Intellectual Property – Pleadings

June 6, 2012

Publication| Intellectual Property

Judge Robinson Rules on Motions Arising from Pleadings in Related Cases

In CyberFone Systems, LLC v. Cellco Partnership, C.A. Nos. 11-827 through 835 (D. Del. Apr. 30, 2012), Judge Robinson ruled on a number of motions brought by defendants in these related cases. Judge Robinson denied a motion to sever for improper joinder brought on the ground that the original complaint (now amended) did not allege joint infringement and was otherwise insufficient to meet the standards for joinder under Federal Rule of Civil Procedure 20. The Court declined to sever and stated that it would consider how to manage the trials of these actions at a later time. In one of the actions, Judge Robinson denied motions to sever claims against wireless manufacturers from those against the carriers based on misjoinder and the customer suit exception. The Court left open the possibility of later staying trial of the claims against the carriers until those against the wireless manufacturers had been tried.

Judge Robinson denied motions to dismiss direct infringement claims because the grounds for dismissal would have required the Court to construe claim terms at the pleading stage and because the amended complaints otherwise conformed with Form 18 of the Federal Rules of Civil Procedure. The Court also denied certain motions to dismiss indirect infringement claims, holding that the knowledge requirement to plead indirect infringement may be satisfied by the filing of a complaint. The Court granted motions to dismiss contributory infringement claims because the pleadings did not allege that the alleged infringers knew that the products were especially made for or adapted for use in infringing the asserted patents, or that the accused products were not staple articles or commodities of commerce suitable for substantial non-infringing use.

Judge Robinson Denies Motion to Dismiss

In Technology Innovations, LLC v. Amazon.com, Inc., C.A. No. 11-690-SLR (D. Del. Apr. 25, 2012), Judge Robinson denied as premature defendant Amazon.com, Inc.’s motion to dismiss an infringement claim based on one of the patents-in-suit because it would have required the Court to construe claim terms at the pleading stage. Because Judge Robinson found that the complaint otherwise satisfied Form 18 of the Federal Rules of Civil Procedure, the motion to dismiss was denied. Accordingly, Judge Robinson denied Amazon’s motion for sanctions, which was premised on the alleged impossibility of showing that the accused product—versions of the Kindle e-reader—infringed the patent subject of the motion.

Magistrate Judge Thynge Recommends Denial of Motion to Dismiss for Failure to State a Claim

In Motivation Innovations, LLC v. Express, Inc. et al., C.A. No. 11-615-SLR-MPT (D. Del. Apr. 24, 2011), Judge Thynge issued a report and recommendation recommending that defendants’ motion to dismiss for failure to state a claim be denied and that plaintiff be permitted to amend its complaint. Plaintiff originally brought the action against four unaffiliated companies alleging infringement of U.S. Patent No. 5,612,527. Defendants moved to dismiss for failure to meet the pleading standards set forth in Federal Rule of Civil Procedure 8(a)(2). In response, plaintiff filed a motion to amend its complaint.

Judge Thynge reviewed individual phrases in the complaint to determine whether such phrases met the specificity required by Twombly and Iqbal and exemplified in Federal Rule of Civil Procedure Form 18. Judge Thynge found that (1) plaintiff’s use of trade names to identify the infringing product was sufficient; (2) plaintiff’s use of conditional language was not per se defective and properly identified a general category of products or methods, followed by a more specific description of the products or methods; and (3) plaintiff was not required to plead specific claims of the patent allegedly infringed or describe in detail how the allegedly infringing products work. Finally, Judge Thynge concluded that plaintiff should be permitted to amend its complaint to correctly identify the rewards program of one defendant.

Judge Robinson Denies Motion to Dismiss

In Apeldyn Corp. v. Sony Corp., C.A. No. 11-440-SLR (D. Del. Apr. 4, 2012), Judge Robinson denied defendants Sony Corp. and Sony Electronics, Inc.’s (“Sony”) motion to dismiss plaintiff Apeldyn Corp.’s indirect infringement and willfulness claims; the Court also denied Sony’s motion to stay the action. On indirect infringement, Judge Robinson ruled that the complaint had sufficiently alleged that Sony had knowledge of the patent because of its involvement in a previous lawsuit with Apeldyn involving the same patent. As for willfulness, Sony suggested that an agreement with Apeldyn to dismiss it from the earlier case, in which the parties also allegedly agreed that the complaint in this case would relate back to the date of filing of the earlier lawsuit’s complaint, meant that the “pre-suit knowledge” necessary for willfulness should be knowledge obtained before the previous suit. Upon review of this provision in the agreement, the Court concluded that it applied only to any laches defense that Sony may raise.

