Mich. Motor Techs. LLC v. Volkswagen Aktiengesellschaft

472 F.Supp.3d 377

MICHIGAN MOTOR TECHNOLOGIES LLC, Plaintiff,

v.VOLKSWAGEN AKTIENGESELLSCHAFT and Volkswagen Group of America, Inc., Defendants.

Case Number 19-10485

United States District Court, E.D. Michigan, Southern Division.

Signed July 13, 2020

Robyn T. Williams, Timothy Devlin, Devlin Law Firm LLC, Wilmington, DE, Thomas R. August, Farmington Hills, MI, Eric A. Bean, Jackier, Gould, Bloomfield Hills, MI, for Plaintiff.

A. Michael Palizzi, Miller, Canfield, Detroit, MI, Andrew S. Dulberg, Dana O. Burwell, Jordan L. Hirsch, Michael J. Summersgill, Sarah B. Petty, Thomas F. Lampert, Wilmer Cutler Pickering Hale & Dorr, Boston, MA, Arthur W. Coviello, Wilmer Cutler Pickering Hale & Dorr, Palo Alto, CA, for Defendants.

OPINION AND ORDER GRANTING VOLKSWAGEN GROUP OF AMERICA'S MOTION TO DISMISS CLAIMS OF WILLFUL, INDUCED, AND CONTRIBUTORY INFRINGEMENT

DAVID M. LAWSON, United States District Judge

Plaintiff Michigan Motor Technologies has alleged in a second amended complaint (SAC) that the defendants directly infringed at least one claim in each of four patents covering inventions that electronically control throttle positions in motor vehicles. The SAC also contained statements that the defendants have engaged in willful, induced, and contributory infringement. Defendant Volkswagen Group of America has moved to dismiss these later claims, contending that the plaintiff failed to support its conclusory allegations with pleaded facts that establish the required elements of those claims. The Court agrees and will grant the motion.

I.

Volkswagen Aktiengesellschaft (VWAG), a multinational corporation with its central headquarters in Wolfsburg, Germany, is the parent company of the Volkswagen Group, which controls various subsidiaries and organizations. The Group designs, manufactures, and sells at least twelve brands of vehicles, including Volkswagen Passenger Cars, Audi, and Porsche. VWAG produces and sells its vehicles in Germany and reaches the American market through its wholly owned subsidiary, Volkswagen Group of America, which is headquartered in Herndon, Virginia.

On February 18, 2019, MMT filed its complaint against Volkswagen Group of America, alleging that Volkswagen's electronic throttle control system infringed twenty of its patents. Certain Volkswagen vehicles utilize a system that links the accelerator to a car engine electronically and is meant to ensure that the engine responds to a driver's commands. The system also supports the cruise control feature, prevents engine overheating, and manages fuel consumption, among other functions. MMT amended the complaint on April 30, 2019, to add VWAG as a defendant. However, because the number of pleaded claims was unmanageable, the Court granted the defendants’ motion to limit the claims on December 23, 2019.

Per the Court's order, MMT dismissed without prejudice sixteen of the twenty patents initially identified and filed its SAC on January 6, 2020. Now, the SAC asserts the following infringement counts:

Count I: U.S. Patent No. 6,588,260, "Electronic Throttle Disable Control Test System" (claim 1);

Count II: U.S. Patent No. 6,443,128, "Method of Controlling an Internal Combustion Engine" (claim 1);

Count III: U.S. Patent No. 6,612,287, "Electronic Throttle Position Feedforward System" (claim 1); and

Count IV: U.S. Patent No. 6,763,804, "Electronic Throttle Servo Overheat Protection System" (claims 1 and 11).

Based on those four asserted patents, the plaintiff brings claims for direct infringement. Toward the end of the SAC, the plaintiff also alleged willful infringement and indirect infringement (induced infringement and contributory infringement).

In support of its willful infringement claim, the plaintiff asserts that the defendants were aware of the patents before the plaintiff sued them:

37. Defendants were made aware of the patents-in-suit at least as early as March 4, 2015, when [they were] provided notice of the patents via letter[; and]

42. On information and belief, since Defendants received notice of the patents, Defendants’ infringement has been and continues to be willful.

