Pagemelding, Inc v. ESPN, Inc.

Filing 56

ORDER GRANTING LEAVE TO AMEND AND VACATING HEARING by Hon. William Alsup granting 50 Motion for Leave to File.(whalc1, COURT STAFF) (Filed on 6/18/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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PAGEMELDING, INC,

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Plaintiff,

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For the Northern District of California

United States District Court

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v.

ORDER GRANTING
LEAVE TO AMEND AND
VACATING HEARING

ESPN, INC.,

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Defendant.
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No. C 11-06263 WHA

INTRODUCTION
In this patent-infringement action, plaintiff again moves for leave to file a first amended

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complaint. For the reasons stated below, the motion is GRANTED. The motion hearing

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scheduled for July 12 is VACATED.

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STATEMENT
This action’s background has been described in prior orders and will be summarized

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below (Dkt. Nos. 38, 48). This action was filed in December 2011. A few months later,

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plaintiff’s complaint was dismissed for failure to allege specific facts showing infringement of

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U.S. Patent No. 6,442,577. A couple of months later, another order denied plaintiff leave to file

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an amended complaint, again for failure to allege sufficiently specific facts under Twombly and

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Iqbal. Now, plaintiff moves again to file a first amended complaint.

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Very recently, after the parties finished briefing this motion, the Federal Circuit issued an

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opinion clarifying patent infringement pleading standards in In re Bill of Lading Transmission

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and Processing Systems Patent Litigation, No. 2010-1493, 2012 WL 2044605 (Fed. Cir.

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June 7, 2012).

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ANALYSIS
In In re Bill of Lading, the Federal Circuit reversed a district court’s dismissal for failure

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to state a claim of direct and inducing infringement. Writing for the majority in a 2-1 split

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decision, Judge Kathleen O’Malley highlighted a potential tension between the Supreme Court

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cases of Iqbal and Twombly, and the bare-bones Form 18 for direct infringement in the Federal

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Rules. The court of appeals held that adequate pleading of direct infringement is to be measured

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by the specificity required by Form 18, explaining that a plaintiff does not need to plead facts

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establishing that each element of an asserted claim is met. In re Bill of Lading, 2012 WL

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2044605 at 6–8. Judge Pauline Newman dissented, arguing that Form 18 complaints are

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For the Northern District of California

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normally insufficient under the Supreme Court’s pleading standards. Id. at 19–20.
Notably, the Federal Circuit’s decision drew a distinction between the pleading standards

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for direct and indirect infringement. For allegations of indirect infringement (contributory and

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inducing infringement), plaintiffs must allege sufficient facts to meet the pleading standards

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articulated in Iqbal and Twombly. Id. at 9.

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1.

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Plaintiff has provided detailed allegations regarding the operation of the allegedly

DIRECT INFRINGEMENT.

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infringing ESPN websites — including how ESPN customizes content in its web pages. This

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information includes an analysis of the code provided by ESPN, an analysis of ESPN’s userData

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application, and an explanation as to why an internet service provider such as AT&T is a “first

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type network node” and an internet content provider such as ESPN is a “second type network

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node” within the meaning of the asserted patent. Nothing more is required from Form 18 for

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alleging direct infringement.

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2.

INDUCED INFRINGEMENT.

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Form 18 measures only the sufficiency of allegations of direct infringement, and not

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indirect infringement. In re Bill of Lading, 2012 WL 2044605 at 9. A caveat however is that the

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underlying act of direct infringement, which is necessary to support a claim of indirect

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infringement, need only be pled in compliance with Form 18. Id. at 6–7. As for the remaining

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requirements to allege induced infringement, the complaint must contain facts plausibly showing
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that defendant specifically intended another party to infringe the patent and knew that the direct

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infringer’s acts constituted infringement. The factual allegations must support reasonable

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inferences, drawn in favor of the non-moving party, for a plausible claim. Id. at 12–13. Plaintiff

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need not identify a specific direct infringer if it pleads facts sufficient to allow an inference that

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at least one direct infringer exists. Id. at 8.

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In its proposed complaint, plaintiff has identified third-party infringers as users of

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ESPN’s “Participating Providers,” which include AT&T, Cox Communications and Charter

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Communications (First Amd Compl. ¶¶ 95–99). As discussed above, plaintiff sufficiently

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alleges that these third-parties were direct infringers under the Form 18 standard.
Pagemelding has also alleged facts, that if true, would lead to reasonable inferences that

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For the Northern District of California

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ESPN intended another party to infringe the patent and knew that the direct infringer’s acts

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constituted infringement. ESPN intended third-parties to use the websites that are alleged to be

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infringing. ESPN actively promotes users of its websites to utilize one of the affiliated ISPs to

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access the ESPN website content. For example, when a user with a non-affiliated ISP clicks on a

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link to view a live sporting event on the ESPN3 website, that user may be presented with content

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that includes ESPN’s request, “Switch to an [sic] WatchESPN affiliated ISP or to [sic] contact

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your ISP and request WatchESPN.” ESPN also solicits ISPs and other entities to enter into

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agreements with ESPN to become “Participating Providers,” which include the alleged direct

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infringers AT&T, Cox Communications and Charter Communications (Compl. ¶¶ 96–101).

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ESPN also had (and has) knowledge of the asserted patent. In October 2011,

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PageMelding sent to ESPN a letter stating that ESPN was utilizing the technology disclosed in

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the ’577 Patent on ESPN’s websites, including the ESPN.com, ESPN3.com and

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WatchESPN.com websites (Compl. ¶ 19).

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CONCLUSION

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For the reasons stated above, plaintiff’s motion for leave to file its first amended

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complaint is GRANTED. The hearing scheduled for July 12 is VACATED. If the Federal Circuit

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hears In re Bill of Lading en banc, then perhaps this order will eventually be re-visited as well.

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IT IS SO ORDERED.

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Dated: June 18, 2012.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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For the Northern District of California

United States District Court

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