BSD Crown, Ltd. v. Amazon.com, Inc.

684 F.Supp.3d 993

BSD CROWN, LTD., Plaintiff, v. AMAZON.COM, INC., et al., Defendants.

Case No. 3:23-cv-00057-WHO

United States District Court, N.D. California

Signed July 27, 2023

Francisco Arturo Villegas, Wenkai Tzeng, Pro Hac Vice, Armstrong Teasdale LLP, New York, NY, Charlie M. Jonas, Pro Hac Vice, Kyle G. Gottuso, Pro Hac Vice, Margaret R. Szewczyk, Pro Hac Vice, Armstrong Teasdale LLP, St. Louis, MO, John V. Picone, III, Hopkins & Carley, San Jose, CA, Mark William Halderman, Pro Hac Vice, Armstrong Teasdale LLP, Philadelphia, PA, Robert Kumar Jain, Holland & Knight LLP, Austin, TX, for Plaintiff.

Stefani Elise Shanberg, Karl Marshall Johnston, Mathieu Swiderski, Nathaniel Bryan Sabri, Robin L. Brewer, Perkins Coie LLP, San Francisco, CA, for Defendants.

ORDER ON MOTION TO DISMISS

Re: Dkt. No. 32

William H. Orrick, United States District Judge

Plaintiff BSD Crown, LTD ("BSD") filed this case alleging direct and willful infringement of its patent, U.S. No. 6,389,473 ("'473 Patent"). Defendants Amazon.com, Inc. ("Amazon.com"), Amazon Web Services, Inc. ("AWS") and Twitch Interactive, Inc. ("Twitch") (and collectively, "defendants") filed a motion to dismiss. For the reasons explained below, the motion is GRANTED in part and DENIED in part, with leave to amend.

BACKGROUND

I. FACTUAL BACKGROUND

The United States Patent and Trademark Office ("USPTO") issued the relevant patent-in-suit, the '473 Patent, on May 14, 2002. Complaint ("Compl.") [Dkt. No. 1] ¶ 21. BSD alleges that the '473 Patent gives BSD exclusive rights to a video streaming technology called "Dynamic Adaptive Streaming over HTTP" and "HTTP Live Streaming." Id. ¶¶ 2, 6, 57-71. It explains that the patented technology improves real-time video streaming broadcasts. Id. ¶¶ 2, 23. It alleges that Amazon.com, AWS, and Twitch currently use this technology to stream live broadcasts and consequently infringe on BSD's patent. Id. ¶¶ 57-64.

BSD says that Amazon.com used Baker & Hostetler LLP of Philadelphia as its patent prosecution counsel and that the firm learned of the '473 Patent while prosecuting Amazon.com's patent because the '473 Patent was included as a primary prior art reference in an issued rejection. Id. ¶¶ 42-46. It asserts that Amazon.com "solicited an interview with the patent examiner" after its patent application was initially rejected by USPTO. Id. ¶ 47. BSD alleges that Amazon.com's proposed amendments to its patent application and its interview summary from February 11, 2016, which both reference the '473 Patent as alleged prior art, demonstrate its knowledge of the patent-in-suit. Id. ¶ 47; Ex. 12. at 42-44. According to BSD, parent company and defendant Amazon.com learned of the '473 Patent in 2015 or earlier through the USPTO patent prosecution process, when one of Amazon.com's patent applications was rejected. See id. ¶¶ 40-51.

BSD alleges that AWS and Twitch also used Baker & Hostetler and that the firm imputed knowledge of the '473 Patent to AWS and Twitch. Id. ¶¶ 52-55, 74, 85. It notes the parent-subsidiary relationship of Amazon.com to AWS and Twitch, id. ¶¶ 69-76, and points to USPTO records that show that "at least three" of Twitch's patents were prosecuted under Amazon.com's Baker & Hostetler account rather than under an account assigned solely to Twitch, id. ¶ 53; Ex. 13.

BSD brings one cause of action for patent infringement against Amazon.com and AWS. Id. ¶¶ 77-81. It also brings one cause of action for patent infringement against Twitch. Id. ¶¶ 82-86. Both causes of action are premised on claims of direct infringement or infringement under the doctrine of equivalents. Id. ¶¶ 78, 83. BSD alleges that all defendants acted egregiously because they knew or were willfully blind to their infringing acts. Id. ¶ 56.

II. PROCEDURAL BACKGROUND

The defendants filed a joint motion to dismiss the claims of willful infringement. ("Mot.") [Dkt. No. 32]. BSD opposed. ("Oppo.") [Dkt. No. 40]. The defendants replied. ("Repl.") [Dkt. No. 41]. I held a hearing at which counsel for both parties appeared.

