Nanosys, Inc. et al-v-QD Vision Inc

Filing 97

ORDER by Judge Yvonne Gonzalez Rogers denying 88 Motion to Dismiss. (ygrlc2, COURT STAFF) (Filed on 1/4/2017)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 NANOSYS, INC., ET AL., Case No. 16-cv-01957-YGR Plaintiffs, 8 v. ORDER DENYING MOTION TO DISMISS 9 10 QD VISION, INC., Re: Dkt. No. 88 Defendant. United States District Court Northern District of California 11 12 Plaintiffs bring this action against defendant QD Vision, Inc. (“QDV”) for alleged 13 infringement of eleven patents.1 Plaintiffs bring claims for: (i) direct infringement of eight of the 14 patents; (ii) induced infringement of one of the patents; and (iii) contributory infringement of two 15 of the patents. Additionally, plaintiffs allege that QDV’s direct infringement of five of the patents 16 was willful, thereby warranting an award of enhanced damages. 17 Currently before the Court is QDV’s motion to dismiss certain claims from the SAC. 18 Specifically, QDV moves to dismiss the following: (i) willful infringement of Patent Nos. 19 6,207,229 (“229 Patent”), 6,322,901 (“901” Patent”), 8,481,112 (“112 Patent”), 8,481,113 (“113 20 Patent”), and 6,821,337 (“337 Patent”) in Counts One through Four and Six (the “Willful 21 Infringement Claims”); (ii) pre-suit induced infringement claims for Patent No. 9,182,621 (“621 22 Patent) in Count Thirteen; (iii) contributory infringement of Patent Nos. 8,648,524 (“524 Patent”) 23 and 9,063,363 (“363 Patent”) in Counts Eleven and Twelve, respectively. (Dkt. No. 88, “Mtn.”) 24 1 25 26 27 28 Plaintiffs filed their original complaint on April 14, 2016 (Dkt. No. 1) and a first amended complaint on June 14, 2016 (Dkt. No. 36). On September 16, 2016, the Court granted in part and denied in part QDV’s motion to dismiss certain claims. (Dkt. No. 80.) Plaintiffs filed a second amended complaint on October 5, 2016, alleging infringement of thirteen patents. (Dkt. No. 84, “SAC.”) On December 9, 2016, the parties filed a joint administrative motion and represented to the Court that plaintiffs were no longer asserting claims for infringement of Patent Numbers 6,576,291 and 7,138,098 at Counts Five and Seven, respectively. (Dkt. No. 94.) 1 The Court previously dismissed these same claims with leave to amend. (Dkt. No. 80.)2 QDV 2 does not move to dismiss any other claims and has filed a partial answer to the SAC. (Dkt. No. 3 89.) 4 Having carefully considered the pleadings and the papers submitted on this motion, and for 5 the reasons set forth more fully below, the Court DENIES QDV’s motion to dismiss as follows: 6 First, with regards to the Willful Infringement Claims, QDV argues that plaintiffs have 7 failed to plead allegations showing willfulness beyond mere knowledge, which this Court noted 8 plaintiffs must do in its prior order dismissing the same. With respect to the patents at issue for 9 the Willful Infringement Claims, plaintiffs have added allegations in the SAC demonstrating the following: Nanosys and QDV shared at least one co-founder, Dr. Moungi Bawendi. Dr. Bawendi 11 United States District Court Northern District of California 10 was also a named inventor of the patents at issue. Dr. Bawendi left Nanosys to found QDV and 12 provide scientific advice to the company. QDV then “availed itself of Dr. Bawendi’s knowledge 13 of the claimed inventions and Nanosys’s technology to develop and market its infringing products, 14 including Color IQ.” (SAC ¶¶ 44, 58, 72, 85, 112.) The Court finds that such allegations 15 constitute more than “mere knowledge” and are, at this stage, sufficient to support a claim for 16 willful infringement. Plaintiffs have alleged that the former founder of Nanosys who is also 17 named as an inventor of the patents at issue used his specific knowledge regarding such patents to 18 develop competing technology at another company. If true, such could constitute egregious 19 actions that would entitle plaintiffs to enhanced damages under the patent laws. See Halo Elec., 20 Inc. v. Pulse Elec., Inc., 136 S. Ct. 1923, 1936 (2016) (acknowledging that “intentional or 21 knowing” infringement “may” warrant a punitive sanction, particularly where the circumstances 22 transform “simple knowledge into such egregious behavior”) (Breyer, J., concurring). 