Intellectual Property – Motions to Dismiss

July 31, 2013

Publication| Intellectual Property

Judge Robinson Dismisses for Lack of Subject Matter Jurisdiction

In Walker Digital, LLC v. Expedia, Inc., et al., C.A. No. 11-313-SLR (and related C.A. Nos. 12-140-SLR, 12-141-SLR and 12-142-SLR) (D. Del. June 19, 2013), Judge Robinson granted certain defendants’ motion to dismiss for lack of subject matter jurisdiction.  The settlement agreement of an earlier action between plaintiff Walker Digital, LLC and eBay, Inc. (also one of the movants) provided for both the transfer of ownership and the license of rights to a number of patents, with the set of patents for each described in a separate part of the agreement.  The language effecting each conveyance was similar: a statement transferring or granting rights to patents listed in a separate appendix or schedule, followed by a sentence extending the transfer or grant to “continuations, continuations-in-part, divisionals, reissues, and re-examinations” of such patents.  By such language, each of the patents at issue in this motion could be found in both the license and the transfer of ownership.  Unable to find any reason not to enforce the transfer of ownership, Judge Robinson granted the motion to dismiss one of the patents at issue in the motion without further discussion.  As to the other two patents at issue, Walker Digital had represented in the settlement agreement that they were not the subject of litigation, which was not the case.  But the Court found that this was not a hurdle, declining to “elevate a standard warranty clause above unambiguous granting language.”  Though the record contained parol evidence suggesting that the parties did not intend to transfer ownership of these two patents, Judge Robinson found that this evidence could not overcome the language of the agreement, given “the complexity of plaintiff’s patent portfolio and the sophistication of the parties to the Settlement Agreement.”

Chief Judge Sleet Dismisses for Lack of Personal Jurisdiction

In Liqui-Box Corporation v. Scholle Corporation, C.A. No. 12-464-GMS (D. Del. June 17, 2013), Chief Judge Sleet found that the Court could not exercise personal jurisdiction over the defendant-patentee under Delaware’s long-arm statute and thus dismissed the plaintiff’s declaratory judgment action.  According to the Court, specific jurisdiction in a declaratory judgment action depends on the extent to which the patentee purposefully directs enforcement activities at residents of the forum and the extent to which the claim arises out of or relates to those activities.  The plaintiff focused on the location of sales of products, not enforcement activities—facts that would have been relevant to specific personal jurisdiction in an infringement suit, but not in a declaratory judgment action.  The Court also rejected the plaintiff’s “dual jurisdiction” theory, since the declaratory judgment action did not arise from injuries caused by a product that the defendant placed in the stream of commerce.  Finally, the plaintiff did not show that the defendant engaged in sufficient activities in Delaware to establish a “general presence” under the state’s long-arm statute.  Although the Court did not reach the due process jurisdictional analysis, it noted that due process requires more activity directed to the forum than letters sent to a corporation threatening an infringement suit. 

Judge Robinson Denies Motion to Dismiss Counterclaims and Strike Affirmative Defenses

In Joao Bock Transaction Systems, LLC v. Jack Henry Associates, Inc., C.A. No. 1138-SLR (D. Del. June 13, 2013), Judge Robinson denied a motion to dismiss counterclaims and strike certain affirmative defenses related to invalidity of the patent-in-suit, as well as certain introductory material.  Judge Robinson found that the defendant’s counterclaims included “numerous details” indicating why the defendant believed the patent-in-suit to be invalid and concluded that there was far more than a bare allegation of wrongdoing.  Judge Robinson also concluded that the motion to strike should be denied because the introductory material was related to the case in a substantive way and the affirmative defenses were properly pled because they contained some supporting facts. 

