Monec Holding AG v. Motorola Mobility, Inc.

897 F.Supp.2d 225

MONEC HOLDING AG, Plaintiff,

v.MOTOROLA MOBILITY, INC., et al., Defendants.

Civil Action No. 11–798–LPS–SRF.

United States District Court, D. Delaware.

Sept. 20, 2012.

Dominick T. Gattuso, Proctor Heyman LLP, Meghan Anne Adams, Wilmington, DE, James M. Moriarty, Pro Hac Vice, Steven J. Moore, Pro Hac Vice, for Plaintiff.

Jack B. Blumenfeld, Karen Jacobs Louden, Morris, Nichols, Arsht & Tunnell LLP, Wilmington, DE, Amr O. Aly, Pro Hac Vice, Douglas Edward McCann, Fish & Richardson, P.C., Wilmington, DE, for Defendants.

ORDER

LEONARD P. STARK, District Judge.

WHEREAS, Magistrate Judge Fallon issued a Report and Recommendation (D.I. 61) dated August 3, 2012;

WHEREAS, the Report and Recommendation recommends that the Court DENY as moot Defendants' motion to dismiss the original complaint (D.I. 30); and GRANT Defendants' motion to dismiss the first amended complaint (D.I. 41).

WHEREAS, any Objections to the Report and Recommendation (D.I. 61) were to be filed by August 20, 2012;

WHEREAS, neither party has filed an Objection to the Report and Recommendation;

WHEREAS, the Court concludes that the Report and Recommendation should be adopted for the reasons stated by Magistrate Judge Fallon;

NOW THEREFORE, IT IS HEREBY ORDERED that the Report and Recommendation (D.I. 61) is ADOPTED; and

Defendants' motion to dismiss the original complaint (D.I. 30) is DENIED as moot. Defendants' motion to dismiss MONEC's claims in the first amended complaint for induced, contributory, and willful infringement of the reexamined '678 patent (D.I. 41) is GRANTED without prejudice.

REPORT AND RECOMMENDATION

SHERRY R. FALLON, United States Magistrate Judge.

I. INTRODUCTION

Presently before the court in this patent infringement action is a motion to dismiss the first amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), filed by three sets of defendants: (1) Motorola Mobility, Inc.; (2) Samsung Electronics America, Inc. and Samsung Electronics Co., Ltd.; and (3) HTC Corporation, HTC America, Inc., and Exeda, Inc. (collectively, “Defendants”) on January 13, 2012. (D.I. 41) For the reasons which follow, I recommend that the court grant the motion to dismiss the claims of indirect infringement and willfulness without prejudice.

II. BACKGROUND

On January 1, 2002, United States Patent No. 6,335,678 (“the '678 patent”), entitled “Electronic Device, Preferably an Electronic Book,” issued to Theodor Heutschi. (D.I. 34 at ¶ 14) On November 12, 2009, a request for ex parte reexamination of the '678 patent was filed, and the United States Patent and Trademark Office (the “PTO”) issued an ex parte reexamination certificate to Plaintiff MONEC Holding AG (“MONEC” or “Plaintiff”) on May 10, 2011. ( Id. at ¶ ¶ 15–16) MONEC is the owner by assignment of the entire right, title, and interest in and to the '678 patent, as reexamined. ( Id. at ¶¶ 14, 18) The reexamined '678 patent embodiments include a flat electronic device housing a processing system to communicate, store, interact with, and display digital media transferred from a peripheral device over a multiband radio network station incorporating a GSM/SIM chip and manipulated by various input means, including a touch screen. ( Id. at ¶ 17)

MONEC filed its complaint in the instant action on September 9, 2011, asserting infringement of the '678 patent, as reexamined. (D.I. 1) MONEC filed its first amended complaint on December 19, 2011, alleging that each Defendant manufactures, markets, and/or sells smart phones and tablet computers ¹ which allegedly infringe the reexamined ' 678 patent. (D.I. 34 at ¶¶ 22–100) Specifically, MONEC alleges that Defendants instruct their customers, both retailers and end-users, on infringing uses of the Infringing Products, and Defendants knew or should have known that the Infringing Products were especially made for use in an infringement of the reexamined ' 678 patent and that there is no substantially noninfringing use of the Infringing Products. ( Id. at ¶¶ 33–35, 58–60, 88–90) According to MONEC, Defendants' competitors Apple and Hewlett–Packard have engaged in litigation with MONEC regarding infringement of the ' 678 patent (the “Apple Action” and the “HP Action,” respectively), and this litigation received substantial press coverage which likely would have been followed and monitored by Defendants,who are also involved in litigation against Apple. ( Id. at ¶¶ 37–40, 62–66, 92–95)

III. LEGAL STANDARD

To state a claim upon which relief can be granted pursuant to Rule 12(b)(6), 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). Although detailed factual allegations are not required, the complaint must set forth sufficient factual matter, accepted as true, to “state a claim for relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 663, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A claim is facially plausible when the factual allegations allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Twombly, 550 U.S. at 555–56, 127 S.Ct. 1955;Iqbal, 556 U.S. at 663, 129 S.Ct. 1937. The court “need not accept as true threadbare recitals of a cause of action's elements, supported by mere conclusory statements.” Id.

