Dynamic Data Techs. v. Brightcove Inc.

DYNAMIC DATA TECHNOLOGIES, LLC Plaintiff, v. BRIGHTCOVE INC., BRIGHTCOVE HOLDINGS, INC., Defendants.

Civil Action No. 19-1190-CFC

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

July 20, 2020

Stephen Brauerman, BAYARD, P.A., Wilmington, Delaware

Counsel for Plaintiff

Jennifer Ying, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware

Counsel for Defendants

MEMORANDUM OPINION

July 20, 2020

Wilmington, Delaware

/s/_________

COLM F. CONNOLLY

UNITED STATES DISTRICT JUDGE

Plaintiff Dynamic Data Technologies, LLC has filed a 15-count complaint against Defendants Brightcove Inc. and Brightcove Holdings, Inc. (collectively, Brightcove) for patent infringement. D.I. 1. Before me is Brightcove's motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). D.I. 12.

I. BACKGROUND¹

Dynamic Data alleges that Brightcove directly infringes and induces infringement of U.S. Patent Nos. 8,073,054 (the #054 patent); 6,774,918 (the #918 patent); 6,996,175 (the #175 patent); 6,996,177 (the #177 patent); 7,010,039 (the #039patent); 8,311,112 (the #112 patent); 7,894,529 (the #529 patent); 7,519,230 (the #230 patent); 7,571,450 (the #450 patent); 8,385,426 (the #426 patent); 7,058,227 (the #227 patent); 6,639,944 (the #944 patent); 6,782,054 (the #054 patent); 7,982,799 (the #799 patent); and 8,442,118 (the #118 patent). D.I. 1 at 1; D.I. 1 ¶¶ 150, 160. Dynamic Data also seeks enhanced damages for alleged willful infringement of each of the asserted patents. See e.g., D.I. 1 ¶ 163.

Each count in Dynamic Data's Complaint alleges infringement of one of the 15 asserted patents. The asserted patents recite "image and video processing" devices, systems, and methods. D.I. 1 ¶¶ 3, 19-144.

II. LEGAL STANDARDS FOR STATING A CLAIM

To state a claim on which relief can be granted, a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Detailed factual allegations are not required, but the complaint must include more than mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted). The complaint must set forth enough facts, accepted as true, to "state a claim to relief that is plausible on its face." Id. at 570. A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). Deciding whether a claim is plausible is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679 (citation omitted).

III. DISCUSSION

A. Direct Infringement

1. Legal Standards

Liability for direct infringement arises when a party "without authoritymakes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent." 35 U.S.C. § 271(a). To plead direct infringement, "[t]he complaint must place the potential infringer on notice of what activity is being accused of infringement." Nalco Co. v. Chem-Mod, LLC, 883 F.3d 1337, 1350 (Fed. Cir. 2018) (internal quotation marks, alterations, and citation omitted). To provide notice, a plaintiff must generally do more than assert that the product infringes the claim; a plaintiff must show how the defendant plausibly infringes by alleging some facts connecting the allegedly infringing product to the claim elements. See SIPCO, LLC v. Streetline, Inc., 230 F. Supp. 3d 351, 353 (D. Del. 2017) (granting the motion to dismiss because "[t]he complaint contains no attempt to connect anything in the patent claims to anything about any of the accused products").

2. Discussion

Brightcove asserts that every Count "fails to plausibly allege infringement of the Asserted Patents because [Dynamic Data] fails to allege factual allegations addressing every element of each asserted claim." D.I. 13 at 11. I disagree.

As an initial matter, "the Federal Rules of Civil Procedure do not require a plaintiff to plead facts establishing that each element of an asserted claim is met." Nalco, 883 F.3d at 1350 (citation omitted). Rather, a plaintiff need only "place the potential infringer on notice of what activity is being accused of infringement" tostate a claim for direct infringement. Id. (internal quotation marks, alterations, and citation omitted).

Here, Dynamic Data plausibly pleads direct infringement because the allegations in the Complaint give Brightcove fair notice of how it may directly infringe the asserted patents. Dynamic Data identifies Brightcove products accused of infringing each of the asserted patents, identifies at least one claim of each asserted patent that the accused products infringe, and describes how those products infringe the identified claim.