Sony also moved to stay the case while related actions involving the same patent proceeded against those who designed the allegedly infringing LCD panels. Sony maintained that it was just a purchaser, not a designer of LCD panels. Apeldyn argued that Sony worked with third parties to tailor certain panels used in its products to fit the needs of its customers. Though discovery had not begun and a trial date was not yet set, the parties envisioned that this suit would take place when Apeldyn let Sony out of the previous action. Balancing these considerations, the Court denied the motion for a stay without prejudice to renew.

Judge Robinson Denies Motion to Dismiss

In Walker Digital, LLC v. Facebook, Inc., C.A. No. 11-313-SLR (D. Del. Apr. 4, 2012), Judge Robinson denied defendants Amazon.com, Inc. (“Amazon”) and Zappos.com, Inc.’s (“Zappos”) motion to dismiss. On direct infringement, Judge Robinson concluded that the amended complaint contained the requirements of Form 18 of the Federal Rules of Civil Procedure; the movants’ other argument—that the accused products do not satisfy a certain claim limitation—would have required claim construction at the pleading stage, which the Court would not do. Judge Robinson also denied the motion to dismiss the inducement claims, even though Walker Digital only alleged that the movants had knowledge of the patent from discussions that took place after the filing of the original complaint. Judge Robinson acknowledged that she had held in her previous decisions in Xpoint Techs. v. Microsoft Corp., 730 F. Supp. 2d 349 (D. Del. 2010), and Eon Corp. IP Holdings LLC v. FLO TV Inc., 802 F. Supp. 2d 527 (D. Del. 2011), that the knowledge of the patent necessary to allege indirect infringement could not be based on the filing of the complaint, but decided that the “better reasoning” is to “allow such cases to proceed to discovery.”

On contributory infringement, the Court found that Walker Digital alleged each of the elements necessary to state a claim. Judge Robinson also found that Walker Digital alleged facts sufficient to support its willfulness claim: the amended complaint sufficiently alleged that the movants had knowledge of the patents through pre-suit meetings with Walker Digital, and alleged continuing actions on the part of Amazon and Zappos sufficient to allow an inference that they acted despite an objectively high likelihood of infringement. Because Zappos is a wholly owned subsidiary of Amazon, the Court attributed to Zappos knowledge of the patent derived from pre-suit meetings between representatives of Walker Digital and Amazon’s intellectual property counsel. For these reasons, Judge Robinson denied the motion to dismiss.

Judge Robinson Denies Motion to Dismiss

In Netgear, Inc. v. Ruckus Wireless, Inc., C.A. No. 10-999-SLR (D. Del. Mar. 28, 2012), Judge Robinson denied defendant Ruckus Wireless, Inc.’s motion to dismiss certain infringement counts in plaintiff Netgear, Inc.’s amended complaint. The Court concluded that the amended complaint contained each of the items required by Form 18 of the Federal Rules of Civil Procedure to state a claim for direct infringement, and rejected Ruckus’ contention that more detail was necessary. Judge Robinson also denied Ruckus’ motion to dismiss Netgear’s inducement claims, finding that the amended complaint included sufficient allegations of knowledge and intent. The Court found that these same allegations sufficed to state a claim for willfulness. The Court also found that the amended complaint alleged sufficient facts to state a claim for contributory infringement.

Judge Stark Grants Plaintiff’s Motion for Leave to File Second Amended Complaint

In St. Clair Intellectual Property Consultants, Inc. v. Hewlett-Packard Company, C.A. No. 10-425-LPS (D. Del. Mar. 28, 2012), Judge Stark granted plaintiff’s motion for leave to file a second amended complaint and denied as moot defendant’s motion to strike the willfulness allegations and request for enhanced damages in the first amended complaint. In response to defendant’s motion to strike the original complaint, plaintiff filed a first amended complaint, procedurally mooting defendant’s initial motion to strike. Defendant then moved to strike the first amended complaint. Plaintiff opposed the motion and requested leave to file a second amended complaint. In granting plaintiff’s motion for leave to file a second amended complaint and denying defendant’s motion to strike, the Court found that plaintiff’s proposed complaint adequately alleged the elements of a willful infringement claim and therefore the amendment was not futile.

