract and that those breach of contract claims arose

16 from the Inventorship Agreement—not the XPA. (Id.) Arbitrator Judge Jonathan Cannon

17 (Ret.) (“Arbitrator Cannon”) summarily denied Sywula’s motion on January 9, 2023 for

18 the reasons provided by Teleport in its opposition, which neither party proffers to this

19 Court. (Arbitrator Cannon’s Denial.)

20 II. LEGAL STANDARD

21 The Federal Arbitration Act (“FAA”) applies to arbitration agreements in any

22 contract affecting interstate commerce. See 9 U.S.C. § 2; see also Circuit City Stores, Inc.

23 v. Adams, 532 U.S. 105, 119 (2001). Under the FAA, agreements to arbitrate “shall be

24 valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for

25 the revocation of any contract.” 9 U.S.C. § 2. Ensconced in the FAA and the decisional

26 law arising therefrom is a “liberal federal policy favoring arbitration” and the “fundamental

27 principle that arbitration is a matter of contract.” AT&T Mobility LLC v. Concepcion, 563

28 U.S. 333, 339 (2011) (internal citations omitted).

1 A party to an arbitration agreement may bring a motion in federal district court to

2 compel arbitration in accordance with the terms of the agreement. See 9 U.S.C. § 4. In

3 deciding whether to compel arbitration, a court generally must determine two threshold

4 issues of arbitrability: (1) whether there is a valid agreement to arbitrate and (2) whether

5 the agreement encompasses the dispute at issue. See Brennan v. Opus Bank, 796 F.3d

6 1125, 1130 (9th Cir. 2015). If there is a valid agreement to arbitrate, and that agreement

7 covers the dispute, the court must compel arbitration. See Lifescan, Inc. v. Premier

8 Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004).

9 Threshold issues of arbitrability are presumptively for the district court to decide.

10 See Martin v. Yasuda, 829 F.3d 1118, 1122–23 (9th Cir. 2016) (citations omitted).

11 However, parties can delegate the power to decide arbitrability to the arbitrator through

12 “clear and unmistakable” evidence of an agreement to do so. Brennan, 796 F.3d at 1130.

13 In determining whether the parties delegated arbitrability to the arbitrator, the court applies

14 federal arbitrability law “absent clear and unmistakable evidence that the parties agreed to

15 apply non-federal arbitrability law.” Cape Flattery Ltd. v. Titan Mar., LLC, 647 F.3d 914,

16 921 (9th Cir. 2011) (citation omitted).

17 “[T]he party resisting arbitration bears the burden of proving that the claims at issue

18 are unsuitable for arbitration.” Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 91

19 (2000) (citation omitted). A court must defer to arbitration “unless it may be said with

20 positive assurance that the arbitration clause is not susceptible of an interpretation that

21 covers the asserted dispute,” and “doubts should be resolved in favor of coverage.” AT&T

22 Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 650 (1986).

23 III. ANALYSIS

24 There is no question the XPA contains a valid arbitration agreement to which the

25 parties are bound. Instead, Sywula contests the Motion on two other grounds. First, he

26 argues Teleport waived its right to seek arbitration. (See Opp’n at 3:7–6:14.) Next, Sywula

27 contends that the XPA’s Arbitration Provision does not cover three of the Subject Patents—

28 the ’252, ’253, and ’709 Patents. Thus, he avers that despite the XPA Provision’s

1 delegation of arbitrability—the validity of which he does not challenge—this Court cannot

2 compel to arbitration Sywula’s § 256 claim as to those three Patents. The Court considers

3 each of Sywula’s arguments in turn.

4 A. Waiver

5 After the Supreme Court’s relatively recent decision in Morgan v. Sundance, Inc.,

6 142 S. Ct. 1708 (2022), “the test for waiver of the right to compel arbitration consists of

7 two elements: (1) knowledge of an existing right to compel; and (2) intentional acts

8 inconsistent with that right.” Hill v. Xerox Bus. Servs., LLC, 59 F.4th 457, 468 (9th Cir.