LEGAL STANDARD

I. RULE 8(A)(2)

A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. Proc. 8(a)(2). "[T]he 'short and plain statement' must provide the defendant with 'fair notice of what the plaintiff's claim is and the grounds upon which it rests.' " Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 346, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). To comply with Rule 8(a), a plaintiff "must allege the basis of [its] claim against each defendant . . . to put defendants on sufficient notice of the allegations against them." Gauvin v. Trombatore, 682 F. Supp. 1067, 1071 (N.D. Cal. 1988).

II. RULE 12(B)(6)

Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim is facially plausible when the plaintiff pleads facts that "allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citation omitted). There must be "more than a sheer possibility that a defendant has acted unlawfully." Id. While courts do not require "heightened fact pleading of specifics," a plaintiff must allege facts sufficient to "raise a right to relief above the speculative level." Twombly, 550 U.S. at 555, 570, 127 S.Ct. 1955.

In deciding whether the plaintiff has stated a claim upon which relief can be granted, the court accepts the plaintiff's allegations as true and draws all reasonable inferences in favor of the plaintiff. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the court is not required to accept as true "allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008).

If the court dismisses the complaint, it "should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000). In making this determination, the court should consider factors such as "the presence or absence of undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies by previous amendments, undue prejudice to the opposing party and futility of the proposed amendment." Moore v. Kayport Package Express, 885 F.2d 531, 538 (9th Cir. 1989).

DISCUSSION

The defendants move to dismiss BSD's willful infringement claims, arguing that BSD failed to plead (1) that AWS and Twitch had the requisite knowledge of the patent, (2) that any defendant had the specific intent to infringe, and (3) that any defendant engaged in egregious conduct. See Mot. BSD contests each argument. See Oppo.

To prove a willful infringement claim, a jury must find that the defendant had pre-suit knowledge of the patent-in-suit and that the defendant infringed deliberately or intentionally. See, e.g., Eko Brands, LLC v. Adrian Rivera Maynez Enters., Inc., 946 F.3d 1367, 1378 (Fed. Cir. 2020) (citing Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93, 105-06, 136 S.Ct. 1923, 195 L.Ed.2d 278 (2016)); SRI Int'l, Inc. v. Cisco Sys., Inc., 14 F.4th 1323, 1329-30 (Fed. Cir. 2021); BASF Plant Sci., LP v. Commonwealth Sci. & Indus. Rsch. Org., 28 F.4th 1247, 1274 (Fed. Cir. 2022). In other words, "[t]o establish willfulness, the patentee must show the accused infringer had [the] specific intent to infringe at the time of the challenged conduct." Bayer Healthcare LLC v. Baxalta Inc., 989 F.3d 964, 987-88 (Fed. Cir. 2021) (citing Halo, 579 U.S. at 105-06, 136 S.Ct. 1923).

However, no binding appellate decisions discuss the pleading requirements for a willful infringement claim. See Sonos, Inc. v. Google LLC, 591 F. Supp. 3d 638, 643 (N.D. Cal. 2022) ("No post-Halo appellate authority addresses any pleading requirements for . . . willful infringement."). Rather, in applying the Federal Circuit's rules for proving willful infringement after Eko, courts in this district have reasoned that to survive a motion to dismiss, a plaintiff must plausibly plead "knowledge of the patent and knowledge of infringement." Id.; see also Dali Wireless, Inc. v. Corning Optical Comm'ns LLC, 638 F.Supp.3d 1088, 1095 (N.D. Cal. 2022).

And courts in this district diverge in whether plaintiffs must plausibly plead that the defendants engaged in egregious conduct. Compare Fortinet, Inc. v. Forescout Techs., Inc., 543 F. Supp. 3d 814, 840 (N.D. Cal. 2021) (requiring plaintiffs to plead egregiousness), with Sonos, 591 F. Supp. 3d at 647 (rejecting the requirement to plead egregiousness).

I. KNOWLEDGE OF THE PATENT

The defendants argue that BSD failed to plead pre-suit knowledge of the '473 Patent for AWS and Twitch, though they do not contest Amazon.com's knowledge of the patent. See Mot. at 5-7 & n.2; Repl. at 5-9. BSD asserts that the companies' patent prosecution counsel imputed knowledge of the '473 patent to AWS and Twitch through a principal-agent relationship and that the parent-subsidiary relationship between the companies helps establish knowledge.¹ Oppo. 7:1-5; 8:13-10:1; Compl. ¶¶ 52-53.

A plaintiff must plausibly plead pre-suit knowledge of the patent for willful infringement to survive a motion to dismiss. Illumina, Inc. v. BGI Genomics Co., Ltd., No. 19-03770-WHO, 2020 WL 571030, at *6 (N.D. Cal. Feb. 5, 2020); see also Sonos, 591 F. Supp. 3d at 644; Word to Info, Inc. v. Google, Inc., 140 F. Supp. 3d 986, 989-90 (N.D. Cal. 2015). BSD's theory of...