SAC, ECF No. 63, PageID.4517, 4518. For its induced infringement claim, the plaintiff states:

39. Upon information and belief, since at least the time of receiving this Amended Complaint, Defendants have induced and continue to induce others to infringe at least claim 1 of the '260 patent ; claim 1 of the '128 patent ; claim 1 of the '287 patent ; and claims 1 and 11 of the '804 patent under 35 U.S.C. § 271(b) by, among other things, and with specific intent or willful blindness, actively aiding and abetting others to infringe, including but not limited to Defendants’ partners and customers, whose use of the Accused Instrumentalities constitutes direct infringement of at least the aforementioned claims. Infringement of these representative claims is alleged solely for illustrative pleading purposes.

40. In particular, Defendants’ actions that aid and abet others such as their partners and customers to infringe include distributing the Accused Instrumentalities and providing materials and/or services related to the Accused Instrumentalities. On information and belief, the Defendants have engaged in such actions with specific intent to cause infringement or with willful blindness to the resulting infringement because Defendants have had actual knowledge of the patents-in-suit and that its acts were inducing infringement of said patents since at least the time of receiving this Amended Complaint.

Id. at PageID.4517. And for its contributory infringement claim, the plaintiff alleges:

41. Upon information and belief, each Defendant is liable as a contributory infringer of the Patents-in-Suit under 35 U.S.C. § 271(c) by offering to sell, selling and importing into the United States the Accused Instrumentalities to be especially made or adapted for use in infringement of the Patents-in-Suit. The Accused Instrumentalities are material components for use in practicing the Patents-in-Suit and are specifically made and are not a staple article of commerce suitable for substantial non-infringing use.

Id. at PageID.4518.

The defendants filed two motions to dismiss. First, VWAG (the German entity) moved to dismiss the complaint against it for insufficient process and lack of personal jurisdiction, which the Court denied last Friday. Volkswagen Group of America then moved to dismiss the plaintiff's claims of willful, induced, and contributory infringement under Federal Rule of Civil Procedure 12(b)(6), which presently is before the Court. It argues that the facts pleaded in the SAC are woefully insufficient to support those theories of recovery or enhanced damages under 35 U.S.C. § 284.

II.

As a general rule, district courts adjudicating patent cases apply the law of the Federal Circuit, not the regional circuit, where the question "is intimately involved with the substance of the patent laws." Grober v. Mako Prods., Inc. , 686 F.3d 1335, 1345 (Fed. Cir. 2012). The sufficiency of a complaint, however, is governed by Federal Rule of Civil Procedure 8(a)(2) as interpreted by the Supreme Court. The Federal Circuit considers that "a purely procedural issue," which is governed by "the applicable law of the regional circuit." In re Bill of Lading Transmission & Processing Sys. Patent Litig. , 681 F.3d 1323, 1331 (Fed. Cir. 2012) (citing McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1355–56 (Fed. Cir. 2007) ).

When the sufficiency of a complaint is challenged in a motion under Rule 12(b)(6), the plaintiff must demonstrate that the "complaint ... contain[s] sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A "claim is facially plausible when a plaintiff ‘pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ " Matthew N. Fulton, DDS, P.C. v. Enclarity, Inc. , 962 F.3d 882, 887 (6th Cir. 2020) (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ). Plausibility requires showing more than the ‘sheer possibility’ of relief but less than a ‘probab[le]’ entitlement to relief. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)." Fabian v. Fulmer Helmets, Inc. , 628 F.3d 278, 280 (6th Cir. 2010). "Where a complaint pleads facts that are ‘merely consistent with’ a defendant's liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’ " Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 557, 127 S.Ct. 1955 ).

Under the regime ushered in by Twombly and Iqbal , pleaded facts must be accepted as true by the reviewing court, Hill v. Snyder , 878 F.3d 193, 203 (6th Cir. 2017), but conclusions may not be credited unless they are plausibly supported by the pleaded facts. In fact, courts "should disregard" legal conclusions and focus on the factual matter pleaded. Henry v. CMBB, LLC , 797 F. App'x 258, 260 (6th Cir. 2020). "[B]are assertions," such as those that "amount to nothing more than a ‘formulaic recitation of the elements’ " of a claim, can provide context to the factual allegations, but are insufficient to state a claim for relief. Iqbal , 556 U.S. at 681, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). That simply " ‘will not do.’ " Id. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). "Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’ " Ibid. (quoting Twombly , 550 U.S. at 557, 127 S.Ct. 1955 ).

A.

The Patent Act requires that an infringer compensate a patentee, but also allows a court to "increase the damages up to three times the amount found or assessed."

35 U.S.C. § 284. Enhanced damages are not awarded as a matter of...