9 2023) (cleaned up). A party opposing arbitration need not show prejudice to prevail. See

10 Hill, 59 F.4th at 468. Morgan also changed the waiver standard in another important

11 aspect: the party opposing arbitration no longer bears a “heavy” burden to overcome some

12 presumption against waiver once ensconced in some courts’ interpretations of the federal

13 policy favoring enforcement of arbitration agreements. See Armstrong v. Michaels Stores,

14 Inc., 59 F.4th 1011, 1015 (9th Cir. 2023) (“No longer is there a ‘special’ rule favoring

15 arbitration” (quoting Morgan, 142 S. Ct. at 1713)). The party opposing arbitration still has

16 the burden of demonstrating waiver, but courts “must hold a party to its arbitration contract

17 just as the court would to any other kind [of contract].” Id. (quoting Morgan 142 S. Ct. at

18 1713).

19 Under the newly enunciated standard for waiver set forth in Morgan, the Court finds

20 the instant case presents a close call. But while Sywula demonstrates Defendants knew of

21 their right to arbitrate under the XPA, he fails to demonstrate Defendants’ intentional acts

22 inconsistent with that right for the reasons stated below.

23 1. Defendants Knew of Their Existing Right to Arbitrate

24 That Sywula has satisfied the first requirement of waiver is neither seriously disputed

25 by Defendants nor in doubt. The record—indeed, the documents proffered by Teleport

26 alongside its Motion—demonstrates that all three Defendants can pinpoint the moment at

27 which they attained knowledge of their right to arbitrate under the XPA to a time before

28 Sywula’s commencement of this Inventorship Action.

1 The Court infers that DaCosta and Coletti were aware of the XPA’s Arbitration

2 Provision in 2018. Those Defendants (1) drafted the XPA in April 2018 and (2) signed

3 and entered the XPA several months later in November 2018. (See Northern District

4 Action Compl. ¶ 23 (“Nearly two years later, Sywula, DaCosta, and Coletti formed the

5 Xelerate Partnership, pursuant to an April 7, 2018 agreement of the same name[.]”); XPA

6 at pp. 1, 20.) Courts routinely impute a party’s knowledge of an existing right to arbitrate

7 when the party is both a drafter and signatory of the contract containing an arbitration

8 clause. See, e.g., Hoffman Const. Co. of Or. v. Active Erectors & Installers, Inc., 969 F.2d

9 796, 798 (9th Cir. 1992) (finding defendant knew of its right to arbitrate because the

10 contract it had entered and signed “itself called for arbitration of disputes”); cf. Morgan

11 Stanley & Co., LLC v. Couch, 134 F. Supp. 3d 1215, 1228 (E.D. Cal. 2015) (“[T]he first

12 Fisher prong is satisfied because [defendant] cannot dispute that he signed the Employment

13 Agreement and twice initialed the Arbitration Clause provisions.”); Freaner v. Valle, 966

14 F. Supp. 2d 1068, 1085–86 (S.D. Cal. 2013) (“To begin with, it is indisputable that

15 [plaintiff] had knowledge of his purported right to arbitrate. [Plaintiff] drafted the printed

16 contract containing the arbitral clause[.]”).

17 As for Teleport, its knowledge of a right to arbitrate under the XPA is attributable to

18 Judge Illston’s Arbitration Order, decided in June 2021. That Order applied the doctrine

19 of equitable estoppel to hold that the XPA is “a valid arbitration agreement” between

20 Sywula and Teleport, despite Teleport’s non-signatory status. Judge Illston accordingly

21 compelled all Teleport’s claims pressed in the Northern District Action to arbitration

22 pursuant to the terms of the XPA. (See Judge Illston’s Arbitration Order at 4:20.) Teleport

23 reaffirmed its knowledge of its right to arbitrate under the XPA when it moved to compel

24 the Rescission Action to arbitration under the terms of the XPA in the summer of 2022.

25 (See Rescission Action Minute Order.)

26 //

27 //

28 //

1 2. Defendants did not Engage in Acts

Inconsistent with Their Right to Arbitration

2

3 It is not enough that Defendants knew they possessed a right to compel arbitration

4 of this Inventorship Action, yet sat idly on those rights for the duration of this litigation.

5 Defendants also must have taken “intentional acts inconsistent” with their rights under the

6 XPA. See Newirth by & through Newirth v. Aegis Senior Cmtys., LLC, 931 F.3d 935, 940

7 (9th Cir. 2019).