Magistrate Judge Burke Recommends Denial of the Parties’ Motions to Dismiss, Grant of Defendant’s Motion to Transfer, and Grant of Plaintiff’s Motion to Substitute 

In Abbott Laboratories v. Roxane Laboratories, Inc., C.A. No. 12-457-RGA-CJB (D. Del. May 28, 2013), Magistrate Judge Burke granted the plaintiff’s motion to substitute AbbVie as the plaintiff in the action, denied the defendant’s motion to dismiss the complaint for lack of subject matter jurisdiction, granted the defendant’s motion to transfer venue to the U.S. District Court for the Southern District of Ohio, and denied the plaintiff’s motion to dismiss as moot.  As to the defendant’s motion to dismiss and the plaintiff’s motion to substitute, Magistrate Judge Burke determined that both motions related to the same underlying issue: the plaintiff’s assignment of the patents-in-suit to AbbVie.  Judge Burke recommended that the plaintiff’s motion to substitute be granted and the defendant’s related motion to dismiss be denied for two reasons.  First, Judge Burke noted that the timing of the plaintiff’s motion to substitute was not dispositive, and that the plaintiff’s filing of its motion a few hours after the filing of the defendant’s motion to dismiss weighed against dismissal of the action.  Second, Judge Burke determined that Rule 25(c) may be used to cure lack of standing incurred after the filing of the complaint as long as the claims survived assignment.  

Regarding the defendant’s motion to transfer, Judge Burke ruled that the first-filed rule did not apply in this case because the Delaware action and the Ohio action were distinguishable in that the subject matter of the suits was different.  Even though the first-filed rule did not apply, Judge Burke found that the case should still be transferred pursuant to the 28 U.S.C. § 1404(a) analysis.  In his report, Judge Burke noted that Delaware had no ties to the plaintiff or the defendant, while Ohio had ties to both parties and to the underlying dispute and was also the forum in which litigation involving the same ANDA was already ongoing.     

Judge Stark Adopts Magistrate Judge Burke’s Report and Recommendation

In Pragmatus AV, LLC v. Yahoo! Inc., C.A. No. 11-902-LPS-CJB (by Memorandum Order, D.I. 153, May 24, 2013), Judge Stark adopted Magistrate Judge Burke’s Report and Recommendation to deny the defendant’s motion to dismiss the complaint with respect to the plaintiff’s direct infringement claims and grant the defendant’s motion to dismiss the complaint with respect to the plaintiff’s indirect infringement claims, which included both induced infringement and contributory infringement claims.  The Court granted the plaintiff leave to file a second amended complaint.

Judge Robinson Denies Motion to Dismiss for Lack of Subject Matter Jurisdiction

In Butamax™ Advanced Biofuels LLC et al. v. Gevo, Inc., C.A. No. 12-1301-SLR (D. Del. May 2, 2013), Judge Robinson denied a motion to dismiss a declaratory judgment suit for lack of subject matter jurisdiction.  In January 2012, the defendant filed a patent infringement suit against the plaintiffs for infringement of U.S. Patent No. 8,101,808 (the “’808” patent”).  The plaintiffs then filed a declaratory judgment action seeking a declaration of non-infringement of U.S. Patent No. 8,282,505 (the “’505” patent).  The ’505 patent is a continuation of the ’808 patent.  The defendant moved to dismiss the declaratory judgment claim for lack of subject matter jurisdiction.  In refusing to dismiss the declaratory judgment action, Judge Robinson found that there were substantial similarities in the subject matter of the two patents.  Judge Robinson found that the similar technology, the pattern of litigation between the parties, and the close relationship between the patents established facts sufficient to demonstrate an actual controversy between the parties concerning the ’505 patent.  Accordingly, Judge Robinson found that the Court had subject matter jurisdiction over the controversy.

Magistrate Judge Thynge Recommends Denial of Defendant’s Motion to Dismiss Plaintiff’s Claims of Direct Infringement, Inducement to Infringe and Contributory Infringement

In T5 Labs (Delaware) LLC v. Gaikai Inc., C.A. No. 12-1281(SLR) (MPT) (D. Del. April 5, 2012), Magistrate Judge Thynge recommended that the defendant’s motion to dismiss be denied.  The plaintiff alleged that the defendant infringed its patent directly by inducing others to infringe and by contributory infringement.  The defendant argued that the plaintiff failed to provide “meaningful notice of which products or services are actually accused of infringement” and failed to provide support for claims of inducement of infringement and contributory negligence.  Judge Thynge disagreed, finding that the plaintiff sufficiently pled direct infringement because the plaintiff provided adequate notice of the allegedly infringing method to the defendant.  Judge Thynge further explained that the plaintiff sufficiently pled an inducement claim because the alleged facts presented a reasonable inference of the defendant knowingly and intentionally encouraging others to infringe, namely its customers and end users.  As for the plaintiff’s contributory infringement claim, Judge Thynge determined that the plaintiff provided a facially plausible claim and adequate notice to the defendant, thereby satisfying the pleading requirements of Twombly and Iqbal.

