Rampage LLC v. Global Graphics Se, Global Graphics Software Inc.

RAMPAGE LLC, Plaintiff, v. GLOBAL GRAPHICS SE, GLOBAL GRAPHICS SOFTWARE INC., AND JOHN DOE #1, Defendants.

Civil Action No. 16-cv-10691-ADB

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

January 19, 2017

MEMORANDUM AND ORDER ON MOTION TO DISMISS

BURROUGHS, D.J.

Rampage LLC ("Rampage") filed this lawsuit against Global Graphics SE, Global Graphics Software Inc. (collectively "Global Graphics"), and John Doe #1 alleging three counts of patent infringement. Rampage's amended complaint alleges that John Doe #1 directly infringed on a patent held by Rampage (Count I), and that Global Graphics committed induced patent infringement (Count II) and contributory patent infringement (Count III). [ECF No. 15]. Now before the Court is Global Graphics' motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). [ECF No. 16]. For the reasons stated below, the Court grants the motion to dismiss as to Count I, without prejudice and with leave to amend if needed after discovery, and denies the motion as to Counts II and III.

I. BACKGROUND

Rampage is the sole owner of U.S. Patent No. 9,053,410 (hereinafter the "'410 Patent"), entitled "Raster Image Processor With Printhead Profile Compensation For a Multi-Level Digital Printing Machine." [ECF No. 15 at ¶ 10]. Mitchell J. Bogart is listed as the inventor.¹ Id. This patent is for a new type of printing technology that presents "[a] system and method of calibration, screening, and compensation . . . for multiple gray-level digital presses." [ECF No. 15-1 at 1]. This new system for distributing ink from inkjet printing presses deals with an issue known as the "Screening Problem." [ECF No. 15 at ¶ 23]. The "Screening Problem" arises because

[m]ost printing software assumes you can print a perfect grid of dots. In [practice] on an inkjet press there are often variations between the control system's aim point for an ink drop and where it actually lands. In addition the interaction of the ink drops with the media may introduce variations. . . . All these variables, in combination or separately, may lead to changes in halftone dots' size or shape away from the intended ideal, which in turn might lead to artifacts and errors that are visible to the naked eye in the finished print.

Id. at ¶ 24.

The '410 Patent covers processes that offer a solution to the Screening Problem. Id. at ¶¶ 26, 28. Bogart's solution, known as the "Multi-Level Screening Solution," "change[s] the size of the tonal sub-ranges based upon density measurements of the actual dot sizes for each colorant" and "overlap[s] each tonal sub-range by a small amount, for example two percent." Id.

Rampage alleges that Global Graphics knew of the patent application by March 5, 2015, perhaps due to its publication. Id. at ¶ 47. On June 23, 2015, someone affiliated with Rampage—the complaint does not mention who—emailed Global Graphics and its Chief Technology Officer, Martin Bailey, informing them of the '410 Patent, and Mr. Bailey confirmed receipt of the email. Id. In approximately the same time frame, Global Graphics developed a software-based raster image processor for use with a digital press that it sells under the mark "Harlequin Host Renderer SDK" (hereinafter the "Accused Product"). Id. at ¶ 14. The Accused Product hasfour types of screening methods that an operator may select: Harlequin multi-level screening, Harlequin Dispersed Screening, Harlequin Cross Modulated, and Harlequin Precision Screening. Id. at ¶ 15. Only the Harlequin multi-level screening option (hereinafter the "Accused Process") is at issue in this case. Rampage asserts that Global Graphics did not sell a multi-level screening option in any of its products until after Rampage contacted Global Graphics regarding the "Multi-Level Screening Solution" invented by Bogart. Id. at ¶ 28. Rampage believes that the Harlequin multi-level screening uses processes and methods covered in the '410 Patent, which forms the basis for the "Multi-Level Screening Solution." Id. at ¶¶ 29-43.

Rampage suspects that Global Graphics then sent the Accused Product to John Doe #1 for testing in the United States. Id. at ¶ 17. Rampage's belief that John Doe #1 has used, tested, or researched the Accused Product in the United States forms the basis for Count I. Id. at ¶¶ 20-45. Rampage's belief that John Doe #1 received the Accused Product from Global Graphics forms the basis for Counts II and III. Id. at ¶¶ 46-59. Rampage does not know the location or identity of John Doe #1, but believes that Global Graphics does know the location and identity of John Doe #1. Id. at ¶¶ 18-19. Rampage also does not have access to the source code for the Accused Product, which is a software product. Id. at ¶ 22. Without examining the source code, Rampage cannot determine exactly how the Accused Product's code is written, and how close it is to the '410 Patent. Id.

Rampage filed this suit on April 10, 2016 [ECF No. 1] and then filed an amended complaint on June 10, 2016 [ECF No. 15]. Global Graphics filed its motion to dismiss on June 24, 2016. [ECF No. 16]. Rampage filed an opposition on July 18, 2016. [ECF No. 23]. The Court held a hearing on the motion to dismiss on November 16, 2016.

