Int'l Bus. Machs. Corp. v. Rakuten, Inc.

INTERNATIONAL BUSINESS MACHINES CORPORATION, Plaintiff. v. RAKUTEN, INC., and EBATES PERFORMANCE MARKETING, INC. DBA RAKUTEN REWARDS, Defendants.

Civil Action No. 21-461-GBW

United States District Court, D. Delaware

December 22, 2022

MEMORANDUM ORDER

GREGORY B. WILLIAMS UNITED STATES DISTRICT JUDGE

Pending before this Court is Defendants' Partial Motion to Dismiss Second Amended Complaint for Patent Infringement and Stay Patent Claims Pending Inter Partes Review Proceedings (D.1.99), Plaintiff s Motion for Leave to File a Third .Amended Complaint (D.L 111), and Rakuten, Inc.'s Renewed Motion to Dismiss Second Amended Complaint for Patent Infringement Under Fed.R.Civ.P. 12(b)(2) (D.L 132). The Court heard oral argument on the above pending motions on December 13,2022. For the reasons below, Defendants' Partial Motion to Dismiss Second Amended Complaint for Patent Infringement and Stay Patent Claims Pending Inter Partes Review Proceedings (D.L 99) is DENIED-IN-PART and GRANTED-IN-PART; Plaintiff's Motion for Leave to File a Third Amended Complaint (D.L 111) is DENIED; and Rakuten Inc.'s Renewed Motion to Dismiss Second Amended Complaint for Patent Infringement Under Fed.R.Civ.P. 12(b)(2) (D.L 132) is DENIED.

I. BACKGROUND^[1]

On March 29, 2021, Plaintiff International Business Machines Corporation (“IBM”) filed its Complaint alleging Rakuten USA, Inc., Rakuten Commerce, LLC, Ebates Inc. d/b/a Rakuten (“Ebates Inc.”) and Rakuten, Inc.^[2] (“Rakuten Japan”) infringe U.S. Patent Nos. 7,072,849 (the “ 849 patent”), 7,631,346 (the “'346 patent”), 6,785,676 (the “'676 patent”), and 7,543,234 (the “'234 patent”). D.I. 1. On May 19, 2021, Rakuten USA, Inc., Rakuten Commerce, LLC. and Ebates Inc. filed its first Motion to Dismiss. D.I. 13. IBM did not respond to the Motion to Dismiss and instead, on June 23,2021, IBM filed its First Amended Complaint in which it dropped Rakuten USA, Inc. and Rakuten Commerce, LLC and added Ebates Performance Marketing, Inc. dba Rakuten Rewards (“Ebates Performance Marketing”), D.I. 18. Rakuten Japan then filed a Motion to Dismiss the First Amended Complaint for lack of personal jurisdiction. D.I. 31. The Court denied Rakuten's Motion to Dismiss without prejudice “to renew upon completion of jurisdictional discovery.” D.I. 63.

Ebates Performance Marketing also moved to dismiss Count Six of the First Amended Complaint, arguing that the '443 patent was invalid. D.I. 60. IBM then filed its Second Amended Complaint to cite to a previously served expert report in a co-pending litigation, which opines the '443 patent is inventive and unconventional. D.I. 70 ¶ 81. Rakuten filed a Partial Motion to Dismiss Count Five of IBM's Second Amended Complaint but eventually withdrew the motion. D.I. 82; D.I. 98.

On April 25, 2022, Ebates Performance Marketing moved to dismiss Counts One, Three, and Five of IBM's Second Amended Complaint as barred by collateral estoppel and moved to stay proceedings with respect to the '346 and '234 patents in view of inter partes review (“IPR”) proceedings (the '‘Motion to Dismiss and Stay”). D.1.99. On July 15,2022, Rakuten Japan joined Ebates Performance Marketing's Motion to Dismiss and Stay. D.I. 134. Briefing regarding the Motion to Dismiss and Stay is complete. See D.I. 100, D.I. 115, D.I. 126.

On May 23, 2022, IBM requested leave to file a Third Amended Complaint. D.I. 111. Letter briefing regarding IBM's motion for leave to file a Third Amended Complaint is complete. See D.I. 112, D.I. 114, D.I. 117.

On July 15, 2022, Rakuten Japan filed a Renewed Motion to Dismiss IBM's Second Amended Complaint for Lack of Personal Jurisdiction Under Federal Rule of Civil Procedure 12(b)(2) (the “Motion to Dismiss for Lack of Personal Jurisdiction”). D.I. 132^[3] Briefing regarding Rakuten Japan's Motion to Dismiss for Lack of Personal Jurisdiction is complete. See D.I. 133, D.1.150, D.I. 166.