8 “There is no concrete test to determine whether a party has engaged in acts that are

9 inconsistent with its rights to arbitrate.” Martin, 829 F.3d at 1125. Rather, the Ninth

10 Circuit instructs courts to employ a holistic approach to suss out whether a party’s actions

11 “indicate a conscious decision to seek judicial judgment on the merits of the arbitrable

12 claims, which would be inconsistent with a right to arbitrate.” Newirth, 931 F.3d at 941

13 (quoting Martin, 829 F.3d at 1125) (cleaned up). In other words, “a party acts

14 inconsistently with exercising the right to arbitrate when it (1) makes an intentional

15 decision not to move to compel arbitration and (2) actively litigates the merits of a case for

16 a prolonged period of time in order to take advantage of being in court” (the “Newirth

17 framework”). Id. A court must “consider the totality of a party’s actions” in applying the

18 Newirth framework. Armstrong, 59 F.4th at 1015 (quoting Hill, 59 F.4th at 471).

19 Considering the case law, Sywula does not meet the second element of the Newirth

20 framework. The Opposition understandably places considerable emphasis on the duration

21 of Teleport’s delay in bringing its Motion. (Opp’n at 2:13-17 (“Defendants are not entitled

22 to arbitration because they have waived such right by acting consistently with the intent to

23 litigate and waiting until February 2023, eighteen months after this case was filed in August

24 2021, to formally request for arbitration.”); see also id. at 4:24–27, 5:3-5.) Approximately

25 18 months lapsed between the commencement of this case and Defendants’ invocation of

26 their arbitral rights under the XPA. To be sure, 18 months certainly is a protracted delay,

27 which falls well within the duration other courts have found to support a finding of waiver.

28 See, e.g., Martin, 829 F.3d at 1126 (finding waiver where movants spent “17 months

1 litigating the case”). But the length of delay is just one factor that gives color to the totality

2 of Defendants’ conduct throughout the Inventorship Action and to whether Defendants’

3 acts were inconsistent with their known rights under the XPA. See, e.g., Grigsby &

4 Assocs., Inc. v. M Sec. Inv., 635 F. App’x 728, 733 (11th Cir. 2015) (“Although delay is

5 undoubtedly a factor to be considered, in our precedent where waiver was found, the delay

6 was always coupled with other substantial conduct inconsistent with an intent to

7 arbitrate.”); cf. Martin, 829 F.3d at 1126 (finding waiver based upon 17 month delay

8 coupled with movant’s “considerable time and effort [spent working on] a joint stipulation

9 structuring the litigation, filing a motion to dismiss on a key merits issue, entering into a

10 protective order, answering discovery, and preparing for and conducting a deposition”

11 (quotation marks and footnote omitted)).

12 “In practical terms, this means [Sywula] must show something more than mere

13 delay[.]” Lobster 207, LLC v. Pettegrow, 1:19-CV-0552-LEW, 2020 WL 2839287, at *9

14 (D. Me. June 1, 2020). Sywula bears a burden to establish that, while Defendants sat idly

15 upon their right to arbitrate, they undertook a “conscious decision . . . to seek judicial

16 judgment on the merits of [the] arbitrable claims.” See Martin, 829 F.3d at 1124–25. Even

17 under the new, post-Morgan landscape, in which “there is no longer a thumb on the scale

18 in favor of arbitration,” Sywula fails to demonstrate this “something more.” See

19 Armstrong, 59 F.4th at 1016.

20 Sywula claims Defendants acted inconsistently with their known right to arbitrate

21 by (1) seeking transfer of venue to the Northern District Action (see Opp’n at 3:20-21), (2)

22 moving to dismiss the Inventorship Action three times (see id. at 5:8-10 & n.2), and (3)

23 partaking in discovery (see id. at 3:23–4:12). But when examined more closely, none of

24 these acts—on their own or in the aggregate—indicate Defendants’ active litigation in

25 pursuit of a decision on the merits of Sywula’s § 256 claim by this Court. See, e.g., Martin,

26 829 F.3d at 1119 (holding that the second element of waiver is satisfied “when a party

27 chooses to delay his right to compel by actively litigating his case to take advantage of

28 being in federal court”); Newirth, 931 F.3d at 941 (surveying Ninth Circuit decisional law,

1 including Martin, 829 F.3d at 1118, and finding that precedent shows “[s]eeking a decision

2 on the merits of a key issue indicates an intentional and strategic decision to take advantage

3 of the judicial forum”).