II. STANDARD OF REVIEW

The parties disagree as to what standard the Court must use to evaluate a motion to dismiss in the patent infringement context. The disagreement boils down to whether or not a complaint that follows Form 18 in the abrogated Appendix of Forms to the Federal Rules of Civil Procedure is sufficient, or whether a complaint must follow the more stringent requirements set forth in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) and Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Before December 1, 2015, Form 18 in the Appendix of Forms provided a sufficient model complaint for direct patent infringement despite the Twombly and Iqbal decisions. Lyda v. CBS Corp., 838 F.3d 1331, 1337 n.2 (Fed. Cir. 2016). Form 18, however, did not suffice for indirect patent infringement, such as induced infringement or contributory infringement, after the decisions in Twombly and Iqbal were issued. In re Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1336 (Fed. Cir. 2012). Form 18 had only five requirements for a complaint alleging direct patent infringement:

(1) an allegation of jurisdiction; (2) a statement that the plaintiff owns the patent; (3) a statement that defendant has been infringing the patent "by making, selling, and using [the device] embodying the patent"; (4) a statement that the plaintiff has given the defendant notice of its infringement; and (5) a demand for an injunction and damages.

Lyda, 838 F.3d at 1338 (quoting In re Bill of Lading, 681 F.3d at 1334).

On December 1, 2015, amendments to the Federal Rules of Civil Procedure eliminated Rule 84 and the Appendix of Forms. Id. at 1337 n.2. When eliminating Rule 84 and the Appendix of Forms, the Advisory Committee explained "[t]he abrogation of Rule 84 does not alter existing pleading standards or otherwise change the requirements of Civil Rule 8." Fed. R. Civ. P. 84 (2015 Advisory Committee Note). "[W]hile it is possible the Form 18 pleading template may provide sufficient information to satisfy Twombly/Iqbal, such information may notnecessarily be sufficient . . . ." Tannerite Sports, LLC v. Jerent Enters., LLC, No. 6:15-cv-00180, 2016 WL 1737740, at *3 (D. Or. May 2, 2016).

No federal appellate court has yet addressed whether Form 18 or the Twombly/Iqbal standard governs the sufficiency of direct patent infringement claims, but the Court concludes that the Twombly/Iqbal standard is the correct standard for reviewing the counts in the first amended complaint in this case. The vast majority of district courts that have considered cases filed after the elimination of Form 18 agree that "a form that no longer exists can no longer control." Tannerite Sports, 2016 WL 1737740, at *3. There is "scant legal justification" for applying the Form 18 standard in the wake of the amendments. Id. at *4. Rampage argues that the Advisory Committee note may indicate that compliance with Form 18 continues to be sufficient, since the amendments were not intended to alter pleading standards. Setting aside any potential merits to this argument, the Advisory Committee Notes are not binding authority. See Horenkamp v. Van Winkle & Co., 402 F.3d 1129, 1132 (11th Cir. 2005); Tome v. United States, 513 U.S. 150, 160 (1995) (Advisory Committee Notes are merely "a respected source of scholarly commentary"). Rather, the Twombly/Iqbal standard governs all civil cases. Iqbal, 556 U.S. at 684. Use of the Twombly/Iqbal standard also promotes uniformity across the judicial system, Tannerite Sports, 2016 WL 1737740, at *4, whereas reliance on a now-abrogated form would only cause confusion and inconsistency.

Rampage cites to decisions issued after the elimination of Form 18 that nevertheless applied the less-demanding standard of review, but in those cases the complaint had been filed prior to the elimination of Form 18. See Lyda, 838 F.3d at 1337 n.2 (amended complaint filed in 2014, and case terminated on motion to dismiss in July 2015); Hologram USA, Inc. v. Pulse Evolution Corp., No. 2:14-cv-0772-GMN-NJK, 2016 WL 199417 (D. Nev. Jan. 15, 2016)(PACER search shows Second Amended Complaint filed on January 30, 2015). Other district courts that have addressed this issue have decided that Form 18 does not control direct patent infringement claims, and applied the more demanding Twombly/Iqbal standard. See, e.g., Sunrise Techs., Inc. v. Cimcon Lighting, Inc., No. 15-cv-11545-NMG, 2016 WL 6902395, at *2 (D. Mass. Nov. 23, 2016); Deetz Family, LLC v. Rust-Oleum Corp., 4:16-cv-10790, 2016 WL 6662677, at *3 (D. Mass. Nov. 10, 2016); Footbalance Sys. Inc. v. Zero Gravity Inside, Inc., No. 15-cv-1058, 2016 WL 5786936, at *3 (S.D. Cal. Oct. 4, 2016); TeleSign Corp. v. Twilio, Inc., No. 16-cv-2106, 2016 WL 4703873, at *3 (C.D. Cal. Aug. 3, 2016); ...