As an example, Count I alleges infringement of the #054 patent. Count I identifies accused Brightcove products and services—the Brightcove Video Cloud, Brightcove Enterprise Video Suite, Brightcove Live, Brightcove OTT Flow, and Brightcove Zencoder—and asserts that those products infringe claim 1 of the #054 patent. D.I. 1 ¶¶ 147, 159. Count I goes on to describe how those products infringe claim 1: The accused products "enable motion estimation with a relatively fast convergence in finding the appropriate motion vectors of the motion vector fields by adding a further candidate motion vector to the set of candidate motion vectors." D.I. 1 ¶ 151. Count I also alleges that the accused products "include a motion estimation unit comprising" several elements recited in claim 1. D.I. 1 ¶¶ 152-56.

Such allegations provide Brightcove with fair notice of how it may infringe the #054 patent. Each of the other counts contains similar allegations about an asserted patent and the Complaint's 15 counts collectively plausibly allege direct infringement of the 15 asserted patents.

B. Induced Infringement

1. Legal Standards

"Whoever actively induces infringement of a patent shall be liable as an infringer." 35 U.S.C. § 271(b). "To prove inducement of infringement, unlike direct infringement, the patentee must show that the accused inducer took an affirmative act to encourage infringement with the knowledge that the induced acts constitute patent infringement." Microsoft Corp. v. DataTern, Inc., 755 F.3d 899, 904 (Fed. Cir. 2014) (citing Glob.-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 765-66 (2011)). Thus, "[f]or an allegation of induced infringement to survive a motion to dismiss, a complaint must plead facts plausibly showing that the accused infringer specifically intended another party to infringe the patent and knew that the other party's acts constituted infringement." Lifetime Indus., Inc. v. Trim-Lok, Inc., 869 F.3d 1372, 1379 (Fed. Cir. 2017) (internal quotation marks, alterations, and citation omitted).

2. Discussion

Dynamic Data has not stated a claim for induced infringement because it hasnot plausibly alleged that Brightcove knew that its products infringed the asserted patents. The only allegations of Brightcove's pre-suit knowledge of infringement are conclusory statements that merely recite the legal requirements for induced infringement. See e.g., D.I. 1 ¶ 162. A complaint, however, must include more than mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action" to survive a motion to dismiss. Twombly, 550 U.S. at 555 (citation omitted).

Dynamic Data argues that its Complaint plausibly alleges knowledge of infringement because each Count alleges that "Brightcove . . . was aware that its accused products allegedly infringe as of the filing of the Complaint." D.I. 13 at 18 n.18. But such allegations do not plead knowledge of infringement because the complaint itself cannot serve as the basis for a defendant's actionable knowledge. "The purpose of a complaint is not to create a claim but rather to obtain relief for an existing claim." VLSI Tech. LLC v. Intel Corp., 2019 WL 1349468, at *2 (D. Del. Mar. 26, 2019). For that reason, the complaint itself cannot be the source of the knowledge required to sustain claims of induced infringement. See id. (holding that "the complaint itself cannot serve as the basis for a defendant's actionable knowledge" for a willful infringement claim); Kaufman v. Microsoft Corp., 2020 WL 364136, at *4 (S.D.N.Y. Jan. 22, 2020) (holding that "Plaintiff's theory [of post-suit knowledge of the asserted patent] is without merit" and "not the law inthis district").

Because Dynamic Data's conclusory statements do not plausibly allege knowledge of infringement, I will dismiss the claims for induced infringement.

C. Enhanced Damages Claims Based on Alleged Willful Infringement

1. Legal Standards

Section 284 of the Patent Act "gives district courts the discretion to award enhanced damages against those guilty of patent infringement." Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1935 (2016). The statute provides that "the court may increase the damages up to three times the amount found or assessed." 35 U.S.C. § 284. Although the Court in Halo intentionally "eschew[ed] any rigid formula for awarding enhanced damages under § 284," 136 S. Ct. at 1934, the Court held that the legal principles "developed over nearly two centuries of application and interpretation of the Patent Act . . . channel the exercise of [the district court's] discretion" and "limit[ ] the award of enhanced damages to egregious cases of misconduct beyond typical infringement," id. at 1935. Thus, enhanced damages awards under § 284 are available only in "egregious cases" of misconduct that involve more than "typical" infringement. Id. As the Court explained, the enhanced damages award provided by § 284 was "designed as a 'punitive' or 'vindictive' sanction for egregious...