4 Motion to Transfer Venue: Defendants twice requested transfer of venue to the

5 Northern District of California. They lodged their first request in their first motion to

6 dismiss, filed on September 1, 2021—approximately three weeks after Sywula commenced

7 this action. (Defs.’ First Mot. to Dismiss (“First MTD”) at 13:22–20:23, ECF No. 8-1.)

8 Rather than respond to Defendants’ First MTD, Sywula amended his pleading. (See FAC.)

9 Defendants renewed their request in their second motion to dismiss, filed on October 4,

10 2021. (Defs.’ Second Mot. to Dismiss (“Second MTD”) at 16:24–24:3, ECF No. 25-1.)

11 Sywula avers—without citing support—that Defendants’ motions to transfer were

12 inconsistent with Defendants’ right to arbitrate.

13 But this Court’s survey of the relevant case law points in the opposite direction. It

14 discloses that a motion to transfer venue, filed in the early stage of proceedings, is not

15 inconsistent with a right to arbitrate. Cf. Sharif v. Wellness Int’l Network, Ltd., 376 F.3d

16 720, 727 (7th Cir. 2004) (holding a motion to transfer venue does not constitute waiver of

17 the right to arbitrate), cited approvingly by Murray v. Transp. Media, Inc., No. 3:19-cv-

18 180-JR, 2019 WL 7144115, at *5 (D. Or. Oct. 17, 2019) (Report & Recommendation),

19 adopted by 2019 WL 7134413, at *1 (Dec. 23, 2019); see also Palmer v. Omni Hotel Mgmt.

20 Corp., No. 15cv1527 JM(MDD), 2016 WL 816017, at *4 (S.D. Cal. Mar. 1, 2016) (finding

21 opposition to motion to transfer venue is not inconsistent with the right to arbitrate). The

22 Court agrees with the implicit conclusion of its sister tribunals that motions to transfer

23 venue do not comprise strong evidence of a party’s “conscious decision to seek judicial

24 judgment on the merits of the arbitrable claims.” See Martin, 829 F.3d at 1125. A motion

25 to transfer venue generally does not bear upon the merits of a cause. And it is particularly

26 weak evidence of the party seeking arbitration’s intent to avail itself of a judicial forum

27 where, as here, the venue to which transfer is sought is litigating or has decided

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1 arbitrability. Therefore, the Court finds this strand of Sywula’s waiver argument

2 unavailing.

3 Defendants’ Three Rule 12(b)(1) Motions: As Sywula points out, Defendants

4 moved thrice to dismiss the Inventorship Action. (See generally First MTD; Second MTD;

5 Defs.’ Third Mot. to Dismiss (“Third MTD”), ECF No. 65-1.) In each instance, Defendants

6 moved on jurisdictional grounds only: they averred this Court lacked subject matter

7 jurisdiction under Rule 12(b)(1) because Sywula has no standing to sue for correction of

8 the Subject Patents. (See First MTD at 6:14–11:27; Second MTD at 6:24–13:3; Third MTD

9 at 9:9–18:24.) All three MTDs lodged facial and factual challenges to subject matter

10 jurisdiction. (First MTD at 7:6-14; Second MTD at 10:3-11; Third MTD at 10:14-16.)

11 This Court did not rule on Defendants’ First MTD, for Sywula rendered it moot by filing

12 a First Amended Complaint. (See FAC.) It granted Defendants’ Second MTD, finding

13 Sywula’s standing allegations did not adequately demonstrate a reputational injury under

14 Shukh. (See Dismissal Order at 10:16-18 (“The Court thus considers Teleport’s Rule

15 12(b)(1) motion as a ‘facial attack’ on this ground for standing[.]”).) However, it denied

16 Defendants’ Third MTD on the basis that Sywula’s supplemental standing allegations

17 adequately invoked Shukh and the extraneous evidence Sywula proffered adequately

18 rebutted Defendants’ factual challenge. (See generally Order Denying Third MTD.)