Following the Supreme Court's decision in Iqbal, district courts have conducted a two-part analysis in determining the sufficiency of the claims. First, the court must separate the factual and legal elements of the claim, accepting the complaint's well-pleaded facts as true and disregarding the legal conclusions. Iqbal, 556 U.S. at 663, 129 S.Ct. 1937. Second, the court must determine whether the facts alleged in the complaint state a plausible claim by conducting a context-specific inquiry that “draw[s] on [the court's] experience and common sense.” Id. at 663–64, 129 S.Ct. 1937;Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.2009). As the Supreme Court instructed in Iqbal, “[w]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is entitled to relief.’ ” Iqbal, 556 U.S. at 679, 129 S.Ct. 1937 (quoting Fed.R.Civ.P. 8(a)(2)).

IV. DISCUSSIONA. Indirect Infringement

1. Legal standards

(a) Knowledge

To prevail on a claim for indirect infringement, a defendant must first demonstrate direct infringement, and then establish that the “defendant possessed the requisite knowledge or intent to be held vicariously liable.” Dynacore Holdings Corp. v. U.S. Philips Corp., 363 F.3d 1263, 1272–73 (Fed.Cir.2004). The knowledge requirement must be met by a showing of either actual knowledge or willful blindness. Global–Tech Appliances, Inc. v. SEB S.A., ––– U.S. ––––, 131 S.Ct. 2060, 2068, 179 L.Ed.2d 1167 (2011). At the pleading stage, “the question before the Court on defendants' motions to dismiss is whether [the plaintiff] has plead sufficient facts ... for the Court to infer that the defendants had knowledge of [the plaintiff's] patents and that their products infringed on those patents.” Trading Techs. Int'l, Inc. v. BCG Partners, Inc., 2011 WL 3946581, at *3 (N.D.Ill. Sept. 2, 2011) (emphasis in original) (citing Global–Tech, 131 S.Ct. at 2068).

This court has held that a complaint sufficiently pleads a defendant's actual knowledge when a plaintiff alleges that the defendant or its predecessor learned of a patent-in-suit from an exchange of proprietary information pursuant to a licensing agreement,² or when a plaintiff alleges that a defendant previously filed papers with the PTO identifying the patents as prior art.³ In contrast, a plaintiff fails to sufficiently plead knowledge of the patent-in-suit when the plaintiff merely recites the elements for indirect infringement without supporting facts,⁴ or when the factual allegations merely support the conclusion that the parties have patents in the same field.⁵

The Supreme Court recently held that a plaintiff may plead knowledge for purposes of a claim for induced infringement by applying the theory of willful blindness, rejecting the “deliberate indifference” standard previously applied by the Federal Circuit. See Global–Tech, 131 S.Ct. at 2071. The Supreme Court identified a willfully blind defendant as “one who takes deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be said to have actually known the critical facts.” Id. at 2070–71. To state a claim for willful blindness, a plaintiff must plead facts demonstrating that the defendant “(1) subjectively believed there was a high probability a particular fact existed or was true, and (2) took deliberate actions to avoid learning of that fact.” Vasudevan Software, Inc. v. TIBCO Software Inc., 2012 WL 1831543, at *5 (N.D.Cal. May 18, 2012) (citing Global–Tech, 131 S.Ct. at 2070). A complaint that fails to identify any affirmative actions taken by the defendant to avoid gaining actual knowledge of the patent-in-suit is insufficient to state a claim for relief based on the willful blindness theory under the pleading standards set forth in Rule 8, Twombly, and Iqbal.Id. at *6;see also Mikkelsen Graphic Eng'g Inc. v. Zund Am., Inc., 2011 WL 6122377, at *7 n. 3 (E.D.Wis. Dec. 8, 2011) (concluding on summary judgment that willful blindness did not apply because there was no evidence that the defendant deliberately shielded itself from clear evidence that the acts it induced constituted patent infringement).

(b) Induced infringement

Pursuant to 35 U.S.C. § 271(b), “[w]hoever actively induces infringement of a patent shall be liable as an infringer.” “To prove induced infringement, the patentee must show direct infringement, and that the alleged infringer knowingly induced infringement and possessed specific intent to encourage...