23 Accordingly, QDV’s motion to dismiss the Willful Infringement Claims is DENIED. 24 25 Second, with regards to the induced infringement claims in Count Thirteen, the Court previously dismissed the pre-suit allegations for failure to allege adequately pre-suit knowledge of 26 27 28 2 The Court adopts here the Background section and its discussion of the legal issues in its prior order on QDV’s motion to dismiss. 2 1 the patents. In the SAC, plaintiffs have added allegations regarding Dr. Bawendi’s involvement 2 with Nanosys, as discussed above. Additionally, plaintiffs allege that the quantum dot technology 3 market consists primarily of only two companies, namely, QDV and Nanosys. As such, plaintiffs 4 allege that QDV would have monitored developments in Nanosys’ technology and intellectual 5 property, and thus knew, or at the very least, should have known, about the issuance of the 621 6 Patent. QDV argues that such allegations remain insufficient to support pre-suit inducement 7 claims. Specifically, QDV argues that Dr. Bawendi left Nanosys in 2004, almost a decade before 8 the 621 Patent was issued. However, the Court finds that the allegations in the SAC are sufficient 9 to raise at least the inference that QDV knew about the 621 Patent prior to the filing of the instant suit. That QDV and Nanosys are the two primary players in a small market increases the 11 United States District Court Northern District of California 10 likelihood that QDV had knowledge of Nanosys’s patents. See, e.g., 3D Sys., Inc. v. Formlabs, 12 Inc., No. 13-CV-7973, 2014 WL 1904365, at *3 (S.D.N.Y. May 12, 2014) (finding knowledge 13 sufficiently pled where parties were in the same market for stereolithographic 3D printers). Thus, 14 the Court DENIES QDV’s motion to dismiss the induced infringement claims in Count Thirteen. 15 Finally, with regards to the contributory infringement claims in Counts Eleven and 16 Twelve, the Court previously dismissed the same finding that plaintiffs failed to plead any facts 17 demonstrating that the accused infringing components lacked any substantial non-infringing uses. 18 Plaintiffs have now incorporated by reference their “Disclosure of Asserted Claims and 19 Infringement Contentions” served on September 9, 2016, and claim that the same supports their 20 allegations that QDV’s products have no “substantial non-infringing uses.” (SAC ¶¶ 165, 185.) 21 Additionally, plaintiffs allege that the accused products are “specially designed and adapted such 22 that it must be used” in the infringing manner claimed in plaintiffs’ patents. (Id. at ¶¶ 170–173, 23 190–193.) QDV no longer appears to challenge plaintiffs’ claims on these grounds, but argues 24 that plaintiffs have failed to allege any facts that would show that QDV knew its products were 25 “especially made to infringe” the patents at issue here because plaintiffs have inadequately pled 26 that QDV knew of the patents when QDV created the allegedly infringing products. (See Dkt. No. 27 92 at 7.) With respect to this issue, plaintiffs have again alleged that, because of the close 28 relationship between Dr. Bawendi and Nanosys and because of the relatively small size of the 3 1 market (see SAC ¶¶ 163, 183), QDV knew or should have known about the patents at issue. As 2 discussed above, such is sufficient at this stage to raise an inference that QDV had the requisite 3 knowledge to sustain a claim for contributory infringement in Counts Eleven and Twelve. 4 Accordingly, QDV’s motion to dismiss the same is DENIED. 5 This Order terminates Docket Number 88.3 6 IT IS SO ORDERED. 7 Dated: January 4, 2017 ______________________________________ YVONNE GONZALEZ ROGERS UNITED STATES DISTRICT COURT JUDGE 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 3 28 The Court VACATES the hearing on this motion currently set for January 10, 2017. 4

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