19 Sywula avers Defendants’ MTDs justify waiver.

20 “[M]oving to dismiss an action on jurisdictional . . . grounds is not inconsistent with

21 a known right to compel arbitration because such motions do not seek a judicial

22 determination on the merits.” Newirth, 931 F.3d at 941–42 & n.10 (citing Martin, 829 F.3d

23 at 1125–26 & n.4). Such motions reflect a “determination to avoid or frustrate the

24 litigation,” not to “actively litigate.” See Britton v. Co-op Banking Grp., 916 F.2d 1405,

25 1413 (9th Cir. 1990).

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1 To buttress his waiver argument, Sywula principally cites Martin, 829 F.3d at 1118.

2 (See Opp’n at 4:24–5:5.)3 But Martin does not support Sywula’s position. In Martin, the

3 moving parties successfully sought dismissal of the action under Rule 12(b)(6) on an issue

4 key to the merits of the underlying claims. See Martin, 829 F.3d at 1122 (describing Martin

5 defendant’s motion to dismiss as premised upon the argument that plaintiffs’ wage-and-

6 hour claims failed because they were not defendant’s employees as a matter of law). The

7 district court concluded the defendant had waived its right to compel arbitration, in part

8 based upon its Rule 12(b)(6) motion. The Ninth Circuit affirmed, finding the moving

9 parties’ Rule 12(b)(6) motion evinced active litigation of the case in pursuit of a judgment

10 on the merits. Id. at 1125. Defendants’ actions in this case are distinguishable. None of

11 the MTDs sought a determination on the merits of Sywula’s § 256 claim; Defendants only

12 ever sought dismissal on jurisdictional grounds—for lack of standing—under Rule

13 12(b)(1). In other words, unlike the Martin defendant, who sought for the court to weigh

14 in on the merits of the claims pressed against it, Defendants here have consistently taken

15 the position throughout litigation that this Court does not have authority to decide the

16 merits of Sywula’s claim.4 See id. at 1126–26 & n.4.

17

18 3 In addition to Martin, Sywula also cites Kelly v. Public Utility District No. 2, 552 F. App’x 663,

664 (9th Cir. 2014). (See Opp’n at 4:24–5:5.) In that case, the Ninth Circuit affirmed in an unpublished

19 memorandum disposition the district court’s finding that defendants had failed to preserve their right to

compel arbitration where they “conducted discovery and litigated motions, including a preliminary

20

injunction and a motion to dismiss.” Kelly, 552 F. App’x at 664. A closer examination of the trial court’s

21 docket in that cases shows the Kelly defendants sought dismissal on jurisdictional grounds under Rule

12(b)(1). Mot. to Dismiss, Kelly v. Public Util. Dist. No. 2, 2:11-cv-0023-JLQ (E.D. Wash. filed Apr. 1,

22 2011), ECF No. 38.

But Kelly does not alter this Court’s conclusion. As an initial matter, the Ninth Circuit’s

23 “unpublished dispositions . . . are not precedent, except when relevant under the doctrine of law of the

cases or rules of claim preclusion or issue preclusion.” Fed. R. App. P. 36-3. Moreover, in its waiver

24

analysis, the Kelly Court paid no mind to whether the Kelly defendants brought their motion to dismiss

25 under Rule 12(b)(1) or (b)(6). To the extent Kelly can be construed as holding that a challenge to

jurisdiction is inconsistent with a known right to arbitrate, the subsequently decided published opinion in

26 Newirth forecloses such an interpretation.

4 The Court does not find Teleport’s argument in its Opposition to Sywula’s Application for a

27 Temporary Restraining Order (“TRO Opposition”) that Sywula is not a co-inventor of the Subject Patents

to be strong evidence of waiver. (See TRO Opp’n at 23:13–25:5.) The TRO Opposition principally

28

1 Sywula also argues it is material to the waiver analysis that this Court dispatched of

2 the Rule 56 standard—considering and weighing extrinsic evidence—in hearing and

3 rejecting Defendants’ facial challenge to subject matter jurisdiction in its Order Denying

4 the Third MTD. (See Opp’n at 5:6–6:2 & n.2.) The Court is unmoved. The standard this

5 Court deployed does not alter the grounds upon which the Third MTD sought dismissal:

6 lack of subject matter jurisdiction, and not on the merits of Sywula’s inventorship claim.