II. LEGAL STANDARD

a. Personal Jurisdiction Under Rule 12(b)(2)

Federal Rule of Civil Procedure 12(b)(2) requires the Court to dismiss any case in which it lacks personal jurisdiction. Fed.R.Civ.P. 12(b)(2); E.I. DuPont de Nemours & Co. v. Rhodia Fiber & Resin Intermediates, 197 F.R.D. 112, 119 (D. Del. 2000). The determination of whether the court has personal jurisdiction over a party' requires a two-part analysis. E.I. DuPont de Nemours, 197 F.R.D. at 119. First the court must determine whether a defendant's actions fall within the scope of a state's long-arm statute. Id. Second, the court must determine whether the exercise of jurisdiction comports with the Due Process Clause of the Constitution. Id. “The Delaware long-arm statute, 10 Del. C. § 3104(c), is to be broadly construed to confer jurisdiction to the maximum extent possible under the Due Process Clause.” Kabbaj v. Simpson, 547 Fed.Appx. 84, 86 n.6 (3d Cir. 2013) (citing LaNuova D & B, Sp.A. v. Bowe Co., 513 A.2d 764, 768 (Del. 1986)); see also Eurofins Pharma U.S. Holdings v. BioAlliance Pharma SA, 623 F.3d 147,155 (3d Cir. 2010); RMG Media, LLC v. iBoats, Inc.,No. 20-290-RGA, 2021 WL 1227730. at *2 (D. Del. Mar. 31,2021) (citing AstraZeneca AB v. Mylan, 72 F.Supp.3d 549, 552 (D. Del. Nov. 5,2014)). In other words, the general two-part analysis of personal jurisdiction-(1) whether a defendant's actions fall within the scope of a state's long-arm statute; and (2) whether the exercise of jurisdiction comports with the Due Process Clause of the Constitution-collapses into a single inquiry of whether a court's exercise of personal jurisdiction comports with Due Process. See id

Constitutional due process is satisfied if “sufficient minimum contacts exist between the defendant and the forum state to satisfy traditional notions of fair play and substantial justice.” TriStrata Tech., Inc. v. Emulgen Labs., Inc., 537 F.Supp.2d 635, 641 (D. Del. 2008); see also Int'l Shoe Co. v. State of Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310, 316 (1945). “In undertaking this ‘minimum contacts' analysis, the Supreme Court has focused on the nature and extent of ‘the defendant's relationship to the forum State.'” RMG Media, 2021 WL 1227730, at *2 (quoting Bristol-Myers Squibb Co. v. Superior Court of Cal., San Francisco Cty., 137 S.Ct. 1773, 1779 (2017)). The purpose of this requirement is to ensure that “defendant's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there.” TriStrata Tech., 537 F.Supp.2d at 641 (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,297 (1980)).

“The plaintiff bears the burden of establishing that the defendants are properly subject to the court's jurisdiction.” Nespresso USA, Inc. v. Ethical Coffee Co. SA, 263 F.Supp.3d 498, 502 (D. Del. 2017). If a plaintiff makes “factual allegations [that] suggest the possible existence of requisite contacts between the defendant and the forum state with ‘reasonable particularity,”' the Court should order jurisdictional discovery. Commissariat AL'Energie Atomique v. Chi Mei Optoelectronics Corp., 395 F.3d 1315, 1323 (Fed. Cir. 2005); see also Mellon Bank (East) PSFS, Nat'l Ass'n v. Farino, 960 F.2d 1217,1223 (3rd Cir. 1992). However, “[a]fter discovery has begun, the plaintiff must sustain [its] burden by establishing jurisdictional facts through sworn affidavits or other competent evidence.” Philips Electronics North America Corp. v. Coniec Corp., No. 2-123-KAJ, 2004 WL 503602, at *3 (D. Del. Mar. 11, 2004) (citing Time Share Vacation Club v. Atlantic Resorts, Ltd, 735 F.2d 61,66 n.9 (3d Cir. 1984)) (internal citations omitted).

b. Motion to Dismiss Under Rule 12(b)(6)

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). Such a claim must plausibly suggest “facts sufficient to ‘draw the reasonable inference that the defendant is liable for the misconduct alleged.'” Doe v. Princeton Univ., 30 F.4th 335, 342 (3d Cir. 2022) (quoting Ashcroft v. Iqbal, 556 U.S. 662,678 (2009)) (citing BellAtl. Corp. v. Twombly, 550 U.S. 544,557 (2007)). “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.'” Klotz v. Celentano Stadtmauer & Walentowicz LLP, 991 F.3d 458,462 (3d Cir. 2021) (quoting Iqbal, 556 U.S. at 678). But the Court will “‘disregard legal conclusions and recitals of the elements of a cause of action supported by mere conclusory statements.'” Princeton Univ., 30 F.4th at 342 (quoting Davis v. Wells Fargo, 824 F.3d 333, 341 (3d Cir. 2016)). Under Rule 12(b)(6), the Court must accept as true all factual allegations in the Complaint and view those facts in the light most favorable to the plaintiff. See Fed. Trade Comm'n v. AbbVie Inc, 976 F.3d 327, 351 (3d Cir. 2020).

‘“The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.'” In re Avandia Mktg., Sales Pracs. & Prod. Liab. Litig., 804 F.3d 633, 638 (3d Cir. 2015) (citation omitted). “A motion to dismiss [under Rule 12(b)(6)] 'may be granted only if, accepting all well-pleaded allegations in the complaint as true, and viewing them in the light most favorable to plaintiff, plaintiff is not entitled to relief.'” McCrone v. Acme Markets, 561 Fed.Appx. 169, 172 (3d Cir. 2014) (quoting In re Burlington Coat Factory Sec. Litig., 114F.3d 1410,1420 (3d Cir. 1997)).

c. Collateral Estoppel

Collateral estoppel (i.e., issue preclusion) precludes parties from relitigating an issue that they previously had a full and fair opportunity to litigate. See Montana v. United States, 440 U.S. 147, 153 (1979)....