Judge Stark Rules on Defendants’ Motions to Dismiss

In Astrazeneca UK Limited, et al. v. Watson Laboratories, Inc. (NV), et al., C.A. No. 10-915-LPS (D. Del. Mar. 13, 2012) (public version, March 23, 2012), Judge Stark granted defendant Watson Laboratories, Inc. (NV)’s (“Watson”) motion to dismiss and granted in part and denied in part EGIS Pharmaceuticals PLC’s (“EGIS”) motion to dismiss. Watson moved to dismiss Counts II and III of the complaint, which alleged infringement of U.S. Patent No. 6,858,618 (“the ‘618 patent”) and U.S. Patent No. 7,030,152 (“the ‘152 patent”) under Section 271(e)(2), for lack of subject matter jurisdiction and failure to state a claim Judge Stark granted Watson’s motion to dismiss in light of a Federal Circuit decision holding that Astrazeneca’s assertion of the ‘618 and ‘152 patents against other generic drug manufacturers failed to state a claim under Section 271(e)(2). Defendant EGIS moved to dismiss Counts IV-IX of the complaint for lack of subject matter jurisdiction and failure to state a claim. Judge Stark granted EGIS’s motion to dismiss Counts V and VI, since they were based on the underlying Section 271(e)(2) Counts II and III asserted against Watson. The Court was not persuaded by EGIS’s arguments for dismissing Count IV, which alleged that EGIS will induce infringement of U.S. Patent No. RE37,314 (“the ‘314 patent”), and therefore denied EGIS’s motion as to Count IV. Counts VII, VIII and IX sought a declaratory judgment that EGIS will induce infringement of the patents-in-suit upon FDA approval of Watson’s NDA. The Court dismissed Count VII on the grounds that it was duplicative of Count IV, and dismissed Counts VIII and IX for lack of subject matter jurisdiction on the grounds that they failed to present a controversy of sufficient “reality” for purposes of Article III.

Judge Robinson Denies Motion to Dismiss

In Cephalon, Inc. v. Sandoz, Inc., C.A. No. 11-821-SLR (D. Del. Mar. 1, 2012), Judge Robinson denied defendant Sandoz, Inc.’s motion to dismiss for lack of subject matter jurisdiction and for failure to state a claim. Two patents covering plaintiff Cephalon, Inc.’s FENTORA® product had issued a year after earlier litigation between the parties over the same drug began, but Cephalon did not list the new patents in the Orange Book until after the 30-day period that would have required a current ANDA applicant to submit a Paragraph IV certification for the new patents. Sandoz thus did not submit a Paragraph IV certification for these patents and refused Cephalon’s request to amend the pleadings in the earlier suit to include the new patents. Cephalon then filed this action on the newly issued patents.

Judge Robinson rejected Sandoz’s arguments that, without a Paragraph IV certification, Cephalon could not sue Sandoz for infringement unless it began to sell a generic version of FENTORA®, and that the Declaratory Judgment Act did not allow for the suit. The Court explained that the purpose of Section 271(e)(2), which creates the artificial act of infringement that allows brand manufacturers to initiate litigation, was to provide notice to the patentee of potential infringement. The filing of Sandoz’s original ANDA and its earlier Paragraph IV certification for the patents in the first lawsuit were sufficient to support jurisdiction over these later patents, since such acts fulfilled the notice function of Section 271(e)(2). Independent of the Hatch-Waxman Act, the Court concluded that it had jurisdiction under the Declaratory Judgment Act, since patentees may seek a declaration that a person will infringe their patents in the future.

Judge Andrews Grants Motion to Dismiss for Lack of Personal Jurisdiction

In Serverside Group Limited, et al. v. CPI Card Group-Minnesota Inc. et al., C.A. No. 11-559-RGA (D. Del. Feb. 17, 2012), Judge Andrews found that the Court lacked personal jurisdiction over certain defendants in an action involving 15 defendants. Two groups of defendants filed motions to dismiss for lack of personal jurisdiction, motions to sever, and motions to transfer. One group of six defendants (the “CPI group”) included a single Delaware corporation. The two defendants in the second group (the “T8 group”) were located in Iowa.

Judge Andrews found that the Court lacked jurisdiction over the non-Delaware entities in the CPI group and both defendants in the T8 group. Although plaintiffs had requested the opportunity to take jurisdictional discovery, Judge Andrews denied that request. Judge Andrews concluded that plaintiffs’ boilerplate allegations were insufficient to confer jurisdiction and found that plaintiffs failed to allege that defendants had sold or offered to sell the technology to any person or entity in Delaware. Judge Andrews also noted that defendants’ advertisements that circulated in Delaware were not “offers to sell” because such advertisements only invited a call for more information.
 

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