7 Because the Rule 12(b)(1) MTDs exhibit an intent to “avoid” litigation of the

8 Inventorship Action, and not to litigate it to resolution in this judicial forum, Sywula fails

9 to demonstrate those MTDs were inconsistent with Defendants’ arbitral rights under the

10 XPA.

11 Discovery: Finally, Sywula avers Defendants’ participation in discovery justifies a

12 determination of waiver. Sywula represents that Defendants served him “with discovery

13 requests in March 2022, requiring [him] to produce thousands of documents,” which

14 Sywula did. (Opp’n at 3:23-27 (citing Declaration of Gary Eastman, Esq. (“Eastman

15 Decl.”) ¶¶ 8, 10, ECF No. 85).) Defendants also remotely deposed Sywula on September

16 23, 2022, shortly after filing their Third MTD. (See Eastman Decl. ¶ 11.) Defendants

17 contend the discovery they have taken to date is not inconsistent with their request to

18 arbitrate because it has been limited, by agreement, only to the issue of Sywula’s

19 standing—namely, whether Sywula suffered concrete reputational harm from DaCosta and

20 Coletti’s actions. (Reply at 5:6–11.) In support, Defendants’ counsel proffers an email

21 thread between himself and Sywula’s counsel, in which the attorneys agreed to “limit”

22 Sywula’s deposition “to issues pertaining to reputational harm, reserving substantive topics

23 related to inventorship for a later date, if need be.” (Email Thread at 1, Ex. 1 to Declaration

24 of Frederic G. Ludwig, Esq. (“Second Ludwig Decl.”), ECF No. 86-1.) They do not,

25

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would create duplicative federal litigation; it styles the merits argument in the alternative to those primary

27 assertions. (See id. 14:8–23:4.) Furthermore, Defendants did not re-assert in any of their three MTDs the

position that Sywula does not qualify as a co-inventor of the Subject Patents under § 256, indicating an

28

1 however, proffer evidence showing that their document requests and Sywula’s subsequent

2 disclosures were similarly circumscribed. In fact, Defendants’ Requests for Interrogatories

3 appear to have been much broader than represented in their Reply and do, indeed, target

4 issues pertaining to the merits, e.g., Sywula’s claim his contributions to the Subject Patents

5 deem him an inventor. (See Minute Entry, ECF Nos. 50–51.)5

6 Still, Sywula’s argument that Defendants’ discovery requests, standing alone, justify

7 warrants waiver is unavailing. As an initial matter, the Court agrees that, by limiting

8 Sywula’s deposition only to issues pertaining to standing, Defendants exhibited a

9 determination to avoid litigation—not to actively litigate the merits of Sywula’s § 256

10 claim. See Britton, 916 F.2d at 1413. Furthermore, even though Defendants’ requests for

11 interrogatories bled into the merits of this case, Sywula has failed to cite any instance in

12 which a court has determined discovery requests alone—however extensive—are so

13 inconsistent with a right to arbitrate that they effect waiver. Cf. Hill, 59 F.4th at 473–74

14 (finding that defendant’s discovery requests, coupled with summary judgment motion, was

15 inconsistent with the agreement to arbitrate). Indeed, the discovery taken can still be used

16 in the Arbitration, and therefore is not necessarily inconsistent with Defendants’ right to

17 arbitrate. See Palmer, 2016 WL 816017, at *12 (finding document discovery and

18 deposition “obviate the need for the same in arbitration proceedings” and, therefore, did

19 not support a finding of waiver)

20 Accordingly, Sywula does not meet his burden to demonstrate Defendants waived

21 their right to arbitration. See Fisher, 791 F.2d at 694.

22 B. The Parties Clearly and Unmistakably Delegated Arbitrability

23 Sywula does not contest that the XPA delegates arbitrability to the arbitrator.

24 Indeed, he advocated in the Northern District Action that the Arbitration Provision contains

25

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5 The Court has listened to the recordings of proceedings held before then-United States Magistrate

27 Judge, now-United States District Judge, Andrew G. Schopler, on May 20, 2022. It is apparent from that

recording that the Request for Interrogatories Defendants served upon Sywula relate to more than just his

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1 a valid delegation of arbitrability. (See Sywula’s Mot. to Compel at 12:20–13:23 (arguing

2 the Arbitration Provision’s incorporation of JAMS Commercial Rule 11 is clear and

3 unmistakable evidence of a contract to delegate arbitrability).) Still, for the sake of

4 thoroughness and completeness, the Court addresses whether the Arbitration Provision

5 contains a valid delegation clause. In line with Judge Illston’s Arbitration Order, it

6 answers that question affirmatively.