Judge Robinson Dismisses for Lack of Personal Jurisdiction

In Intellectual Ventures I LLC, et al. v. Nikon Corp., et al., C.A. No. 11-1025-SLR (D. Del. Apr. 1, 2013), Judge Robinson granted defendant Sendai Nikon Corporation’s (“Sendai”) motion to dismiss for lack of personal jurisdiction, as well as the remaining defendants’ motion to dismiss plaintiffs Intellectual Ventures I LLC and Intellectual Ventures II LLC’s joint infringement claims.  The plaintiffs argued that general personal jurisdiction existed under the agency theory, by which the acts of a subsidiary are attributed to its parent to establish jurisdiction over the latter.  According to the Court, the facts presented were the opposite: Sendai manufactures and sells cameras to its parent, defendant Nikon Corporation, in Japan.  Nikon Corporation, not Sendai, then sells the cameras worldwide, including in the United States.  Nor did Judge Robinson find any indication that Sendai had an agency relationship with defendants Nikon Inc. or Nikon Americas Inc. The Court also rejected the plaintiffs’ dual jurisdiction theory, by which personal jurisdiction can be established on the basis of general contacts with the forum state, out of which contacts the claims arise.  The plaintiffs argued that “United States-specific configurations” in the cameras made by Sendai and sold in the United States satisfied the intent element of this theory, but the Court disagreed: the cameras included configurations for many languages and time zones, and Sendai’s website was in Japanese and did not allow customers to purchase products.  Judge Robinson also dismissed the plaintiffs’ joint infringement claims.  The activities of Sendai, now dismissed, could not be used to show joint infringement, and the Court did not find any other allegations sufficient to show control or direction by Nikon Corp. over the remaining defendants.  The Court denied the motion to dismiss the indirect infringement claims.

Judge Stark Rules on Defendants’ Motions to Dismiss

In Clouding IP, LLC v., Inc. et al., C.A. No. 12-641-LPS, Clouding IP, LLC v. Oracle Corporation, C.A. No. 12-642-LPS, and Clouding IP, LLC v. Rackspace Hosting, Inc., et al., C.A. No. 12-675-LPS (D. Del. May 24, 2013), Judge Stark granted in part and denied in part the defendants’ motions to dismiss for failure to state a claim.  Defendant Oracle moved to dismiss the plaintiff’s complaint in its entirety, including claims of direct infringement, indirect infringement and willful infringement.  In the alternative, Oracle sought a more definite statement.  The Amazon and Rackspace defendants moved to dismiss the plaintiff’s claims of induced infringement and willful infringement.  The Court denied Oracle’s motion to dismiss the plaintiff’s direct infringement claim, holding that compliance with Form 18 was sufficient to satisfy the pleading requirements for direct infringement.  The Court denied all moving defendants’ motions to dismiss the plaintiff’s inducement claims, holding that the plaintiff’s inducement claim was limited to post-filing conduct and pre-filing knowledge was not required to state a claim for such inducement.  In denying the defendants’ motions to dismiss the plaintiff’s willful infringement claim, the Court held that the term “filing” in Seagate refers to the filing of the willful infringement claim, and not the filing of the original complaint.  The plaintiff’s willful infringement claim was later added in its amended complaint.  Therefore, the time between the filing of the original complaint and the filing of the amended complaint was deemed “pre-filing” conduct under Seagate.  The Court also denied Oracle’s motion for a more definite statement with respect to direct infringement, but granted the motion with respect to indirect infringement.

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