7 Defendants aver the Arbitration Provision requires that any dispute pertaining to

8 arbitrability must be submitted to the arbitrator because it “expressly incorporates by

9 reference the JAMS Commercial Arbitration Rules.” (Mot. at 12:3-10; see XPA § 19.)

10 JAMS Commercial Rule 11(c) provides:

11 Jurisdictional and arbitrability disputes, including disputes over the formation,

existence, validity, interpretation or scope of the agreement under which

12

Arbitration is sought, and who are proper Parties to the Arbitration, shall be

13 submitted to and ruled on by the Arbitrator. The Arbitrator has the authority

to determine jurisdiction and arbitrability issues as a preliminary matter.

14

15 (JAMS Commercial Rule 11(c), Ex. 10 to First Ludwig Decl.)

16 In her Arbitration Order, Judge Illston held that the XPA’s incorporation of Rule

17 11(c) evinced “clear and unmistakable evidence that arbitrability was delegated to the

18 arbitrator.” (Judge Illston’s Arbitration Order at 5:9-10.) She found particularly relevant

19 that, in the context of another arbitrator, the Ninth Circuit has held that “incorporation of

20 the AAA rules constitutes clear and unmistakable evidence that the contracting parties

21 agreed to arbitrate arbitrability.” See Brennan, 796 F.3d at 1130; (see Judge Illston’s

22 Arbitration Order at 6:9-28.) This Court agrees with Judge Illston and adopts her

23 arbitrability determination as if it were this Court’s own. Accordingly, the Court finds

24 that the parties have clearly and unmistakably delegated the question of arbitrability.

25 C. Sywula’s Remaining Argument is Unavailing

26 Having found there is a valid agreement to arbitrate between the parties, and that yet

27 another contract to arbitrate arbitrability is included within that agreement, this Court is

28 bound by the FAA to compel arbitration without weighing in on which variants of Sywula’s

1 § 256 claim is covered by the XPA. See 9 U.S.C. § 3; see also Henry Schein, Inc. v. Archer

2 & White Sales, Inc., 139 S. Ct. 524 (2019) (holding that, “if a valid agreement exists, and

3 if the agreement delegates the arbitrability issue to an arbitrator, a court may not decide the

4 arbitrability issue” but instead “must compel arbitration ‘in accordance with the terms of

5 the agreement’”).

6 Nonetheless, Sywula argues that this Court cannot compel arbitration—at least not

7 Sywula’s § 256 claim concerning three of the five Subject Patents. (Opp’n at 6:17–7:22.)

8 Those Patents, Sywula claims, are not covered by the XPA’s Arbitration Provision because

9 they do not constitute Xelerate IP. (Opp’n at 7:3-6.) Unlike the ’250 and ’500 Patents,

10 into which the Xelerate IP matured, the ’252, ’253, and ’709 Patents are merely

11 continuation-in-part patents of the Xelerate IP. (See Eastman Decl. ¶¶ 4–7.)6 That is,

12 although the ’252, ’253, and ’709 Patents are “related to similar technology” as the Xelerate

13 IP, they do not list the Xelerate IP in their prior publication data and are directly derived

14 from other applications. (See Opp’n at 7:7-8.) Pointing to Section 3, Sywula avers that

15 continuation-in-part patents, like the ’252, ’253, and ’709 Patents, are explicitly excised

16 from the XPA’s coverage. (Id.) That provision states, “[A]ny further intellectual property

17 . . . related to” the Xelerate IP, including “continuation-in-part patents, . . . will not be

18 restricted by [the XPA] and may be governed by another contract.” (XPA § 3.) Sywula,

19 therefore, contends the XPA does not confer a right to compel disputes pertaining to

20 Subject Patents that do not fit within the narrow definition of Xelerate IP. (Opp’n at 6:17–

21 7:22.) But Sywula’s argument is flawed both as a matter of contractual interpretation and

22 as a matter of law.

23 First, Sywula conflates the scope of the XPA’s definition of Xelerate IP with the

24 scope of its Arbitration Provision. While the former is narrow, the latter is broad. The

25 Arbitration Provision comprises an agreement not just to arbitrate disputes concerning the

26

27 6 Eastman attaches to his Declaration—loosely and without exhibit pages—excerpts of the Subject

Patents. (Excerpts of the Subject Patents, annexed to Eastman Decl.) Only the ’250 and ’500 Patents list

28

1 Xelerate IP, but to arbitrate “[a]ny case or controversy arising out of or relating to” the

2 XPA. (XPA § 19 (emphasis added).) Because Sywula, himself, concedes the ’252, ’253,

3 and ’709 Patents are related to the Xelerate IP (see Opp’n at 7:7-8), this entire Inventorship

4 Action “touches” upon the subject matter of the XPA and, thus is covered by the Arbitration

5 Provision. See Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 721 (9th Cir. 1999) (instructing

6 the phrase “arising out of or relating to” in an arbitration agreement must be construed

7 broadly, and the factual allegations at issue “need only touch matters covered by the

8 contract containing the arbitration clause”).

9 The language in the XPA to which Sywula cites—that any continuation-in-part

10 patent subsequently invented by one of the parties “will not be restricted by [the XPA] and

11 may be governed by another contract”—does not militate a different conclusion. (See XPA

12 § 3.) Sywula does not point to any other agreement between the parties governing the

13 forum in which disputes concerning the ’252, ’253, and ’709 Patents should be resolved.

14 Indeed, neither the Consulting Agreement nor the Inventions Agreement contains an

15 arbitration provision. Thus, Sywula fails to show the expansive reach of the XPA’s

16 Arbitration Provision is cut off from disputes concerning the ’252, ’253, and ’709 Patents

17 in light of some other agreement.

18 Even more fundamentally, the Supreme Court recently foreclosed arguments like

19 Sywula’s. In Henry Schein, Inc. v. Archer and White Sales, Inc., 139 S. Ct. 524 (2019)

20 (“Schein”), the Court noticed a trend among district courts that it found troubling: “[e]ven

21 when a contract [] delegate[s] the arbitrability question to an arbitrator, some federal courts

22 nonetheless will short-circuit the process and decide the arbitrability question themselves

23 if the argument that the arbitration agreement applies to a particular dispute is ‘wholly

24 groundless.’” Id. at 528–29. The Schein Court concluded that this approach is inconsistent

25 with the FAA. “When the parties’ contract delegates the arbitrability question to the

26 arbitrator,” the FAA demands that “courts must respect the parties’ decision as embodied

27 in the contract.” Id. at 531. Schein elucidates that Sywula’s arbitrability argument is

28 misdirected. Because there exists a valid agreement to delegate arbitrability to the

| |;arbitrator, Sywula must raise his contentions concerning the scope of the Arbitration

2 || Provision’s coverage to the arbitrator—not this Court.

3 D. Request to Stay

4 As part of its Motion, Teleport requests a stay pending arbitration. (See Reply at

5 || 8:13-9:1.) DaCosta and Coletti join in that request. Under the FAA, a court may stay the

6 || trial of an action pending arbitration when it is satisfied the issues in dispute are referable

7 || to arbitration under the parties’ arbitration agreement. See 9 U.S.C. § 3. For the reasons

8 || stated above, supra Sec. II.A-C, the Court is satisfied the FAA’s requirements for a stay

9 met. Accordingly, this action is stayed pursuant to 9 U.S.C. § 3.

10 CONCLUSION

11 Accordingly, the Court HEREBY ORDERS:

12 1. Teleport’s Motion to compel arbitration is GRANTED (ECF No. 80).

13 2. The parties must proceed to JAMS for a determination of arbitrability and

14 possible arbitration in the manner provided under Section 19 of the XPA.

15 3. The action is STAYED as to all parties and claims.

16 4. The Clerk of Court is DIRECTED to ADMINISTRATIVELY CLOSE this

17 case.

18 IT IS SO ORDERED.

19 || DATED: July 18, 2023 ( yi A A (Hiphan 6

20 United States District Judge

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